Terrorism Risk Insurance Program; Terrorism Risk Insurance Program Reauthorization Act Implementation, 18135-18138 [E9-9007]
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Federal Register / Vol. 74, No. 75 / Tuesday, April 21, 2009 / Rules and Regulations
DEPARTMENT OF THE TREASURY
31 CFR Part 50
RIN 1505–AB93
Terrorism Risk Insurance Program;
Terrorism Risk Insurance Program
Reauthorization Act Implementation
Departmental Offices, Treasury.
Final rule.
AGENCY:
ACTION:
The Department of the
Treasury (Treasury) is issuing this final
rule as part of its implementation of
amendments made by the Terrorism
Risk Insurance Program Reauthorization
Act of 2007 (Reauthorization Act) to
Title I of the Terrorism Risk Insurance
Act of 2002 (TRIA, or Act), as
previously amended by the Terrorism
Risk Insurance Extension Act of 2005
(Extension Act). The Act established a
temporary Terrorism Risk Insurance
Program (Program) that was scheduled
to expire on December 31, 2005, under
which the Federal Government shared
the risk of insured losses from certified
acts of terrorism with commercial
property and casualty insurers. The
Extension Act extended the Program
through December 31, 2007, and made
other changes. The Reauthorization Act
extended the Program through
December 31, 2014, revised the
definition of an ‘‘act of terrorism,’’ and
made other changes. This final rule
contains regulations that Treasury is
issuing to implement certain aspects of
the Reauthorization Act. In particular,
the rule addresses mandatory
availability (‘‘make available’’) and
disclosure requirements. An interim
final rule with request for comments
was published in the Federal Register
on September 16, 2008, and generally
incorporated the substance of interim
guidance previously issued by Treasury
and published in the Federal Register.
Since no comments were received
regarding the interim final rule, this
final rule adopts the text of the interim
final rule without revision.
DATES: This final rule is effective May
21, 2009.
FOR FURTHER INFORMATION CONTACT:
Howard Leikin, Deputy Director,
Terrorism Risk Insurance Program (202)
622–6770 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
SUMMARY:
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I. Background
A. Terrorism Risk Insurance Act of 2002
On November 26, 2002, the President
signed into law the Terrorism Risk
Insurance Act of 2002 (Pub. L. 107–297,
116 Stat. 2322). The Act was effective
immediately. The Act’s purposes are to
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address market disruptions, ensure the
continued widespread availability and
affordability of commercial property
and casualty insurance for terrorism
risk, and allow for a transition period
for the private markets to stabilize and
build capacity while preserving State
insurance regulation and consumer
protections.
Title I of the Act establishes a
temporary Federal program of shared
public and private compensation for
insured commercial property and
casualty losses resulting from an act of
terrorism which, as defined by the Act,
is certified by the Secretary of the
Treasury, in concurrence with the
Secretary of State and the Attorney
General. The Act authorizes Treasury to
administer and implement the
Terrorism Risk Insurance Program (the
Program), including the issuance of
regulations and procedures.
Each entity that meets the Act’s
definition of insurer must participate in
the Program. The amount of Federal
payment for an insured loss resulting
from an act of terrorism is determined
by insurance company deductibles and
excess loss sharing with the Federal
Government as specified in the Act and
Treasury’s implementing regulations.
An insurer’s deductible is calculated
based on the value of direct earned
premiums collected over certain
prescribed calendar periods. Once an
insurer has met its individual
deductible, the Federal payments cover
a percentage of the insured losses above
the deductible, all subject to an annual
industry aggregate limit of $100 billion.
The Act gives Treasury authority to
recoup Federal payments made under
the Program through policyholder
surcharges. The Act reduces the Federal
share of compensation for insured losses
that have been covered under any other
Federal program. The Act also contains
provisions designed to manage certain
litigation arising from or relating to a
certified act of terrorism. Section 107 of
the Act creates an exclusive Federal
cause of action, provides for claims
consolidation in Federal court, and
contains a prohibition on Federal
payments for punitive damages under
the Program. The Act provides the
United States with the right of
subrogation with respect to any
payment or claim paid by the United
States under the Program.
The Program was originally set to
expire on December 31, 2005. On
December 22, 2005, the President signed
into law the Terrorism Risk Insurance
Extension Act of 2005 (Pub. L. 109–144,
119 Stat. 2660), which extended the
Program through December 31, 2007,
and made other significant changes to
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18135
TRIA that included a revised definition
of property and casualty insurance and
creation of a new Program trigger that
prohibits payment of Federal
compensation by Treasury unless the
aggregate industry insured losses
resulting from a certified act of terrorism
exceed a certain amount ($100 million
in 2007 and any Program Year
thereafter).
B. Terrorism Risk Insurance Program
Reauthorization Act of 2007
Under the Extension Act, the Program
was set to expire on December 31, 2007.
On December 26, 2007, the President
signed into law the Terrorism Risk
Insurance Program Reauthorization Act
of 2007 (Pub. L. 110–160, 121 Stat.
1839), which extended the Program
through December 31, 2014 (i.e., added
additional Program Years to the
Program). Other provisions of the
Reauthorization Act:
• Revise the definition of ‘‘act of
terrorism’’ to remove the requirement
that the act of terrorism be committed
by an individual acting on behalf of any
foreign person or foreign interest in
order to be certified as an act of
terrorism for purposes of the Act.
• Define ‘‘insurer deductible’’ for all
additional Program Years as the value of
an insurer’s direct earned premiums for
commercial property and casualty
insurance for the immediately preceding
calendar year multiplied by 20 percent.
• Set the Federal share of
compensation for insured losses (subject
to a $100,000,000 Program trigger) for
all additional Program Years at 85
percent of that portion of the amount of
insured losses that exceeds the
applicable insurer deductible.
• Require Treasury to submit a report
to Congress and issue final regulations
for determining the pro rata share of
insured losses to be paid under the
Program when aggregate insured losses
exceed $100,000,000,000.
• Require the Secretary of the
Treasury to notify Congress not later
than 15 days after the date of an act of
terrorism as to whether aggregate
insured losses are estimated to exceed
$100,000,000,000.
• Require for policies issued after the
date of enactment, that insurers provide
clear and conspicuous disclosure to the
policyholder of the existence of the
$100,000,000,000 cap at the time of
offer, purchase, and renewal of a policy
(in addition to current disclosure
requirements).
• Revise the recoupment provisions
of the Act. For purposes of recouping
the Federal share of compensation
under the Act, the ‘‘insurance
marketplace aggregate retention
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amount’’ for all additional Program
Years is the lesser of $27,500,000,000
and the aggregate amount, for all
insurers, of insured losses during each
Program Year. With regard to mandatory
recoupment of the Federal share of
compensation through policyholder
surcharges, collection is required within
a certain schedule specified in the
Reauthorization Act. The limitation that
surcharges not exceed 3 percent of the
premium charged for property and
casualty insurance coverage under the
policy is eliminated (but remains in the
case of discretionary recoupment).
• Require Treasury to issue
recoupment regulations within 180 days
of enactment, and publish an estimate of
aggregate insured losses within 90 days
after an act of terrorism.
• Require the President’s Working
Group on Financial Markets to perform
an ongoing analysis regarding the longterm availability and affordability of
terrorism risk insurance and submit
reports in 2010 and 2013.
• Require the Comptroller General to
examine and report on the availability
and affordability of insurance coverage
for nuclear, biological, chemical, and
radiological terrorist events; the future
outlook for such coverage; and the
capacity of insurers and State workers
compensation funds to manage the risk
associated with nuclear, biological,
chemical, and radiological terrorist
events.
• Require the Comptroller General to
study and report on the question of
whether there are specific markets in
the United States where there are
unique capacity constraints on the
amount of terrorism risk insurance
available.
C. The Interim Final Rule
The interim final rule was published
in the Federal Register at 73 FR 53359
(September 16, 2008). It incorporated
certain changes to 31 CFR Part 50
required by the amendments to TRIA in
the Reauthorization Act. The rule
included various conforming changes,
such as a change to the definition of
‘‘act of terrorism,’’ and extension of
applicable insurer deductible amounts
and the Federal share of compensation
for insured losses for additional
Program Years.
This final rule, and the preceding
interim final rule, reflect interim
guidance previously issued by Treasury
in a notice published in the Federal
Register on January 29, 2008 (73 FR
5264), in order to assist insurers,
policyholders, and other interested
parties in complying with immediately
applicable requirements of the
Reauthorization Act. Treasury consulted
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with the National Association of
Insurance Commissioners (NAIC) in
developing the interim final rule. No
comments were submitted on the
interim final rule and therefore,
Treasury is finalizing that rule by
adopting the text without change.
II. Analysis of the Final Rule
The following briefly describes the
content of the final rule. For a more
detailed discussion, please refer to the
interim final rule publication of
September 16, 2008.
A. Definitions (§ 50.5)
The final rule incorporates revised
definitions for the terms ‘‘act of
terrorism,’’ ‘‘Program Years,’’ ‘‘insurer
deductible,’’ and ‘‘Program Trigger
event.’’
To conform to the Reauthorization
Act, the definition of ‘‘act of terrorism’’
in § 50.5(b)(1)(iv) is revised to remove
the requirement that the act be
committed by an individual ‘‘acting on
behalf of any foreign person or foreign
interest’’ in order to be certified as an
act of terrorism for purposes of TRIA.
The revisions to the definitions of
‘‘Program Years,’’ ‘‘insurer deductible,’’
and ‘‘Program Trigger event’’ merely
conform these definitions to the changes
in the Reauthorization Act.
B. Interim Guidance Safe Harbors
(§ 50.7)
Section 50.7 of the final rule adds the
Interim Guidance issued by Treasury on
January 22, 2008, and published at 73
FR 5264 (January 29, 2008) to the list of
Interim Guidance documents Treasury
has issued.
C. Disclosure (§ 50.12)
The Reauthorization Act made no
change to the requirement in section
103(b) of TRIA that insurers provide
clear and conspicuous disclosure to the
policyholder of the premium charged
for insured losses covered by the
Program and the Federal share of
compensation for insured losses under
the Program. However, because an
‘‘insured loss’’ is defined, in part, as a
loss resulting from an act of terrorism,
the revision of the definition of an act
of terrorism to eliminate the ‘‘foreign
person or interest’’ element (i.e., to add
what is often referred to as ‘‘domestic
terrorism’’) may affect the premium
charged for insured losses and an
insurer’s compliance with the
disclosure requirements.
Section 50.12(b)(2) of the final rule
states that if an insurer makes an initial
offer of coverage, or offers to renew an
existing policy on or after December 26,
2007, the disclosure provided to the
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policyholder must reflect the premium
charged for insured losses covered by
the Program consistent with the
definition of an act of terrorism as
amended by the Reauthorization Act. As
a general matter, the requirement to
make available coverage for insured
losses must be met according to the
provisions of the Act in effect at the
time the offer is made. The disclosure
must be consistent with the offer that is
made.
Section 50.12(e)(3) of the final rule
provides that if an insurer made
available coverage for insured losses in
a new policy or policy renewal in 2007
or in the first three months of 2008 for
coverage becoming effective in 2008, but
did not provide a disclosure at the time
of offer, purchase or renewal of the
policy, then the insurer must be able to
demonstrate to Treasury’s satisfaction
that it has provided a disclosure as soon
as possible following January 1, 2008.
Treasury considers March 31, 2008, to
be the latest reasonable date for
compliant disclosures to policyholders,
barring unforeseen or unusual
circumstances. If the March 31, 2008,
date was not met by an insurer,
Treasury will expect the insurer to
demonstrate, when submitting a claim
for the Federal share of compensation
under the Program, why it could not
comply by that date.
D. Cap Disclosure (§§ 50.15 and 50.11)
Section 103(e)(2) of TRIA provides
that if aggregate insured losses exceed
$100,000,000,000 during any Program
Year, Treasury shall not make any
payment for any portion of the amount
of such losses that exceeds
$100,000,000,000, and no insurer that
has met its insurer deductible shall be
liable for the payment of any portion of
the amount of such losses that exceeds
$100,000,000,000. Section 103(b)(3) of
TRIA, as amended by the
Reauthorization Act, requires an insurer
to provide a clear and conspicuous
disclosure to the policyholder of the
existence of the $100,000,000,000 cap
under section 103(e)(2). The
requirement applies to ‘‘any policy that
is issued after the date of enactment’’ of
the Reauthorization Act, or December
26, 2007. The disclosure must be made
at the time of offer, purchase, and
renewal of the policy.
New section 50.15 in the final rule
addresses these requirements. Section
50.11 also includes a minor change to
clarify that the term ‘‘cap disclosure’’ in
the regulations refers to this disclosure
required by section 103(b)(3) of the Act.
For policies issued after December 26,
2007, this cap disclosure must initially
be provided to the policyholder at the
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first occurrence thereafter of an offer,
purchase or renewal. The final rule
provides that, for policies issued after
December 26, 2007, if an insurer does
not provide a cap disclosure by the time
of the first offer, purchase or renewal of
the policy after December 26, 2007, then
the insurer must be able to demonstrate
to Treasury’s satisfaction that it has
provided the disclosure as soon as
possible following December 26, 2007.
Treasury considers March 31, 2008, to
be the latest reasonable date for
providing the cap disclosure (including
reprocessing of policies, if necessary,
where a compliant disclosure was not
possible), barring unforeseen or unusual
circumstances. If the March 31, 2008,
date was not met by an insurer,
Treasury will expect the insurer to
demonstrate, when submitting a claim
for the Federal share of compensation
under the Program, why it could not
comply by that date.
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E. Use of Model Forms (§ 50.17)
Section 50.17(e) of the final rule adds
a provision specifically addressing the
cap disclosure. In addition, a minor
refinement of section 50.17(a)(2) has
been made in order to more accurately
reflect section 105(c) of the Act.
On December 19, 2007, the NAIC
modified Model Disclosure Forms No. 1
and 2 to satisfy the disclosure
requirements of section 103(b) of the
Act, including the cap disclosure
requirement under section 103(b)(3).
The new forms are found on the
Treasury Web site at https://
www.treasury.gov/trip. However,
insurers are not required to use the
NAIC forms, and may use other means
to comply with the disclosure
requirements.
F. Make Available (§§ 50.20 and 50.21)
The Reauthorization Act made no
change to the TRIA ‘‘make available’’
requirements in section 103(c).
However, because the ‘‘make available’’
requirements apply to insured losses,
and an ‘‘insured loss’’ is defined, in
part, as a loss resulting from an act of
terrorism, the revision of the definition
of an act of terrorism in the
Reauthorization Act to add domestic
terrorism may have an impact on an
insurer’s compliance with the ‘‘make
available’’ requirements.
The Reauthorization Act was effective
immediately upon enactment, December
26, 2007. The TRIA regulations in 31
CFR 50.21(a) generally provide that the
‘‘make available’’ requirements apply at
the time of the initial offer of coverage
or offer of renewal of an existing policy.
Thus, any initial offers of coverage or
offers of renewal of existing policies,
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made on or after the date of enactment,
must be consistent with the revised
definition of act of terrorism. In
addition, if an insurer makes an offer of
coverage on or after December 26, 2007
on a policy that is in mid term, then the
insurer must make available coverage
for insured losses consistent with the
revised definition of an act of terrorism.
These general rules are included in
revised section 50.21(b) of the final rule.
Section 50.21 addresses in detail
insurer implementation of the ‘‘make
available’’ requirements under various
circumstances as a result of enactment
of the Reauthorization Act. Treasury
considers March 31, 2008, to be the
latest reasonable date for compliant
offers of coverage (including
reprocessing of policies, if necessary,
where a compliant post-December 26,
2007 offer was not possible), barring
unforeseen or unusual circumstances. If
the March 31, 2008, date was not met by
an insurer, Treasury will expect the
insurer to demonstrate, when
submitting a claim for the Federal share
of compensation under the Program,
why it could not comply by that date.
Section 50.21(c)(2) addresses policies
where the coverage for insured losses
expired as of December 31, 2007, but
other coverage under the policy
continued in force in 2008. An insurer
must make coverage for insured losses
available for the remaining portion of
the policy term and, under section
50.21(e)(4), an insurer must be able to
demonstrate to Treasury’s satisfaction
that it has offered such coverage as soon
as possible following January 1, 2008.
However, if a policyholder had declined
an offer made by an insurer for coverage
for insured losses expiring as of
December 31, 2007, then the insurer is
not required to make a new offer of
coverage before the policy is due to be
renewed.
Section 50.21(e)(5) addresses
situations where coverage became
effective in 2008. Section 50.21(e)(5)(i)
requires that if an insurer processed a
new policy or policy renewal in 2007,
or in the first three months of 2008, for
coverage becoming effective in 2008, but
did not make available coverage for
insured losses, then the insurer must be
able to demonstrate to Treasury’s
satisfaction that it has provided an offer
of coverage for insured losses as soon as
possible following January 1, 2008.
Under section 50.21(e)(5)(ii), if an
insurer made an initial offer or offer of
renewal of coverage for insured losses
on or after December 26, 2007, for a
policy term becoming effective in 2008,
but the scope of the insured losses in
the offer was inconsistent with the
Reauthorization Act’s revised definition
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18137
of an act of terrorism, then an insurer
must make a new offer of coverage as
soon as possible following January 1,
2008. If an insurer made an initial offer
of coverage or offer of renewal before
December 26, 2007, for a policy term
becoming effective in 2008, and
coverage for insured losses was in
compliance with the Act and the
definition of an act of terrorism at the
time of the offer, then the insurer is not
required to make a new offer of coverage
before the policy is due to be renewed.
G. Federal Share of Compensation
(§§ 50.50 and 50.53)
These sections of the final rule
include other minor and conforming
changes to reflect the extension of the
Program and the inclusion of the cap
disclosure.
III. Procedural Requirements
This final rule is not a significant
regulatory action under the terms of
Executive Order 12866.
Regulatory Flexibility Act. Pursuant to
the Regulatory Flexibility Act (5 U.S.C.
chapter 6), it is hereby certified that this
final rule will not have a significant
economic impact on a substantial
number of small entities. The final rule
implements changes prescribed or
authorized by the Reauthorization Act.
TRIA requires all insurers, regardless of
size or sophistication, that receive direct
earned premiums for any type of
commercial property and casualty
insurance, to participate in the Program.
The Act also defines ‘‘property and
casualty insurance’’ to mean
commercial lines without any reference
to the size or scope of the commercial
entity. The rule allows all insurers,
whether large or small, to use existing
systems and business practices to
demonstrate compliance. The disclosure
and ‘‘make available’’ requirements are
required by the Act. In addition, the Act
now defines an ‘‘act of terrorism’’ to
include domestic terrorism. Any
economic impact associated with the
final rule flows from the Act and not the
final rule. However, the Act and the
Program are intended to provide
benefits to the U.S. economy and all
businesses, including small businesses,
by providing a Federal reinsurance-type
backstop to commercial property and
casualty insurers and spreading the risk
of insured losses resulting from an act
of terrorism. Accordingly, a regulatory
flexibility analysis is not required.
List of Subjects in 31 CFR Part 50
Terrorism risk insurance.
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Authority and Issuance
For the reasons set forth above, the
interim final rule amending 31 CFR Part
50, which was published at 73 FR 53359
on September 16, 2008, is adopted as a
final rule without change.
■
Kenneth E. Carfine,
Acting Under Secretary for Domestic Finance.
[FR Doc. E9–9007 Filed 4–20–09; 8:45 am]
BILLING CODE 4810–25–P?≤
ENVIRONMENTAL PROTECTION
AGENCY
40 CFR Part 52
[EPA–R05–OAR–2007–1045; FRL–8894–1]
Approval and Promulgation of Air
Quality Implementation Plans;
Minnesota
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AGENCY: Environmental Protection
Agency (EPA).
ACTION: Direct final rule.
SUMMARY: EPA is approving a sitespecific revision to the Minnesota sulfur
dioxide (SO2) State Implementation
Plan (SIP) for the Olmsted Waste to
Energy Facility (OWEF), located in
Rochester, Olmsted County, Minnesota.
In its September 28, 2007, submittal, the
Minnesota Pollution Control Agency
(MPCA) requested that EPA approve
certain conditions contained in OWEF’s
revised Federally enforceable Title V
operating permit into the Minnesota SO2
SIP. The request is approvable because
it satisfies the requirements of the Clean
Air Act (Act). The rationale for the
approval and other information are
provided in this rulemaking action.
DATES: This direct final rule will be
effective June 22, 2009, unless EPA
receives adverse comments by May 21,
2009. If adverse comments are received,
EPA will publish a timely withdrawal of
the direct final rule in the Federal
Register informing the public that the
rule will not take effect.
ADDRESSES: Submit your comments,
identified by Docket ID No. EPA–R05–
OAR–2007–1045, by one of the
following methods:
1. www.regulations.gov: Follow the
on-line instructions for submitting
comments.
2. E-mail: mooney.john@epa.gov.
3. Fax: (312) 886–5824.
4. Mail: John M. Mooney, Chief,
Criteria Pollutant Section, Air Programs
Branch (AR–18J), U.S. Environmental
Protection Agency, 77 West Jackson
Boulevard, Chicago, Illinois 60604.
5. Hand Delivery: John M. Mooney,
Chief, Criteria Pollutant Section, Air
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Programs Branch (AR–18J), U.S.
Environmental Protection Agency, 77
West Jackson Boulevard, Chicago,
Illinois 60604. Such deliveries are only
accepted during the Regional Office
normal hours of operation, and special
arrangements should be made for
deliveries of boxed information. The
Regional Office official hours of
business are Monday through Friday,
8:30 a.m. to 4:30 p.m. excluding Federal
holidays.
Instructions: Direct your comments to
Docket ID No. EPA–R05–OAR–2007–
1045. EPA’s policy is that all comments
received will be included in the public
docket without change and may be
made available online at
www.regulations.gov, including any
personal information provided, unless
the comment includes information
claimed to be Confidential Business
Information (CBI) or other information
whose disclosure is restricted by statute.
Do not submit information that you
consider to be CBI or otherwise
protected through www.regulations.gov
or e-mail. The www.regulations.gov Web
site is an ‘‘anonymous access’’ system,
which means EPA will not know your
identity or contact information unless
you provide it in the body of your
comment. If you send an e-mail
comment directly to EPA without going
through www.regulations.gov your
e-mail address will be automatically
captured and included as part of the
comment that is placed in the public
docket and made available on the
Internet. If you submit an electronic
comment, EPA recommends that you
include your name and other contact
information in the body of your
comment and with any disk or CD–ROM
you submit. If EPA cannot read your
comment due to technical difficulties
and cannot contact you for clarification,
EPA may not be able to consider your
comment. Electronic files should avoid
the use of special characters, any form
of encryption, and be free of any defects
or viruses.
Docket: All documents in the docket
are listed in the www.regulations.gov
index. Although listed in the index,
some information is not publicly
available, e.g., CBI or other information
whose disclosure is restricted by statute.
Certain other material, such as
copyrighted material, will be publicly
available only in hard copy. Publicly
available docket materials are available
either electronically in
www.regulations.gov or in hard copy at
the Environmental Protection Agency,
Region 5, Air and Radiation Division,
77 West Jackson Boulevard, Chicago,
Illinois 60604. This Facility is open
from 8:30 a.m. to 4:30 p.m., Monday
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through Friday, excluding legal
holidays. We recommend that you
telephone Christos Panos,
Environmental Engineer, at (312) 353–
8328 before visiting the Region 5 office.
FOR FURTHER INFORMATION CONTACT:
Christos Panos, Environmental
Engineer, Criteria Pollutant Section, Air
Programs Branch (AR–18J),
Environmental Protection Agency,
Region 5, 77 West Jackson Boulevard,
Chicago, Illinois 60604, (312) 353–8328,
panos.christos@epa.gov.
SUPPLEMENTARY INFORMATION:
Throughout this document whenever
‘‘we,’’ ‘‘us,’’ or ‘‘our’’ is used, we mean
EPA. This supplementary information
section is arranged as follows:
I. General Information
1. What is the Background for this Action?
2. What information did Minnesota submit,
and what were its requests?
3. Why is EPA Taking this Action?
4. What is a ‘‘Title I Condition?’’
II. What Action is EPA Taking?
III. Statutory and Executive Order Reviews
I. General Information
1. What is the Background for this
Action?
OWEF, a municipal waste combustor
facility owned by Olmsted County, is
located at 301 Silver Creek Road
Northeast, in Rochester, Olmsted
County, Minnesota. The facility is a
district heating and cooling plant as
well as an electric power generating
station. Energy is produced mainly
through combustion of municipal solid
waste in two mass burn combustion
units. The other emission units are a
diesel generator that provides
emergency electrical power and
occasional peaking capacity and an
auxiliary boiler used when the waste
combustor is going through
maintenance. Minnesota originally
submitted a Title V permit for OWEF as
part of the Minnesota SO2 SIP for
Olmsted County on November 4, 1998.
This Title V permit contains the SO2
emission limits and operating
restrictions imposed on the facility to
provide for attainment and maintenance
of the SO2 National Ambient Air Quality
Standards (NAAQS).
2. What information did Minnesota
submit, and what were its requests?
The SIP revision submitted by MPCA
on September 28, 2007, consists of
Minnesota Air Emission Permit No.
10900005–002, issued to OWEF on
August 23, 2007, which serves as a joint
Title I/Title V document. The state has
requested that EPA approve only the
portions of the permit cited as ‘‘Title I
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]]>Agencies
[Federal Register Volume 74, Number 75 (Tuesday, April 21, 2009)]
[Rules and Regulations]
[Pages 18135-18138]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-9007]
[[Page 18135]]
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DEPARTMENT OF THE TREASURY
31 CFR Part 50
RIN 1505-AB93
Terrorism Risk Insurance Program; Terrorism Risk Insurance
Program Reauthorization Act Implementation
AGENCY: Departmental Offices, Treasury.
ACTION: Final rule.
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SUMMARY: The Department of the Treasury (Treasury) is issuing this
final rule as part of its implementation of amendments made by the
Terrorism Risk Insurance Program Reauthorization Act of 2007
(Reauthorization Act) to Title I of the Terrorism Risk Insurance Act of
2002 (TRIA, or Act), as previously amended by the Terrorism Risk
Insurance Extension Act of 2005 (Extension Act). The Act established a
temporary Terrorism Risk Insurance Program (Program) that was scheduled
to expire on December 31, 2005, under which the Federal Government
shared the risk of insured losses from certified acts of terrorism with
commercial property and casualty insurers. The Extension Act extended
the Program through December 31, 2007, and made other changes. The
Reauthorization Act extended the Program through December 31, 2014,
revised the definition of an ``act of terrorism,'' and made other
changes. This final rule contains regulations that Treasury is issuing
to implement certain aspects of the Reauthorization Act. In particular,
the rule addresses mandatory availability (``make available'') and
disclosure requirements. An interim final rule with request for
comments was published in the Federal Register on September 16, 2008,
and generally incorporated the substance of interim guidance previously
issued by Treasury and published in the Federal Register. Since no
comments were received regarding the interim final rule, this final
rule adopts the text of the interim final rule without revision.
DATES: This final rule is effective May 21, 2009.
FOR FURTHER INFORMATION CONTACT: Howard Leikin, Deputy Director,
Terrorism Risk Insurance Program (202) 622-6770 (not a toll-free
number).
SUPPLEMENTARY INFORMATION:
I. Background
A. Terrorism Risk Insurance Act of 2002
On November 26, 2002, the President signed into law the Terrorism
Risk Insurance Act of 2002 (Pub. L. 107-297, 116 Stat. 2322). The Act
was effective immediately. The Act's purposes are to address market
disruptions, ensure the continued widespread availability and
affordability of commercial property and casualty insurance for
terrorism risk, and allow for a transition period for the private
markets to stabilize and build capacity while preserving State
insurance regulation and consumer protections.
Title I of the Act establishes a temporary Federal program of
shared public and private compensation for insured commercial property
and casualty losses resulting from an act of terrorism which, as
defined by the Act, is certified by the Secretary of the Treasury, in
concurrence with the Secretary of State and the Attorney General. The
Act authorizes Treasury to administer and implement the Terrorism Risk
Insurance Program (the Program), including the issuance of regulations
and procedures.
Each entity that meets the Act's definition of insurer must
participate in the Program. The amount of Federal payment for an
insured loss resulting from an act of terrorism is determined by
insurance company deductibles and excess loss sharing with the Federal
Government as specified in the Act and Treasury's implementing
regulations. An insurer's deductible is calculated based on the value
of direct earned premiums collected over certain prescribed calendar
periods. Once an insurer has met its individual deductible, the Federal
payments cover a percentage of the insured losses above the deductible,
all subject to an annual industry aggregate limit of $100 billion.
The Act gives Treasury authority to recoup Federal payments made
under the Program through policyholder surcharges. The Act reduces the
Federal share of compensation for insured losses that have been covered
under any other Federal program. The Act also contains provisions
designed to manage certain litigation arising from or relating to a
certified act of terrorism. Section 107 of the Act creates an exclusive
Federal cause of action, provides for claims consolidation in Federal
court, and contains a prohibition on Federal payments for punitive
damages under the Program. The Act provides the United States with the
right of subrogation with respect to any payment or claim paid by the
United States under the Program.
The Program was originally set to expire on December 31, 2005. On
December 22, 2005, the President signed into law the Terrorism Risk
Insurance Extension Act of 2005 (Pub. L. 109-144, 119 Stat. 2660),
which extended the Program through December 31, 2007, and made other
significant changes to TRIA that included a revised definition of
property and casualty insurance and creation of a new Program trigger
that prohibits payment of Federal compensation by Treasury unless the
aggregate industry insured losses resulting from a certified act of
terrorism exceed a certain amount ($100 million in 2007 and any Program
Year thereafter).
B. Terrorism Risk Insurance Program Reauthorization Act of 2007
Under the Extension Act, the Program was set to expire on December
31, 2007. On December 26, 2007, the President signed into law the
Terrorism Risk Insurance Program Reauthorization Act of 2007 (Pub. L.
110-160, 121 Stat. 1839), which extended the Program through December
31, 2014 (i.e., added additional Program Years to the Program). Other
provisions of the Reauthorization Act:
Revise the definition of ``act of terrorism'' to remove
the requirement that the act of terrorism be committed by an individual
acting on behalf of any foreign person or foreign interest in order to
be certified as an act of terrorism for purposes of the Act.
Define ``insurer deductible'' for all additional Program
Years as the value of an insurer's direct earned premiums for
commercial property and casualty insurance for the immediately
preceding calendar year multiplied by 20 percent.
Set the Federal share of compensation for insured losses
(subject to a $100,000,000 Program trigger) for all additional Program
Years at 85 percent of that portion of the amount of insured losses
that exceeds the applicable insurer deductible.
Require Treasury to submit a report to Congress and issue
final regulations for determining the pro rata share of insured losses
to be paid under the Program when aggregate insured losses exceed
$100,000,000,000.
Require the Secretary of the Treasury to notify Congress
not later than 15 days after the date of an act of terrorism as to
whether aggregate insured losses are estimated to exceed
$100,000,000,000.
Require for policies issued after the date of enactment,
that insurers provide clear and conspicuous disclosure to the
policyholder of the existence of the $100,000,000,000 cap at the time
of offer, purchase, and renewal of a policy (in addition to current
disclosure requirements).
Revise the recoupment provisions of the Act. For purposes
of recouping the Federal share of compensation under the Act, the
``insurance marketplace aggregate retention
[[Page 18136]]
amount'' for all additional Program Years is the lesser of
$27,500,000,000 and the aggregate amount, for all insurers, of insured
losses during each Program Year. With regard to mandatory recoupment of
the Federal share of compensation through policyholder surcharges,
collection is required within a certain schedule specified in the
Reauthorization Act. The limitation that surcharges not exceed 3
percent of the premium charged for property and casualty insurance
coverage under the policy is eliminated (but remains in the case of
discretionary recoupment).
Require Treasury to issue recoupment regulations within
180 days of enactment, and publish an estimate of aggregate insured
losses within 90 days after an act of terrorism.
Require the President's Working Group on Financial Markets
to perform an ongoing analysis regarding the long-term availability and
affordability of terrorism risk insurance and submit reports in 2010
and 2013.
Require the Comptroller General to examine and report on
the availability and affordability of insurance coverage for nuclear,
biological, chemical, and radiological terrorist events; the future
outlook for such coverage; and the capacity of insurers and State
workers compensation funds to manage the risk associated with nuclear,
biological, chemical, and radiological terrorist events.
Require the Comptroller General to study and report on the
question of whether there are specific markets in the United States
where there are unique capacity constraints on the amount of terrorism
risk insurance available.
C. The Interim Final Rule
The interim final rule was published in the Federal Register at 73
FR 53359 (September 16, 2008). It incorporated certain changes to 31
CFR Part 50 required by the amendments to TRIA in the Reauthorization
Act. The rule included various conforming changes, such as a change to
the definition of ``act of terrorism,'' and extension of applicable
insurer deductible amounts and the Federal share of compensation for
insured losses for additional Program Years.
This final rule, and the preceding interim final rule, reflect
interim guidance previously issued by Treasury in a notice published in
the Federal Register on January 29, 2008 (73 FR 5264), in order to
assist insurers, policyholders, and other interested parties in
complying with immediately applicable requirements of the
Reauthorization Act. Treasury consulted with the National Association
of Insurance Commissioners (NAIC) in developing the interim final rule.
No comments were submitted on the interim final rule and therefore,
Treasury is finalizing that rule by adopting the text without change.
II. Analysis of the Final Rule
The following briefly describes the content of the final rule. For
a more detailed discussion, please refer to the interim final rule
publication of September 16, 2008.
A. Definitions (Sec. 50.5)
The final rule incorporates revised definitions for the terms ``act
of terrorism,'' ``Program Years,'' ``insurer deductible,'' and
``Program Trigger event.''
To conform to the Reauthorization Act, the definition of ``act of
terrorism'' in Sec. 50.5(b)(1)(iv) is revised to remove the
requirement that the act be committed by an individual ``acting on
behalf of any foreign person or foreign interest'' in order to be
certified as an act of terrorism for purposes of TRIA.
The revisions to the definitions of ``Program Years,'' ``insurer
deductible,'' and ``Program Trigger event'' merely conform these
definitions to the changes in the Reauthorization Act.
B. Interim Guidance Safe Harbors (Sec. 50.7)
Section 50.7 of the final rule adds the Interim Guidance issued by
Treasury on January 22, 2008, and published at 73 FR 5264 (January 29,
2008) to the list of Interim Guidance documents Treasury has issued.
C. Disclosure (Sec. 50.12)
The Reauthorization Act made no change to the requirement in
section 103(b) of TRIA that insurers provide clear and conspicuous
disclosure to the policyholder of the premium charged for insured
losses covered by the Program and the Federal share of compensation for
insured losses under the Program. However, because an ``insured loss''
is defined, in part, as a loss resulting from an act of terrorism, the
revision of the definition of an act of terrorism to eliminate the
``foreign person or interest'' element (i.e., to add what is often
referred to as ``domestic terrorism'') may affect the premium charged
for insured losses and an insurer's compliance with the disclosure
requirements.
Section 50.12(b)(2) of the final rule states that if an insurer
makes an initial offer of coverage, or offers to renew an existing
policy on or after December 26, 2007, the disclosure provided to the
policyholder must reflect the premium charged for insured losses
covered by the Program consistent with the definition of an act of
terrorism as amended by the Reauthorization Act. As a general matter,
the requirement to make available coverage for insured losses must be
met according to the provisions of the Act in effect at the time the
offer is made. The disclosure must be consistent with the offer that is
made.
Section 50.12(e)(3) of the final rule provides that if an insurer
made available coverage for insured losses in a new policy or policy
renewal in 2007 or in the first three months of 2008 for coverage
becoming effective in 2008, but did not provide a disclosure at the
time of offer, purchase or renewal of the policy, then the insurer must
be able to demonstrate to Treasury's satisfaction that it has provided
a disclosure as soon as possible following January 1, 2008. Treasury
considers March 31, 2008, to be the latest reasonable date for
compliant disclosures to policyholders, barring unforeseen or unusual
circumstances. If the March 31, 2008, date was not met by an insurer,
Treasury will expect the insurer to demonstrate, when submitting a
claim for the Federal share of compensation under the Program, why it
could not comply by that date.
D. Cap Disclosure (Sec. Sec. 50.15 and 50.11)
Section 103(e)(2) of TRIA provides that if aggregate insured losses
exceed $100,000,000,000 during any Program Year, Treasury shall not
make any payment for any portion of the amount of such losses that
exceeds $100,000,000,000, and no insurer that has met its insurer
deductible shall be liable for the payment of any portion of the amount
of such losses that exceeds $100,000,000,000. Section 103(b)(3) of
TRIA, as amended by the Reauthorization Act, requires an insurer to
provide a clear and conspicuous disclosure to the policyholder of the
existence of the $100,000,000,000 cap under section 103(e)(2). The
requirement applies to ``any policy that is issued after the date of
enactment'' of the Reauthorization Act, or December 26, 2007. The
disclosure must be made at the time of offer, purchase, and renewal of
the policy.
New section 50.15 in the final rule addresses these requirements.
Section 50.11 also includes a minor change to clarify that the term
``cap disclosure'' in the regulations refers to this disclosure
required by section 103(b)(3) of the Act.
For policies issued after December 26, 2007, this cap disclosure
must initially be provided to the policyholder at the
[[Page 18137]]
first occurrence thereafter of an offer, purchase or renewal. The final
rule provides that, for policies issued after December 26, 2007, if an
insurer does not provide a cap disclosure by the time of the first
offer, purchase or renewal of the policy after December 26, 2007, then
the insurer must be able to demonstrate to Treasury's satisfaction that
it has provided the disclosure as soon as possible following December
26, 2007. Treasury considers March 31, 2008, to be the latest
reasonable date for providing the cap disclosure (including
reprocessing of policies, if necessary, where a compliant disclosure
was not possible), barring unforeseen or unusual circumstances. If the
March 31, 2008, date was not met by an insurer, Treasury will expect
the insurer to demonstrate, when submitting a claim for the Federal
share of compensation under the Program, why it could not comply by
that date.
E. Use of Model Forms (Sec. 50.17)
Section 50.17(e) of the final rule adds a provision specifically
addressing the cap disclosure. In addition, a minor refinement of
section 50.17(a)(2) has been made in order to more accurately reflect
section 105(c) of the Act.
On December 19, 2007, the NAIC modified Model Disclosure Forms No.
1 and 2 to satisfy the disclosure requirements of section 103(b) of the
Act, including the cap disclosure requirement under section 103(b)(3).
The new forms are found on the Treasury Web site at https://www.treasury.gov/trip. However, insurers are not required to use the
NAIC forms, and may use other means to comply with the disclosure
requirements.
F. Make Available (Sec. Sec. 50.20 and 50.21)
The Reauthorization Act made no change to the TRIA ``make
available'' requirements in section 103(c). However, because the ``make
available'' requirements apply to insured losses, and an ``insured
loss'' is defined, in part, as a loss resulting from an act of
terrorism, the revision of the definition of an act of terrorism in the
Reauthorization Act to add domestic terrorism may have an impact on an
insurer's compliance with the ``make available'' requirements.
The Reauthorization Act was effective immediately upon enactment,
December 26, 2007. The TRIA regulations in 31 CFR 50.21(a) generally
provide that the ``make available'' requirements apply at the time of
the initial offer of coverage or offer of renewal of an existing
policy. Thus, any initial offers of coverage or offers of renewal of
existing policies, made on or after the date of enactment, must be
consistent with the revised definition of act of terrorism. In
addition, if an insurer makes an offer of coverage on or after December
26, 2007 on a policy that is in mid term, then the insurer must make
available coverage for insured losses consistent with the revised
definition of an act of terrorism. These general rules are included in
revised section 50.21(b) of the final rule.
Section 50.21 addresses in detail insurer implementation of the
``make available'' requirements under various circumstances as a result
of enactment of the Reauthorization Act. Treasury considers March 31,
2008, to be the latest reasonable date for compliant offers of coverage
(including reprocessing of policies, if necessary, where a compliant
post-December 26, 2007 offer was not possible), barring unforeseen or
unusual circumstances. If the March 31, 2008, date was not met by an
insurer, Treasury will expect the insurer to demonstrate, when
submitting a claim for the Federal share of compensation under the
Program, why it could not comply by that date.
Section 50.21(c)(2) addresses policies where the coverage for
insured losses expired as of December 31, 2007, but other coverage
under the policy continued in force in 2008. An insurer must make
coverage for insured losses available for the remaining portion of the
policy term and, under section 50.21(e)(4), an insurer must be able to
demonstrate to Treasury's satisfaction that it has offered such
coverage as soon as possible following January 1, 2008. However, if a
policyholder had declined an offer made by an insurer for coverage for
insured losses expiring as of December 31, 2007, then the insurer is
not required to make a new offer of coverage before the policy is due
to be renewed.
Section 50.21(e)(5) addresses situations where coverage became
effective in 2008. Section 50.21(e)(5)(i) requires that if an insurer
processed a new policy or policy renewal in 2007, or in the first three
months of 2008, for coverage becoming effective in 2008, but did not
make available coverage for insured losses, then the insurer must be
able to demonstrate to Treasury's satisfaction that it has provided an
offer of coverage for insured losses as soon as possible following
January 1, 2008.
Under section 50.21(e)(5)(ii), if an insurer made an initial offer
or offer of renewal of coverage for insured losses on or after December
26, 2007, for a policy term becoming effective in 2008, but the scope
of the insured losses in the offer was inconsistent with the
Reauthorization Act's revised definition of an act of terrorism, then
an insurer must make a new offer of coverage as soon as possible
following January 1, 2008. If an insurer made an initial offer of
coverage or offer of renewal before December 26, 2007, for a policy
term becoming effective in 2008, and coverage for insured losses was in
compliance with the Act and the definition of an act of terrorism at
the time of the offer, then the insurer is not required to make a new
offer of coverage before the policy is due to be renewed.
G. Federal Share of Compensation (Sec. Sec. 50.50 and 50.53)
These sections of the final rule include other minor and conforming
changes to reflect the extension of the Program and the inclusion of
the cap disclosure.
III. Procedural Requirements
This final rule is not a significant regulatory action under the
terms of Executive Order 12866.
Regulatory Flexibility Act. Pursuant to the Regulatory Flexibility
Act (5 U.S.C. chapter 6), it is hereby certified that this final rule
will not have a significant economic impact on a substantial number of
small entities. The final rule implements changes prescribed or
authorized by the Reauthorization Act. TRIA requires all insurers,
regardless of size or sophistication, that receive direct earned
premiums for any type of commercial property and casualty insurance, to
participate in the Program. The Act also defines ``property and
casualty insurance'' to mean commercial lines without any reference to
the size or scope of the commercial entity. The rule allows all
insurers, whether large or small, to use existing systems and business
practices to demonstrate compliance. The disclosure and ``make
available'' requirements are required by the Act. In addition, the Act
now defines an ``act of terrorism'' to include domestic terrorism. Any
economic impact associated with the final rule flows from the Act and
not the final rule. However, the Act and the Program are intended to
provide benefits to the U.S. economy and all businesses, including
small businesses, by providing a Federal reinsurance-type backstop to
commercial property and casualty insurers and spreading the risk of
insured losses resulting from an act of terrorism. Accordingly, a
regulatory flexibility analysis is not required.
List of Subjects in 31 CFR Part 50
Terrorism risk insurance.
[[Page 18138]]
Authority and Issuance
0
For the reasons set forth above, the interim final rule amending 31 CFR
Part 50, which was published at 73 FR 53359 on September 16, 2008, is
adopted as a final rule without change.
Kenneth E. Carfine,
Acting Under Secretary for Domestic Finance.
[FR Doc. E9-9007 Filed 4-20-09; 8:45 am]
BILLING CODE 4810-25-P?>
