The Tennessee Valley Authority (TVA) recently recovered $42 million in a settlement with one of its insurance carriers, Arch Reinsurance, Ltd.  The $42 million payment comes from a $50 million insurance policy.  Arch initially rescinded the policy, claiming TVA did not provide complete information when it applied for the policy.  In this settlement, TVA agreed to a 16 percent discount on the policy.

This settlement ends one of three arbitration disputes over coverage for the disastrous 2008 dike failure at TVA’s Kingston Plant in Roane County, Tenn,, where more than a billion gallons of coal ash spilled into the adjacent community and waterways.  It is probably no coincidence that the $42 million is the same amount TVA paid to Roane County for economic development in the area after the spill. Despite being found liable for the disaster, TVA may be able to recover additional insurance funds in the two remaining arbitration disputes with its other insurers. TVA has two remaining cases in arbitration in London — one related to a $150 million ACE Bermuda Insurance Ltd. policy and another concerning a $50 million policy from Zurich Insurance Co.

As TVA actively pursues insurance recovery from its insurance carriers, it has yet to make whole those property owners impacted by the spill.  At the time of the spill, EPA Administrator Lisa P. Jackson acknowledged that the disaster was “one of the largest and most serious environmental releases in our history.” The cleanup continues today, nearly five years after the disaster, and this once-tranquil community continues to suffer the impacts associated with the spill.

TVA is a quasi-governmental agency that enjoys immunity under the Federal government’s discretionary immunity doctrine. However, in August 2012, a Federal Judge in Knoxville, Tenn., found TVA liable for its negligence in causing the coal ash spill.  The Judge then ordered TVA into mediation with Plaintiffs to resolve damages it owes to those property owners impacted by the spill. Lawyers at Beasley Allen represent hundreds of these property owners whose property and way of life continue to be impacted by TVA’s negligence in causing the 2008 disaster.

If you need additional information on this subject, contact Rhon Jones or Brantley Fry, lawyers in our firm’s Toxic Torts Section, who have been heavily involved in the TVA litigation. They can be reached at 800-898-2034 or by email at Rhon.Jones@beasleyallen.com or Brantley.Fry@beasleyallen.com.

Sources: Law360.com, the Associated Press and The Knoxville News Sentinel

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