VERTEX was retained by an international property and casualty insurance carrier to assist them in their review and technical evaluation of a claim from an insured that operates a food waste recycling and cogeneration power facility in New Jersey. The claim pertained to alleged violations of the facility’s wastewater discharge permit for biological oxygen demand (BOD) levels and solids content.
The claimant was an adjacent public sewerage utility to which the insured’s facility discharged wastewater following treatment in their three 1.1M-gallon anaerobic digester tanks. The digester tanks had begun experiencing subsidence shortly after installation which affected the performance of the tanks’ agitators (mixers) and in turn resulted in the elevated BOD and solids content in the discharge despite the tanks being operated at 70% of normal capacity due to the ongoing subsidence and concerns regarding the structural integrity of the tanks if operated at full capacity.
The claimed damages related to operational impacts of the insured’s discharge on the sewer utility’s own digester tank, which required major servicing, the costs incurred by the insured for installation of a new treatment system as rectification of the tank subsidence problem was going to require an extended period of time (up to a year), and associated lost revenue due to having to operate the facility at greatly reduced capacity.
VERTEX review identified several potential avenues for subrogation with regard to the settling of the tanks (the ultimate cause of the discharge permit violation), including the general contractor, tank installation contractor, and geotechnical contractor. VERTEX also concluded that no release of a contaminant to the subsurface environment had occurred and that no environmental impacts requiring remediation by a regulatory authority resulted from the settling of the tanks or the discharge permit exceedances.