Hazardous Waste

An estimated 275 million metric tons of hazardous waste are treated, stored, and disposed of annually in the United States, and the volume is growing. Congress has been concerned about the difficulties encountered by some hazardous waste facilities in obtaining pollution insurance. Unless facilities can demonstrate that they have the resources to cover bodily injury and property damages resulting from their operations, they cannot legally stay in business, which raises concerns about the adequate handling of hazardous waste. This report (1) lists insurance companies providing pollution liability insurance and closure or postclosure insurance and describes the extent of coverage and the coverage costs; (2) updates the cost and availability of pollution insurance to land disposal facilities; and (3) determines the implications if state cleanup funds were made available to treatment, storage, and disposal facilities for pollution cleanup and for compensating victims who have suffered pollution, bodily injury, or property damage.

GAO found that: (1) although 24 insurance companies offer various forms of pollution liability insurance, two insurance carriers dominate the pollution insurance market; (2) the majority of companies operating TSD facilities have had difficulty in obtaining pollution insurance because insurance carriers are becoming increasingly reluctant to underwrite pollution liability; (3) closure and postclosure insurance is available to TSD facilities only under exceptional circumstances; (4) about one-third of TSD companies use liability insurance to cover accidents and meet financial responsibility requirements; (5) some land disposal facilities use liability insurance to meet gradual coverage requirements; (6) small TSD companies have more difficulty in obtaining insurance than large companies and they often use financial tests to meet responsibility requirements; (7) since 1986, the cost of liability insurance has increased 29 percent and many companies are opting for fronting policies that do not offer true coverage; (8) more than half the states have Environmental Protection Agency-approved state cleanup funds to cover the financial responsibility of underground storage tank owners and operators in the case of pollution damage; (9) about 50 percent of all TSD facilities would use state cleanup funds for cleanup if cleanup funds were available; and (10) insurance companies oppose the use of state funds as an financial mechanism for cleanup, since the use of state funds could result in reduced coverage and higher premiums.