Dec 28, 2000

Unknown Exposures are Potential Liabilities for Wastewater Treatment Plants

Loss Control

Any facility that treats, stores or disposes of wastes faces environmental
exposures. While these seem apparent at landfills or hazardous waste treatment
facilities, environmental exposures are less obvious at facilities such
as wastewater treatment plants. Nevertheless, wastewater treatment plants
do face environmental exposures from their operations, with potential resulting

As an example, consider the case of a wastewater treatment plant that utilized
sulfuric acid in its process. The acid was stored on-site in a 20,000-gallon
aboveground storage tank. The storage tank was contained by two foot-high,
chemically-sealed concrete walls. Overnight, an area high on the wall of
the storage tank ruptured, releasing the acid. The leak squirted beyond
the secondary containment, releasing approximately 3,000 gallons of the
tank contents onto the soil and into an adjacent stream. The government-mandated
costs for cleanup of on-site soil, the stream and the stream bank exceeded
$1 million.

Fortunately, environmental exposures can be mitigated through effective
loss control techniques and risk transfers. The following is an exploration
of the exposures facing wastewater treatment plants and how these exposures
can be addressed to reduce potential liabilities.

Sources of Exposure

When the public thinks of wastewater treatment plants, unpleasant odors
typically spring to mind. However, wastewater treatment plants have the
potential to contaminate the surrounding environment from several main sources.
Contamination can result from

  • discharges of contaminated effluent due to inadequate treatment
  • cracks in wastewater treatment tanks
  • leaks or releases from storage tanks
  • leaching of contaminants from sludge in on-site storage areas.

Effluent Exposures

The most obvious exposure at a wastewater treatment plant is the discharge
of contaminated effluent. Effluent is typically discharged to surface water
or groundwater, or else is sprayed on the land. The effluent generated at
the end of the treatment process is supposed to be "clean." However,
if the plant encounters any problems in the treatment process, the effluent
many contain contaminants that then enter the receiving surface water, groundwater
or soils. Problems that can upset the treatment process include

  • a treatment process breakdown
  • untreatable contaminants
  • excess volume from combined sewer overflows, resulting in treatment

Subsequently, the contaminated effluent can cause surface water, groundwater,
and/or soil contamination. If contaminated effluent enters a surface water
body, the following effects could occur:

  • fish kills
  • harm to human health (if the surface water body is used for recreational
    purposes such as swimming, boating and fishing)
  • contamination of a drinking water supply source.

Contaminated effluent also poses harm to groundwater that may be a drinking
water source for both private and public wells.

Several loss control techniques can be used to help prevent losses from
contaminated effluent. First, the plant should closely track its Discharge
Monitoring Reports and use a reputable laboratory to test all samples. Such
tracking will aid in early detection of effluent problems. Second, the facility
should have a Preventive Maintenance Program in place to adequately maintain
and replace equipment to prevent problems from occurring. Another way to
minimize this exposure is to have a good audit program in place for all
of the plant's industrial users. A good program will help to ensure that
the facility is not receiving untreatable wastewater.

Tank Exposures

Most wastewater treatment plants utilize concrete tanks (that are often
partially in the ground) to process the wastewater. Over time, these tanks
can develop cracks. If these cracks are not repaired immediately, tank contents
can emanate from the process tank and contaminate underlying soils and groundwater.
This could result in on-site contamination and lead eventually to third-party
property damage from contaminants migrating off-site. Once again, there
is also the potential for contaminating groundwater that may be a drinking
water supply source. Additionally, wastewater treatment plants generally
use both underground and aboveground storage tanks to store process materials
and wastes on-site. These tanks present several environmental exposures.
Underground storage tanks may leak over time, and the contents have the
potential to contaminate the underlying soils and groundwater. Aboveground
tanks have the potential to present problems such as

  • leaks from tank bottoms
  • ruptures causing a catastrophic release of tank contents
  • spills during the loading or unloading process.

Tank exposures can be mitigated through the implementation of tank testing
and maintenance programs. These programs schedule and track integrity testing
of storage tanks, repairs and maintenance. Effective Spill Plans detail
what action to take in the event a spill or release occurs. Timely and adequate
response can help minimize the amount of a loss.

Storage Exposures

One of the process materials typically stored on-site is chlorine. A deadly
gas, chlorine can kill people in the vicinity of a release. Therefore, on-site
chlorine storage represents a major exposure. Chlorine detection systems
with alarms can be used to provide an early warning of any problems with
chlorine storage or handling. Plants should also have evacuation plans for
the facility as well as the surrounding community in the event of a release.

Another practice of many wastewater treatment plants is on-site storage
of sludge that is a by-product of the treatment process. Historically, "storage"
simply meant placing the sludge on the ground or on wooden pallets. This
old storage method may have resulted in contamination of underlying soils
and groundwater. However, today, most plants store sludge in covered concrete
areas, thus minimizing the impact of the sludge on the surrounding environment.

Odor Exposure

Indeed, there is also the potential for a wastewater treatment plant to
have a negative effect on the surrounding environment simply by producing
foul odors. While these odors are not harmful, they are unpleasant and could
result in nuisance claims against the facility.

Reducing The Risks

The most effective way to reduce the environmental exposures facing wastewater
treatment plants is through the integration of the preceding loss control
techniques into a comprehensive loss control program. However, losses will
still occur. When they do, pollution insurance programs are available in
the marketplace that are both comprehensive and affordable.

Pollution liability insurance is currently available that provides coverage
for both third party bodily injury and property damage resulting from pollution
conditions emanating from a wastewater treatment plant, as well as on-site
cleanup of the facility in the event contamination is discovered on site.
Defense costs are also included. Therefore, this type of insurance policy
would provide coverage if the wastewater treatment plant discharged contaminated
effluent into a surface water body and subsequently impacted a drinking
water supply source. Additionally, if the treatment tanks at a facility
cracked and contaminated the underlying soils and groundwater, then this
type of policy would provide for the cleanup of the impacted soils and groundwater.
If the facility in the example at the beginning of this article had pollution
coverage in place, its policy would have covered both the on-site and off-site


Wastewater treatment plants do face environmental exposures. By being aware
of these exposures, potential liabilities can be minimized through the implementation
of effective loss control techniques. For those losses that do occur, pollution
liability insurance is available to address both on-site cleanup of the
site and third party bodily injury and property damage resulting from the
operation of the plant.

About the Author:

Victoria L. Ostertag, ARM, is a senior underwriter, with extensive environmental
consulting and pollution insurance underwriting experience, at ECS, Underwriting,
Inc., a national provider of insurance programs for companies facing environmental
exposures. Victoria holds a Masters of Science degree in Environmental Health

About the author