ERP - Environmental Risk Professionals

On-Site 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 manufacturing facility could impact soil or groundwater, 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.

Stormwater Run-off

Stormwater run-off could come in contact with manufacturing facilities’ chemicals, debris, fueling areas, wastes, and other outside storage. Heavy-duty trucks loading and unloading at manufacturing facilities can leak automotive fluids on the property. If stormwater is not properly controlled, contained, or pre-treated before discharge into sanitary or storm drainage systems, it can pollute soil and groundwater or discharge directly into surface waters, impacting human health and aquatic systems.

Accidental Releases During Transport

Accidental releases during the transportation of products or wastes from a manufacturing facility due to improper cargo securement, a loose valve, or vehicle upsets or overturns can result in environmental liability.

Air Emissions

Air emissions can emanate from the manufacturing process or the release of exhaust or toxic gases from equipment. Vehicles and powered equipment, such as forklifts, trucks, and cranes, may be used at facilities. These types of internal combustion vehicles are powered by diesel or propane, which can emit carbon monoxide gas and diesel particulates. Improper controls or malfunctioning equipment can result in exceedances and regulatory violations. Chemicals may be stored that produce a vapor cloud if accidentally released. Air emissions or a vapor cloud release can pose health hazards to third parties.

Product Defects

Manufacturers produce products. Environmental exposure can result from releasing, escaping, or dispersal of pollutants or contaminating water, soil, and air due to product damage or defects. Many General Liability and Product Liability insurance policies deny coverage for cleanup, bodily injury, and property damage and defense arising from the discharge of pollutants from a product.

Water Intrusion and Mold

Mold could develop from moisture intrusion due to storms or flooding from leaking water pipes, sprinklers, and HVAC systems. Many manufacturing 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 Incompatibility and Fire Risks

Incompatible chemicals are prone to react violently or produce toxic byproducts/gases when stored together or mixed. Flammable products may result in a fire that spreads and releases other contained materials, emitting toxic fumes and smoke from the materials stored at the site or due to a mix of materials resulting from the fire. Firefighting water or foam could create contaminated run-off that spreads to nearby storm drains or properties, resulting in environmental cleanup and tort liability.

Waste Disposal

Manufacturers may generate hazardous or regulated wastes requiring special disposal procedures. Improper waste disposal could lead to environmental liability or legal consequences for violating regulatory requirements. A manufacturer can become a Potentially Responsible Party (PRP), liable for cleanup costs in the environmental cleanup of a non-owned disposal (NOD) facility where they sent wastes.

Off-Site Migration and Contamination

Many manufacturing facilities are located in industrial areas. Contaminants from neighboring facilities could migrate to the manufacturer’s property. If the neighboring business owner is not properly insured or goes bankrupt, the cost of cleanup could fall on the manufacturer for their property. Additionally, historic site uses could have impacted the site, and the current operator could be liable for cleanup under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).

Vandalism

Inadequate security at a facility can allow vandalism to occur. Damage to facility equipment, such as aboveground tanks or containers of chemicals, can result in environmental releases.

Illicit Abandonment

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

Wastewater Management

Cleaning storage tanks and processing equipment may generate wastewater or sludge. Wastewater treatment systems may be present at facilities, or these waste materials may be taken to a non-owned disposal facility or wastewater treatment facility. Releases of insufficiently treated wastewater or spills could occur during cleaning, transport, or transfer from waste storage areas and 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

Integrated GL/site pollution and options to include excess, auto, and work comp may be available

Monoline site pollution liability

Third-party claims for bodily injury and property damage

First-party and third-party cleanup

Both sudden and gradual pollution conditions

Defense of third-party claims

Emergency response costs

Natural resource damage

First and third-party transportation pollution liability

Loading and unloading

Products pollution liability

Business interruption resulting from pollution conditions

Aboveground and underground storage tanks

Non-owned disposal sites

Civil fines and penalties

Mold, legionella, and more

Illicit abandonment

Claims Scenarios & Examples

A manufacturing facility caught on fire, which caused a dike to collapse, releasing large amounts of toxic chemicals, including xylene and benzene, into a waterway. The county’s emergency response costs $1.9 million, and long-term remediation and natural resource damage costs were expected to be extensive.

One weekend, a break-in occurred at a manufacturing facility, and The vandals damaged a valve on a 10,000-gallon tank full of chemicals. The damaged valve leaked until Monday morning when facility employees discovered it. Although most of the tank’s contents needed to be removed and properly disposed of from the containment area, local environmental officials required subsurface testing of soils and groundwater. Total costs for the company were over $90,000.

A cement manufacturer had three years of air pollution and reporting violations and, as a result, was fined. The state reported that the manufacturer’s emissions increased air pollution and impacted the health of the region’s residents.

A manufacturer had aboveground storage tanks at their location with piping connections underground. It was later found that the piping had leaked for an unknown time. There was soil and groundwater contamination on and off-site, along with damage to a nearby petroleum site. The insured had coverage for cleanup and defense costs, totaling about $3.4 million.

An employee at a manufacturing facility accidentally dropped a moving tote that held lubricating oil. The container ruptured and spilled its contents into the site’s stormwater system, which was then flushed into a retention pond where many animals were known to congregate. About 340 gallons of oil were released into the pond. Crews that responded to the spill caught and cleaned several animals with oil on them, but others they could not catch. During the cleanup, it was discovered that a collection pit at the facility was also draining into the pond. The manufacturer paid over $220,000 in fines, state spill response expenses, natural resource damage assessment, improvements to their spill prevention equipment, and employee training.

A container of hazardous liquid was illegally placed into a dumpster at a small manufacturing facility by an unknown party. The container leaked and contaminated the contents of the load, which in turn, contaminated the waste on the tipping foot of the transfer station. Cleanup costs and legal fees exceeded $150,000.

A loose flange at a chemical manufacturer’s property resulted in the escape of gases, which caused a flash fire and the rupture of a feeder pipe. The vapor plume from the release migrated several miles, and about 10,000 residents filed class action suits for bodily injury.

An industrial facility updated its air pollution control equipment and hired a contractor to install new scrubbers. A few days later, nearby residents experienced dizziness and nausea; many even had to go to the hospital. The illnesses were due to the fumes from the facility’s exhaust stacks. Upon investigation, it was found that the scrubber was installed correctly but manufactured incorrectly. The scrubber manufacturer was sued and had to pay $500,000 in damages.

A large regional vinyl window manufacturer was working at a new housing development. While unloading windows from the vehicle, a hydraulic hose was dislodged from the truck’s loading arm, releasing hydraulic fluid onto a new paved patio. While cleaning the pavers, the driver spread contaminated water into a stormwater drain. Local regulators required the storm sewer to be capped, flushed, and cleaned. The property developer filed a claim for damage to the paving stones and soil excavation costs.

A manufacturer used a machine press to make automotive parts, which were partially located under the concrete slab foot at the facility. Lubricating oil leaked unknowingly from the machine into the soil under the building for over 20 years. When the facility was for sale, a potential buyer tested the soil, and petroleum hydrocarbons were found in the soil from the machine press. The manufacturer was responsible for contamination cleanup, and the property sale was stalled.

Property Types

Manufacturing

Environmental Exposures May Include: