Risk mitigation in the waste industry: Lessons learned from the Chiquita Canyon Landfill

The Chiquita Canyon Landfill in Los Angeles County continues to present imminent and substantial endangerment to nearby communities due to the ongoing noxious fumes and contaminated runoff caused by an underground garbage fire. The fire was allegedly caused from volumes of waste that can combust under certain heat and moisture conditions. The current situation at the landfill has drawn more than 10,000ⁱ complaints, a number of lawsuits and calls for it to close from residents and elected officials. The U.S. Environmental Protection Agency (EPA) has ordered Chiquita Canyon LLC (CCL) to take immediate steps to protect human health. Allegations of responsibility against the landfill owner, operator and contractors include potentially costly and extensive exposures to liability. The leachate (liquid generated as landfill waste dissolves) is also under review by local agencies as a potential harmful contaminant. The cost of remediation, fines and third-party claims will likely be substantial. 

This type of incident is not uncommon. In fact, in the U.S. alone, over 8,000ⁱⁱ landfill fires occur each year. Landfills are aging and the technologies and engineering needed to maintain their efficacy is becoming increasingly complex. Communities served by landfills are also growing and contributing to the added pressures on waste services companies to accommodate the growth. This dynamic creates situations where the risk of failing to maintain and sustain landfill operations has also increased. 

Liable parties
As the lawsuits continue to mount, it is probable that claims will also be made against the contractors that service the landfills, as well as prior owners and lenders that may have financed the landfill. The scope of potential responsible parties is extensive. It has been reported that as many as 100ⁱⁱⁱ people have been listed in the first mass tort action lawsuit against the landfill with thousands more potentially filing claims individually. It is not uncommon for a claim that isn’t certified as a class to be more costly, as each individual plaintiff can have an independent claim that requires its own defense. 

Claims in this arena often have several components. 

• The claim may involve emergency response, evacuations and forced closures of the operations by local agencies, or through injunction.
  
  
• Agencies will conduct studies and issue costly remediation orders.
  
  
• Contamination can migrate into local waterways and protected lands, generating claims for damages to natural resources.

A solid risk management strategy that includes insurance is critical for protecting the businesses that own and operate these facilities and the communities they serve. 

Protecting your business and the community
Negotiating insurance coverage that can protect your business should an incident such as the Chiquita Canyon Landfill occur requires expertise in the environmental insurance market. With backgrounds in law, finance, environmental science, engineering and insurance, Alliant assists businesses with effective, tested environmental insurance solutions. Our critical, comprehensive understanding of these situations includes:

• Underwriting submission basics necessary to negotiate market leading coverage with carrier partners that understand our clients’ needs and pay claims, if or when the time comes.
  
  
• Need for estimating a sensible total cost of risk (TCOR) that truly balances our clients’ self-insured retention, premium costs and limit capacity to insure for the exposures to major catastrophic events; Alliant has direct access to over 20 carriers and over $300M in limit capacity.
  
  
• Dynamics in managing defense strategies and public relations in complex claims with strong, proactive claims advocacy.
  
  
• Benefits of facilitating engineering reviews and site inspections with carriers; this is valuable in obtaining the best coverage and in forging long-term insurance market relationships.

Implementing thorough, thoughtful and effective risk mitigation strategies in the waste industry carries weight with insurance underwriters and in the communities our clients serve. Pollution liability and environmental insurance policies cover exposures in the waste services industry, including odor and air quality claims as well as claims related to polluted ground and surface water. 

Coverage can include:

• Bodily injury, property damage, remediation costs, civil fines and penalties, natural resources damage, business interruption, emergency response costs, public relations costs and other exposures to risk.
  
  
• Support by environmental carriers in helping waste services firms satisfy regulatory requirements in various states that require financial assurance for closed landfills, often less expensively than in the surety market.
  
  
• Panel defense counsel with deep expertise in the complexities of environmental law and class action toxic tort claims.

Alliant Environmental is a market leader
Alliant Environmental is comprised of a multidisciplinary team with expertise and backgrounds in engineering, law, risk management consulting and claims management. 

We work with clients and their attorneys and engineering teams to design environmental enterprise risk management systems and mitigation strategies. Negotiated coverage that responds to all these risk areas is integral and we have the insurance carrier relationships to build broad programs that respond to our clients’ needs. Alliant offers claims advocacy when incidents occur, providing advice and guidance on how to ensure claims are handled effectively and paid promptly.         

For more information visit: www.Alliant.com/Environmental