{"id":196,"date":"2007-07-10T09:46:54","date_gmt":"2007-07-10T13:46:54","guid":{"rendered":"http:\/\/www.environmentalriskmanagers.com\/erm\/potential-environmental-liability-exposures-for-general-contractors-performing-above-ground-and-underground-construction-services\/"},"modified":"2007-07-10T09:46:54","modified_gmt":"2007-07-10T13:46:54","slug":"potential-environmental-liability-exposures-for-general-contractors-performing-above-ground-and-underground-construction-services","status":"publish","type":"post","link":"https:\/\/estrategist.com\/members\/potential-environmental-liability-exposures-for-general-contractors-performing-above-ground-and-underground-construction-services\/","title":{"rendered":"Potential environmental liability exposures for general contractors performing above ground and underground construction Services"},"content":{"rendered":"

Potential environmental liability exposures:<\/strong> completed operations exposures including incomplete line hookup or improper system construction causing spills or emissions; fumes, emission and spills of chemicals applied during construction (finishers, sealants), lubricant oils and other fluids from field equipment; release of oils\/fuels as a result of vandalism, site preparation\/excavation work through preexisting contaminated soil, air emissions from dust and debris, impacting underground storage tanks, storm water runoff contamination, excavation and spreading of unknown preexisting contaminated soil, impacting groundwater from drilling and excavation work (i.e. cross contamination of aquifers, etc.); impacting underground utilities and other underground structures, release of naturally occurring asbestos during excavation, no auditing of waste handling and disposal companies, heating ventilation, air conditioning construction or maintenance errors causing release of airborne bacteria,. <\/font><\/p>\n

Environmental liability case studies<\/strong><\/font><\/p>\n

1. Excavated Soil Spreads Contamination On and Off Work Site: a general contractor excavated 357 feet of trench for one week at a cost of roughly $30,000 and stockpiled the soil on an adjacent property. Within six months from the excavation date, dioxin was discovered in the soil. Subsequent investigation also found contamination at the adjacent property. It was determined that contamination had seeped from the ground surface into a shallow aquifer which is located next to the housing development and feeds the water supply for 5,000 residents. The contractor so far has paid in excess of $1,000,000 to address the issue.<\/font><\/p>\n

The US Environmental Protection Agency (EPA) investigated and found dioxin levels to be unacceptable. Also, the EPA concluded that people who drink or come in contact with the water from the wells tapping the aquifer might be at risk. An extensive clean-up was ordered at the work site and the adjacent property. Numerous people filed claims for property and environmental damages against the industrial contractor. Also, thirty homeowners filed claims for property damage and bodily injury. Damages from multiple claims and cleanup costs for all properties exceeded $3 million. <\/font><\/p>\n

2. Faulty Pump Contaminates Local Creek and Pond. During routine transfer of diesel fuel from a fuel truck to an onsite job fuel storage tank, a pump malfunctioned releasing approximately 4,500 gallons of diesel fuel. The product migrated along the edge of the tanks into a culvert, spilled into an adjacent creek, and pooled in a pond. The state department of environmental management was notified and the company’s spill response plan was initiated. Approximately 644,300 gallons of contaminated water was removed from the creek and pond at a cost of $63,000.<\/font><\/p>\n

3. An excavation contractor was working on a $500,000 sewer rehabilitation project. During excavation of a trench, the bucket of a backhoe hit a natural gas line. This forced evacuation of the immediate area, including a small strip mall. Storeowners filed loss of business claims against the contractor, which exceeded $75,000. The general contractors general liability carrier denied the claims based upon the absolute pollution exclusion. <\/font><\/p>\n

4. An excavation contractor was subject to cleanup costs and business interruption expenses in excess of $500,000 when they ruptured and unmarked petroleum pipeline.<\/font><\/p>\n

5. During an expansion for a mine, the contractor bulldozed fill and installed dams in a tributary and damaged wetlands. As a result, a dam built by the previous landowner failed, which sent a large amount of sediment downstream. The EPA said the un-permitted discharges threatened the water quality in the tributary and a nearby creek. The owner was ordered to immediately stop any further discharge into the creek, wetlands and tributaries and to submit a plan within 30 days for assessing and repairing the damage. Work must be completed in one year. The mine owner was found responsible for all costs associated with the assessment and clean-up ordered by the EPA. The assessment must be completed by a qualified wetland scientist acceptable to the EPA and provide full documentation. Documentation must include area mapping, a description of the damage, a description of the sediment and work needed to restore it, and plans for future monitoring. Under the Clean Water Act, the owner could be fined up to $27,500 a day for discharging pollutants into waterways without a permit from the U.S. Army Corps of Engineers.<\/font><\/p>\n

6. A general contractor dropped a piece of heavy equipment from a crane onto a pipe leading to a hydrofluoric acid tank. Acid was emitted into the surrounding atmosphere, creating a vast vapor cloud. Approximately 3,000 residents were evacuated and 1,000 were treated for respiratory injuries. The court entered judgment holding the contractor 95% liable for the accident. Over 4,500 claims have been filed in excess of $23,000,000. The claims include bodily injury, property damage, lost profits and emergency response costs. <\/font><\/p>\n

7. ASARCO, Inc., one of the country’s largest mining companies has agreed to spend $50 million for environmental improvements and pay a $6 million fine to settle pollution charges concerning two facilities in Arizona and Montana. ASARCO agreed to clean up toxic contamination at the two sites and to establish a new pollution management program at all 38 of its facilities in seven states. The settlement resolved nearly two years of litigation over what the government claimed were years if illegal discharges of toxic waste at the company’s open pit copper mine near Kelvin, Ariz., and a lead smelting facility near East Helena, Montana.<\/font><\/p>\n

8. An excavation\/grading contractor unknowingly spread petroleum-contaminated soil across a project site during fill operations. The contractor was named in a lawsuit for exacerbating the extent of contamination. After lengthy deliberations, the contractor was eventually removed from the lawsuit. However, he had invested $250,000 in his defense.<\/font><\/p>\n

Risk Transfer Strategies<\/strong><\/font><\/p>\n

The majority of contractors 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.<\/font><\/p>\n

Consider the three main benefits environmental liability insurance affords: <\/font><\/p>\n

    \n
  1. 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.<\/font><\/li>\n
  2. 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.<\/font><\/li>\n<\/ol>\n

    3. 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? <\/font><\/p>\n

    CONTRACTORS POLLUTION LIABILITY <\/strong><\/font><\/h2>\n

    Contractors (i.e. general contractors, HVAC, plumbing, electrical, mechanical, demolition, drilling, excavation, highway, street and paving contractors, rigging, utility, millwrights, artisan, residential, etc.) performing their regular services have exposure to environmental losses that are excluded from their general liability policies. Contractors Pollution Liability (CPL) insurance protects the insured should they cause or exacerbate an environmental condition while performing their construction services. This is for covered operations performed by or on behalf of the insured and the loss must occur away from any premises the insured owns, rents, leases or occupies.<\/font><\/p>\n

    Typically, coverage for CPL insurance is rated based upon the Insured’s gross receipts or payroll. You can purchase coverage on a claims made or occurrence basis. Coverage can be purchased 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 and\/or off-site disposal coverage. <\/font><\/p>\n

    TRANSPORTATION POLLUTION LIABILITY<\/strong><\/font><\/h2>\n

    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. <\/font><\/p>\n

    UNDERGROUND STORAGE TANKS <\/strong><\/font><\/p>\n

    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. <\/font><\/p>\n","protected":false},"excerpt":{"rendered":"

    Potential environmental liability exposures: completed operations exposures including incomplete line hookup or improper system construction causing spills or emissions; fumes, emission and spills of chemicals applied during construction (finishers, sealants), lubricant oils and other fluids from field equipment; release of oils\/fuels as a result of vandalism, site preparation\/excavation work through preexisting contaminated soil, air emissions… Continue reading Potential environmental liability exposures for general contractors performing above ground and underground construction Services<\/span><\/a><\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":""},"categories":[5],"tags":[],"class_list":["post-196","post","type-post","status-publish","format-standard","hentry","category-risk","entry"],"_links":{"self":[{"href":"https:\/\/estrategist.com\/members\/wp-json\/wp\/v2\/posts\/196","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/estrategist.com\/members\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/estrategist.com\/members\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/estrategist.com\/members\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/estrategist.com\/members\/wp-json\/wp\/v2\/comments?post=196"}],"version-history":[{"count":0,"href":"https:\/\/estrategist.com\/members\/wp-json\/wp\/v2\/posts\/196\/revisions"}],"wp:attachment":[{"href":"https:\/\/estrategist.com\/members\/wp-json\/wp\/v2\/media?parent=196"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/estrategist.com\/members\/wp-json\/wp\/v2\/categories?post=196"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/estrategist.com\/members\/wp-json\/wp\/v2\/tags?post=196"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}