Opinion ID: 1734320
Heading Depth: 1
Heading Rank: 5

Heading: Origin of the Total Pollution Exclusion

Text: As the environmental movement gained momentum in the 1970s, the insurance industry began to offer separate Environmental Impairment Liability policies to cover pollution risks. See Frank P. Grad, Treatise on Environmental Law, § 4A.02[5][d] (Matthew Bender 1998) (quoting United States General Accounting Office, Hazardous Waste, Issues Surrounding Insurance Availability, Report to Congress October 1987 (GOA/RCED-88-2), at 12)). In doing so, insurers attempted to shift coverage of environmental risks away from commercial general liability policies by introducing what has come to be known as the original general pollution exclusion. That provision excluded coverage for: Bodily injury or property damage arising out of the discharge, dispersal, release or escape of smoke, vapors, fumes, acids, alkalis, toxic chemicals, liquids or gases, waste materials or other irritants, contaminants or pollutants into or upon land, the atmosphere or any water course or body of water. 9 Lee R. Russ, Couch on Insurance § 127:6 (3rd ed.1997). Over time, many policies began to include a sudden and accidental exception to this pollution exclusion: This exclusion does not apply if such discharge, dispersal, release or escape is sudden or accidental. See id. at § 127:8. By the late 1970s and early 1980s, Congress had enacted new legislation that sought to protect the environment in many ways. See id. at § 127:3. The most significant piece of legislation in this regard was the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA). See 42 U.S.C. § 9601 et seq. [5] CERCLA was designed to allow the government and private individuals or entities to act as quasi-regulators over environmental pollution by allowing them to carry out the cleanup of hazardous waste sites and then recover the expenses of the cleanup from the responsible parties. See 61C Am.Jur.2d Pollution Control § 1270 (1999). Thus, two of the main purposes of CERCLA were prompt cleanup of hazardous waste sites and imposition of all cleanup costs on the responsible party. Key Tronic Corp. v. United States, 511 U.S. 809, 815 n. 6, 114 S.Ct. 1960, 128 L.Ed.2d 797 (1994) (quoting General Elec. Co. v. Litton Indus. Automation Sys., Inc., 920 F.2d 1415, 1422 (8th Cir. 1990)). As this legislation was enforced, considerable litigation ensued over the possible existence of coverage under the standard CGL policy and, more particularly, over the meaning of the sudden and accidental exception to the general pollution exclusion then en vogue. See Russ, supra, at § 127:3. As this litigation expanded, insurers responded with the absolute pollution exclusion. By 1986, the absolute pollution exclusion had been introduced which omitted from the exclusion the sudden or accidental exception. See Grad, supra, at § 4A.02[5][e]. [6] Throughout its development, the general purpose of these pollution exclusions has remained constant: to exclude coverage for environmental pollution, and under such interpretation, [the] clause will not be applied to all contact with substances that may be classified as pollutants. Russ, supra, at § 127:6 n. 62 (citing Stoney Run Co. v. Prudential-LMI Comm. Ins. Co., 47 F.3d 34, 37 (2nd Cir. 1995)). In fact, some jurisdictions now require the inclusion of the exclusion because the exclusion serves the purpose of: [S]trengthen[ing] environmental protection standards by imposing the full risk of loss due to personal injury or property damage from pollution upon the polluter by eliminating the option of spreading that risk through insurance coverage. Id. at § 127:6. Importantly, there is no history in the development of this exclusion to suggest that it was ever intended to apply to anyone other than an active polluter of the environment. Consequently, the intent of this pollution exclusion was not to apply unambiguously regardless [as the majority stated in Ducote ] of whether the release was intentional or accidental, a one-time event or part of an on-going pattern of pollution. Ducote, 98-0942 at 4-5, 730 So.2d at 437. In fact, to give the pollution exclusion the broad reading found in Ducote would contravene the very purpose of a CGL policy, without regard to the realities which precipitated the need for the pollution exclusionthe federal government's war on active polluters. Commercial General Liability policies are purchased by both large and small business owners in an attempt to protect against losses that may result from unforeseen liability-imposing events or circumstances. As stated in Section I(A)(1)(a) of the policy at issue here, the issuer of a liability policy will pay those sums that the insured becomes legally obligated to pay as damages because of `bodily injury' or `property damage' to which this insurance applies. Business owners rely on these policies to protect them against claims and losses which might otherwise force insolvency or prompt serious losses. [7] The insurance company, on the other hand, agrees to absorb liability to which the business might otherwise be exposed in return for a premium which, along with the premiums of other insureds, is designed to adequately spread potential losses among all of the insurer's clients. These businesses come to rely on the liability policies because, without them, a single large claim might force insolvency or an intolerable monetary loss. Consequently, business owners expect that any exclusions within their policy will be read reasonably and with due regard to the intent of the policy as a whole. Giving these pollution exclusions a strictly literal reading without regard to the limited purpose behind their post-CERCLA formation would thwart the very purpose of the comprehensive general liability policy. Both liability insurers and their insureds have certain expectations regarding issuance of a CGL policy. The liability insurer expects premiums in exchange for a certain level of risk, and the insureds expect to be insulated generally from liability claims. A literal reading of the total pollution exclusions would alter the general scope and expectation of the parties. Consequently, because the pollution exclusion was designed to exclude coverage for environmental pollution only, it should be interpreted so that the clause will not be applied to all contact with substances that may be classified as pollutants. Russ, supra, at § 127:6 n. 62 (citing Stoney Run Co. v. Prudential-LMI Comm. Ins. Co., 47 F.3d 34, 37 (2nd Cir.1995)). As Ducote conflicts with the intent of the policy exclusion and disrupts the expectations of both insurers and insureds, that opinion will be overruled at this time. We have been urged in brief (by the Amicus Insurance Environmental Litigation Association) to avoid the result this majority effects today based on jurisprudence constante. In fact, during oral argument, counsel for Genesis read from an expression of a former justice of this court who warned of the confusion and turmoil that may result from this court overruling a prior case. Counsel went so far as to argue that if Ducote were reversed, incredible uncertainty would result because of this court's failure to follow its own precedent. That statement ignores the fundamental difference between a common law judiciary's adhering to stare decisis and our courts' following the civilian principle of jurisprudence constante. [8]