PROPOSED RULEMAKING
COAL AND CLAY MINE SUBSIDENCE INSURANCE BOARD
[25 PA. CODE CH. 401]
Mine Subsidence Fund
[34 Pa.B. 1329] The Coal and Clay Mine Subsidence Insurance Board (Board) proposes to amend Chapter 401 (relating to mine subsidence fund) regarding the administration of the Mine Subsidence Insurance Fund (Fund) and the Mine Subsidence Insurance Program (Program). The rulemaking is proposed to revise ambiguous terms and provisions in Chapter 401 and to remove dynamic provisions of the insurance policy--that is, coverage limits, premium surcharges and policy durations. The dynamic provisions of the insurance policy are established by the Board and are contained in the Insuring Agreement, the contract between the Fund and its policyholders and part of the insurance policy, so that they can expeditiously be modified by the Board as needed.
This proposed rulemaking was adopted by the Board at its meeting of December 18, 2003.
A. Effective Date
The proposed rulemaking will go into effect upon final-form publication in the Pennsylvania Bulletin.
B. Contact Persons
For further information, contact Lawrence Ruane, Administrator, Mine Subsidence Program, P. O. Box 8462, Rachel Carson State Office Building, Harrisburg, PA 17105-8462, (717) 783-9590; or Marc Roda, Assistant Counsel, Bureau of Regulatory Counsel, P. O. Box 8464, Rachel Carson State Office Building, Harrisburg, PA 17105-8464, (717) 787-7060. Information regarding submitting comments on this proposal appears in Section I of this preamble. Persons with a disability may use the AT&T Relay Service by calling (800) 654-5984 (TDD users) or (800) 654-5988 (voice users). This proposal is available on the Department of Environmental Protection's (Department) website: www.dep.state.pa.us.
C. Statutory Authority
Section 19 of the act of August 23, 1961 (P. L. 1068, No. 484) (52 P. S. § 3219) (Act 484) provides that the Board shall have the power to make rules and regulations and other conditions of the policies.
D. Background and Purpose
The Fund was created in 1961 to provide a reliable source of compensation for losses caused by coal and clay mine subsidence, a risk excluded from standard homeowners insurance policies. The Fund is vital to the economic well being of this Commonwealth's coal mining regions because it underwrites potential losses to real property and thereby facilitates the collateralization of real property that is needed for economic growth in the housing industry.
Section 1 of Act 484 (52 P. S. § 3201) created the Board. It consists of the Secretary of the Department as Chairperson and the State Treasurer and the Insurance Commissioner as members. A listing of the Board members is available upon request from Lawrence Ruane, whose name, address and phone number appear in Section B of this preamble.
Section 19 of Act 484 provides that ''the Board may make such rules and regulations and such other conditions of the policies as it deems just and expedient in keeping with the fulfillment of the purposes herein set out . . . .'' Chapter 401 codifies terms and definitions used by the Fund, establishes procedures that are followed in the administration of the Fund and the Program and establishes static provisions of coverage, such as eligibility criteria, that are not expected to be routinely changed. In prior amendments to Chapter 401, more dynamic provisions of the insurance policy--that is, coverage limits, premium surcharges and policy durations, which are coverage provisions that are continually reviewed and revised by the Board--were added to Chapter 401. This proposed rulemaking removes the dynamic provisions of coverage from Chapter 401 and thereby facilitates the Board's efforts to provide policyholders with relevant coverage while safeguarding the solvency of the Fund. It will also eliminate confusion and the potential for conflicts between provisions in Chapter 401 and provisions in the insurance policy.
E. Summary of Proposed Amendments
This proposed rulemaking amends Chapter 401. There are no companion Federal laws or regulations that govern the administration of the Fund and the Program.
The specific regulatory changes are as follows:
§ 401.1. Definitions.
The term ''mine subsidence'' is being revised to reflect the definition in the insurance policy. The definition in the insurance policy more clearly identifies that subsidence must result from the partial or complete cave-in or the collapse of mine workings and not mining operations. This amendment eliminates the potential for an interpretation of the term ''mine subsidence'' to be broadened to include losses caused by surface operations associated with underground mining operations and precisely identifies that losses must be caused by the collapse of underground mine voids.
The term ''mine workings'' is added because it is used to replace the term ''mining operations,'' the term used in the existing definition of ''mine subsidence,'' which created the ambiguity related to the compensable source of damage.
§ 401.13. Coverage limits and premiums for insurance.
Coverage limits, premium surcharges and policy durations are being deleted from this section and will continue to be established in the insurance policy as is provided in section 19 of Act 484. The dynamic provisions of the insurance policy need to be continually reviewed and amended by the Board. Therefore, they should be established in the insurance policy and then approved by the Attorney General, a process that is prescribed by law. This process is much more expedient and much less expensive than establishing dynamic provisions of the insurance policy through regulations. Adherence to establishing dynamic provisions of the insurance policy in the policy itself, and not through regulations, also eliminates the potential for conflicting provisions.
The effective date of coverage is also being revised to make it clear that coverage is effective when the Board receives a completed application and receives the premium payment in full. The current language is ambiguous because it does not state the need for a completed application.
F. Benefits, Costs and Compliance
Benefits
This proposed rulemaking will bring the provisions in Chapter 401 into conformance with the provisions in the Insuring Agreement, which is the contract between the Fund and the policyholders and is a part of the insurance policy. By eliminating dynamic provisions of the insurance policy from Chapter 401, the Board will be more expedient in making revisions to the insurance policy, as is prescribed in section 19 of Act 484. Most significantly, it will be more agile when making adjustments to coverage limits, which is what Act 484 intends.
Compliance Costs
There are no costs associated with the proposed rulemaking. However, removing the dynamic provisions of the insurance policy from Chapter 401 will eliminate the need to promulgate regulations when changing provisions of the insurance policy, which will result in significant cost savings. Ultimately, those efficiencies will be conveyed to policyholders in the form of lower premium rates.
Compliance Assistance Plan
This proposed rulemaking does not require a compliance assistance plan because it does not propose new or modify existing compliance provisions.
Paperwork Requirements
No additional paperwork will result from this proposed rulemaking.
G. Sunset Review
This proposed rulemaking will be reviewed in accordance with the sunset review schedule published by the Department to determine whether the regulation effectively fulfills the goals for which it was intended.
H. Regulatory Review
Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on February 25, 2004, the Department submitted a copy of this proposed rulemaking and a copy of a Regulatory Analysis Form to the Independent Regulatory Review Commission (IRRC) and to the Chairpersons of the Senate and House Environmental Resources and Energy Committees. A copy of this material is available to the public upon request.
Under section 5(g) of the Regulatory Review Act, IRRC may convey any comments, recommendations or objections to the proposed rulemaking within 30 days of the close of the public comment period. The comments, recommendations or objections shall specify the regulatory review criteria which have not been met. The Regulatory Review Act specifies detailed procedures for review, prior to final publication of the rulemaking, by the Department, the General Assembly and the Governor of comments, recommendations or objections raised.
I. Public Comments
Written Comments--Interested persons are invited to submit comments, suggestions or objections regarding the proposed rulemaking to the Coal and Clay Mine Subsidence Insurance Board, P. O. Box 8462, Harrisburg, PA 17105-8462 (express mail: Rachel Carson State Office Building, 5th Floor, 400 Market Street, Harrisburg, PA 17101-2301). Comments submitted by facsimile will not be accepted. Comments, suggestions or objections must be received by the Board by April 5, 2004. Interested persons may also submit a summary of their comments to the Board. The summary may not exceed one page in length and must also be received by April 5, 2004. The one-page summary will be provided to each member of the Board in the agenda packet distributed prior to the meeting at which time the final regulation will be considered.
Electronic Comments--Comments may be submitted electronically to the Board at RegComments@state.pa.us and must also be received by April 5, 2004. A subject heading of the proposal and a return name and address must be included in each transmission.
KATHLEEN A. MCGINTY,
ChairpersonFiscal Note: 7-389. No fiscal impact; (8) recommends adoption.
Annex A
TITLE 25. ENVIRONMENTAL PROTECTION
PART III. COAL AND CLAY MINE SUBSIDENCE INSURANCE BOARD
CHAPTER 401. MINE SUBSIDENCE FUND
GENERAL PROVISIONS § 401.1. Definitions.
The following words and terms, when used in this chapter, have the following meanings, unless the context clearly indicates otherwise:
* * * * * Mine subsidence--[The lateral or vertical subsidence of the earth resulting from past or present underground coal or clay mining operations.] The movement of the ground's surface as a result of the partial or complete cave-in or the collapse of underground coal or clay mine workings.
Mine workings--The roof, floor or pillars within an underground coal or clay mine.
* * * * *
INSURANCE POLICIES § 401.13. Coverage limits and premiums for insurance.
(a) The maximum amount of insurance for a single covered structure [is $150,000 for a residential structure and $250,000 for a commercial structure or the current market value of the structure, whichever is less], the term or duration of the policy, and the premium rate shall be determined by the Board.
(b) [The premium charged on a policy, for an amount of coverage which is less than 70% of the current market value of the covered structure, shall, by resolution of the Board, be subject to a surcharge based upon the difference between the amount of available insurance purchased and the current market value of the structure.
(c) The premium charged on a policy shall, by resolution of the Board, be subject to additional surcharges of up to 25%, in accordance with the degree of risk, for each of the following conditions:
(1) The location of the covered structure in an area subject to subsidence from active mining.
(2) The location of the covered structure in an area scheduled for underground flushing operations.
(3) The location of the covered structure in an area having a high risk of subsidence damage.
(4) The covered structure having a history of subsidence damage.
(d)] An insurance policy [will not be] is effective [until] when a complete application is received by the Board or its agents and the premium [has been] associated with that application is received [and the maximum term for all insurance policies will be 1 year, unless otherwise specified by a Board resolution and disclosed to the policyholders] by the Board or its agents.
[Pa.B. Doc. No. 04-369. Filed for public inspection March 5, 2004, 9:00 a.m.]
No part of the information on this site may be reproduced for profit or sold for profit.This material has been drawn directly from the official Pennsylvania Bulletin full text database. Due to the limitations of HTML or differences in display capabilities of different browsers, this version may differ slightly from the official printed version.
