Increased Environmental Pollution Risks Resulting from COVID-19 Shutdowns
What to expect when America goes back to work
Social distancing measures have impacted the routines for almost every business and industry in the U.S. As these entities resume operations in the coming weeks, we should be prepared for an increase in pollution incidents, such as:
– mold impacts to vacant / under-utilized properties
– Legionella outbreaks caused by lack of HVAC maintenance
– fuel releases from active regulated USTs (over 500,000 nationwide)
– pipeline releases as they return to full capacity
This list includes some of the potential incidents that are more likely to occur once America goes back to work, but many more probably exist. Due to the long shutdown, any process or equipment designed to prevent pollution impacts from occurring may be compromised, increasing the chance for pollution incidents to occur that may trigger environmental claims. Insurers and insureds who have planned properly and implemented additional measures to quickly respond to emergencies are typically in a better position to limit the magnitude of the release as well as clean-up costs.
Most accidents are either directly caused by human error or exacerbated by human error when an unusual event occur. Environmental pollution incidents are no exception to this. In my twelve years of providing oversight on emergency response claims, I have observed that many of the more severe pollution losses occur around holidays or at times when there has been a disruption from ‘normal’. The build-up to a holiday often causes workers to be distracted. Vacations and absent employees disrupt the chain of command and can affect the response to an incident. Certainly, the COVID-19 pandemic and resulting distancing measures have been distracting to workers and disruptive to in-person communication. Insurers should look out for the following conditions as industries transition back to business as usual.
Slowed Production Facilities
Many industries have seen production slow significantly. The petrochemical industry, for example, has experienced a significant drop in commodity pricing as demand for motor fuels has fallen. This has resulted in a drop in production and increase in the need for storage of both finished product and crude. Bulk storage tanks and associated piping that may not routinely be in service are now being utilized. This situation could also result in storage tanks being filled to capacity or beyond. There are bound to be hiccups anytime a complex network of chemical and manufacturing infrastructure experiences a shutdown and restart. As the inevitable re-start happens there will be unforeseen consequences as some systems and processes come back online. Situations like these can be a catalyst for leaks, spills, fires, and explosions. Add to that the absence of some key experienced workers due to illness, and a manageable situation becomes one of cascading failure. Catastrophic events are often precipitated by unusual events followed by a breakdown in appropriate response. It’s vital that facility operators are aware of the status of their plants and that all fail-safes are operating as intended.
Industries working at diminished capacity:
– automakers / auto parts manufacturing
– other labor-intensive close quarters manufacturing
– transportation (private and public automotive)
– cruise industry
– passenger airlines
– film production
The shutdown has not only affected manufacturing and the chemical industry, it has also vacated schools, restaurants, hotels, and other buildings. Some school systems in the country have already indicated students won’t return to classroom instruction until the fall. These under-utilized buildings could have unchecked moisture/mold conditions. Idled HVAC systems and chillers could be harboring bacterial conditions like Legionnaires’ disease. Facilities are likely short staffed and therefore not available to provide the necessary checks to prevent or stop leaks once they occur increase both the frequency and servility of leaks and spills that may translate into pollution claims. These conditions will most likely only be discovered after resuming occupancy.
Shuttered buildings include:
– senior centers
– community centers
– movie theaters
– movie studios
– convention venues
– restaurants and bars
– nightclubs / live music halls / live theaters
– theme parks
– retail / malls
How to Prepare
Now is the time to reach out to your insured’s risk managers to remind them to check for systems that are not operating or buildings that are vacated. It’s also important to get the word out to your insureds to make sure they have planned adequately before systems are turned back on or people are moved back into buildings. Insureds should make sure spill prevention plans are in place and updated, and that responders are lined up in the event they’re needed to manage and mitigate accidents. Insurers should also ask insureds to confirm that emergency contacts are still in business and able to respond; it’s best to have at least two backup responders identified. They should also make sure employees understand the company’s emergency response protocol and who to contact in the event of an emergency. Once a spill or release occurs and the insurer is notified of the claim, it’s also important for insurers to have vendors in place that can be responsive and provide loss prevention measures. This includes assessing whether the clean-up efforts are reasonable, necessary, and performed correctly from the start.
By taking a proactive approach, insurers and their insureds can better prepare themselves for unanticipated emergency events resulting from the transition back to normal operations.
Want to know more about this subject, or have a question about a particular environmental emergency response claim? Contact us.
Brian Galusha, PG
Mr. Galusha is a licensed Professional Geologist with more than 23 years of experience in the environmental industry. Prior to joining First Environment, he provided direct environmental technical support to attorneys administering environmental insurance claims. He facilitated the evaluation of environmental insurance claims by applying his extensive expertise of environmental investigation/remediation techniques, regulatory knowledge, and industry contacts. Specifically, he evaluated pollution claims involving source and timing, environmental history, regulatory requirements, and validity of investigation/remediation activities as well as related costs. Mr. Galusha also provided guidance relating to the direction of ongoing pollution conditions, as well as projections of future costs and risks. He has conducted numerous investigations evaluating the merit of environmental insurance claims based on the particular policy provisions and known environmental history. Types of environmental claims Mr. Galusha has worked on include: storage tank, truck and auto service stations/refueling centers, all manner of soil and water remediation, indoor air mitigation, historic fill, clandestine disposal sites, asbestos, and mold. In addition, he has nine years of experience coordinating emergency environmental response for all manner of spills and catastrophic toxic events. The quick mobilizations he initiated minimized further environmental damage, and his continued oversight reduced both the cost and duration of the environmental cleanup process.
Mr. Galusha has also conducted numerous multi-media environmental investigations throughout the U.S. under various federal, state, regional, and tribal regulatory programs. He also has extensive experience developing and implementing environmental investigation and remedial strategies to resolve complex environmental issues. Specifically, Mr. Galusha has been responsible for preparing and implementing Phase I and II environmental site assessments, soil and groundwater investigations, ISRA compliance plans/reports, remedial reports, UST closure plans/reports, quality assurance (QA) program plans, and discharge monitoring reports.