Tag: Natural Resources

  • Logging Contractors

    What is a Pollutant? 

    Any material, substance, liquid, product, etc… which is introduced into an environment for other than its intended use / purpose. Fresh water, cheese, and milk have all been classified as pollutants by Insurance Carriers under various circumstances. 

    Many non-environmental contractors assume that claims arising from operations are covered by the general liability policy. However, claims resulting from a “pollution incident” are excluded from most general liability policies, which leaves many of these contractors exposed to potentially uncovered claims. What pollutants are impacting your business?

    Environmental Exposures Impacting Logging Contractors  

    May include, but are not limited to: Puncturing unknown underground storage tanks or utilities;  Release of oils/fuels from equipment;  Spills from mobile storage tanks;  Excavating through and/or spreading of unknown preexisting contaminated soil;  Storm water runoff;  Puncturing unknown illegally buried drums or containers; Lead;  Asbestos;  Silica;  No auditing of waste handling and disposal companies;  Natural resource damages; Vapor intrusion;  Storage and/or transportation of raw materials;  Business interruption expenses;  Leaks from hydraulic fluid storage tanks;  And more… 

    Environmental Claim Scenarios

    • A logging contractor ruptured an unmarked gas pipe while working on a job, which created a large high-pressure release. Claims for cleanup and natural resource damages exceeded $300,000. 
    • A property owner made a deal with a logging company for a selective cut on his large private acreage, that would be completed during the winter. After returning to his property in the spring, the owner noticed vast areas where vegetation wasn’t growing back. And over the next couple months, valuable oak trees were showing signs of diminishing health. After further investigation, it was found that the logging contractor’s equipment had been leaking fuel all over the property during their month of logging that winter. Claims for investigation, remediation, 3rd party property damage, and natural resource damages cost the logging contractor over $500,000. 
    • The concrete secondary containment of a 10,000-gallon diesel aboveground storage tank was cracked. A release from the tank spilled 8,000 gallons into the containment. The diesel seeped into the underlying soils.  Total cost for investigation, removal, and disposal exceeded $320,000. 
    • During the night an unknown party illegally placed drums of hazardous liquid at a logging contractors job site.  The containers were not leaking, but the contractor was held responsible for properly disposing of the hazardous liquid, costing the logging contractor roughly $50,000. 
    • A logging company was performing a cut during late winter. Over the weekend a major warm front and thunderstorm caused a sudden snow melt, allowing sediment from the site to flow down grade into a nearby blue ribbon trout stream. The logging contractor was held liable for natural resource damages, and 3rd party property damages filed by property owners on the stream. Total cost of the claim exceeded $1,000,000.  
    • A logging contractor hired a waste hauler to transport its used equipment oil and fluids to a 3rd party disposal site. The waste hauler got into an accident which caused the contents of the tanker to be released directly into a creek.  Under Federal law (CERCLA) you own your waste from cradle-to-grave, so the logging contractor had to pay their apportionment of the remediation costs, which totaled $450,000.     
    • A logging company routinely stored barrels of fuel, oil, anti-freeze, and other hydraulic fluids at their outdoor storage yard. While loading about 1,000 pounds of potentially hazardous products onto a truck, five barrels slipped off the fork lift releasing the contents.  Fortunately, the logging company had an emergency response plan and their quick action allowed them to contain most of the contaminants.  Cost of the additional cleanup was $70,000.
    • A contractor was subject to cleanup costs after vandals opened an onsite mobile refueling tank causing diesel fuel to be released onto virgin soil.

    Benefits of Environmental Liability Insurance

    Unlike most liability exposures impacting Logging Companies, pollution losses are not a frequency risk, but rather a severity risk. Since every Logging Company is impacted by environmental liabilities, 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 insureds only consider the remediation costs associated with a pollution event. However, often times the clean-up costs are far less than other costs that often arise from the loss.

    Three Overlooked Benefits of environmental liability insurance:

    • 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 have to expense defense costs i.e. legal fees, environmental investigations, etc.  
    •  Claim Management:  All policies come with specialists to assist you in handling a claim.  Who is in charge of communications, public relations, emergency response, government compliance, financial management, third party claims for bodily injury, property damage, natural resource damages….?
    • Third Party Liability:  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 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

    Contractors Pollution Liability (CPL)

    Contractors Pollution Liability (CPL) insurance protects the insured should they cause or exacerbate an environmental condition while performing their contractor services.  CPL protects the insured for covered operations performed by or on behalf of the insured, while operating away from any premises they own, rent, lease or occupy.

    CPL can be offered on a claims made or occurrence basis.  Coverage can be written on a job specific basis, or on a blanket basis to cover all the work performed by the insured.  Most policies can be endorsed to cover transportation pollution liability, mold, lead, and asbestos, defense outside the limits, off-site disposal coverage, and more. Contractors incorporating CPL coverage as part of their risk transfer strategy, drive their growth and profits by marketing the benefits CPL coverage affords in reducing job interruption due to environmental issues.  A major environmental liability exposure faced by all contractors lies in who they are doing business with.  If there is an environmental loss at a job site, innocent contractors can and do get named in lawsuits.  Do your subs/vendors have CPL insurance if they cause an environmental loss?

    Environmental Impairment Liability (EIL) 

    EIL is for contractors that own, rent, lease, operate or have any other insurable interest in real property (a fixed site facility such as a shop, batch plants, cement manufacturing/mixing plant….) that can be susceptible to pollution liabilities that actually or allegedly originated from the insured property. 

    Coverage can include: Pre-existing unknown pollution, new pollution conditions, first party on-site clean up, third party bodily injury, property damage, business interruption and extra expense, off site cleanup costs, legal defense expenses, transportation pollution liability, offsite disposal coverage….  Multi year term policies can be negotiated. 

    Transportation Pollution Liability

    Generally, Business Auto or Truckers policies will exclude pollution losses arising from spills or other releases of transported cargo. Transportation pollution liability affords coverage during the loading, unloading and transportation, for a spill, release or sudden upset and overturn of transported cargo.    

    Underground Storage Tanks

    Financial responsibility requirements ensure that owners and operators of underground storage tank systems can 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 tank system.  

    Incidental Professional Liability 

    Professional exposures are generally excluded from General Liability and monoline Contractors Pollution Liability policies. In the course of their normal operations, contractors face all types of professional exposures. They may make slight adjustments on the provided plans to get the job done properly, they may supervise subcontractors, or provide other recommendations which could potentially be questioned in the event of a claim. In the event of a professional claim, will your insurance provide coverage? 

  • Example Of Environmental Economics

     

    In this May 1, 2014 photo, irrigation water runs along the dried-up ditch between the rice farms to provide water for the rice fields in Richvale, Calif. California’s drought-ravaged reservoirs are running so low that state water deliveries to some metropolitan areas have all but stopped, and cutbacks are forcing growers to fallow fields. (AP Photo/Jae C. Hong)
    Irrigation water runs along the dried-up ditch between the rice farms to provide water for the rice fields in Richvale, Calif. California’s drought-ravaged reservoirs are running so low that state water deliveries to some metropolitan areas have all but stopped, and cutbacks are forcing growers to fallow fields. (AP Photo/Jae C. Hong)

    Environmental Strategist, between the lines:  The article below offers an excellent example of why we are transitioning away from our current slash and trash economic platform to an environmental economic platform.

    The basic difference is, under our current slash and trash economic platform our environment is a subset under the economy.  Operating under an environmental economic platform the opposite is true, our economy is a subset under the environment. 

    This article highlights how businesses operating in our past slash and trash economy decided they would bring the environment to where they wanted to grow food, which happens to be in a desert.  Under environmental economics, you grow food where there are already sufficient natural resources to support the business. 

    When mother nature removes or reduces a resource it has a tremendous negative impact upon a slash and trash economy. 

    Playing Dirty in the War for Water

    • January 26, 2016

    I am a farmer’s daughter. I grew up checking sprinklers and changing irrigation with my dad in a pair of muddy boots. The experience afforded me an intimate awareness of the importance of having affordable water to nourish one’s crops. My family still farms in California, and as my last name indicates, our heritage is Hispanic. Which is why I find this story especially upsetting.

    With poignant slogans and gripping imagery, an organization called “El Agua Es Asunto de Todos”—Water is Everybody’s Business—has demanded more water for the San Joaquin Valley. In video testimonials on the group’s website, Hispanic community members share stories of the valley’s once-productive fields as well as the suffering they experience now from lack of work. They discuss school closures, poverty, and loss of homes. The organization’s website reads: “No water. No work. No economy,” and, “Water is the key to our future. And the future is in our hands.”

    The group’s message is a valid one. Without water there are no fields and therefore fewer jobs. But its message also strikes me as disingenuous. While El Agua operates under the guise of a grassroots Latino community effort, as the New York Times reported in December, it is funded entirely by Westlands Water District.

    To be clear, nowhere on El Agua’s website could I find mention that the organization is bankrolled by Westlands. Nor could I find any statistic or reference to water availability and usage. Instead, its pages are filled with emotionally charged language and victimized pleas. “It’s a disaster,” one testimonial reads. “We’re going to lose everything we have.” But the fact is, that the group’s participants—presumably innocent, well-meaning people—are being played. And their heart-wrenching village campaign is, in reality, a thirsty wolf in sheep’s clothing.

    Westlands Water District is not your average water district. According to the New York Timesarticle, it supports about 600 large-scale farmers within a 600,000-acre stretch of land in California’s San Joaquin Valley. As the Times reports, it’s a $100 million-a-year agency and a powerful political force, with a litigious past and five lobbying firms under contract in Washington and Sacramento, all with one objective: to get its hands on inexpensive water.

    The New York Times reports that for decades a federal water management organization called the Central Valley Project offered farmers in California’s San Joaquin Valley an abundance of affordable water that it gathered in northern California and piped south via 500 miles of canals. Farmers within the district received a triple subsidy—cheap water, USDA crop subsidies, and below-market electricity. However, in the 1970s, the State Water Project created a second canal system and diverted some of the same water from the northern Californian source rivers.

    As you can imagine, devastating environmental problems emerged. Commercial salmon fisheries collapsed. At the confluence of the Sacramento and San Joaquin Rivers, fish populations declined dramatically. Congress’s solution was a law reserving at least a minimum amount of water for wildlife. Not surprisingly, it hit a nerve with farmers in the San Joaquin Valley. El Agua represents one facet of Westlands’ many efforts to access more federal water.

    Since then, Westlands has lobbied for new reservoirs to augment Central Valley Project reserves, according the New York Times. It has pleaded that water scarcity will ruin the lives of the district’s Latino population. Purchasing water at inflated prices from other sources would reduce agricultural profits and threaten farmers’ bottom line with ruinous results. The New York Times reports that Westlands is currently working to persuade Congress to loosen the rules that set aside Sacramento basin water for fisheries. And it will stop at nothing to get the federal tap turned back on.

    In a heartfelt message on El Agua’s website, general director Martha Elvia Rosas writes, “When we suffer water restrictions, all of us are affected. However the Hispanic community is especially vulnerable. We lose our jobs and our businesses. Furthermore, we lose educational opportunities for our children and, in general, our entire future is put at risk.” This statement, while partially true, leaves out the fact that Westlands has the power to change the current circumstances, or any role in the issue’s resolution for that matter.

    El agua es absolutamente asunto de todos. I couldn’t agree more. Water rights are indeed everyone’s business. And I wholeheartedly support an honest discussion of facts between farmers, politicians, and the Hispanic community. But manipulative tactics and self-serving slogans? That just seems sinister.

    I welcome your thoughts.

     

  • 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