The Second Generation – Cost Cap 2.0

Remediation Cost Overrun Protection 2.0


Environmental Services Group
Aon Risk Solutions

Early incarnations of remediation cost cap products were eliminated from carrier offerings in late 2009 or early 2010 while the underlying risk of remediation cost overruns and the demand for an insurance solution remained. The previous versions of cost cap insurance offered by several major carriers were tremendously popular but resulted in unfavorable loss experience. Cost caps’ poor loss history coupled with the lowest interest rate environment on record, led to the disappearance of the product from the marketplace. Several environmental markets have determined that with different underwriting methodologies, coverage parameters and interest rates on the rise a new generation of cost cap products, or Cost Cap 2.0, represents an opportunity for clients and carriers alike.

Today the EPA estimates there are over 450,000 active Brownfield projects in the U.S., collectively leveraging some $14 billion in cleanup and redevelopment funding. When dealing with large-scale contamination and remediation issues, stakeholders, including site owners, investors, banks, property developers and contractors, have always been concerned that cleanup costs will exceed estimates primarily for the following four reasons:

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Subrogation and CERCLA Cost Recovery: 7th Circuit Court Refuses to Adopt 9th Circuit Ruling in Chubb

Taft Stettinius & Hollister LLP
Tammara D. Porter

July 10, 2014


Subrogation has been defined as “the substitution of one person in the place of another with reference to a lawful claim, demand or right, so that he who is substituted succeeds to the rights of the other in relation to the debt or claim, and its rights, remedies, or securities.” Farm Bureau Ins. Co. v. Allstate Ins. Co., 765 N.E.2d 651, (Ind. Ct. App. 2002). Stated differently, the equitable principle of subrogation allows one person to stand in the shoes of another and assert that person’s rights against a third party. U.S. Airways, Inc. v. McCuthchen, 133 S.Ct. 1537, 1546 n. 5 (2013). A typical example of a subrogation action involves an auto accident where a driver gets struck by another motorist. The driver submits a claim to its auto insurer to cover the costs of repairing the driver’s car or to cover the driver’s hospital bills. The auto insurer pays the claim and then sues the other motorist (or the motorist’s insurer) to recover the costs it has paid. Over the course of the last year or so, two federal courts have rendered different decisions on the issue of whether an insurer who pays claims based on costs incurred to remediate environmental contamination may maintain a subrogation action against other potential responsible parties under the federal Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA” or “Superfund”).

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Riders on the Storm Beware

Wilson Elser
Wendy D. Testa & John Allegretto

July 15, 2014

Every summer, warm weather prompts millions to flock to bodies of water. While sunbathers likely give little thought to the source of water in which they frolic, design professionals and builders of public and private projects must pay careful attention to how construction will affect stormwater that eventually finds its way into lakes and oceans. Stormwater runoff is rain or melted snow that runs across, rather than seeps into, the ground. Runoff can cause severe damage. Without any type of treatment, runoff also pollutes tributaries and major waterways. Improper design, faulty construction or lack of maintenance of stormwater management systems can create professional exposure to unexpected avenues of liability.

Detention ponds have become popular in commercial and residential building. Unlike retention ponds, which remain dry except to capture water briefly and slowly release it, detention ponds are always filled with water.

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Boiler Owners Must Submit Notification to EPA by July 19, 2014

Pierce Atwood LLP
Dixon P. Pike and Brian M. Rayback

July 9, 2014

If you own or operate a boiler, keep reading.

In December 2012, the U.S. EPA finalized changes to its National Emission Standards for Hazardous Air Pollutants for Area Source Boilers at 40 C.F.R. Part 63, Subpart JJJJJJ.  Under this regulation, owners or operators of virtually any boiler were required to conduct an initial tune-up by March 21, 2014, as described in a prior alert, and must now submit a notice of compliance status (NOCS) to EPA.

Boilers located at major sources of hazardous air pollutants* are not subject to the July 19 notice requirement.

Other exemptions:

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