15 U.S.C. § 3901 — Definitions

Page 2088 TITLE 15—COMMERCE AND TRADE § 3809 § 3809. Authorization of appropriations; required funding There are authorized to be appropriated to the Secretary for purposes of carrying out this chap- ter, not to exceed $3,000,000 for the fiscal year ending September 30, 1982, not less than one-half of which shall be for the purpose of making loans under section 3806(b) of this title; not to exceed $5,000,000 for the fiscal year ending Sep- tember 30, 1983, not less than one-half of which shall be for the purpose of making loans under section 3806(b) of this title; not to exceed $5,000,000 for the fiscal year ending September 30, 1984, not less than one-half of which shall be for the purpose of making loans under section 3806(b) of this title; and such sums as may be necessary for the fiscal years ending September 30, 1985, and September 30, 1986. Any amount ap- propriated pursuant to this section shall remain available until expended. (Pub. L. 96–512, § 10, Dec. 12, 1980, 94 Stat. 2833.) § 3810. Relationship to other laws (a) Modification or waiver Nothing in this chapter shall be construed as authorizing the Secretary or any other official with respect to any activity pursuant to this chapter to modify or waive the application of any Federal, State or local laws dealing with the production, transportation, storage, safety, use or pricing of methane. (b) Promulgation of rules Nothing in this chapter shall be construed as granting the Secretary or any other Federal of- ficial any authority to promulgate rules of gen- eral application to regulate the production, transportation, storage, safety, use or pricing of methane as a transportation fuel or vehicles which use methane as a transportation fuel. (Pub. L. 96–512, § 11, Dec. 12, 1980, 94 Stat. 2833.) CHAPTER 65—LIABILITY RISK RETENTION Sec. 3901. Definitions. 3902. Risk retention groups. 3903. Purchasing groups. 3904. Securities laws. 3905. Clarification concerning permissible State authority. 3906. Injunctive orders issued by United States dis- trict courts. § 3901. Definitions (a) As used in this chapter— (1) ‘‘insurance’’ means primary insurance, excess insurance, reinsurance, surplus lines in- surance, and any other arrangement for shift- ing and distributing risk which is determined to be insurance under applicable State or Fed- eral law; (2) ‘‘liability’’— (A) means legal liability for damages (in- cluding costs of defense, legal costs and fees, and other claims expenses) because of inju- ries to other persons, damage to their prop- erty, or other damage or loss to such other persons resulting from or arising out of— (i) any business (whether profit or non- profit), trade, product, services (including professional services), premises, or oper- ations, or (ii) any activity of any State or local government, or any agency or political subdivision thereof; and (B) does not include personal risk liability and an employer’s liability with respect to its employees other than legal liability under the Federal Employers’ Liability Act (45 U.S.C. 51 et seq.); (3) ‘‘personal risk liability’’ means liability for damages because of injury to any person, damage to property, or other loss or damage resulting from any personal, familial, or household responsibilities or activities, rather than from responsibilities or activities re- ferred to in paragraphs (2)(A) and (2)(B); (4) ‘‘risk retention group’’ means any cor- poration or other limited liability associa- tion— (A) whose primary activity consists of as- suming, and spreading all, or any portion, of the liability exposure of its group members; (B) which is organized for the primary pur- pose of conducting the activity described under subparagraph (A); (C) which— (i) is chartered or licensed as a liability insurance company under the laws of a State and authorized to engage in the busi- ness of insurance under the laws of such State; or (ii) before January 1, 1985, was chartered or licensed and authorized to engage in the business of insurance under the laws of Bermuda or the Cayman Islands and, be- fore such date, had certified to the insur- ance commissioner of at least one State that it satisfied the capitalization require- ments of such State, except that any such group shall be considered to be a risk re- tention group only if it has been engaged in business continuously since such date and only for the purpose of continuing to provide insurance to cover product liabil- ity or completed operations liability (as such terms were defined in this section be- fore October 27, 1986); (D) which does not exclude any person from membership in the group solely to pro- vide for members of such a group a competi- tive advantage over such a person; (E) which— (i) has as its owners only persons who comprise the membership of the risk re- tention group and who are provided insur- ance by such group; or (ii) has as its sole owner an organization which has as— (I) its members only persons who com- prise the membership of the risk reten- tion group; and (II) its owners only persons who com- prise the membership of the risk reten- tion group and who are provided insur- ance by such group; (F) whose members are engaged in busi- nesses or activities similar or related with respect to the liability to which such mem- Page 2089 TITLE 15—COMMERCE AND TRADE § 3901 1 So in original. The period probably should be a semicolon. bers are exposed by virtue of any related, similar, or common business, trade, product, services, premises, or operations; (G) whose activities do not include the provision of insurance other than— (i) liability insurance for assuming and spreading all or any portion of the similar or related liability exposure of its group members; and (ii) reinsurance with respect to the simi- lar or related liability exposure of any other risk retention group (or any member of such other group) which is engaged in businesses or activities so that such group (or member) meets the requirement de- scribed in subparagraph (F) for member- ship in the risk retention group which pro- vides such reinsurance; and (H) the name of which includes the phrase ‘‘Risk Retention Group’’.1 (5) ‘‘purchasing group’’ means any group which— (A) has as one of its purposes the purchase of liability insurance on a group basis; (B) purchases such insurance only for its group members and only to cover their simi- lar or related liability exposure, as described in subparagraph (C); (C) is composed of members whose busi- nesses or activities are similar or related with respect to the liability to which mem- bers are exposed by virtue of any related, similar, or common business, trade, product, services, premises, or operations; and (D) is domiciled in any State; (6) ‘‘State’’ means any State of the United States or the District of Columbia; and (7) ‘‘hazardous financial condition’’ means that, based on its present or reasonably antici- pated financial condition, a risk retention group is unlikely to be able— (A) to meet obligations to policyholders with respect to known claims and reason- ably anticipated claims; or (B) to pay other obligations in the normal course of business. (b) Nothing in this chapter shall be construed to affect either the tort law or the law gov- erning the interpretation of insurance contracts of any State, and the definitions of liability, personal risk liability, and insurance under any State law shall not be applied for the purposes of this chapter, including recognition or quali- fication of risk retention groups or purchasing groups. (Pub. L. 97–45, § 2, Sept. 25, 1981, 95 Stat. 949; Pub. L. 98–193, Dec. 1, 1983, 97 Stat. 1344; Pub. L. 99–563, §§ 3, 4, 12(b), Oct. 27, 1986, 100 Stat. 3170, 3171, 3177.) Editorial Notes REFERENCES IN TEXT The Federal Employers’ Liability Act (45 U.S.C. 51 et seq.), referred to in subsec. (a)(2)(B), is act Apr. 22, 1908, ch. 149, 35 Stat. 65, which is classified generally to chapter 2 (§ 51 et seq.) of Title 45, Railroads. For com- plete classification of this Act to the Code, see Short Title note set out under section 51 of Title 45 and Ta- bles. CODIFICATION October 27, 1986, referred to in subsec. (a)(4)(C)(ii), was in the original ‘‘the date of the enactment of the Risk Retention Act of 1986’’, which was translated as meaning the date of enactment of the Risk Retention Amendments of 1986 to reflect the probable intent of Congress. AMENDMENTS 1986—Subsec. (a)(1) to (3). Pub. L. 99–563, § 3(a), redes- ignated par. (2) as (1), added pars. (2) and (3), and struck out former par. (1) defining completed operations liabil- ity, and former par. (3) defining product liability. Subsec. (a)(4). Pub. L. 99–563, § 4(a)(1), struck out ‘‘taxable as a corporation, or as an insurance company, formed under the laws of any State, Bermuda, or the Cayman Islands’’ after ‘‘association’’ in introductory provisions. Subsec. (a)(4)(A). Pub. L. 99–563, § 4(a)(2), substituted ‘‘liability exposure’’ for ‘‘product liability or completed operations liability risk exposure’’. Subsec. (a)(4)(C). Pub. L. 99–563, § 4(a)(3), amended subpar. (C) generally. Prior to amendment, subpar. (C) read as follows: ‘‘which is chartered or licensed as an insurance company and authorized to engage in the business of insurance under the laws of any State, or which is so chartered or licensed and authorized before January 1, 1985, under the laws of Bermuda or the Cay- man Islands, except that any group so chartered or li- censed and authorized under the laws of Bermuda or the Cayman Islands shall be considered to be a risk re- tention group only after it has certified to the insur- ance commissioner of at least one State that it satis- fies the capitalization requirements of such State;’’. Subsec. (a)(4)(E) to (H). Pub. L. 99–563, § 4(a)(4), added subpars. (E) to (H), and struck out former subpar. (E) which read as follows: ‘‘which is composed of member each of whose principal activity consists of the manu- facture, design, importation, distribution, packaging, labeling, lease, or sale of a product or products;’’. Subsec. (a)(5). Pub. L. 99–563, § 4(b), amended par. (5) generally. Prior to amendment, par. (5) read as follows: ‘‘ ‘purchasing group’ means any group of persons which has as one of its purposes the purchase of product li- ability or completed operations liability insurance on a group basis;’’. Subsec. (a)(7). Pub. L. 99–563, § 3(b), added par. (7). Subsec. (b). Pub. L. 99–563, § 12(b), substituted ‘‘liabil- ity, personal risk liability, and insurance’’ for ‘‘product liability and product liability insurance’’. 1983—Subsec. (b). Pub. L. 98–193 substituted provision that nothing in this chapter would be construed to af- fect either the tort law or the law governing the inter- pretation of insurance contracts of any State, and that the definitions of product liability and product liability insurance under any State law would not be applied for the purposes of this chapter, including recognition or qualification of risk retention groups or purchasing groups for provision that the definition of product li- ability in this section would not be construed to affect either the tort law or the law governing the interpreta- tion of insurance contracts of any State. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1986 AMENDMENT; APPLICABILITY Pub. L. 99–563, § 11(a), (b), and (c)(2), Oct. 27, 1986, 100 Stat. 3177, provided that: ‘‘(a) GENERAL RULE.—Subject to subsection (b), this Act [see Short Title of 1986 Amendment note below] shall take effect on the date of its enactment [Oct. 27, 1986]. ‘‘(b) SPECIAL RULE REGARDING FEASIBILITY STUDY.— The provisions of section 3(d) of the Liability Risk Re- tention Act of 1986 (as added by section 5(b) of this Act) Page 2090 TITLE 15—COMMERCE AND TRADE § 3902 [15 U.S.C. 3902(d)], relating to the submission of a feasi- bility study, shall not apply with respect to any line or classification of liability insurance which— ‘‘(1) was defined in the Product Liability Risk Re- tention Act of 1981 [Pub. L. 97–45, which enacted this chapter] before the date of the enactment of this Act [Oct. 27, 1986]; and ‘‘(2) was offered before such date of enactment by any risk retention group which has been chartered and operating for not less than 3 years before such date of enactment. ‘‘(c) RULE REGARDING POLLUTION LIABILITY.— ‘‘(2) Nothing in this Act shall be construed, inter- preted or applied to diminish the obligations of any person to establish or maintain evidence of financial responsibility or otherwise comply with any of the requirements of Federal environmental laws, includ- ing but not limited to the Comprehensive Environ- mental Response, Compensation and Liability Act of 1980 [42 U.S.C. 9601 et seq.] and the Solid Waste Dis- posal Act [42 U.S.C. 6901 et seq.].’’ SHORT TITLE OF 1986 AMENDMENT Pub. L. 99–563, § 1, Oct. 27, 1986, 100 Stat. 3170, provided that: ‘‘This Act [enacting sections 3905 and 3906 of this title, amending this section, sections 3902 and 3903 of this title, and sections 9671 to 9675 of Title 42, The Pub- lic Health and Welfare, enacting provisions set out as notes under this section and section 9671 of Title 42, and amending provisions set out as a note under this sec- tion] may be cited as the ‘Risk Retention Amendments of 1986’.’’ SHORT TITLE Pub. L. 97–45, § 1, Sept. 25, 1981, 95 Stat. 949, as amend- ed by Pub. L. 99–563, § 12(a), Oct. 27, 1986, 100 Stat. 3177, provided that: ‘‘This Act [enacting this chapter] may be cited as the ‘Liability Risk Retention Act of 1986’.’’ OVERSIGHT OF IMPLEMENTATION; REPORT TO CONGRESS Pub. L. 99–563, § 10, Oct. 27, 1986, 100 Stat. 3176, pro- vided that: ‘‘(a) IN GENERAL.—(1) Not later than September 1, 1987, and not later than September 1, 1989, the Sec- retary of Commerce shall submit reports to the Con- gress concerning implementation of this Act [see Short Title of 1986 Amendment note above]. ‘‘(2) Such report shall be based on— ‘‘(A) the Secretary’s consultation with State insur- ance commissioners, risk retention groups, pur- chasing groups, and other interested parties; and ‘‘(B) the Secretary’s analysis of other information available to the Secretary. ‘‘(b) CONTENTS OF THE REPORT.—The report shall de- scribe the Secretary’s views concerning— ‘‘(1) the contribution of this Act [see Short Title of 1986 Amendment note above] toward resolution of problems relating to the unavailability and unaffordability of liability insurance; ‘‘(2) the extent to which the structure of regulation and preemption established by this Act is satisfac- tory; ‘‘(3) the extent to which, in the implementation of this Act, the public is protected from unsound finan- cial practices and other commercial abuses involving risk retention groups and purchasing groups; ‘‘(4) the causes of any financial difficulties of risk retention groups and purchasing groups; ‘‘(5) the extent to which risk retention groups and purchasing groups have been discriminated against under State laws, practices, and procedures contrary to the provisions and underlying policy of this Act and the Product Liability Risk Retention Act (as amended by this Act) [Pub. L. 97–45, which enacted this chapter]; and ‘‘(6) such other comments and conclusions as the Secretary deems relevant to assessment of the imple- mentation of this Act.’’ § 3902. Risk retention groups (a) Exemptions from State laws, rules, regula- tions, or orders Except as provided in this section, a risk re- tention group is exempt from any State law, rule, regulation, or order to the extent that such law, rule, regulation, or order would— (1) make unlawful, or regulate, directly or indirectly, the operation of a risk retention group except that the jurisdiction in which it is chartered may regulate the formation and operation of such a group and any State may require such a group to— (A) comply with the unfair claim settle- ment practices law of the State; (B) pay, on a nondiscriminatory basis, ap- plicable premium and other taxes which are levied on admitted insurers and surplus lines insurers, brokers, or policyholders under the laws of the State; (C) participate, on a nondiscriminatory basis, in any mechanism established or au- thorized under the law of the State for the equitable apportionment among insurers of liability insurance losses and expenses in- curred on policies written through such mechanism; (D) register with and designate the State insurance commissioner as its agent solely for the purpose of receiving service of legal documents or process; (E) submit to an examination by the State insurance commissioners in any State in which the group is doing business to deter- mine the group’s financial condition, if— (i) the commissioner of the jurisdiction in which the group is chartered has not begun or has refused to initiate an exam- ination of the group; and (ii) any such examination shall be co- ordinated to avoid unjustified duplication and unjustified repetition; (F) comply with a lawful order issued— (i) in a delinquency proceeding com- menced by the State insurance commis- sioner if there has been a finding of finan- cial impairment under subparagraph (E); or (ii) in a voluntary dissolution pro- ceeding; (G) comply with any State law regarding deceptive, false, or fraudulent acts or prac- tices, except that if the State seeks an in- junction regarding the conduct described in this subparagraph, such injunction must be obtained from a court of competent jurisdic- tion; (H) comply with an injunction issued by a court of competent jurisdiction, upon a peti- tion by the State insurance commissioner alleging that the group is in hazardous fi- nancial condition or is financially impaired; and (I) provide the following notice, in 10-point type, in any insurance policy issued by such group: ‘‘NOTICE ‘‘This policy is issued by your risk retention group. Your risk retention group may not be