1998 Legislation
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HOUSE BILL NO. 774, As Amended – State Insure Fund, bd of directr

HOUSE BILL NO. 774, As Amended

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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

Bill Text


H0774


                                                                        
 ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
Fifty-fourth Legislature                 Second Regular Session - 1998
                                                                        

                             IN 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
38     S  s tate  I  i nsurance   F
39      f  und, for the  purpose of insuring employers against lia-
40    bility for compensation under  this    Workmen's      worker's
41       C  c ompensation  L  l aw
42    and the    O    o  ccupational    D    d
43    isease    C    c ompensation  L  l


                                          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  administered    by the state insurance manager
 7     without liability on the part of the state .     beyond
 8    the  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 the  Workmen's   worker's   C    c
11    ompensation  L  l aw and the  O  o
12    ccupational    D    d isease  C  c
13    ompensation  L  l 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  the
53    office  of  state  insurance manager, elsewhere in this chapter referred to as


                                          3

 1      The board of directors of the state insurance fund shall  appoint
 2    a  manager  of the state insurance fund , whose duties ,
 3        it   subject to the direction and supervision of the
 4    board,  shall be to conduct the business of the  state  insurance  fund,
 5      and  the  said  manager  is hereby vested with full authority over said
 6    fund,  and  may  do 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 on  by the manager  under the provi-
 9    sions of this chapter.  Said   The  manager shall  
10    be appointed by the governor and shall serve during the pleasure of the 
11      governor,  and      have 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.
15          The state insurance manager may acquire real property as a site for
16    an office  building and may construct thereon an office building, or may  pur-
17    chase an office building, and may use for such purposes any moneys in the fund
18    that  may  be available for investment; provided however, that no acquisition,
19    construction or purchase may be made  hereunder  without  the  prior   written
20    approval  of  the board of examiners. Any moneys used pursuant to this section
21    for site acquisition or construction or purchase of an office building  shall,
22    when 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-
26    visions  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 in  this chapter    sections
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 (1 8  9 ) of this section.
13        (  6    7  )  "Contamination"  means the presence of
14    petroleum or petroleum products in surface or subsurface soil, surface  water,
15    or ground water.
16        (  7   8 )  "Commission" means the state tax commis-
17    sion of the state of Idaho.
18        ( 8  9 )  "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        (  9    10  ) "Department"  means  the department of
30    insurance of the state of Idaho.
31        (1 0  1  ) "Director"  means  the  director  of  the
32    department of insurance.
33        (1 1  2 ) "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        (1 2  3 ) "Free product" means petroleum  or  petro-
42    leum products in the nonaqueous phase, (e.g., liquid not dissolved in water).
43        (1  3    4  ) "Fund" or "trust fund" means the Idaho
44    petroleum clean water trust fund.
45        (1 4  5 ) "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        (1  5    6 ) "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        (1 6  7 ) "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        (1 7  8 ) "Manager" means the duly appointed manager
12    of the state insurance fund of the state of Idaho.
13        (1  8    9  ) "Noncommercial purposes" means not for
14    resale, with respect to motor fuels.
15        ( 19  20 ) "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        (2 0  1 ) "Operator" means any person in control, or
19    having responsibility for, the daily operations of a petroleum storage tank.
20        (2  1    2  ) "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        (2 2  3 ) "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        (2 3  4 ) "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        (2 4  5 ) "Property damage" means injury or destruc-
34    tion to tangible property caused by an occurrence.
35        (2  5    6  ) "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        (2 6  7 ) "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        (2 7  8 ) "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        (2  8    9 ) "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        (  29      30 ) "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        (3 0  1 ) "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        (3 1  2 ) "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        (3 2  3  ) "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 (2 3
17     4 ) 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,
28         Manager 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 / Fiscal Impact


    





                           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