Liability For Environmental Damage Does Not go Away

Steve Henshaw

By: Steve Henshaw - President and CEO, Enviroforensics

Category: Environment

"The past is never dead. It's not even past," wrote William Faulkner is his novel "Requiem for a Nun." It is true in personal relations and politics. And it's also true in business, even if a company is long gone from the scene.

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There's an example now working in Terre Haute: the Indiana Department of Environmental Management is remediating the site of a former dry cleaner. The cleanup is necessary so the property may be redeveloped. But it also needs to be paid for, and the first responsibility will probably fall with the former operator of the dry cleaning business.

There are dozens, if not hundreds, of cleanup projects like this at small businesses every year in Indiana. There are even larger examples in virtually every community: the old Bryant manufacturing facility and RCA plants in Indianapolis, the site where Studebaker built cars for decades in South Bend, and shuttered steel plants in Lake County.

Old gas stations and shopping centers are also prominent sources of pollution.

And the list will grow longer as new industrial parks, shopping centers and office parks spring up in the suburbs or on redeveloped inner-city locations.

In fact, if you are in business, at least one environmental regulation covers what you do. The federal EPA uses the term "responsible party" (RP) to cover any businessperson that fits the classification of owner, operator, generator or transporter where contamination is found. It's a broad classification, covering many types of activity. Including: anyone who owns or operates a facility that is impacted with hazardous substances, owned or operated a facility at the time hazardous substances were being disposed, arranged for the treatment or disposal of hazardous substances, or anyone that accepts any hazardous substances for transport to a facility requiring cleanup, assuming the transporter selected the facility.

Owner, operator, generator, transporter. What business person doesn't fit one or more of those categories?

Here's an insurance term you should know. It's called "Long-tail liabilities." In other words, a burden you or your descendants may bear far down the road.
What can be done to minimize Long-Tail Liability on a site you operate? With respect to waste disposal, audits should be conducted to evaluate the operating conditions of a particular site; its cleanliness, the criteria and procedures for keeping records, and the status of your facility's compliance with its operating permit. No audit is certain, but most of the times, an audit will indicate whether the facility is operating well or whether it is a real "pit" in terms of environmental conditions, housekeeping, violations, etc. Because an audit may be cost prohibitive for any one generator, the idea of pooling resources may be an option. Get together with others on or near your site, whether your business is an an industrial park, an office complex or a shopping center.

In fact, real estate developers should consider environmental audits as an important detail in creating safe, job-producing and profitable projects.
It should also be said that many business lenders require environmental audits.

In the end, there is no one thing that can protect you and your company from Long-Tail Liability, but it is important to manage your risks and exposures. "Managing" includes how your business is legally established, protecting your personal assets, the insurance you procure, your own housekeeping practices (spill prevention and spill response), your waste disposal and waste management decisions, the equipment you are using, and the manner in which you store and minimize your waste solvents. You also need to insure as best you can against unseen problems.

Even if you follow the law today, you may not be covered tomorrow. So, keep up with current regulations and hire a trustworthy, experienced attorney.

Steve Henshaw is President and CEO of Indianapolis-based Enviroforensics, Inc.

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