Property Types

Fabrication Facilities

Fabrication companies play a vital role in various industries by transforming raw materials into finished products through cutting, welding, and machining. They serve various industries, including construction, automotive, aerospace, and manufacturing, providing tailored solutions to meet specific project requirements. However, these activities can pose significant environmental, health, and safety risks due to exposure to pollutants. Common sources of pollution in fabrication facilities include fumes from welding, dust from cutting and grinding, fluids from maintaining equipment, and hazardous chemicals used in cleaning and finishing processes. Understanding these exposures is essential for implementing effective safety measures, compliance with regulatory requirements, proper waste handling, storage, and disposal, and protecting workers and the surrounding community.

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Environmental Exposures May Include:

Waste Handling
Stormwater Run-off
Oil Water Separators
Mold
Chemical Releases
Hazardous Dust and Vapors
Illicit Abandonment
Wastewater

Waste Handling

Waste generation, such as scrap metal, coolant, used oil, solvent, paint, adhesives, coatings, and other waste materials, may be generated by fabrication operations and can be considered hazardous. Improper storage and handling of wastes can lead to releases that may cause contamination. Additionally, waste generators are responsible for determining if their wastes are hazardous and require special disposal or recycling procedures. Waste generators retain “cradle to grave” liability for their disposal of wastes, and improper characterization and disposal can result in regulatory violations and environmental liability.

Stormwater Run-off

Stormwater run-off could contact chemicals, metals, oil, wastes, or other outside storage. Trucks delivering raw materials or picking up products or wastes can leak automotive fluids on the property and collect in stormwater run-off. If adequate precautions are not taken to prevent pollutants from entering stormwater, they can impact soil or groundwater at a facility or neighboring property, migrate to storm drains, and be discharged to surface waters.

Oil Water Separators

Oil/water separators designed to separate oils from coolants may be present at fabrication facilities, either in-ground or aboveground. Over time, these separators can develop leaks that allow oil or coolant to seep from the system into the surrounding environment.

Mold

Mold could develop from moisture intrusion caused by storms or flooding from leaking water pipes, sprinklers, and HVAC systems. Many fabrication buildings are flat-roofed, where pooled water can be absorbed by the roofing material and seep into sub-roof areas. Mold can also develop within HVAC systems or from improper building ventilation or humidity management of climate-controlled areas within the building.

Chemical Releases

Releases of chemicals, petroleum products, or wastes from aboveground or underground storage tanks, process equipment, containers, wastewater treatment systems, piping systems, drains, or other areas of a facility could impact soil or ground-water, result in toxic air releases, migrate off-site, harm municipal sanitary sewers, or impact surface waters and result in cleanup claims, third-party suits, natural resource damages, and civil fines.

Hazardous Dust and Vapors

Welding, brazing, and cutting can generate fumes and vapors that contain metals, carbon dioxide, carbon monoxide, ozone, fluorides, and other chemical components that can adversely impact health. Dust can be generated from grinding activities. If the area where these operations are performed is not properly vented, or fumes or dust are vented to areas where they are drawn into neighboring HVAC systems, third parties could be exposed to the fumes or dust, resulting in bodily injury claims.

Illicit Abandonment

Illicit abandonment is the illegal dumping of pollutants on a property by a third party. If law enforcement cannot locate the originator of the waste, it can become the property owner’s burden for cleanup and third-party bodily injury or property damage.

Wastewater

Wastewater from fabrication operations can contain metals, oils, grease, solvents, detergents, suspended solids, and other pollutants. Wastewater treatment systems may be present at facilities, or wastewater may be taken to a non-owned disposal site or wastewater treatment facility. Releases of insufficiently treated wastewater or spills during storage, transport, or transfer from wastewater storage areas could create environmental risks. Improper waste disposal could lead to environmental liability or legal consequences for violating regulatory requirements.

Environmental Pollution Liability Can Provide Coverage For

On-site cleanup of new and pre-existing pollution conditions

Off-site cleanup of new and pre-existing pollution conditions

Third-party claims for bodily injury and property damage

Third-party claims for cleanup

Both sudden and gradual pollution conditions

Aboveground and underground storage tanks

Non-owned disposal sites

Business interruption resulting from pollution conditions

First and third-party transportation pollution liability

Loading and unloading

Defense of third-party claims

Illicit abandonment

Natural resource damage

Civil fines and penalties

Claims Scenarios & Examples

A fabrication company that manufactures steel components for construction buildings and bridges and stores its materials and equipment in a large outdoor clearing area was found to have polluted a renowned bay. During the rainy season, run-off facilitated the discharge of aluminum, iron, zinc, and nitrogen chemicals into the bay. A non-profit organization committed to safeguarding the bay filed a lawsuit against the fabrication company. The settlement agreement requires the company to cover the costs of cleaning up its pollution, install pollution controls at its facility, pave outdoor areas, discontinue outside storage of scrap materials, and allocate funds towards environmental restoration initiatives to benefit its local community.
The Environmental Protection Agency (EPA) accused a ship repair and metal fabrication company of violating Clean Water Act regulations at its site. The company went over the allowed limits of zinc and copper in its stormwater run-off four times. To resolve the issue, the company was ordered to fix and replace its entire facility’s plumbing, repaint the roofs of its buildings, enhance industrial cleaning efforts, and adopt best practices for preventing stormwater pollution. Following these actions, the company is subject to a three-year monitoring period. Should it not achieve the set pollution standards during this period, the company will be mandated to set up a stormwater treatment system on its premises.
A family-owned fabrication company has agreed to pay $4 million in civil penalties and an additional $9 million to fund environmental projects. The settlement resolved over 400 violations of federal and state environmental laws. This business, which operates 28 facilities across 14 states, was cited for a variety of environmental infractions, including stormwater contamination at numerous sites and violations of the Clean Air Act (CAA), Clean Water Act (CWA), Resources Conservation and Recovery Act (RCRA), Comprehensive Environmental Response Compensation and Liability Act (CERCLA), Safe Drinking Water Act (SDWA), and Toxic Substances Control Act (TSCA). The company must establish and implement a comprehensive environmental management system (EMS) as part of the settlement.
A settlement of $22.5 million was reached by an industrial goods and metal fabrication company to resolve a class-action lawsuit related to air pollution. As a result of the settlement, over 4,200 residents were compensated for the impact of the company’s operations emitting toxic chemicals into their homes. Throughout the legal proceedings, researchers from the U.S. Forest Service presented data indicating elevated levels of arsenic, cadmium, nickel, and other metals in the air surrounding the company’s facility.
At its facility, a welding and fabrication company stored spent paint and solvent waste in seven 55-gallon drums. The state’s environmental protection agency conducted a complaint investigation and compliance evaluation inspection at the facility. During the inspection, it was discovered that the company failed to evaluate its generated wastes to determine whether they should be classified as hazardous. As a result, the company was cited for hazardous waste violations and required to pay a fine.
A fabrication facility neglected to monitor all stormwater discharge points, leading to a violation of the Clean Water Act. As a result, the business was required to pay a civil penalty of $82,000. Beyond the financial cost of the fine for discharging stormwater into a nearby watershed, the facility was also mandated to undertake a stormwater evaluation, revise and update its stormwater Pollution Control Plan, and install additional treatment capacity to mitigate excess zinc discharges.
Residents living near a metal fabrication plant filed a lawsuit against the facility, alleging issues related to noise, air, water, and soil pollution. Seven families accused the fabricator of causing hazardous chemical contamination in their homes, claiming that the company neglected to investigate and remediate the contamination for over 15 years. Tetrachloroethylene, also known as perchloroethylene (PCE), was found in the soil and vapor beneath, inside, and surrounding the homes. The settlement amount was agreed upon at $7.2 million.

Final Consideration

Your business can be faced with the cost to defend itself against allegations or legal action from pollution related events, regardless if you are at fault or not. Having the proper insurance coverage in place will help fund the expenses incurred to investigate or defend against a claim or suit and provide you with environmental claims handling expertise.

This environmental risk overview offers a general understanding of potential risks and may not reflect all risks associated with your business. Environmental Risk Professionals has compiled this overview for informational purposes only. This overview does not constitute legal opinion or advice, nor does it establish a consultant-client relationship. This overview is not intended to guide project parties in interpreting specific contracts or resolving disputes; such decisions may require consultation with counsel and depend on various factors. © 2025 Environmental Risk Professionals, LLC

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