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Nuclear-Waste Firm Sues Balky Insurer

May 19, 1987|ALAN GOLDSTEIN | Times Staff Writer

American Ecology, an Agoura Hills-based company specializing in disposing of low-level radioactive waste, has sued its insurance carrier, American Nuclear Insurers, for refusing to pay attorney fees, as well as for damages that might occur in two lawsuits involving the company's controversial dump sites.

The suit was filed recently in Los Angeles Superior Court, one day after the insurance group asked a Kentucky court to declare that it not be held responsible for costs associated with a dump in Maxey Flats, Ky., operated by U.S. Ecology, a Louisville-based unit of American Ecology.

The Environmental Protection Agency wants U.S. Ecology to pay $30 million in cleanup costs associated with the Maxey Flats dump. Studies of soil samples have shown traces of highly radioactive plutonium outside the dump.

But American Nuclear Insurers, an unincorporated association of 34 insurance companies based in Farmington, Conn., maintains that its policies cover only lawsuits, not special "Superfund" notices served on American Ecology by the U.S. Environmental Protection Agency.

Considered Long-Term Threat

Superfund sites are those considered to pose a serious long-term threat to human health and thus qualify for federal funds for some of the cleanup. Taxes from industries held responsible for the contamination have contributed a substantial amount to the federal funds.

American Nuclear Insurers claims it is liable for a maximum of $10 million a year in claims. But American Ecology officials say that, because the pollution damage in Kentucky occurred over several years, American Nuclear Insurers should pay up.

"That's what you buy insurance for," said William E. Prachar, American Ecology chairman, chief executive and president.

American Nuclear Insurers could not be reached for comment.

American Ecology has had serious contamination problems at its other dumps in Nevada, Washington state and Illinois.

Because American Ecology was afraid its insurer would also try to avoid responsibility for the Illinois dump site, American Ecology sued American Nuclear Insurers in an attempt to force it to cover any costs at the Illinois site as well.

The Illinois attorney general has filed several suits against U.S. Ecology, charging that radioactive isotopes have leaked from a low-level radioactive-waste site in Sheffield, 120 miles west of Chicago.

"They pooh-poohed the litigation for a while," said Douglas R. Augenthaler, referring to American Ecology, "but they're down to the brass tacks now." Augenthaler follows the company for E. F. Hutton, a New York brokerage.

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