Non-Owned Disposal Sites (NODS)

Environmental legislation may hold parties liable for the contamination of a disposal site if a release was to be discovered at a later date, even if the waste had been properly disposed of at an approved disposal facility. All Commercial General Liability (CGL) policies contain some form of total pollution exclusion. Occasionally carriers are willing to give back limited coverage by endorsement; however, these endorsements do not typically address all risks. Among these excluded risks are Non-Owned Disposal Sites, leaving a contractor exposed. Contractors Pollution Liability (CPL) policies can provide coverage for hazardous waste disposed of at a properly permitted facility through Non-Owned Disposal Sites (NODS) coverage. If a disposal site has environmental problems, Federal, State and Local regulatory agencies may review the hazardous waste manifests and require all parties responsible for the disposal of the waste to pay for a portion of the cleanup.

NODS coverage is often written on a claims-made basis. Here are a few claim examples to consider that demonstrate the need for such coverage:

• An excavation contractor was responsible for a portion of the clean-up costs at a landfill after the discarded material was found to contain a variety of contaminants, including asbestos. Even though the contractor was unaware that the material was contaminated, the landfill filed suit against the contractor for improper classification and disposal of waste material.
• A construction company agreed to pay for improper disposal of PCBs in soils during a project. The contractor was responsible for excavating and disposing of contaminated material from the site, including 2,750 tons of material in an area with elevated PCB concentrations. According to the U.S. EPA, soils with lower concentrations of PCBs were mixed with soils containing higher concentrations, in violation of rules that do not allow dilution of contaminated materials. Some of the soil excavated contained PCB concentrations of 191 parts per million, more than seven times the 25-ppm concentration allowed at the disposal site where the mixed soils were sent for disposal.
• Called into a large renovation project, an electrician removed hundreds of old lighting fixtures and replaced them with new ones. The old ones were placed in 55-gallon drums and disposed of with the rest of the construction debris. A year later, the contractor was shocked to receive a letter from the EPA holding him responsible for over $1 million to clean up hazardous PCB's that were in the ballasts of the old fixtures and leaked from the drums, contaminating an otherwise sanitary landfill.
• An environmental contractor was hired by an environmental consultant to perform excavation, transportation and disposal of contaminated concrete and soil at a manufacturing plant. The excavated materials were segregated as non-hazardous and hazardous and placed into roll-off bin containers. The containers were then transported to either a hazardous or solid waste landfill in accordance with their waste profile. A few weeks later, as the consultant was finalizing their report a discrepancy between the consultant's notes and the waste disposal records revealed that a container of hazardous waste was incorrectly shipped to a non-hazardous waste landfill. During removal of the containers from the site, the contractor mixed up two containers of broken concrete and inadvertently transported hazardous waste to a non-hazardous waste landfill. Due to the time that had passed between the discovery of the mistake and disposal date, the landfill had estimated the material was buried under at least 60 feet of waste, and the likeliness of finding it was very slim. A risk assessment was required by the state environmental agency and the manufacturing plant was fined for improper disposal of hazardous waste. The manufacturing plant sued the environmental consultant, who then sued the environmental contractor to recoup costs associated with the fine and legal fees.

Project owners and general contractors generally rely on a contractor’s statement of qualifications and certificates of insurance to satisfy project requirements. However, standard certificates of insurance fail to confirm true pollution liability has been secured for a project and do not state if the pollution insurance is a Commercial General Liability (CGL) endorsement or a Contractors Pollution Liability (CPL) policy. A CGL endorsement typically has a pollution exclusion or an endorsement restricting coverage for NODS, whereas a CPL policy covers environmental liabilities left uncovered by CGL policies with restrictive pollution exclusions. This is not evident just by reading the certificate of insurance.

Certified Environmentally Responsible Contractor (CERC) is a certification program powered by Environmental Risk Professionals, LLC that highlights a company’s commitment to training employees in environmentally responsible work practices while backing said practices with financial responsibility. CERC requires contractors to secure a comprehensive pollution policy and train their employees by distributing Pollution Prevention Practices designed to prevent an incident from happening. When a contractor obtains a CERC certificate from Environmental Risk Professionals, project owners can be confident in knowing that their contractors are properly trained and insured. Read the CERC Overview for more information.