No coverage for landfill clean-up – not sudden and accidental

Patrick Bracher from Norton Rose Fulbright.

A US Supreme Court reversed a lower court’s decision awarding $9.1 million to an insured company for the company’s defence costs of litigation over a clean-up of a landfill in Massachusetts.

The clean-up was done under the Comprehensive Environmental Response, Compensation and Liability Act when an action was brought by the authorities forcing the company to clean up a hazardous waste site. The work done involved excavating already discharged sludge and did not qualify as a ‘sudden and accidental event’. The alleged damage clearly stemmed from the company’s intentional release of pollutants into the environment over several decades contaminating the soil with toxic substances.

The court distinguished it from previous cases where there was, for instance, a sudden and accidental release involving a tank seal that burst at one site releasing 2 000 gallons of a pollutant, and a fire and explosion at another site that released pollutants. These are clearly sudden and accidental events.

(The judgment is The Narragansett Electric Co v Century Indemnity Co.)

First published by Financial Institutions Legal Snapshot.