United States Office of Solid Waste February 1991
Environmental Protection and Emergency Response
Agency Office of Waste Programs (OS-510)
v/EPA Report On The Results
Of The
EPA-Sponsored
Consultative Process
On The Proposed
Guidance For Section
119OfCERCLA, As
Amended
Printed on Recycled Paper
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REPORT ON
THE RESULTS OF THE
EPA-SPONSORED CONSULTATIVE PROCESS
ON THE PROPOSED GUIDANCE FOR
SECTION 119 OF CERCLA,
AS AMENDED
FEBRUARY 14, 1991
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TABLE OF CONTENTS
Page No.
A. Background 1
1. The Consultative Process 1
2. The Results of the Consultative Process 2
B. The Context 3
1. Technical Risks Faced by RACs 3
2. Liability Risks Faced by RACs 5
3. Availability of Commercial Insurance Products 6
C. Coverage Issues 10
1. Limits 10
2. Deductibles 11
3. Term of Coverage 14
4. Exclusions 14
5. Sub-Contractor Issues 15
D. Administration Issues 18
1. Due Diligence Requirements 18
2. Retroactivity of Proposed Guidance 20
3. Fixed Price Contracts 20
E. Other Issues 22
1. Alternative Approaches to Risk Transfer 22
2. Surety Issues 23
E. Conclusion 24
Appendices
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A. BACKGROUND
Section 119 of the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA"), as amended, requires the
Environmental Protection Agency ("EPA") to develop guidelines to carry
out the response action contractor ("RAC") indemnification provisions of
the statute. In 1987, EPA issued an interim guidance governing the
indemnification program until a final version was promulgated; and, in
October 1989, EPA proposed final guidelines for public comment.
Approximately 90 sets of comments were received.
In October 1990, EPA retained ENDISPUTE, Inc. ("ENDISPUTE"),
through the Conservation Foundation, to assess, from a neutral perspective,
the utility and feasibility of a consultative process through which EPA
could obtain additional information from interested organizations on the
proposed guidance. Unless ENDISPUTE found that a consultative process
would not be productive, it was to convene, structure and facilitate a full-
day meeting involving EPA and the interested parties.
1. The Consultative Process.
ENDISPUTE performed these services between October and
December 1990.1 It assessed, convened and facilitated the consultative
process as follows:
a) Endispute developed, in consultation with EPA and with
input from the Hazardous Waste Action Coalition, a list of
organizations that either had an interest in the proposed
guidance or had information relevant to the issues raised by
the proposed guidance.
b) ENDISPUTE conducted an initial set of interviews with the
organizations that had been identified and that were willing
to meet. The interviews were conducted pursuant to a
standard protocol that ENDISPUTE developed.
1 Michael D. Young of ENDISPUTE's New York office served as the senior
convener/facilitator. Katina B. Leodas of ENDISPUTE's Cambridge, Massachusetts office
served as junior convener/facilitator.
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During these interviews, ENDISPUTE explored
i) the concerns each party had with the proposed
Guidance;
ii) whether that party was willing and able to participate in
a consultative process in good faith; and
iii) whether that party could identify other parties that it
believed should be involved.
In addition, ENDISPUTE gathered the information and
insights necessary to develop a design for the meeting and an
agenda that addressed the concerns of all interested parties.
A list of the parties that ENDISPUTE interviewed is attached
hereto as Appendix A.
c) ENDISPUTE arranged and facilitated a full-day meeting of
EPA and the interested parties on November 19, 1990. At
this meeting all parties explored various issues that were
raised in the initial interviews relating to the proposed
Guidance.
A copy of the agenda for this meeting is attached hereto as
Appendix B-l and a copy of the Ground Rules for the
meeting is attached as Appendix B-2. A list of participants is
attached hereto as Appendix C.
d) ENDISPUTE conducted a limited number of follow-up
telephone interviews to clarify some of the views articulated
at the meeting or during the initial set of interviews.
2. The Results of the Consultative Process
A full range of views was explored during the consultative process.
Among the parties that were interviewed and participated in the November
19 meeting were: organizations representing RACs, including the
Hazardous Waste Action Coalition, the Hazardous Waste Treatment
Council, the National Constructors Association and the Associated General
Contractors; insurance interests, including the American Insurance
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Association and the American Insurance Group; and governmental
representatives, including federal Office of Management and Budget, the
U.S. Army Corps of Engineers and various EPA units.
The parties that participated in the consultative process provided
ENDISPUTE, the EPA and each other with a substantial amount of
information regarding the issues raised by the proposed Guidance. EPA
has requested that ENDISPUTE, from its neutral perspective, summarize and
organize the information gathered during the interview and meeting
process, including the views articulated by the parties.
This report provides that summary, organized by issue.2
ENDISPUTE believes that it is accurately reporting the views of the parties
as articulated by their representatives. It has not and does not, however,
judge the validity of the beliefs or arguments it is reporting.
In some instances during the interviews that ENDISPUTE conducted, a
party requested anonymity: it did not want to have a particular statement
publicly attributed to it. ENDISPUTE has attempted to honor all such
requests throughout the consultative process, including in the preparation
of this report.
B. THE CONTEXT
1. Technical Risks Faced bv RACs
Most of the RACs viewed their work as inherently risky from a
technical perspective. The work is risky because, at a minimum, of the
following factors:
a) Superfund sites, particularly those that have been identified
as "priorities," may contain chemical or other waste that is
extremely harmful to people and property.
2 In addition to this report, ENDISPUTE orally reported to EPA on the results of the
consultative process on December 13, 1990. ENDISPUTE subsequently reported on the
results of its follow-up interviews with some of the parties. The substance of these
presentations has been integrated into this report.
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b) The technology of hazardous waste remediation is new and
continually developing. The remediation approaches
recommended to the EPA by the design, engineering and
other technical consultants reflect a substantial element of
professional judgment and are frequently novel. The
governing statutes encourage the use of innovative
approaches. It is not guaranteed that these will work; in any
event they are often subject to second guessing.
c) Any underground work is inherently risky because, despite
extensive testing, one can never be certain of what is below
the ground surface.
d) EPA, which is subject to community and other political
pressures, does not always accept the RAC's recommendation
regarding the most technically appropriate or feasible
remediation approach or action.
Most of the parties believed that the design and engineering RACs
faced more risk than the constructors. The general consensus appeared to
be that the constructors could control the risk to a greater extent because
they are executing plans, not developing them. In other words, while the
design and engineering RACs face both technological and performance
risks, the constructors usually face only performance risks. Although the
Associated General Contractors ("AGC") and the National Constructors
Association ("NCA"), whose members are almost exclusively constructors,
might disagree with this perspective, those RACs that perform both design
and construction work would agree with the distinction.
None of the RACs could quantify the technical risk of performing
Superfund remediation work. In other words, none could state precisely
how risky the work is or, for example, how frequently they would expect a
pollution release to result from their remediation actions. Any risk
assessment, if possible at all, can only be done on a site-specific basis.
In addition, most of the parties agreed that prior history of release
incidents arising out RAC work—there have been very few—is not
instructive as to what will happen in the future. If there are to be
problems, they will not occur until remediation plans are implemented. It
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is important to note that the American Insurance Group takes this position
when it sets premiums.
Most of the RACs argued, however, that it is not important to
quantify the technical risk. As discussed in Section B (2), they take the
position that a substantial liability risk exists irrespective of how technically
risky the work really is.
The only party that disagreed with the above analysis was Waste
Management Inc. It views RAC work as involving "some risk" but not at
an "ultra-hazardous" level. It acknowledged that any analysis of the
technical risk must be site specific. It is also important to note that Waste
Management does not view itself as a design/engineering firm, so that its
view of the risk may reflect the distinction drawn above between
remediation design and construction work.
2. Liability Risks Faced bv RACs
The RACs, the insurance interests and other parties including the
Office of Information and Regulatory Affairs of the federal Office of
Management and Budget ("OIRA"), all agreed that, whatever the extent of
the technical risk, the RACs faced significant risks of claims being brought
against them. They argue, as set forth more fully in Section B (3), that this
high risk of claims is the primary reason for the unavailability of
commercial insurance.
More specifically, the RACs believe, and others agree, that the
structure of both state and federal law encourages plaintiffs to sue RACs
even if most of the liability belongs elsewhere. According to one of the
HWAC representatives, "if you touch a site, you own it."
Specifically, the joint and several liability standard that is found in
CERCLA and in many state statutory and common law schemes will lead to
the joining of all "deep pockets," including RACs, even if the primary, if
not exclusive, responsibility for the pollution release or other damage lies
elsewhere. Although the strict liability standard in federal law provides an
incentive to target the "potentially responsible parties" ("PRPs") as opposed
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to the RACs who can be found liable only if fault is proven,3 the RACs
remain concerned because many of them are large companies and many
PRPs are small and unable to fulfill judgments. Under the joint and several
liability rules, plaintiffs need only demonstrate some RAC liability in order
to collect the full amount of the judgment from the RAC, leaving the latter
to try to collect the proportionate shares of the other defendants from
them.
The RACs are particularly concerned about the risk of a catastrophic
judgment and what they believe to be the certainty of high defense costs.
The experience of the American Insurance Group, which is one of the
three companies currently underwriting this risk, is consistent with these
concerns: claims are not very frequent, but they are large, and defense
costs are usually very high.
Specifically, the RACs and the insurance interests agree that such
catastrophic judgments should not occur very frequently, but the amount
may be so high as to bankrupt all but the very largest of the RACs. Large
judgments are possible because in the event of a pollution release there are
likely to be many injured third parties and remediation costs may be very
high. Moreover, since many RACs are deep pockets, they may be, under
the joint and several liability rules, liable in the first instance for the full
amount of the judgment. Finally, even if their chances of prevailing in a
lawsuit are good, the RACs assume that they will be forced to incur high
defense costs in exculpating themselves.
3. Availability of Commercial Insurance Products
All parties, including the EPA, agree that indemnification is
necessary because of problems with the availability of commercial
insurance. The parties disagree regarding the extent of the unavailability,
the reasons for such unavailability, and whether increased demand will lead
to greater availability.
3 According to the American Insurance Association ("AIA"), RACs may be held strictly
liable for any damage resulting from their actions under the statutory or common law of
twenty three states. The RACs acknowledge that Section 119 precludes EPA
indemnification under such circumstances.
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All the parties, including the insurance interests and OIRA, disagreed
with the basic EPA premise that the lack of adequate insurance for
pollution release liability is a temporary aberration in the insurance market
caused by being in a low point in an insurance cycle. OIRA and the
American Insurance Association ("AIA")4 accept the concept of an
insurance cycle, but discount its significance in this context. They argue
that the contraction in the availability of insurance for environmental
damage has continued even after the insurance cycle "contraction period"
has ended.
Nor do they believe that lack of demand for insurance is a
determinative factor. While stimulating demand may lead to a marginal
decrease in premiums and a similarly marginal increase in limits, it will
not lead to a significant expansion in die availability of insurance.
OIRA, and the AIA and others in the insurance industry, attribute
the lack of insurance primarily to factors other than the insurance cycle
and lack of demand. The reasons they cite for insurers being unwilling to
underwrite this risk reflect an understanding of the nature of the risk that
is consistent with that of the RACs, as set forth in Sections B (1) and (2)
above.
These factors are:
a) The remediation work that the insurers are being asked to
insure is inherently risky, yet the risk is difficult to predict.
A company's past claims experience, while instructive, is not
necessarily useful in predicting the risk. Insurers do not
want to insure a risk the size or frequency of which they can
not predict.
b) The long latency period for injuries arising out of pollution
release incidents makes risk prediction very difficult.
4 "Tie AIA has 225 members. They are all stock companies and most of them specialize
in p.operty and casualty lines. Its members include such large companies as CIGNA,
Aetna, and Crum and Forster. Neither the American Insurance Group or Reliance
Insurance Co., which are the two underwriters currently providing pollution liability
insurance, are members of the AIA.
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Moreover since litigation will not occur until many years
after the activity allegedly causing the problems occurred,
there is a great possibility that courts and juries will second-
guess the reasonableness of the initial activity, applying
standards of conduct based on hindsight and wisdom gained
in the interim.
c) The strict liability standard found in federal law and in many
state statutory and common law schemes, as well as the joint
and several liability rules, have created such a high a risk of
claims and indemnity that insurers are unwilling to assume it.
d) This specific concern with respect to the law governing
liability for environmental damage is exacerbated by a
perception that the scope of tort law has generally expanded
and that litigation has become too costly.
e) The insurers are further concerned because of what they
perceive to be the willingness of courts to "rewrite"
exclusions and other insurance policy language in order to
find a deep pocket. They point to the insurance industry's
experience with litigation on the "sudden and accidental"
language in general liability policies.
Until these factors are addressed, the insurance interests do not
believe that there will be a substantial expansion of the availability of
adequate insurance products.
According to the AIA, the market for pollution liability insurance
always has been and always will be viewed as a specialty one. It does not
believe that there will ever be a substantial number of multi-line companies
selling such policies. None of the AIA member companies are currently
planning to enter this market.
Three companies have been issuing pollution release liability
policies. These companies are Demeter, which is a RAC initiated risk
retention group, the American Insurance Group ("AIG") and the Reliance
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National Insurance Co.("Reliance").5 The policies are all claims-made,
with a limited and expensive tail. Coverage limits are low. A chart
comparing the terms of the various policies is attached hereto as
Appendix D.
For example, AIG sells three basic products:
a) a Comprehensive Pollution Liability policy for constructors
for environmental pollution liability, covering claims
brought by third parties. About 120-130 constructors have
bought such policies since the product was introduced. AIG
earned about $15 million in premiums for these policies
during 1990. The limits for this policy are $10 million per
occurrence and $10 million aggregate;
b) an Errors and Omissions policy for architects and engineers.
This is a site specific-wrap around policy that is targeted for
Superfund sites and covers sub contractors. Usually the
limits are at $1 million per occurrence and $2 million
aggregate. Sometimes the limits are as high as $5 million
per occurrence and $5 million aggregate, but rarely;
c) a newly introduced Practice Policy, that is designed to cover
potential environmental damage liability arising out of all the
work that the contractors do. The limits are currently at $2
million per occurrence and $2 million aggregate; AIG hopes
to increase the aggregate limit to $5 million.
These policies are all claims-made, though the RAC can buy a tail.
AIG recognizes that both the initial premium as well as the tail are
expensive, but given what it perceives to be limited demand, the only way
that AIG can make a profit is by charging high amounts. AIG believes
that premium amounts will decrease and limits will increase if there is
more demand, but it also acknowledges that it is unlikely that the limits will
increase significantly.
5 In spite of several efforts to contact its representatives, Reliance was not interviewed
by ENDISPUTE.
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The RACs and the insurance interests disagree regarding the extent
of the effort the RACs are making to buy available insurance. AIG
suggests that RACs are not buying the available products for work on
Superfund sites because of the existence of the EPA indemnification
program and because of the relative difficulty of passing the cost of the
insurance on to the EPA. They give out quotes out to brokers representing
the Superfund RACs but frequently do not receive responses. Conversely,
in AIG's experience, RACs are buying the insurance for non-Superfund
sites because, it believes, the RACs find it easier to pass the costs on to
private clients.
The RACs agree that little insurance is currently being purchased but
ascribe the reason to the difficulties they are having in the application
process and in meeting the underwriting criteria. AIG acknowledges that it
has imposed strict technical requirements — it is reluctant to provide
insurance to a questionable firm or at a risky site. The RACs, particularly
those who work on ARC contracts, also point to the administrative
difficulties and cost they face in trying to obtain insurance for each of the
sites on which they work. They argue that the effort is not worthwhile in
light of the inadequacy of the available product.
Finally, it is important to note that some of the insurance interests
raised concerns regarding whether there will be commercial insurance in
the future at the time when the claims start coming in. They suggested that
in the past AIG and Reliance have withdrawn from the market for a
particular type of insurance when there begin to be claims, having made
their profits by selling claims-made insurance prior to that time. AIG
denies that this has been or will be the case.
C. COVERAGE ISSUES
1. Limits
The RACs acknowledge that Section 119 requires EPA to set a limit
on the amount of indemnification it will offer. The central concern that
the RACs have with the proposed limit of $50 million per contract is the
amount. They believe that it is inadequate, particularly in light of the risk,
however low, of a catastrophic judgment. A related concern is whether the
limit should be set on a per contract basis.
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Assuming that EPA decides to set an aggregate limit per contract, the
RACs believe that it should be set at least at $200 million and preferably at
$250 million. They point to the $250 million recommendation in the
Tilinghaus report. The AGC, NCA and HWAC all suggested that a $200
million limit may be adequate, even for design contracts. Moreover,
HWAC points out that at the time that claims arise fifteen or twenty years
from now, the $200 million, or even $250 million, indemnification amount
will be worth significantly less.
The representative of AIG suggested that the limit be increased for a
RAC that buys a larger amount of commercial insurance. This approach
would satisfy EPA's interest in encouraging the purchase of commercial
insurance as well as the RACs interest in increasing the limits. The RACs
argued that this approach was not feasible until more adequate insurance
was available. In addition, a concern was raised that EPA would end up,
except possibly in a fixed-price context, paying twice -- once if it
reimburses the premium and once through the increased limits.
There was strong sentiment that, unless the limit was increased to the
$200-250 million range, it should not be set on a per contract basis but
rather per site or per work assignment/activity. Those RACs who work on
ARC contracts felt particularly strongly that setting the limit on a per
contract basis was unfeasible and unfair, given the number of sites on
which an ARC contractor works. Moreover, as discussed in greater detail
in Section B (5), setting the limit on a per contract basis causes problems
with respect to the allocation of the indemnification between the prime
contractor and the sub-contractors.
2. Deductibles
The deductibles proposed in the 1989 Guidance are of significant
concern to many RACs. Although they recognize that a deductible layer is
an appropriate way to share some of the risk, they are troubled by the
amount of the deductible, that it is per claim or per occurrence, and by
other related aspects of the proposal.
The RACs believe that the deductible amount is too high, particularly
since, given their concern about catastrophic risks and the need to allocate
the indemnification between the primes and the subcontractors, they will
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always seek a $50 million limit and therefore will always have a $3.5
million deductible. This deductible amount is larger than the total net
worth of many RACs. So, in essence, those RACs would be "betting the
farm" whenever they did EPA work under the proposed Guidance.
The RACs are particularly concerned about defense costs. Since the
deductible is "per occurrence," RACs will, on a repeated basis, have "first
dollar" costs. The claim would not have to be large or catastrophic for the
RAC to incur significant defense costs yet, given the high deductible, not
exhaust it. Under such circumstances, the RAC "could be right, yet
bankrupt."6
Most of the RACs were opposed to there being a sliding scale for
limits and deductibles because, even if the limit amount was increased and
the maximum deductible amount stayed the same, the deductible amount
was still "prohibitively high."7 If both the limits and the deductibles were
increased, this sliding scale, like the current draft of the Guidance, would
serve as a disincentive to a contractor to seek the level of indemnification it
actually needs.8
The following recommendations were made by the RAC groups with
respect to the amount of the deductible and the treatment of defense costs:
a) HWAC recommended that defense costs be applied only
against the coverage limit, not against the deductible. EPA
would pay defense costs from the first dollar. HWAC could
accept a high deductible if it only applied to indemnity costs
and EPA picked up first dollar defense costs, though it
6 Several of the parties noted that the proposed deductible approach is contrary to
insurance industry practice. Most of the pollution liability policies that are available cover
defense costs and have a lower deductible than EPA proposes, even on a relative basis
(given the differences in limits). By having a lower deductible, insurers cover most of the
defense costs and therefore can control (and contain) such costs.
7 At the November 19 meeting, the representative from the NCA suggested that the
NCA members may be willing to absorb a higher deductible if the limits were higher.
8 In most commercial insurance situations other than insurance for pollution release
liability, the RACs can increase the limits of the insurance by buying excess policies. This
manner of increasing the limits does not result in an increase in the deductible amounts.
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clearly preferred in any event that the deductible amount be
less than proposed;
HWAC alternatively suggested that the deductible be lowered
significantly, to an amount equivalent to the deductibles
found in commercial insurance policies. In these policies,
costs of defense are included in the deductible;
b) The NCA recommended that deductibles be measured
according to contract price, rather than coverage limit. Its
rationale is that a contractor may be willing to bet its full
anticipated profit margin (possibly 5-6%), but not the entire
firm.
c) Most RACs recommended that the deductible be calculated
on a per contract, rather than per occurrence, basis. This
approach would permit the aggregation of claims against the
deductible.
d) Another party suggested that the deductible amount be set in
the same manner as insurance companies would set it. A
deductible is usually set in an amount to cover the type of
risk that the insured can most easily predict and control.
This party suggested that the EPA conduct this analysis,
perhaps with the assistance of an insurance company.
Finally, HWAC expressed concern about having the deductible
stacked on top of the commercial insurance layer. It recommended that the
RACs be permitted to apply commercial insurance payment against the
EPA deductible. This approach would provide even more of an incentive
to the RACs to obtain commercial insurance so as to defray a portion of the
EPA indemnification deductible. This approach might also make
acceptable a higher deductible amount.9
9 The RACs acknowledge that under this appro;.- - EPA may be paying for pan of the
deductible if it reimburses the contractor for the premiums for commercial insurance which
arguably defeats the purpose of a deductible. They argue, however, for the reasons stated
in the text, that EPA's interests are better served by this approach.
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3. Term of Coverage
The RACs acknowledge EPA's interest in setting a limit on the term
for coverage, but they believe that the proposed ten year term is unrealistic
and ignores the nature of the risk. While a ten year term may be sufficient
to cover some claims that will arise from immediately apparent negligence
in the execution of work plans,10 it is not sufficient to cover long term
pollution release problems, particularly given the latency periods associated
with many of the kinds of injuries such releases may cause.
The RACs, as well as some of the other parties, recommend that the
term be set, at a minimum, at thirty years. They believe that thirty years is
probably sufficient to encompass the latency periods of most of the possible
injuries that could arise in a pollution release occurrence. Moreover, they
point to the fact that under the RECRA statute owner/operators are held
responsible for a thirty year period after disposal.
4. Exclusions
The RACs are very concerned with the exclusion from coverage of
mixed strict liability/negligence judgments. Even though they are
immunized from a strict liability judgment under federal law, they still
face the risk of a strict liability judgment under the law of at least 23 states.
If the law of those states is applied, either in a state court lawsuit or as a
pendent claim in federal suit, the RACs fear that if there is a negligence
finding, it is very likely that there will also be a strict liability finding.
The RACs believe that the goal of Section 119 would be undermined
if there was no coverage for such mixed judgments. Although Congress
did not preempt state law, it did want to protect RACs from the financial
consequences of judgments, except when they were grossly negligent. It
would undermine that intent if the same (non-grossly negligent) conduct
would leave the RACs unprotected from judgments. The RACs believe that
the language of Section 119 can be read to authorize indemnification for
such mixed judgments.
10 David Coduto of Terra Insurance Company stated that in his experience with Terra and
Demeter, environmental impairment claims are filed about ten years after the construction
work is done — an even longer period of time after the design work is completed.
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The RACs are also concerned that the references in the proposed
Guidance to "third party" liability can be read to preclude liability for
judgments or orders in enforcement proceedings. They would prefer that
the government be prohibited from bringing such actions against RACs,
but otherwise would like to have the language clarified so that the current
authority for indemnification in such circumstances is maintained.11
5. Sub-Contractor Issues
In general, sub contractors tend to be smaller companies than prime
contractors, although this is not always the case. Some RACs, such as those
that work on ARC contracts, are primes on some jobs and subs on others.
The smaller subs, such as members of the Hazardous Waste Treatment
Council ("HWTC"), are often quite small.12 They are professional service
companies whose assets are their people. Many have been involved in the
rapid development of new, advanced remediation technologies. They
believe that because the field is new, with rapidly evolving state-of-the-art
technology, there will be problems and there is a substantial liability.13
11 Although they seek indemnification for subsequent remediation costs, RACs are more
concerned with third party liability than with CERCLA liability, for several reasons. First,
third party liability is perceived as potentially far greater, yet less easily predictable.
Second, they believe that their contractual relationship with the government would give
them a greater degree of control over any dispute than they would have with third parties.
Finally, in some circumstances a surety may share some of the costs as EPA may go after
the surety if there was a finding that the RAC had not performed on the job and that the
RAC itself was unable to rectify the failure.
12 These groups articulate a more generalized complaint: indemnification or no
indemnification, they are not getting much work. They claim that engineering firms are
over-studying and over-evaluating sites, perhaps due to EPA encouragement or perhaps
due to the nervousness of the design consultants about liability and the lack of insurance to
cover that liability. Some smaller speciality firms made substantial capital investments four
or five years ago, anticipating that these investments would be recouped through
government contracts. Now, they face financial distress as the anticipated contracts have
been slow to materialize.
13 As indicated above, EPA does not always approve actions recommended by the design
consultants and the specialty subs. The perceived result, they believe, is that RACs that
implement EPA-directed remediation face increased risks, since they may take
responsibility for an approach they did not favor.
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The proposed Guidance provides for indemnification of such subs,
but the "flow-down" method set forth establishes almost an inherent
conflict of interest between the prime and the subs. The Guidance allocates
indemnification by contract, rather than by contractor. Prime contractors
are the recipients of the indemnification. Thus, for sub contractors to
receive coverage, indemnification must be passed down from primes to
subs.
All RACs (with the exception of Waste Management) believe that the
proposed pass-through scheme is an unrealistic means of distributing
coverage to all the contractors at risk on a particular job. They do not
believe that indemnification will trickle down to the subs, because they
think the amount of coverage is too low for primes to be able to (or to
have any incentive to) share it. There is a growing concern that if the
primes resist giving indemnification to the subs, then subs will not work
and remediation will not proceed.
Moreover, RACs argue, as indicated above, that the deductible
structure creates a similar disincentive for the prime to share the
indemnification with the subs. If the prime chooses to obtain $50 million
in indemnification (and most RACs indicated they would purchase the
maximum) so as to at least attempt to have enough to share with the subs, it
must meet the $3.5 million deductible. Since the subs will often be unable
to pay their share of the deductible (sometimes, the sub's entire contract is
for $20,000-$30,000, which is less than their share of the deductible), the
prime is probably not going to be willing to share the indemnification.14
A number of groups suggested that EPA indemnify sub contractors
directly. One group said it thought EPA had attached too much significance
to the notion of privity of contract; this party saw no legal barrier to direct
14 A related concern raised by one group is that of indemnification pass-through to
individual professionals employed by subs. The professional liability insurance secured by
the individual almost certainly does not cover pollution liability. Yet individual
professionals could, conceivably, be the target of third-party claims, if not claims under
CERCLA. If indemnification is not passed down from primes to subs, it is unlikely that it
will be further passed down from subs to individual professionals employed by the subs.
This lack of insurance coverage, real or perceived, may discourage the "best and the
brightest" from developing and testing new technologies and that in the long run the public
will suffer.
-16-
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EPA indemnification of subs. Others, such as the HWTC, viewed the lack
of privity as a bar to direct indemnification of the subs by EPA.
Many RACs urged that EPA provide to the prime specific indemnity
amounts for the subs. The amount could be measured by the size of the
contract or a judgment of the risk inherent to the particular activity that the
sub is performing. This approach would satisfy the need of the sub, as
articulated by the AGC and the HWTC in particular, to know at the start of
the job, that it is being provided with a particular indemnity amount. It
throws the allocation function back to EPA which may not satisfy the
agency's interest in easing the administrative burden.
Otherwise, the RACs believed that the EPA could eliminate the
disincentive to share the indemnification by significantly increasing the
coverage limit, either by increasing the per contract amount or by setting
it, in a high enough amount, on a per site or per activity basis. If the
increase to coverage limits either way is significant enough, EPA's initial
intent of having the prime be responsible for allocation could be achieved,
although sub-contractor representatives, such as the HWTC, believed that
even under these circumstances EPA should mandate and ensure an
appropriate flow down.
Depending on the extent of the increase in the limit, it might also be
necessary to develop an allocation method or standard.15 The RACs
expressed interest in the idea of EPA providing an indemnification amount
on a per activity basis. If an activity analysis is performed, EPA could
determine that some activities are risky enough to justify a large amount of
coverage, but that some are not that risky or that insurance is available for
certain kinds of activities. Since one or a limited number of subs are
performing work as part of the particular activity, it will be easier to
allocate the indemnification on this basis.
Finally, under the proposed Guidance, non-profit organizations
receive the same treatment as for-profit RACs. At least one non-profit
15 AIG suggested that the allocation method be similar to that used in commercial
insurance contexts: that the amount of coverage be allocated according to the responsibility
for the loss. This approach appeared unworkable to many of the RACs and, moreover, it
does not satisfy the interest of the RACs in knowing, at the beginning of the work effort,
the indemnification coverage that they will have.
-17-
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group believes that this approach is unrealistic and unfair, given the vast
differences in resources, assets and purpose/mission between for-profit and
non-profit organizations.
D. ADMINISTRATION ISSUES
1. Due Diligence Requirements
The proposed Guidance restates the statutory requirement that in
order to be eligible for indemnification the RACs prove that they diligently
sought to obtain adequate commercial insurance, but were not able to do
so. The proposed Guidance implements this provision by requiring that
RACs obtain 3 quotes for liability insurance for each site they work on,
every year.
All the RACs (with the exception of Waste Management) complained
that this level of due diligence was costly, time-consuming and wasteful.
They gave the following reasons:
a) Only 2 insurance companies — AIG and Reliance — are
selling pollution liability insurance of any kind, at any level
to the general market. Hence it is very difficult to get three
bids.
b) No standard for what constitutes "adequate" insurance has
been developed by EPA. Even if the commercial insurance
market expands, the RACs can not know, in advance and for
certain, whether the bid that they are likely to receive will be
considered adequate.
c) It usually takes 4 months to obtain a quote. The application
process for AIG and Reliance is very vigorous. Moreover,
since most other are not actually selling policies, it is not in
their interest to make delivery of quotes a priority.
d) The application process can be very costly.
-18-
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e) The RACs maintain that some insurers have told them that
they will cease giving because of the cost involved and
because the available product is never bought.16
f) The RACs perceive that EPA believes that adequate,
affordable insurance is much more available than it actually
is. Since they believe that adequate insurance is not
available, they believe that they are being forced to waste
time and money
As an alternative to the proposed Guidance, the RACs and others
recommended the following approach to implementing the due diligence
requirement:
a) EPA should articulate a standard for what constitutes
adequate, affordable pollution liability insurance. Since
Section 119 contains no definition, EPA has the flexibility to
develop a standard that is reasonable under the
circumstances.17
b) The due diligence requirement would be fulfilled if the RAC
obtain a letter from its broker which describes available
insurance. The EPA would review that letter to determine
whether what is available is adequate; if so, the RAC would
proceed to obtain further quotes.
c) EPA should require a RAC to fulfill the due diligence
requirement once annually on each contract, rather than on
each site.
If EPA is not prepared to implement the above approach, the RACs
urged that other means be found to streamline the due diligence process
and make it less onerous.
16 AIG claims that it is giving RACs quotes, but that the RACs are not presenting those
quotes to EPA
17 On the other hand, one trade organization complained that EPA already has too much
discretion to determine whether the insurance that is available is adequate
-19-
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Finally, the RACs were very concerned regarding one particular
consequence of the due diligence requirement — they are often put in the
position of having to start to work even before knowing whether they will
be indemnified. The RACs claim that, in particular, on emergency
contracts they often begin the work prior to being able to complete due
diligence; the indemnification is granted subsequently, exposing them to a
risk of liability without protection in the interim. They recommend that
EPA make the effective date of insurance coverage automatically co-
terminous with the contract starting date.
2. Retroactivitv of Proposed Guidance
The proposed Guidance would apply retroactively to contracts signed
prior to its final promulgation — from the effective date on, EPA could
offer indemnification only according to its terms and, therefore, pre-
existing contracts would have to be altered to incorporate these terms. The
RACs primary concern over the retroactivity provision is that whatever
the final form of the proposed Guidance, it will be less liberal than the
prior policy; thus, the change in contract terms would significantly alter
the relationship between profit and risk. There would have to be a re-
negotiation of their contracts so that they would secure consideration for
the greater risk that they would be assuming.
Several people within the government were concerned that the
retroactivity provision might cause disruptions in the on-going work. If
the EPA and the RACs were not able to re-negotiate the contracts, the
government would have to terminate the contract "for the convenience of
the government" and then resolve claims of the just-terminated contractor
and find new contractors.
The RACs proposed that in order to avoid the potential disruption of
contract re-negotiation, that pre-Guidance contracts be "grandfathered" so
that the current policy would stay in place throughout the life of the
contract.
3. Fixed Price Contracts
Under the proposed Guidance, RACs bidding on fixed price
contracts must indicate in their bid whether they are requesting
government indemnification. EPA determines a value for the requested
-20-
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amount of indemnification, imputes that value to the bid total, and selects
the lowest bidder.
Large and small RACs alike agreed that this scheme has two negative
consequences. It favors the large companies that can self-insure, and
therefore do not request government indemnification, over the smaller
firms. At the same time, the RACs and others fear that the only other
types of firms that will bid without seeking indemnification are the
"cowboy" firms whose work practices may endanger the public and their
workers. As a result, the more responsible, though less capitalized firms
may be driven out of business.18
Others agreed with these concerns. The Joint Management/Labor
Trust Fund and the Laborers Association General Contractors Education
and Training Fund both stated their concern for the safety of the
remediation workers. OIRA is concerned that fewer RACs will bid on
contracts and that reduced competition will drive up contractor bids and,
ultimately, cost the government more than it would cost to provide
indemnification directly.
The American Association of Surety Bond Producers is also
particularly concerned with this provision of the proposed Guidance
because sureties depend on the quality of RACs to protect their investment
in surety bonds. Any practice or requirement which drives high quality
RACs out of the business and encourages the participation of less
scrupulous and careful companies is a disincentive to surety participation.
The RACs generally recommended that this requirement be dropped.
For example, the AGC, whose members frequently work under fixed price
contracts, recommended that EPA offer a set amount of insurance for the
particular job so that the amount of indemnification sought does not
become a distinguishing factor among bids and that there is no disincentive
to requesting indemnification.
18 One party at the November 19 meeting raised the legal question of whether the
government had the legal authority to impute values to a competitive bid and whether such
imputation of values constitutes"tampering" with a RACs sealed bid?
-21-
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E. OTHER ISSUES
1. Alternative Approaches to Risk Transfer
David Coduto and Am Re Managers have been circulating the idea
for an alternative approach to risk transfer in this context. The concept is
as follows: A group of RACs would capitalize a risk retention group which
would then be able to insure the lowest layer of risk. EPA would
indemnify the RACs for the excess risk up to a limit. EPA would specify
both the limit per contract or per activity or site, as well as total limit of its
excess pool.
Coduto believes that this structure would encourage commercial
participation, first in the form of reinsurance. This would occur because
the commercial sector would know that its liability would be capped at the
point that the excess layers kick in.
The structure presents two advantages to EPA. First, as commercial
sector involvement increases and as the first layer builds up — premiums
would flow in and interest would build up, but early on there will not be
significant outflow as there will be few claims), the amount of EPA funds
dedicated to indemnification of the excess layer can decrease. Second, EPA
will not have to be in the initial insurance underwriting process nor will it
have to process claims.
None of the RACs objected in principle to the idea of a captive
insurance program or risk retention group similar to the one proposed by
Coduto, although HWAC has raised questions regarding the legal authority
for EPA's participation in a structure such as presented by Coduto.19 All
RACs, however, were pessimistic about their ability to raise sufficient
capital to create a fund with the resources to give adequate (per
occurrence) coverage. They point to the Demeter experience: Demeter
failed because it was not sufficiently capitalized to provide an adequate
insurance product. The problem was compounded, they believe, by EPA's
failure to reimburse for the Demeter premiums.
19 The AIA had previously fought against the changes in federal law that allowed the
establishment of risk retention groups. It now views them as potentially appropriate risk
transfer mechanisms, though it is concerned about the solvency of many such groups.
-22-
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2. Surety Issues
According to one source, only 6 out of 680 surety companies
nationwide have ever written bonds for EPA Superfund projects.
According to a 1990 U.S. Army Corps of Engineers study of surety
bonding for all, not just public, Superfund sites, about 30% of existing
bonds were written by a company called Seaboard. That company,
however, is apparently no longer writing bonds.
Surety bond producers claim that public Superfund work is a
potentially enormous market for them, one they would like to tap into.
They are concerned, however, regarding similar technical and legal risks
as are the RACs. It is possible that the recent passage of an amendment to
Section 119 providing sureties with indemnification equal to that provided
to the RACs, will increase the willingness of the sureties to write bonds,
but that has not yet occurred.20 The sureties appreciate the protections
afforded by this amendment, but are concerned about most of the same
issues regarding the proposed Guidance as are the RACs.
Sureties believe that they face legal risk, and consequently are
hesitant to bond EPA Superfund projects, because they fear that they will
be exposed to liability for claims outside traditional surety boundaries, i.e.,
the contractor's performance of the work in accordance with the plans and
specifications, and payment of covered subs and suppliers. In their
February, 1990 comments on the proposed Guidance, the AIA stated that
sureties view environmental law as an area characterized by the expansion
of insurer liability far beyond those claims originally anticipated by the
contracting parties. The sureties believe that it is quite likely that they will
be sued in tort by injured third parties. Twenty years from now, when a
liability claim is made on a hazardous waste cleanup project and there is no
liability insurer and no RAC capable of satisfying the claim, the sur.ty
bond producers fear that they may be the only avenue left for payment to
the injured party. They argue that such a "misconstruction" of policy terms
is not unheard of in current court decisions relating to personal injury and
environmental damage.
20 AGC members have not been able to secure bonding for EPA irfund sites. Even
major contractors like Bechtel are unable to get bonds without posting assets equal to the
value of the bond. Unless this situation changes, the result will be that larger firms with
greater assets will have a competitive advantage over the smaller firms.
-23-
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E. CONCLUSION
In spite of significant differences among those involved in this
process about the validity of the assumptions underlying EPA's proposed
Guidance and about EPA's efforts to resolve the many indemnification
issues, the interviews and November 19 meeting produced constructive,
and partly candid, discussion between the agency and those affected by the
Guidance. At the conclusion of the meeting, several participants expressed
appreciation for the opportunity to exchange information and views with
the EPA on what are very complex questions. All in attendance
contributed to the dialogue in a constructive fashion and await the outcome
of EPA's decision-making on the issues.
-24-
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APPENDIX A
-------
ENDISPUTE interviewed the following individuals during the
convening stage of the consultative process. Many of these interviews were
conducted in groups and some were conducted by telephone.
Jack Curtin
Jane Dudley
Gregory Brown
Lynn Schubert
James Kimble
Martha Hamby
Mark Haynes
Robert Blackwell
Karen Jordan
Richard Fiesta
David Case
Carol Terry
Elizabeth Epstein
Paul Nadeau
Ken Ayers
Scott Fredericks
Ron Minsk
Richard Belzer
Tom Gillis
Susan Brigham
Jane Seigler
John Meachem
Brian Deery
David Coduto
National Assoc. of Surety Bond Producers
National Constructors Assn.
Stone and Webster
American Insurance Assn.
American Insurance Assn.
American Insurance Assn.
Fluor Constructors Intl.
EBASCO
Joint Management/Labor Trust Fund
Laborers Association General Contractors
Education and Training Fund
Hazardous Waste Treatment Council.
Environmental Business Assn.
Environmental Business Assn.
EPA-OERR
EPA-OERR
EPA-OERR
OMB-Office of Information and Regulatory
Affairs
OMB-Off ice of Information and Regulatory
Affairs
EPA
Waste Management Inc.
Waste Management Inc.
Waste Management Inc.
Associated General Contractors
Terra Insurance Company
-i-
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Matt Prastein
David Dybdahl
Dennis Connolly
George Barrone
Robert Patterson
William McElroy
Peggy Cutler
Jack Mahon, Esq.
William Topping
Thomas Hickey
Alex Karlin, Esq.
George Gleason
S. Wyatt McCallie
Michael K. Yates
Leonard Kessler
Carolyn Kiely, Esq.
John Schulz
Gary Dunbar
Pete Lederman
James Whitehead
John Curtis
Doug Congdon
Brad Figley
Department of Defense
Carroon and Black
Johnson & Higgins
Am Re Managers
American Insurance Group
American Insurance Group
American Insurance Group
U.S. Army Corps of Engineers
EPA - Remedial Contracts Branch
HWAC (Malcolm Pirnie)
HWAC (Morgan Lewis & Bockius)
HWAC (NUS)
HWAC (CH2M Hill)
HWAC (EBASCO)
HWAC (EBASCO)
HWAC
HWAC (Bechtel)
HWAC (Los Alamos Technical Associates)
HWAC (Roy F. Weston, Inc.)
HWAC (Badger)
HWAC (COM)
HWAC (Versar)
HWAC (IT)
-n-
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APPENDIX B-l
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AGENDA
FACILITATED DIALOGUE ABOUT THE
EPA RAC INDEMNIFICATION
GUIDELINES
November 19, 1990
Washington Marriott Hotel
9:30 - 10:00 AM Facilitators' Introduction
• Objectives for Meeting
• Role of Faciliator
• Ground Rules
• Agenda
10:00 -11:15 AM Parties' Introduction
• Interests and Objectives
• Constraints
11:15-11:30 AM Break*
11:30 - 12:45 PM General Discussion - "Context"
• Statutory Requirments
• Technical Risks of RAC Work
• Legal Risks of RAC Work
• Availability of Insurance
• Surety Issue
12:45-1:OOPM Break*
-m-
1 The conference room will have side caucus rooms to allow for private meetings during the breaks among the
representatives of a party or between parties.
2 Lunch will be served. Participants should plan to eat lunch during sub-group sessions.
-------
Agenda (con't)
1:00-3:00 PM Sub-groups - Issues/Alternatives
1 - Administration
• Diligence Requirements
• Multi-Site Issues
• Retroactivity Issues
• Approval Mechanisms
• Fixed Price Contracts
• Subcontractor Issues
2 - Coverage
• Limits
• Deductibles
• Term
• Exclusions
• Subcontractor Issues
3 - Stimulating Insurance Availability
• How the Guidance fits into this
overall statutory goal,
3:00 - 3:30 PM Breaks
3:30-5:00 PM General Discussion - Issues/Alternatives
• Sub-groups will report
• Further discussion will occur
5:00 - 5:30 PM General Discussion - What did we accomplish
today? Next Steps, if any
-IV-
We are planning for a longer break than usual to allow any sub-group to extend its meeting.
-------
APPENDIX B-2
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GROUND RULES
FACILITATED DIALOGUE ABOUT THE
EPA RAC INDEMNIFICATION
GUIDELINES
November 19, 1990
Washington Marriott Hotel
1. Each party that participates in the dialogue agrees to be bound by
these ground rules and otherwise to participate in good faith.
2. Each party subscribes to the objectives of the dialogue — to help the
other parties understand its interests, concerns and positions with respect to
the EPA RAC Indemnification Guidelines, and the constraints under which
it acts; and to help the EPA determine whether further consultation with
the parties, or consultation of a different nature, would be useful, feasible
and appropriate — and agrees to act consistently with these objectives.
3. The dialogue shall be facilitated by Michael D. Young and Katina B.
Leodas of ENDISPUTE, Inc. The facilitators shall be responsible for
coordinating the dialogue and for ensuring that it proceeds in an orderly
manner.
4. The dialogue shall proceed according to the agenda developed by the
facilitators, unless there is a consensus among the parties represented,
including EPA, to modify it.
5. Although a party may be represented by multiple individuals, it shall
designate no more than two individuals who shall generally speak on its
behalf during either general or sub-group discussions.
-v-
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6. No party shall be bound by any statement of any kind made by its
representatives during the dialogue, unless it explicitly agrees to be so
bound.
7. All comments made are off-the-record. No party shall publicly
quote or cite outside of the dialogue the statements of any other party made
during the dialogue, unless permission is explicitly given or unless required
by law.
6. No formal record of the dialogue shall be made. Any party may
take notes, and each party agrees that in the future it shall not subpoena, or
otherwise attempt to obtain, the notes of any other party or of the
facilitators.
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APPENDIX C
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EPA INDEMNIFICATION MEETING
November 19, 1990
Name
Affiliation/Address
Telephone/Fax
John Turner
Warren Diederich
Brian Deery
Richard Belzer
Ron Minsk
S. Matthew Prastein
George Gleason
Thomas J. Hickey
Jack Mahon
Theodore M. Pierce
Alex S. Karlin
Remedial Contractors Institute
National Solid Waste Management Assn.
1730 Rhode Island Ave. NW, Suite. 1000
Washington, DC 20036
Industrial Builders Inc.
General Contractor
P.O. Box 406
Fargo, ND 58107
Associated General Contractors
1957 E Street NW
Washington, DC 20006
Office of Management and Budget
New Exec. Office Bldg., Room 3019
Washington, DC 20503
ODASD(E) 206 N. Washington
Alexandria, VA 22314
Hazardous Waste Action Coalition
1015 Fifteenth Street, NW
Washington, DC 20005
Malcolm Pirnie
Two Corporate Park Dr., Box 751
White Plains, NY 10602
U.S. Army Corps of Engineers
Attention: CECC-C
20 Mass. Avenue, NW
Washington, DC 20314
National Association, of Surety
Bond Producers
6931 Arlington Road, Rm. 308
Bethesda,MD 20814
Morgan Lewis & Bockius
1800 M Street, NW
Washington, DC 20036
202-659-4613
701-282-4977
202-393-2040
202-347-4004
202-395-3084
202-395-7285
713-325-2211
301-258-8647
301-258-9116
914-641-2949
202-272-0021
301-986-4166
202-467-7158
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WyatttMcCallie
Richard Fiesta
Jane Dudley
Herb Blum
David Coduto
Bill Topping
Stuart Ferguson
Arthur Weissman
CffiMHill
P.O. Box 22508
Denver, CO 80222
Connexion, Ray & Simon
(Laborers - AGC Training Fund)
1920 L Street NW, 4th Floor
Washington, DC 20036-5004
National Constructors Association
888 17th Street, NW Suite 400
Washington, DC 20006
Chairman, General Counsels Committee
National Constructors Association
Ebasco Services Inc.
2 World Trade Center
New York, NY 10048
Terra Insurance Company
Two Fifer Avenue, Suite 100
Corte Madera, CA 94925
EPA/PCMD
PM-214F
499 South Capitol Street SW
Washington, DC 20032
AM-RE Managers, Inc.
555 College Road - East
Princeton, NH 08543
EPA/Office of Waste Programs
Enforcement OS-500
401 M Street SW
Washington, DC 20460
303-771-0900
303-220-5106
202-466-6790
202-659-3458
202-659-6810
212-839-2616
212-839-2825
800-872-0077
415-927-3204
202-382-3184
609-243-4332
202-475-6770
Elaine Stanley
Ken Ayers
OS220-W
Paul Nadeau
OS220-W
EPA/Office of Waste Programs
Enforcement OS-500
401 M Street SW
Washington, DC 20460
EPA/Hazardous Site Control Division
401 M Street, SW
Washington, DC 20460
EPA/Hazardous Site Control Division
401 M Street, SW
Washington, DC 20460
202-382-4823
703-308-8343
703-308-8313
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BenHamm
George Barone
Tony Guadagno
William McElroy
David Case
Rick Colbert
Karen Jordan
Jane Seigler
Jim Kimble
EPA/Office of Waste Programs
Enforcement
401 M Street SW
Washington, DC 20460
Am Re Managers
685 College Road East
Princeton, NJ 08543-5241
EPA, Office of General Counsel
401 M Street, SW
Washington, DC 20460
Commerce & Industry Insurance Co.
70 Pine Street
New York, NY 10270
Hazardous Waste Treatement Council
1440 New York Avenue, NW, Suite 310
Washington, DC 20005
EPA/Office of Waste Program
Enforcement
401 M Street SW
Washington, DC 20460
Laborers-Employers
Cooperation & Education Trust
905 16th Street NW
Washington, DC 20006
Waste Management Inc.
1155 Connecticut Ave., NW Suite 800
Washington, DC 20036
American Insurance Association
1130 Connecticut Ave., NW
Washington, DC 20036
202-475-9804
202-382-3106
609-243-4904
609-243-4940
202-475-8880
212-770-5398
212-422-8198
202-783-0870
202-737-2038
202-382-4015
202-783-3545
202-467-4480
202-659-8752
202-828-7100
202-293-1219
-Vlll-
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APPENDIX D
-------
CURRENT POLLUTION LIABILITY MARKET FOR RESPONSE ACTION CONTRACTORS
(Source: Business Insurance, October 8, 1990)
Maximum Policy
Limits (Smillions)
Insurer
AIG
Product
Contractors
Pollution
X
I
AIG Contractors
Errors & Omissions
Reliance Contractors Pollution
(Blanket)
(Project)
Reliance Environmental Consulting
Professional
(Blanket)
(Project)
Reliance Consultants Pollution &
Errors & Omissions,
Combined
(Blanket)
(Project)
Per Claim Aggregate ($thousands) ($thousands)
10
2
5
5
5
5
5
5
10
2
5
10
5
10
5
10
50
50
25
25
25
25
25
25
25 ($1 million
50'( " )
20 ( " )
20 ( " )
25 (")
25(")
20(")
20(")
'For bjyers with other coverage from AIG
-------
RESPONSE f CTION CONTRACTOR PRIMARY RISK SPECTRUM
&
AVAILABILITY OF COVERAGE IN STAiSDARI) INSURANCE POLICIES
Risk
Non-pollution Related
Professional non-negligent
Professional negligent
Non-professional non-negligent
Non-professional negligent
Pollution Related
Professional non-negligent
Professional negligent
Non-professional non-negligent
Non-profewional negligent
Professional Liability Insurance
Covered
Covered
Excluded
Excluded
Excluded1
Excluded 1
Excluded
Excluded
General Liability Insurance
Excluded
Excluded
Covered
Covered
Excluded
Excluded
Excluded
Excluded
As of 11/9/90
1 Except wastewater, potable water & stormwater projects
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