LRBs0155/1
PJK/RCT/MGG:wlj:jf
2005 - 2006 LEGISLATURE
ASSEMBLY SUBSTITUTE AMENDMENT 2,
TO 2005 ASSEMBLY BILL 222
June 23, 2005 - Offered by Representative Schneider.
AB222-ASA2,1,4
1An Act to create 20.370 (2) (dj), 292.71 and 632.28 of the statutes;
relating to:
2environmental claims under general liability insurance policies, fees related to
3removal of contaminated material from a navigable water, and making an
4appropriation.
Analysis by the Legislative Reference Bureau
This substitute amendment addresses various issues related to environmental
claims under general liability insurance policies. An environmental claim is defined
in the substitute amendment as a claim made by an insured under a general liability
insurance policy for defense or indemnity based on the insured's liability or potential
liability for bodily injury or property damage arising from the presence of pollutants
on the bed or banks of a navigable water in this state as a result of a release of
pollutants in this state.
The substitute amendment provides some general principles for interpreting
a general liability insurance policy under which an environmental claim is made,
including: 1) that Wisconsin law will be applied in all cases; 2) that any action taken
by, or agreement made with, a governmental entity under which the insured is
considered to be potentially liable for pollution in this state and that directs or
requests the insured to take action with respect to the pollution is equivalent to a
lawsuit under the terms of the policy; and 3) that the insurer may not deny coverage
for reasonable fees, costs, or expenses incurred by the insured under a voluntary
agreement between the insured and a governmental entity as a result of a directive
or request by the governmental entity to take action with respect to pollution in this
state on the ground that those expenses are voluntary payments by the insured.
The substitute amendment provides that in any lawsuit relating to an
environmental claim there are rebuttable presumptions that certain specified costs
are defense costs, and certain other specified costs are indemnity costs, payable by
an insurer; and that, if the court determines that apportioning recoverable defense
and indemnity costs between insurers is appropriate, the court must allocate those
costs on the basis of the time that the insured was covered for the environmental
claim under each of the policies, the policy limits under each of the policies, and
which of the policies provides the most appropriate type of coverage for the type of
environmental claim. If the insured was not covered under a policy that provided
coverage for the environmental claim at any time that is included in the
environmental claim, the insured will be considered an insurer for that period of time
for purposes of the allocation of costs. The substitute amendment also provides that
any insurer that pays (or that has paid before the effective date of the substitute
amendment) an environmental claim may seek contribution from any other insurer
that is potentially liable for the claim and that has not entered into a good faith
settlement of the claim with the insured.
The substitute amendment also addresses a lost policy that is subject to an
environmental claim. It sets out duties for both the insurer and the insured in that
situation, and provides that, if the insured is unable to produce evidence of the policy
limits, the applicable limits will be the minimum limits that the insurer was offering
at the time, but that, if the insured produces evidence of the limits, the insurer then
has the burden to show that different limits apply.
Finally, the substitute amendment authorizes the Department of Natural
Resources (DNR) to collect fees from a person who is responsible, under state or
federal law, for an environmental cleanup requiring the removal of at least 10,000
tons of contaminated material from the bed or banks of a navigable water. The fee
may not exceed 25 cents per ton. DNR may use the fees for activities related to
environmental cleanups in and adjacent to navigable waters.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB222-ASA2, s. 1
1Section
1. 20.370 (2) (dj) of the statutes is created to read:
AB222-ASA2,2,42
20.370
(2) (dj)
Solid waste management — navigable waters. All moneys
3received under s. 292.71 for activities under ch. 292 related to remedial action in and
4adjacent to navigable waters.
AB222-ASA2,3,9
1292.71 Fees related to removal of contaminated materials from a
2navigable water. The department may assess and collect fees from a person
3responsible, under this chapter or the federal Comprehensive Environmental
4Response, Compensation, and Liability Act,
42 USC 9601 to
9675, for remedial action
5involving the removal of at least 10,000 tons of contaminated material from the bed
6or banks of a navigable water. The department may not assess a fee under this
7section that exceeds 25 cents per ton of contaminated material removed from the bed
8or banks of a navigable water. Fees collected under this section shall be credited to
9the appropriation account under s. 20.370 (2) (dj).
AB222-ASA2,3,12
11632.28 Environmental claims under general liability insurance
12policies. (1) Definitions. In this section:
AB222-ASA2,3,1713
(a) "Environmental claim" means a claim for defense or indemnity that is
14submitted under a general liability insurance policy by an insured and that is based
15on the insured's liability or potential liability for bodily injury or property damage
16arising from the presence of pollutants on the bed or banks of a navigable water in
17this state as a result of a release of pollutants in this state.
AB222-ASA2,3,1818
(b) "General liability insurance policy" does not include any of the following:
AB222-ASA2,3,1919
1. A homeowners insurance policy.
AB222-ASA2,3,2020
2. An insurance policy covering a farm owner's or farm operator's liability.
AB222-ASA2,3,2121
3. A claims-made insurance policy.
AB222-ASA2,3,2422
(c) "Governmental entity" means any federal, state, or local government, or any
23instrumentality of any of them, or any trustee for natural resources designated
24under
42 USC 9607 (f) (2) or
40 CFR part 300, subpart G.
AB222-ASA2,3,2525
(d) "Navigable waters" has the meaning given in s. 30.01 (4m).
AB222-ASA2,4,3
1(e) "Pollutant" means any solid, liquid, or gaseous irritant or contaminant,
2including smoke, vapor, soot, fumes, acids, alkalies, chemicals, asbestos, petroleum
3products, lead, products containing lead, and waste.
AB222-ASA2,4,44
(f) "Pollution" means the presence of pollutants in or on land, air, or water.
AB222-ASA2,4,7
5(2) General interpretation provisions. Except as otherwise provided in the
6policy, all of the following provisions apply to the interpretation of general liability
7insurance policies under which environmental claims are made:
AB222-ASA2,4,148
(a) Wisconsin law shall be applied in all cases involving environmental claims,
9regardless of the state in which the general liability insurance policy under which
10the claim is or was made was issued or delivered. Nothing in this section shall be
11interpreted to modify common law rules governing choice of law determinations for
12claims for defense or indemnity that are submitted under general liability insurance
13policies and that involve bodily injury or property damage arising from pollution
14outside this state.
AB222-ASA2,4,2015
(b) Any action taken by a governmental entity against, or any agreement by a
16governmental entity with, an insured in which the governmental entity, in writing,
17notifies the insured that it considers the insured to be potentially liable for pollution
18in this state, or directs, requests, or agrees that the insured take action with respect
19to pollution in this state, is equivalent to a suit or lawsuit as those terms are used
20in the general liability insurance policy.
AB222-ASA2,5,221
(c) The insurer may not deny coverage for any reasonable and necessary fees,
22costs, and expenses, including costs and expenses of assessments, studies, and
23investigations, that are incurred by the insured under a voluntary written
24agreement, consent decree, or consent order between the insured and a
25governmental entity and as a result of a written direction, request, or agreement by
1the governmental entity to take action with respect to pollution in this state, on the
2ground that those expenses constitute voluntary payments by the insured.
AB222-ASA2,5,4
3(3) Suit relating to environmental claim. In any lawsuit that relates to an
4environmental claim, all of the following apply:
AB222-ASA2,5,55
(a) All of the following are rebuttable presumptions:
AB222-ASA2,5,96
1. That the costs of preliminary assessments, remedial investigations, risk
7assessments, feasibility studies, site investigations, or other necessary investigation
8are defense costs payable by the insurer, subject to the provisions of the general
9liability insurance policy under which there is coverage for the costs.
AB222-ASA2,5,1410
2. That the costs of removal actions, remedial action, or natural resource
11damages are indemnity costs and that payment of those costs by the insurer reduces
12the insurer's applicable limit of liability on the insurer's indemnity obligations,
13subject to the provisions of the general liability insurance policy under which there
14is coverage for the costs.
AB222-ASA2,5,1815
(b) If the court determines that apportioning recoverable defense and
16indemnity costs between or among insurers is appropriate, the court shall allocate
17the amounts between or among the insurers before the court on the basis of the
18following factors:
AB222-ASA2,5,2119
1. The total time that each general liability insurance policy that was issued
20by each insurer and that provided coverage to the insured with respect to the
21environmental claim was in effect.
AB222-ASA2,5,2422
2. The policy limits, including any exclusions to coverage, of each of the general
23liability insurance policies that provide coverage or payment for the environmental
24claim for which the insured is liable or potentially liable.
AB222-ASA2,6,2
13. The policy that provides the most appropriate type of coverage for the type
2of environmental claim.
AB222-ASA2,6,63
(c) If the insured was not covered under a general liability insurance policy that
4provided coverage with respect to the environmental claim for any portion of the time
5included in the environmental claim, the insured shall be considered an insurer for
6that portion of the time for purposes of the allocation under par. (b).
AB222-ASA2,6,11
7(4) Contribution among insurers. An insurer that pays an environmental
8claim, or an insurer that paid an environmental claim before the effective date of this
9subsection .... [revisor inserts date], may seek contribution from any other insurer
10that is liable or potentially liable for the claim and that has not entered into a good
11faith settlement and release of the environmental claim with the insured.
AB222-ASA2,6,14
12(5) Lost policy. (a) In this subsection, "lost policy" means all or any part of a
13general liability insurance policy that is subject to an environmental claim and that
14is ruined, destroyed, misplaced, or otherwise no longer possessed by the insured.
AB222-ASA2,6,2115
(b) If, after a diligent investigation by an insured of the insured's own records,
16including computer records and the records of past and present agents of the insured,
17the insured is unable to reconstruct a lost policy, the insured may provide notice of
18the lost policy to the insurer that the insured believes issued the policy. The notice
19must be in writing and in sufficient detail to identify the person or entity claiming
20coverage, including the name of the alleged policyholder, if known, and any other
21material facts concerning the lost policy known to the person providing the notice.
AB222-ASA2,7,222
(c) An insurer must thoroughly and promptly investigate a notice of a lost policy
23and must provide to the insured claiming coverage under the lost policy all facts
24known or discovered during the investigation concerning the issuance and terms of
1the policy, including copies of documents establishing the issuance and terms of the
2policy.
AB222-ASA2,7,43
(d) For facilitating reconstruction, and determining the terms, of a lost policy,
4the insurer and the insured must comply with the following minimum standards:
AB222-ASA2,7,105
1. Within 30 business days after receipt by the insurer of notice of a lost policy,
6the insurer shall commence an investigation into the insurer's records, including
7computer records, to determine whether the insurer issued the lost policy. If the
8insurer determines that it issued the policy, the insurer shall commence an
9investigation into the terms and conditions relevant to any environmental claim
10made under the policy.
AB222-ASA2,7,1611
2. The insurer and the insured shall cooperate with each other in determining
12the terms of a lost policy. The insurer and the insured shall provide to each other the
13facts known or discovered during an investigation, including the identity of any
14witnesses with knowledge of facts related to the issuance or existence of the lost
15policy, and shall provide each other with copies of any documents establishing facts
16related to the lost policy.
AB222-ASA2,7,2217
3. An insurer that discovers information tending to show the existence of an
18insurance policy that applies to the claim shall provide an accurate copy of the terms
19of the policy or a reconstruction of the policy. If the insured discovers information
20tending to show the existence of an insurance policy that applies to the claim, the
21insurer shall provide an accurate copy of the terms of the policy or a reconstruction
22of the policy upon the request of the insured.
AB222-ASA2,8,423
4. If the insurer is not able to locate portions of the policy or determine its terms,
24conditions, or exclusions, the insurer shall provide copies of all insurance policy
25forms issued by the insurer during the applicable policy period that potentially apply
1to the environmental claim. The insurer shall identify which of the potentially
2applicable forms, if any, is most likely to have been issued by the insurer to the
3insured, or the insurer shall state why it is unable to identify the forms after a good
4faith search.