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H0774aa....................................................by STATE AFFAIRS
STATE INSURANCE FUND - Amends existing law to provide that the state
insurance fund is an independent agency to be governed by a board of
directors who shall be appointed by the governor; to provide that the board
of directors shall appoint the manager of the State Insurance Fund, who
shall have expertise in the insurance industry; to provide that the manager
may hire necessary personnel; to provide definitions and to provide that
the Idaho Petroleum Clean Water Trust Fund, subject to the direction and
supervision of the Board of Directors of the State Insurance Fund, is
authorized to insure the owners and operators of petroleum storage tanks
against certain costs; and to provide that the State Insurance Fund does
not fall within the prohibition against government-owned insurers.
02/25 House intro - 1st rdg - to printing
02/26 Rpt prt - to St Aff
03/10 Rpt out - to Gen Ord
03/12 Rpt out amen - to engros
03/13 Rpt engros - 1st rdg - to 2nd rdg as amen
03/16 2nd rdg - to 3rd rdg as amen
03/17 3rd rdg as amen - PASSED - 38-31-1
AYES -- Barraclough, Bieter, Bivens, Black(15), Boe, Campbell, Crane,
Cuddy, Deal, Field(13), Gagner, Gould, Hadley, Jaquet, Jones(9),
Jones(22), Judd, Kellogg, Kempton, Kendell, Kjellander, Kunz,
Linford, Marley, Meyer, Miller, Newcomb, Pischner, Pomeroy, Reynolds,
Richman, Robison, Stone, Tilman, Tippets, Trail, Watson, Mr Speaker
NAYS -- Alltus, Barrett, Bell, Black(23), Bruneel, Callister, Chase,
Clark, Crow, Denney, Ellsworth, Field(20), Geddes, Henbest, Hornbeck,
Jones(20), Lake, Loertscher, Mader, McKague, Mortensen, Ridinger,
Sali, Schaefer, Stevenson, Stoicheff, Stubbs, Taylor, Wheeler, Wood,
Zimmermann
Absent and excused -- Hansen,
Floor Sponsor - Newcomb, Deal
Title apvd - to Senate
03/18 Senate intro - 1st rdg as amen - to Com/HuRes
03/19 Rpt out - rec d/p - to 2nd rdg as amen
03/20 2nd rdg - to 3rd rdg as amen
03/20 3rd rdg as amen - PASSED - 32-2-1
AYES--Andreason, Boatright, Branch, Bunderson, Burtenshaw, Cameron,
Crow, Danielson, Darrington, Deide, Dunklin, Frasure, Geddes, Hansen,
Hawkins, Ingram, Ipsen, Keough, King, Lee, McLaughlin, Parry,
Richardson, Riggs, Risch, Sandy, Sorensen, Stennett, Sweeney, Thorne,
Wheeler, Whitworth
NAYS--Noh, Schroeder
Absent and excused--Twiggs
Floor Sponsor - McLaughlin
Title apvd - to House
03/23 To enrol - rpt enrol - Sp signed
03/24 Pres signed - to Governor
04/03 Governor signed
Session Law Chapter 428
Effective: 04/03/98
H0774|||| LEGISLATURE OF THE STATE OF IDAHO |||| Fifty-fourth Legislature Second Regular Session - 1998IN THE HOUSE OF REPRESENTATIVES HOUSE BILL NO. 774, As Amended BY STATE AFFAIRS COMMITTEE 1 AN ACT 2 RELATING TO THE STATE INSURANCE FUND; AMENDING SECTION 72-901, IDAHO CODE, TO 3 PROVIDE THAT THE STATE INSURANCE FUND IS AN INDEPENDENT BODY CORPORATE 4 POLITIC, TO PROVIDE FOR APPOINTMENT OF THE BOARD OF DIRECTORS OF THE STATE 5 INSURANCE FUND, TO PROVIDE TERMS, TO PROVIDE DUTIES, TO PROVIDE PURPOSES, 6 TO PROVIDE APPLICATION OF TITLE 41, IDAHO CODE, TO THE FUND, TO PROHIBIT 7 THE FUND FROM OPERATING AS AN INSURER IN OTHER STATES AND TO MAKE TECHNI- 8 CAL CORRECTIONS; AMENDING SECTION 72-902, IDAHO CODE, TO PROVIDE THAT THE 9 BOARD OF DIRECTORS SHALL APPOINT A MANAGER OF THE STATE INSURANCE FUND, TO 10 PROVIDE QUALIFICATIONS FOR THE MANAGER AND TO DELETE REFERENCE TO THE 11 STATE INSURANCE MANAGER ACQUIRING REAL PROPERTY; AMENDING SECTION 72-906, 12 IDAHO CODE, TO PROVIDE THAT THE MANAGER MAY EMPLOY NECESSARY PERSONNEL, TO 13 PROVIDE THAT THE PERSONNEL POLICIES AND COMPENSATION SCHEDULES FOR EMPLOY- 14 EES SHALL BE ADOPTED BY THE BOARD OF DIRECTORS AND SHALL BE COMPARABLE IN 15 SCOPE TO OTHER INSURANCE COMPANIES DOING BUSINESS IN THE STATE AND THE 16 REGION AND TO PROVIDE THAT EMPLOYEES SHALL BE MEMBERS OF THE PUBLIC 17 EMPLOYEE RETIREMENT SYSTEM; REPEALING SECTION 72-911, IDAHO CODE; AMENDING 18 SECTION 41-291, IDAHO CODE, TO MAKE A TECHNICAL CORRECTION AND TO FURTHER 19 DEFINE THE TERM INSURER; AMENDING SECTION 41-4903, IDAHO CODE, TO PROVIDE 20 A DEFINITION FOR BOARD OF DIRECTORS OF THE STATE INSURANCE FUND; AMENDING 21 SECTION 41-4904, IDAHO CODE, TO PROVIDE THAT THE IDAHO PETROLEUM CLEAN 22 WATER TRUST FUND, SUBJECT TO THE DIRECTION AND SUPERVISION OF THE BOARD OF 23 DIRECTORS OF THE STATE INSURANCE FUND IS HEREBY AUTHORIZED TO INSURE THE 24 OWNERS AND OPERATORS OF PETROLEUM STORAGE TANKS AGAINST CERTAIN COSTS; 25 AMENDING SECTION 41-4908, IDAHO CODE, TO PROVIDE A CORRECT CITATION; 26 AMENDING SECTION 59-904, IDAHO CODE, TO DELETE THE AUTHORITY OF THE GOVER- 27 NOR TO APPOINT THE MANAGER OF THE STATE INSURANCE FUND AND TO PROVIDE THAT 28 THE GOVERNOR SHALL APPOINT MEMBERS OF THE BOARD OF DIRECTORS OF THE STATE 29 INSURANCE FUND; AMENDING SECTION 41-309, IDAHO CODE, TO CLARIFY THAT THE 30 STATE INSURANCE FUND DOES NOT FALL WITHIN THE PROHIBITION AGAINST GOVERN- 31 MENT-OWNED INSURERS; AND DECLARING AN EMERGENCY. 32 Be It Enacted by the Legislature of the State of Idaho: 33 SECTION 1. That Section 72-901, Idaho Code, be, and the same is hereby 34 amended to read as follows: 35 72-901. BOARD OF DIRECTORS OF STATE INSURANCE FUND -- CRE- 36 ATION OF STATE INSURANCE FUND. (1) There is hereby created 37 as an independent body corporate politic a fund, to be known as the 38Ss tateIi nsuranceF39f und, for the purpose of insuring employers against lia- 40 bility for compensation under thisWorkmen'sworker's 41Cc ompensationLl aw 42 and theOo ccupationalDd 43 iseaseCc ompensationLl 2 1 aw and of securing to the persons entitled thereto the compensation pro- 2 vided by said laws. Such fund shall consist of all premiums and penalties 3 received and paid into the fund, of property and securities acquired by and 4 through the use of moneys belonging to the fund, and of interest earned upon 5 moneys belonging to the fund and deposited or invested as herein provided. 6 Such fund shall be administeredby the state insurance manager7without liability on the part of the state .beyond8the amount of such fund.Such fund shall be applicable to the payment 9 of losses sustained on account of insurance and to the payment of compensation 10 under theWorkmen'sworker'sCc 11 ompensationLl aw and theOo 12 ccupationalDd iseaseCc 13 ompensationLl aw and of expenses of adminis- 14 tering such fund. 15 (2) The governor shall appoint five (5) persons to be the board of 16 directors of the state insurance fund. One (1) member shall be a licensed 17 insurance agent, one (1) member shall represent businesses of the state, one 18 (1) member shall be a representative of labor, one (1) member shall be a mem- 19 ber of the state senate and one (1) member shall be a member of the state 20 house of representatives. The governor shall appoint a chairman from the five 21 (5) directors. The directors shall be appointed for terms of four (4) years, 22 except that all vacancies shall be filled for the unexpired term, provided 23 that the first two (2) appointments the governor makes after the effective 24 date of this act shall serve a term of two (2) years and the other three (3) 25 members shall serve a term of four (4) years. Thereafter, a member shall serve 26 a term of four (4) years. A certificate of appointment shall be filed in the 27 office of the secretary of state. A majority of the members shall constitute a 28 quorum for the transaction of business or the exercise of any power or func- 29 tion of the state insurance fund and a majority vote of the members shall be 30 necessary for any action taken by the board of directors. The members of the 31 board of directors shall appoint a manager of the state insurance fund who 32 shall serve at their pleasure and such other officers and employees as they 33 may require for the performance of their duties and shall prescribe the duties 34 and compensation of each officer and employee. Members of the board of direc- 35 tors shall receive a compensation for service like that prescribed in section 36 59-509(h), Idaho Code. 37 (3) It shall be the duty of the board of directors to direct the policies 38 and operation of the state insurance fund to assure that the state insurance 39 fund is run as an efficient insurance company, remains actuarially sound and 40 maintains the public purposes for which the state insurance fund was created. 41 (4) The state insurance fund is subject to and shall comply with 42 the provisions of the Idaho insurance code, title 41, Idaho Code. For purposes 43 of regulation, the state insurance fund shall be deemed to be a mutual 44 insurer. The state insurance fund shall not be a member of the Idaho insurance 45 guaranty association. 46 (5) Nothing in this chapter, or in title 41, Idaho Code, shall be con- 47 strued to authorize the state insurance fund to operate as an insurer in other 48 states. 49 SECTION 2. That Section 72-902, Idaho Code, be, and the same is hereby 50 amended to read as follows: 51 72-902. STATE INSURANCE MANAGER -- POWERS AND DUTIES OF STATE INSURANCE 52 MANAGER.There is hereby created in the office of the governor the53office of state insurance manager, elsewhere in this chapter referred to as3 1The board of directors of the state insurance fund shall appoint 2 a manager of the state insurance fund , whose duties , 3itsubject to the direction and supervision of the 4 board, shall be to conduct the business of the state insurance fund, 5and the said manager is hereby vested with full authority over said6fund,andmaydo any and all things which are necessary 7 and convenient in the administration thereof, or in connection with the insur- 8 ance business to be carried onby the managerunder the provi- 9 sions of this chapter.SaidThe manager shall10be appointed by the governor and shall serve during the pleasure of the11governor, andhave skill and expertise in managing and 12 administering within the insurance industry, shall be of good moral character 13 and shall be bonded in the time, form and manner as prescribed by chap- 14 ter 8, title 59, Idaho Code. 15The state insurance manager may acquire real property as a site for16an office building and may construct thereon an office building, or may pur-17chase an office building, and may use for such purposes any moneys in the fund18that may be available for investment; provided however, that no acquisition,19construction or purchase may be made hereunder without the prior written20approval of the board of examiners. Any moneys used pursuant to this section21for site acquisition or construction or purchase of an office building shall,22when so used, constitute an investment of the fund.23 SECTION 3. That Section 72-906, Idaho Code, be, and the same is hereby 24 amended to read as follows: 25 72-906. EMPLOYMENT OF ASSISTANTS. The manager, subject to the pro-26visions of chapter 53, title 67, Idaho Code,may employ such assis- 27 tants, experts, statisticians, actuaries, accountants, inspectors, clerks, and 28 other employees as necessary to carry out the provisions of this chapter and 29 to perform the duties imposed upon him by this chapter. The personnel 30 policies and compensation schedules for employees shall be adopted by the 31 board of directors and shall be comparable in scope to other insurance compa- 32 nies doing business in the state and the region. Employees shall be members of 33 the public employee retirement system. 34 SECTION 4. That Section 72-911, Idaho Code, be, and the same is hereby 35 repealed. 36 SECTION 5. That Section 41-291, Idaho Code, be, and the same is hereby 37 amended to read as follows: 38 41-291. DEFINITIONS. As used inthis chaptersections 39 41-290 through and including section 41-298, Idaho Code : 40 (1) Sections 41-290 through 41-298, Idaho Code, shall be known as the 41 Idaho Arson and Fraud Reporting-Immunity Act. 42 (2) "Authorized agencies" shall mean: 43 (a) The director, department of law enforcement; 44 (b) The prosecuting attorney responsible for prosecution in the county 45 where the fire or fraud occurred; 46 (c) The attorney responsible for the prosecution in the county where the 47 fire or fraud occurred as designated by the attorney general; 48 (d) The department of insurance. 49 (3) Solely for the purpose of section 41-292(1), Idaho Code, "authorized 50 agencies" shall also include: 4 1 (a) The United States attorney's office when authorized or charged with 2 investigation or prosecution of the fire or fraud in question; 3 (b) The federal bureau of investigation or any other federal agency, 4 charged with investigation or prosecution of the fire or fraud in ques- 5 tion. 6 (4) "Relevant" means information having any tendency to make the exis- 7 tence of any fact that is of consequence to the investigation or determination 8 of the issue more probable or less probable than it would be without the evi- 9 dence. 10 (5) Material will be "deemed important," if within the sole discretion of 11 the "authorized agency," such material is requested by the "authorized 12 agency." 13 (6) "Action," as used in this statute, shall include nonaction or the 14 failure to take action. 15 (7) "Immunity" means that no civil action may arise against any person 16 for furnishing information pursuant to section 41-248, 41-258, 41-290, 41-292, 17 41-296 or 41-297, Idaho Code, where actual malice on the part of the insurance 18 company, department of insurance, state fire marshal, authorized agency, their 19 employees or agents, is not present. 20 (8) "Financial loss" includes, but is not limited to, loss of earnings, 21 out-of-pocket and other expenses, repair and replacement costs and claims pay- 22 ments. 23 (9) "Person" means a natural person, company, corporation, unincorporated 24 association, partnership, professional corporation and any other legal entity. 25 (10) "Practitioner" means a licensee of this state authorized to practice 26 medicine and surgery, psychology, chiropractic, law or any other licensee of 27 the state whose services are compensated, directly or indirectly, by insurance 28 proceeds, or a licensee similarly licensed in other states and nations or the 29 practitioner of any nonmedical treatment rendered in accordance with a recog- 30 nized religious method of healing. 31 (11) "Statement" includes, but is not limited to, any notice statement, 32 any statement submitted on applications for insurance, proof of claim, proof 33 of loss, bill of lading, receipt for payment, invoice, account, estimate of 34 property damages, bills for services, diagnosis, prescription, hospital or 35 doctor records, X-rays, test results or other evidence of loss, injury or 36 expense, whether oral, written or computer generated. 37 (12) "Insurer" shall mean any insurance company contemplated by title 41, 38 Idaho Code, any business operating as a self-insured for any purpose, 39 the state insurance fund, and any self-insured as contemplated by title 40 72, Idaho Code. 41 SECTION 6. That Section 41-4903, Idaho Code, be, and the same is hereby 42 amended to read as follows: 43 41-4903. DEFINITIONS. For the purposes of this chapter: 44 (1) "Above ground storage tank" means any one (1) or a combination of 45 tanks, including pipes connected thereto, that is used to contain an accumula- 46 tion of petroleum or petroleum products, and the volume of which, including 47 the volume of pipes connected thereto, is less than ten percent (10%) beneath 48 the surface of the ground. This term does not include a heating tank, farm 49 tank or residential tank or any tank with a capacity of one hundred ten (110) 50 gallons or less. 51 (2) "Accidental release" means any sudden or nonsudden release of petro- 52 leum from a storage tank that results in a need for corrective action or com- 53 pensation for bodily injury or property damage neither expected nor intended 5 1 by the tank owner or operator. 2 (3) "Administrator" means a person, other than the trustee, employed by 3 the trustee to administer the Idaho petroleum clean water trust fund. 4 (4) "Application fee" means the amount paid or payable by an owner or 5 operator applying for a contract of insurance with the trust fund to offset 6 the costs of issuing contracts of insurance and other costs of administering 7 this fund. 8 (5) "Board" means the board of directors of the state insurance 9 fund as established by section 72-901, Idaho Code. 10 (6) "Bodily injury" means any bodily injury, sickness, disease or 11 death sustained by any person and caused by an occurrence defined in subsec- 12 tion (189 ) of this section. 13 (67 ) "Contamination" means the presence of 14 petroleum or petroleum products in surface or subsurface soil, surface water, 15 or ground water. 16 (78 ) "Commission" means the state tax commis- 17 sion of the state of Idaho. 18 (89 ) "Corrective action" means those actions as 19 are reasonably necessary to satisfy applicable federal and state standards in 20 the event of a release into the environment from a petroleum storage tank. 21 Corrective action includes initial corrective action response or actions con- 22 sistent with a remedial action to clean up contaminated soil and ground water 23 or address residual effects after initial corrective action is taken, as well 24 as actions necessary to monitor, assess and evaluate a release. Corrective 25 action also includes the cost of removing a tank which is releasing or has 26 been releasing petroleum products and the release cannot be corrected without 27 removing the tank; but corrective action does not include the cost of replac- 28 ing this tank with another tank. 29 (910 ) "Department" means the department of 30 insurance of the state of Idaho. 31 (101 ) "Director" means the director of the 32 department of insurance. 33 (112 ) "Farm tank" means any tank with a capacity 34 of more than one hundred ten (110) gallons but less than one thousand one hun- 35 dred (1,100) gallons situated above ground or underground which is used for 36 storing motor fuel for noncommercial purposes and which is located on a tract 37 of land devoted to the production of crops or raising animals, including fish, 38 and associated residences and improvements. A farm tank must be located on the 39 farm property. "Farm" includes fish hatcheries, rangeland and nurseries with 40 growing operations. 41 (123 ) "Free product" means petroleum or petro- 42 leum products in the nonaqueous phase, (e.g., liquid not dissolved in water). 43 (134 ) "Fund" or "trust fund" means the Idaho 44 petroleum clean water trust fund. 45 (145 ) "Heating tank" means any tank with a 46 capacity of more than one hundred ten (110) gallons situated above ground or 47 underground which is used for storing heating oil for consumptive use on the 48 premises where stored. 49 (156 ) "Legal defense costs" means any expense 50 that an owner or operator or the trust fund incurs in defending against claims 51 or actions brought by the federal environmental protection agency or a state 52 agency to require corrective action or to recover the costs of corrective 53 action; or by or on behalf of a third party for bodily injury or property dam- 54 age caused by a release. 55 (167 ) "Licensed distributor" means any distribu- 6 1 tor who has obtained a license under the provisions of section 63-2427A, Idaho 2 Code. If a person subject to the fee imposed by section 41-4908(6), Idaho 3 Code, is not required to obtain a distributor's license under the provisions 4 of chapter 24, title 63, Idaho Code, such person shall apply to the commission 5 for a limited license for the purpose of complying with the requirements of 6 this chapter. Such a limited license shall not be valid for any other purpose. 7 No bond shall be required for a limited license. A holder of a limited 8 license is a "licensed distributor" for the purposes of filing reports, paying 9 fees and other actions necessary to the proper administration and enforcement 10 of this chapter. 11 (178 ) "Manager" means the duly appointed manager 12 of the state insurance fund of the state of Idaho. 13 (189 ) "Noncommercial purposes" means not for 14 resale, with respect to motor fuels. 15 (1920 ) "Occurrence" means an accident, including 16 continuous or repeated exposure to conditions, which resulted in a release 17 into the environment of petroleum products from a petroleum storage tank. 18 (201 ) "Operator" means any person in control, or 19 having responsibility for, the daily operations of a petroleum storage tank. 20 (212 ) "Owner" means the owner of a petroleum 21 storage tank, except that "owner" does not include any person who, without 22 participation in the management of a petroleum storage tank, holds indicia of 23 ownership primarily to protect the owner's security interest in the tank. 24 (223 ) "Person" means any corporation, associa- 25 tion, partnership, one (1) or more individuals, or any governmental unit, or 26 agency thereof, other than federal or state agencies. 27 (234 ) "Petroleum" and/or "petroleum products" 28 mean crude oil, or any fraction thereof, which is liquid at standard condi- 29 tions of temperature and pressure (i.e., at sixty (60) degrees fahrenheit and 30 fourteen and seven-tenths (14.7) pounds per square inch absolute). The term 31 includes motor gasoline, gasohol, other alcohol blended fuels, diesel fuel, 32 heating oil and aviation fuel. 33 (245 ) "Property damage" means injury or destruc- 34 tion to tangible property caused by an occurrence. 35 (256 ) "Release" means any spilling, leaking, 36 emitting, discharging, escaping, leaching, or disposing from a petroleum stor- 37 age tank into ground water, surface water, or surface or subsurface soils. 38 (267 ) "Residential tank" means any tank with a 39 capacity of more than one hundred ten (110) gallons but less than one thousand 40 one hundred (1,100) gallons situated above ground or underground which is used 41 for storing motor fuel for noncommercial purposes and which is located on 42 property used primarily for dwelling purposes. 43 (278 ) "Site" means a single parcel of property 44 where petroleum or petroleum products are stored in a petroleum storage tank 45 and includes all contiguous land, structures, other appurtenances, surface 46 water, ground water, surface and subsurface soil, and subsurface strata within 47 and beneath the property boundary. 48 (289 ) "State" means the state of Idaho or any 49 office, department, agency, authority, commission, board, institution, hospi- 50 tal, college, university or other instrumentality thereof. 51 (2930 ) "Tank" means a stationary 52 device designed to contain an accumulation of petroleum or petroleum products 53 and constructed of nonearthen materials (e.g., concrete, steel, plastic) that 54 provide structural support. 55 (301 ) "Trustee" means the trustee of the Idaho 7 1 petroleum clean water trust fund, who for the purposes of this chapter shall 2 be the manager of the state insurance fund of the state of Idaho. 3 (312 ) "Underground storage tank" means any one 4 (1) or combination of tanks, including underground pipes connected thereto, 5 that is used to contain an accumulation of petroleum or petroleum products, 6 and the volume of which, including the volume of underground pipes connected 7 thereto, is ten percent (10%) or more beneath the surface of the ground. This 8 term does not include any: 9 (a) Farm or residential tank of one thousand one hundred (1,100) gallons 10 or less capacity used for storing motor fuel for noncommercial purposes; 11 (b) Tank used solely for storing heating oil for consumptive use on the 12 premises where stored; 13 (c) Septic tank; 14 (d) Pipeline facility including gathering lines regulated under: 15 (i) The natural gas pipeline safety act of 1968 (49 U.S.C. app. 16 1671, et seq.); or 17 (ii) The hazardous liquid pipeline safety act of 1979 (49 U.S.C. 18 app. 2001, et seq.); or 19 (iii) State laws comparable to the provisions of the law referred to 20 in paragraph (d)(i) or (d)(ii) of this subsection as an intrastate 21 pipeline facility; 22 (e) Surface impoundment, pit, pond or lagoon; 23 (f) Storm water or wastewater collection system; 24 (g) Flow-through process tank; 25 (h) Liquid trap or associated gathering lines directly related to oil or 26 gas production and gathering operations; 27 (i) Storage tank situated in an underground area (such as a basement, 28 cellar, mineworking, drift, shaft, or tunnel) if the storage tank is situ- 29 ated upon or above the surface of the floor; 30 (j) Tanks with a capacity of one hundred ten (110) gallons or less. 31 The term "underground storage tank" does not include any pipes connected to 32 any tank which is described in paragraphs (a) through (i) of this definition. 33 (323 ) "Underground storage tank regulations" 34 means regulations for petroleum storage tanks promulgated by the United States 35 environmental protection agency (EPA) pursuant to subtitle I of the solid 36 waste disposal act, as amended by the resource conservation and recovery act, 37 regulations promulgated by the state of Idaho as part of a state program for 38 underground storage tank regulation under subtitle I, or other regulations 39 affecting underground storage tank operations and management, including the 40 uniform fire code adopted by the state of Idaho. 41 SECTION 7. That Section 41-4904, Idaho Code, be, and the same is hereby 42 amended to read as follows: 43 41-4904. CREATION, AUTHORIZATION AND MANAGEMENT OF THE IDAHO PETROLEUM 44 CLEAN WATER TRUST FUND. (1) The Idaho petroleum clean water trust fund is 45 hereby created , subject to the direction and supervision of the board 46 , and the manager of the state insurance fund is hereby authorized to 47 utilize this trust fund for the purpose of insuring governmental and private 48 entities who are owners and operators of petroleum storage tanks against the 49 costs of corrective action and compensating third parties that are legally 50 entitled to receive compensation for bodily injury and property damage arising 51 out of accidental releases of petroleum from petroleum storage tanks covered 52 by a contract of insurance between the owner or operator and the trust fund. 53 The manager shall be the trustee of this fund, and shall appoint an adminis- 8 1 trator of this fund who shall be an employee of the state insurance fund. 2 (2) Nothing in this chapter shall enlarge or otherwise adversely affect 3 the legal liability of any legal entity insured by the trust fund, and any 4 immunity or other bar to a civil lawsuit under Idaho or federal law shall 5 remain in effect. The fact that the trust fund insures the legal liability of 6 any legal entity and thus may relieve the entity or an employee of the entity 7 from the payment of any judgment arising from a civil lawsuit, shall not be 8 communicated to the trier of fact in such a lawsuit. 9 (3) The trust fund shall consist of all application fees and all transfer 10 fees collected pursuant to section 41-4908, Idaho Code, all other moneys 11 received and paid into the trust fund, property and securities acquired by or 12 through the use of money belonging to the trust fund, money loaned to the 13 trust fund under the terms and agreements of a subordinated note of indebted- 14 ness or borrowed surplus as hereinafter defined and authorized, and of inter- 15 est earned on money and securities owned or in the possession of the trust 16 fund under an agreement that such investment earnings can accrue to the bene- 17 fit of the trust fund. 18 (4) The trust fund shall have the powers and privileges of a nonprofit 19 corporate entity and in its name may sue and be sued in any court of competent 20 jurisdiction, and may lease and maintain offices and space for its departmen- 21 tal and operational facilities, subject to the provisions of chapters 6 and 7, 22 title 41, Idaho Code. 23 (5) (a) The personnel costs, operating expenditures and capital outlay 24 budget of the trust fund shall be subject to review and approval in the 25 appropriation of the state insurance fund, and it is the intent of this 26 chapter that the trust fund be a self-supporting insurance fund, so that 27 no appropriations, loans, or other transfers of state funds need to be 28 made to the trust fund except as follows: 29 (i) A temporary line of credit for the initial start-up costs of 30 the trust fund may be obtained as provided in paragraph (b) of this 31 subsection; and 32 (ii) A temporary line of credit to offset any temporary shortages in 33 the operating fund balance of the trust fund may be obtained as pro- 34 vided in paragraph (b) of this subsection. 35 (b) There is hereby established a temporary line of credit to be drawn 36 from the state general account to the trust fund account in the amount of 37 one million dollars ($1,000,000). This amount of money is continuously 38 appropriated for the purposes of this chapter. The temporary line of 39 credit may be drawn upon by the trust fund only during the first eighteen 40 (18) months after the effective date of this chapter and only for the pur- 41 pose of financing the initial start-up costs of the trust fund and any 42 temporary shortages in the operating fund balance of the trust fund. The 43 manager may draw upon all or part of the temporary line of credit, as 44 shall be required. The money advanced from the state general account shall 45 be repaid with interest from surplus moneys in the trust fund to the gen- 46 eral account within one (1) year from the date the trust fund commences to 47 issue contracts of insurance. Interest of ten percent (10%) per annum 48 shall be calculated upon the principal amount outstanding each month until 49 repaid. 50 (c) In the event the trust fund is unable to repay the funds drawn from 51 the state general account under the temporary line of credit established 52 under paragraph (b) of this subsection due to the dissolution of the trust 53 fund pursuant to a court order, then an amount necessary to repay the line 54 of credit shall be appropriated by the next regular session of the state 55 legislature. 9 1 (d) Funds obtained from the temporary line of credit shall constitute a 2 subordinated indebtedness subject to the provisions of section 41-4943, 3 Idaho Code. 4 (6) The manager of the state insurance fund, as trustee of the trust 5 fund, shall enter into a management and administrative contract with the state 6 insurance fund to provide the following services to the trust fund: 7 (a) Administrative functions including the hiring of qualified personnel 8 and the payment of salaries and wages earned, plus recordkeeping for the 9 personnel hired to provide services for the trust fund. 10 (b) Accounting and recordkeeping of all receipts and disbursements of the 11 trust fund. 12 (c) Underwriting functions of the trust fund to issue contracts of lia- 13 bility insurance and charge appropriate application fees under section 14 41-4908, Idaho Code, for such contracts and keep accurate statistical 15 records. 16 (d) Claims handling functions of the trust fund to process and pay appro- 17 priate claims in a prompt, fair and reasonable manner. 18 (e) Auditing functions of the trust fund to maintain accurate records of 19 receipts and disbursements by the trust fund and accurate reporting of 20 statistics by owners or operators of storage tanks covered by a contract 21 of insurance issued by the trust fund. 22 (f) Actuarial functions of the trust fund to maintain credible and viable 23 statistics, sufficient operating fund balances, and appropriate loss 24 reserves. 25 (g) Computer and data processing functions to assist the trust fund in 26 maintaining complete and accurate records in a timely manner and issue 27 loss payments and other disbursements, as well as provide individual sta- 28 tistics and records of storage tanks covered by a contract of insurance 29 issued by the trust fund. 30 (h) Computer programming functions to maintain a proficient and current 31 data processing system for the trust fund. 32 (i) Legal services for the trust fund. 33 (j) Any and all other functions the manager of the state insurance fund 34 as trustee deems prudent and reasonable to assure the successful operation 35 of the trust fund. 36 (7) The Idaho petroleum clean water trust fund shall be administered 37 without liability on the part of the state insurance fund or the state of 38 Idaho beyond the amount of said trust fund. 39 (8) The administrator, subject to the approval of the manager of the 40 state insurance fund as trustee, shall have the power to receive and account 41 for all moneys paid into the trust fund, accept and evaluate applications for 42 insurance coverage and issue the contracts of insurance and evaluate, investi- 43 gate and adjust claims made against the trust fund and make agreements for 44 corrective actions or compensation to third parties for bodily injury or prop- 45 erty damage those parties may be legally entitled to receive from the trust 46 fund in accordance with the provisions of this chapter. 47 (9) The administrator, with the approval of the trustee, shall establish 48 underwriting procedures to issue contracts of insurance and claim procedures. 49 The administrator shall be given notice of all applications, hearings and pro- 50 ceedings involving the rights of the trust fund and shall represent the trust 51 fund in all proceedings. The administrator's decisions shall be written, and 52 shall include all reasons for his decisions and shall be subject to judicial 53 review in the district court of Ada county; provided, however, that the admin- 54 istrator and the trust fund shall not be liable for alleged bad faith or other 55 legal theories based on any method or timing of the claims processed on his 10 1 decision. 2 (10) The manager of the state insurance fund may employ legal counsel or 3 obtain legal counsel through the attorney general concerning all legal matters 4 arising out of the existence and operation of the trust fund, including claims 5 made against the contracts of insurance issued by the administrator of the 6 trust fund. 7 (11) The manager of the state insurance fund may also employ such employ- 8 ees or contract for such services as are necessary to assist in the adminis- 9 tration of the trust fund, and all such administrative expenses incurred by 10 the state insurance fund for the benefit of the trust fund shall be reimbursed 11 by the trust fund. 12 (12) The administrator may, in his official capacity, sue and be sued in 13 all courts of the state, and shall be entitled to a defense by the state of 14 Idaho for any alleged acts of negligence that may arise out of his official 15 duties as administrator and/or as an employee of the state of Idaho. 16 SECTION 8. That Section 41-4908, Idaho Code, be, and the same is hereby 17 amended to read as follows: 18 41-4908. SOURCE OF TRUST FUND -- APPLICATION FEES -- APPLICATION FOR 19 ENROLLMENT -- TRANSFER FEES. (1) Every owner or operator of an underground 20 storage tank may, if he desires to apply to the trust fund to insure the 21 underground tank, make application for and pay into the trust fund an initial 22 application fee set by the administrator, but not to exceed twenty-five dol- 23 lars ($25.00) for each tank for which application for coverage is made. 24 (2) Every owner or operator of an above ground storage tank may, if he 25 desires to apply to the trust fund to insure the above ground tank, make 26 application for and pay into the trust fund an initial application fee set by 27 the administrator, but not to exceed twenty-five dollars ($25.00) for each 28 tank for which application for coverage is made. 29 (3) Every owner or operator of a farm tank or residential tank may, if he 30 desires to apply to the trust fund to insure the tank, make application for 31 and pay into the trust fund an initial application fee set by the administra- 32 tor, but not to exceed twenty-five dollars ($25.00) for each tank for which 33 application for coverage is made. 34 (4) Every owner or operator of a heating tank may, if he desires to apply 35 to the trust fund to insure the tank, make application for and pay into the 36 trust fund an initial application fee set by the administrator, but not to 37 exceed five dollars ($5.00) for each tank for which application for coverage 38 is made. 39 (5) The application for insurance shall be made to the administrator on 40 forms furnished and prescribed by him for the purpose of eliciting reasonably 41 available information as to the type and use of the storage tank, the type of 42 business enterprise of the tank owner or operator, the age of the storage 43 tank, the materials used in the construction of the tank and the inside and 44 outside protective coatings and other corrosion protective measures, leak 45 detection methods, spill and overfill prevention methods of the tank, the 46 location of the tank and its proximity to roads and buildings, the foundation 47 and type of material used as a bedding and fill for the tank, any available 48 inspection records of the tank including the gallons of petroleum products 49 entered into the tank and the gallon dispersements from the tank, and other 50 information that is reasonably prudent in order to obtain a sufficient body of 51 statistical data to determine the relative hazards of various categories of 52 tanks, the potential that future leaks or discharges may occur, and the condi- 53 tions under which cleanup costs and personal injury and property damage costs 11 1 may occur and vary in the severity of the release and the resultant costs to 2 the trust fund. 3 (6) The administrator shall act upon the application for insurance with 4 all reasonable promptness, and he shall make such investigations of the appli- 5 cant as he deems advisable to determine if the information contained in the 6 application for insurance is accurate and complete. The administrator shall 7 determine if the applicant's storage tanks meet all the eligibility require- 8 ments and promptly notify the applicant of the acceptance or nonacceptance of 9 the application for insurance. The absence of unknown data requested on the 10 application shall not preclude an applicant's acceptance for coverage by the 11 trust fund, if the applicant is otherwise eligible for insurance under this 12 chapter. 13 (7) In addition to the application fees received by the trust fund pursu- 14 ant to this section, the trust fund shall receive the revenue produced by the 15 imposition of a "transfer fee" of one cent ($.01) per gallon on the delivery 16 or storage of all petroleum products as defined in subsection (23174 ) of section 41-4903, Idaho Code, delivered or stored 18 within the state of Idaho. This transfer fee is hereby imposed upon the first 19 licensed distributor who transfers title to a petroleum product to another 20 legal entity within this state for the privilege of engaging in the delivery 21 or storage of petroleum products whose delivery or storage may present the 22 danger of a discharge into the environment and thus create the liability to be 23 funded. The fee imposed by this subsection shall not apply to (a) petroleum or 24 petroleum products which are first delivered or stored in this state in a con- 25 tainer of fifty-five (55) gallons or less if such container is intended to be 26 transferred to the ultimate consumer of the petroleum or petroleum products or 27 (b) petroleum or petroleum products delivered or stored in this state for the 28 purpose of packaging or repackaging into containers of fifty-five (55) gallons 29 or less if such container is intended to be transferred to the ultimate con- 30 sumer of the petroleum or petroleum products. 31 (8) The transfer fee shall be collected by the commission on all petro- 32 leum products delivered or stored within this state after April 1, 1990. This 33 transfer fee shall be in addition to any excise tax imposed on gasoline and/or 34 aircraft engine fuel or other petroleum products and shall be remitted to the 35 commission with the distributor's monthly report as required in section 36 63-2406, Idaho Code. The distributor may deduct from his monthly report those 37 gallons of petroleum products returned to a licensed distributor's refinery or 38 pipeline terminal storage or exported from the state when supported by proper 39 documents approved by the commission. For the purpose of carrying out its 40 duties under the provisions of this chapter, the commission shall have the 41 powers and duties provided in sections 63-3038, 63-3039, 63-3042 through 42 63-3066, 63-3068, 63-3071, and 63-3074 through 63-3078, Idaho Code, which sec- 43 tions are incorporated by reference herein as though set out verbatim. 44 (9) No person shall be excused from liability for any duty or fee imposed 45 in this chapter for failure to obtain a distributor's license. 46 (10) The director shall certify to the commission when the unencumbered 47 balance in the trust fund equals thirty million dollars ($30,000,000). Effec- 48 tive the first day of the second month following the date of such certifica- 49 tion, the imposition of the transfer fee shall be suspended. Thereafter, the 50 director shall certify to the commission when the unencumbered balance in the 51 trust fund equals twenty million dollars ($20,000,000). Effective the first 52 day of the second month following the date of such certification, the imposi- 53 tion of the transfer fee shall be reinitiated. 54 SECTION 9. That Section 59-904, Idaho Code, be, and the same is hereby 12 1 amended to read as follows: 2 59-904. STATE OFFICES -- VACANCIES, HOW FILLED AND CONFIRMED. (a) All 3 vacancies in any state office, and in the supreme and district courts, unless 4 otherwise provided for by law, shall be filled by appointment by the governor. 5 Appointments to fill vacancies pursuant to this section shall be made as pro- 6 vided in subsections (b), (c), (d), (e), and (f) of this section, subject to 7 the limitations prescribed in those subsections. 8 (b) Nominations and appointments to fill vacancies occurring in the 9 office of lieutenant governor, state controller, state treasurer, superintend- 10 ent of public instruction, attorney general and secretary of state shall be 11 made by the governor, subject to the advice and consent of the senate, for the 12 balance of the term of office to which the predecessor of the person appointed 13 was elected. 14 (c) Nominations and appointments to and vacancies in the following listed 15 offices shall be made or filled by the governor subject to the advice and con- 16 sent of the senate for the terms prescribed by law, or in case such terms are 17 not prescribed by law, then to serve at the pleasure of the governor: 18 Director of the department of administration, 19 Director of the department of finance, 20 Director of the department of insurance, 21 Director, department of agriculture, 22 Director of the department of labor, 23 Director of the department of water resources, 24 Director of the department of law enforcement, 25 Director of the department of commerce, 26 Director of the department of juvenile corrections, 27 The state historic preservation officer, 28Manager of the state insurance fund,29 Member of the state tax commission, 30 Members of the board of regents of the university of Idaho and the state 31 board of education, 32 Members of the Idaho water resources board, 33 Members of the state fish and game commission, 34 Members of the Idaho transportation board, 35 Members of the state board of health and welfare, 36 Members of the board of directors of state parks and recreation, 37 Members of the board of correction, 38 Members of the industrial commission, 39 Members of the Idaho public utilities commission, 40 Members of the Idaho personnel commission, 41 Members of the board of directors of the Idaho state retirement 42 system , 43 Members of the board of directors of the state insurance fund . 44 (d) Appointments made by the state board of land commissioners to the 45 office of director, department of lands, and appointments to fill vacancies 46 occurring in those offices shall be submitted by the president of the state 47 board of land commissioners to the senate for the advice and consent of the 48 senate in accordance with the procedure prescribed in this section. 49 (e) Appointments made pursuant to this section while the senate is in 50 session shall be submitted to the senate forthwith for the advice and consent 51 of that body. The appointment so made and submitted shall not be effective 52 until the approval of the senate has been recorded in the journal of the sen- 53 ate. Appointments made pursuant to this section while the senate is not in 54 session shall be effective until the appointment has been submitted to the 13 1 senate for the advice and consent of the senate. Should the senate adjourn 2 without granting its consent to such an interim appointment the appointment 3 shall thereupon become void and a vacancy in the office to which the appoint- 4 ment was made shall exist. 5 All appointments made pursuant to subsection (c) of this section, except 6 those appointments for which a term of office is fixed by law, shall terminate 7 at the expiration of any gubernatorial term. Appointments to fill the vacan- 8 cies thus created by the expiration of the term of office of the governor 9 shall be forthwith submitted to the senate for the advice and consent of that 10 body, and when so submitted shall be as expeditiously considered as possible. 11 Upon receipt of an appointment in the senate for the purpose of securing 12 the advice and consent of the senate, the appointment shall be referred by the 13 presiding officer to the appropriate committee of the senate for consideration 14 and report prior to action thereon by the full senate. 15 (f) It is the intent of the legislature that the provisions of this sec- 16 tion as amended by this act shall not apply to appointments which have been 17 made prior to the effective date of this act. It is the further intent of the 18 legislature that the provisions of this section shall apply to the offices 19 listed in this section and to any office created by law or executive order 20 which succeeds to the powers, duties, responsibilities and authorities of any 21 of the offices listed in subsections (c) and (d) of this section. 22 SECTION 10. That Section 41-309, Idaho Code, be, and the same is hereby 23 amended to read as follows: 24 41-309. GOVERNMENT-OWNED INSURERS NOT TO BE AUTHORIZED. No insurer the 25 voting control or ownership of which is held in whole or substantial part by 26 any government or governmental agency, or which is operated for or by any such 27 government or agency, other than the Idaho state insurance fund, 28 shall be authorized to transact insurance in this state. Membership in a 29 mutual insurer, or subscribership in a reciprocal insurer, or ownership of 30 stock of an insurer by the alien property custodian or similar official of the 31 United States, or supervision of an insurer by public insurance supervisory 32 authority shall not be deemed to be an ownership, control, or operation of the 33 insurer for the purposes of this subsection. 34 SECTION 11. An emergency existing therefor, which emergency is hereby 35 declared to exist, this act shall be in full force and effect on and after its 36 passage and approval.
STATEMENT OF PURPOSE
RS 08000C2
Relating to the State Insurance Fund, this legislation creates a board of directors to guide the
operations of the Fund. This proposal also removes the state fund from the executive of office of the
Governor and provides that it would become an entity like the Idaho Housing Authority. The reserves
and other monies of the fund would continue to be held by the State Treasurer as custodian and
invested by the endowment fund investment board. At least two of the five members of the board of
directors would be legislators and all directors would be appointed by the Governor subject to
confirmation by the senate. A manager of the fund with insurance company management experience
would be appointed by the board of directors.
FISCAL NOTE
This legislation will have no fiscal impact on the state or local government.
CONTACT:
Name: Representative Newcomb
Phone: 332-1000
H 774