Tag: environmental insurance

  • ERMI Business Professional Series Realtors

    Licensed Real Estate Professionals have a duty to perform their services with a level of care which is established by contract and prevailing standards of conduct in their field.  The fact is, Realtors have professional duties to disclose material facts of which encompass environmental exposures / liabilities.

    Today’s, transparent business environment, means real estate professionals must be aware of the evolution of their E&O liability loss exposures.  Claims under E&O often include allegation of failure to disclose or misrepresentation on a transaction.

    Historically, Realtors have relied upon “Environmental Indemnifications” in buy sell agreements.  The vast majority in the private sector have been slow to implement financial assurance requirements because they have been falsely content that contracts utilized are iron clad.  What we have learned is “Environmental Indemnifications” in buy / sell agreements may not be worth the paper they are written on if not backed by a financial assurance strategy.

    Governmental financial assurance requirements have been around for decades.  For example, when I began working with pollution insurance in the 1980’s we were selling primarily to asbestos / lead abatement / remediation contractors because the government required them to have Contractors Pollution Liability insurance to perform their remedial services.  Industrial and hazardous waste haulers must evidence transportation pollution liability insurance coverage in force before they can move any waste.  Owners of regulated underground storage tanks must evidence financial assurance before they can put any product into a storage tank and the list goes on.

    You may ask, why has the real estate profession been so slow to react?  Answer: Lack of environmental education.  That is where Insurance Professionals add their value in teaming with Professional Realtors.  By coaching Realtors on better protect their E&O exposure while assuring they are dealing with cleaner and greener real estate, backed by a financial assurance strategy.

    To understand why “Best Practices” for realtors means moving beyond traditional environmental indemnifications / site assessments to possessing a working knowledge of managing and transferring environmental exposures, we first must be on the same page about a few environmental facts.

    1. What is a “Pollutant”? If you look at a Buy / Sell Agreement they generally describe a Pollutant as smoke, vapors, soot, fumes, acids….  However, due to the way courts and insurance companies have responded to lawsuits and insurance claims, environmental Strategist™ (eS) has developed a definition that is easier to understand.  eS define a “Pollutant” as a material, substance or product, introduced to an environment for other than its intended use or purpose.”  In other words, something that ends up where it does not belong can be a Pollutant.  eS have examples where fresh water, milk, cheese, fruit, beer and more have all been defined as a “Pollutant”.
    2. A leading source of E&O claims against real estate professionals is failure to disclose potential environmental liabilities. From Sick building Syndrome, (i.e. mold, Legionella, vapor intrusion, asbestos, lead paint, category 3 water…), storm water runoff, natural resource damages, leaking aboveground or underground storage tanks, Renovation Repair & Painting Rule, meth labs… the list goes on.  Pollution insurance can protect against these environmental exposures and much more.
    3. Every real estate transaction presents its unique set of environmental exposures and has changed the way Realtor’s must address environmental financial assurance for their client’s.
    4. eS research has determined that fewer than 50% of Phase I Site Assessments are accurate. eS has heard from environmental professionals who feel in excess of 80% of Phase I site Assessments are inaccurate.  Also, environmental due diligence (Phase I, Phase II…) as part of meeting the innocent landowner defense only protects the real estate owner from the government.  Impacted non-governmental third parties can still file suit.  Note:  In Phase I Site Assessments when investigating who neighbors are that could have contamination going onto a subject property, environmental engineers do a minimum of a 2-mile radius search.  Pollution insurance can protect against third party liabilities.
    5. Illegal disposal of waste in the United States is a tens of billions of dollars a year industry and real estate, especially vacant real estate, is a popular place to illegally dispose of waste. Pollution insurance can protect against illegal disposal of waste.
    6. In the United States there are more than 250,000 known leaking underground storage tanks. How many don’t we know about?  Leaking underground tanks can and do cause Pollutants to go onto neighboring properties.  Pollution insurance can protect property owners if third parties contaminate their property.

    Professional realtors need to know if they are selling / purchasing an asset or environmental liability.

    Educating realtors on managing and transferring environmental exposures will better protect their E&O exposure while driving the sales of pollution liability insurance.  Why is this critical?  Environmental exposures can be a deal killer and realtors not proactively addressing environmental exposures may find their professional liability insurance at risk of a claim when a client discovers an environmental liability on property the realtor sold. 

    Environmental Insurance Products to Meet Financial Assurance on Real Estate Transactions

    Overlooked Benefits of Environmental Liability Insurance

    Unlike other liability exposures impacting commercial real estate owners, pollution losses are not a frequency risk, but rather a severity risk. Because all commercial real estate owners have environmental exposures, consideration needs to be given to the economies of scale afforded with environmental liability insurance as part of your risk transfer strategy, versus self-insurance.

    Furthermore, most commercial real estate owners only consider the remediation costs associated with a pollution event. However, often the clean-up costs are far less than other costs that can arise from an environmental loss.

    Overlooked Benefits of Environmental Liability Insurance:

    1. Defense Costs: Environmental liabilities are relatively new and very litigious.  Even if you do nothing wrong you can still get named in a suit and must expense defense costs i.e. legal fees, environmental investigations, etc.
    2. Claim Management: All policies come with specialists to assist you in handling a claim.  Who oversees communications, public relations, emergency response, government compliance, financial management, third party claims for bodily injury, property damage, natural resource damages….?
    3. Third Party Liability: Most the time the cost to clean up the environmental problem/s is far less than the associated claims that come in from third parties for bodily injury, property damage and business interruption.  You need to look at your client’s and neighbors that can be impacted if you or a sub-contractor/vendor cause an environmental loss.

    Environmental Liability Insurance Coverages

    Property Transfer Coverage:  When buying or selling property there can be unknown preexisting environmental conditions. Since environmental due diligence (All Appropriate Inquiry (AAI), a Phase I or Phase II survey, Baseline Environmental Assessment (BEA)….), 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.  Real estate owners and developers who use this product as part of their risk transfer strategy often find they can negotiate with the seller to share the cost and negotiate a better mortgage rate than if they did not have property transfer coverage.  You can cover multiple locations on a single policy.

    Mergers, Acquisitions & Pollution Protection (MAPP):  Combining Representations & Warranties Insurance w/ Pollution Liability Insurance to keep your company’s growth & value on course.

    Key to any acquisition is the correct valuation and effective due diligence and MAPP operates as a backstop against issues that the diligence or valuation processes may not be able to identify.

    As a financial assurance mechanism for M&A’s, pollution liability insurance has become part of “Best Practices”.  Representation & Warranties (R&W) insurance is proving its value for M&A’s much the same as pollution liability insurance has.

    R&W insurance is designed expressly to provide insurance coverage for the breach of a representation or a warranty contained in a Buy / Sell Agreement, in addition to or as a replacement for all or most of the seller’s contractual representations and warranties.

    As we have learned from environmental indemnifications in transactional documents, if there is not a pre-determined financial assurance mechanism in place, the environmental indemnification the seller agrees to may not be worth the paper the agreement is written on.  With MAPP, Environmental Risk Managers, Inc. (ERMI) has raised the bar on financial assurance for M&A deals.

    The insurance industry has learned that one out of every four M&A deals has at least one claim of a breach of the reps and warranties.  In the past, the response has been let’s try to negotiate around the problem.  Unfortunately, negotiating often is expensive, time consuming and rarely brings about the most desirable outcomes for the parties involved.

    MAPP delivers a cost-effective way to transfer R&W and pollution liabilities to a financially stable third party.

    Environmental Impairment Liability (EIL):  EIL is for commercial real estate owners susceptible to economic loss caused by pollution that actually, or allegedly originated from their property.  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/or the operations. Coverage can be written to cover preexisting conditions and/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 multiyear terms.  Sewer lines and pump/lift stations can be covered by EIL.  Most EIL policies cover above ground storage tanks up to a certain size.  You can also cover multiple locations on a single policy.

    Transportation Pollution Liability: Generally, Business Auto or Truckers policies will exclude pollution losses arising from spills or releases of transported 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.  Whether it’s building materials or business supplies, you need to strategize on your exposure to transportation.  How are goods received?  FOB point of Shipment or FOB point of delivery?  Do not be confused by thinking the MCS-90 endorsement is auto pollution liability coverage.

    Underground Storage Tanks

    Storage tank financial responsibility requirements ensure that owners/operators of underground storage tank systems have the ability to financially handle a release from the tank system. 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 tank system.

    Real estate owners with a financial responsibility strategy dependent upon state UST funds need to regularly confirm fund solvency and length of time it will take to get reimbursed.  If part of your business strategy depends upon the state tank fund, you are putting the future success of your business in the hands of the state.  You need to strategize on “just how strong is your business” if you are putting its future in the hands of your state government.

  • ERMI Business Professional Series Realtors

    Licensed Real Estate Professionals have a duty to perform their services with a level of care which is established by contract and prevailing standards of conduct in their field.  The fact is, Realtors have professional duties to disclose material facts of which encompass environmental exposures / liabilities.

    Today’s, transparent business environment, means real estate professionals must be aware of the evolution of their E&O liability loss exposures.  Claims under E&O often include allegation of failure to disclose or misrepresentation on a transaction.

    Historically, Realtors have relied upon “Environmental Indemnifications” in buy sell agreements.  The vast majority in the private sector have been slow to implement financial assurance requirements because they have been falsely content that contracts utilized are iron clad.  What we have learned is “Environmental Indemnifications” in buy / sell agreements may not be worth the paper they are written on if not backed by a financial assurance strategy.

    Governmental financial assurance requirements have been around for decades.  For example, when I began working with pollution insurance in the 1980’s we were selling primarily to asbestos / lead abatement / remediation contractors because the government required them to have Contractors Pollution Liability insurance to perform their remedial services.  Industrial and hazardous waste haulers must evidence transportation pollution liability insurance coverage in force before they can move any waste.  Owners of regulated underground storage tanks must evidence financial assurance before they can put any product into a storage tank and the list goes on.

    You may ask, why has the real estate profession been so slow to react?  Answer: Lack of environmental education.  That is where Insurance Professionals add their value in teaming with Professional Realtors.  By coaching Realtors on better protect their E&O exposure while assuring they are dealing with cleaner and greener real estate, backed by a financial assurance strategy.

    To understand why “Best Practices” for realtors means moving beyond traditional environmental indemnifications / site assessments to possessing a working knowledge of managing and transferring environmental exposures, we first must be on the same page about a few environmental facts.

    1. What is a “Pollutant”? If you look at a Buy / Sell Agreement they generally describe a Pollutant as smoke, vapors, soot, fumes, acids….  However, due to the way courts and insurance companies have responded to lawsuits and insurance claims, environmental Strategist™ (eS) has developed a definition that is easier to understand.  eS define a “Pollutant” as a material, substance or product, introduced to an environment for other than its intended use or purpose.”  In other words, something that ends up where it does not belong can be a Pollutant.  eS have examples where fresh water, milk, cheese, fruit, beer and more have all been defined as a “Pollutant”.
    2. A leading source of E&O claims against real estate professionals is failure to disclose potential environmental liabilities. From Sick building Syndrome, (i.e. mold, Legionella, vapor intrusion, asbestos, lead paint, category 3 water…), storm water runoff, natural resource damages, leaking aboveground or underground storage tanks, Renovation Repair & Painting Rule, meth labs… the list goes on.  Pollution insurance can protect against these environmental exposures and much more.
    3. Every real estate transaction presents its unique set of environmental exposures and has changed the way Realtor’s must address environmental financial assurance for their client’s.
    4. eS research has determined that fewer than 50% of Phase I Site Assessments are accurate. eS has heard from environmental professionals who feel in excess of 80% of Phase I site Assessments are inaccurate.  Also, environmental due diligence (Phase I, Phase II…) as part of meeting the innocent landowner defense only protects the real estate owner from the government.  Impacted non-governmental third parties can still file suit.  Note:  In Phase I Site Assessments when investigating who neighbors are that could have contamination going onto a subject property, environmental engineers do a minimum of a 2-mile radius search.  Pollution insurance can protect against third party liabilities.
    5. Illegal disposal of waste in the United States is a tens of billions of dollars a year industry and real estate, especially vacant real estate, is a popular place to illegally dispose of waste. Pollution insurance can protect against illegal disposal of waste.
    6. In the United States there are more than 250,000 known leaking underground storage tanks. How many don’t we know about?  Leaking underground tanks can and do cause Pollutants to go onto neighboring properties.  Pollution insurance can protect property owners if third parties contaminate their property.

    Professional realtors need to know if they are selling / purchasing an asset or environmental liability.

    Educating realtors on managing and transferring environmental exposures will better protect their E&O exposure while driving the sales of pollution liability insurance.  Why is this critical?  Environmental exposures can be a deal killer and realtors not proactively addressing environmental exposures may find their professional liability insurance at risk of a claim when a client discovers an environmental liability on property the realtor sold. 

    Environmental Insurance Products to Meet Financial Assurance on Real Estate Transactions

    Overlooked Benefits of Environmental Liability Insurance

    Unlike other liability exposures impacting commercial real estate owners, pollution losses are not a frequency risk, but rather a severity risk. Because all commercial real estate owners have environmental exposures, consideration needs to be given to the economies of scale afforded with environmental liability insurance as part of your risk transfer strategy, versus self-insurance.

    Furthermore, most commercial real estate owners only consider the remediation costs associated with a pollution event. However, often the clean-up costs are far less than other costs that can arise from an environmental loss.

    Overlooked Benefits of Environmental Liability Insurance:

    1. Defense Costs: Environmental liabilities are relatively new and very litigious.  Even if you do nothing wrong you can still get named in a suit and must expense defense costs i.e. legal fees, environmental investigations, etc.
    2. Claim Management: All policies come with specialists to assist you in handling a claim.  Who oversees communications, public relations, emergency response, government compliance, financial management, third party claims for bodily injury, property damage, natural resource damages….?
    3. Third Party Liability: Most the time the cost to clean up the environmental problem/s is far less than the associated claims that come in from third parties for bodily injury, property damage and business interruption.  You need to look at your client’s and neighbors that can be impacted if you or a sub-contractor/vendor cause an environmental loss.

    Environmental Liability Insurance Coverages

    Property Transfer Coverage:  When buying or selling property there can be unknown preexisting environmental conditions. Since environmental due diligence (All Appropriate Inquiry (AAI), a Phase I or Phase II survey, Baseline Environmental Assessment (BEA)….), 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.  Real estate owners and developers who use this product as part of their risk transfer strategy often find they can negotiate with the seller to share the cost and negotiate a better mortgage rate than if they did not have property transfer coverage.  You can cover multiple locations on a single policy.

    Mergers, Acquisitions & Pollution Protection (MAPP):  Combining Representations & Warranties Insurance w/ Pollution Liability Insurance to keep your company’s growth & value on course.

    Key to any acquisition is the correct valuation and effective due diligence and MAPP operates as a backstop against issues that the diligence or valuation processes may not be able to identify.

    As a financial assurance mechanism for M&A’s, pollution liability insurance has become part of “Best Practices”.  Representation & Warranties (R&W) insurance is proving its value for M&A’s much the same as pollution liability insurance has.

    R&W insurance is designed expressly to provide insurance coverage for the breach of a representation or a warranty contained in a Buy / Sell Agreement, in addition to or as a replacement for all or most of the seller’s contractual representations and warranties.

    As we have learned from environmental indemnifications in transactional documents, if there is not a pre-determined financial assurance mechanism in place, the environmental indemnification the seller agrees to may not be worth the paper the agreement is written on.  With MAPP, Environmental Risk Managers, Inc. (ERMI) has raised the bar on financial assurance for M&A deals.

    The insurance industry has learned that one out of every four M&A deals has at least one claim of a breach of the reps and warranties.  In the past, the response has been let’s try to negotiate around the problem.  Unfortunately, negotiating often is expensive, time consuming and rarely brings about the most desirable outcomes for the parties involved.

    MAPP delivers a cost-effective way to transfer R&W and pollution liabilities to a financially stable third party.

    Environmental Impairment Liability (EIL):  EIL is for commercial real estate owners susceptible to economic loss caused by pollution that actually, or allegedly originated from their property.  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/or the operations. Coverage can be written to cover preexisting conditions and/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 multiyear terms.  Sewer lines and pump/lift stations can be covered by EIL.  Most EIL policies cover above ground storage tanks up to a certain size.  You can also cover multiple locations on a single policy.

    Transportation Pollution Liability: Generally, Business Auto or Truckers policies will exclude pollution losses arising from spills or releases of transported 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.  Whether it’s building materials or business supplies, you need to strategize on your exposure to transportation.  How are goods received?  FOB point of Shipment or FOB point of delivery?  Do not be confused by thinking the MCS-90 endorsement is auto pollution liability coverage.

    Underground Storage Tanks

    Storage tank financial responsibility requirements ensure that owners/operators of underground storage tank systems have the ability to financially handle a release from the tank system. 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 tank system.

    Real estate owners with a financial responsibility strategy dependent upon state UST funds need to regularly confirm fund solvency and length of time it will take to get reimbursed.  If part of your business strategy depends upon the state tank fund, you are putting the future success of your business in the hands of the state.  You need to strategize on “just how strong is your business” if you are putting its future in the hands of your state government.

  • Green But Not Clean

    Recycling may be the right thing to do, but it carries its own set of risks.

    By: Susannah Levine  Risk & Insurance

    The recycling industry is poised to continue growing as humans put greater stress on the planet, and technology allows more efficient extraction of useful materials from spent products.

    Although recycling may be green, the process is not clean, and it carries many of the same risks as other heavy industries, plus some additional pollution exposures.

    Even as environmental laws and regulations grow more restrictive, many recyclers still underinsure their operations for pollution.

    Typically, the recycling industry’s claims look like the claims affecting any heavy industry’s. The risks to recyclers of a product are similar to the manufacturer of that product, experts said.

    “When a pollution claim hits, it hits big,” said Daniel Curran, director of underwriting for several of Willis’ environmental programs, including RecycleGuard.

    Many recycling companies underestimate their environmental liability exposure and take a pass on the insurance.

    Even so, the market for pollution insurance is a “sizable” $1 billion — a rough estimate, since hard numbers don’t exist, said Mary Ann Susavidge, environmental chief underwriting officer at XL Insurance.

    The law requires more regulated companies, such as landfills and hazardous waste recyclers, to buy environmental insurance, while others, including “R2 certified” electronic recyclers, are contractually obliged to buy it.

    There are also larger companies that see environmental insurance as true asset protection even if they are not required to purchase it.

    Then, there are some less regulated companies, including paper and scrap recyclers, that tend to have operations of $5 million or less. Those companies often regard pollution coverage as a discretionary expense, experts said.

    “Fifty percent of the accounts I look at gamble on their general liability covering an environmental spill, fire or contamination and they don’t protect their assets,” said Matt Gartner, assistant vice president of underwriting at XL Insurance.

    “They don’t expect an incident, but bad things happen to good people,” he said.

    Stacy Brown, president and managing partner of Freberg Environmental Insurance, recalled a small business with a large above-ground storage tank that dislodged during one of the increasingly frequent major floods on the East Coast.

    The tank floated downstream, struck a tree and spilled five thousand gallons of oil into a river. Fortunately, the company had pollution insurance, which covered the million-dollar-plus remediation that would otherwise have forced it into bankruptcy.

    Many insurance companies request an environmental audit to limit their losses to catastrophic “acts of God.”

    When Brown underwrites a facility, he looks for the company’s degree of compliance with federal, state and local environmental laws. Even before he walks in the door, he looks at publicly available records, compliance histories, permits, and Google Earth, which shows the physical plant, stacks of recovered materials and above-ground storage tanks.

    Regulations guide the underwriting process. If the company handles hazardous materials, are they stored in the proper tanks? Does it have a storm-water management plan? Where does it store used oil?

    “I look at cleanliness. Housekeeping tells a lot about how a company is run,” Brown said. He looks at records, since companies may accumulate certain waste materials for only a certain time, and whether they’re filed neatly or jumbled in a desk drawer.

    He interviews management to understand how tightly they run the facility and line workers to understand how they do their jobs. Are they draining fluids the right way?

    The consultation with compliance experts is collaborative, not confrontational, he said.

    Noncompliant companies eventually get shut down and expose themselves to expensive engineering remedies. They also suffer reputational loss, which can be as crippling as the cost of corrective action.

    “It’s cheaper to stay in compliance,” Brown said.

    Bad Company

    And it’s cheaper to do business with compliant recyclers. Under Superfund Section 107, said Bill McElroy, senior vice president at Liberty International Underwriters, the chain of liability extends from material producers, through transporters, waste brokers, recyclers, and the people who buy the recovered materials.

    For example, 255 defendants — mostly upstream industrial producers — were named in United States vs. Chemetco Inc. et al., in which a now-bankrupt recycler of copper-bearing scrap and manufacturing residue pleaded guilty in 2001 to violating the Clean Water Act by secretly installing a pipe that illegally dumped metal-filled wastewater into a creek for a decade.

    The plaintiffs were fined $3.8 million, and the property is now a Superfund site.

    Not only do upstream producers have liability under the Resource Conservation and Recovery Act (RCRA) for the misdeeds of the rare recycling “bad actor,” said Kim Ferraro, a senior staff attorney with the Hoosier Environmental Council, an Indiana environmental advocacy group, but so do responsible buyers of a site contaminated by previous owners.

    Ferraro represented the plaintiffs in Adkins et al. vs. VIM Recycling, which couldn’t keep up with the volume of waste — engineered woods, plastics, steel, padding, drywall, etc. — from nearby recreational vehicle manufacturers in Elkhart, Ind.

    The waste accumulated in 100-foot-high piles, Ferraro said, and rotted noxiously when exposed to the elements, sickening neighbors with its smell and dust emissions, and contaminating the groundwater.

    When a spark ignited in a dirty grinder, the plant went up in flames, killing one worker and injuring another. VIM did not have the permits to do business legally, let alone pollution insurance, Ferraro said.

    The RV producers whose waste VIM putatively recycled may have had liability under RCRA, which establishes responsibility for solid waste that creates endangerment. Ferraro considered naming them in the case, but finally did not.

    The neighbors cheered when the court reached a default judgment against VIM, which failed to defend itself in court and went out of business.

    The assets of the operation were purchased by Soil Solutions, which makes animal bedding and landscape mulch from recycled wood chips.

    Although it obtained the proper permits and set up a responsible shop, said its attorney, Ed Sullivan, a partner with the international law firm of Faegre Baker Daniels, the company found itself hobbled by the hostility of the community, as well as lingering problems from VIM’s many failures to satisfy state standards.

    Soil Solutions was added as a defendant to an existing class-action lawsuit claiming the operations were a nuisance and health hazard. As part of an out-of-court settlement, it agreed to process and remove many of VIM’s contaminants.

    The settlement halts the litigation, and allows Soil Solutions to operate on the site for up to five years.

    Lessons learned? Beyond complying with regulations, Ferraro said, it’s important to have cordial relations with the community. Legitimately listen and address the concerns of neighbors.

    And second, she said, don’t buy a business that is being sued.

    Sullivan agreed on the importance of good community relations. “My client tried to do that,” he said, “but the plaintiffs decided early that Soil Solutions was just like VIM.”

    Any kind of environmental operation that creates odor, such as composting yard and waste processing, creates third-party liability and is fertile ground for plaintiffs’ attorneys — even if the operator does everything correctly and has all its permits, said Ken Cornell, executive vice president, chief environmental lines underwriter with Aspen Insurance

    Plaintiffs’ attorneys may comb through regulatory databases and inspections for violations, even administrative errors such as posting the right notice in the right place.

    “Good relations with your neighbors, and make darn sure your record is clean,” he advised. “Have a methodology for dealing with complaints up-front before the neighbors get attorneys.”

  • Look Out Below

    environmental Strategist, between the lines:  Exacerbate:  means to make worse, aggravate, intensify.  If you exacerbate a pollution incident, under federal law you can be held accountable and have to expense defense dollars, claims management, clean up costs, business interruption, bodily injury, property damage, reputational risk….Contractors pollution liability insurance covers the insured should they cause or exacerbate a pollution incident.

    USA Today is doing a series of pieces on our infrastructure and below are some links to give you some insight why. Contractors, real estate owners, municipalities, or owners or operators of our county’s infrastructure are all potentially at risk (i.e. oil and gas pipelines, water / sewer / storm water pipes, roads, bridges…)  The United States is falling apart and most of it is out of sight so out of mind.

    Exacerbation liabilities have put many a business out of business because they elected to self insure their environmental exposures.  Our aging infrastructure creates a huge exacerbation environmental exposure for those that own, work on or live near our aging infrastructure.  What is your financial assurance strategy?

    http://www.usatoday.com/longform/news/nation/2014/09/23/gas-pipes-cast-iron-deaths-explosions-investigation/15783697/

    http://www.usatoday.com/story/news/local/2014/09/23/pensacolas-aged-gas-mains-cause-concern/16112477/

  • More water problems hit Town of Jackson residents Friday

    environmental Strategist, between the lines:  Fact:  when businesses analyze their environmental exposures they generally focus on their exposure to clean up costs should a spill / release / exacerbation… of pollutants take place.  In reality, the cost to clean up a spill / release / exacerbation… of pollutants is far less than the claims / costs that come in from third parties for bodily injury, property damage and what I call the big black hole, business interruption.  You have to also factor in costs for defense, environmental investigations, claims management, public relations, natural resource damages….  Environmental insurance can cover the above environmental costs and more.

    So the real question a business has to answer when analyzing their environmental exposures is “does it make financial sense based upon our business model to transfer our environmental liabilities to a third party for fractions of a cent on the dollar or wait until an environmental liability occurs and pay 100 cents on the dollar out of our own pocket for clean up, third party bodily injury, property damage, business interruption, defense, environmental investigations, claims management, public relations, natural resource damages…”.

    Since every business is impacted by environmental exposures, every business must have a strategy to address their environmental exposures if they want to remain viable in today’s business environment.  environmental Strategist proprietary environmental Management Strategy (eMS) is designed to accomplish this goal and much more.  Contact us if you would like more information on development and execution of an eMS to drive growth and profits in today’s business environment.

    10/31/2014 – Milwaukee Journal Sentinel (WI)

    For Tom Willetts and his neighbors in the Town of Jackson, what he calls the next chapter in “the continuing saga” of a 2012 gasoline pipeline spill came Friday with the Halloween-style trick of no drinking water followed by a brownish flow.

    When he started his day early Friday, there was no water pressure, and no water in the line, Willetts said. Low pressure was restored a short time later but he wouldn’t drink or use what was coming out of his pipes, he said.

    “It looked pretty nasty,” Willetts said in describing the thick, brown water that flowed into his home Friday morning.

    Earlier this year, town residents living near the spill were offered connections to Village of Jackson water service as a substitute for contaminated wells or other private wells in a contamination advisory area.

    On July 17, 2012, a section of gasoline pipeline ruptured and spilled an estimated 54,600 gallons of gasoline in a farm pasture.

    West Shore Pipe Line Co. of Illinois, owner of the regional fuel distribution pipeline, is paying all costs of extending village water service to a large portion of the town. West Shore also is paying costs of building lateral lines needed to connect municipal mains to residences.

    The state Department of Natural Resources ordered 37 contaminated water wells to be abandoned.

    As of Tuesday, a total of 102 town residences had been connected to the municipal water system, Heidtke said.  Eight miles of water main have been installed to serve an area of the town on the west.

     

  • There Are 532 Superfund Sites in Indian Country! How many contaminated sites don’t we know about?

     environmental Strategist™, between the lines:  My question after you read the article below is how many contaminated sites don’t we know about?

    Under CERCLA you are responsible for the environmental condition of your property.  What if a third party contaminates your property and they do not have the financial ability to correct the problem?  Your asset has just become a liability.

    Contamination from third parties can come from air, water, soil, ground water or just over the surface of the land and below are real life examples.

    While this article points out that 25% of Superfund sites are on Tribal land, the other 75% represent and even greater impact on human health and the environment.

    Environmental Strategist™ Risk Management Tip:  Environmental insurance can protect real estate owners if third parties contaminate their property.

    Environmental Trivia Question:  Where are the highest concentration of Superfund Sites in the United States?  Answer below article.

    Kill the Land, Kill the People: There Are 532 Superfund Sites in Indian Country!

    Terri Hansen:  Indian Country Today – 6/17/14

    Of a total of 1,322 Superfund sites as of June 5, 2014, nearly 25 percent of them are in Indian country. Manufacturing, mining and extractive industries are responsible for our list of some of the most environmentally devastated places in Indian country, as specified under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), the official name of the Superfund law enacted by Congress on December 11, 1980. 

    Most of these sites are not cleaned up, though not all of the ones listed below are still active. Some sites are capped, sealing up toxics that persist in the environment. In cases like the Navajo, the Akwesasne Mohawk and the Quapaw Tribe, the human health impacts are known because some doctors and scientists took enough interest to do studies in their regions. Some of those impacts may persist through generations given the involvement, as in the case of the Mohawk, of endocrine disrupters. 

    TheSalt Chuck Mine Superfund site in southeast Alaska operated as a copper-palladium-gold-silver mine from 1916 to 1941. Members of the Organized Village of Kasaan, a federally recognized tribe, traditionally harvested fish, clams, cockles, crab and shrimp from the waters in and around Salt Chuck, unaware for decades that areas of impact were saturated with tailings from the former mine. As if that weren’t enough, Pure Nickel Inc. holds rights to mining leases in the area and began active exploration to do even more mining in summer 2012, according to Ground Truth Trekking.

    The Elem Band of Pomo Indians, whose colony was built on top of the waste of what would become California’s Sulfur Bank Mine Superfund site in 1970, have elevated levels of mercury in their bodies, and now fear for their health. According to an NBC News investigation, nearby Clear Lake is the most mercury-polluted lake in the world, despite the EPA’s spending about $40 million over two decades trying to keep mercury contamination out of the water. Although the EPA cleaned soil from beneath Pomo homes and roads, pollution still seeps beneath the earthen dam built by the former mine operator, Bradley Mining Co. For years, Bradley Mining has fought the government’s efforts to recoup cleanup costs.

    The Washoe Tribe of Nevada and California requested EPA involvement in the cleanup of an abandoned open pit sulfur mine on the eastern slope of California’s Sierra Nevada that became the Leviathan Mine Superfund site. The Washoe Tribe had become concerned that contaminated waters were affecting their lands downstream, causing impacts to culture and health, environmental damage, remediation, monitoring and testing, posting of health advisories, drinking water, effects on pregnancy, and cancer. Aluminum, arsenic, cadmium, iron, manganese, nickel and thallium have beendetectedin surface water and sediment downstream from the mine. The U.S. Centers for Disease Control and Prevention (CDC) concluded that exposures could result in cancerous and non-cancerous health effects.

    The abandoned FMC phosphorus facility occupies more than 1,000 acres of the Shoshone-Bannock Tribes’ Fort Hall Reservation in Idaho, and lies within Eastern Michaud Flats Superfund site. The primary contaminants of concern at the site are arsenic, elemental phosphorous and gamma radiation. FMC left a legacy of contamination in the air, groundwater, soil and the nearby Portneuf River, which threatened plants, wildlife and human health on the reservation and in surrounding communities. The Shoshone-Bannock have long asked for a cleanup of contaminated soils, but instead the EPA’s 2012 interimremedyis to cap and fill, including areas containing gamma radiation and radionuclides.

    Answer to trivia question:  Silicon Valley

  • Potential value of environmental liability insurance — AST spills into Colorado River

    environmental Strategist, between the lines:  Businesses often times question the value environmental liability insurance offers their business model.  Below is s simple spill that only released 7,500 gallons of oil from an Above Ground Storage Tank.

    The premium for a $1,000,000 Above Ground Storage Tank policy runs roughly $400.  So the premium versus the face value of the policy means it cost the insured $.0004 cents on the dollar for the insurance versus self insuring and paying 100 cents on the dollar out of your own pocket for cleanup costs, defense, third party bodily injury, third party property damage, third party business interruption….

    Environmental insurance versus self insurance, what adds more value?

    7,500 gallons of oil spills into Colorado river

    Fort Collins Coloradoan – by Ryan Handy

    FORT COLLINS, Colo. — A storage tank damaged by recent flooding has dumped 7,500 gallons of crude oil into the Poudre River near Windsor, the Colorado Oil and Gas Conservation Commission (COGCC) reported late Friday afternoon.

    “At this time we know of no drinking water intakes affected by this spill. The release is not ongoing,” COGCC spokesman Todd Hartman said

    The oil has stained vegetation as far as a quarter of mile away from the damaged tank, Hartman said.

    The tank’s operator, Noble Energy, discovered the spill Tuesday afternoon and later reported it to the COGCC, the state’s regulatory agency for the oil and gas industry. Recent high river flows undercut the bank where the storage tank was sitting, causing the tank to drop and breaking a valve. About 178 barrels of oil dumped into the river.

    The well near the tank has been shut in, and a second tank in the area appears to be unaffected, Hartman said in a news release.

    COGCC and water quality experts from the Colorado Department of Public Health and Environment were at the scene of the tank spill, where clean-up efforts were underway Friday. Clean-up crews are working to absorb the spilled oil and a vac-truck is removing oil-filled standing water from a low-lying area around the tank.

    The site of the spill is southeast of Fort Collins near the Poudre River Trail.

    Contributing: Associated Press

  • Marinas, Yacht Clubs, and Shipyards…What is your strategy?

    Environmental Strategist, between the lines: 

    I often talk on the three benefits environmental insurance offers insureds besides what most people think of, first party cleanup.

    3 benefits of environmental insurance: 

    1.  Defense Coverage
    2. Specialists to assist you in handling a claim
    3. Coverage for third party Bodily injury, third party property damage, Third party business interruption.

    You can read the story below and view videos on how a simple boat fire impacts all three of the benefits offered by environmental insurance.  I would also like to point out that over the years when I have strategized on marine fires the quick response back I most often hear from the environmentally uninformed is a boat will burn and sink, besides fuel you won’t have any other liabilities.  Read On!

    La Conner boat fire. Photo courtesy of the Seattle Times
    La Conner boat fire 2/21/14. Photo courtesy of the Seattle Times

    La Conner marina fire: sunken boats and ‘broken hearts’

    A fire destroyed seven boats and damaged at least eight more, totaling an estimated $1 million in damage at Shelter Bay Marina near La Conner in Skagit County on Friday afternoon.

    The fire started at about 4 p.m. on one boat at the residential marina and quickly spread to adjacent boats, according to Shelter Bay community manager David Franklin.

    One dock was engulfed in flames, which allowed one burning boat to float to another dock and further spread the fire, he said.

    Firefighters were able to contain the damage on the adjacent dock, but they weren’t able to fully knock down the fire until shortly after 6 p.m., Franklin said.

    “There were no injuries,” he said, “just a lot of broken hearts for those boats that were lost.”

    Dylan Furst, of Bellingham, said he saw the cloud of black smoke from about two miles away while he was driving to Bellingham from Deception Pass. He could smell the smoke from more than 400 yards away, he said.

    Furst said firefighters had trouble aiming directly at the flames because the boats kept drifting.

    “It was just one big fire of boats,” Furst said. “They weren’t separated at all.”

    Firefighters from multiple agencies responded, including the Swinomish Reservation, Skagit County, La Conner and the U.S. Coast Guard.

    Some residents tried to move unaffected boats away from the flames as firefighters battled the blaze with water and foam, the Swinomish Yacht Club reported via Twitter.

    “With boat fires, with the water, fiberglass, fuel and the intensity of the flame, it’s very difficult to put out,” La Conner Fire Chief Dan Taylor said.

    The 15 boats that burned are 40- to 50-foot pleasure craft kept at the 325-slip marina in the private, gated community of Shelter Bay on the Swinomish Channel. Six of the seven boats that were destroyed sank, and the seventh was severely burned, Skagit County Fire District 13 Chief Roy Horn told the Skagit Valley Herald.

    One resident told the newspaper that his $300,000 yacht, with 400 gallons of diesel fuel, burned and then sank.

    “They were nice boats,” Franklin said. “Very nice boats.”

    Franklin said officials will work to determine the cause and the full extent of the damage Saturday, as well as the possible environmental impacts, including the diesel fuel that leaked into the channel.

    “We’ll see what the morning light brings,” Franklin said. “Hopefully, tomorrow, it won’t be as bad as we think.”

    Material from The Associated Press was used in this report.

    Paige Cornwell: 206-464-2530 or pcornwell@seattletimes.com

    Update 2-26-14:  LA CONNER —

    Recovery operations of several sunken ships continue this week in Shelter Bay.  Crews were able to remove two damaged vessels this weekend but have run into problems recovering the remaining five ships. Fire damage to the ships has complicated the salvage efforts.

    Crews are also using placing booms and absorbent pads on the water to recover fuel after discovering skimmers to be ineffective. Damage is estimated at more than $1 million. The cause is still under investigation.

    Update:  All burned boats removed from La Conner marina

    The Associated Press LA CONNER, Wash. — 

    All six boats that sank during the fire at the Shelter Bay Marina in La Conner have been pulled from the water.

    Ecology Department spokeswoman Lisa Copeland also says 600 gallons of diesel were removed from a seventh vessel that was destroyed in Friday’s fire but did not sink.

    The Skagit Valley Herald reports (http://bit.ly/1k9f0HC ) cleanup of an estimated 2,400 gallons of spilled oil and fuel may continue through Friday.

    Copeland says there have been no reports of oiled birds or other impact to wildlife.

    The property loss from the fire is estimated at more than $1 million.

    These videos give a prime example of the public outcry that results when pollution incidents occur, and show another major reason why environmental liability coverage is such a valuable asset for businesses. Especially when local residents are potentially impacted and government regulators get involved –

    Video of the fire scene and local residents reactions  

    Video of the aftermath

    Video of Salvage operations 

    Video of the fire from third party spectators  

     

     

     

  • Gasoline gets into southeast Kentucky cave system

    environmental Strategist™, between the lines:  The majority of the time when you ask a business how they purchase their raw materials they will tell you they buy them FOB (Freight On board) point of shipment.  Why, because it’s cheaper.  The story below is a simple example of the dangers a business can experience buying their raw materials FOB point of shipment.

    Before you say it, let me, “This is a loss that could never Happen.”  Environmental liabilities for businesses generally are not a frequency problem but a severity problem.

    Gasoline gets into southeast Kentucky cave system – February 3, 2014 

    Kentucky Department of Environmental Protection crews are working with cavers after a fuel spill late last week.

    Early on the morning of January 30th 2014, a gasoline tanker truck left the pavement of US Highway 27 and rolled down an embankment just south of Burnside in southern Pulaski County.

    Due to a considerable delay between the time of the accident and when it was finally reported, most if not all 8,200 gallons of gasoline had already leaked out of the tanker by the time emergency personnel arrived on the scene.

    The fuel had flowed overland to a gully and several hundred feet over frozen ground to a swallow hole, believed to be connected to the Sloan’s Valley Cave system.

    Efforts to clean up the fuel remaining on the surface are underway, but the majority is thought to now be in the cave and groundwater.

    Although six cave entrances were checked and no fumes were detected, dangerous conditions inside the cave could exist inside. Several sumps exist along the base level stream passage and the gasoline is expected to be trapped on top of the water for a significant period of time.

    Fuel vapors may make self-contained breathing apparatus a necessity to enter the cave and there is also the potential for an explosion.

    Signs have been posted at the entrances warning of the potential hazardous conditions.

    In the future, before caving in Sloan’s or Neely’s Creek please obtain the latest information from the Kentucky Division of Water.

    [via Jared Snyder] & Gasoline gets into southeast Kentucky cave system [courier-journal.com]

     

    eS Risk Management Strategy:  environmental Strategist™ (eS) understand that sustainability is just another word for environmental risk management.  Through environmental risk management, eS offer four simple risk management strategies a business can implement to reduce their environmental liability exposures in receiving their raw materials.

    1.  Stop buying your raw materials FOB point of shipment, purchase them FOB point of delivery.

    2.  Working with your attorney team member, have then draw up a contract that transfers the transportation liability to the transporter until your raw materials are delivered and off loaded.

    3.  Only deal with transporters that carry transportation pollution liability coverage.

    4.  Businesses can purchase an insurance policy that protects them while third parties are transporting their goods.

    Business owner, what would you like to do?

    Through environmental risk management eS offer businesses options on managing and transferring their environmental exposures to increase profits in today’s business environment.  For more go to www.estrategist.com.

  • Wal-Mart’s Environmental Risk Transfer Strategy

    A few years ago we told you about Wal-Mart paying a multimillion dollar fine to the EPA for storm water runoff from their construction sites.  The fines were generated through the construction vendors Wal-Mart hired to do work for them.

    We suggested one strategy Wal-Mart would probably institute would be requiring certain vendors they hire to evidence proof of environmental liability insurance.  That day has arrived.

    Over the course of the last few weeks we have had agents contact us on insureds looking to do work for Wal-Mart but in order to even offer a bid a vendor has to be able to include with their bid package an insurance certificate evidencing proof of Contractors Pollution Liability (CPL) insurance being in force.  So Wal-Mart has gone a step further and said if you do not have CPL in place we do not want you to even submit a bid to us.

    In other words, No CPL, no work with Wal-Mart.

    We all know that Wal-Mart carriers a big stick and the businesses they impact are vast.  So if it makes good business sense for Wal-Mart to require CPL insurance I am sure you will see vendors of Wal-Mart along with other businesses implementing this same risk transfer strategy.

    environmental Strategist, risk management strategy:  For years we have stated that environmental insurance allows insureds to use the environmental insurance they purchase as a marketing tool to drive growth and profits.  Wal-Mart has now reinforced this and do not be surprised when this becomes a requirement for more and more contractors bidding jobs.  We have been seeing this trend growing for years and with companies like Wal-Mart getting on board it just solidifies that CPL coverage will become part of doing business for contractors.