Expert Commentary

Naturally Occurring Hazards: They Can Be "Hazardous" to Your Contractors Pollution Liability Coverage

For years, many of us have been discussing the potential issues associated with naturally occurring environmental hazards or substances such as silica, mercury, arsenic, pyrite, and probably the most prevalent, asbestos. All these naturally occurring substances have hazardous properties associated with them, so they are typically defined as pollutants or hazardous substances.

January 2007

In fact, nearly all are recognized as or contain toxic substances as defined by the U.S. Environmental Protection Agency (EPA) and therefore present unusual exposure to many property owners, developers, and contractors. The purpose of this article is to bring attention to some of the various and more obscure naturally occurring substances present in our environment that can expose organizations to environmental liability and the potential problems they may cause with a construction firm's contractors pollution liability (CPL) coverage.

It's There, We Just Don't See It

Even though they can wreak havoc with any entity owning, developing, or building on real estate, we often are unaware of how exposed we may be to the different naturally occurring minerals and substances found in our environment: mercury, arsenic, asbestos, radon, and so forth. Most of these substances are discovered during development or construction. It is only then that we realize the potential catastrophic impact on an organization or community as a result of disturbing such substances.

Naturally occurring asbestos has seen the most recent media exposure in the past year. One article tells of an El Dorado County, California, family that built its dream home near a vein of tremolite—a mineral containing naturally occurring asbestos. The thought of raising a family near such a carcinogenic hazard squashed whatever dreams family may have had, and they simply walked away from the property. Little is said in the article about any potential liability tied to the actual sale or construction of the home; nonetheless, it made a significant impact in the lives of those involved.

Another press article tells of a general contractor in Virginia who was building a "box store." The excavation subcontractor removed material from the job site and used the material as fill at three other sites. It just so happened that the material they removed was soil containing remnants of an asbestos-containing mineral called Actinolite.

The Stuff To Be Aware of

As you will see in this discussion of a few of the more obscure substances/minerals that can be labeled hazardous, each region of the country produces its own unique environmental hazard. For construction firms, the biggest exposure is disturbance of this material through excavation, street/road construction, and any other intrusive type work.


Mercury is present in the environment as a result of both natural processes and human activities. Natural sources of mercury include volcanoes, hot springs, and natural mercury deposits. Sources related to human activities include coal combustion, waste incineration, certain industrial activities, and some mining activities. Although mercury is only a trace constituent of the fossil fuels we burn, these processes alone result in the release of approximately 48 tons of the toxin into the atmosphere in the United States each year. Natural sources of mercury release three times that amount on an annual basis.

According to the EPA, mercury is a human neurotoxin. Developing fetuses and small children are at greatest risk from exposure. The principal route of human exposure is through consumption of mercury-contaminated fish. When mercury enters an aquatic environment, it may encounter conditions that cause its conversion to methyl mercury. Methyl mercury is taken up by aquatic organisms and tends to concentrate as it moves up the food chain. This process is referred to as biomagnifications (from bacteria to fish-eating fish) and can result in high mercury concentrations in predatory fish such as striped bass and sharks, and in fish-eating birds and mammals.

In California, environmental mercury issues are primarily related to historical mining operations that had occurred up until the early 1980s. During this time it is estimated that nearly 100 million kilograms of mercury were produced within the state and large quantities of mercury were distributed into the environment. Cinnabar is a naturally occurring mercury sulfide found in and around Santa Clara County. It was the main ore of mercury mined by many of the California mining companies for the past 150 years. Cinnabar is generally found in a massive, granular, or earthy form, and is bright scarlet to brick-red in color. Sometimes mistaken for weathered brick from construction activities, cinnabar is more crystal-like.


Pyrite or iron sulfide or "Fool's Gold," FeS2 for true geologists, is one of the most common sulfide minerals. Because of its rather high sulfur content, when exposed to the atmosphere (oxygen) or water, pyrite forms sulfuric acid. The most notable operations that create such an environment are mining operations—resulting in what we have all heard before as acid mine drainage.

There have also been a number of instances where acid drainage was created as a result of construction activities. One in particular occurred in Pennsylvania in 2004—the official name was the PA 26 Relocation Project, also known as I-99. It was a $195 million project connecting to other expressways in central Pennsylvania, a 1.4 mile stretch. In February of 2004, construction came to a stop when contractors exposed substantial amounts of pyrite, causing uncharacteristically high amounts of acid drainage into the surrounding area. The acid drainage ended up contaminating several streams and potable water wells of residents in the area. The environmental impact statement apparently missed this geologic formation.

The project was and is still shut down. In September 2006, the Pennsylvania Department of Environmental Protection (PA DEP) approved remedial plans to address the problem, and the work has recently begun to remove a majority of the pyrite material at a cost of approximately $26 million. The remaining material will be covered with an engineered, impermeable material to prevent exposure to rainwater and oxygen. Once remediation is complete, construction is expected to resume on I-99.

Most notable presence of pyrite is in the Northeast United States, Illinois, and Missouri. There may be other pyrite varieties or other sulfide containing minerals (consider those areas that are heavily mined for coal) that can produce the same effects in other parts of the country.


Naturally occurring asbestos (NOA) is much more prevalent in the United States than once thought. NOA is found in the various minerals that produce the carcinogenic fibers like chrysotile, crocidolite, amosite, anthophyllite, tremolite, actinolite, and serpentinite. Undisturbed, these minerals can have little to no impact on the environment and human health; however, weathering, mining, and real estate development/construction emit asbestos fibers into the atmosphere, exposing the workforce and communities to unknown respiratory hazards. As we should all know by now, asbestos causes cancer of the lungs and of the lining of internal organs. In addition, asbestosis and mesothelioma are other asbestos-related diseases that inhibit lung function.

Similar to the last two hazards, NOA can become an issue for virtually any construction firms performing intrusive-type operations. According to the U.S. Geological Survey, 27 of the 50 states contain some form of NOA containing minerals. NOA can be found in various mineral deposits in the East, from Maine to Alabama, and in the West, predominantly in California. Apparently, San Benito and Fresno Counties in California are located on one of the largest naturally occurring asbestos deposits in the world. Popular to motorcyclists and other off-road vehicles, this area is underlain by a 30,000-acre serpentine deposit. Serpentine just happens to be the state rock of California.


When we refer to "silica," we are usually referring mostly to the crystalline form otherwise known as silicon dioxide (SiO2). There are other, noncrystalline forms of silica, but since most of the issues are centered on the inhalation of the crystalline form, we'll focus on that form.

There are three major forms of crystalline silica that are most common in the workplace: quartz, tridymite, and crystobailite. The most common we can probably all relate to is quartz. Quartz can be found in virtually all soil in nearly every part of the country. The "rock" sandstone is composed of quartz and can be found in many areas throughout the country except for southern coastal areas where most beaches are made up of limestone.

Tridymite and crystobalite are simply polymorphs of quartz. In other words, they are composed of the same elements but have different chemical structures. An easy example to help understand what is meant by polymorph would be tridymite. Tridymite, while somewhat rare, can be found in many volcanic rocks. In this example, the heat associated with volcanoes acts as the catalyst that "morphs" or changes the chemical structure of the quartz into rocks containing tridymite. Crystobalite is not too different than tridymite. To put this into some type of context and to bring some vision to this issue, consider the eruption of Mount St. Helens back in the 1980s. Those people that may have been exposed to silica and contracted silica-related respiratory injuries would most likely have been inhaling tridymite or crystobalite in the dust after the explosions. Those people in and around the collapse of the World Trade Centers in 2001 would mostly be inhaling quartz coming from the concrete dust. The point is simple. Although all are different in chemical structure, all forms of crystalline silica can eventually be deadly.

When it comes to identifying or locating silica, it's simple. It's everywhere!


Arsenic, or As, is a naturally occurring element found throughout the earth's crust. Due to weathering, volcanic eruption, mining, smelting operations, agriculture and real estate development/construction activities, it is believed that all soil contains some amount or level of arsenic. As a result, everyone is exposed to some level of As. According to the EPA, arsenic has been linked to cancer of the bladder, lungs, skin, kidney, nasal passages, liver, and prostate. In addition, non-cancer effects can include thickening and discoloration of the skin, stomach pain, nausea, vomiting, diarrhea, numbness in hands and feet, partial paralysis, and blindness. Although not used in residential construction (still used in industrial) anymore, arsenic's most widely use was as a preservative in pressured treated lumber—the copper chromated arsenic (CCA) process.

Naturally occurring arsenic has been found in the ground water of almost every aquifer of Wisconsin. Of the water wells drawing from these aquifers, water sample results indicate about 3.5 percent of these wells have concentrations exceeding the current public drinking water standard of 50 ppb. Concentrations detected in several existing wells in this region are in the thousands of ppb and represent some of the highest found naturally occurring in the world.

According to the Geological Society of America (GSA) elevated levels of As have also been found in Massachusetts, Michigan, New Hampshire, Rhode Island, Maine, and some western states.

Implication in Contractors Pollution Liability Coverage

When looking for financing alternatives for environmental loss, many organizations now move in the direction of environmental liability insurance. It has become less expensive, broader in scope, and easier to secure than a few years ago. While this is a sound alternative, there are a number of pitfalls that one may encounter when securing such insurance, regardless of whether it is obvious or not. One of the most common pitfalls is exclusionary wording for naturally occurring substances, like the materials identified above. This makes a complex issue even more complex.

Specifically addressing the contractors pollution liability (CPL) marketplace (from environmental or remediation contractors to general and specialty trades/subcontractors), there are several ways exposure to naturally occurring hazards may be excluded. Some are fairly recognizable as straightforward exclusions. Others are more cryptic—coming in the definition of pollutants or pollution conditions. For example, one insurer applies a specific exclusion for naturally occurring substances in the exclusions section of the policy that can have significant impact on coverage:

This insurance does not apply to claims or losses based upon or arising out of any naturally occurring substances in their original location and unaltered form, or altered solely through naturally occurring processes or phenomena.

Another insurer will exclude by definition. In its definition of pollution conditions, the definition does not include naturally occurring substances, therefore negating coverage for such exposure:

  • Pollution Conditions means the emission, discharge, dispersal, release or escape of pollutants, provided such are not naturally occurring. The entirety of any such emission, discharge, release or escape or any series of continuous, repeated, or related emissions, discharges, releases or escapes shall be deemed to be one pollution condition.

Even though the underwriters may describe their intent is to cover such claims, either way, such exclusions can have a tremendous impact on coverage when the claims attorney gets a hold of the policy. And, of course, intent is never provided in writing.


Buying a CPL policy is a very sound alternative for financing environmental loss; however, if you don't know the pitfalls of such policies (they are manuscript and there are about 75 different CPL forms offered by about 20 different companies), you can be putting your organization at risk—even as you are trying to protect it. This is more significant for those firms performing intrusion type work and/or subcontract to other companies that perform intrusive type work, and triple to those performing such operations in the areas identified above.

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.

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