Ebasco Choice Of Law: A Decision Half A Century In The Making

• Published date: 18 August 2023
• Subject Matter: Corporate/Commercial Law, Environment, Insurance, Energy and Natural Resources, Corporate and Company Law, Environmental Law, Utilities, Insurance Laws and Products, Clean Air / Pollution
• Law Firm: Pillsbury Winthrop Shaw Pittman
• Author: Mark J. Plumer and Jesse N. Vazquez

Following the breakup of large utility holding companies by trust busters in the 1930s, General Electric created Ebasco (Electric Bond and Share Company), a construction company and consultancy that, among other things, assisted newly independent utilities throughout the United States to obtain broad excess-level occurrence-based liability insurance policies. These so-called Ebasco policies were attractive to utility policyholders because of their comprehensive insuring agreement, modest exclusions (e.g., no pollution exclusions), and the absence of aggregate limits. Illustratively, a $10 million Ebasco policy potentially could pay up to 20 times its limits (equivalent to $200 million) to fund cleanup of 20 contaminated sites, assuming an occurrence at each site happened during the policy period. For decades, Ebasco policies, primarily underwritten by London market insurers, have been the subject of litigation related to pollution, asbestos and human health claims.

Dozens of large utilities located across the United States participated in this program over the years. These included entities like American Electric Power (Ohio), Arizona Public Service (Arizona), Boston Gas (Massachusetts) Columbia Gas (Virginia), Consolidated Edison (New York), Duke Power (North Carolina), Florida Power (Florida), Montana Power (Montana), Pennsylvania Power & Light (Pennsylvania), Potomac Electric Power Company (Washington, DC), Public Service Electric & Gas (New Jersey), Texas Eastern Transmission Company (Texas), Virginia Electric (Virginia), and Washington Water Power Company (Washington), to name just a few.

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