Property Types

Recycler - Paper

Paper recyclers can face many environmental exposures from the materials brought on site, treatment processes conducted, and wastes that are generated. There is a large variety in the types of paper recycled, but nearly all contain chemicals and materials added during the manufacturing process that may be hazardous. Treatments to remove these materials and reprocess the waste paper for reuse, such as cleaning, de-inking, and bleaching, utilize chemicals and solvents and generate wastewater and sludge that can be contaminated. Improper handling, containment, and disposal of these wastes can expose the recycler to cleanup and third-party liability. Additional environmental exposures can result during the storage of paper before treatment, the storage of chemicals and solvents on-site, and the release of fluids and fuels from equipment.

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Environmental Exposures May Include

Wastewater Management
Sludge
Bleaching Processes
Chemical Storage
Equipment Leaks
Leachate
Fire Emissions
Odor and Gas Irritants

Wastewater Management

Treatment processes such as cleaning, washing, and de-inking involve using various chemicals, solvents, and detergents to remove inks, clays, plastics, adhesives, and other materials, which generates wastewater contaminated with the treatment chemicals and the material removed from the paper, which may be hazardous, such as heavy metals in the printing inks like copper, lead, zinc, and chromium. Containment breaches or improper disposal of wastewater can release these contaminants into soil and groundwater or discharge through drains into other water sources.

Sludge

Sludge generated as a by-product from the recycling process, particularly from de-inking and flotation operations, is a solid waste containing various hazardous materials such as heavy metals, dioxin, coatings, adhesives, dyes, and fillers such as calcium carbonate and clay. Disposal of the sludge, or sludge ash created from incinerating the waste, can create liability at the landfill or other non-owned disposal site. Landspreading is another way of disposing of sludge, as it can contain some trace nutrients, but contaminants such as heavy metals can pollute the receiving soils and groundwater.

Bleaching Processes

Bleaching recycled pulp uses hazardous chemicals, often the same as those used to bleach virgin pulp, including hydrogen peroxide and sodium hydrosulfite. Chlorine and chlorine dioxide could also be used, creating highly toxic chlorinated byproducts, such as dioxins and furans. Releasing the bleaching agents can result in environmental cleanup and third-party liability. Exposure to even a low level of chlorine could be fatal. Bleaching processes also generate effluent containing these chemicals; improper handling or disposal could result in environmental liability.

Chemical Storage

During the storage and handling of chemicals and solvents, a containment breach, leak, or spill can lead to environmental liability. Failure to segregate or the mixing of incompatible materials can create hazards. Spent chemicals and wastewater may be considered hazardous waste and require special disposal procedures.

Equipment Leaks

Shredding equipment, sorters, bailers, forklifts, conveyors, compactors, and trucks may be used for conducting business. Petroleum-based fluids may leak from on-site equipment and vehicles, at pickup sites, in transit between pickup and drop-off points, or docked in the yard. If maintenance and fueling are also conducted, these products may be spilled or leaked from stock supplies. Products include diesel fuels, hydraulic fluids, cleaners, and coolants. Releases can contaminate soil, be carried off-site in stormwater run-off, or contribute to fire hazards. Idling diesel tractor-trailers may also produce significant localized toxic exhaust emissions.

Leachate

Manufactured paper products have chemicals that leach from paper when exposed to moisture. Recyclers use their working yard, outdoor storage, and other storage containers, directly exposing them to stormwater, transient flooding, leaks, fire sprinkler deployment, or firewater. Paper leachate can discharge pollutants into storm drainage systems and cause severe impacts on water quality at outfalls to surface water, and damage natural resources. Potential pollutants in the leachate can include inks, adhesives, varnishes, dyes, polypropylene, barium, dioxin, PAHs, sulfate/sulfides, and silicates.

Fire Emissions

Fires involving various types of paper release emissions of small particles. Some can be grouped into the classes of priority pollutants for the National Ambient Air Quality Standards for PM10 and PM2.5. Some will be present as ultra-fine particles, which have been shown to cause serious health impacts. Chemicals may include PAHs, 1,3-butadiene, phenols, and benzene. Some of these chemicals are carcinogens.

Odor and Gas Irritants

Odors can be a nuisance and irritant to neighboring properties, resulting in claims for third-party bodily injury or diminution of property value. Using chemicals, including chlorine and gases produced during processes, such as hydrogen sulfide, can cause eye, nose, and throat irritation, headaches, nausea, and coughing and could aggravate existing medical conditions such as asthma.

Environmental Pollution Liability Can Provide Coverage For

Integrated General Liability/Site Pollution, options to include XS, Automobile, and Workers’ Compensation may be available

Monoline Site Pollution Liability

Third-party claims for bodily injury, property damage

First-party and third-party cleanup

Defense of third-party claims

Emergency response costs

Natural resource damage                                                                                                                          

First and third-party transportation pollution liability

Loading and unloading

Products pollution liability

Crisis/reputation management

Civil fines and penalties

Off-site services pollution liability

Business interruption expenses

Non-owned disposal sites

Claims Scenarios & Examples

A couple sued a nearby recycling plant that recycled paper and cardboard to make toilet paper and paper towels. The couple alleged that the company was releasing toxic chemicals into the atmosphere and to their property through their operations, sludge fields, and waste disposal facilities. The couple claimed their property lost value and was damaged because of this, and they sought damages and attorney fees. A class action lawsuit was also brought against the plant from 116 nearby properties, claiming the sludge dumped at the plant released hydrogen sulfide into the air. Because the chemical also corrodes metal, neighbors found that their air conditioning systems were experiencing corrosion. The neighbors claimed that the gas and corrosion caused damage to their homes and caused the value to decrease. The recycling company appealed the class-action status to the Court of Appeals but lost.
After vandals started a fire at a recycling facility and caught a large amount of cardboard on fire, the fire burned for several days, and clouds of toxic substances were sent into the air. Due to the toxic and hazardous materials often found in cardboard, residents living nearby complained of their exposure to the toxic fumes. The residents sued, seeking a medical diagnosis, testing, and monitoring damages. The recycler filed the claim with their general liability carrier, which was denied due to the total pollution exclusion.
A paper recycling facility had rainwater run-off contaminated with high levels of pollutants, including suspended solids, silt and industrial waste, heavy metals, and chemical oxygen demand. The run-off was entering a nearby bay, and the contamination was found to be harmful to aquatic life. A citizens group sued the company. The facility settled with the group to prevent contaminated run-off and legally agreed to cover inbound shredded paper and to improve the run-off filtration system to keep the site cleaner.
After closing for the night, a fire broke out at a recycling center, releasing a plume of toxic black smoke. Because of this, a health advisory was issued, and several residents had to be evacuated. The residents sued the facility for bodily injury, property damage, and relocation expenses.
A paper processing facility experienced a bleach spill when a fitting on a bleach tote failed. The solution spilled onto a concrete pad and into the soil near the facility’s wastewater processing equipment. The facility did not initially report the spill; however, a contaminant was later found in a groundwater monitoring well on the property that was likely related to the spill. The state regulatory authority was subsequently notified of the spill. The company was fined and had to clean up the release and take steps to improve chemical handling moving forward.

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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