Contractors

Pipeline Construction & Repair

Pipeline contractors perform operations and handle equipment, materials, and waste that can expose them to environmental liability. Improper construction, testing, and repair of pipelines could result in a breach of material from pipes, such as petroleum, natural gas, or sewage, that can lead to environmental cleanup and tort liability. At the jobsite, heavy construction equipment, earthwork activities, directional drilling, and testing or flushing of pipelines can expose contractors to the release of air particulates and fluids or generate run-off or wastes that can contain hazardous materials or create pollution conditions in surrounding soil, groundwater, surface waters, and natural resources. Contractors can also face exposure at a jobsite from disturbing pre-existing contamination in soil and pipe material (e.g., asbestos), striking underground utilities, or unknown hazards.

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Environmental Exposures May Include

Pipeline Integrity Failures & Product Release Hazards
Trenchless Construction Slurries & Erosion Control
Right-of-Way Clearing & Ecological Habitat Impact
Pipeline Construction Refueling & Hydraulic Fluid Spills
Hydrostatic Testing Wastewater & Disinfection Discharges
Pre-Existing Pipeline Corridor Soil Contamination
Subsurface Pipeline Utility Strikes & Line Punctures
Legacy Pipe Wrap Asbestos & Abatement Disposal
Pipeline Earthwork Dust & Pipe Cutting Particulates

Pipeline Integrity Failures & Product Release Hazards

Products passing through pipelines can include oil (petroleum, home heating), natural gas, slurry (solids suspended in water, such as coal, bauxite, limestone, and metal ores), water, or sewage. Improper installation, repair, integrity testing, or maintenance of pipes, valves, pumps, or other equipment can release products that can contaminate surrounding soils and water supply, harming drinking and recreational water, natural resources, and ecosystems. A more abrasive or corrosive product requires appropriate pipe materials, linings, and coatings to prevent premature system failure, cracks, or ruptures.

Trenchless Construction Slurries & Erosion Control

Earthwork activity, such as excavation, directional drilling, regrading, fill placement, and stockpiling of material, requires proper soil management and silt and erosion control. Silt and sediment can become pollutants when present in surface run-off, which can occur from rain events or work-generated water such as site dewatering, hydrostatic testing/flushing, slurries generated for trenchless construction, dust suppression over-application, or accidental release of fluids contained in drums, totes, and ASTs. Improper erosion control/soil management can allow silt and sediment-contaminated run-off to enter storm drainage systems or migrate directly or indirectly to surface waters. Silts and sediments can damage or block storm drain systems, cause catch basins to lose treatment efficiency, and severely damage water quality, off-site property, aquatic systems, and drinking water sources.

Right-of-Way Clearing & Ecological Habitat Impact

Operations such as clearing the right-of-way, constructing access roads, chemical application of herbicides, and soil compaction from heavy construction vehicles can severely impact ecosystems. Inadequate erosion controls, stormwater management, clearing/grading, and restoration can directly impact streambanks, wetlands, surface vegetation/tree canopy, and surface waters and harm wildlife, aquatic systems, and other natural resources.

Pipeline Construction Refueling & Hydraulic Fluid Spills

Construction equipment may be powered by diesel fuel and require petroleum-based hydraulic fluids and lubricants. Spills or leaks can occur during refueling or maintenance, contaminating jobsite soil and the business equipment yard.

Hydrostatic Testing Wastewater & Disinfection Discharges

Hydrostatic testing, flushing, or disinfecting activities produce wastewater that must be properly handled, stored, and disposed of and may be regulated. The wastewater can contain chemicals and raw material in the pipe or chlorination chemicals from disinfection. The contractor is responsible for wastewater treatment, proper disposal, and containment to prevent damage to surrounding ecosystems, soil erosion, and discharge into downstream storm drains.

Pre-Existing Pipeline Corridor Soil Contamination

Pre-existing contamination may occur in site soil or building structure materials. Disturbance could spread contamination to clean areas of the site or adjacent properties and create environmental liability in the transportation and disposal of any excavated material.

Subsurface Pipeline Utility Strikes & Line Punctures

Failure to properly locate underground utilities or unknown hazards, such as abandoned storage tanks and septic tanks, could result in striking a line or an accidental puncture, which could cause a subsequent release of fuel oil, chemicals, toxic gases, or sewage.

Legacy Pipe Wrap Asbestos & Abatement Disposal

Asbestos-containing materials (ACM) and other toxic materials may be present inside pipe walls, coatings, and pipe-wrapping of older pipes. Repair, renovation, recoating, or removal of older piping can disturb existing ACM and other toxic materials, resulting in environmental cleanup and tort liability. Any piping containing ACM or wastes generated from abatement work is regulated as hazardous waste and must follow procedures for handling, labeling, transporting, and disposing at an approved facility. The contractor can be considered a waste generator and retain cradle-to-grave liability.

Pipeline Earthwork Dust & Pipe Cutting Particulates

Particulates PM10/PM2.5 can become airborne from heavy equipment trafficking across the site, trenching or digging under dry soil conditions, cutting or sawing pipe, jackhammering concrete or pavement cover, or handling and mixing dry concrete, mortar, cement, mastics, or resins. Particulates generated can migrate off-site, expose third parties to nuisance dust and allergens, cause respiratory illnesses, and may even contain carcinogens.

Contractors Pollution Liability Can Provide Coverage For

Contracting operations completed “by or on behalf of” the insured

Contracting operations performed at a jobsite

Third-party claims for bodily injury and property damage

Third-party claims for cleanup

Defense of third-party claims

Natural resource damage

Silt and sedimentation

Sudden and accidental coverage for owned/leased location

First and third-party transportation pollution liability

Loading and unloading

First-party emergency response costs

Mold, legionella, bacteria, and  fungi

Lead and asbestos

Non-owned disposal sites

Civil fines and penalties

Claims Scenarios & Examples

During a project, an employee of a pipeline contractor punctured a benzene pipeline with a backhoe even though all the lines were previously marked, causing 8,400 gallons of benzene to be released into the soil, resulting in a loss of over $990,000.
A pipeline construction company was issued several violations while working on a project. The first violation was after the contractors burned debris within 1,000 feet of a home. Several millions of gallons of construction mud containing various chemicals were released into a high-quality wetland a few weeks later. The spill happened while the company used horizontal drilling to carve a path underground to lay down pipe. The state EPA and Federal Energy Regulatory Commission were in charge of monitoring the spill cleanup. EPA issued a $431,000 fine.
A pipeline construction company was working on a project that involved building natural gas pipelines across two states. The company did not properly follow the plans to control erosion, sediment, or industrial waste. As a result, landowners along the pipeline route complained about muddy stormwater run-off after heavy rains, and a cattle farmer complained of flooded hayfields. Investigations were completed in response to the complaints. They found violations that included sediment-laden water that polluted streams, failures to follow erosion control measures, and an “open dump” along the pipeline route where the contractors had disposed of drill cuttings and other waste. The contractor faced enforcement actions from state regulators and agreed to pay a $106,050 fine and provide a plan to fix damages.
A pipeline experienced an oil spill of 210,000 gallons that resulted from its construction. The failure was caused by mechanical damage to the pipe and coating of an installed weight. The spill happened on rural farmland, and a response team of 170 had to come to clean up the site. Approximately 44,730 gallons of crude oil were recovered.
The state EPA sued a pipeline developer for allegedly polluting the state’s air and water. The EPA claimed that the developer had spilled soap wastewater, soil, and sediment into a creek’s tributary. It was also alleged that during pipeline construction, the company had released two million gallons of drilling sludge that contained diesel fuel into wetlands and local quarries that provided drinking water. The lawsuit sought $2.3 million in fines.
A pipeline construction company received water pollution violations from their pipeline construction activities. Eighteen violations were issued, along with two cease-and-desist orders for failing to control erosion and allowing sediment water to seep from construction areas. The company agreed to pay over $430,000 in fines.
Contractors working on a sewer pipe replacement project were found to be allegedly removing asbestos-containing pipe. They did not properly inspect, secure, or dispose of waste containing asbestos and other solid waste at the site, which posed a public risk for asbestos exposure. Along with $385,000 in penalties, the contractors faced remediation costs for the site.
A ut company was installing new pipelines and received permission to run the new lines above and below the existing pipeline; however, they were under strict rules for how to do the construction. They were required to perform an open-cut excavation around the existing pipes, but instead, the contractors bored horizontally to install the pipeline. The 28-inch reamer used in the drilling process struck one of the existing pipelines and caused a release of 988 cubic meters of crude oil condensate blend into the construction site. The owner of the existing lines sued the contractors for $29.5 million for the lost product, cleanup costs, business interruption, repairs, and ongoing environmental consultations, assessments, and reclamation wlity

Final Consideration

As a contractor you can be faced with the cost to defend yourself 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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