Hotels, motels, resorts, restaurants, and entertainment/sports venues confront
environmental liability every day, whether known or not. Specifically, all types of
hospitality facilities or properties face environmental exposures in their on-site
operations and transportation/disposal of supplies and waste. Each area must be explored
to identify risks that may expose the organization to environmental liability.
On-Site Environmental Risks
One of the biggest operational risks is indoor air quality
affected by microbial growth, including mold, bacteria, and even viruses. Not
managing or addressing this growth when identified can lead to what we call "sick
building syndrome." In fact, a recent review of the book of insureds at RT
Specialty's Environmental and Construction Professional Practice found that indoor
air quality was the leading cause of pollution legal liability insurance claims
among the hospitality-related policies purchased. This was closely followed by
incidents involving spills on the premises and contractors uncovering or
inadvertently hitting existing structures, such as utility lines, tanks, and so
forth.
Whether it's the result of fungal or mold growth
(Aspergillus and Stachybotrys are the usual suspects) in the
building or ventilation system, or bacterial build-up (Legionella pneumophila
is the typical culprit) in the air conditioning or drinking water systems, when this
growth becomes widespread, the result is typically not good. For those not familiar
with Legionella pneumophila, between 5 and 30 percent of those who contract
Legionnaires' disease die from it, according to the Centers for Disease Control and
Prevention. Furthermore, hospitality properties have other structural features that
can expose patrons to water-borne bacteria, including fountains, saunas/spas, and
pools/hot tubs.
In late 2021, for example, a Hampton Beach resort was sued as a
result of the presence of Legionella pneumophila, which caused the deaths of
two people and sickened dozens more. Since late 2018, there have been 49 confirmed,
probable, or suspected cases and 2 deaths linked to the Hampton Beach outbreak
traced to the Sands Resort, suggesting that its hotel's water systems—including spa,
showers, and hot tubs—were not properly maintained. Damages included "medical
expenses, severe pain and mental suffering, and substantial inconvenience," and many
were sick as well afterward. Even if the Sands proves that it was not negligent and
maintained the systems properly, the legal defense costs alone could be
substantial.
Waste-Related Environmental Risks
Other risks that can expose hospitality properties to environmental liability include the following.
Existence of lead (paint and pipes), asbestos (insulation and tiles), and polychlorinated biphenyls (light ballasts and transformers) creating liability associated with third parties coming onto or working in and around the property.
Improper use of hazardous chemicals (e.g., cleaning chemicals, fuels,
lubricants, red bag waste, lab chemicals and waste, pesticides/herbicides,
paints, solvents, or volatile organic compounds) can release indoors or outdoors
via improper storage, inadequate containment, or vandalism.
Inadvertent transport and subsequent disposal of unknown contaminated soil
or materials from onsite activities, such as small spills resulting in waste
product.
Liability arising from both on- and off-site historical use, such as improper disposal, underground tanks, residual contamination from small leaks or spills, etc.
Liability associated with local or regional soil/groundwater contamination, regardless of the source of contamination.
Cleanup and liability associated with the disposal of waste/materials at
disposal facilities or recyclers. This may expose the organization to Superfund
liability. Such materials may include air conditioning units containing
chlorofluorocarbons, acids, dry cleaning chemicals, adhesives, halogen lights,
waste oil, batteries, and general waste.
Laundry operations may include dry cleaning, which utilizes
perchloroethylene and other chemicals, wastewater, and detergents.
Carbon monoxide released from fossil-fuel-fired devices, including ovens,
boilers, floor buffers, and space heaters.
Exposed asbestos and asbestos insulation on pipes and boiler, tiles, and insulation.
In tradeshow events, exhibitors may bring hazardous materials onto the premises without adequate precautions.
Improper storage, resulting in the release of cleaning products, compressed
gases, diesel fuel and other lubricant oils, flammable paints and solvents, pool
and hot tub chemicals, and maintenance chemicals.
Disposal of televisions, computers, monitors, microwaves, refrigerators, and other devices.
One last area of exposure is with the property itself; many
hospitality properties have operated on the same premises for over 50 years. The
past improper disposal practices of waste materials may have caused adverse soil and
groundwater conditions on-site and to neighboring properties without realizing it.
Furthermore, in many instances and especially with large resorts
and resort chains, large parcels of property are hard to inspect and maintain and
can present the owners with potential environmental problems if not properly
assessed. Often, there are poor or inadequate records of activity on these
properties, so many unknown problems are only identified when the property is
developed. Even if environmental assessments are performed, especially during Phase
I, they are only cursory reviews of the property, perhaps with a "walk-through" to
physically identify issues. In the event there was illegal or "midnight" dumping of
waste, environmental reports would not identify it.
Property contamination from historical usage is real, and unless a
process to vet such properties is in place, owners are exposing themselves to
big-time headaches!
Opinions expressed in Expert Commentary articles are those of the author and are not necessarily held by the author's employer or IRMI. Expert Commentary articles and other IRMI Online content do not purport to provide legal, accounting, or other professional advice or opinion. If such advice is needed, consult with your attorney, accountant, or other qualified adviser.
Hotels, motels, resorts, restaurants, and entertainment/sports venues confront environmental liability every day, whether known or not. Specifically, all types of hospitality facilities or properties face environmental exposures in their on-site operations and transportation/disposal of supplies and waste. Each area must be explored to identify risks that may expose the organization to environmental liability.
On-Site Environmental Risks
One of the biggest operational risks is indoor air quality affected by microbial growth, including mold, bacteria, and even viruses. Not managing or addressing this growth when identified can lead to what we call "sick building syndrome." In fact, a recent review of the book of insureds at RT Specialty's Environmental and Construction Professional Practice found that indoor air quality was the leading cause of pollution legal liability insurance claims among the hospitality-related policies purchased. This was closely followed by incidents involving spills on the premises and contractors uncovering or inadvertently hitting existing structures, such as utility lines, tanks, and so forth.
Whether it's the result of fungal or mold growth (Aspergillus and Stachybotrys are the usual suspects) in the building or ventilation system, or bacterial build-up (Legionella pneumophila is the typical culprit) in the air conditioning or drinking water systems, when this growth becomes widespread, the result is typically not good. For those not familiar with Legionella pneumophila, between 5 and 30 percent of those who contract Legionnaires' disease die from it, according to the Centers for Disease Control and Prevention. Furthermore, hospitality properties have other structural features that can expose patrons to water-borne bacteria, including fountains, saunas/spas, and pools/hot tubs.
In late 2021, for example, a Hampton Beach resort was sued as a result of the presence of Legionella pneumophila, which caused the deaths of two people and sickened dozens more. Since late 2018, there have been 49 confirmed, probable, or suspected cases and 2 deaths linked to the Hampton Beach outbreak traced to the Sands Resort, suggesting that its hotel's water systems—including spa, showers, and hot tubs—were not properly maintained. Damages included "medical expenses, severe pain and mental suffering, and substantial inconvenience," and many were sick as well afterward. Even if the Sands proves that it was not negligent and maintained the systems properly, the legal defense costs alone could be substantial.
Waste-Related Environmental Risks
Other risks that can expose hospitality properties to environmental liability include the following.
One last area of exposure is with the property itself; many hospitality properties have operated on the same premises for over 50 years. The past improper disposal practices of waste materials may have caused adverse soil and groundwater conditions on-site and to neighboring properties without realizing it.
Furthermore, in many instances and especially with large resorts and resort chains, large parcels of property are hard to inspect and maintain and can present the owners with potential environmental problems if not properly assessed. Often, there are poor or inadequate records of activity on these properties, so many unknown problems are only identified when the property is developed. Even if environmental assessments are performed, especially during Phase I, they are only cursory reviews of the property, perhaps with a "walk-through" to physically identify issues. In the event there was illegal or "midnight" dumping of waste, environmental reports would not identify it.
Property contamination from historical usage is real, and unless a process to vet such properties is in place, owners are exposing themselves to big-time headaches!
Opinions expressed in Expert Commentary articles are those of the author and are not necessarily held by the author's employer or IRMI. Expert Commentary articles and other IRMI Online content do not purport to provide legal, accounting, or other professional advice or opinion. If such advice is needed, consult with your attorney, accountant, or other qualified adviser.