Non-Owned Disposal Sites (NODS) are facilities to which owners/operators or contractors take waste. Companies utilizing NODs typically have no ownership interest or control over them. The material shipped there may be waste from a company, tenants, client, or anyone else’s waste the generator is responsible for. Non-Owned Disposal Site coverage is designed to protect against claims for bodily injury, property damage, or cleanup costs made against a disposal facility. Coverage is designed to protect insureds against claims for bodily injury, property damage, or cleanup costs made against a disposal facility and environmental regulators or attorneys representing the disposal facility. It also protects third parties in the vicinity of the disposal site and owners/operators or contractors that initially generated the waste. In some instances, this coverage may also respond to the inadvertent, improper disposal of waste by insureds.
How is Non-Owned Disposal Site coverage offered?
Coverage is generally offered as part of a Premises Pollution or Contractors Pollution Liability policy. In some cases, the NODS coverage may include coverage for the inadvertent disposal of waste to the wrong type of disposal site. As an example, if an insured disposes of, or arranges to dispose of, waste from their manufacturing facilities at a landfill, they could be held liable for any pollution-related incidents stemming from the landfill.
Why is it important that insureds have NODS coverage?
Under environmental regulations such as the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), parties found to be responsible for contaminating disposal sites may be jointly and severally liable. An example of this legal theory is, if a hundred entities sent their waste to a disposal site where there was a pollution release, regulators or attorneys may pursue recovery costs against just one of those entities (typically the one with the “deepest pockets”). It would be up to the entity that was pursued to then turn around and sort out the proportions of liability with the rest of the other entities, if they chose to. In most cases, they will not be able to do this until they had resolved their liabilities and completed any cleanup actions before they pursue reimbursement from any other parties. Although the EPA will typically go after the most financial stable company, there is still the possibility that a minor contributor (i.e., de minimis contributor) to a waste site can be held liable for the entire cost of a clean-up, particularly if other contributors are insolvent or not able to be tracked down. Even if an entity settles with the EPA, the EPA will typically reserve their right to pursue the entity again if information not known to the EPA at the time of settlement is discovered later, which could increase their settlement or contribution costs.
Typical types of NODS include, but are not limited to:
- Landfills/surface impoundments/landfarms
- Transfer stations
- Recycling facilities (hazardous and non-hazardous)
- Municipal solid waste facilities
- Construction debris landfills