Environmental Non-Owned Disposal Site Coverage Exposure Risk Insurance

Under environmental regulations such as the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), parties found to be responsible for contaminating disposal sites may be jointly and severally liable. An example of this legal theory is, if a hundred entities sent their waste to a disposal site where there was a pollution release, regulators or attorneys may pursue recovery costs against just one of those entities (typically the one with the “deepest pockets”). It would be up to the entity that was pursued to then turn around and sort out the proportions of liability with the rest of the other entities, if they chose to. In most cases, they will not be able to do this until they had resolved their liabilities and completed any cleanup actions before they pursue reimbursement from any other parties. Although the EPA will typically go after the most financial stable company, there is still the possibility that a minor contributor (i.e., de minimis contributor) to a waste site can be held liable for the entire cost of a clean-up, particularly if other contributors are insolvent or not able to be tracked down. Even if an entity settles with the EPA, the EPA will typically reserve their right to pursue the entity again if information not known to the EPA at the time of settlement is discovered later, which could increase their settlement or contribution costs.