VERTEX was retained by a property and casualty insurance carrier to assist in their review of a claim submitted by an insured pursuant to an environmental/pollution insurance policy, pertaining to a release of NISOL® Liquid Red BK-50, more commonly referred to as red dye additive (RDA), at the insured’s bulk petroleum storage terminal in northern California.
The release of RDA occurred in 2020 when hundreds of gallons of RDA leaked from compromised subsurface product piping associated with one of the facility’s aboveground storage tanks. The RDA is red in color and composed of dye (2-naphthalenol phenyl azo alkyl derivatives) and kerosene, in equal parts, along with secondary components (petroleum naphtha, xylenes, and ethylbenzene.) The release impacted soil and groundwater, including the presence of free-phase RDA, and also migrated into a storm sewer system, with subsequent discharge into a canal located to the east of the facility.
Upon acquisition and review of all available site documents and data, VERTEX identified that prior to the claim related RDA release, at least two documented historical releases had occurred at the facility, including petroleum contamination identified in soil and groundwater during removal of two underground storage tanks in 1986 and a release of 3,700 gallons of kerosene at the facility in 1998. At the time that the subject claim RDA release occurred, light, non-aqueous phase liquid (LNAPL) was present in multiple groundwater monitoring wells at the facility, at thickness of up to 3-feet, attributable to the historical incidents. Following initial emergency cleanup of the storm sewer and canal RDA impacts, the proposed remediation approach for site-wide groundwater contamination involved a combination of total fluids batch extraction (TFBA) and groundwater monitoring. VERTEX’s evaluation concluded that only 50% of the future remediation costs warranted allocation to the subject claim as the remediation would be addressing the combined impacts of the subject claim and the historical releases equally and concurrently. This analysis will likely result in avoided claim related costs of at least $250,000.
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