Will You Be Covered? – Professional Liability Insurance for Environmental Professionals

John G. Nevius, Anderson Kill & Olick, P.C., 1251 Avenue of the Americas, New York, NY 10020-1128, Tel: 212-278-1508, Fax: 212-278-1733, Email: jnevius@AndersonKill.com

For environmental professionals, the uncertainty and variability associated with work involving the natural environment – especially the subsurface – is replete with the risk of litigation and potential liability.  You need to understand the legal risks you may face in order to avoid them.  You also need to understand the insurance you have in case you or your company gets sued.  Implementation of even the best, most well thought-out plans can lead to unintended consequences.  For instance, suppose that in performing an environmental site review prior to a commercial real estate transaction, the contaminated property is erroneously given a clean bill of health.  Similarly, imagine that the remedial design does not work, there is a collapse, or the perils of chlorinated solvents, hydrocarbons, or indoor air quality are not properly addressed.  These kinds of mistakes can carry with them an infinite set of potential risks, including litigation liability.  Professional liability insurance, commonly known as errors and omissions (“E&O”) insurance, can potentially insulate the environmental professional from this risk of litigation liability.  Scientists, engineers, and other environmental professionals not only need to grasp the legal implications of their work, but also to comprehend that ignoring insurance likely will exacerbate future liability.  This presentation will provide a basic primer on professional liability insurance designed for environmental professionals.

The first issue is whether there has been a “loss.”  Insurance policies generally define “loss” to include all damages and judgments rendered against, or settlements entered into by, the policyholder.  Not only must there be a “loss” to trigger coverage under an E&O insurance policy, there must also be a “negligent act, error, or omission” committed by the policyholder during the policy period and in the performance of “professional services.”  A lot depends on the allegations o any lawsuit or other claim.  Other issues to be addressed include the timing of notice and what it means to have “claims made and reported” coverage.  Common exclusions on coverage will also be discussed, including those relating specifically to “pollution” and to what you knew and when.

Environmental professionals need to understand insurance coverage for their own purposes as well as for those of their clients.  Matching the activities conducted to the coverage sold is crucial.  Proper disclosure on insurance applications, during the underwriting process and in the event of an actual or potential claim can be the determining factor in whether or not coverage is ultimately obtained.  Insurance, just like a chlorinated solvent, can be volatile and may break down when you do not expect it.  Don’t let this happen to you!

Pollution Exclusions Not Really Absolute

John G. Nevius, Esq., P.E., Anderson Kill & Olick, P.C., 1251 Avenue of the Americas, New York, NY 10020-1128, Tel: 212-278-1508, Fax: 212-278-1733, Email: jnevius@AndersonKill.com

Soil or other contamination can render real estate undesirable for sale or development.  The first order of business then is to address the contamination concerns whether or not the site is on the regulators’ radar screen.  Whether the necessary investigation and/or remediation will be accomplished depends on the availability of funds.  Phase I, Phase II and other investigative reports prepared by environmental professionals often represent the baseline description of environmental conditions.  How you present information in such reports has many implications, but may determine whether insurance funds will be available for cleanup.  In fact, environmental reports are often used against policyholders seeking insurance for problems they thought were covered.  There are a number of exclusions on insurance coverage potentially relevant to soil contamination and other forms of pollution.  Insurance companies often push the envelope in citing these exclusions to avoid coverage.

This presentation will cover the history, development, rise, use, abuse and recent legal decisions regarding so-called pollution exclusions.  The latest generation of exclusions, i.e., the ”absolute” or “total” pollution exclusions use language right out of CERCLA, but have been cited in all kinds of circumstances from ambient background soil concentrations to application of fertilizer, wastewater discharges, paint fumes, chlorinated drinking water, vapor intrusions – even exhaust from the Zamboni at your local ice rink.  Earlier generations of exclusions were designed to discourage intentional pollution, but have been used to deny coverage for any releases that could be characterized as gradual.

It is important that environmental professionals do not unwittingly provide ammunition that could be used to deny “environmental” claims and, thereby, prejudice potential funding sources.  Many people only think about insurance when they write premium checks.  You need to know about environmental coverage in order to properly advise clients facing costly cleanups or liabilities.  Whether the issue is tapping historic coverage to off-set present liabilities and fund Brownfield redevelopment or risk management going forward in real estate transactions, this presentation will assist in avoiding common pitfalls.

Wetlands: Federal Programs, Federal Policies, and Innovative Uses

William Schaal, M.Sc., TN & Associates, 668 Tiburon Lane, Vacaville, California, 95687, Tel: 415-760-6624, Fax: 707-446-8032, Email: bschaal@tnainc.com
Daniel Servetas, P.E., Shaw Environmental & Infrastructure, 13 British American Boulevard, Latham, New York 12110, Tel:  518-783-6088 ext. 236, Fax: 518-783-8397, Email: daniel.servetas@shawgrp.com
Heide-Marie Dudek, P.E., Division of Environmental Remediation, New York State Department of Environmental Conservation, 625 Broadway, Albany, New York 12233, Tel: 518-402-9622, Fax: 518-402-9627, Email: hmdudek@gw.dec.state.ny.us  
Note: Opinions expressed are those of the author and not the NYSDEC

Wetlands have long been recognized for providing benefits that include recreation and aesthetics; shoreline erosion protection; flood storage; and fish and wildlife habitat.  This paper examines wetlands from three related perspectives: 1) federal regulatory programs, 2) federal policy; and 3) innovative technology.  In doing so, it aims to strengthen engineering, scientific, and planning practices by highlighting new programs, selected policies, and innovative uses for wetlands. 

The federal Environmental Protection Agency (EPA) develops programs that actively pursue improvement and protection of wetlands in order to perpetuate the benefits associated with them.  For example, the EPA administers the Five Star Restoration Program to promote environmental education through grants to support projects that restore wetlands.  Additionally, in early 2006 EPA Region 9 awarded $1.5M for programs that protect wetlands and EPA Region 3 awarded nearly $2.6M for projects that focus on linking state and Tribal program activities to measurable environmental outcomes; particularly no net loss of wetlands, net gain of wetlands and the protection of vulnerable wetlands. 

Federal agencies craft and enforce policy to protect wetlands.  For example, EPA has prepared guidance documents for national management measures to protect and restore wetlands and riparian areas through the abatement of nonpoint source pollution and to use best management practices (BMP) to control nonpoint source pollution in urban areas.  As a result of the 1995 document, “Federal Guidance on the Establishment, Use, and Operation of Mitigation Banks,” released by a consortium of federal agencies, the number of estimated banks exceeded 450 in recent years and nearly 200 more are proposed for future development.

There is a growing international interest in employing wetlands for improving and contributing to environmental quality.  Environmental engineers and scientists are constructing wetlands for successful storm water control; treating municipal, industrial, and agricultural waste water; and mitigating mine drainage and landfill leachate.   

Top