Superfund Cost Relief

Thomas Byro is director of special projects for the Institute of Scrap Recycling Industries (Washington, D. C.).

You've been named as a potentially responsible party in a Superfund cleanup. Under current legal interpretation, it appears that your liability is clear, your insurance coverage is limited or nonexistent, and the Superfund site's former operator has disappeared or is unwilling to meet or incapable of meeting the cleanup costs. You foresee eventual receipt of a bill for millions of dollars.

It's a frightening scenario, but not one without recourse: There may be available insurance coverage sufficient to pay for part or all of the cleanup costs assigned to you. Few if any people, however, will volunteer this information to you, so it's important to scrutinize all possible avenues.

The site's former operators may have vanished, but their old insurance policies--including general liability, automotive, and excess risk policies-may provide coverage. Many insurance policies issued through the early 1980s were extremely generous in providing pollution liability coverage.

When investigating the viability of this option, look beyond the operators' policies:

The Superfund site's operators may have managed the site as a franchise of a parent company with greater insurance coverage.

The land on which the business was conducted may belong to another firm with its own pollution liability coverage.

The buildings that housed the former operations may belong to yet another firm that could have available coverage.

Independent trucking firms that served the facility may have insurance policies that will provide some coverage.

All of these policies should be obtained and carefully scrutinized for potential coverage for every pollution incident related to the Superfund cleanup. Consider retaining the services of an insurance adjuster to help you find all of the necessary documents. This person can be particularly important to your search if the companies whose policies you seek are no longer in business and, thus, local and national insurance brokers must be contacted for information.

Selection of the right insurance adjuster is critical. Not only must this person be aggressive and thorough, but he or she must have an understanding of pollution issues-unfortunately, a difficult attribute to find in an insurance adjuster.

Assigning someone with knowledge of all the technical, legal, and insurance issues involved to oversee the cleanup cost investigation also may be helpful in obtaining the maximum possible coverage from the various insurers. This person can direct the efforts of the attorneys, insurance adjusters, and cleanup contractors involved.

Throughout the investigation/recovery attempt period, it's important to identify and file for insurance benefits for each separate pollution incident at the site. Insurance companies often attempt to lump together separate pollution incidents. Because most policies provide a certain amount of coverage for each incident, however, the amount of benefits available may be multiplied if each incident is considered separately.

Unfortunately, there are no clear guidelines as to what constitutes a separate incident. Does a truckload of lead-acid batteries that were eventually improperly “disposed” constitute one or many pollution incidents? The question may ultimately have to be resolved in court, and, although the issue is not clear, court rulings have tended to favor the insured. Furthermore, some insurance companies will capitulate rather dm face the prospect of a lengthy court battle whose outcome is uncertain.

It's vital, of course, to retain legal counsel from the moment you're named as a potentially responsible party, and such advice plays an additional role if you are able to attempt to recover costs from insurers.

There's no guarantee that these efforts will reduce or eliminate your Superfund cleanup cost liability, but the possibility does exist and could well be worth the monetary and time costs involved.•

You may have some recourse if billed as a potentially responsible party for cleanup costs at a Superfund site.