Case Study – Subrogation Support / Gas Station Spill

File Issues

  • At a retail gas station that had operated for more than 40 years and had a history of spills and hydrocarbon impacts, the insured, who had done some tank maintenance at the top of one of the underground gasoline tanks, was accused of causing a release via a damaged gasket at the top of one tank.
  • The alleged release mechanism was not confirmed.
  • The insured responded once notified and pumped over 17,000 litres of impacted groundwater and free product from the gravel fill (tank nest) around the underground tanks.
  • There were various subsurface investigations conducted by the property owner in the months following the alleged release, which was estimated to be 100 litres or less.
  • One year later, the gas station was to be decommissioned and investigations by the station owner indicated that virtually the entire site and lands downgradient were impacted by gasoline and diesel.
  • The owner then presented a claim for 50% of the estimated remediation cost of more than $2,000,000.

Pario’s Assignment

  • To review the site conditions and determine if a release did occur as a result of the alleged damage, what percentage could be attributed to the alleged release.
  • Pario’s Methodology
  • Periodically attended the site as the remediation and decommissioning progressed.
  • Collected representative samples of the impacted soil and groundwater.
  • Viewed the piping and the tanks as these were removed from the ground. Holes were documented in the distribution lines (unrelated source area).
  • Reviewed the previous investigations presenting the soil impacts, groundwater impacts, and geological conditions.
  • Prepared a model of the soil and groundwater conditions and impacts.
  • From the investigation and sampling, it was concluded that the vast majority of the site could not have been impacted from the alleged release.
  • Estimated groundwater flow velocity indicated that the travel time to reach the down-gradient property boundary was in the order of 20 years (groundwater flow velocity of 2 m/year), yet investigations conducted by the property owner’s consult just months after the alleged release showed impacts at three the property boundaries.
  • The conclusion was supported by the distribution of diesel fuel impacts that were far less extensive than the gasoline, but more concentrated at the same source area (tank nest).
  • The diesel fuel release pre-dated the alleged gasoline release.

File Outcome

The file was settled for significantly less than the $2 million claim initially demanded and while the final settlement is confidential, it can be stated that the reduction was the majority of the claimed amount.