AGRiP Compilation of responses from email survey on the question: “Sewage Classified as a Pollutant”
July 24, 2009
Email survey message:
Mr. Pumford is researching a question posed by a member pool. The inquiry deals with topic of raw
sewage or effluent discharge.
The gist of the member’s question is as follows:
We have a pollution exclusion in our CGL policy. The policy does not specifically cite raw
sewage or effluent as a “pollutant”. Our definition is same as ISO form CG 00-01-10-01. The only
term that would encompass sewage is the word “waste”. As such, we presently consider sewage
a pollutant and we invoke the exclusion.
My question is on discharges and not backups. We’re now facing a discharge claim and trying to
determine if we should interpret sewage as a pollutant or not. We recently had a claim stemming
from a burst pipe in a pumping station. Obviously insured doesn’t see sewage as a pollutant and
wants coverage. Other states have ruled (most saying it is a pollutant) but our state has yet to do
so.
Please assist by providing the following information:
1) Does your liability policy specifically cite raw sewage or effluent as a pollutant?
2) Do law or court rulings in your state classify raw sewage or effluent as a pollutant?
3) Do your coverage documents affirmatively state that sewage is not a pollutant?
____________________________________________________________________________________
Answering on behalf of Massachusetts Interlocal Insurance Association (MIIA).
1. Our contract contains the so-called absolute pollution exclusion. However, the exclusion is amended
for our use by specifically exempting "back up or discharge of sewage" from the definition of "pollutant."
2. Massachusetts courts are not definitive as to whether or not sewage would be a pollutant. Rather, the
interesting development here is the suggestion in some cases that while the sewage itself MAY be a
pollutant, the water with which it is mixed is NOT. The theoretical challenge would be to separate
damage from the sewage from damage from the water.
3. See number 1 above.
NH Public Risk Management Exchange (Primex3)
1. Primex’s agreement does not specifically cite raw sewage or effluent as a pollutant.
2. Raw sewage would be deemed water pollution under NH RSA 485-A, the Water Pollution
and Waste Disposal Act.
3. Primex’s agreement does not affirmatively state raw sewage or effluent is not a pollutant.
MMRMA Michigan Municipal Risk Management Authority
1.- Rather than rely on the Pollution exclusion we have added to our manuscript policy an exclusion
specifically for Sewage.
2.- While there are always fights about which cases control, generally Michigan courts see sewage as a
pollutant.
3. – No. While we specifically exclude Sewage, we also see it as excluded as pollution.
ICAP Iowa Communities Assurance Pools
1) The ICAP liability certificate does not specifically cite raw sewage or effluent as a pollutant.
2) Unsure. Legal research would need to be conducted, in order to determine this.
3) No.
CIRSA Colorado Intergovernmental Risk Sharing Agency
1) Does your liability policy specifically cite raw sewage or effluent as a pollutant? No – we have the
“waste” language.
2) Do law or court rulings in your state classify raw sewage or effluent as a pollutant? See
Blackhawk-Central City Sanitation Dist. v. American Guarantee and Liability Ins. Co., 214 F.3d
1183 (10th Cir. 2000). Click here for link to United States Court of Appeals, Tenth Circuit
decision. The Tenth Circuit Appeals Court discussed “Whether the Effluent is a Pollutant” in the
decision. That portion of the decision is as follows:
B. Whether the Effluent is a Pollutant
19
The District first argues that the district court erred in finding that the District's effluent
constitutes a "pollutant" within the scope of the pollution exclusion provisions in the insurance
policies. The policies define "pollutants" broadly to include "toxic chemicals, liquids or gases; or
waste material or other irritants or contaminants." Appellant's App. at 83, 111. The District argues
that an ambiguity exists about whether sewage sludge from a sewage treatment facility should be
considered a "pollutant." The District relies on two federal district court decisions from Colorado
and a Colorado Court of Appeals decision, City of Englewood v. Commercial Union Assurance
Cos., 940 P.2d 948, rev'd in part by Compass, 984 P.2d 606, which recognized a distinction
between toxic industrial sludge, and non-toxic, non-hazardous "biosolids" or domestic sewage
sludge, because of the beneficial reuse of sewage sludge in agriculture. See id. at 955. City of
Englewood held that genuine issues existed as to the legal and factual characterization of
domestic municipal sewage sludge. See id. The District argues that in cases where sewage
sludge is the alleged pollutant, there is a mixed question of law and fact as to whether the
sewage sludge constitutes a "pollutant."3
20
However, the portion of the Colorado Court of Appeals decision upon which the District's
argument is based was recently overruled by the Colorado Supreme Court. In Compass Ins. Co.
v. City of Littleton, the Colorado Supreme Court held that the Colorado Court of Appeals erred in
City of Englewood in considering whether genuine issues existed as to the legal and factual
characterization of sewage sludge with respect to whether it constituted a "pollutant." See 984
P.2d at 615. Compass held that, in resolving duty-to-defend claims, courts may only look at the
allegations of the underlying complaint against the insured, and cannot look to any extrinsic
evidence, including evidence that sewage effluent may not be a pollutant, in analyzing pollution
exclusion provisions. See id. at 615-16. Under Colorado law, the only relevant inquiry is how the
complaint characterized the materials and whether that characterization fits within the terms of
the policy. See id.
21
Thus, the relevant inquiry in this case is how the Old Timer complaint characterized the alleged
discharges. The Old Timer complaint makes the factual allegation that the District discharged
"Suspended Solids, Fecal Coliform Bacteria, Ammonia, Residual Chlorine, and other chemicals
and substances in amounts in excess of levels permitted by law," and that it discharged "raw
sewage and other pollutants." Appellant's App. at 64, 69. Clearly, these materials constitute
"waste material" and "contaminants" within the policies' broad definition of "pollutants." See
Compass, 984 P.2d at 615-16 and 615 n.7. It would, therefore, have been improper for the district
court to have looked beyond the face of the complaint, as urged by the District, in order to have
considered any extrinsic evidence offered by the District in its attempt to change the
characterization of the discharge. See id. at 615-16. The complaint also makes the legal
allegation that the discharges constitute "pollutants," and that the plaintiffs suffered damage from
"pollutants" discharged by the District that entered and remained on their land. See Appellant's
App. at 64, 69, 70. Finally, the environmental statutes that the Old Timer complaint alleges the
District violated and under which the complaint seeks damages, define "pollutants" to include
sewage and sewage sludge. See 33 U.S.C. 1362(6); Colo. Rev. Stat. 25-8-103(15) (1990).
Accordingly, we conclude the district court did not err in finding that the sewage and effluent the
District is alleged to have discharged constitute "pollutants" within the meaning of St. Paul's
insurance policies' exclusions.
3) Do your coverage documents affirmatively state that sewage is not a pollutant? No, but ultimate
net loss arising out of the “backup or overflow of any sewer” is an exception to the pollution
exclusion
Arthur J Gallagher (New Jersey)
1)
2)
3)
Does your liability policy specifically cite raw sewage or effluent as a pollutant?
NO
Do law or court rulings in your state classify raw sewage or effluent as a pollutant? Do not know
Do your coverage documents affirmatively state that sewage is not a pollutant?
NO
ICRMP Idaho Counties Risk Management Program
1. Our policy does not specifically cite raw sewage or effluent as a pollutant.
2. Idaho Courts have not addressed this issue.
3. No. Our policy states we will cover sewer back ups but this is a limited and narrow exception to
our pollution exclusion.
Our underwriting intent is cover liability claims related to damages from sewage back-ups but not to cover
clean up or environmental penalties related to discharges of affluent into the ground or waterways.
POOL – Nevada Public Agency Insurance Pool
Below is our exclusion and the exception for sewer backup is highlighted.
3. POLLUTION HAZARD - It is agreed that this coverage does not apply to:
A)
any loss or damages which would not have occurred in whole or in part but for the actual,
alleged or threatened existence, discharge, dispersal, seepage, migration, release or
escape of pollutants, irritants or hazardous substances at any time; “Pollutant” means
any solid, liquid, gaseous or thermal irritant, corrosive or contaminant, including but not
limited to smoke, vapors, soot, fumes, acids or alkalis, chemicals, metals and waste.
Waste also includes materials to be recycled, reconditioned or reclaimed.
B)
any loss, cost or expense arising out of any:
(1)
request, demand or order that any Assured or others test for, monitor, clean up,
remove, contain, treat, detoxify or neutralize or in any other way respond to, or
assess the effects of pollutants; or
(2)
claim or suit by or on behalf of a governmental authority or others for damages
because of testing for, monitoring, cleaning up, removing, containing, treating,
detoxifying or neutralizing, or in any way responding to or assessing the effects
of pollutants.
However, coverage does apply to any loss or damage arising out of:
i)
Heat, smoke or fumes from a hostile fire;
ii)
Backup or overflow of any sewer;
iii)
Use of teargas, mace, or similar substance by any public safety officer within the
scope of employment for the Named Assured;
iv)
Collision, upset or overturn of any vehicle;
v)
Loss or damage caused by an employee or official of the Named Assured (but
only while acting within the scope of duty and on behalf of the Named Assured)
and where property or persons are in danger because of sudden and unexpected
discharge, dispersal, release or escape of any pollutant.
The onset of the discharge, dispersal, release or escape of pollutants must have
occurred no more than 72 hours prior to any Assured’s arrival at the site or
location of the Event. POOL’s Limit of Liability for all such loss will not exceed
$1,000,000 for any one Event or in the aggregate annually. This limit is part of
Section VI limits and not in addition to any other limit provided by this coverage.
vi)
Water intended for sale or use by an Assured, provided the damages arise out
of pollution that was accidental, demonstrated as having commenced during the
term of the coverage form, became known to the Assured within 120 hours, was
reported by the Named Assured within 14 calendar days from the start of the
Event, and efforts to terminate the Event were expended as soon as reasonably
possible;
vii)
Use of chemicals approved by the U.S. Environmental Protection Agency to
disinfect or purify a swimming pool owned or operated by the Assured;
viii)
Cost of cleanup at the premises of the Assured made necessary as a result of
covered loss or damage to Covered Property.
ix)
Weed spraying operations by or on behalf of any Assured; coverage is extended
only for Property Damage liability; damage must manifest itself and be reported
to POOL within 180 days of the spraying; POOL’s Limit of Liability for all such
loss will not exceed $250,000 for any one Event or in the aggregate annually.
This limit is part of Section VI limits and not in addition to any other limit provided
League of Minnesota Cities Insurance Trust
The LMCIT coverage document defines “pollutants” to mean “any solid, liquid, gaseous or thermal irritant
or contaminant, including smoke, vapor soot, fumes, acids, alkalis, chemicals, and waste.” Our
interpretation has always been that sewage is very clearly a “pollutant” under this definition. In order to
provide coverage for sewer backups, etc., the LMCIT liability coverage doc therefore includes an
exception to the pollution exclusion for damage “which arises from the accidental rupture, backup, or
overflow of the city’s sanitary sewer, storm sewer, or water supply systems.” In other words, LMCIT
would cover the claim you described.