Insurance Recovery for Manufactured Gas Plant Liabilities

Fortnightly Magazine - April 15 1997
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Valuation, optimization and settlement strategies

oth gas and electric utilities face a variety of environmental issues arising from more than 1,500 former manufactured gas plant (MGP) sites, which supplied a major source of energy in the United States from the early 1800s to the mid-1900s. Using the standard operating procedures of the day, MGPs created and often disposed of byproducts such as coal and oil tars, tar/water emulsions, sludges, spent oxides (including cyanides), lampblack, ash and clinker.

Today, simply identifying these MGP sites and their history of operation and ownership can be a significant chore. It calls for review of company records and historical association proceedings, industry directories, journals and other documents that describe individual plant operations and site layouts. MGP site environmental liability issues include the type and extent of contamination, the risks posed and current and future use of the site. State laws and regulations also must be considered. Site remedies and expected costs pose another issue, including how those costs are best allocated. Other potential liabilities include property damage and toxic tort claims. %n1%n

Once a company identifies these liabilities, questions soon follow concerning recoverability of costs from insurers, such as: How to place a value on a potential insurance recovery or damage award? How to maximize recovery through litigation or settlement? And, how can coverage disputes be mediated to avoid litigation?

Valuing Potential Recovery

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