Fixed-Price Cleanups: Using Captives and Other Cost Cap Alternatives

This CLE course will review the legal mechanics and technical prerequisites of entering fixed-price cleanups (FPCs) in the wake of Commercial Insurers' 2011 exit from the cost cap insurance market. It is designed for counsel for property owners and prospective owners (including brownfield developers), remediation contractors, cost recovery litigators, PRP groups, governments, and bankruptcy debtors and creditors, all of whom share an interest in quantifying cleanup costs in a manner that is accurate, efficient, and will hold over time. The panel will examine the use of cost cap alternatives (CCAs) using FPCs and other insurance products approved and used to support FPCs since the 2011 demise of the commercial cost cap market.

Environmental cleanups come with many risks, including the risks of cost overruns and other exposures. Until 2011, the majority of FPCs relied on cost cap insurance. When cost cap coverage dried up in 2011, a CCA was invented out of necessity. It has successfully met even the most rigorous forms of review and it carries many advantages over traditional cost caps insurance products.

Counsel should understand the advantages and disadvantages of using CCAs and when to reduce cleanup cost uncertainties (and, typically, also cleanup costs) that may create a hurdle to reaching an agreement regarding the property or transaction involved.

Listen as our authoritative panel examines the use of CCAs to support FPCs, including when and why to use CCAs. The panel will also discuss the mechanics of CCAs and lessons learned from FPCs, as well as offer guidance for using CCAs in FPCs.