By Ursula Knowles, Assistant Vice President, Information Development
Environmental liabilities stem from a variety of sources, with the most predominant being negligent acts, liability as a result of environmental laws, or breach of contracts. Of these sources, it is often thought that environmental liabilities as a result of obligations under environmental laws are the most complicated and difficult to manage. Supporting this theory, the Environmental Protection Agency (EPA) recently released its enforcement results for fiscal year 2014. The EPA ensures compliance with environmental laws by taking enforcement actions when these laws are violated. Every three years, they set national enforcement initiatives to help their departments prioritize their civil and criminal enforcement resources on the most serious pollution conditions affecting communities.
The 2014 EPA enforcement results state that companies spent:
– $9.7 Billion on actions and equipment to control pollution and clean up contaminated sites.
– $163 Million on federal administrative, civil judicial penalties, and criminal fines.
– $16 Million on court-ordered environmental projects resulting from criminal prosecutions.
– 155 combined years of incarceration for sentenced defendants.
– $453.7 Million on commitments from responsible parties to clean up Superfund sites.
These results don’t really factor in all of the costs to companies involved in these enforcement actions since they don’t include the legal costs that most of these entities incurred in defending themselves against these environmental regulatory claims.
The companies involved in these enforcement actions weren’t only large manufacturing or power entities as typically thought of as targets for EPA enforcement, they also include companies such as retailers, ski resorts, residential landlords, construction & paint contractors, a recycler, and a food processing company. Many of these organizations were expected to conduct activities that would protect the environment. One developer was required to conduct approximately $20 million in cleanup work and a dairy had to pay $75,000 in civil penalties to settle alleged violations of the Clean Water Act.
What this means is that any company, in any sector, may be a target for EPA enforcement actions in the coming year and that every company in every sector has to ensure that they are compliant with environmental regulations governing their activities. Site Pollution Liability policies and Contractor Pollution Liability policies are designed to respond to bodily injury, property damage, and cleanup cost claims. In the event that entities comply with environmental regulations, but still incur civil fines or penalties, carriers may be willing to provide coverage for these civil fines or penalties. Please contact us about whether or not your client may be eligible for this coverage.