Financing Liabilities Under Superfund

One of the more critical environmental risk areas involves the financing of cleanup costs associated with past improper disposal of hazardous wastes. These costs will run into the tens of billions of dollars. The federal Superfund program and related state programs are the driving forces for cleaning up hazardous waste. Under Superfund, the government collects taxes and coordinates cleanup strategies, and searches for potentially responsible parties (generators, disposers, transporters) to assist in financing the cleanup. To lessen the financial impact, responsible parties are looking to their liability insurers to provide coverage under old general liability insurance policies. Insurance companies contend that Superfund liabilities are not covered under liability policies. The paper examines the various financing methods and liabilities produced by Superfund. Particular emphasis is placed on developments in the courts which are resulting in a significant shift in the financial responsibilities to the insurance industry. Broad estimates of the financial impact of Superfund liabilities are developed. Finally, several public policy issues, which are raised by the topics exmained in this paper, are discussed.