Carbon Dioxide - Irritant or Contaminant? - Application of the Absolute Pollution Exclusion (Part 1)

Carbon Dioxide - Irritant or Contaminant? - Application of the Absolute Pollution Exclusion (Part 1)

June 27, 2008 13:34
by J. Wylie Donald

The question remains whether the absolute pollution exclusion, the most typical pollution exclusion found in CGL policies today, would bar coverage for climate-change related liabilities associated with the release of carbon dioxide; in other words, whether carbon dioxide would qualify as a “pollutant” as defined in a typical absolute pollution exclusion.

The so-called absolute pollution exclusion purports to bar coverage for property damage or bodily injury only if it arises out the release of a “pollutant,” which is generally defined as an “irritant,” or “contaminant.”  As those terms typically are not defined in the policy, it is necessary to turn to various courts’ interpretations of the terms “irritant” and “contaminant.”  Those interpretations suggest that carbon dioxide is neither an irritant nor a contaminant, and therefore would not qualify as a “pollutant.”

Some courts have interpreted those terms so as to include only toxic substances.  Under that interpretation, coverage is excluded only when damage is caused by a pollutant’s toxic nature.  For example, in Beahm v. Pautsch, 510 N.W.2d 702, 705 (Wis. Ct. App. 1993, smoke from an intentionally set brush fire blew onto a nearby roadway, causing a multi-vehicle accident.  Because it was not the toxic nature of the smoke that caused the accident, but rather its property of obscuring vision, it did not qualify as a pollutant so as to bar coverage.  Similarly, carbon dioxide is non toxic (and only causes harm, at levels far in excess of conceivable atmospheric concentrations, as an asphyxiant; i.e., by displacing oxygen available for breathing).  Even if carbon dioxide's potential as an asphyxiant were considered, it would still not qualify as a pollutant under Beahm because it causes harm by virtue of its heat-trapping characteristics, rather than from any potential asphyxiation.  Therefore, under the “toxic” definition of “pollutant,” damages resulting from carbon dioxide emissions should not be precluded from coverage under a CGL policy's absolute pollution exclusion.

Courts that do not adhere to a “toxicity” limiting principle often determine whether a substance is a “pollutant” by turning to the common usage (i.e., the dictionary definitions) of the terms “irritant” or “contaminant.”  Because the term “irritant” normally connotes a biological or physiological response to stimulus, it does not apply to atmospheric carbon dioxide (which does not evoke such a response).  Nor would the term apply as a general matter to property damage (as opposed to physical harm) allegedly resulting from carbon dioxide emissions. 

Therefore, we are left with a “pollutant” defined as a “contaminant.”  In common usage, a “contaminant” is something that is introduced into an environment in which it (a) does not naturally occur and (b) renders that environment “impure” and “unfit for use.”  See Websters Third New International Dictionary (definition of “contaminant”).  Courts have often adopted this definition of “contaminant” in interpreting the absolute pollution exclusion.  Examples of contaminants under such an interpretation include fertilizer in the form of liquid cow manure that migrates into drinking water, and petrochemicals that have leaked into soil.  Examples of non-contaminants are discarded sand and excess rainwater.

As we have discussed in a prior entry, carbon dioxide is a natural component of the biosphere, and its atmospheric concentration has fluctuated greatly over the Earth’s past, such that present levels are well within geohistorical ranges.  As such, it is doubtful whether carbon dioxide can properly be considered a “contaminant,” and hence a “pollutant,” so as to preclude coverage under a CGL policy’s absolute pollution exclusion.

For a fuller discussion of these concepts, the interested reader can consult J. Wylie Donald & Craig W. Davis, Carbon Dioxide: Harmless, Ubiquitous and Certainly Not a “Pollutant” Under a Liability Policy’s Absolute Pollution Exclusion, forthcoming in Volume 39 of the Seton Hall Law Review, and currently available at the Social Science Research Network, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1137959.

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