Contingency Planning for Environmental Spills

This post first appeared on Risk Management Magazine. Read the original article.

environmental spills risk management

Fuel spills and discharges of hazardous materials, pollutants and other regulated materials, even in small quantities, can turn into expensive incidents for spill generators and their insurers. Therefore, the time to prepare for an environmental release is before it happens.

Spill preparedness starts with a risk assessment. Companies at risk for environmental releases should conduct a survey of their operations to identify every activity that has the potential for a release. Next, they should draft a spill contingency plan detailing emergency response actions tailored to each activity. Sufficient planning efforts can help minimize spill-related costs, limit the potential for third-party liability claims, and avoid fines and penalties for non-compliance with environmental regulations.

The written contingency plan is an important part of risk mitigation because it helps ensure that the right people in an organization are notified about a spill, the appropriate internal and external reports are triggered, and preferred contractors are contacted for cleanup. A plan will be especially valuable if a spill occurs at night, on weekends or over holidays, when key company personnel may not be available to respond.

The contingency plan should also include contact information of local, state, provincial and federal environmental agencies as well as the reporting requirements in each jurisdiction where the company has facilities and its trucks travel. Names and phone numbers of local cleanup contractors qualified to handle spills of the specific materials used at the facilities should also be listed.

Even a minor spill can wreak environmental havoc if the material reaches water. Any incident resulting in contamination of drinking water by fuel or oil should be reported to the National Response Center, which is the federal point of contact for reporting oil and chemical spills.

Nearly 30,000 local, state, provincial and federal jurisdictions across North America require incident reports from spill generators. Shippers and transporters that are unprepared to quickly handle spill emergencies and comply with all reporting requirements can end up with major expenses for cleanup and disposal services. There are also liability issues and steep penalties for failing to file incident reports on time.

Reportable quantities vary from jurisdiction to jurisdiction and spills can often involve multiple jurisdictions, which can cause significant complications for the organization responsible. Strict compliance with all environmental reporting regulations will keep the spill generator from incurring fines and penalties for non-compliance, which are not covered by insurers.

Make the Plan Accessible 24/7

The contingency plan needs to be kept in a secure online file that can be accessed by company personnel at a moment’s notice. Someone should be assigned the duty of tracking fast-changing environmental regulations and keeping all of the information and emergency response instructions up to date.

Companies should make arrangements with outside experts and include them in the spill emergency team. By aligning with specialists that are equipped to provide support when it is needed most, the spill generator can help minimize exposure to spill-related expenses and potential liability.

An increasing number of insurers are partnering with third-party spill response experts who can provide insureds with 24/7 assistance with regulatory reporting, managing spill response and coordinating with authorities at spill sites. Time is of the essence when it comes to hazardous materials incidents and these spill support programs can help underwriters and insureds resolve claims faster while minimizing risk exposure.

Spill-reporting smartphone apps are also available and can be very useful for communicating the exact location of a spill, expediting reporting and requesting help. These apps let an insurance company get involved within minutes of an incident to assist the claimant with mitigating the situation quickly, controlling spill-related costs and limiting potential liability.

Insurance rates in the transportation industry are rising, in part, due to increasing numbers of accidents, which is all the more reason for companies at risk for environmental releases to be prepared to respond quickly and efficiently when a spill occurs.

Driver Training is Vital

An important aspect of spill preparedness and risk mitigation is driver training. Trucks should be equipped with spill kits containing plugs, trenching tools and absorbent materials that can be used to stop fuel leaks and limit damage to the environment. Drivers need to be instructed in the use of items in these kits. They should also know the location of fuel shutoff valves on their trucks and understand the importance of preventing leaking fuel or hazardous materials from running into streams or storm drains.

The U.S. Environmental Protection Agency classifies spilled fuel as hazardous waste. A driver involved in a fuel spill should record the quantity spilled (based on last fueling and miles driven), times and phone numbers of calls made to report the incident, actions taken to contain the leak, actions taken by emergency responders at the scene, the number of responders, time of arrival on the scene, and equipment used. The driver’s log will provide a written record that can be used to place the company in a legally defensible position. It will also help in auditing invoices from contractors and emergency responders that demand reimbursement for their services.

Thorough documentation of every environmental release is the best way to maintain a legally defensible position against third-party claimants and avoid being included as a responsible party to a pre-existing contamination problem. The log will provide documentation that the release was separate in time, separate in nature and the subject of a separate and complete response and remediation.

Environmental liability laws are written in such a way that, no matter who causes a release, the party that has “care, custody and control” of the spilled material at the time of the loss is the one legally responsible for responding, containing and reporting the pollution event, as well as remediating the site and safely and legally disposing of the contaminated soil and materials.

The key to staying out of trouble with environmental authorities is knowing which reports are owed to whom after accidental releases of fuel, spent solvents, cleaning materials, toxic chemicals and other hazardous materials. A spill generator should never try to cover up an environmental release—stiff fines for failure to report make looking the other way an unwise decision. In fact, it is better to report a spill even if the spill generator does not believe it involves a reportable quantity.

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