Author: tucson insurance

In 1980, Congress passed The Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) to address the issue of cleaning up hazardous substances at inactive or abandoned sites. The law is sometimes referred to as the “Superfund” because the cleanup program it established includes a Trust Fund used by the EPA and other agencies to clean up hazardous waste sites when the original polluter cannot be identified. CERCLA also requires the immediate reporting of any releases of hazardous substances at a construction site if the amount released meets or exceeds the level designated by the law as a reportable quantity.

The Emergency Planning and Community Right-to-Know Act (EPCRA), originated from CERCLA. This law requires the use of emergency planning, and provides citizens, local governments, and local response authorities with information regarding the potential hazards in their community. Before beginning the bidding process, the owner or developer needs to research the history of the construction site to find out if there was any hazardous substance use or disposal at the site. This review will give contractors a better understanding of potential risks and liabilities.

There is the likelihood that your project will be subject to Superfund or EPCRA requirements if hazardous substances are discovered during construction activities such as grading, digging or demolition. If your site was previously used for industrial or commercial activities that may have created hazardous substances, or there is the possibility that waste was disposed at the site, you should test the soil, surface water, and groundwater before beginning.

To determine if your construction site is subject to EPCRA emergency planning requirements, you need to determine if it meets both of the following criteria:

• An extremely hazardous substance or any substance regulated by your state or local authority is stored on site.
• A substance above the designated Threshold Planning Quantity is stored on site. The quantity varies by substance.

You can find additional information at: http://yosemite.epa.gov/oswer/ceppoweb.nsf/content/epcraOverview.htm

As for responsibility for meeting CERCLA requirements, if hazardous substances are discovered during construction, the contractor or subcontractor who first discovers it is responsible for notifying the general contractor, developer or owner. Because the hazardous substance was at the site before construction began, the developer or owner is responsible for seeing that the hazardous substances are handled and disposed of properly.

However, if you excavate or spread soils containing a hazardous substance, you may be responsible under CERCLA as an operator, arranger, or transporter:

• You may be an operator if you spread soil that contains a hazardous substance on the land.
• You may be an arranger if you dispose of a hazardous substance or arrange to have it removed from the construction site.
• You may be a transporter if you move hazardous substance from one location to another.

If there is a hazardous substance release above the reportable quantity for CERCLA, you must immediately notify the National Response Center at 1-800-424-8802 and your State Emergency Response Commissions (SERC) and Local Emergency Planning Committees (LEPC). If there is an extremely hazardous substance release above the reportable quantity for EPCRA, you must immediately notify your SERC/LEPC. If no notification occurs, the owner, contractor and subcontractor may all be held responsible.

The penalties for non-compliance are stringent. EPA has the power to impose administrative, civil, and criminal sanctions on a property owner and/or contractor. Administrative penalties and civil penalties can reach $32,500 per violation per day. In addition to fines, you may need to cover legal fees. If legal action is taken against your construction site, you could also be the recipient of increased scrutiny by regulatory agencies at all the construction sites that you operate.

Necessity is clearly the mother of invention, especially when it comes to language. As each new event causes a civilization to be at a loss for words to describe it, the civilization invents the words it needs. Hazardous waste management has certainly contributed its share of new words. Take, for example, the term “bioremediation.” This is the processof using microorganisms or their enzymes to return an environment that has been by polluted by contaminants to its original state. Bioremediation can be used alone to attack specific contaminants that can be degraded by bacteria, or it can be one step in a multi-pronged approach.

The first words in the lexicon associated with bioremediation that you need to be aware of are “in situ” and “ex situ.”  These are not strictly new words; they are actually Latin phrases dating back to the Romans, but they have taken on a new usage in the 21^st century world of hazardous waste management. In situ, or literally “in place” means treating the contaminated material on site while ex situ, or “away from the place” means  the contaminated material is removed and treated elsewhere.

Biomremediation can often be accomplished by biostimulation. This means that the contaminated environment is altered to stimulate the growth of  bacteria that already exist there that are capable of degrading those contaminants. This is usually accomplished by adding various forms of nutrients, such as phosphorus, nitrogen, or carbon. However, the problem with this process is that while the good bacteria is growing, so is the undesirable bacteria. These bad bacteria can cause what is known as biofouling. This can result in the clogging of pumps, which are used to remove the contaminants.

Another process that is sometimes confused with biostimulation is bioaugmentation. This usually involves studying the types of bacteria present in the area to determine if they are capable of degrading the contaminants. If there is no indigenous variety of bacteria that is capable of performing the job, then a new bacteria is introduced into the area that can do the degrading. In this process a sufficiently high dose of the desired bacteria is introduced into an area so they become dominant. There is no fouling; and when the job is done, the bacteria die and turn into carbon dioxide and water, which can be pumped out and removed.

Some other types of bioremediation include bioventing and biosparging. Bioventing is a technology that provides oxygen to existing soil microorganisms that have been deprived of oxygen in order to stimulate them to degrade any aerobically degradable compounds in the soil. Aerobically degradable means they can be degraded by the use of oxygen. The oxygen is introduced as part of the air that is directly injected into the contamination in dry soil. Bioventing uses low airflow rates to provide only enough oxygen to sustain the microorganisms’ activity.

Biosparging is a remediation process that also uses microorganisms that already exist in a contaminated area to degrade the contaminants. In biosparging, air and sometimes nutrients are injected into saturated or wet soil to increase the microorganisms’ activity. In addition, biosparging can be used to reduce concentrations of contaminants that are dissolved in groundwater, or adsorbed in the soil below the water table.

As industrial chemical processes become more sophisticated, the contaminants that are released from these processes will become more complex requiring more innovative ways of removing them from the environment. The technologies mentioned in this article are the beginning of the movement toward righting the wrongs done to the environment. Understanding what they are can help business owners look for the right kind of products and services that can keep them in compliance with the regulations established to maintain a green America.

The issue of product liability is a true legal thorn bush. Manufacturers, who fail to understand how liability can impact in bringing a new product to market, are apt to find themselves nicked by the thorns.

There are three ways that a manufacturer can be held liable: strict liability, negligence, or breach of warranty. Strict liability means that a manufacturer is responsible for injuries caused by a product whose defect makes it unreasonably dangerous, despite the fact that they exercised reasonable care in its development.

If a manufacturer is accused of negligence, it means that they did not act with reasonable care in making sure the product was safe. The most important difference between strict liability and negligence is that if a manufacturer is charged with negligence, they will not be held liable if they took reasonable care to look for defects and to avoid them. However, if a manufacturer is charged with strict liability, that fact that an unreasonably dangerous defect exists in the product means that no matter how much care they exercised in its creation, they are still liable.

A breach of warranty is a determination that an assurance or promise about the quality of a product is proven false; that is, the product is defective or not in the condition a reasonable buyer would expect it to be in. The party making the warranty, the manufacturer, is liable to the party to whom the warranty was made, the purchaser. A warranty can be expressed in the description of the product such as describing a piece of clothing as colorfast. An implied warranty means that the buyer can assume certain assurances about the product to be true unless other wise stated. That’s why furniture that is used as a floor model is sold “as is.” There would normally be an implied warranty that the furniture is without nicks or dents. However, by adding the phrase “as is” to the sale tag, it removes the implied warranty.

As a product manufacturer, you also need to be aware of the three different types of defects. The first is the manufacturing defect. This stems from the way a product was made, as opposed to the way it was designed or labeled. An iron that doesn’t get hot enough to take the wrinkles out of cotton clothing is an example of a manufacturing defect.

A design defect is one that is arises from the way a product was designed, rather than the way it was made or labeled. For example, if an auto maker manufactures a vehicle that is so lightweight it’s likely to rollover in a collision, that is an example of a design defect.

A product may also be defective if a manufacturer fails to adequately warn consumers about risks involved in using it that aren’t immediately obvious. The failure to warn defect, as this is called, is the foundation of a number of cases brought against many of the major pharmaceutical companies over the last few years.

Manufacturing defects, design defects, or inadequate warnings are not the only ways a product can be considered defective. A product may be deemed defective if it fails to meet minimum legal standards for a product. However, even if a product does meet minimum legal standards, that does not usually protect a manufacturer from liability.

It’s important to remember that the type of negligence will influence the calculation of damages. In strict liability and breach of warranty cases, damages are limited to compensatory damages. While in negligence suits, the defendant can be awarded both compensatory and punitive damages.

If you are an employer who has received an experience modification rating, it is imperative that you understand how it affects your workers’ compensation premium calculations to make your rating work in your favor.

Workers’ compensation coverage is known as a class rated insurance program. That means that an insurance company gives all employers within a state who fall into a given industry or class the same rate. This is an average rate which doesn’t take into consideration any individual characteristics of the employer. Since policy premiums are affected by the individual factors surrounding the business, carriers need a statistical method of differentiating one business in a given class from another. This is what an experience rating offers.

The experience modification rating is calculated individually for each employer who qualifies. In order to qualify, you would need to pay a premium in excess of $10,000 or a 3-year average premium of $5,000, depending on the state. The modification rating is a value that compares the claim profile of the employer to the claim profile that would be expected of an employer of similar payroll size in the same industry or class code. In this system, 1.00 is average, meaning the frequency and severity of the actual employer’s losses is equal to what the carrier would expect the employer to lose. A rating greater than 1.00 means the employer has experienced worse than expected losses during the rating period, and a rating of less than 1.00 indicates the employer experienced better than expected losses for the rating period.

An employer’s experience modification rating is calculated using claims data from the three most recently completed years. The current calendar year would be excluded because it would not give a full picture of the year’s losses.

Each claim’s paid and reserved value is listed. Then the frequency of claims is evaluated. An organization with only one large claim will be looked on more favorably than a second one with numerous smaller claims even if both companies’ losses are of equal dollar value. Since the second company is more prone to claims, for any claim over the highest dollar value claim, only a fraction of the amount in excess of that dollar value is used in the calculation. Also, in some states only a percent of the medical only claims are used in the formula. These adjusted claims are compared to the expected losses for the industry class and payroll size of the organization, and an experience modification rating is given to the individual employer. A rating that is less than 1.00 will reduce the company’s premium, while a rating that is greater than 1.00 will increase it.

Obviously, a company will want to find ways to lower their rating. One method a company shouldn’t try is to manipulate class codes when they are obtaining a policy in an effort to get the most payroll into the lowest rated class. This may actually raise the experience modification rating in the long run.

Because the rating is calculated from a comparison of actual losses versus expected losses, allocating payroll to less risky classifications will also put you in line for expected losses that are far lower than what you realistically experience. This increases the likelihood that your actual losses will be greater than expected for the classification, leading to a higher rating in the future. The best way to decrease your rating is to make safety a priority, which will eliminate losses and save you money in the long run.