Many utilities and other companies that have generated power using coal have historically stored their coal combustion residuals (“CCRs”) [1] in coal ash basins or impoundments. A number of companies have faced allegations of environmental property damage resulting from releases of CCRs out of impoundments and into surrounding bodies of water or onto soil, [2] while others have faced allegations of environmental property damage resulting from the leaching of contaminants out of coal ash impoundments into groundwater. Some of these claims have been made under decades-old statutes, such as the Clean Water Act (“CWA”) or the Resource Conservation and Recovery Act (“RCRA”). [3] In 2015, the Environmental Protection Agency raised the profile of CCR concerns when it published a final rule, which, among other things, requires groundwater monitoring at coal ash impoundment sites and raises the possibility of requiring remediation of alleged CCR contaminants (“the CCR Rule”). [4]
A recently issued report entitled “Coal’s Poisonous Legacy – Groundwater Contaminated by Coal Ash Across the U.S.” (the “EIP Report”) again directs national attention at CCRs.
EIP Report Focuses on CCRs
On March 4, 2019, two environmental groups, the Environmental Integrity Project and Earthjustice, published the EIP Report. That report contains allegations of groundwater contamination at hundreds of coal ash impoundments across the country. [5] In addition to making general allegations regarding groundwater contamination caused by CCRs, the EIP Report includes specific contentions regarding pollutants found in groundwater at particular identified coal ash impoundment sites, including the extent to which the pollutant concentrations exceed safe drinking levels. The EIP Report alleges that unsafe levels of one or more pollutants exist at 254 of the 265 sites mentioned.
Companies that may be connected to any of the sites listed in the EIP Report – whether as owners or operators or as former owners or operators of a site, and/or as contributors of CCRs to a site – may find themselves on the receiving end of claims asserting that they bear liability for alleged environmental damage at these sites. As companies prepare for the possibility of these claims, this Alert offers some practical suggestions for assessing and preserving access to insurance assets that may provide coverage for any resulting defense and indemnity costs.
Review Your Insurance Program, Including Historical Policies
To determine whether it may have coverage for alleged CCR-related liability, a policyholder should review its insurance program, including any historical and current liability policies. Most “occurrence-based” general liability policies issued through the mid-1980s provide coverage for property damage that occurred during the policy period, including long-term environmental damage, regardless of when liability is actually asserted. [6] In addition, historical liability policies also often provide coverage for the costs incurred to defend and investigate environmental claims. Many policyholders will find that their single largest potential source of coverage is under general liability policies issued decades ago.
General liability policies, however, are not the only source of potential coverage for alleged...
