Managing Pollution Liability Claims


Managing liability claims can be a very difficult and costly. In this blog we will be discussing some important things to keep in mind when managing these claims. It is important to understand your company’s potential pollution liabilities to best avoid them.

Insureds that could present an environmental liability claim

There are many different types of insureds who can present an environmental liability claim. Some examples of these include:

  • Retail petroleum outlets
  • Mining / quarry operations
  • Apartment/ multi-family housing
  • Hospitals
  • Golf courses
  • Etc.

Costs Associated with Environmental Liability Claims

Environmental liability can be very costly considering it can affect more than just one person or group of people. Some of the costs associated with environmental liability claims include but are not limited to:

  • Expensive claims
  • Environmental enforcement fines
  • Third party damages and liability (perceived and real)
  • Natural resource damages
  • Possible co-mingling of pre-existing contamination
  • Poor public relations and public perception
  • Distractions from normal business issues
  • Property devaluation

Ignorance of environmental regulations is not a defense.

What is a “spill” or “release”?

General definition: “Any unpermitted emission, spillage, leakage, pumping, pouring, emptying, or dumping of oil, petroleum, or other hazardous substance…”

  • Although a release may be due to the actions of a third party, the entity having control of the released product (or the facility) is typically responsible for reporting and initial response actions (at a minimum).

Regulatory Environment

When thinking about different environmental regulations you must understand that there are both state, federal, and sometimes local regulations and reporting requirements. In addition, these regulations change on a regular basis, so it is important to stay up to date on what the current regulations are.

  • State reporting requirements under the Oil Discharge Contingency Plan Regulations, UST regulations, AST regulations, water quality regulations, etc.
  • Federal reporting requirements per the US EPA (OPA 90, CWA, etc.)
  • Federal reporting requirements per the US DOT.

Reporting to one agency does not satisfy all reporting requirements!

Federal Reporting Requirements:

Once a release is discovered, reporting must be immediately performed if:

  • Any volume of oil/petroleum that violates state water quality standards, causes a sheen on the water surface, or leaves sludge/emulsion beneath the water surface.
  • Any reportable volume of material from a facility subject to SPCC requirements.
  • Any regulated chemical is released in a volume greater than the reportable quantity for that chemical.

Typically, the US EPA will request additional written information regarding the release, response activities, and the results of remediation activities within 60 days of the release.

USDOT Reporting Requirements:

Transportation-related hazardous materials incidents.  Reports must be filed within 12 hours if:

  • A person is killed or injured (requiring hospitalization)
  • Public evacuation is required
  • A major transportation artery is closed for one hour or more
  • Aircraft flight plans/routes are diverted
  • Fire, breakage, or spillage of radioactive materials are involved
  • Fire, breakage, or spillage of infectious substances are involved
  • A release of a marine pollutant exceeding 400 Kg/450 L is involved
  • A “lading retention system” is damaged requiring repair

State Reporting of Releases of Regulated Chemicals:

Releases must be reported (immediately or at most within 24-hours) if:

  • Confirmed or suspected petroleum releases from underground storage tanks.
  • Confirmed releases greater than 25 gallons.
  • A release of any oil, petroleum, or hazardous material that threatens, impacts, or causes a sheen on a water body.
  • A release of any hazardous material in a volume greater than the reportable quantity (RQ).

Contrary to popular belief, in most cases properly reporting a spill or release decreases the chances of getting a fine.

  • When in doubt… Report!!!

How do you reduce liability?

  1. Have your insureds develop a contingency plan(s) and train their employees before an incident occurs.
  2. Request that your insureds make notifications or file claims in a timely manner.  Agents should have resources to assist their clients.
  3. Advise your insureds to execute proper environmental “due diligence” before purchasing sites.
  4. Advise your transport insureds to inspect new delivery locations before the first delivery (and periodically thereafter).
  5. Develop an environmental vendor approval process, or have your insureds pre-select an environmental consultant, contractor, or both.
  6. Beware of co-mingled contamination.
  7. Beware of pre-existing conditions/contamination.
  8. Aggressively remediate petroleum-impacted soil to avoid groundwater impacts whenever possible.
  9. Advise your insureds to develop a media policy.
  10. Make certain that all waste is properly documented and is transported to properly licensed facilities.


We hope these tips can help your company to avoid some environmental liability claims. For more information about what Highlands Environmental Solutions can do to help your company plan for liability claims please reach out to

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