Environmental Claims Presentation Rheged 27 th October 2010 David - PowerPoint PPT Presentation

Environmental Claims Presentation Rheged 27 th October 2010 David Waller, LLB (Hons) ACII, ACILA, Director, Environmental Claims Division, QuestGates, Chartered Loss Adjusters & Claims Specialists. 1

What is an Environmental Claim? “An environmental claim in its widest context can emanate from any incident resulting in pollution or contamination to human health, buildings or other structures, land, the atmosphere or any water course or body of water” 2 2

Where are the Gaps in Insurance Cover?  Sudden identifiable incident  Own land contamination – Yorkshire Water v. Sun Alliance  Statutory charges – Bartoline v. RSA  Preventative work – duty to mitigate  Overlapping policy cover  Diminution of market value 3 3

4 Operative Clause would read:-  In the event of accidental personal injury or loss of or damage to property or obstruction trespass nuisance or interference with any right of way, air, light or water or other easement which arises in connection with the business and which occurs during the period of insurance and within the territorial limits.  Insurers will indemnify the policy holder against (1) legal liability for compensation up to the limit of indemnity and (2) costs and expenses.  Usual exceptions will seek to exclude own land/property and pollution/contamination other than caused by a sudden identifiable unintended and unexpected incident which occurs in its entirety at a specific time and place during the period of insurance. 4 4

Typical Occupiers Liability Extension To Household Policy Your legal liability to pay damages and claimant’s costs and expenses for:  Accidental bodily injury or illness; or  Accidental loss of or damage to property  Happening during the period of insurance and arising:  As occupier (not as owner) of the home and its land; Usual exclusions include damage to own land/property Loss damage or liability arising from pollution or contamination unless caused by: a) A sudden and unexpected accident which can be identified; or b) Oil leaking from a domestic oil installation at the home. 5 5

Legislation  Brief history and development of environmental legislation in the UK 6 6

Legislation (continued)  Land – Environmental Protection Act 1990 Part IIA  Contaminated Land Regime Land is defined as contaminated if “ significant harm is being  caused or there is a significant possibility of such harm to be caused, or pollution of controlled waters is likely to be caused” . A significant pollution linkage (SPL) must be identified The regime identifies two type of people which may be liable  under the principle “the polluter pays”. Class A - Those who have caused or knowingly permitted • the presence of contaminants • Class B - The owner or the occupier of the land 7 7

Legislation (continued) Controlled Water   Water Resource Act (1991) Part III Chapter 1 Section 85 – “A person who causes or knowingly permits  any poisonous or polluting matter or any solid waste to enter any controlled waters”. Section 161 – Authority shall be entitled to carry out anti-  pollution work and operations if: • Pollution is likely to enter controlled waters • If contamination has entered controlled waters to restore as reasonably practicable the flora and fauna dependent on the aquatic environment prior to the pollution incident. 8 8

Legislation (continued) Water Environment & Water Services (Scotland) Act 2003  Provides statutory framework for protection, improvement  and sustainable use of surface waters, transitional waters, coastal waters and groundwater Requires any activity that is liable to cause water pollution  to be authorised.  Water Environment (Controlled Activities) (Scotland) Regulations 2005 Creates offence of discharging polluting matters without  authorisation. 9 9

The Environmental Damage (Prevention and Remediation) Regulations  This is the transposition of the Environmental Liability Directive (ELD) into UK law (1 st March 2009)  Liable persons Operator of occupational activity carried out  under EC legislation listed in Directive is strictly liable for preventive or remedial measures due to imminent threat of , or actual, environmental damage to natural resources, that is: • Water • Land • Protected species and natural habitats 10 10

The Environmental Damage (Prevention and Remediation) Regulations (continued)  Liable Persons Operator of occupational activity not carried out  under listed EC legislation is liable for preventive or remedial measures due to imminent threat of or damage to: • Protected species and natural habitats • Provided that operator is negligent or otherwise at fault 11 11

The Environmental Damage (Prevention and Remediation) Regulations (continued)  Environmental damage threshold Land: significant risk of adverse effect on human  health Water: significant adverse effect on ecological  chemical or quantitative status and ecological potential of waters Protected species and natural habitats:  significant adverse effect on attainment or maintenance of conservation status 12 12

The Environmental Damage (Prevention and Remediation) Regulations (continued)  Remediation Land  • Removal of significant risk of adverse effect on human health Water and protected species  and natural habitats: • Primary remediation • Complementary remediation • Compensatory remediation 13 13

The Environmental Damage (Prevention and Remediation) Regulations (continued)  Exceptions (armed conflict, natural phenomenon, activities serving national defence or international security, protection from national disasters)  Mandatory defences (caused by third party despite appropriate safety measures, result of compliance with governmental authority’s unrelated compulsory order or instruction  Optional defences (emission or event in compliance with permit issued under domestic law which has transposed EC legislation or activity or emission not likely to cause damage according to current scientific and technical knowledge. 14 14

The Environmental Damage (Prevention and Remediation) Regulations (continued) Type of damage Liability for operators Liability of operators of Standard of remediation Type of remediation of Annex iii other occupational applicable occupational activities activities To protected species Strict Fault based Return the environment as a Primary and natural habitats whole back to baseline Complementary condition, and remove any Compensatory significant risk of an adverse effect on human health To water Strict None Return the environment as a Primary whole back to baseline Complementary condition, and remove any Compensatory significant risk of an adverse effect on human health To land Strict None The removal of any Remove significant risk of significant risk of an adverse adverse effects on effect on human health Human health, taking account of actual or planned future use 15 15

The Environmental Damage (Prevention and Remediation) Regulations (continued)  Suggested could have only modest impact in reality  Baseline levels/target values - potential difficulty to determine baseline condition pre incident Preventative action i.e. regulator can impose  corrective action for potential damage - quantification therefore difficult  Improvement works regulators may insist upon this, query policy coverage 16 16

The Environmental Damage (Prevention and Remediation) Regulations 2009 (continued)  Remediation, primary, complimentary and compensatory  Reserving issues  Potential choice of legislation available to regulators  Possible bean feast for the consultants! 17 17

EDR in Action Mid Devon District Council case   Modest spill of kerosene at residential location from road tanker  Health threat to household  EDR more practicable tool to enforce clean up than Part IIA EPA 1990 or WRA 1991  Spill resulted from economic activity, dangerous substance entered ground, health risk, none of exemptions applied. Why EDR?  “adverse effects on human health” easier to satisfy than “significant risk of significant hard”. 18 18

Hungarian Sludge & ELD Alumina plant reservoir – dam  failure at Ajka, Hungary, Highly alkaline sludge, pH9-12   6 villages destroyed, 5 dead, controlled water including the Danube under threat. Natural attenuation – chemical  neutralisation/buffering in soils and surface water and dilution.  Response includes adding clay and acids to rivers to neutralise.  Human health – mainly ingestion risk and dust inhalation. 19 19

Hungarian Sludge - Remediation Source removal – as practicable   Treatment of oils and water with neutralising agents  Soil washing and recovery (acids etc; metals recovery.  Natural attenuation – chemical neutralisation/buffering in soils and surface water and dilution. Response includes adding clay  and acids to rivers to neutralise. Human health – mainly  ingestion risk and dust inhalation. 20 20