TITLE II DISTRICT ADMINISTRATIVE CODE

2.20.100 General Statement Regarding Risk

The District recognizes that through its services and statutory obligations it will be unavoidably exposed to a variety of risks of loss from occurrences involving damage to property, loss of income, extra expenses, liability to others, and injury to employees. The District is self-insured through a risk sharing pool with other similar water agencies. Both minor and significant losses represent cash and/or other asset losses to the District. It is the objective of the Board of Directors to limit these losses to protect District ratepayers from inordinate rate increases to replace said assets.

2.20.110 Statement of Risk Management Program Goals and Objectives

The goals and objectives of the District's Risk Management Program are to:

1. To protect the District against the financial consequences of accidental losses which may be catastrophic in nature.
2. To protect the District's assets.
3. To safeguard that all exposures to financial loss are discovered and treated.
4. To reduce other financial losses by using efficient reduction procedures.
5. To ensure a safe environment for employees and for members of the public who encounter these employees as services are provided.
6. To minimize the possible interruption of vital public services.
7. To reduce the cost of accidents, including insurance premiums, through effective safety programs and practices.
8. To periodically reassess the District's various exposures to loss, ability to bear financial loss, and the adequacy of its risk avoidance, prevention, reduction, retention, and transfer programs.
9. To minimize the long-term costs of all risk management activities, through cost-effective loss control, claims handling, and risk financing.

2.20.120 General Statement of Risk Management Policies

The general Risk Management policies of the District are that:

1. The District will provide safe working conditions for its employees. Under no circumstances will the risk of serious injury or death of employees be considered an acceptable risk.
2. The Risk Manager shall have responsibility and authority to administer the District's risk management program, including insurance procurement. The Risk Manager shall be assisted by any staff or consultants retained to provide risk management assistance.
3. The costs of risk shall be minimized through the sound application of risk avoidance, prevention, reduction, retention and transfer techniques.
4. The Risk Manager will periodically assess, subject to governing body appropriations, the District's exposures to risk and the effectiveness of existing risk management programs and make recommendations for improvements.
5. Procurement of all District insurance will be administered by the Association of California Water Agencies Joint Powers Insurance Authority (JPIA) with District participation of JPIA policy development through membership on the Board of Directors of the JPIA.
6. Self-insured retentions and reserves shall be maintained and budgeted within a separate fund. No expenditures for self-insurance shall be included in the District’s budget.
7. Administrative policies, procedures and guidelines will be established to avoid, prevent, reduce, retain or transfer risks.

2.20.125 General Manager as Risk Manager

The General Manager shall serve as the District's designated Risk Manager, per Section 2.10.245.

2.20.130 Risk Management Duties of District Counsel

The risk management duties of the District Counsel are to:

1. Coordinate with JPIA legal counsel assigned to claims.
2. To review all agreements, contracts, deeds, easements, and other legal documents for form and compliance to the insurance, hold harmless, and indemnification standards of the District.
3. To resolve and/or defend claims and suits, as required, in consultation with the JPIA.

2.20.135 District Health and Safety Committee

The Health and Safety Committee shall consist of the Risk Manager, Safety Officer, members of the Personnel Committee, and one staff member. The duties of the Committee are defined in the District’s Health and Safety Manual.

2.20.200 Risk Management Considerations for the Board

Board members, like employees, may incur liability for the District and may be held liable for what they both say and do, either individually or collectively. There may be either case law or statutory responsibility for certain behaviors. The following is a description of the most common legal areas of concern:

1. There are several conflict-of-interest prohibitions outlined in State statutes. Whether legally mandated or not, Directors should not vote on a matter where the Director's financial interest is affected.
2. During the pendency of any quasi-judicial proceeding, no member of the Board should engage in ex parte (outside the hearing) communications with proponents or opponents about a matter in the proceeding.
3. Board members have a legal obligation to become familiar with the Ralph M. Brown Act and to not participate in meetings in violation thereof.
4. There are several risk reduction checklists that the Board should use when considering draft ordinances and other proposed legislative action. These checklists are found in Sections 2.20.201 through 2.20.206.

2.20.201 Equal Protection Checklist

• Does the action treat different groups of people differently? If so, what standard will the classification be judged?
• Is the classification justifiable under the appropriate standard?
• Will an ordinance or policy which is neutral on its face have a discriminatory impact when applied?
• Does the Board have a sufficient basis in fact in support of the action and/or classification?

2.20.202 Substantive Due Process Checklist

• Does the District have a legitimate goal in pursuing its proposed course of action?
• What is the nature of the "right" being affected by the District's decision?
• Is it a right which is deemed to be fundamental? If so, does the District have a compelling interest for taking the action?
• If a fundamental right is involved, is there another, less drastic way for the District to achieve its goal which will create less interference with the constitutional right?
• If it is an economic, social or business regulation, is there a rational relationship between the regulation and the governmental goal?
• Does the regulation create an irrebuttable presumption?

2.20.203 Procedural Due Process Checklist

• Will the proposed action or ordinance deprive a person of a "liberty" or "property" interest? If so, has that person been afforded due process?
• Has the person been given notice?
• Has the person been given an opportunity to be heard?
• Has the person been given a statement of reasons for the District's decision?
• Has the District complied with applicable statutory, ordinance or contract provisions requiring due process?
• Does the proposed regulation give sufficient notice to persons of its requirements?
• Are the terms used in the regulation defined?
• Does the regulation provide clear standards for the conduct of the officials who must enforce it?

2.20.204 Licenses and Permits Due Process Checklist

• Is there an ordinance dealing with the granting or revocation of the license or permit?
• Is the ordinance clear and unambiguous?
• Has the applicant for a license or permit been given reasonable information as to the items which must be submitted to the District prior to issuance?
• Does the District have the authority to legislate in the area for which the license or permit is to be granted?
• Are the requirements for issuance of a license or permit reasonable and have they been consistently applied?
• Do the items required prior to the issuance of a license or permit bear some reasonable relationship to the activity to be allowed?
• Has the District sought to limit the number of persons who can receive the license or permit?
• If there is a limitation in the number of persons who may receive the license or permit, is there statutory authority for such a limitation?
• Has an applicant for a license or permit been given an opportunity to have a hearing if the granting of a license or permit has been denied?
• Has a hearing been held prior to the suspension or revocation of an existing license or permit?
• If in an area with a limited number of licenses or permits, can the District present a reason for the reduction, and has the identity of the business which will lose its license or permit been determined in a non-discriminatory manner?
• Is the refusal to issue, or revocation of, the license or permit justified, or solely in response to public pressure?
• Has the inspection or regulatory system of the District been enforced in a non-discriminatory manner, or is the person being singled out for enforcement?
• Do the fees charged for licenses and permits bear a reasonable relation to the cost of enforcement?

2.20.205 Inverse Condemnation Checklist

• Is the regulation of property being done to advance a legitimate public interest?
• Will a particular regulation deprive a property owner of every economically viable use of his/her property?
• Has the property owner taken actions such as expenditure of funds in reliance upon a District action, such as granting of a building or utility permit?
• Does the District action constitute an illegal or unwarranted physical intrusion on the property?
• Have the officials compiled a sufficient record setting forth the reasons for the action?
• Is there a less intrusive way of achieving the same goal?

2.20.206 General Ordinance Adoption Checklist

• Have all the statutory or local procedural requirements been followed?
• Is the ordinance a subject upon which the District has Federal or State constitutional or statutory authority to act?
• As drafted, does the ordinance treat all similarly situated persons in the same way?
• Are the terms of the ordinance clear enough so that people do not have to guess at its meaning?
• Does the ordinance clearly state what a person must do to comply with it?
• Does the ordinance define special or broad terms which it uses?
• Does the ordinance set sufficient standards for the officials who must enforce it, or does it give the enforcing agent too much discretion in deciding whether or not to do something?
• Does the ordinance require that notice or hearing be given to a person whose rights are affected by it?
• Does the ordinance require the official who is deciding under it to give notice of that decision and the reasons for it within a reasonable time?
• Can the local government achieve its goal by using a less restrictive or intrusive means?
• Do the ordinance provisions constitute a "prior restraint" on a person's First Amendment rights?
• Has the District created an adequate record or compiled sufficient evidence in order to support its findings and conclusions for enacting the ordinance?
• Is the ordinance too broad?
• Does the ordinance so heavily burden a per-son's use of his property that it might be considered a taking?
• If an ordinance is changing an existing local regulation, does it give persons a reasonable amount of time to comply with the changes?
• Has District Counsel and Risk Manager been consulted before taking action which might result in claims against the District or litigation?
• Have similar ordinances been upheld elsewhere?
• If an ordinance is challenged, would you consider suspending it pending a judicial determination?

2.20.300 Contract Guidelines

The following contract guidelines have been established to ensure that the District's exposures and risks are reasonably treated in all agreements, contracts, leases, settlements, etc.

2.20.305 Consulting Contracts

Consultant services should be procured by written contract and accompanying purchase order to track consultant costs. Contracts for services that should be in writing include, but are not limited to, management and planning studies, engineering, legal counsel, labor negotiations, plans examination, employment assessment centers, executive search, etc.

2.20.310 Minor Construction Contracts

Contracts for minor construction projects (e.g. under $25,000) may be procured by written "short form" contract and accompanying purchase order to track project costs. Contracts for services that are to be in writing include, but are not limited to, facility or infrastructure repair or remodeling, etc.

2.20.315 Consulting and Minor Construction Contracts

To avoid, reduce, or transfer the risk of loss, for contracts for consulting services the following policies are to be applied in a manner consistent with the recommendations contained in the JPIA publication "Risk Transfer Procedures for ACWA/JPIA Member Districts":

1. Workers Compensation Insurance: By his signature hereunder, contractor certifies that he is aware of the provisions of Section 3700 of the Labor Code which require every employer to be insured against liability for workers compensation or to undertake self-insurance in accordance with the provisions of that code, and he will comply with such provisions before commencing the performance of the work of this contract.
2. Indemnification: Contractor shall indemnify and hold harmless and defend District, its directors, employees, agents or volunteers, and each of them from and against:
   1. All claims, demands, causes of action, damages, costs, expenses, losses or liabilities, in law or in equity, of every kind and nature whatsoever for, but not limited to, injury to or death of any person including District and/or contractor, or any directors, officers, employees, agents or volunteers of District or contractor, and damages to or destruction of property of any person, including but not limited to, District and/or contractor and their directors, officers, employees, agents or volunteers, arising out of or in any manner directly or indirectly connected with the work to be performed under this agreement, however caused, regardless of any negligence of District or its directors, officers, employees, agents or volunteers, except the sole negligence or willful misconduct or active negligence of District or its directors, officers, employees, agents or volunteers;
   2. All actions, proceedings, damages, costs, expenses, penalties or liabilities, in law or equity, of every kind or nature whatsoever, arising out of, resulting from, or on account of the violation of any governmental law or regulation, compliance with which is the responsibility of contractor;
   3. Contractor shall defend, at contractors’ own cost, expense and risk, any and all such aforesaid suits, actions or other legal proceedings of every kind that may be brought or instituted against District or Districts directors, officers, employees, agents or volunteers;
   4. Contractor shall pay and satisfy any judgment, award or decree that may be rendered against District or its directors, officers, employees, agents or volunteers, in any such suit, action or other legal proceeding;
   5. Contractor shall reimburse District and its directors, officers, employees, agents and/or volunteers, for all legal expenses and costs incurred by each of them in connection therewith or in enforcing the indemnity herein provided; and
   6. Contractor agrees to carry insurance for this purpose as specified.
3. Independent Contractor: All consulting contracts shall contain language to the effect that: "The Contractor and District agree that the Contractor is an independent contractor with respect to the services provided pursuant to this Agreement. Nothing in this Agreement shall be considered to create the relationship of employer and employee between the parties."
4. Assignment: All contracts shall expressly prohibit the Contractor from subletting or assigning any of the services covered by this agreement without the express written consent of the District. Assignment does not include printing or other customary reimbursable expenses or subcontractors as may be approved in advance by the District that may be provided in an Agreement.
5. Comprehensive General Liability Insurance: All contractors shall secure and maintain in force throughout the duration of the contract comprehensive general liability insurance with carriers acceptable to the District, with a minimum coverage of one million dollars ($1,000,000) per occurrence and two million dollars ($2,000,000) aggregate for personal injury, and one million dollars ($1,000,000) per occurrence/aggregate for property damage. The District shall be named as an additional insured and the insurance policy shall include a provision prohibiting cancellation of said policy except upon thirty (30) days prior written notice to the District. Certificates of Insurance shall be delivered to the District within fifteen (15) days of execution of the agreement.
6. Professional Liability Insurance: Contracts with consultants who are required to be professionally certified by the State (such as design engineers or attorneys) shall be required to provide professional liability insurance in the amount of two million dollars ($2,000,000), with a minimum coverage of one million dollars ($1,000,000) per occurrence and two million dollars ($2,000,000) aggregate. The District shall be named as an additional insured and the insurance policy shall include a provision prohibiting cancellation of said policy except upon thirty (30) days prior written notice to the District. Certificates of Insurance shall be delivered to the District within fifteen (15) days of execution of the agreement.
7. Business Auto Liability Insurance: All contractors shall be required to have business auto liability coverage, with minimum limits of one million dollars ($1,000,000) per Occurrence, Combined Single Limit for Bodily Injury Liability and Property Damage Liability. This coverage shall include all contractor Owned Vehicles used on the contract, Hired and Non-Owned Vehicles, and Employee Non-Ownership Vehicles. The District shall be named as an additional insured and the insurance policy shall include a provision prohibiting cancellation of said policy except upon thirty (30) days prior written notice to the District. Certificates of Insurance shall be delivered to the District within fifteen (15) days of execution of the agreement.
8. Required Provisions: The general liability and automobile liability policies are to contain, or be endorsed to contain the following provisions:
   1. The District, its directors, officers, employees, agents and volunteers are to be covered as insureds as respects: liability arising out of activities performed by or on behalf of the contractors, products and completed operations of the contractor; premises owned, occupied or used by the contractor; or automobiles owned, leased, hired or borrowed by the contractor. The coverage shall contain no special limitations on the scope of protection afforded to the District, its directors, officers, employees, agents and volunteers.
   2. For any claims related to this project, the contractor’s insurance shall be primary insurance as respects the District, its directors, officers, employees, agents and volunteers. Any insurance or self-insurance maintained by the District, its directors, officers, employees, agents and volunteers shall be excess of the contractor’s insurance and shall not contribute with it.
   3. Any failure to comply with reporting or other provisions of the policies including breaches of warranties shall not affect coverage provided to the District, its directors, officers, employees, agents, and volunteers.
   4. The contractor’s insurance shall apply separately to each insured against whom claim is made or suit is brought, except with respect to the limits of the insurer’s liability.
   5. Each insurance policy required by this clause shall be endorsed to state that coverage shall not be suspended, voided, canceled by either party, reduced in coverage or in limits except after thirty (30) days prior written notice by certified mail, return receipt requested, has been given to the District. Such liability insurance shall indemnify the contractor and his subcontractors against loss from liability imposed by law upon, or assumed under contract by, the contractor or his subcontractors for damages on account of such bodily injury (including death), property damage, personal injury and completed operations and products liability. Such insurance shall be provided on a policy form written by underwriters through an agency satisfactory to the District, which includes a cross-liability clause, and covers bodily injury and property damage liability, owned and non-owned vehicles and equipment, blanket contractual liability and completed operations liability. Such liability insurance shall include explosion, collapse, underground excavation and removal of lateral support. The District, its directors, officers, employees, agents and volunteers shall be named as additional primary insured on any such policies. An additional insured endorsement (ISO CG 2010 or equivalent, modified to include provisions 1-5 above) and a certificate of insurance (Accord Form 25-S or equivalent), shall be provided to the District.
   6. It shall be the responsibility of the contractor to ensure that all subcontractors comply with the same insurance requirements that the prime contractor is required to meet.
9. Performance Bond: A Contractor on a minor construction job shall furnish to the local government prior to start of construction a performance bond in an amount of 100% of the contract in a form acceptable to the District. In lieu of a bond, fifty percent (50%) retainage may be held for 30 days after final acceptance and/or liens cleared.

2.20.320 Major Construction Contracts

Contracts for major construction projects (e.g. over $25,000) should be procured by written contract in a manner consistent with state law. To avoid, reduce, or transfer the risk of loss, the following policies in addition to the policies established in Section 2.20.315 hereinabove are to be applied in a manner consistent with the recommendations contained in the JPIA publication "Risk Transfer Procedures for ACWA/JPIA Member Districts":

1. Subcontractors: The prime Contractor shall include all subcontractors as insureds under its policies or shall furnish separate Certificates and Endorsements for each subcontractor. The Contractor shall not assign or sublet the Contract in whole or in part without the written consent of the District, nor shall the Contractor assign any moneys due or to become due to Contractor hereunder without prior written consent of the District. The Contractor shall not subcontract more than thirty percent (30%) of the work without the express written consent of the District. In any event, the Contractor shall, at least five (5) working days prior to proposed start of a subcontractor's work, notify the District in writing of the name of the proposed subcontractor for the work, and shall not enter into any subcontracts which the District may object to as incompetent or unfit. The Contractor shall agree that Contractor is fully responsible to the for the acts and omissions of the subcontractor and persons either directly or indirectly employed by subcontractors, as well as for the acts and omissions of persons directly employed by the Contractor. Consent to subcontracting part of the work shall, in no way, release the Contractor from responsibility for performance of the work, and Contractor will be held, in all respects, accountable for the same as if no consent had been given. The Contractor shall be required to give personal attention to the work which is sublet. Nothing contained in the Contract Documents shall create any contractual relation between any subcontractor and the District.
2. Builders Risk Insurance: The Contractor shall provide and maintain Builders Risk Insurance covering all risks of direct physical loss, damage, or destruction to the work in the amount specified in the General Conditions, to insure against such losses until final acceptance of the work by the District. Such insurance shall include explosion, collapse, underground excavation and removal of lateral support. The District shall be named as an additional primary insured on any such policy. The making of progress payments to the contractor shall not be construed as creating an insurable interest by or for the District or be construed as relieving the contractor or his subcontractors of responsibility for loss from any direct physical loss, damage or destruction occurring prior to final acceptance of the work by the District. The insurer shall waive all rights of subrogation against the District. The contractor shall provide the District with a certificate of insurance for Builders Risk insurance coverage and evidence of waiver of rights of subrogation against the District.

2.20.325 Evidence and Cancellation of Insurance

Prior to execution of the contract, the contractor shall file with the District evidence of insurance from an insurer or insurers certifying to the coverage of all insurance required herein. Such evidence shall include the ISO CG 2010 (or insurers equivalent) signed by the insurers representative and certificate of insurance (Accord Form 25-S or equivalent). All evidence of insurance shall be certified by a property authorized officer, agent or qualified representative of the insurer and shall certify the names of the insured, any additional primary insurers, where appropriate, the type and amount of the insurance, the location and operations to which the insurance applies, the expiration date, and that the insurer will give by certified mail, written notice to the District at least thirty (30) days prior to the effective date of any cancellation, lapse of material change in the policy.

The contractor shall, upon demand of the District, deliver to the District all such policy or policies of insurance and the receipts for payment of premiums thereon; and should the contractor neglect to obtain and maintain in force any such insurance or deliver such policy or policies and receipts to the District, then it shall be lawful for the District to obtain and maintain such insurance, and the contractor hereby appoints the District his true and lawful attorney-in-fact to do all things necessary for this purpose. All money paid by the District for insurance premiums under the provisions of this article shall be charged to the contractor.

2.20.330 Performance Bond

The contractor shall furnish a surety bond or bonds covering faithful performance of the Contract and the payment of all obligations arising thereunder. The bond shall be in the full amount of the Contract and shall be upon the form of bond set forth herein. The surety shall be a firm qualified to conduct business as a surety in the state. The performance bond for this Contract shall not only indemnify the District for the usual performance provisions of the Contract, but in addition, shall be a bond to guarantee payment of all tax or other liability of any type, kind, nature, or description due because of work performed pursuant to the Contract.

2.20.335 Laws, Regulations and Permits

The contractor shall give all notices required by law and comply with all laws, ordinances, rules and regulations pertaining to the conduct of the work. The contractor shall be liable for all violations of the law in connection with work furnished by the contractor. If the contractor observes that the drawings or specifications are at variance with any law or ordinance, rule or regulation, he shall promptly notify the engineer in writing and any necessary changes shall be made in written instruction or change order. If the contractor performs any work knowing it to be contrary to such law, ordinances, rules and regulations and without giving notice to the engineer, the contractor shall bear all costs arising therefrom.