Contractors May Be Unaware Of Environmental Risks

NU Online News Service, Oct. 11, 2:37 p.m. EDT

Contractors venturing into areas outside of their proven expertise, while seeking work in a weak economy, should be aware that strict enforcement of environmental laws is on the increase and they should be taking steps to mitigate a huge potential risk, according to a recent report.

The report released today by the insurer ACE, titled "ACE Progress Report: Contractors and Consultants Face Increasingly Strict Environmental Laws," said that given the expensive remedial work, project delays and lost revenues that could result from inexperience, there is a growing trend in both public and private projects to require substantial environmental insurance coverage–even on jobs for which it was not previously required.

The report notes that as regulations have evolved, so have the insurance coverages available for contractors' pollution liability.

"These coverages provide vital insurance protection against liability from pollution incidents for which contractors, subcontractors, and consultants may share legal responsibility," the report said.

The paper authored by Barbara Deas and William P. Hazelton, and released today during the National Association of Surplus Lines Offices conference in Atlanta, says the risk is greatest for contractors looking to work on infrastructure projects.

"Today, virtually any contractor or consultant faces a growing array of environmental risks and liabilities," the report said.

As a result, the report continued, contractors are vulnerable to both new and newly-enforced regulations and potentially costly liabilities stemming from pollution incidents at job sites.

The report said that to deal with the issue, contractors and consultants should address potential environmental liabilities with thorough pre-planning.

Indeed, while a project is in progress, "environmental impacts should be mitigated by taking the correct steps to manage and lessen the impact," the report said.

Moreover, even when a project is finished, environmental concerns are likely to remain, the report said.

"Because of all these exposures, the environmental impact of a project should be considered at every phase, from start to finish," the report suggests.

"Contractors and consultants that ignore these concerns can expose themselves to significant legal risks and large fines," the paper warns.

Specifically, the report points out that construction projects must pass a series of regulatory hurdles before gaining local, state, or federal approval. These hurdles range from air quality issues to so-called "riparian concerns" for projects bordering streams and waterways, in other words, soil and run-off issues where grading is involved, the paper said.

Environmental specialists face even greater challenges with projects that involve so-called "brownfield" sites, where hidden pollutants may be present, as well as operations at sites that are known to be contaminated, the paper observed.