IS WASTEWATER A POLLUTANT?

Commercial General Liability

Pollution Exclusion

NRS Consulting Engineers (NRS) was hired by The Town of Mill Creek (Mill Creek) to design and plan the town’s wastewater treatment plant improvements. NRS hired B3, Inc. (B3) to make those improvements. B3 was contractually required to indemnify NRS and Mill Creek for any claims arising from the work. A number of landowners came together as a group and sued all three parties because raw or improperly treated sewage were polluting their land and water sources.

B3 turned to Certain Underwriters at Lloyds London (Lloyds), their commercial general liability carrier, for defense and indemnity. Lloyd’s rejected the claim based on the Total Pollution exclusion on the policy. NRS demanded coverage from Lloyds. Its argument was that the pollution exclusion did not apply because the definition of pollutants did not include the term “wastewater.”

The definition of pollutants in the policy was “any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemical and waste. Waste includes materials to be recycled, reconditioned or reclaimed.”

The trial court agreed with Lloyds that wastewater is a pollutant and entered judgment in favor of Lloyds.

NRS and B3 appealed arguing that the term “pollutants” is ambiguous and must therefore be interpreted in the policyholder’s favor.

The appellant court noted that the entire case brought by the landowners was that their property had been polluted by the raw sewage within the wastewater. It concluded that NRS was advocating a strained construction in their attempt to find a latent ambiguity.

The appeal court, therefore, affirmed the trial courts opinion.

Certain Underwriters at Lloyds London v B3, Inc. Okla.Civ.App.div.1, 2011, 262 P 3d 397, 2011 OK CIV APP 96