In response to our articlelast week on Environmental Insurance as an Investment. we received tremendous feedback. Thank you everyone who joined in on the conversation. Here is one of the many responses/questions we received. We thought this was well worth sharing along with our response. Thanks for reading and please keep the questions and comments flowing!
I believe you make excellent sales points. The client still needs to realize the actual cost of Environmental Insurance vs. the size of the jobs available that require it. I also agree that it’s a nice “value add” when bidding on jobs that do not require it, but it would be hard to measure how often that puts you over the top. How does the cost break out for Environmental Insurance?
Environmental Risk Managers Response (by Parker Bunbury) –Great points and thank you for the feedback. Minimum premiums for CPL coverage with $1MM limits start at just $2,500 for both annual and project specific policies. Premiums are rated off of revenues and the type of work being done. The premium for a pollution liability insurance policy versus the policies face value costs the insured fractions of a cent on the dollar.
A situation that I come across too frequently is contractors being reactive with their environmental coverage’s as opposed to proactive, resulting in increased costs for the contractor. Many times by going with an annual policy instead of project specific policies we are able to cut costs substantially for the contractor. Also, while only some of their jobs require coverage, the insured is faced with numerous exposures and potential environmental losses on a daily basis in all of their work (see www.estrategist.com or our ERA for Contractors for more information)
As you eluded to, contractors are finding CPL coverage requirements in SOME of the contracts they win (This is a trend that is becoming standard practice and only increasing in it’s application nationwide). As a result, when a contractor wins a job requiring CPL coverage they tend to have their agent get them a “Project Specific Policy” for that job. Minimum premiums as I mentioned earlier are $2,500 for $1MM limits, whether the coverage is project specific or annual. Each job the contractor wins that requires coverage, they are getting another “Project Specific Policy” to meet contractual requirements for coverage. If the contractor took a proactive approach there is potential for the contractor to realize substantial savings in terms of premium.
Here’s a simple example – let’s say a contractor doing $5MM in revenue annually wins 4 contracts annually that require CPL coverage. That’s 4 “Project Specific Policies” at $1m limits, $2,500 a piece if the contractor handles coverage re-actively which results in $10,000 in premium. Interestingly, if the contractor was proactive about their environmental coverage’s, and purchased an annual policy that would cover them for all of their work, they would be paying around $5,000 in premium. In this particular instance, a savings of over 50%. Obviously there are variables involved and each contractor is unique, but my point is when insureds are proactive about their environmental exposures and managing them, there is the opportunity for them to save money while gaining value. The value provided by having coverage in place for all of their work is an essential need for the majority of businesses in our country, as the average environmental loss would put most small businesses out of business. With 98% of U.S. businesses being small businesses (100 employees of less).
environmental Strategist, between the lines: We often talk about the reputational risk associated with environmental crimes, see the example below and as if it’s not bad enough to get caught, then you have the EPA putting this out on a nationwide notification.
What about the exposure to a property owner of a pre-1978 structure who hires a contractor like HarenLaughlin Construction Company to work on a rental dwelling? I can only image there is an ambulance chasing attorney looking to bring suit against the property owner that exposed tenants to lead.
HarenLaughlin Construction Company of Lenexa, Kan., to Pay $27,286 Penalty for Failure to Use Lead-Safe Work Practices and Notify Property Owner of Lead RisksRelease Date: 06/05/2013
Environmental News FOR IMMEDIATE RELEASE
(Lenexa, Kan., June 5, 2013) – HarenLaughlin Construction Company, of Lenexa, Kan., has agreed to pay a $27,286 civil penalty to settle allegations that it failed to use proper lead-safe work practices during the renovation of a multifamily property built in 1922 at 811 E. Armour Boulevard., Kansas City, Mo., in violation of the Renovation, Repair, and Painting (RRP) rule. It also failed to notify the property owner about lead-based paint risks before the company or its subcontractors performed renovation work at the site.
Under the agreement, HarenLaughlin will complete a supplemental environmental project valued at $24,500 to remove lead-based paint from the nearby Valentine Apartments, at 3560 Broadway Street, Kansas City, Mo. HarenLaughlin will pay the remaining $2,786 in the form of a cash penalty.
According to an administrative consent agreement and final order filed by EPA Region 7 in Lenexa, Kan., HarenLaughlin was legally required to use proper lead-safe work practices during the renovation of the Armour Boulevard property, including posting signs, notifying the public, and placing plastic sheeting to minimize the spread of lead-based paint chips. HarenLaughlin also failed to provide owners of the property with an EPA-approved lead hazard information pamphlet, known as the Renovate Right pamphlet, before starting renovations. The Renovate Right pamphlet helps homeowners and tenants understand the risks of lead-based paint, and how best to minimize these risks to protect themselves and their families.
The RRP rule requires that general contractors and subcontractors that work on pre-1978 dwellings and child-occupied facilities are trained and certified to use lead-safe work practices. This ensures that common renovation and repair activities like sanding, cutting and replacing windows minimize the creation and dispersion of dangerous lead dust. EPA finalized the RRP rule in 2008 and the rule took effect on April 22, 2010.
This enforcement action addresses RRP rule violations that could result in harm to human health. Lead exposure can cause a range of adverse health effects, from behavioral disorders and learning disabilities to seizures and death, putting young children at the greatest risk because their nervous systems are still developing.
ERMI utilizes environmental Strategist™ Brand resources to assist our agents to sell more insurance.
In an effort to educate businesses and risk management professionals on environmental exposures and management strategies. We have created educational, open dialogue forums on the social media platforms Facebook and Linkedin. We will be sharing our knowledge, relevant news, changes in the insurance market place, and general discussion topics surrounding environmentally related impacts on business and the economy. We encourage you to join in on the conversation, ask questions, share your thoughts and ideas. Join the conversation today!
I was contacted by an insurance professional that represents a client whose business obtains their work predominantly through bidding for jobs. Over the past few years the insured has been more limited on work they can bid because more and more jobs are requiring them to have pollution insurance coverage. The insurance professional told me his insured did not have pollution coverage because they were sure it was going to cost too much.
That is when the light went off, the insurance industry has marketed their products in such a way, insureds for the most part look at insurance as an expense or as a way to finance a loss.
Generally speaking that is an accurate way to look at insurance. But there are some insurance products that are an investment and they allow those who invest in them to gain a leg up and benefit, not just be made whole. In many circumstances environmental insurance is an investment that allows the investor to gain benefit and grow while better protecting their business assets.
I shared the following with the insurance professional: “The insured is looking to buy environmental insurance because more and more jobs are requiring the pollution coverage in order to get work. By investing into an environmental insurance policy the insured can use it as a marketing tool while also being able to bid on jobs requiring the coverage. On the other end of the spectrum, for jobs they bid that do not require pollution coverage, they can add value by pointing out to a prospective client why they should require vendors performing this class of work to have pollution coverage. Not only will this help to eliminate competitors it will increase the opportunity to get work. Both ways, investing into environmental insurance, is a win win for the insured and the pollution coverage is assisting the insured to grow their business. Pollution insurance is not an expense but part of “Best Practices” and in many instances a strategic investment in a business’s ability to grow and be successful.”
environmental Strategist™, between the lines: $81,000,000 environmental penalty and a total of $110,000,000 being paid by Wal-Mart to “resolve cases alleging violations of federal and state environmental laws.” That is some serious cash, must be some serious violations, or at least that is probably going to be the view of the general public.
Wal-Mart will survive this reputational risk but what damage has it done and what if it were the other way around?
What if Wal-Mart attracted customers by assisting the local communities in which they operate to make it an environmentally better place to live? Better protecting human health and the environment would build a stronger customer base than being viewed as an illegal disposer of waste polluting the local communities in which they operate to increase profits and competitiveness against small locally owned businesses.
Illegal disposal of waste is atens of billions of dollars a year industry in the United States!
To be environmentally proactive and make where you work a better place to live, go to www.estrategist.com.
This is something every business needs to consider. How are you impacting the environment? Could you be subject to fines and penalties for your impacts?
FOR IMMEDIATE RELEASE
May 28, 2013 Wal-Mart Pleads Guilty To Federal Environmental Crimes And Civil Violations And Will Pay More Than $81 Million
Retailer admits violating criminal and civil laws designed to protect water quality and to ensure proper handling of hazardous wastes and pesticides
WASHINGTON – Wal-Mart Stores Inc. pleaded guilty today in cases filed by federal prosecutors in Los Angeles and San Francisco to six counts of violating the Clean Water Act by illegally handling and disposing of hazardous materials at its retail stores across the United States. The Bentonville, Ark.-based company also pleaded guilty today in Kansas City, Mo., to violating the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA) by failing to properly handle pesticides that had been returned by customers at its stores across the country.
As a result of the three criminal cases brought by the Justice Department, as well as a related civil case filed by the U.S. Environmental Protection Agency (EPA), Wal-Mart will pay approximately $81.6 million for its unlawful conduct. Coupled with previous actions brought by the states of California and Missouri for the same conduct, Wal-Mart will pay a combined total of more than $110 million to resolve cases alleging violations of federal and state environmental laws.
According to documents filed in U.S. District Court in San Francisco, from a date unknown until January 2006, Wal-Mart did not have a program in place and failed to train its employees on proper hazardous waste management and disposal practices at the store level. As a result, hazardous wastes were either discarded improperly at the store level – including being put into municipal trash bins or, if a liquid, poured into the local sewer system – or they were improperly transported without proper safety documentation to one of six product return centers located throughout the United States.
“By improperly handling hazardous waste, pesticides and other materials in violation of federal laws, Wal-Mart put the public and the environment at risk and gained an unfair economic advantage over other companies,” said Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. “Today, Wal-Mart acknowledged responsibility for violations of federal laws and will pay significant fines and penalties, which will, in part, fund important environmental projects in the communities impacted by the violations and help prevent future harm to the environment.”
“As one of the largest retailers in the United States, Wal-Mart is responsible not only for the stock on its shelves, but also for the significant amount of hazardous materials that result from damaged products returned by customers,” said Melinda Haag, U.S. Attorney for the Northern District of California. “The crimes in these cases stem from Wal-Mart’s failure to comply with the regulations designed to ensure the proper handling, storage, and disposal of those hazardous materials and waste. With its guilty plea today, Wal-Mart is in a position to be an industry leader by ensuring that not only Wal-Mart, but all retail stores properly handle their waste.”
“This tough financial penalty holds Wal-Mart accountable for its reckless and illegal business practices that threatened both the public and the environment,” said Tammy Dickinson, U.S. Attorney for the Western District of Missouri. “Truckloads of hazardous products, including more than 2 million pounds of pesticides, were improperly handled under Wal-Mart’s contract. Today’s criminal fine should send a message to companies of all sizes that they will be held accountable to follow federal environmental laws. Additionally, Wal-Mart’s community service payment will fund important environmental projects in Missouri to help prevent such abuses in the future.”
Wal-Mart owns more than 4,000 stores nationwide that sell thousands of products which are flammable, corrosive, reactive, toxic or otherwise hazardous under federal law. The products that contain hazardous materials include pesticides, solvents, detergents, paints, aerosols and cleaners. Once discarded, these products are considered hazardous waste under federal law.
Pursuant to the plea agreement filed in Missouri and accepted today by U.S. District Judge John T. Maughmer, Wal-Mart agreed to pay a criminal fine of $11 million and to pay another $3 million to the Missouri Department of Natural Resources, which will go to that agency’s Hazardous Waste Program and will be used to fund further inspections and education on pesticide regulations for regulators, the regulated community and the public. In addition, Wal-Mart has already spent more than $3.4 million to properly remove and dispose of all hazardous material from Greenleaf’s facility.
In conjunction with today’s guilty pleas in the three criminal cases, Wal-Mart has agreed to pay a $7.628 million civil penalty that will resolve civil violations of FIFRA and Resource Conservation and Recovery Act (RCRA). In addition to the civil penalties, Wal-Mart is required to implement a comprehensive, nationwide environmental compliance agreement to manage hazardous waste generated at its stores. The agreement includes requirements to ensure adequate environmental personnel and training at all levels of the company, proper identification and management of hazardous wastes, and the development and implementation of Environmental Management Systems at its stores and return centers. Compliance with this agreement is a condition of probation imposed in the criminal cases.
The criminal cases announced today are a result of investigations conducted by the FBI and the EPA, which received substantial assistance from the California Department of Substance and Toxics Control, and the Missouri Department of Natural Resources.
In Missouri, the case was prosecuted by Deputy U.S. Attorney Gene Porter and ENRD Senior Trial Attorney Jennifer Whitfield of the Environmental Crimes Section of the Environment and Natural Resources Division. In California, the cases were prosecuted in Los Angeles by Assistant U.S. Attorney Joseph O. Johns and in San Francisco by Assistant U.S. Attorney Stacey Geis.
Hope all is well sir. Just wanted to see if you have any information you can share. I have a client who owns some five and ten cent stores and I wanted to know what pollution exposures exist along with any case studies I can share with my client.
Thank you.
environmental Strategist™ (eS) Response,
Well, I could carry on and on about the environmental exposures for a five and ten cent store but let me focus on just a few items for this insured that owns one building and rents 8 other locations.
Their inventory. Plastic for the most part is petroleum based, should it catch on fire it gives off toxic fumes. If they are buying fire insurance, what is their strategy once the fire occurs and they are being sued for third party BI and PD from the toxic properties of their inventory? The insured has several other products in their inventory that should they catch on fire will create an environmental liability.
Tenant exposure. As a tenant in 8 locations they have signed a lease agreement that I am confident contained an environmental indemnification. What is their strategy to pay for defense costs, clean up costs, third party BI, PD, business income…. Should they cause an environmental liability?
Who are their neighbors? Neighbors can cause contamination to come onto the insureds property and what if the neighbor does not have the financial where with all to pay for the cleanup, defense costs, third party BI, PD, Business income….? Under federal law the owner of the property is ultimately responsible for the environmental condition of their property. In this case the insured has one location they own and 8 locations they lease. In the united State we have in excess of 450,000 known leaking underground storage tanks that most are causing contamination on neighboring properties. In Michigan alone we have in excess of 9,000 known leaking underground tanks.
I am sure on occasion the insured will hire contractors such as HVAC, Plumbing, Electrical, Janitorial…. what if one of these contractors causes an environmental liability while working for your insured? What is their strategy?
Due to the vast array of environmental exposures impacting this class of business the environmental insurance industry has created several products that can add value to this insureds business model. Please refer to our environmental Risk Assessment (eRA) for Real Estate Developers and Owners or the QR Codes.
The eRA allows you and your client/s to get on the same page about the environmental exposures impacting their operations. I am sending the eRA to you in a Word format so you can cut and paste it into a marketing presentation that compliments your agencies marketing program. Our agents utilizing the eRA find it an excellent way to leverage their environmental liability insurance sales.
The eRA comes in three parts:
1. Review of specific environmental exposure impacting your insured.
2. Environmental loss examples
3. Environmental insurance coverage’s that are appropriate for the insured to consider.
WASHINGTON— April 19th: The U.S. Environmental Protection Agency (EPA) and the U.S. Department of Justice (DOJ) announced today that CEMEX, Inc., the owner and operator of a Portland cement manufacturing facility in Lyons, Colo., has agreed to operate advanced pollution controls on its kiln and pay a $1 million civil penalty to resolve alleged violations of the Clean Air Act (CAA). “Today’s settlement will reduce harmful emissions of nitrogen oxides, which can have serious impacts on respiratory health for communities along Colorado’s Front Range,” said Cynthia Giles, assistant administrator for EPA’s Office of Enforcement and Compliance Assurance. “Cutting these emissions will also help improve environmental quality and visibility in places like Rocky Mountain National Park.”
“The settlement is part of the Justice Department’s continuing efforts, along with the EPA, to bring significant sources of air pollution within the cement manufacturing sector into compliance with the Clean Air Act.”
The Department of Justice , on behalf of EPA, filed a complaint against CEMEX alleging that between 1997—2000, the company unlawfully made modifications at its Lyons plant that resulted in significant net increases of nitrogen oxide (NOx) and particulate matter (PM) emissions. The complaint further alleges that these increased emissions violated the CAA’s Prevention of Significant Deterioration and Non-Attainment New Source Review requirements, which state that companies must obtain the necessary permits prior to making modifications at a facility and install and operate required pollution control equipment if modifications will result in increases of certain pollutants.
As part of the settlement, CEMEX will install “Selective Non-Catalytic Reduction” (SNCR) technology at their Lyons facility, which is an advanced pollution control technology designed to reduce NOx emissions. This will reduce their NOx emissions by approximately 870 to 1,200 tons of NOx per year. The initial capital cost for installing SNCR is approximately $600,000 and the cost of injecting ammonia into the stack emissions stream, a necessary part of the process, is anticipated to be about $1.5 million per year.
The settlement is part of EPA’s national enforcement initiative to control harmful air pollution from the largest sources of emissions, including Portland cement manufacturing facilities.
NOx emissions may cause severe respiratory problems and contribute to childhood asthma. These emissions also contribute to acid rain, smog, and haze which impair visibility in national parks. CEMEX’s facility is located within 20 miles of Rocky Mountain National Park, and its emissions may contribute to visibility impairment and to the nitrogen pollution problem that is affecting the park’s vegetation, water quality, and trout populations. Air pollution from Portland cement manufacturing facilities can also travel significant distances downwind, crossing state lines and creating region-wide health problems.
EPA Takes Action Against Violators of the Lead Renovation, Repair and Painting Rule
WASHINGTON – Today, EPA announced 17 enforcement actions for violations of the Lead Renovation, Repair and Painting rule (RRP).
The RRP rule protects homeowners and tenants from dangerous lead dust that can be left behind after common renovation, repair, and painting work. It requires that contractors and subcontractors be properly trained and certified, and use lead-safe work practices to ensure that lead dust is minimized. Lead exposure can cause a range of health effects, from behavioral problems and learning disabilities to seizures and death, putting young children at the greatest risk because their nervous systems are still developing.
“Using lead-safe work practices is good business and it’s the law,” said Cynthia Giles, assistant administrator for EPA’s Office of Enforcement and Compliance Assurance. “EPA is taking action to enforce lead rules to protect people from exposure to lead and to ensure a level playing field for contractors that follow the rules.”
The enforcement actions address serious violations of the RRP rule, including fourteen actions where the contractor failed to obtain certification prior to performing or offering to perform renovation activities on pre-1978 homes, where lead is more likely to be present. Other alleged violations included failure to follow the lead-safe work practices, which are critical to reducing exposure to lead-based paint hazards.
The 17 enforcement actions listed below include 14 administrative settlements assessing civil penalties of up to $23,000. These settlements also required the contractors to certify that they had come into compliance with the requirements of the RRP rule. Additionally, EPA filed three administrative complaints seeking civil penalties of up to the statutory maximum of $37,500 per violation. As required by the Toxic Substances Control Act, a company or individual’s ability to pay a penalty is evaluated and penalties are adjusted accordingly.
Enforcement actions:
• Groeller Painting, Inc. of St. Louis, Missouri.
• Albracht Permasiding and Window, Co. of Omaha, Nebraska.
• Midwest College Painters, LLC of Bloomfield Hills, Michigan.
• ARK Property Investments, LLC of Richmond, Indiana.
• Henderson & Associates Services of Largo, Florida.
• Home Resources Management, LLC of Columbia, Tennessee.
• Camaj Interiors & Exteriors of Jacksonville, Florida.
• Cherokee Home Improvements, LLC of Church Creek, Maryland.
• Window World of Harford located in Belair, Maryland.
• EA Construction and General Contracting of West Chester, Pennsylvania.
• Roman Builders of Morton, Pennsylvania.
• Accolade Construction Group, Inc. of New York, New York.
• PZ Painting of Springfield, New Jersey.
• Creative Renovations of Brooklyn, New York.
• Reeson Construction of Webster, New Hampshire.
• New Hampshire Plate Glass Corporation of Portsmouth, New Hampshire.
• CM Rogers Handyman of Manchester, New Hampshire.
Vapor intrusion is a major problem and to learn more about vapor intrusion just Google vapor intrusion or ASTM 2600.
My focus in the article below is not the at fault party but the impacted innocent third parties in the way of the contamination plume. The article talks about residences and business being impacted by vapor intrusion.
Let me point out this is not a limited situation because in the United States we have in excess of 450,000 known leaking underground storage tanks causing this exact same problem. How many tanks don’t we know about that are leaking?
What if the party/s causing the contamination does not have the financial ability to compensate impacted innocent third parties for clean up, property damage, bodily injury, business interruption, defense costs…? Environmental insurance can protect property owners if third parties contaminate their property. So even if a property owner foolishly thinks they do not have an environmental exposure simply ask them who their neighbors are. Keep in mind, in conducting a Phase I site assessment, they utilize a two mile radius search as a minimum to look for neighbors that can impact a subject property.
When you start to understand that if you own property you can be impacted by third party contamination, all of a sudden, spending fractions of a cent on the dollar to transfers the exposures to an insurance carrier looks to be a pretty good investment to protect what to many may be the largest investment a property owner makes in their life time.
A property owner was found liable under the New York Navigation Law for cleanup costs incurred by the New York State Department of Environmental Conservation (NYSDEC) responding to gasoline fumes that had migrated a quarter of a mile from the gas station. While the vast majority of the state’s costs were associated with the cleanup of soil and groundwater, it was the presence of the vapors that drew regulatory attention to this spill.
In State of New York v Slezak Petroleum Products, 947 N.Y.S. 2d 189 (App. Div-3rd Dept 2012), the defendant leased its property in Amsterdam, New York to a gas station operator. In October 2004, gasoline fumes were detected in a warehouse located approximately one quarter mile from the gas station. The NYSDEC conducted an investigation and determined that that the vapors from a gasoline spill had infiltrated nearby sewer lines and residences. After the USTs at the site failed a tightness test, the tanks were removed and holes were observed on the bottom. Further sampling confirmed the presence of extensive soil and groundwater contamination.
When the defendant declined to undertake further investigation for financial reasons, NYSDEC retained a contractor to implement response actions. The NYSDEC determined that the groundwater flowed from the gas station towards toward the warehouse and affected residences. In addition, the highest concentrations of contaminated groundwater were consistently found in the monitoring wells at and immediate downgradient from the gas station. The petroleum detected in monitoring wells at the affected residences revealed minimally weathered gasoline and MTBE.
After investigating other potential sources of the contamination, including two nearby gas stations, NYSDEC concluded that the defendant’s property was the source of the petroleum contamination causing the vapors at the warehouse and the affected residences. When the defendant again declined to take further action, NYSDEC implemented extensive remediation measures to remove the contamination at the gas station and mitigate the vapors at the affected business and residences.
DEC filed a cost recovery action pursuant to article 12 of the Navigation Law along with penalties. The trial court granted DEC’s partial summary judgment that the defendant was strictly liable for all cleanup and removal costs and prejudgment interest, and entered a judgment for $937,233.53.
The defendant appealed, arguing that there other discharges who had contributed to the contamination and that as a property owner who did not operate the gas station, it could not be held strictly liable as a discharger under the Navigation Law. The appellate court affirmed, noting that while liability for remediation costs cannot be premised solely on land or ownership of the tank system, owners who have “control over activities occurring on their property” and who had reason to believe that petroleum products were stored there could be liable as dischargers. The court then found it was it is undisputed that defendant was the owner of the contaminated site as well as the petroleum tanks and system from which the spill emanated, had control over the activities on and the use of its property, and was aware that petroleum products were stored in underground tanks and sold from its property. Because the defendant clearly had the “capacity to take action to prevent an oil spill or to clean up contamination resulting from a spill, the court said defendant was strictly liable as a discharger.
TOXIC EXPOSURE CLAIMS ARISING FROM RESTAURANT’S DISCHARGE OF COOKING GREASE INTO CITY SEWERS EXCLUDED FROM CGL COVERAGE BY POLLUTION EXCLUSION
The insured restaurant dumped large quantities of cooking grease down its sewer line, resulting in a several foot-long clog. Certain plaintiffs were overcome by hydrogen sulfide gas while trying to clean out the sewer line. After the plaintiffs obtained a liability verdict against the insured, the liability insurer for the restaurant (Mountain States) (that had defended under reservation of rights initially until it obtained a declaratory judgment in a federal coverage action) was issued a garnishment in the state liability case. The insurer asserted that coverage was barred by the pollution exclusion and asserted the declaratory judgment in its favor in the federal case. The trial court found for the insurer on summary judgment, but the Court of Appeals reversed, finding the pollution exclusion to be ambiguous. The Supreme Court granted review and reversed the Court of Appeals. Mt. States Mut. Cas. Co. v. Roinestad, 2013 CO 14, 2013 Colo. LEXIS 166 (Colo. Announced February 25, 2013).
The evidence showed that the restaurant dumped large quantities of grease into the sewer, creating a clog several feet long, in violation of a municipal ordinance. The clog allowed for the accumulation of hydrogen sulfide gas which overcame the workers. The CGL policy contained the modern “absolute” pollution exclusion. The Court rejected arguments that the pollution exclusion was ambiguous, or had to be confined to instances of “traditional” environmental pollution. The language of the policy was not so limited, and excluded anything that was an irritant or contaminant. The statute upon which the restaurant was held liable prohibited the discharge of any “pollutant” that obstructed sewer line flow. The Court also rejected a “reasonable expectations” argument for coverage, holding that the doctrine had no application to unambiguous policy provisions. Such absolute pollution exclusions had been broadly applied by Colorado courts in other cases in the past, The Court thus Reversed the Court of Appeals and remanded for entry of judgment in favor of Mountain States. For a copy of Roinestad, click here.
From the law firm of Montgomery, Kolodny, Amatuzio & Dusbabek, LLP
