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AIG's proposal for cleanup fund makes headway.

Despite Congress' reauthorization of Superfund late last year, a proposal to establish an environmental trust fund to replace the federal cleanup program has gained some acceptance on Capitol Hill, according to supporters.

The trust fund proposal, put forth by Maurice Greenberg, chairman of American International Group Inc. in New York, would impose a 2 percent tax on insurance premiums and an assessment on self insureds to pay for cleaning up old sites. All businesses, including insurers, would participate without regard to liability.

"The failure of [Superfund] to clean up sites and its devastating financial effect upon banks, municipalities, large and small businesses and insurers might be enough to propel Congress to accept a rational solution like the National Environmental Trust Fund when Superfund is seriously examined in 1993 and 1994," according to Peter Lefkin, vice president of government and industry affairs for Fireman's Fund Insurance Co. Mr. Lefkin made his remarks before 260 people in Chicago attending a recent Harold H. Hines Jr. Memorial Symposium, which was cosponsored by the Risk and Insurance Management Society's Chicago and Northeastern Illinois chapters and the Insurance School of Chicago.

Mr. Lefkin noted that many industry representatives were surprised when Congress unexpectedly reauthorized Superfund in October, but that the battle against the program is far from over.

"This should not be construed as congressional endorsement of the status quo, but as a reflection of the fact that, exhausted by the Clean Air Act debate and facing reauthorization of RCRA in 1991, it did not want to delve into another Superfund battle," said. "Oddly enough, this delay may be good news for advocating fundamental changes to the Superfund system.

"The extension does provide time to compile a record demonstrating that the present law is not working as intended. It also provides an opportunity to build a coalition of those who, like insurers, feel economically threatened by the law. Many who may be included were never involved in the Superfund debates in 1980 and 1986, and Congress might be surprised to learn that Superfund involves them also."

"Peter is correct," says Chip Nottingham, a legislative consultant for AIG. "We think it has really ripened as an issue in the last year." AIG, along with Fireman's Fund and others, apparently has stepped up the pace of trying to build the reform coalition. Members of the coalition include banks, which have become responsible for cleaning up foreclosure properties, and municipalities, which collect household garbage.

Although there is no draft legislation for AIG's proposal, the insurer and the others are trying to establish a record of what has happened under Superfund. AIG is preparing a paper on the program's transaction costs, including lawyer and consultant fees, which will be published in the Environmental Law Reporter. "We're also meeting every day with groups to bring attention to the problem," and to discuss AIG's trust fund proposal, adds Mr. Nottingham.

Apparently, some of that effort has already paid off. One person who thinks so is Jan Paul Acton, regulatory policies program director for The RAND Corp., the Santa Monica, CA-based non-profit research firm. Mr. Acton told symposium participants that members of his organization have seen "a growing sympathy from the staff of Congress for it."
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Title Annotation:American International Group
Author:Schussel, Mark L.
Publication:Risk Management
Date:Apr 1, 1991
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