UNLOCKING THE REAL BENEFITS OF ENVIRONMENTAL INSURANCE FOR LRAs AND DEVELOPERS

Presenters: Barry Steinberg / Kutak Rock Bob Hallenbeck / XL Group – Environmental

ADC NATIONAL SUMMITWASHINGTON, DC

JUNE 5, 2014

I. What should insurance do for your organization?

• Control liability• Limit exposures• Protect financial stability• Provide risk management tools• Help you avoid catastrophic losses• Protect Directors and Officers

II. Who can you protect?

• The LRA itself• The LRA board• LRA employees• Tenants• Vendors• Contractors• Passers-by• Adjacent property owners

III. Which insurance policies should be considered, and what do they cover?

• Property – your site and what’s on it that you own or lease• General Liability – what happens on your site• Workers Comp – what happens to workers on the site• Auto – vehicles you own and their drivers• Directors & Officers – actions taken by your Board of Directors• Errors and Omissions – actions taken by professional staff and

outside consultants

IV. Are there any other insurance policies you should know about and do you require them to be obtained?

• Tenants• Contractors• Subcontractors• Vendors• Architects• Engineers• Consultants• Environmental Risk – CGL Exclusion

V. What kind of environmental risk will I encounter?

• Known conditions• Unknown conditions• Breach of Land use restrictions• Level of cleanup needed• Government continuing obligations• Government right of access• Adjacent property migration – to and from

VI. How can I mitigate environmental risk?

• Review of government documents– ECP– Regulator concerns

• Due diligence– Inadequacy of the CERCLA requirement– No intrusive testing– Petroleum is not a CERCLA hazardous substance– Obtain your own database

• Insurance

VII. Evolving environmental risk considerations for former military installations

• Leases – no CERCLA warranty• MEC-Army / EPA dispute concerning CERCLA applicability • Vapor intrusion• Pesticides

VIII. Government continuing obligations

• CERCLA warranty – when does the government respond?• 330 – the OSD effort to limit it

IX. So what does environmental insurance protect against?

• Unknown and new conditions that are not the government’s responsibility

• Remediation • 3rd party bodily injury and property damage• Legal defense costs• Regulatory reopeners• Business interruption and other enhancements

X. What does it not protect?

• Known conditions that are the government’s responsibility • New and unknown conditions that are the government’s

responsibility• Ongoing government remediation and demolition• The government being added as an additional insured

XI. Who does it protect?

• The LRA (Camp Bonneville)• The LRA Board (Roosevelt Roads)• Tenants (Riverbank)• Developers (Lowry)• Municipalities and communities (Ft Ord)