What is Environmental Structured Settlement?

Environmental Structured Settlement is an intelligent and innovative extension of the concept of structured settlement which is the gift of a wonderful legal arrangement in 1983 . It is a unique form of settlement between two parties – the claimant who files a lawsuit against the other party, the defendant. In case of the environmental structured settlements, the claimant files a lawsuit against the defendant for an environmental damage or any other form of irreversible environmental degradation, for which it can be held liable.

Environmental Structured Settlement

Structured Settlement is the special form of compensation amount payable for any form of damage done to the environment (like pollution or natural resource degradation) by another party against whom the claimant files a lawsuit. The unique feature of this settlement amount is that it is paid out to that party through installments instead of paying the whole compensation as a lump sum.

These installments can be variable depending on the agreement between the two parties like – a smaller annual amount for next 20 years. The guaranteed stream of payments can stretch up to as long as 50 years! This stream of payments is necessary to fund for the clean-up exercise to prevent further environmental damage. These settlements are especially useful in case of large clean-up programmes for landfills, mines, industrial pollution etc. The April 17, 1995 Environmental Protection Act paper set the basis of this form of structured settlement.

Process of setting up Environmental Structured Settlement

  • The setting up of an environmental structured settlement is an easy process.
  • The agreement to provide guaranteed stream of payments is entered into by both the parties.
  • The defendant assigns the responsibility for payment to an assignment company that pays periodically on the defendant’s behalf.
  • The assignment company buys an annuity that provides periodic payments
  • The assignment company is backed by the guarantee of a very large and creditworthy US Life Insurance Company to avoid risk of default.

The following figure explains briefly the whole concept of Environmental Structured Settlement and how its use is put into operation via various participating agents.
Environmental Structured Settlement

 Benefits of Environmental Structured Settlement

Having understood how this unique form of compensatory settlement came about, there are certain salient features as well as benefits to this form of settlement.

  • There is no risk of default generally, since it is guaranteed by the largest US life insurance companies.
  • Structured Settlement is a source of a guaranteed income stream with the freedom to spend the money on the clean-up projects.
  • The payments schedule can be elongated to as along as fifty years of guaranteed income stream!
  • The defendant can completely free himself of payments obligation by handing it over to the assignee.
  • The clean-up money is made available even if the original defendant party dies or goes bankrupt.
  • The society as a whole reaps the benefits of a cleaner environment which is properly funded.
  • There is incentive for research; development and installation of cleaner technology t prevent environmental damage.