Environmental Claim: Gas Station, Commercial and Residential Area, Texas

This environmental claim illustrates the critical initial evaluation of available claim-related information and data, which forms the basis of the source and timing evaluation that the insured will use in their determination of whether coverage exists for the claimed event. The subject site consists of an active gas station in Texas where a tank system removal had recently taken place. Post-tank system removal sampling indicated limited soil (below a dispenser) and groundwater impacts.

Environmental Challenge
SCS was presented with the Texas equivalent of a tank closure report, which fortunately also contains background information on the site as well as copies of previously-issued site-specific environmental documents. We also drew from site-specific information available on the Texas Commission on Environmental Quality (TCEQ) on-line petroleum facility database.

Our review looked at the history of the site and the associated previous and current tank systems, technical data on a previous release at the site, tank system inventory and repair records, plus observations and analytical data collected during the removal of the current tank system and associated infrastructure (i.e., piping, dispensers). Taking this information into consideration, SCS then developed a series of conclusions regarding the source and timing of the subject release using the soil and groundwater impacts during post-tank removal sampling.

The results of our review indicated no evidence that the recently removed tank system or its associated infrastructure was compromised.  Specifically, there were no holes, signs of corrosion, and/or leaking pipe joints that would result in a release to the environment. Furthermore, the detected levels of contamination in the post-tank removal soil and groundwater samples were less than what remained when the previous on-site release had received regulatory closure.  SCS also noted that methyl tertiary butyl ether (MTBE) was in site groundwater. MTBE has not been used in gasoline in the United States since 2006.

Environmental Insurance Services - SCS Engineers
One of two 12,000-gallon underground storage tanks removed; note the extremely good condition of the tank, with no signs of holes, corrosion, or damage, a strong indication the tank is not the source of an alleged release.

SCS concluded that the tank system was intact, and the observed contamination was likely residual impacts associated with the prior release or possibly other sources. Other sources could be off-site or on-site surface spills. No evidence was found that would indicate that an environment release was attributable to the recently removed tank system.

Outcomes and Benefits
Taking SCS’s conclusions into consideration as part of their policy and claim review, our client (the insurer in this case) determined that coverage was not available and a claim denial was issued. In cases such as this, SCS’s environmental claim review provides the first step of evaluation during a claimed event. When the facts are reviewed, a determination is made that assists our client in determining whether an insured’s policy is triggered and costs incurred during the investigation and remediation of a pollution condition will be the responsibility of the insurer or the insured.  SCS’s assistance on this matter resulted in a denial of coverage that would have included costs likely approaching $100,000 or more.