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New Lessons in Pollution Liability

College administrators' plates are heaping with responsibilities, everything from providing conducive environments for learning to constructing multimillion-dollar facilities. One area that is demanding more attention lately is the environment--and the potentially high expense of ignoring environmental exposures.

For example, last fall, Yale University paid $348,000 to settle EPA allegations that the school jeopardized the safety of nearby residents and students. The violations included storage of hazardous materials in open or damaged containers in areas where students worked; improperly labeling waste containers; and risking explosion by storing incompatible chemicals near each other. Though the school neither denied nor admitted wrongdoing in the settlement, it was an expensive lesson nonetheless. In a separate case, Stanford University paid nearly $1 million to California regulators in 1994 to settle similar allegations.

Common exposures Thinking that your school does not have a problem can prove costly, because problems often are hidden until construction begins. For example, during excavation activities for a new building you may uncover an underground storage tank, whose location previously was unknown. After sampling the soil and groundwater, it may show petroleum hydrocarbon contamination, resulting in pollution clean-up costs in the hundreds of thousands of dollars.

Schools can face many environmental exposures. Pollution exposures from former unknown uses of the properties, unsafe disposal practices and sick-building syndrome in campus facilities are prevalent. Many research labs historically have disposed of waste in underground storage tanks or at off-campus locations. Since many of the nation's leading research-based colleges have been around for more than 100 years, time has allowed for a lot of waste to accumulate, often in forgotten corners of campuses. As new development takes place on the campus, old storage areas are discovered and disposal issues must be mitigated. Cleanup can be costly.

Additionally, labs and research facilities often hold incompatible chemicals and old chemicals. Therefore, the possibility exists for a fire or an unexpected chemical or biological release.

Risky areas Overall, schools face various common environmental exposures caused by numerous factors, and some come from unlikely sources. Animal-waste pollution problems are present on many campuses from such things as pigeons on the quadrangle and bats in the belfry. Colleges must clean up pollution from bat and pigeon droppings containing ammonia and bacteria. The possibility also exists for surface-water run-off from animal wastes and agricultural activities at crop-science and veterinary schools.

Many universities are spread out over several campuses, which are managed by different departments, resulting in varying disposal practices for hazardous, infectious and radioactive waste. In addition, there often are different methods for bulk storage of chemicals or wastes. Acceptable practices at one site may be unacceptable at another, with the possibility that neither facility's practices actually meet minimum industry or regulatory standards.

In some cases, an institution may not have caused the pollution, but it is still liable for the cleanup. Examples include local or regional soil and groundwater contamination from an undetermined off-campus site; past use of property for activities that caused historical contamination; unknown pollution conditions at donated trustee properties; and liability from disposal of waste at non-owned disposal facilities.

The age of facilities can play a role in environmental exposures. Many buildings have been constructed or renovated before the banning of products containing PCBs, asbestos and lead paint. Aged heating and air-conditioning systems hold accumulations of mold or bacteria, which can cause a severe decrease in indoor air quality. Old storage sites can deteriorate and lead to leaking underground or aboveground storage tanks and associated piping systems. Also, some sites may contain insufficient systems for pre-treatment of wastewater before discharge to municipal treatment plants.

Addressing IAQ The old ivy-covered walls of college buildings can harbor environmental exposures. Sick-building syndrome and poor indoor air quality can cause bodily injury claims for actual or perceived health effects, or property-damage claims for cleanup.

Unfortunately, like any site facing environmental exposures, accidents can occur. Incidents include fire causing release of air pollutants and spread of contaminants due to use of fire-fighting water; pollution release from vehicles during loading and unloading activities; and unexpected release from chemical-research laboratories causing property damage, business loss or bodily injury. All of these must be addressed.

Reducing the risk More schools are beginning to look into risk-management practices and loss-control procedures to minimize risk. As a first step, many institutions are charging risk managers and environmental personnel with the day-to-day activities and procedures of reducing pollution exposures.

Insurance coverage also is playing a greater role in reducing exposures. In the past, to finance environmental risk management, schools traditionally self-insured the exposure or relied on general-liability policies. However, general-liability policies available today often exclude pollution or severely restrict coverage. As a result, schools are beginning to purchase stand-alone pollution policies to protect against environmental exposures, including protecting against historical and ongoing pollution events caused by sudden and gradual releases. These policies are much broader than they were, have less expensive premiums and have longer policy terms, often up to five years. Policies can contain on-site and off-site coverage for historical and ongoing pollution exposures, and can be tailored to meet needs.

With large campuses in Camden, Newark, Piscataway and New Brunswick, N.J., Rutgers University is among the growing number of schools purchasing pollution coverage to protect against unknown historical and ongoing pollution exposures.

For a university as large as Rutgers, environmental liability insurance provides protection for unanticipated costs that may result from incidents at any one of its 752 buildings, its new waste-reduction facility, several power and cogeneration facilities, or its 11 miles of sewer lines.

Before purchasing coverage, Rutgers conducted an environmental-exposure audit and saw that, with extensive research being conducted in 1,300 labs, there were multiple potential exposure points distributed across a wide area. Though a comprehensive risk-management program could help minimize the likelihood of an environmental incident, the broad distribution made control difficult. As a research university, environmental insurance and loss-control procedures, such as proper training in material- and waste-handling procedures of chemicals and compounds, often handled by students, play an integral role in managing the exposures of its laboratories.

Another concern was that a large amount of small-quantity chemicals are managed, packaged and disposed of at off-site locations. This means that Rutgers has to control exposure at the 1,300 laboratories, and it has to manage risk at the additional chemical-storage and disposal facilities, as well as at transfer routes between facilities.

Finally, with so many materials stored at so many sites, there is an increased risk of the potential for fire to cause a pollution release. Though each site is equipped with fire-control measures, the inability to centrally monitor or police every site on a round-the-clock basis heightens risk factors, further justifying the university's decision to secure environmental liability insurance.

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