The question of whether ethylene oxide emissions constitute traditional environmental pollution for the purpose of interpreting commercial general liability pollution exclusions remains unsettled in many jurisdictions across the United States. The issue may soon receive greater clarity in Illinois — and more broadly within the Seventh Circuit Court of Appeals — in response to a recent direct request from the Seventh Circuit Court of Appeals to the Illinois Supreme Court to provide specific direction concerning how Illinois law should address the question.
The Seventh Circuit’s request stems from one aspect of the massive litigation arising out of nearly 1,000 lawsuits concerning 35 years of alleged Sterigenics’ and its former parent company’s ethylene oxide emissions in Illinois. To date, one jury awarded $363 million in finding emissions contributed to a breast cancer diagnosis. Another jury rejected claims that emissions contributed to the development of leukemia.
Sterigenics and certain of its insurers became involved in insurance coverage litigation with the insurer position advancing the argument that no coverage exists for the hundreds of ethylene oxide emissions cases due to the application of the policies’ pollution exclusions. In opposition, Sterigenics has argued consistent with an intermediate Illinois appellate court finding in Erie Insurance Exchange v. Imperial Marble Corp. that industrial emissions of a contaminate like ethylene oxide, pursuant to a regulatory permit, alters the analysis in such a way as to create an ambiguity in the standard commercial general liability policy pollution exclusion because ethylene oxide emissions are specifically regulated by the Illinois Environmental Protection Agency.
The case before the Seventh Circuit Court of Appeals is considering whether an insurer for Sterigenics and its former parent company owe in excess of $150 million in coverage for the pollution suits. With the assistance of the Illinois Supreme Court, the Seventh Circuit’s decision will have considerable significance for the insurance industry addressing environmental claims law and how policyholders like Sterigenics manage their environmental risks.
