THE NINTH CIRCUIT FINDS CARRIER HAD DUTY TO DEFEND BASED ON POTENTIAL THAT EROSION TO LAND COULD HAVE OCCURRED DURING ITS POLICY PERIOD

THE NINTH CIRCUIT FINDS CARRIER HAD DUTY TO DEFEND BASED ON POTENTIAL THAT EROSION TO LAND COULD HAVE OCCURRED DURING ITS POLICY PERIOD

Posted on January 5, 2015 by Sheryl Barr

St. Paul Fire & Marine Ins. Co. v. Vadnais Corp.,2014 U.S. App. LEXIS 13084 (9th Cir. July 10, 2014)

In St. Paul, the Ninth Circuit reversed the ruling by the Eastern District of California that an exclusion for work performed by the insured applied to all “property damage” that potentially occurred during Steadfast Insurance Company’s (“Steadfast”) policy period because, in addition to potential damage to the pipeline at issue, soil erosion caused by the pipeline leak could have occurred during the policy period and was not excluded.  As such, the court held that Steadfast had a duty to defend and that St. Paul Fire & Marine Insurance Company (“St. Paul Fire”) was entitled to contribution for the defense costs it incurred on the insured’s behalf.

St. Paul was a construction defect suit arising out of a leak in a large pipeline owned by the Cawelo Water District (“Cawelo”) that had been constructed by the mutual insured of St. Paul Fire and Steadfast.  After the leak was discovered, Cawelo was sued and it tendered its defense to both of its insurers.  Both carriers accepted the defense, but Steadfast withdrew that defense shortly thereafter based on the position that the complaint only alleged damage to the pipeline during its policy period – damage which was subject to an exclusion in its policy for “work performed by the named insured.”  After the underlying case was settled St. Paul Fire sued Steadfast for contribution toward the insured’s defense costs, and the District Court granted Steadfast’s motion for summary judgment.  St. Paul Fire appealed.

On appeal the Ninth Circuit reversed the district court’s ruling.  In reaching its ruling, the court noted that allegations in the Complaint that the pipeline was defective and leaked during Steadfast’s policy period were sufficient to establish the potential that erosion – which was not subject to any exclusion in Steadfast’s policy – could also have occurred during that time period.  As such, there was a potential for coverage and Steadfast had a duty to defend the insured.

SOME GLOUCESTER COUNTY, NEW JERSEY TOWNS STILL DEALING WITH TAINTED WATER BECAUSE OF ELEVATED LEVELS OF PERFLUORONONANOIC ACID (PFNA), A TYPE OF PERFLUORINATED CHEMICAL (PFC).

SOME GLOUCESTER COUNTY, NEW JERSEY TOWNS STILL DEALING WITH TAINTED WATER BECAUSE OF ELEVATED LEVELS OF PERFLUORONONANOIC ACID (PFNA), A TYPE OF PERFLUORINATED CHEMICAL (PFC).

When Paulsboro reached a settlement in December with the plastics company it had sued nearly a year before over a contaminated water well, it marked a win for a scrappy industrial town familiar with environmental woes.

The agreement, valued at more than $2 million, stipulates that Solvay Specialty Polymers will install a sophisticated filtration system on the contaminated well.

Although the settlement signaled a hopeful end to Paulsboro’s most recent health scare, it also raised questions about how several neighboring towns in Gloucester County would address the issue.

West Deptford, Greenwich, East Greenwich, and Woodbury also have wells deactivated because of elevated levels of perfluorononanoic acid (PFNA), a type of perfluorinated chemical (PFC).

Solvay has denied culpability. It has said it stopped using PFCs voluntarily in 2010.

PFNA is not regulated by state or federal governments, but the N.J. Department of Environmental Protection is reviewing possible standards. The chemical, used to make some materials water- and grease-resistant, has not been the subject of extensive studies. A sibling chemical, perfluorooctanoic acid (PFOA), was determined by a scientific panel to have “probable links” to kidney cancer and thyroid disease.

In 2014, PFNA contamination prompted several lawsuits filed by residents. The state DEP installed filtration systems on 11 private wells in West Deptford and announced it would test additional private wells. And the federal Agency for Toxic Substances and Disease Registry agreed to investigate the chemical’s presence in the area.

Now, at least one municipality – Greenwich Township – is moving toward buying its own filtration systems. The township plans to request bids this month for installation of granular activated carbon filtration systems for its two water-treatment plants.

The DEP has provided temporary approval of the installations, department spokesman Bob Considine said in an e-mail, adding, “No other system has approached us with PFC treatment at this time.”

Greenwich plans to issue a bond to pay for the two treatment systems, Mayor George W. Shivery Jr. said, but it will try to recoup the cost, possibly through legal proceedings or state aid. He would not discuss specifics of either.

“If we get into a lawsuit battle, it could take God knows how long,” Shivery said. “We’re not prepared to wait that long to clean up our water supply.”

He would not say how much the systems were expected to cost, citing the bidding process, except to say: “It’s not cheap.”

Shivery hopes the systems will be ready by summer.

Although it’s not clear how Woodbury, West Deptford, or East Greenwich will proceed, officials in those towns say they won’t put their affected wells back into use until the contamination is remedied.

“We will not put that well back online until the [PFNA levels] come down or until we have a mechanism for treating the water,” Woodbury Administrator Michael Theokas said. “The council has been made aware throughout the entire process, and they are considering any and all options to make this right for the citizens.”

West Deptford Administrator Brandon Umba said his town was committed to getting its well back online, but how wasn’t yet clear.

East Greenwich Mayor Dale Archer said his town had maintained an open dialogue with Solvay, which is monitoring PFNA levels at the affected well.

Archer said that during the summer, East Greenwich had to buy more water from New Jersey American Water because its Well No. 3 was offline. He did not have available costs for the additional water.

“We will be trying to recoup some of those losses,” he said. “All factors will be taken into consideration with the new committee in 2015.”

Solvay spokesman David Klucsik said the company would address each municipal well on a case-by-case basis.

“We’ll do that based on scientific data that’s available on those locations,” he said.

Solvay has paid for many tests of PFCs in water supplies in the area. It also has provided bottled water to Paulsboro residents and to owners of private wells.

“The source of PFCs, including PFNA, detected in groundwater in Paulsboro has not been determined,” Solvay said after settling with Paulsboro. “Solvay’s actions reflect its desire to assist in the response to concerns raised by the New Jersey Department of Environmental Protection in a community in which many of our employees live.”

Paulsboro’s Well No. 7, which had the highest PFNA readings among municipal wells – up to 150 parts per trillion – remained in use until April because two other wells were offline to fix a system to remove radium, a regulated contaminant. That coincided with a DEP advisory saying parents in the borough should not to use tap water to feed children 1 year old and younger. The DEP lifted that advisory in October.

H2M DESIGN DISASTER: ONE OF RIVERHEAD WATER DISTRICT’S NEWEST WELLS IS PRODUCING WATER CONTAMINATED WITH PERCHLORATE, A CHEMICAL KNOWN TO AFFECT THE HUMAN ENDOCRINE SYSTEM AND CONSIDERED BY THE U.S. ENVIRONMENTAL PROTECTION AGENCY A “LIKELY HUMAN CARCINOGEN.”

H2M design disaster: One of Riverhead Water District’s newest wells is producing water contaminated with perchlorate, a chemical known to affect the human endocrine system and considered by the U.S. Environmental Protection Agency a “likely human carcinogen.”

 

One of Riverhead Water District’s newest wells is producing water contaminated with perchlorate, a chemical known to affect the human endocrine system and considered by the U.S. Environmental Protection Agency a “likely human carcinogen.”
Well 16, located off Edwards Avenue north of Route 25 in Calverton, completed in 2011 at a total cost of more than $2 million, has been taken offline pending installation of a treatment system expected to cost as much as $555,000.
The Riverhead Town Board, which sits as the governing body of the Riverhead Water District, will hold a public hearing on the expenditure of water district funds to install the treatment system tomorrow at 2:10 p.m.
The source of the perchlorate contamination is not known for sure but the water district engineers believe fertilizers are to blame, Walter said.
Perchlorate is both a naturally occurring and man-made chemical used in the production of rocket fuel, missiles, fireworks, flares and explosives, according to water treatment experts and health officials.
“Its widespread release into the environment is primarily associated with defense contracting, military operations and aerospace programs,” according to a Dec. 21, 2012 article in Scientific American.
The well is located a few miles to the northeast of the former Naval Weapons Reserve Plant operated by Northrop Grumman until the mid-1990s. The plant straddles the regional groundwater divide. Groundwater beneath the northern half of the facility flows to the northeast and, ultimately, into the Long Island Sound, according to a 2003 water resources investigations report prepared by the U.S. Geological Survey. Groundwater on the fluctuating divide flows generally to the east, USGS says.
But perchlorate is also present in some fertilizers. According to researchers at the Suffolk County Water Authority, “ammonia perchlorate was a principal ingredient in a fertilizer that was sold in the 50s and 60s” and used by farmers as an inexpensive crop fertilizer, former SCWA chairman Michael LoGrande told the Pine Barrens Research Forum in 1999.
Well 16 is considered a critical water source for the Riverhead Water District — without it, the district “would have run out of water” during peak demand times in summer of 2010, Dennis Kelleher, an engineer with H2M, the district’s longtime consulting engineers, said at a March 15, 2011 public hearing on a proposal to increase the new well’s capacity.
“We’ll have the system installed and the well back in service before summer,” Supervisor Sean Walter told RiverheadLOCAL last week.
The perchlorate removal treatment system, like the well itself, has been designed by H2M. The water district is currently soliciting bids for construction of the treatment system. Those bids are due Jan. 13.
Perchlorate levels at Well 16 have been increasing since the well was constructed in 2010 and have reached a maximum of 14 micrograms per liter, H2M engineer John Collins wrote in a Sept. 11, 2014 letter to the water district.
“In accordance with the requirements of the New York State Department of Health, if perchlorate levels in a well exceed 18 µg/l, then the well must be removed from service,” Collins wrote.
“Although perchlorate detections from the well have not reached this level, due to the uncertainty of groundwater contamination, the Town/District supervisor has determined te installation of treatment at this well is a top priority,” he wrote. Should the levels continue to rise and reach 18 µg/l, forcing the well out of service, the district would lose pumping capacity of 2.3 million gallons per day, which would “severely impact” its ability to meet peak demand, Collins said.
The federal EPA currently does not require perchlorate removal, though the agency is considering it. Two states, Massachusetts and California, currently have perchlorate limits much lower than New York’s; Massachusetts is 2 µg/l and California is 6 µg/l.
“We’re aiming for a non-detect level,” Walter said. He said no other wells in the district’s system have detectable levels of perchlorate.
The supervisor, who serves as chairman of the water district, said while he was “not happy” about the contamination at one of the district’s two brand-new wells, he was “very unhappy” he was not made aware of it until recently — even though the district engineers and superintendent knew perchlorate had been detected there since it first came online.
“The levels were not that high and they thought it would disappear,” Walter said. Instead, the levels just keep increasing, he said. “As we’ve been using the well, we’ve been pulling more and more perchlorate into the well. This is why this well was shut down at the end of September,” the supervisor said.
Well 16 was initially drilled in early 2010. The district had a $351,000 interim treatment plant — to provide for chlorination and PH adjustment — designed by H2M and installed at the site so the well could be brought online before summer. The original design was for a single well site that could pump about 2 million gallons per day, with a total construction cost of $1.58 million.
After the well was first brought online, H2M proposed that the district increase its pumping capacity from 1,380 gallons per minute to 2,000 gallons per minute — an extra half million gallons per day. The new total cost of well 16 was set at $2.18 million.
Walter said he does not understand how H2M could recommend “ramping up” the production capacity of well 16 when, he said, the firm already knew the water had perchlorate contamination, even though the levels were then “low.”
If H2M knew well 16 had a perchlorate contamination problem, it did not disclose it during the March 2011 public hearing on increasing the new well’s capacity.
H2M engineer Dennis Kelleher told the board “we had excellent water quality” when the well was drilled in 2010.
“In the spring of 2010 we were also — our firm was retained to design the permanent treatment system at Edwards Avenue. However, since we knew we had an excellent water quality and excellent quantity, we talked about could this site be increased in capacity either with a second well or could we increase well 16-1 for additional capacity,” Kelleher said, according to the meeting minutes.
Walter said he thinks the water district should solicit proposals for engineering consulting services to see what other firms can offer. H2M has been the water district’s engineering consultant for decades, he said. The supervisor since taking office in 2010 has been critical of the condition of the water district’s facilities.
He said he had the water district solicit a proposal from a second engineering firm, Dvirka and Bartilucci, to design the perchlorate removal system, Walter said. But H2M’s proposal came in at $15,000 less, so H2M was awarded the $47,500 design contract.
The town board last week appointed assistant superintendent Mark Conklin to the superintendent’s post, following Pendzick’s retirement earlier this month after 32 years as superintendent.
Walter said he’d like to wait until Conklin gets settled into his new role before considering any major changes to how the district is managed.
“Mark’s a sharp guy,” Walter said. “I have 100-percent confidence in him to do the things that need to be accomplished.”

FRANKLIN TOWNSHIP, NEW JERSEY GAS STATION FIRE SPARKED BY 2-CAR CRASH

FRANKLIN TOWNSHIP, NEW JERSEY GAS STATION FIRE SPARKED BY 2-CAR CRASH

A two-car crash in Franklin Township resulted in a fire at a local gas station on Saturday afternoon, according to police.

Officers responded on Jan. 3 at 3:18 p.m. to the area of Tuckahoe and Coles Mill roads for reports of a crash and discovered that two vehicles had collided near the U.S. Gas Station on Tuckahoe road, according to police.

After the initial impact, police say a Chevrolet Equinox operated by Carl Thornton, 26, of Monroe Township, continued to travel into a fuel pump at the gas station, causing the pump and the vehicle to catch fire.

All occupants of the vehicle were able to safely exit and were unharmed, according to police.

The second vehicle — a four-door Mercedes operated by Garrett Craig, 20, of Franklinville — maneuvered away from the fire, say police.

No injuries were reported in the crash that remains under investigation.

Gloucester County EMS, Janvier Fire Department, Star Cross Fire Department and the Gloucester County HAZMAT team assisted at the scene.