1. Environmental Claims: A View to a Spill… 31 October 2007 CILA SIG David Waller – Associate Director QuestGates Environmental Claims Unit

2. Legislation Brief history and development of environmental legislation in the UK

3. Legislation Land  Contaminated Land Regime. Environmental Protection Act 1990 Part IIA (200) – Enforced by the Local Authorities in conjunction with the EA.  Waste Regulations (1994) – If contaminated land requires to be treated on site. Implemented by the EA. Controlled Waters  Water Resources Act (1991) – Under Section 85 and 161.  Groundwater Regulations (1998) – Under Section 19 and identification of List I & II compounds.  Enforced by the EA.

4. Legislation 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 types 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.

5. Legislation 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.

6. Environmental Claims A Working Definition “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”.

7. Typical Claim Scenarios Domestic or commercial oil spill Sewage/Effluent Asbestos contamination incidents Chemical spills and crossover incidents Ecoli 0157 and other bacterial/virus contaminations The future – Japanese knotweed, toxic mould, bird flu H5N1, Foot & Mouth disease etc

8. Cover under standard Public Liability and First Party wordings Sudden, identifiable etc. Material damage not covered unless standard peril Claims occurring Legal not moral liability Household Insurers – but not Commercial Insurers may indemnify for statutory charges.

9. Initial Investigations Contact Insured, Third Parties and Regulators Emergency – Instruct consultants or spill contractors possibly without prejudice to legal liability and policy response Joint site visit with consultant and interested parties to agree emergency response and general strategy Massive cost mitigation opportunities at initial stage

10. Response and Investigation Issues Risk based approach to contaminated land/ground water Source – Pathway – Receptor concept Risk assessment

11. Handing the Claim - The Issues Is the claim covered under the policy In the case of a third party claim is there a legal liability attaching to the Insured. Does the pollution or contamination actually matter? What needs to be done?

12. Legal Liability Potentially, but not always covered under the policy. No cover for criminal liability No strict civil liability e.g under Rylands v Fletcher Possible grey areas: negligence issues, legal nuisance

13. Policy Response Little judicial interpretation – operative clauses Insurers subjectivity

14. Contamination Do nothing: An option! Risk assessment to determine remediation targets Who defines clean up targets – must be agreed with interested parties and regulators

15. Remediation Options Acceptable level of residual contamination Drive from regulators and stakeholders – Different agenda. Different operators = different solutions Inappropriate clean up targets or remedial strategies Cost transparency Paper trail of the remediation process

16. Case Study 1 Location – Domestic property Nr Winchester. Pollutant – Approximately 5000 litres of kerosene Groundwater vulnerability – Total catchment area. Very close to a grade A river and SSSI. Geology – Topsoil overlying approximately 1.5 m of gravel followed by chalk at depth. Hydrogeology – presence of shallow (<1m) groundwater.

17. Site Location

18. Contamination Assessment Kerosene mostly contained as free product on top of shallow groundwater. Lateral movement of free and dissolved phase. Constraints: – –Kerosene impacted nearby listed (grade II) building with no foundations. –High soil permeability requires extremely high pumping rates in order to achieve hydrogeological containment. –No discharge possible except to surface water. –Necessity to minimise on site disruption. Remediation – system of trenches excavated. In situ treatment of groundwater over 18 months, then 6 months monitoring. Cost £350,000.

19. Traditional Approach Excavation of approximately 5000 m3 of material Contaminated soil disposal approx. £300K Backfill operations approx £100K Garden reinstatement approx £35K Total - £435K + structural and reinstatement works on the dwelling

20. Case Study 2 Claim: First party contamination, business interruption and potentially a very significant personal injury claim. Trigger: E.coli outbreak at Nursery in Scotland. Several pupils hospitalised with kidney failure. Incident reported on national television and press. Investigation revealed no original source of contamination within nursery. Nursery reopened after 3 weeks following thorough disinfection due to health risk Claim Cost: £100,000 ongoing No third party claims to date

21. Emerging Issues (continued) Development of innovative remediation technologies Contractor/Consultants  The need for regulation or self regulation Changing and emerging liabilities (i.e. Environmental Liability Directive).

22. CONCLUSIONS Heightening profile in media, law and political forums of Environmental issues. Dynamic phase of legal development underway – Bartoline v. RSA. Environmental Liability Directive, possible clarification of common law position. Need for greater clarity in insurance position either under existing policies or specialist environmental products and a quality claims handling process from Insurers office, to Adjusters, to Consultants.