Last reviewed 28 June 2017
A chemical spillage is not only an inconvenience to businesses but also a costly affair. In this article, Caroline Raine discusses some of the direct and indirect costs that are associated with a chemical spill.
In addition to the legal and moral obligations that employers have, companies are also very keen to keep their costs down and avoiding spillages is one of those ways to save money. Having a successful emergency response plan in place is likely to save a company thousands.
Spillages and other incidents involving chemicals can be costly, both directly and indirectly. Indirect costs include business interruption, loss of business due to a loss of reputation, sick pay, repair to damaged equipment, legal fees and increased insurance premiums to mention just a few!
Direct costs can easily run into hundreds of thousands, if not more! If the Fire Service, Environment Agency (EA) or Health and Safety Executive (HSE) are involved, they can charge for their presence, expensive specialist clear up contractors may be required, fines may be imposed and there may also be legal costs.
Indirect costs are hard to quantify, as sometimes it can be difficult to prove the link between the spillage and the cost. In some cases that is easy to quantify; when an insurance claim is made and then the premium goes up it is clear that cost is associated to the spill. Loss of business may have been as a result of the spillage and bad publicity but it could equally mean many other things; for example, your customer no longer has a need, or has folded, or found a cheaper deal elsewhere.
Spillages inevitably need to be cleared up when they occur and while small spills are relatively straight forward, larger spills often require additional help and support. Both have their associated costs. For example the equipment needed to clear the spill, absorbent granules, shovels, PPE, containers, overpacks, labels, documentation, while all relatively cheap on their own (ie under £50) when you need them all and in quantities of more than one it can very quickly start to add up.
Specialist clear up and disposal can range from a few hundred pounds to thousands depending on the size of the spill. Staff time can also be costly and at times the impact on others can also be expensive.
Very small spills have been reported to cost companies up to £3000 in direct costs alone.
Fines dramatically increased in the last five years. In the UK, the EA has recently fined several companies for pollution incidents, some examples of which we will now consider.
Thames Water ordered to pay record £20 million for river pollution
On 22 March 2017, Thames Water was fined a record £20,361,140.06 in fines and costs for a series of significant pollution incidents on the River Thames. Six separate cases that caused pollution at different sites were deemed to be avoidable, instead they caused widespread repeated and sustained pollution.
The pollution was caused during the period 2012–2014. The fines for each charge were as follows:
Little Marlow: £8,000,000
The court heard how Thames Water’s repeated illegal discharges of sewage into the River Thames, and its tributaries, resulted in major environmental damage including visible sewage along 14km of the river, and the death of birds, fish and invertebrates.
Sir James Bevan, Chief Executive of the EA, said: “Water and sewerage companies provide a vital service to the community. Where they experience problems through no fault of their own we will always work with them to resolve them but where negligence causes serious pollution, or a serious threat to the environment, we will seek the strongest possible penalties. This case sends a clear signal to the industry that safeguarding the environment is not an optional extra, it is an essential part of how all companies must now operate.”
His Honour Judge Sheridan requested that the fines be met by Thames Water and must not be passed on to its customers. He commented on the “disgraceful conduct” of Thames Water Utilities Limited, which he said was “entirely foreseeable and preventable”.
Thames Water had previously been fined £1 million and £380,000 for similar problems at two of its sites, Tring in Hertfordshire and Princess Risborough in Buckinghamshire, which occurred in 2013.
Disposal of waste
In April 2017, a North East man was fined and ordered to pay thousands of pounds in compensation after he illegally stored waste at a site and then abandoned it.
John James Armstrong was fined £1000, ordered to pay compensation of £7069.49 to the landowner to cover the costs they paid to clear the site, and £1591.26 costs. The fine was for not having an environmental permit, and the costs were for the disposal of the waste. While this was not directly related to a chemical spill, it shows the significant costs associated with disposal of waste.
Silt-laden water into a tributary
Interserve Construction Limited (ICL) was fined £54,000 with £5955 costs after admitting a single incident of discharging silt-laden water into a tributary of the River Rother in Burwash, East Sussex on 1 October 2014.
The EA has accepted an enforcement undertaking from the company following pollution incident.
Pollution incident in river
Kerry Ingredients UK Limited donated £127,975 to four charities following a pollution incident in the River Cam in Gloucestershire in June 2014 that resulted in the deaths of more than 200 fish. This case did not go to court and so neither party had the added legal costs.
Tata Steel UK Ltd — pollution incidents on the Bottesford Beck
On 22 May 2015, EA officers found a heavy red coloured lubricating oil on Seraphim lagoon, the Bottesford Beck and in wetland channels of Ashby Ville Local Nature Reserve. Investigations discovered that the oil had overflowed from an industrial bulk container (IBC) as oil was being drained from a lubricating tank.
Tata Steel UK Ltd accepted an obligation to make a donation of £73,000 to the Humber Nature Partnership. Again this case did not go to court.
Heineken — Pollution incident Hereford
In August 2014, a container of ammonia-contaminated water was emptied to a surface water drain which connected to the Widemarsh Brook. It was estimated that between 2000 and 3000 fish were killed including bullhead, minnows, juvenile chub and dace.
The EA accepted an offer of £160,000 for an enforcement undertaking from Heineken, UK. Heineken also paid more than £12,000 to cover the EA’s legal costs.
Some of the incidents mentioned here could have been avoided by having clear plans and procedures in place and ensuring they were followed. While others were not avoidable they could have certainly been mitigated, again by having clear plans and procedures to execute.
Every incident is different and so it is very difficult to predict the exact costs, but needless to say they are pricey!