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Environmental ClaimsPresentation
Rheged
27th October 2010
David Waller, LLB (Hons) ACII, ACILA,Director,
Environmental Claims Division,QuestGates, Chartered Loss Adjusters & Claims
Specialists.
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What is an Environmental Claim?
“An environmental claimin its widest context canemanate from anyincident resulting inpollution orcontamination to humanhealth, buildings or otherstructures, land, theatmosphere or any watercourse or body of water”
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Where are the Gaps in Insurance Cover?
Sudden identifiable incident Own land contamination – Yorkshire Water v.
Sun Alliance Statutory charges – Bartoline v. RSA Preventative work – duty to mitigate Overlapping policy cover Diminution of market value
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Operative Clause would read:-
In the event of accidental personal injury or loss of or damage toproperty or obstruction trespass nuisance or interference with any rightof way, air, light or water or other easement which arises in connectionwith the business and which occurs during the period of insurance andwithin the territorial limits.
Insurers will indemnify the policy holder against (1) legal liability forcompensation up to the limit of indemnity and (2) costs and expenses.
Usual exceptions will seek to exclude own land/property andpollution/contamination other than caused by a sudden identifiableunintended and unexpected incident which occurs in its entirety at aspecific time and place during the period of insurance.
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Typical Occupiers Liability Extension ToHousehold Policy
Accidental bodily injury or illness; or Accidental loss of or damage to property Happening during the period of insurance and arising: As occupier (not as owner) of the home and its land;
Your legal liability to pay damages and claimant’s costs andexpenses for:
Usual exclusions include damage to own land/propertyLoss damage or liability arising from pollution or contamination unless
caused by:
a) A sudden and unexpected accident which can be identified; orb) Oil leaking from a domestic oil installation at the home.
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Legislation
Brief history anddevelopment ofenvironmentallegislation in the UK
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Land – Environmental Protection Act 1990 Part IIA
Contaminated Land Regime Land is defined as contaminated if “significant harm is being
caused or there is a significant possibility of such harm to becaused, or pollution of controlled waters is likely to be caused”. Asignificant pollution linkage (SPL) must be identified
The regime identifies two type of people which may be liableunder the principle “the polluter pays”.
• Class A - Those who have caused or knowingly permittedthe presence of contaminants
• Class B - The owner or the occupier of the land
Legislation (continued)
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Controlled Water Water Resource Act (1991) Part III Chapter 1
Section 85 – “A person who causes or knowingly permitsany poisonous or polluting matter or any solid waste toenter any controlled waters”.
Section 161 – Authority shall be entitled to carry out anti-pollution work and operations if:
• Pollution is likely to enter controlled waters• If contamination has entered controlled waters to
restore as reasonably practicable the flora and faunadependent on the aquatic environment prior to thepollution incident.
Legislation (continued)
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Water Environment & Water Services (Scotland) Act 2003 Provides statutory framework for protection, improvement
and sustainable use of surface waters, transitional waters,coastal waters and groundwater
Requires any activity that is liable to cause water pollutionto be authorised.
Water Environment (Controlled Activities) (Scotland)Regulations 2005
Creates offence of discharging polluting matters withoutauthorisation.
Legislation (continued)
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The Environmental Damage (Prevention andRemediation) Regulations
This is the transposition of the EnvironmentalLiability Directive (ELD) into UK law (1st March 2009)
Liable persons Operator of occupational activity carried out
under EC legislation listed in Directive is strictlyliable for preventive or remedial measures dueto imminent threat of , or actual, environmentaldamage to natural resources, that is:
• Water• Land• Protected species and natural habitats
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The Environmental Damage (Prevention andRemediation) Regulations
(continued)
Liable Persons Operator of occupational activity not carried out
under listed EC legislation is liable for preventiveor remedial measures due to imminent threat ofor damage to:
• Protected species and natural habitats• Provided that operator is negligent or
otherwise at fault
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The Environmental Damage (Prevention andRemediation) Regulations
(continued)
Environmental damage threshold Land: significant risk of adverse effect on human
health Water: significant adverse effect on ecological
chemical or quantitative status and ecologicalpotential of waters
Protected species and natural habitats:significant adverse effect on attainment ormaintenance of conservation status
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The Environmental Damage (Prevention andRemediation) Regulations
(continued)
Remediation Land
• Removal of significant riskof adverse effect on humanhealth
Water and protected speciesand natural habitats:
• Primary remediation• Complementary remediation• Compensatory remediation
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The Environmental Damage (Prevention andRemediation) Regulations
(continued)
Exceptions (armed conflict, natural phenomenon, activitiesserving national defence or international security, protectionfrom national disasters)
Mandatory defences (caused by third party despiteappropriate safety measures, result of compliance withgovernmental authority’s unrelated compulsory order orinstruction
Optional defences (emission or event in compliance withpermit issued under domestic law which has transposed EClegislation or activity or emission not likely to cause damageaccording to current scientific and technical knowledge.
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The Environmental Damage (Prevention andRemediation) Regulations
(continued)
Type of damage Liability for operatorsof Annex iiioccupational activities
Liability of operators ofother occupationalactivities
Standard of remediation Type of remediationapplicable
To protected speciesand natural habitats
Strict Fault based Return the environment as awhole back to baselinecondition, and remove anysignificant risk of an adverseeffect on human health
PrimaryComplementaryCompensatory
To water Strict None Return the environment as awhole back to baselinecondition, and remove anysignificant risk of an adverseeffect on human health
PrimaryComplementaryCompensatory
To land Strict None The removal of anysignificant risk of an adverseeffect on human health
Remove significant risk ofadverse effects onHuman health, taking accountof actual or planned future use
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The Environmental Damage (Prevention andRemediation) Regulations
(continued)
Suggested could have only modest impact in reality Baseline levels/target values - potential difficulty to
determine baseline condition pre incident Preventative action i.e. regulator can impose
corrective action for potential damage -quantification therefore difficult
Improvement works regulators may insist upon this,query policy coverage
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The Environmental Damage (Prevention andRemediation) Regulations 2009
(continued)
Remediation, primary, complimentary andcompensatory
Reserving issues Potential choice of legislation available to regulators Possible bean feast for the consultants!
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EDR in Action Mid Devon District Council case Modest spill of kerosene at residential location from road tanker Health threat to household EDR more practicable tool to enforce clean up than Part IIA
EPA 1990 or WRA 1991 Spill resulted from economic activity, dangerous substance
entered ground, health risk, none of exemptions applied.
Why EDR? “adverse effects on human health” easier to satisfy than
“significant risk of significant hard”.
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Hungarian Sludge & ELD Alumina plant reservoir – dam
failure at Ajka, Hungary, Highly alkaline sludge, pH9-12 6 villages destroyed, 5 dead,
controlled water including theDanube under threat.
Natural attenuation – chemicalneutralisation/buffering in soilsand surface water and dilution.
Response includes adding clayand acids to rivers to neutralise.
Human health – mainlyingestion risk and dustinhalation.
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Hungarian Sludge - Remediation Source removal – as practicable Treatment of oils and water with
neutralising agents Soil washing and recovery
(acids etc; metals recovery. Natural attenuation – chemical
neutralisation/buffering in soilsand surface water and dilution.
Response includes adding clayand acids to rivers to neutralise.
Human health – mainlyingestion risk and dustinhalation.
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Hungarian Sludge - ELD
More pressure on EU Governments to forceindustries to insure or make financial provisionagainst such serious enviro incident.
Hungary had intended to enforce compulsoryfinancial provision.
Current position – MAL Magyor Aluminium hasoffered to pay villages €360 per family, up to max of€110,000
Company’s 3 private owners have individualfortunes of between €60,000,000 and €85,000,000!
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Insurance Solutions?
Environmental Impairment Liability insurance. Increasingly available, at more competitive rates e.g.
specialist cover offered by endorsement to NFUMutual policyholders.
Cover not subject to “sudden identifiable”restrictions, covers own land clean up and statutoryas well as civil liabilities.
Regulator Enforced remediation – including habitatdamage (primary, complementary andcompensatory).
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Case Study 1 Location – Domestic
property Nr Winchester. Pollutant – Approximately
5000 litres of kerosene Groundwater vulnerability –
Total catchment area. Veryclose to a grade A river andSSSI.
Geology – Topsoil overlyingapproximately 1.5 m ofgravel followed by chalk atdepth.
Hydrogeology – presence ofshallow (<1m) groundwater.
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Site Location
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Contamination Assessment Kerosene mostly contained as free
product on top of shallow groundwater.Lateral movement of free and dissolvedphase.
Constraints: – Kerosene impacted nearby listed
(grade II) building with nofoundations.
High soil permeability requiresextremely high pumping rates inorder to achieve hydrogeologicalcontainment.
No discharge possible except tosurface water.
Necessity to minimise on sitedisruption.
Remediation – system of trenchesexcavated. In situ treatment ofgroundwater over 18 months, then 6months monitoring.
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Traditional Approach
Excavation of approximately 5000 m3 of materialContaminated soil disposal approx. £300KBackfill operations approx £100KGarden reinstatement approx £35KTotal - £435K
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Innovative Treatment Solution
Installation of an innovative in situ recovery systemSystem cost including installation £190KOperating cost £40KPost monitoring cost £15KTotal £245K 27
