PRIOR PRINTER'S NO. 418 PRINTER'S NO. 2332
No. 401 Session of 2001
INTRODUCED BY SOLOBAY, DeWEESE, ALLEN, BELARDI, BELFANTI,
CALTAGIRONE, COSTA, DeLUCA, FAIRCHILD, FRANKEL, GEORGE,
GRUCELA, HARHAI, HENNESSEY, JOSEPHS, LaGROTTA, LAUGHLIN,
LEVDANSKY, MANN, MARKOSEK, MICHLOVIC, PETRARCA, PISTELLA,
READSHAW, ROONEY, SAINATO, SHANER, STABACK, STEELMAN, STERN,
SURRA, TIGUE, TRELLO, TRICH, WALKO, C. WILLIAMS, WANSACZ,
WOJNAROSKI, YOUNGBLOOD, YUDICHAK AND DALEY, JANUARY 31, 2001
AS AMENDED ON THIRD CONSIDERATION, HOUSE OF REPRESENTATIVES,
JUNE 20, 2001
AN ACT
1 Amending the act of August 23, 1961 (P.L.1068, No.484),
2 entitled, as reenacted and amended, "An act to provide for
3 the creation and administration of a Coal and Clay Mine
4 Subsidence Insurance Fund within the Department of
5 Environmental Resources for the insurance of compensation for
6 damages to subscribers thereto; declaring false oaths by the
7 subscribers to be misdemeanors; providing penalties for the
8 violation thereof; and making an appropriation," further
9 providing for purpose, for definitions, for disbursements,
10 for inflation protection, for audits by the Insurance <--
11 Department and for subrogation; establishing the Mine
12 Subsidence Assistance Program; providing for subsidence
13 insurance; and making editorial changes.
14 The General Assembly of the Commonwealth of Pennsylvania
15 hereby enacts as follows:
16 Section 1. The title and sections 1, 2, 3, 4, 5, 7 and 9 of
17 the act of August 23, 1961 (P.L.1068, No.484), entitled, as
18 reenacted and amended, "An act to provide for the creation and
19 administration of a Coal and Clay Mine Subsidence Insurance Fund
20 within the Department of Environmental Resources for the
1 insurance of compensation for damages to subscribers thereto;
2 declaring false oaths by the subscribers to be misdemeanors;
3 providing penalties for the violation thereof; and making an
4 appropriation," reenacted and amended November 27, 1972
5 (P.L.1243, No.278), are amended to read:
6 AN ACT
7 To provide for the creation and administration of a Coal and
8 Clay Mine Subsidence Insurance Fund within the Department of
9 Environmental [Resources] Protection for the insurance of
10 compensation for damages to subscribers thereto; declaring
11 false oaths by the subscribers to be misdemeanors; providing
12 penalties for the violation thereof; and making an
13 appropriation.
14 Section 1. Purposes.--Whereas, the anthracite and bituminous
15 coal and clay mine areas have been faced with the grave problem
16 of subsidence for many years, and
17 Whereas, these problems are becoming more widespread, and
18 Whereas, these conditions cause undue hardship upon a
19 multitude of persons, and
20 [Whereas, studies reveal that the subsidence is traceable
21 primarily to mining of thirty or more years ago and not
22 necessarily to present day mining so that effective measures
23 cannot readily be taken at this late date for the elimination of
24 the problem, and]
25 Whereas, it would be to the advantage of residents of the
26 anthracite and bituminous coal and clay mining regions to form a
27 common bond to combat distress resulting from subsidence;
28 Now therefore, there shall be established a Coal and Clay
29 Mine Subsidence Insurance Fund and a Coal and Clay Mine
30 Subsidence Insurance Board with the powers and duties as herein
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1 set out.
2 Section 2. [Terms.--The Coal and Clay Mine Subsidence
3 Insurance Board is hereinafter called the board, the Coal and
4 Clay Mine Subsidence Insurance Fund is hereinafter called the
5 fund, and the Department of Environmental Resources is
6 hereinafter called the department.] Definitions.--The following
7 words and phrases when used in this act shall have the meanings
8 given to them in this section unless the context clearly
9 indicates otherwise:
10 "ABANDONED UNDERGROUND MINING AREA." AN AREA DETERMINED BY <--
11 THE DEPARTMENT OF ENVIRONMENTAL PROTECTION TO BE EITHER ABOVE OR
12 IN CLOSE PROXIMITY TO ABANDONED UNDERGROUND MINE WORKINGS AND
13 PERIODICALLY PUBLISHED IN THE PENNSYLVANIA BULLETIN.
14 "Board." The Coal and Clay Mine Subsidence Insurance Board
15 established in section 3.
16 "Department." The Department of Environmental Protection of
17 the Commonwealth.
18 "Dwelling." A single-family structure the primary purpose of
19 which is residential.
20 "Dwelling requiring mine subsidence insurance." A dwelling <--
21 located above abandoned mine workings, which is within a one-
22 half mile radius of an area where mine subsidence has been
23 detected and which the department determines to be at risk for
24 mine subsidence damage.
25 "Fund." The Coal and Clay Mine Subsidence Insurance Fund
26 established in section 4.
27 "Mine subsidence." The lateral or vertical movement of the
28 earth resulting from past or present underground coal or clay
29 mining operations.
30 "Mine subsidence emergency." A condition in which a dwelling
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1 sustains mine subsidence damage sufficient to render the
2 structure unsafe for human occupancy as determined by the
3 department.
4 "Mine subsidence insurance policy." An insurance
5 certificate, an insuring agreement, an application for mine <--
6 subsidence insurance and endorsements to the insurance policy.
7 AGREEMENT, AS DEFINED BY DEPARTMENT REGULATION, WHICH IS ISSUED <--
8 BY THE DEPARTMENT.
9 "Owner of structure." A person, corporation, organization or
10 association holding title to a structure within the anthracite
11 or bituminous coal or clay mine regions as defined by the board.
12 "Program." The Mine Subsidence Assistance Program
13 established in section 20.
14 "Secretary." The Secretary of Environmental Protection of
15 the Commonwealth.
16 "Structure." A complete building which contains a roof,
17 walls and a foundation which firmly attaches the structure to
18 the earth.
19 Section 3. The Coal and Clay Mine Subsidence Insurance
20 Board.--The Coal and Clay Mine Subsidence Insurance Board is
21 hereby created consisting of the [Secretary of Environmental
22 Resources] secretary, as chairman, and the Commissioner of
23 Insurance and the State Treasurer.
24 Section 4. The Coal and Clay Mine Subsidence Insurance
25 Fund.--The premiums to be paid by owners of structures, as
26 hereinafter described, are hereby constituted a Coal and Clay
27 Mine Subsidence Insurance Fund, [hereinafter called fund,] for
28 the purpose of insuring from the moneys in the fund such owners
29 against the damages resulting from subsidence, of coal or clay
30 mines. Such fund shall be administered by a board without
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1 liability on the part of the State except as hereinafter
2 provided beyond the amount thereof and shall be applied to the
3 payment of such damages.
4 Section 5. The Initial Source of Fund.--The expenses of the
5 administration of the fund shall after July 1, 1972, be paid out
6 of the general appropriation of the [Department of Environmental
7 Resources] department.
8 Section 7. Schedule of Premiums.--At any time during each
9 year, the [said] board shall prepare and publish a schedule of
10 premiums or rates of insurance for subscribers, which schedule
11 shall be printed and distributed free of charge to such persons
12 who shall make application therefor, and any such subscriber
13 may, at his option as hereinafter provided, pay to the fund the
14 amount of premium appropriate, and upon payment thereof, shall
15 be insured, as hereinafter provided, for the year for which such
16 premium is paid, and such insurance shall cover all payments
17 becoming due for which said premium is paid. The premium is
18 fixed and shall be adequate to enable payment of all sums which
19 may become due and payable under the provisions of this act, and
20 adequate reserve sufficient to carry all policies and claims to
21 maturity. In fixing the premiums payable by any subscriber, the
22 board may take into account the condition of the premises of
23 such subscriber in respect to the possibility of subsidence as
24 shown by the report of any inspector appointed by the board or
25 by the department, and they may from time to time change the
26 amount of premiums payable by any of the subscribers as
27 circumstances may require and the condition of the premises of
28 such subscribers in respect to the possibility of subsidence may
29 justify, and they may increase the premiums of any subscriber
30 whose loss experience warrants such change. The insurance of any
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1 subscriber shall not be effective until he shall have paid in
2 full the premium so fixed and determined.
3 Section 9. Investment of Surplus.--The [said] board may
4 invest any of the surplus or reserve belonging to the fund in
5 such securities and investments as are authorized for investment
6 by savings banks. All such securities or evidences of
7 indebtedness shall be placed in the hands of the State Treasurer
8 who shall be the custodian thereof. He shall collect the
9 principal and interest thereof when due and pay the same into
10 the fund. The State Treasurer shall pay for all such securities
11 or evidences of indebtedness by check issued upon requisition of
12 the board. All such payments shall be made only upon delivery of
13 such securities or evidences of indebtedness to the State
14 Treasurer. To all requisitions calling upon the State Treasurer
15 to pay for any securities or evidences of indebtedness, there
16 shall be attached a certified copy of the resolution of the
17 board authorizing the investment. The [said] board may upon like
18 resolution sell any of such securities.
19 Section 2. Section 10 of the act, amended November 20, 1981
20 (P.L.350, No.127), is amended to read:
21 Section 10. Disbursements from Fund.--(a) Moneys from the
22 general appropriation of the [Department of Environmental
23 Resources] department are hereby made available for the expense
24 of administering the fund including the purchase through the
25 Department of General Services of surety bonds for such officers
26 or employes of the board as may be required to furnish them
27 supplies, materials, motor vehicles, workmen's insurance
28 covering the officers and employes of the board, and liability
29 insurance covering vehicles operated by the officers and
30 employes of the board.
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1 (b) Moneys from the general appropriation of the [Department
2 of Environmental Resources] department shall also be available
3 [for payment, to the Insurance Department, of the cost incurred
4 by that department in examining and auditing the fund in such
5 amounts as the Insurance Department shall determine, and] for
6 payment, to the Treasury Department, of the cost of making
7 disbursements out of the fund on behalf of the fund at such
8 amounts as the Treasury Department, with the approval of the
9 Executive Board, shall determine.
10 (c) The board shall keep an accurate account of the money
11 paid in premiums by the subscribers and the disbursements on
12 account of damages to the premises thereof, and if at the
13 expiration of any year there shall be a balance remaining after
14 deducting such disbursements, the unearned premiums on
15 undetermined risks and the percentage of premiums paid or
16 payable to create or maintain the surplus provided herein, and
17 after setting aside an adequate reserve, so much of the balance
18 as the board may determine to be safely distributable may either
19 be allocated to the cost of administering the fund or be
20 distributed among the subscribers in proportion to the premiums
21 paid by them and the proportionate share of such subscribers as
22 shall remain subscribers to the fund shall be credited to the
23 installment of premiums next due by them and the proportionate
24 share of such subscribers as shall have ceased to be subscribers
25 in the fund shall be refunded to them out of the fund in the
26 manner hereinafter provided.
27 Section 3. Section 12 of the act, amended July 10, 1984 <--
28 (P.L.711, No.151), is amended to read:
29 SECTION 3. SECTIONS 12 AND 12.1 OF THE ACT, AMENDED OR ADDED <--
30 JULY 10, 1984 (P.L.711, NO.151), ARE AMENDED TO READ:
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1 Section 12. Application for Insurance; Terms of Insurance;
2 Penalty for False Statement.--(a) Any owner of a structure
3 located within the anthracite or bituminous coal or clay mine
4 region and who desires to become a subscriber to [said] the fund
5 for the purpose of insuring such a structure therein against
6 damages from coal or clay mine subsidences, shall make a written
7 request for an application for such insurance to the [said]
8 board or any of its agents. The board shall then send to the
9 owner of the structure an application in which application the
10 applicant shall state the name, address, date of ownership of
11 the premises to be insured, the condition of the premises, prior
12 subsidence experience, if any, nature of title whether it
13 includes any subsurface support, whether any agreement exists
14 concerning surface support. Thereupon, the board shall make such
15 investigation as may be necessary if such application complies
16 with the rules and regulations of the board and within sixty
17 days after the request for an application is received shall
18 issue a certificate showing the acceptance of the application
19 and the amount of premium payable by such applicant for the year
20 for which premium is sought. THE AMOUNT OF INSURANCE COVERAGE <--
21 SHALL NOT EXCEED THE REPLACEMENT COST OF THE INSURED STRUCTURE
22 OR THE MAXIMUM AMOUNT OF COVERAGE ESTABLISHED BY THE FUND,
23 WHICHEVER IS LESS. Policies may be issued for one year, for two
24 years or for three years as the board may establish. Except as
25 provided in subsection (b), no insurance shall become effective
26 until the premiums have been paid. All premiums shall be payable
27 to the State Treasurer whereupon a receipt shall be issued
28 therefor. The receipt for premium together with a certificate of
29 the board shall be evidence that the applicant has become a
30 subscriber to the fund and is insured.
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1 (b) If the board fails to make the necessary investigations
2 or inspection and fails to approve or deny an application for
3 insurance within sixty days of receipt of the written request
4 for an application by the board or any of its agents, in
5 accordance with this section, the insurance requested by the
6 applicant shall be deemed granted. The insurance shall be
7 effective from the date the written request for an application
8 was received by the board or any of its agents, but the coverage
9 will be null and void if the applicant fails to remit the
10 premium payment within twenty days from the day the bill for the
11 premium was postmarked.
12 (1) The insurance may be subjected to later reductions, and
13 premiums adjusted accordingly, if the board determines that the
14 amount of insurance coverage requested is in excess of the
15 current market value of the structure or current statutory <--
16 CURRENT [MARKET VALUE] REPLACEMENT COST OF THE STRUCTURE OR <--
17 [CURRENT STATUTORY limits] THE MAXIMUM AMOUNT OF COVERAGE <--
18 ESTABLISHED BY THE FUND, whichever is less.
19 (2) The insurance shall be void if, upon inspection of the
20 structure, the board determines that either (i) mine subsidence
21 damage occurred prior to the request by the applicant for
22 insurance, or (ii) the applicant by his unreasonable actions or
23 in actions is responsible for the failure of the board to
24 inspect the structure within sixty days of receipt of the
25 written request for an application in accordance with this
26 section.
27 (c) Whoever shall knowingly furnish or make any false
28 certificate, application or statement herein required shall be
29 guilty of a misdemeanor, and upon conviction thereof, shall be
30 sentenced to pay a fine not exceeding one thousand five hundred
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1 dollars ($1,500) and shall undergo imprisonment not exceeding
2 one year.
3 SECTION 12.1. APPLICATION FOR AN INCREASE IN INSURANCE.--(A) <--
4 ADDITIONS IN THE AMOUNT OF INSURANCE, UP TO THE ALLOWABLE
5 LIMITS, MAY BE MADE AT ANY TIME BY THE SUBSCRIBER BY SUBMITTING
6 A WRITTEN STATEMENT TO THE BOARD OR TO ANY OF ITS AGENTS, EXCEPT
7 DURING A PERIOD WHEN A CLAIM FILED BY THE SUBSCRIBER IS OPEN AND
8 PENDING INVESTIGATION BY THE DEPARTMENT. UPON RECEIPT OF THE
9 SUBSCRIBER'S WRITTEN STATEMENT BY THE BOARD OR ANY OF ITS
10 AGENTS, THE BOARD SHALL HAVE SIXTY DAYS FROM THE DAY THE REQUEST
11 WAS RECEIVED TO REINSPECT THE STRUCTURE. IF REINSPECTION OCCURS
12 WITHIN THE SIXTY-DAY PERIOD AND THE STRUCTURE PASSES THE
13 REINSPECTION, THE NEW AMOUNT OF INSURANCE SHALL BE EFFECTIVE
14 FROM THE DATE OF PREMIUM PAYMENT AFTER REINSPECTION. IF
15 REINSPECTION DOES NOT OCCUR WITHIN THE SIXTY-DAY PERIOD, THE NEW
16 AMOUNT OF INSURANCE SHALL BE EFFECTIVE FROM THE DATE THE
17 SUBSCRIBER'S WRITTEN REQUEST FOR ADDITIONAL INSURANCE WAS
18 RECEIVED BY THE BOARD OR ANY OF ITS AGENTS, BUT THE ADDITIONAL
19 COVERAGE WILL BE NULL AND VOID IF THE APPLICANT FAILS TO REMIT
20 THE PREMIUM PAYMENT WITHIN TWENTY DAYS FROM THE DAY THE BILL FOR
21 ADDITIONAL PREMIUM IS POSTMARKED.
22 (B) THE ADDITIONAL INSURANCE MAY BE SUBJECTED TO LATER
23 REDUCTIONS, AND PREMIUMS ADJUSTED ACCORDINGLY, IF THE BOARD
24 DETERMINES THAT THE ADDED INSURANCE RAISES THE TOTAL AMOUNT OF
25 INSURANCE IN EXCESS OF THE CURRENT [MARKET VALUE] REPLACEMENT
26 COST OF THE STRUCTURE OR [CURRENT STATUTORY LIMITS] THE MAXIMUM
27 AMOUNT OF COVERAGE ESTABLISHED BY THE FUND, WHICHEVER IS LESS.
28 (C) THE ADDITIONAL INSURANCE SHALL BE VOID IF, UPON
29 REINSPECTION OF THE STRUCTURE, THE BOARD DETERMINES THAT EITHER:
30 (1) MINE SUBSIDENCE DAMAGE OCCURRED PRIOR TO THE REQUEST OF
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1 THE SUBSCRIBER FOR ADDITIONAL INSURANCE.
2 (2) THE SUBSCRIBER'S UNREASONABLE ACTIONS OR INACTIONS ARE
3 RESPONSIBLE FOR THE BOARD'S FAILURE TO REINSPECT THE INSURED
4 STRUCTURE WITHIN SIXTY DAYS OF RECEIPT OF THE WRITTEN REQUEST
5 FOR AN INCREASE IN THE AMOUNT OF COVERAGE BY THE BOARD OR ANY OF
6 ITS AGENTS.
7 Section 4. Sections 13, 14, 15 and 17 of the act are amended
8 to read:
9 Section 13. Audit by Auditor General.--The Auditor General
10 through such agents as he may select shall, at least once each
11 year, make a complete examination and audit of the fund
12 including all receipts and expenditures, cash on hand and
13 securities, investments or property held representing cash or
14 cash disbursements, and for these purposes the Auditor General
15 is hereby authorized to employ such consultants, experts,
16 accountants or investigators as he may deem advisable.
17 The expense incurred in making said examination and audit
18 shall be certified to the fund by the Auditor General and shall
19 be paid from the general appropriation of the [Department of
20 Environmental Resources] department.
21 The first audit of such fund may, in the discretion of the
22 Auditor General, extend back to the creation of such fund or to
23 any other period in its life.
24 [Section 14. Audit by Insurance Department.--The Insurance
25 Department at least once each year shall make a complete
26 examination and audit of the affairs of the fund including all
27 receipts and expenditures, cash on hand and securities,
28 investments or property held representing cash or cash
29 disbursements to ascertain its financial condition and its
30 ability to fulfill its obligations, whether the board in
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1 managing the fund has complied with the provisions of law
2 relating to the fund and the equity of the board's plans and
3 dealings with its policyholders.
4 For the purpose of any examination and audit authorized by
5 this act, the Commissioner of Insurance, his deputy or his
6 examiners shall have free access to all the books, records and
7 papers pertaining to the fund, and all persons charged with the
8 management of the fund or connected therewith as employes are
9 hereby directed and required to give to the Commissioner of
10 Insurance, his deputy or officers the means, facilities and
11 opportunity for such examination and audit.
12 The expenses incurred by the Insurance Department in making
13 any examination and audit under the provisions of this act shall
14 be ascertained by the department, certified to the fund, and
15 paid from the general appropriation of the Department of
16 Environmental Resources.]
17 Section 15. Claims against Fund.--Any subscriber to the fund
18 must file with the board a true statement of his claim for any
19 subsidence and shall give to the board an opportunity to
20 investigate and to determine whether the board will pay the
21 claim. For any claim to be considered valid the department must
22 determine that a mine subsidence event occurred during the term
23 of the mine subsidence insurance policy.
24 Section 17. Subrogation to Rights of Claimants.--Nothing
25 herein shall relieve any person, partnership, or corporation
26 otherwise liable therefor from any liability for damages
27 sustained; and the fund and the program shall be subrogated to
28 the rights of any property owners' insurance herein.
29 Section 5. The act is amended by adding sections to read:
30 Section 20. Program.--(a) If a homeowner believes that the
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1 homeowner's dwelling has sustained mine subsidence damage, the
2 homeowner may apply to the department for mine subsidence
3 assistance. The application must be on a form prepared by the
4 department and must provide for inspection of the dwelling to
5 determine the nature, extent and time of the damage. Upon a
6 determination that a dwelling has sustained mine subsidence
7 damage and that an application for assistance was submitted to
8 the department within forty-five days of occurrence of the mine
9 subsidence event, the department shall, to the extent funds are
10 made available, grant assistance, as follows:
11 (1) Grants may be awarded only to persons whose dwellings
12 are unsafe for occupancy as a result of a mine subsidence
13 emergency and may be awarded to move and provide temporary
14 housing for persons whose dwellings are destroyed or endangered
15 until the homes are repaired, until there is no further danger
16 of subsidence or until a new permanent residence is found,
17 provided that grants shall not be used to pay for temporary
18 housing for more than one year and the total amount of a grant
19 shall not exceed twelve thousand dollars ($12,000).
20 (2) Loans may be approved at an interest rate equal to the
21 current rate of return being earned by the fund, or five AVERAGE <--
22 RATE OF RETURN EARNED BY THE FUND DURING THE PREVIOUS FIVE YEARS
23 OR SIX percent, whichever is lower for the repair or replacement
24 of dwellings damaged by mine subsidence. Loans shall be awarded <--
25 on a priority basis according to severity of damages sustained,
26 but a dwelling need not be rendered unsafe for human occupancy
27 as a result of a mine subsidence emergency to qualify for a
28 loan. The loan shall be for a period of time not exceeding
29 fifteen years in duration and shall be in an amount sufficient
30 to cover the cost of repairing the structural damage to the
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1 dwelling, but in no event shall be more than the replacement <--
2 cost MARKET VALUE of the dwelling as determined by an appraiser, <--
3 or the maximum coverage limit for dwellings under the subsidence <--
4 insurance program, whichever amount is lower OF COVERAGE <--
5 ESTABLISHED BY THE FUND, WHICHEVER IS LESS, as provided for in
6 regulations promulgated under this act. Loans shall be
7 administered by the department PURSUANT TO STANDARD CRITERIA <--
8 UTILIZED BY THE MORTGAGE BANKING INDUSTRY IN ISSUING
9 CONVENTIONAL MORTGAGES, PROVIDED THAT THE DEPARTMENT MAY
10 CONSIDER OTHER EQUITY INTERESTS IN REAL PROPERTY AVAILABLE TO
11 THE BORROWER IN ADDITION TO THE EQUITY IN THE DWELLING FOR WHICH
12 THE LOAN IS APPLIED and shall be secured by a lien upon the
13 dwelling being repaired or replaced.
14 (3) In addition to repairing or replacing structural damage
15 to a dwelling, loans may also be made to repair or replace
16 dwelling-related driveways, septic systems, sidewalks, fences,
17 sewer laterals, water lines, gas lines, wells and inground
18 pools, located on the property on which the dwelling is located,
19 provided that the damage has been caused by the same mine
20 subsidence event that damaged the dwelling.
21 (4) Loans shall be made for only the amount not covered by
22 insurance or other sources of remuneration, including amounts
23 for which a mine operator is liable under the act of April 27,
24 1966 (1st Sp. Sess., P.L.31, No.1), known as "The Bituminous
25 Mine Subsidence and Land Conservation Act," unless it is
26 determined that the operator is unable to meet his obligations
27 under that act.
28 (5) ANY HOMEOWNER WHO HAS CARRIED MINE SUBSIDENCE INSURANCE <--
29 IN THE PAST ON A DWELLING FOR WHICH ASSISTANCE UNDER THIS
30 SECTION IS APPLIED SHALL NOT BE ELIGIBLE FOR SUCH ASSISTANCE IF
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1 THE HOMEOWNER HAS FAILED TO MAINTAIN THE INSURANCE AND COVERAGE
2 IS NOT IN EFFECT AT THE TIME OF THE MINE SUBSIDENCE EVENT THAT
3 CAUSED THE DAMAGE FOR WHICH ASSISTANCE IS APPLIED. THIS
4 PARAGRAPH DOES NOT APPLY TO HOMEOWNERS WHO MAY APPLY FOR
5 ASSISTANCE AS A RESULT OF THE FAILURE OF A MINE OPERATOR TO MEET
6 HIS OBLIGATIONS UNDER "THE BITUMINOUS MINE SUBSIDENCE AND LAND
7 CONSERVATION ACT."
8 (b) If a person receiving assistance under this section does
9 not have mine subsidence insurance AND IS NOT INELIGIBLE TO <--
10 RECEIVE SUCH ASSISTANCE UNDER SUBSECTION (A)(5), the person
11 shall be required to purchase a mine subsidence insurance policy
12 when the structural damage for which assistance was granted has
13 been repaired. Persons receiving a loan under this section must
14 maintain mine subsidence insurance coverage for the duration of
15 the loan, and persons receiving a grant under this section must
16 maintain mine subsidence insurance coverage for as long as it is
17 determined by the department that the dwelling is in danger of
18 further damage from mine subsidence. If a person receiving mine
19 subsidence assistance fails to maintain the required mine
20 subsidence insurance, the person shall immediately pay the fund
21 the outstanding balance due on the loan OR REFUND THE GRANT <--
22 PROCEEDS PROVIDED under this section.
23 (c) Repairs for which loans are provided under this section
24 must be completed within one year of the receipt of grant or
25 loan assistance, unless an extension is approved by the
26 department. If the department determines that repairs have not
27 been made within one year and that no extension should be
28 granted, the person who received the grant or loan assistance
29 shall repay the fund for the amount of the grant or loan not
30 expended on repairs for which the grant or loan was provided.
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1 (D) LOANS PROVIDED PURSUANT TO THIS SECTION ARE NOT <--
2 TRANSFERABLE. IF A PERSON RECEIVING A LOAN UNDER THIS SECTION
3 SELLS OR TRANSFERS OWNERSHIP OF THE DWELLING FOR WHICH LOAN
4 ASSISTANCE HAS BEEN PROVIDED, THE PERSON SHALL PAY THE FUND THE
5 OUTSTANDING BALANCE DUE ON THE LOAN AT THE TIME TITLE TO THE
6 DWELLING IS TRANSFERRED.
7 (d) (E) Up to five percent of the money in the fund which is <--
8 not committed to reserves, claims or other fund expenses, plus
9 repayment of principal and interest on loans under this section,
10 shall be used to fund assistance under this section.
11 Section 20.1. Subsidence Insurance Purchase and Compliance <--
12 Requirements.--(a) Every purchaser of a dwelling requiring mine
13 subsidence insurance shall purchase subsidence insurance in an
14 amount at least equal to the appraised value of the dwelling
15 purchased or to the maximum amount of coverage available with
16 respect to the particular dwelling, whichever is less; provided,
17 however, that the amount of subsidence insurance required need
18 not exceed the outstanding principal balance of a loan against
19 the dwelling and need not be required beyond the term of the
20 loan.
21 (b) Notification of mortgage lending institution shall be as
22 follows:
23 (1) The department shall notify mortgage lending
24 institutions in areas identified by the department as being
25 located above abandoned mine workings of the requirements for
26 subsidence insurance. Notified lenders shall direct persons
27 applying for loans for the purchase of dwellings in these areas
28 to contact the department to determine if the dwelling requires
29 mine subsidence insurance and to provide the lender with a
30 certificate from the department stating one of the following:
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1 (i) That subsidence insurance is necessary under the
2 provisions of this section and has been obtained as a condition
3 of receiving and maintaining the loan.
4 (ii) That subsidence insurance may be necessary under the
5 provisions of this section but is not being provided for reasons
6 set forth in the certificate by the department.
7 (iii) That subsidence insurance is not necessary under the
8 provisions of this section.
9 (2) Each State agency participating in providing mortgage
10 loan assistance for the purchase of a dwelling in an area
11 identified by the department as being located above abandoned
12 mine workings shall, by regulations, require borrowers to obtain
13 subsidence insurance under the circumstances and in the manner
14 provided in subsection (a).
15 (c) Notwithstanding any other provision of this section,
16 subsections (a) and (b) shall not apply to any loan having an
17 original outstanding principal balance of five thousand dollars
18 ($5,000) or less and a repayment term of one year or less.
19 (d) If a lender subject to this act requires the escrowing
20 of taxes, insurance premiums, fees or any other charges for a
21 loan secured by a dwelling, then all premiums and fees for
22 subsidence insurance for the dwelling shall be paid to the
23 lender or servicer for the loan in a manner sufficient to make
24 payments as due for the duration of the loan. Upon receipt of
25 the premiums, the lender or other servicer of the loan shall
26 deposit the premiums in an escrow account on behalf of the
27 borrower. Upon receipt of a notice from the department that
28 subsidence insurance premiums are due, the lender or servicer
29 shall pay from the escrow account to the department the amount
30 of insurance premiums owed. Escrow accounts established pursuant
20010H0401B2332 - 17 -
1 to this subsection shall be subject to the provisions of section
2 10 of the Real Estate Settlement Procedures Act of 1974 (Public
3 law 93-533, 12 U.S.C. § 2609).
4 (e) Placement of subsidence insurance by lender shall be as
5 follows:
6 (1) If, at the time of origination or at any time during the
7 term of a loan secured by a dwelling requiring mine subsidence
8 insurance, a lender or servicer for the loan determines that the
9 dwelling is not covered by subsidence insurance or is covered by
10 such insurance in an amount less than the amount required for
11 the property pursuant to subsection (a), the lender or servicer
12 for the loan shall notify the borrower that the borrower should
13 obtain, at the borrower's expense, the required amount of
14 subsidence insurance for the term of the loan and provide the
15 lender or servicer for the loan with a certificate from the
16 department as provided in subsection (b)(1).
17 (2) If the borrower fails to purchase the required
18 subsidence insurance within forty-five days after notification
19 under paragraph (1), the lender or servicer for the loan shall
20 purchase the insurance on behalf of the borrower and may charge
21 the borrower for the cost of premiums and fees incurred by the
22 lender in purchasing the insurance.
23 (3) Review of determination that subsidence insurance is
24 required:
25 (i) The borrower and lender for a loan secured by a dwelling
26 may jointly request the department to review a determination
27 that the dwelling requires mine subsidence insurance. The
28 request must be supported by technical information relating to
29 the dwelling and its location. Within forty-five days of
30 receiving the request for review, the department shall provide
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1 the borrower and the lender with a written redetermination
2 stating whether the dwelling requires mine subsidence insurance.
3 The redetermination of the department shall be final.
4 (ii) If the department redetermines that the dwelling
5 securing the loan of the borrower does not require mine
6 subsidence insurance, the borrower shall not be obligated to
7 purchase subsidence insurance for the dwelling during the period
8 determined by the department, which shall be stated in the
9 redetermination under subparagraph (i) and shall begin on the
10 date on which the letter is provided.
11 (iii) The borrower shall not be required to purchase
12 subsidence insurance for the dwelling securing the loan until a
13 redetermination under subparagraph (i) is provided if a request
14 for redetermination is made under subparagraph (i) and the
15 department does not provide the redetermination before the later
16 of:
17 (A) the expiration of the time period under subparagraph
18 (i); or
19 (B) closing of the loan.
20 (iv) A lender or any servicer for a loan may charge the
21 borrower a reasonable fee for the costs of determining whether
22 the dwelling securing the loan requires mine subsidence
23 insurance if any of the following apply:
24 (A) The determination is made pursuant to the making,
25 increasing, extending or renewing of the loan that is initiated
26 by the borrower.
27 (B) The loan for the dwelling may reasonably be considered
28 to require the determination.
29 (C) The determination results in the purchase of subsidence
30 insurance pursuant to paragraph (2).
20010H0401B2332 - 19 -
1 (v) The purchaser or transferee of such a loan may be
2 charged the fee in the case of sale or transfer of the loan.
3 (f) Penalties for failure to require subsidence insurance
4 shall be as follows:
5 (1) Monetary penalty shall be as follows:
6 (i) The department may assess a penalty in the amount of
7 three hundred dollars ($300) for each violation against any
8 lender that fails to require subsidence insurance pursuant to
9 subsection (b)(1) or fails to notify a borrower of lack of
10 coverage pursuant to subsection (e)(1).
11 (ii) Each State agency providing mortgage loan assistance
12 for dwellings located above abandoned mine workings pursuant to
13 subsection (b)(2) may assess a penalty in the amount of three
14 hundred dollars ($300) for each violation against any lender
15 participating in the program that fails to require subsidence
16 insurance pursuant to agency regulations or fails to notify a
17 borrower of lack of coverage pursuant to subsection (e)(1).
18 (iii) This paragraph is subject to 2 Pa.C.S. Chs. 5 Subch. A
19 (relating to practice and procedure of Commonwealth agencies)
20 and 7 Subch. A (relating to judicial review of Commonwealth
21 agency action).
22 (2) Any lender that purchases or renews subsidence insurance
23 on behalf of or as an agent of a borrower of a loan for which
24 subsidence insurance is required shall be considered to be in
25 compliance with this section.
26 (3) Sale or other transfer of a loan by a lender that has
27 committed a violation of this section which occurs subsequent to
28 the violation shall not affect the liability of the transferring
29 lender regarding any penalty under this subsection. A lender
30 shall not be liable for any violations by another lender that
20010H0401B2332 - 20 -
1 previously held the loan.
2 (4) Penalties collected under this subsection shall be paid
3 into the fund.
4 (5) No penalty may be imposed under this subsection after
5 the expiration of the four-year period beginning on the date of
6 the violation for which the penalty is authorized under this
7 subsection.
8 (g) This section shall apply with respect to any loan made,
9 increased, extended or renewed on or after the effective date of
10 this section.
11 Section 21. Department.--(a) The department shall provide
12 for public notice of the program and the requirements for mine
13 subsidence insurance.
14 (b) The department shall make an annual report on the
15 program and on compliance and experience with mine subsidence
16 insurance requirements to the Environmental Resources and Energy
17 Committee of the Senate and the Environmental Resources and
18 Energy Committee of the House of Representatives.
19 SECTION 20.1. NOTICE OF RISK OF SUBSIDENCE AND AVAILABILITY <--
20 OF SUBSIDENCE INSURANCE.--(A) EVERY MORTGAGE LENDING
21 INSTITUTION DOING BUSINESS IN AN ABANDONED UNDERGROUND MINING
22 AREA SHALL PROVIDE EVERY PERSON APPLYING FOR A LOAN FOR THE
23 PURCHASE OF A DWELLING LOCATED WITHIN AN ABANDONED UNDERGROUND
24 MINING AREA WITH NOTICE OF THE RISK OF MINE SUBSIDENCE AND OF
25 THE AVAILABILITY OF MINE SUBSIDENCE INSURANCE.
26 (B) THE DEPARTMENT, WITH THE ASSISTANCE OF THE DEPARTMENT OF
27 BANKING, SHALL NOTIFY MORTGAGE LENDING INSTITUTIONS DESCRIBED IN
28 SUBSECTION (A) OF ABANDONED UNDERGROUND MINING AREAS AND SHALL
29 PROVIDE THEM WITH INFORMATIONAL PUBLICATIONS ABOUT MINE
30 SUBSIDENCE INSURANCE AND APPLICATIONS FOR SUCH INSURANCE FOR
20010H0401B2332 - 21 -
1 DISTRIBUTION BY THE LENDER TO EVERY PERSON APPLYING FOR A
2 MORTGAGE LOAN IF THE LOAN APPLIES TO A DWELLING LOCATED WITHIN
3 AN ABANDONED UNDERGROUND MINING AREA.
4 (C) IF A PERSON APPLYING FOR A MORTGAGE LOAN FOR A DWELLING
5 LOCATED WITHIN AN ABANDONED UNDERGROUND MINING AREA DECLINES TO
6 PURCHASE MINE SUBSIDENCE INSURANCE AFTER BEING PROVIDED THE
7 NOTICE, INFORMATION AND APPLICATION REQUIRED BY SUBSECTIONS (A)
8 AND (B), THEN THE PERSON APPLYING FOR THE MORTGAGE LOAN SHALL
9 SIGN A STATEMENT ACKNOWLEDGING THAT HE OR SHE HAS RECEIVED THE
10 REQUIRED NOTICE, INFORMATION AND APPLICATION REGARDING MINE
11 SUBSIDENCE INSURANCE; HAS DECLINED TO PURCHASE SUCH INSURANCE;
12 AND BY DECLINING TO PURCHASE SUCH INSURANCE WAIVES THE RIGHT TO
13 RECEIVE A GRANT OR LOAN UNDER THE PROGRAM UNTIL MINE SUBSIDENCE
14 INSURANCE IS PURCHASED. THE MORTGAGE LENDING INSTITUTION SHALL
15 FORWARD A COPY OF THE SIGNED STATEMENT TO THE DEPARTMENT.
16 (D) A MORTGAGE LENDING INSTITUTION THAT FAILS TO PROVIDE THE
17 REQUIRED NOTICE, INFORMATION AND SIGNED STATEMENT REQUIRED UNDER
18 SUBSECTIONS (A), (B) AND (C) SHALL COMPENSATE THE MORTGAGOR FOR
19 THE REASONABLE COST OF REPAIRING ANY ACTUAL SUBSIDENCE DAMAGE
20 NOT COVERED BY SUBSIDENCE INSURANCE WHICH MAY RESULT FROM THE
21 FAILURE. IT SHALL NOT BE A DEFENSE TO AN ACTION UNDER THIS
22 SUBSECTION THAT THE MORTGAGE LENDING INSTITUTION DID NOT RECEIVE
23 THE NOTICE FROM THE DEPARTMENT UNDER SUBSECTION (B).
24 (E) THIS SECTION SHALL APPLY WITH RESPECT TO A MORTGAGE LOAN
25 MADE, INCREASED, EXTENDED OR RENEWED ON OR AFTER THE EFFECTIVE
26 DATE OF THIS SECTION.
27 SECTION 21. DEPARTMENT REPORT.--THE DEPARTMENT SHALL MAKE AN
28 ANNUAL REPORT ON THE PROGRAM AND ON EXPERIENCE WITH MINE
29 SUBSIDENCE INSURANCE NOTICE REQUIREMENTS TO THE ENVIRONMENTAL
30 RESOURCES AND ENERGY COMMITTEE OF THE SENATE AND THE
20010H0401B2332 - 22 -
1 ENVIRONMENTAL RESOURCES AND ENERGY COMMITTEE OF THE HOUSE OF
2 REPRESENTATIVES.
3 Section 6. Sections 22 and 24.1 of the act are amended to
4 read:
5 Section 22. Employes of the Board to Be Part of the
6 Department [of Environmental Resources].--All employes of the
7 board shall be employed by and located in the [Department of
8 Environmental Resources] department and shall be subject to the
9 administrative jurisdiction and authority of the [Secretary of
10 Environmental Resources] secretary.
11 Section 24.1. Appeals.--Any party aggrieved by an action of
12 the board [hereunder] shall have the right to appeal to the
13 Environmental Hearing Board.
14 Section 7. The addition of section 20 of the act shall apply
15 to mine subsidence damage incurred after December 31, 1998,
16 provided that mine subsidence damage which occurred between
17 January 1, 1999, and the effective date of this act and for
18 which mine subsidence assistance is applied must have been
19 reported to the department prior to the effective date of this
20 act, and an application for assistance for such damage must be
21 filed with the department within 90 days of the effective date
22 of this act.
23 Section 8. This act shall take effect as follows:
24 (1) The addition of section 20.1 of the act shall take
25 effect in 180 days.
26 (2) The remainder of this act shall take effect
27 immediately.
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