Property Types

Lumber Manufacturing & Storage

Lumber treatment, handling, and storage facilities face many environmental exposures. Work performed to prepare and treat wood can release contaminants that can leach into soil and groundwater or create hazardous air emissions. Along with cleaning the facility and equipment, these operations can generate contaminated wastewater that can discharge into soil and water systems. The exposure of yards to precipitation creates a risk of stormwater collecting silts, pesticides, and chemicals and contaminating run-off. The storage, handling, and disposal of various chemicals and hazardous wastes can lead to additional environmental liability.

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Environmental Exposures May Include

Wood Treatments
Wastewater
Log Yard Run-off
Chemical Storage
Stormwater
Equipment Fluid Leaks
Hazardous Waste
Emissions
Illicit Abandonment

Wood Treatments

Wood treatments used to protect against insect damage, fungus, and decay involve dipping or pressurized treatment using pesticides and chemicals, including chromium, copper, arsenic, or zinc. Some preservatives may contain chromated arsenicals, creosote, and pentachlorophenol. Drainage from treatment drying or moving wood to stacking areas can result in contaminated soil and groundwater. Fugitive emissions from spraying chemicals can create hazardous air emissions.

Wastewater

Cleaning tanks and equipment used in wood treatment processes generate contaminated wastewater. Wastewater is also generated during the wood conditioning before treatment and from condensation buildup on the cylinders. Improper handling or containment can allow the contaminated wastewater to leach into soil or discharge into water systems or adjacent properties. Sludge can also accumulate in wastewater or treatment cylinders and storage tanks. The sludge can contain very high concentrations of preservative chemicals.

Log Yard Run-off

Wastewater effluent from log yards and ponds can also contain toxic chemicals such as tannins, phenols, resins, and fatty acids leached from the timber, pesticides, soil, and other materials washed out of the bark. Improper handling or containment of the wastewater can allow contaminants to leach into soil or discharge into water systems. If the wood has been pressure treated, unabsorbed preservatives can continue to exude for some time and can leach into soils and contaminate stormwater if exposed to precipitation.

Chemical Storage

Facilities that apply wood preservative treatments or coat wood products may store large volumes of hazardous chemicals such as preservatives, pesticides, paints, lacquers, and solvents. Improper handling or mixing of chemicals, or spills and leaks during delivery or from storage containment, can result in a pollution incident. Environmental exposure can also result from inadequate or no secondary containment for releases from storage tanks.

Stormwater

The exposure of lumber mills and yards to weather elements creates a significant risk for stormwater run-off to collect chemicals, oils, pesticides, silt and sediment, and wood wastes. Contaminated run-off can discharge into water systems and lead to human health hazards and natural resource damage.

Equipment Fluid Leaks

Vehicles and powered equipment, such as forklift trucks and cranes, may be used at a facility. These vehicles contain fuels, oils, hydraulic fluids, and other automotive fluids. Leaks from vehicles or storage containers can contaminate soils and groundwater or collect in stormwater run-off. Washing down maintenance, storage, and repair areas could discharge pollutants into stormwater drains. Greasy rags, oil filters, air filters, batteries, spent coolant, and degreasers could also be considered hazardous waste and must be disposed of or recycled properly.

Hazardous Waste

Wood waste containing preservative chemicals should be treated as hazardous waste. The waste should either be disposed of in a facility capable of handling wastes that may have chemical leaching properties or incinerated in an incinerator with effective air pollution control devices. Additional hazardous wastes generated that may require special disposal procedures include spent preservatives, wastewater, process residuals, and preservative drippage.

Emissions

Hazardous air pollutants can be generated from many sources, including wood boilers that burn wood waste and can emit fly ash, carbon monoxide volatile organic compounds (VOCs), and kiln drying of wood, which can release methanol, formaldehyde, and VOCs. Other hazardous air emissions can come from applying solvents, coatings, lacquers, wood dust, and larger particles generated during sawing, machining, and sanding operations.

Illicit Abandonment

Illicit abandonment is the illegal dumping of pollutants on your property. It can become the property owner’s burden for cleanup and third-party bodily injury or property damage if the originator of the waste can’t be located.

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

First and third-party transportation pollution liability

Aboveground and underground storage tanks

Non-owned disposal sites

Mold, bacteria, viruses, legionella, and more

Natural resource damage

Emergency response costs

Silt and sedimentation

Loading and unloading

Defense of third-party claims

Civil fines and penalties

Illicit abandonment

Crisis management

Claims Scenarios & Examples

A company that owned and operated lumber mills was found to be discharging polluted water into the local waterway without a correct permit. The state conducted an inspection and found that the stormwater on site was contaminated and was black and foaming, which happens when the water has been in contact with wood waste for a prolonged period. The EPA issued a fine of $37,500 for each day the stormwater was dumped into the local waterway and $52,414 per violation. The company also had another facility that was found to be dumping copper discharge into a tidal estuary. The company paid $65,000 in waterway restoration costs.
While working at a lumber yard, an employee used a forklift and knocked over and punctured two five-gallon drums containing an unknown chemical. The forklift driver fainted after the accident and was sent to the hospital due to exposure to unknown chemicals. The fire department responded to the incident and spent several hours investigating the scene and containing the chemical spill. They said that the chemicals may not have been on the lumber yard’s property and could have been abandoned on the site by an unknown party.
A resident that lived near a log yard claimed that the yard operator had been spilling 50 gallons of hydraulic oil daily for more than three years onto the ground and into the stormwater system. Testing was completed and found evidence of diesel fuel five times more than the allowed level. The log yard company leased the 12-acre site from a port.
A worker at a lumber treatment yard did not properly secure the door for a pressurizing tank before leaving the facility for the night. The tank contained lumber that was being treated overnight. As a result, 2,500-4,000 gallons of the bright green wood-treating chemical, which contained copper, chromium, and arsenic, flowed from the tank, across the parking lot and up the street about 200 yards. The liquid pooled in a cement-lined sump, and an unknown amount seeped into the partly clogged drain of the sump, which led under the road and drained into a private fish pond that opened into a bay.
A lumber company was found to have violated the Clean Water Act, among others. The company’s 35-acre property was polluted from run-off from washing vehicles and water that cooled down radiators and brakes on various machines. In addition, stormwater and wastewater at the facility combined with sawdust, chemicals, and metals. Each day with a discharge of pollution counted as a separate violation, and each violation was a penalty of $37,500.
A small lumber mill was accused of sending polluted stormwater into nearby creeks and rivers. The lawsuit alleged that the mill discharged stormwater with high levels of arsenic, lead, and other chemicals from the industrial activities, which ended up in a creek and two rivers. The mill was found in violation of the Clean Water Act and did not meet permit requirements. They were fined $37,500 per day for each permit violation and were required to remediate the environmental damage and create a new pollution control plan to help them comply with their permit.
Residents living near a log sorting operation filed a public nuisance lawsuit claiming the company was destroying their quality of life due to noise, dust, and concerns about water pollution from its operations. They argued that the company was not an agriculture company but an industrial operation because they sorted logs on the property, not cut logs down. After the run-off from the logging site flooded nearby fields with water, the residents noticed an oily sheen. They filed a complaint with the state Department of Environmental Quality to see if the groundwater or surface water was polluted.
PCB-contaminated dirt was found along a river from a lumber mill site. Over 32,000 cubic yards of hazardous material were removed, including PCB-contaminated sludge in the bottom of a cooling pond that held water from the mill’s steam system before it was released into the river. While some sludge was taken to the city landfill, the more toxic sediments were taken to a hazardous waste facility. The lumber mill agreed to pay $6.5 million to settle the lawsuit with the state Department of Environmental Quality and Department of Justice.

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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