Property Types

Recycler - Plastic

Plastic recyclers accept used plastic and reprocess it into raw materials for manufacturers to make new products. Plastics are recycled either by mechanical or chemical processes. Mechanical processing may include grinding, washing, separation, drying, re-granulating, and compounding. Chemical processing breaks down waste plastic into basic raw material components for conversion into new plastic polymers. Plastic recyclers are exposed to numerous environmental risks from using and storing chemicals or wastes. Accidental discharges of pollutants can migrate into on-site drains or soils, and pollutants can impact drinking water sources, including rivers, lakes, streams, and groundwater. Hazardous fumes may be generated from processing operations or equipment at plastics processing facilities, which can lead to third-party liability. Improper handling, containment, and disposal of waste a facility generates can expose the recycler to cleanup or third-party liability.

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Environmental Exposures May Include

Wastewater Management
Stormwater Run-off
Toxic Plastic Chemical Leaching
Plastic Pellet Transport Spills
Chemical Storage
Air Emissions
Storage Tanks
Flammables
Residual Chemical Containers

Wastewater Management

Unacceptable materials, such as metals or other wastes, can be mixed with plastics to be recycled. Contaminant removal done at the recycling facility can subject the facility to hazardous waste generator requirements. Additionally, spent chemicals may be generated from treatment processes, waste oils, and solvents from the maintenance of processing equipment or fleet vehicles. Wastewater may also be generated from mechanical washing processes. The facility is responsible for the proper containment, labeling, storage, and disposal of wastewater and hazardous wastes. Improper waste disposal could lead to environmental liability or legal consequences for violating regulatory requirements. Additionally, off-site disposal of wastes can lead to liability for the cleanup of non-owned disposal (NOD) facilities.

Stormwater Run-off

Stormwater that comes in contact with stored stockpiles of plastics to be recycled, plastic resin pellets, and powder coloring for plastics can collect microplastic particles, including polypropylene, polyvinyl chloride, polyester, etc., and become contaminated. If the stormwater run-off is not properly controlled, contained, and pre-treated before discharge into sanitary or storm drainage systems, it could impact groundwater, surface water quality, and aquatic systems. Microplastics display nutritive algae that organisms up the food chain require.

Toxic Plastic Chemical Leaching

Plastics have several toxic constituents, among which are phthalates, polyfluorinated chemicals, bisphenol A (BPA), brominated flame retardants, and antimony trioxide, which can leach out to have adverse effects on the environment and public health. Plastic recyclers sell to manufacturers that use their plastic to make new items. As part of the product supply chain, plastic recyclers could be drawn into product pollution suits and face the potential for liability and defense costs.

Plastic Pellet Transport Spills

Accidental releases of plastic pellet products can occur during transportation or loading/unloading. Spilled plastic pellets can migrate into municipal sewers or waterways. Once in the environment, the pellets are persistent. They can be ingested and harm wildlife, leading to potential natural resource damage, cleanup liability, and third-party claims.

Chemical Storage

The chemicals used to break down waste plastics or the component chemicals created can leak or spill during use, storage, or loading/unloading. Releases can impact the environment at the site or migrate off-site in groundwater or stormwater. Cleanup, third-party claims, or natural resource damage claims can result.

Air Emissions

Hazardous air emissions can be generated from various operations and equipment used at plastic recycling facilities. Particulate matter air emissions can be generated from material handling and finishing operations. Volatile organic compounds and hazardous air pollutant emissions can result from chemical processing or extrusion operations. Also, air emissions can emanate from boilers, vehicles, and powered equipment, such as forklifts, trucks, and cranes. Boilers and internal combustion vehicles are often powered by diesel or propane, which can emit carbon monoxide gas. Air emissions not properly controlled or exceeding permit limits can lead to violations or third-party injury claims.

Storage Tanks

Aboveground or underground storage tanks may store wastewater, products, gasoline, diesel fuel, lubricants, motor oils, coolants, hydraulic fluids, heating oils, or other chemicals at plastic recycling facilities. Spills or leaks of chemicals may occur during storage, during loading/unloading, during use, or from equipment. These releases can impact soil or groundwater, migrate to surface water bodies or drinking water sources, or impact indoor air through vapor intrusion.

Flammables

Some chemicals and materials used, stored, or produced at plastics recycling facilities may be flammable and could cause a fire that spreads and releases other contained materials. A fire at a facility could emit toxic fumes and smoke from the materials stored or due to a mix of materials resulting from the fire. Firefighting solutions such as water or foam could create contaminated run-off that spreads to nearby storm drains or properties, resulting in environmental cleanup and tort liability.

Residual Chemical Containers

Plastic containers that are recycled may have contained pesticides, chemicals, wastes, etc., in the past. The Federal Drug Administration (FDA) has identified a concern about recycling these containers. They have indicated that contaminants from the chemicals held may be present in recycled plastics. They also encouraged testing for possible surrogate contaminants to ensure they are not present in end-use consumer products. If present, consumers could be exposed to harmful contaminants, which may lead to product pollution liability suits against the recycler.

Environmental Pollution Liability Can Provide Coverage For

Integrated GL/Site Pollution, options to include XS, Auto, and WC may be available

Monoline Site Pollution Liability

Third-party claims for bodily injury and 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

Crisis/reputation management

Civil fines and penalties

Off-site services pollution liability

Business interruption expenses

Non-owned disposal sites

Products pollution liability

Claims Scenarios & Examples

A fire broke out at a plastics recycling facility. An explosion occurred, releasing chemicals and toxic fumes into the air. As a result, a shelter-in-place order was issued for the surrounding residents and businesses. The recycler faced 17 toxic tort lawsuits on behalf of more than 42,000 claimants.
A solvent was used as part of a purification process by a plastics recycler. The solvent was stored in an aboveground storage tank inside the building next to a doorway. The tank did not have secondary containment, and one weekend, the tank began to leak. Because there was no secondary containment, the solvent leaked onto the floor and seeped outside into a nearby storm drain. The storm drain led to a nearby creek, which became contaminated. The plastics recycler was held liable for the cleanup.
A plastics recycler was found to be polluting a large bay with contaminated run-off that migrated from its facility. The run-off had increased metals, organic matter, and industrial waste levels. The investigation found numerous exposed plastic containers on site that were likely the source of the polluted run-off after rainwater hit them. The contaminated run-off entered the municipal stormwater sewer system that discharged into the bay. The recycler agreed to contribute to the cleanup and implement improved pollution controls to stop contamination from leaving the site.
A plastics recycling facility used aboveground storage tanks to store fuel for the fleet of trucks. The tanks and dispensers were separated by underground piping. Over time, fuel leaked from the pipes and slowly contaminated the soil and groundwater on the site. The recycler was held responsible for the cleanup.
A plastics recycler was transporting a load of plastic pellets to a customer on their truck. During transport, the truck crashed and spilled approximately 25,000 pounds of pellets, which rolled into a nearby stream. Although emergency response teams tried to clean up the pellets promptly, the location of the crash made it difficult. The truck had landed next to a steep ravine, and the water in the stream was fast-moving, taking the pellets downstream. The pellets were believed to have caused a fish kill as a result. The recycler was held liable for emergency response costs, cleanup costs, and fines for the fish kill.
A plastics recycler accepted used pesticide containers for recycling at their facility. The recycled plastic from the pesticide containers was then sold to a consumer goods manufacturer who used the recycled plastic to make pill bottles. It was later discovered that the levels of pesticides found in the recycled plastic were at unacceptable levels, and the manufacturer had to recall the pill bottles. The manufacturer sued the plastics recycler for the associated costs.

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 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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