In the year 1948 a smog developed over Donora, Pennsylvania.[1]The smog was a result of both airborne pollutants from the town’s zinc smelting facility and steel mills, as well as unusual weather conditions. The smog created and exacerbated medical issues in the town’s population and made it difficult for residents to leave town due to poor visibility. The estimated totals of dead and sickened vary between 11 to 20 deaths and between 6,000 to 7,000 injured as a result of the poor air conditions. The town’s population at the time was 14,000.

The incident in Donora was a motivating factor in the passage of the Clean Air Act. While that act and other environmental regulations have helped to clean up our manufacturing processes, the development of more sophisticated air quality analysis tools as well as other scientific advancements have revealed new risks to our health and environment as a result of air pollution. Among the health effects of air pollution on humans are respiratory illness, heart attacks[2], strokes, and possibly type 2 diabetes development or complications.[3] These pollutants can also injure or kill animals.[4]

Manufacturing can contribute to pollution in soil, water, and air. Due to recent events involving lead and other contaminants, there have been numerous stories on water pollution in the news. It’s important to remember that in spite of less media coverage, air pollution also remains a large exposure for the industry. Like water and soil contamination, air pollution can lead to regulatory fines and penalties as well as lawsuits due to the health effects on citizens and animals.  

Air pollution may not be as easy to remediate as pollution found in water or soil due to weather conditions in the area or the inability to capture or contain the pollutants. The flow of air around a facility and weather systems at any given time can make it difficult for pollutants to disperse. In other cases, pollutants can be drawn miles away from a facility due to air currents, sometimes even crossing state or national boundaries. While it may be difficult to pinpoint the exact origin of air pollutants due to multiple contributors in the same geographic area, a company may still be drawn into a lawsuit related to the pollution condition.

In addition to manufacturing processes that generate air pollutants, it’s possible that a facility’s products and waste by-products could contribute to or cause air pollution. Like production processes, a company’s products can release Volatile Organic Compounds (VOCs) into the atmosphere, causing illness or damage to surrounding structures.[5] Air pollution from waste generated by or located at a manufacturing facility can come from the breakdown of chemicals over time, the interaction of those chemicals and other waste, or the burning of waste. Another issue stemming from waste breakdown and processing is odor problems. Odors can be a form of air pollution leading to a decline in property values, the enjoyment of property, and driving away customers from nearby businesses.

One way to reduce the costs of investigations, defense against, and remediation of air pollution related to a company’s operations, products, and waste is to insure the risk. Most General Liability (GL policies) have a total pollution exclusion or very limited pollution coverage that may or may not address these types of conditions.[6]

Pollution-specific policies can include broad definitions of pollutants and dispersal of those pollutants. They may include coverage for pollution conditions associated with the facility location (Site Pollution), Non-Owned Disposal locations (NODs), manufactured goods (Products Pollution), transportation of goods (TPL), and contracting or contractor services (CPL) related to the installation and maintenance of products for third parties.

Pollution policy enhancements may also be available. For example, crisis management coverage is designed to ease the cost of managing a company’s image following a pollution incident linked to it. Natural resource damage coverage can respond to loss associated with damage to protected habitats and species.

It is also important to understand the extent to which a policy will respond to fines and penalties stemming from pollution violations. Some policies exclude these fines all together while others provide a giveback, where allowable by law.

For manufacturers, General Liability can often be included with the pollution policy. By packaging the GL and Pollution coverage together, the insured will typically receive more comprehensive coverage than with a standard GL market, not to mention more streamlined claims handling and possibly more competitive pricing by offering one policy instead of two.

Though we have come a long way from Donora in terms of the regulation and management of industrial pollution, manufacturing processes and products continue to emit pollutants. To help mitigate the cost to remediate these incidents or defend against claims of pollution, manufacturers should strongly consider purchasing a pollution-specific policy.

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Settlements: Manufacturers & Air Pollution

Adkins et al v. Will et al, No. 3:2009cv00510 - Document 226 (N.D. Ind. 2015) $50m Class Action Settlement against VIM Recycling due to odors emanating from their former property

UNITED STATES OF AMERICA vs. WESTVACO CORP. CIVIL ACTION NO. MJG-00-2602, Case 1:00-cv-02602-MJG Document 435-1 Filed 03/10/16, $1.6m settlement against a paper mill for air pollution

United States of America, et al v. Guardian Industries Corp, Consent Decree 2:15-cv-13426-MAG-MJH Doc # 2 Filed 09/29/15, $71m settlement against a flat glass manufacturer violating Clean Air Act

[1] The Donora Smog Disaster - October 30-31, 1948 http://www.phmc.state.pa.us/portal/communities/documents/1946-1979/donora-smog-disaster.html

[2] Health Effects of Ozone and Particle Pollution http://www.lung.org/our-initiatives/healthy-air/sota/health-risks/

[3] Air Pollution and Type 2 Diabetes http://diabetes.diabetesjournals.org/content/61/12/3037

[4] Impacts of Air Pollution & Acid Rain on Wildlife http://www.air-quality.org.uk/17.php

[5] Air Quality, Air Pollution http://www2.brevard.edu/pfi/AirPollution.htm

[6]http://b-h-a.com/blog/the-gl-form-and-pollution-exclusions/