Property Types

Wastewater Treatment Plants

Wastewater treatment plants face various environmental exposures from their operations and the waste they process, including sewage, industrial wastewater, and stormwater run-off. These wastewaters can contain various contaminants that could be hazardous to human health and natural resources. Problems encountered during treatment could generate effluent or sludge that carries these contaminants into receiving soil and water systems. Additional exposures can result from land application of contaminated sludge or transporting and disposal of contaminated sludge. Aboveground and underground tanks are used for processing and storage of wastes and chemicals. Containment breaches or leaks could result in the release of wastes and hazardous chemicals, leading to cleanup and third-party liability.

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Environmental Exposures May Include

Treatment Process Failure
Nitrogen and Phosphorus
Concrete Tank Crack Leaks
Storage Tanks
On-Site Sludge Containment Failures
Processed Bio-Solids Off-Site Services
Chlorine Gas Releases
Odors, Irritants, and Third-Party Claims

Treatment Process Failure

Wastewater can contain various contaminants such as pathogens, biohazards, chemicals, pharmaceuticals, soil particles and other sediments, heavy metals, animal waste, pesticides, oil, and grease. If the plant encounters problems in the treatment process, the generated effluent may contain contaminants that enter the receiving surface water, groundwater, or soil. Problems that can upset the treatment process could include a breakdown, inadequate treatment, untreatable contaminants, and excess volume from combined sewer overflows resulting in a treatment bypass. A release of contaminated effluent can result in environmental cleanup, natural resource damage, and harm to human health by contaminating drinking water or water used for recreational purposes such as swimming, boating, or fishing.

Nitrogen and Phosphorus

Wastewater may also contain high levels of the nutrients nitrogen and phosphorus. Different treatment processes are required to remove nitrogen and phosphorus. A release of effluent containing high concentrations of these nutrients can harm the environment and human health. They can cause the overgrowth of algae or lead to the growth of toxic blue-green algae, harming aquatic life. Some algal species produce toxins that contaminate drinking water supplies.

Concrete Tank Crack Leaks

Concrete tanks used to process wastewater can develop cracks. If cracks are not immediately repaired, contents can emanate from the process tank and contaminate underlying soil and groundwater, resulting in on-site contamination, leading to third-party property damage from contaminants migrating off-site and contaminating groundwater that may be a drinking water source.

Storage Tanks

Underground and aboveground storage tanks store process materials and wastes on-site. Underground storage tanks may leak over time, and the contents have the potential to contaminate the underlying soil and groundwater. Aboveground tanks have the potential to present problems such as leaks from tank bottoms, ruptures causing a catastrophic release of tank contents, and spills during the loading or unloading process.

On-Site Sludge Containment Failures

Sludge generated as a by-product of the treatment process can pose potential environmental and public health risks. Sludge may contain high levels of pathogens, nutrient pollutants, chemicals, and heavy metals, depending on the composition of the wastewater from which it was produced and the treatment process used. A release or leaching from on-site storage or during sludge processing, such as dewatering, digestion, composting, and incineration, can result in soil, water, and air pollution.

Processed Bio-Solids Off-Site Services

Processed sludge suitable for disposal or land application can retain contaminants like phosphorus, heavy metals, and chemicals. A release of sludge during transporter loading and unloading can result in environmental cleanup, third-party liability, and natural resource damage. Treatment facilities can also be responsible for the proper use or disposal of the sludge they produce. Wastes brought to landfills can expose facilities to disposal liability. Sludge used in the land application could create a product’s exposure. If the facility performs the land application, they can carry an off-site service exposure, including improper application or over-application of nutrient pollutants.

Chlorine Gas Releases

Hazardous chemicals may be used, stored, and disposed of as part of the treatment and disinfection process. Materials include chlorine, ammonia, sulfuric acid, hydrochloric acid, and sodium hypochlorite. Containment breaches, spills, or improper handling and disposal can lead to environmental liability. Chlorine gas is highly poisonous and could kill people near a release. Chemicals should be properly segregated during storage, as incompatible materials can create hazards.

Odors, Irritants, and Third-Party Claims

Odors produced can be a nuisance and irritant to neighboring properties, resulting in claims for third-party bodily injury or diminution of property value. The use of chemicals such as ammonia and chlorine and gases produced during treatment, such as hydrogen sulfide, can cause eye, nose, and throat irritation, headache, nausea, cough, chest tightness, nasal congestion, and stress, and could aggravate existing medical conditions such as asthma.

Environmental Pollution Liability Can Provide Coverage For

Integrated GL/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

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 processing tank at a wastewater treatment plant malfunctioned, releasing untreated wastewater into a nearby stream. This release killed numerous fish and damaged several aquatic plants. The local regulatory authority fined the wastewater treatment plant operator for the unauthorized discharge, and several residents and an environmental group filed suits for loss of enjoyment of the creek.
A city’s sewage treatment plant was sued by water quality advocates, who claimed that water discharging from the plant harmed a river’s aquatic balance. Tests revealed nutrient levels that were causing unnatural algae and aquatic weed growth, damaging underwater insects, and causing a sudsy and strong-smelling plume on the river. The suit sought civil penalties of more than $52,000 per day for the violations and ordered more nitrogen and phosphorus removal from the treated water before being discharged.
The operator of a small wastewater treatment plant received a bulk shipment of chlorine bleach used in the treatment process at the facility. During delivery, the valve connecting the hose to the tank was not secure, and a significant amount of chlorine bleach was released before the vendor or operator realized what happened. The liquid chlorine ran into a small culvert on a neighboring property. By the time the vendor closed the valve, the spill had contaminated the culvert and surrounding soil, and the resulting fumes caused an adjacent manufacturing operation to be evacuated. There was a significant cost to neutralize the chlorine and remediate the spill, and the company was also fined.
An environmental group sued a city for releasing over 30 million gallons of wastewater into a river tributary. The group claimed that unintended human and industrial wastewater discharges and stormwater run-off occurred more than 100 times over several years. The largest of the wastewater plant overflows were due to heavy rainfall and were recorded to be 20.4 million gallons on one occurrence and 10.5 million on another. The environmental group also claimed that the overflows were not reported within the time period as the law required. Although the city was permitted to release a certain amount of treated wastewater, overflows were prohibited.
A wastewater treatment plant experienced a failed valve, which caused a release of 4,000 gallons of cleaning solution. The solution had levels of sodium hypochlorite three times higher than bleach. Protective barriers had to be erected inside the building to contain the spill, and a contractor had to be hired to perform the cleanup and properly dispose of the cleaning solution.
A complaint was filed against a city as the wastewater treatment plant operator for violating the state’s water pollution control laws and not complying with its National Pollutant Discharge Elimination System (NPDES) permit and state wastewater discharge permit requirements. The violations included improper storage of dewatered and liquid sludge in a biosolids lagoon at the facility. Because of the improper storage of these contents, there was a higher chance of the pollutants discharging into a nearby protected river. The city was given a $25,000 administrative penalty and ordered to remove and dispose of the biosolid lagoon contents and perform groundwater monitoring to confirm the lagoon was not leaking.

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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