Some common environmental exposures faced by public entities/municipalities include: Wastewater treatment plants/pumping stations present exposures from nuisance odor claims, raw sewage rupture, chlorine gas emissions, and historic site conditions (i.e. old in ground features, surface impoundment, lagoons, clarifiers, unknown/old landfills; sewer lines, rupture of raw sewage lines, flood, discharge to surface water); maintenance garage services, aboveground tanks, parts washer solvents, petroleum waste products, vehicle storage; parks, lakes, rivers and open land (i.e. midnight dumping, discharge of raw sewage/industrial waste, asphalt paving projects with storm discharge to open waters, unknown surface conditions); landfills (Inadequate control of dusts, odors and windblown trash, Insufficient daily cover material, Absent or inadequate methane collection or venting, Inadequate treatment of leachate and storm water; unknown locations within the municipality, rupture of leachate lines and groundwater contamination, leachate runoff into open waters, uncontrolled storm water, nuisance odor); incinerators (i.e. airborne particulates, heavy metals (airborne and in residual ash), airborne volatile organic compounds); aboveground/underground storage tanks which present several exposures, leaks from tanks bottoms, ruptures during a catastrophic release, spills during loading/unloading process; No auditing of waste handling and disposal companies; abandoned industrial sites within the municipality; Lack of formal inspection documentation; Contamination from cemetariesInadequate security; Poor community relations; Poor information on the possible adverse reactions and interactions of chemical compounds that accidentally commingle during a fire, Brownfields.
Municipal recycle/recovery/incinerator Facilities: Contaminated storm water runoff.; Poorly treated wastewater discharges; Uncontained aboveground fuel and oil storage tanks; Improperly managed underground tanks; Lack of understanding about previous use of the property; Lack of proper air permits, monitoring equipment, and reports; Noise and odor emissions; Electrical equipment containing PCB dielectric fluids; Chronic litter problems around the property; Incomplete combustion causing increased ash disposal requirements; Incomplete testing of incinerator ash for hazard characteristics; Improper on-site and off-site ash disposal practices; Inadequate screening of municipal sludge and solid waste.
Vehicle and Road Maintenance Facilities: Poor management of underground tanks; Improper storage and/or disposal of waste oil, fuels, solvents; Lack of proper secondary containment for oil storage areas; Road salt improperly stored; Floor drains for spilled liquids to flow to local surface waters; Improperly maintained oil/water separator systems; Past spills and on-site disposal of waste oils and solvents;
Municipal Buildings in General: Presence of asbestos or lead; Electrical equipment containing PCB dielectric fluids; Sick building syndrome; Mold; Poorly managed underground fuel oil tanks; Pesticides/herbicides for lawn maintenance at buildings and parks; Improper management disposal of chemicals from school laboratories,
Electrical Transmission Facilities: Herbicides leach into surface/ground waters at transmission areas; Inadequate underground tank management programs; Leaching from pressure-treated wood along power transmission areas; Improperly maintained electrical equipment containing PCBs; Remote PCB transformers and capacitors along transmission lines; Improper handling/disposal of solvents from maintenance operations; Electrical equipment and dielectric fluids stored without containment; Poor preventive maintenance programs.
Note: The above list is intended only to outline some typical pollution exposures common to public entities it is not all-encompassing. If a public entity has schools, airports, hospitals, golf courses or other operations not outlined above contact environmental Strategist, Inc. for a list of common environmental exposures.
Environmental Liability Claims For Public Entities
1.Chlorine release at a wastewater treatment plant resulted in toxic air emissions. Area residents and businesses were evacuated and several people were hospitalized for inhalation of fumes. A total of 12 businesses were forced to shut down for the better part of a day. Bodily injury claims amounted to $70,000 and business interruption claims totaled $120,000.
2. A wastewater treatment plant that was 25 years old had been upgraded several times over the years. Improper closure of an old clarifier and on-site surface impoundment had allowed gradual seepage into groundwater. These constituents contaminated the underlying groundwater, which was a potable water supply for the neighboring community. The costs for groundwater cleanup and emergency water supply for residents totaled $550,000.
3. A local park owned by a municipality served as a convenient illegal disposal site for a recycling contractor. The contractor dumped five 55-gallon drums, releasing 275 gallons of used mineral spirits into the municipal park. When the drums were dumped, the hazardous contents leaked into the soil. In addition, the contractor emptied the contents of the vacuum truck into a nearby community lake. Total cleanup expenses amounted to $475,000.
4. A maintenance garage used solvents for parts washing performed the work over a drain leading to an on-site septic system. Over time, the septic system leach field migrated into the surrounding soils and groundwater. At the time of the septic system closure and conversion to a public sewer system, the contamination was discovered. Site remediation involved soil removal and installation of a groundwater recovery system. The costs exceeded $720,000.
5. A municipal property was selected as the site for a new library. Construction was halted after the discovery of an unknown landfill location at the site. As a result of haphazard disposal techniques, there had been a wide array of materials disposed at this site. An investigation revealed that the landfill occupied about three acres and the refuse was approximately 20 feet deep. The cost to exhume all buried materials and sort them for proper disposal exceeded $1 million. Additionally, further investigation turned up soil contaminated with pesticides, total petroleum hydrocarbons and various volatile organic compounds. Soil investigations, cleanup and disposal amounted to approximately $500,000, bringing total costs to $1.5 million.
6. At a newly built wastewater treatment plant pumping station, a faulty valve malfunctioned. As a result, a ruptured pipe released 2.8 million gallons of raw sewage into a local creek. Municipal workers acted quickly to stop the pipe rupture. Raw sewage traveled down stream to a larger river. The river was used by local fisherman, recreational boaters and marinas. Many boats were damaged by the sewage and marinas were forced to close temporarily while the riverbanks were cleaned up. The total cost of property damage and loss of income claims totaled $195,000.
7. William Lee Slocum Jr., of Youngsville, Pa. Has pleaded guilty in Pittsburgh U.S. District court to six counts of negligently violating the Clean Water Act when he operated the Youngsville Sewage Treatment Plant between 1983 and 1995. The Justice Department said during that period there were repeated discharges of raw sewage and sewage sludge from the plant into Brokenstraw Creek, a tributary of the Allegheny River. Slocum, a Pennsylvania Sate senator, could be sentenced to one year in prison and/or a fine of $100,000 per violation.
8. The facilities department for a municipality hired a licensed hazardous waste transporter to pick-up and deliver three barrels of spent solvents, used for cleaning their boiler, to a treatment plant. While loading on municipal grounds, one barrel fell and spilled its con-tents, which seeped into the ground. Shortly after, twenty neighbors notified the state health de-partment that their well water smelled odd. Health officials determined that chemicals from the accident had seeped into their wells. The municipality paid $1.2 million in damages and clean-up costs.
9. A municipality hired a fiber optics company to install a network of data and voice cables. The job included directional drilling under a number of roads. While drilling, the contractor hit a fuel line and did not report it. After about 2 years, neighbors smelled gas in their well water. During investigation, the damaged fuel line was discovered and determined as the source of contamination. Since the fiber optics company was no longer in business, the municipality was held liable for damages and clean-up costs in excess of $2.7 million.
ENVIRONMENTAL LIABILITY INSURANCE PRODUCTS APPROPRIATE FOR PUBLIC ENTITIES
The majority of public entities operating today, lack the financial strength to self insure their environmental liabilities. Consideration needs to be given to the economies of scale afforded with environmental liability insurance as part of your risk transfer strategy.
Consider the three main benefits environmental liability insurance affords:
- Coverage includes defense cost. Environmental liabilities are relatively new and very litigious. Even if you do nothing wrong you can still get named in a suit and have to expense defense dollars to get released. At one time, Superfund had .83 cents of every dollar going to legal fees, and only .17 cents for actual cleanup. When you realize the average Superfund site cost in excess of $30,000,000 to clean up, you can begin to understand just how big of a factor defense costs play in your risk transfer strategy.
- All policies come with experts to assist you in handling the claim. Anytime you can have the EPA, state and local environmental officials along with the press pounding on your door, this is not a fender bender, you need experts to assist you in running damage control central.
- The majority of the time the cost to clean up the environmental problem/s is far less than the associated claims that come in from third parties, mainly for business interruption. You need to look at the customers and neighbors that can be impacted should an environmental loss occur. Who can you impact should you or a sub-contactor/vendor cause an environmental liability?
ENVIRONMENTAL IMPAIRMENT LIABILITY (EIL)
EIL is for public entities susceptible to economic loss caused by pollution that actually or allegedly originated from their operations. Sometimes referred to as pollution legal liability this coverage is for those who own, operate, lease, or have any other insurable interest in real property and the operations. Coverage can be written in a variety of ways addressing unknown preexisting conditions or new conditions. Coverage can include third party bodily injury and property damage along with business interruption and extra expense, on and off site clean up costs, legal defense expenses, non-owned disposal sites, transportation and more. EIL can be offered on multi year terms. Sewer lines and pump/lift stations can be covered by EIL. Most EIL policies cover above ground storage tanks.
PROPERTY TRANSFER COVERAGE
When buying, selling or condemning property their can be unknown preexisting environmental conditions. Since a Phase I or Phase II survey cannot guarantee uncovering all potential environmental liabilities, insurance companies have created property transfer insurance. This coverage protects the new owner or any party with an insurable interest, against unknown environmental conditions that may be discovered during the policy period, that were not caused by the new owner. This coverage not only helps to keep the property at its maximum value, it will assist the purchaser in being able to secure the necessary financing to complete their transaction.
TRANSPORTATION POLLUTION LIABILITY
Generally, business auto or truckers policies will exclude pollution losses arising from spills or other releases of their cargo. Broadened auto pollution liability (typically Form CA 9948) affords coverage during the loading, unloading and transportation, for a spill, release or sudden upset and over turn of transported cargo. Note: An MCS-90 endorsement is not pollution coverage.
UNDERGROUND AND ABOVE GROUND STORAGE TANKS
Financial responsibility requirements ensure that owners and operators of underground storage tank systems have the ability to financially handle a release from an underground storage tank. The responsibility encompasses the ability to pay funds for corrective action and third party bodily injury and property damage from non-sudden and sudden and accidental releases from a regulated underground system.
Note: For public entities, you have potential indirect environmental exposures from the vendors you hire to perform services. Should your vendors cause an environmental problem or exacerbate an existing environmental issue their general liability insurance policy generally will have either an absolute or total pollution exclusion. In order to be protected you should make sure your vendors have the proper environment insurance coverage before they do any work on your behalf.
CONTRACTORS POLLUTION LIABILITY
This coverage can be purchased to meet two specific exposures. First, contractors that perform remedial activities (asbestos, lead, mold, soil or ground water remediation) there is the standard contractors pollution liability (CPL) insurance coverage. This protects the insured for pollution conditions they may cause or exacerbate an existing situation while performing remedial services. This is for covered operations performed by or on behalf of the insured. The loss must occur away from any premises the insured owns, rents, leases or occupies, in other words while they are performing remedial services at an educational institution.
Secondly, standard contractors (i.e. general contractors, HVAC, plumbing, electrical, mechanical, janitorial, demolition, drilling, excavation, highway, street and paving contractors, rigging, utility, millwrights, artisan, etc.), in performing their services may cause an environmental liability that is generally excluded from their general liability coverage. For these contractors there is contingent contractors pollution liability (CCPL) coverage. Basically they are afforded the same coverage as remedial contractors but the cost to purchase this insurance is substantially less.
PROFESSIONAL LIABILITY (E&O)
Should a environmental engineer/consultant or analytical laboratory make an error or an omission in performing professional services for you they will need a E&O policy including pollution for their to be coverage. Some professional services could include Phase I or Phase II site assessments, All Appropriate Inquiry (AAI), air monitoring, lead and asbestos assessments, waste characterization, remedial action plans, water testing, mold survey’s, environmental training….
