Transcript: The Problem with the Definition of Pollutants
CLARICE: Good morning, everybody. And welcome to this week’s episode of Environmentally Speaking.MARISA: Hi, everyone. I’m Marisa Desautel an environmental attorney in Rhode Island and Massachusetts.
CLARICE: And I’m Clarice, usually coming in with topics and discussions but today this one is coming from you, Marisa.
MARISA: Yeah. I am fired up. I get notifications of recent decisions in Rhode Island, court decisions. And I always scroll –
CLARICE: Are you –
MARISA: What?
CLARICE: Oh, I was going to say are you like school bus idling fired up, or?
MARISA: Oh, no, no, no. I don’t think we’ll ever reach that level again.
CLARICE: Just going to brace our listeners.
MARISA: That was a good topic, but, no. This is more me being fired up as an environmental lawyer about a couple of different topics that I will get into. The Rhode Island Supreme Court issues decisions during its session and I get an e-mail notification any time there’s a major decision that comes out and I always scroll through them to see what’s happening in terms of environmental law. And this particular case known as Regan Heating and Air Conditioning versus Arbella Protection Insurance Company is not what I would call your customary environmental law case because it’s a private cause of action that is really based in insurance contract law. It just so happens that the source of the contract dispute centers around a definition of the term pollutant.
CLARICE: Yeah. It’s funny that you bring up the fact that this doesn’t sound like the typical environmental case. When you sent me a link to the article and I started reading the court case, I actually wasn’t sure if I had the right case.
MARISA: Yeah.
CLARICE: Like you said, it was two private parties. I was like, all right, when do we get to the environment. But it’s there. It picks up. So tell me, what happened? Why are these people fighting?
MARISA: The facts of the case briefly are that a company went into install a new heating system for a private party in Rhode Island and there was a leak of 170 gallons of home heating oil in this residence in the basement. So that party sued the heating system installer and a course of defense and indemnification ensued. The insurance company was brought in and the insurance company of course said the leak was not a covered occurrence pursuant to the insurance policy. Stop me if you need more background there.
[0:03:13] CLARICE: No. No. No. You know, hearing the basic sort of facts of the case I have to say my kind of feelings and my sympathies immediately go out to the homeowner. They go and get this repair and home oil is all over their basement. And now it’s a situation of like, what do you do. How do you fix this. How are you going to pay for all of this especially after you’ve already paid for a repair. And of course, you know, I’m sure our listeners aren’t going to be surprised. Insurance comes back with, actually, we don’t cover that.
MARISA: Well, here’s the nuance. The property owner was not a party to the Supreme Court matter. It looks like the property owner sued the heating and air conditioning company and it’s the heating and air conditioning company that went to their insurance provider and tried to make the claim. I don’t know what happened with the property owner. They’re not a party to this action, so my guess is – and you and I just talked about this before we got started on today’s episode. The office has gotten calls from private parties who are experiencing something similar where they’ve got a home heating oil leak and they want to know whether they are covered under their homeowners insurance policy. And that was, I don’t know, five years ago that I remember someone calling in with that type of inquiry.
CLARICE: I think so.
MARISA: They ultimately didn’t become a client, so I don’t know what happened with them, but it does make sense that if you’re a property owner and you’ve got a leak you go to your homeowners insurance. They’re likely going to tell you that they’re not covering you and then you probably reach out to the contractor and say, hey, I’m suing you. My insurance isn’t going to cover me. You know, you’re going to have to pay for the cleanup and that’s not cheap. I think oil is a pollutant, but that’s what this entire case is about.
CLARICE: Yeah. See our past episode about oil spills in water bodies.
MARISA: Okay. So with that as background, the parties go to Superior Court and they start arguing over the definition of pollutant as that term is defined in the subject insurance policy. The insurance policy defines pollutants as any solid, liquid, gaseous, or thermal irritant or contaminant including smoke, vapor, soot, fumes, acids, alkalis, chemicals, and waste.
[0:06:03] CLARICE: That sounds like a pretty broad description already.
MARISA: Well, one more sentence. Waste includes materials to be recycled, reconditioned, or reclaimed, so that’s the total definition. But, yes, I agree with you. Seems pretty comprehensive to me except I disagree with the last sentence and the overall usage of the term waste. In the environmental regulation world, waste does not include materials to be recycled, reconditioned, or reclaimed. Waste is waste. It cannot be reused.
CLARICE: It’s what can’t be – yes.
MARISA: It’s still a regulated category of pollutants, but it doesn’t meet the definition that this insurance policy includes. Why am I bringing that up? Well, it struck me when I was reading this decision that these insurance policies would really benefit from having some kind of environmental expert vet how their policies are written because clearly the definition of pollutant in this policy does not meet the definition of Rhode Island law or environmental regulation in Rhode Island, so that’s a red flag to me right away.
If I’m an environmental attorney and I’m looking at this policy, I know that there is a potential argument to be made that whoever drafted this insurance policy did not either review state law and regulation or didn’t have a consultant take a look at this or an attorney take a look at it to make sure that it met the technical merits of environmental law in Rhode Island. So that’s one issue.
And I’ve got a note here to refer listeners to Page 13 of the decision. Hopefully we can drop the decision in the show notes if anyone’s interested in reading it. But continuing with that discussion about waste, looks like on Page 13 of the decision there’s some additional discussion by the Rhode Island Supreme Court of waste. Again, Page 13 reproduces the definition of pollutant from the insurance policy and then goes on to say, oil and more specifically home heating oil is not explicitly listed as a pollutant within the insurance policy’s definition.
This is what the Rhode Island Supreme Court uses as the beginning of its argument to declare that the insurance policy should have covered the release of the home heating oil in this person’s house. Why am I talking about this? Why am I so fired up about this? It’s because I don’t know how you would go back to amend an insurance policy to explicitly list every single pollutant within the policy’s definition.
[0:09:42] CLARICE: I’m so happy you’re making this point.
MARISA: Do you know how many pollutants exist in our society? And that just seems like a crazy argument for the Rhode Island Supreme Court to come up with. Now, I know the Rhode Island Supreme Court goes on to site various treatises on insurance and pollution exclusion arguments, but I think that’s crap as a practical matter.
CLARICE: I’m so happy you’re saying this because in my mind – and, you know, I was coming in after reading that section thinking, well, does it have to be explicit. Does the definition have to encompass every possible option. And what shocks me is in the definition they say things like and give examples. And in my mind when you say like, you’re using it as a similarity, not a totality. So in your experience in things like this, have you seen cases where things that aren’t explicitly stated are covered or are included in these definitions?
MARISA: In my experience when you’re dealing with environmental due diligence in the context of a commercial property transaction you’ve got agreements between very sophisticated corporate entities where they list every God damn type of pollutant, contaminant and then they go on to further define contaminant and then contaminant goes on to further define – you know, and you’ve got a 200-page document that the parties are signing at the end. To me once you start down that road of explicitly listing materials, number one, you’re never going to capture everything and, number two, that opens the door for a review in court to say, well, clearly, you know, there’s an explicit list here and if something is not included in that explicit list the party who is pressing an argument is going to do better than a party that’s saying, well, it’s not explicitly listed, but here’s my argument about why it should be covered.
So I don’t agree with the court on this at all. I think instead – and, frankly, I don’t agree with the insurance company either. I think if the insurance company hopefully moving forward – go back and look at your policies and start siting federal and state law and whichever state you’re in also site the Rhode Island Department of Environmental Management regulations. They’ve figured all of this out over decades and decades of experience. Why are you rewriting policies – or excuse me – re-creating the wheel here.
All you have to do is say, we adopt the definitions that state and federal government have adopted under various federal and state laws and regulation. Then you’re covered. I mean, every single contaminant and pollutant known to man is regulated by the government, so I don’t know why you wouldn’t just site to that. And then if you’re challenged, you go to the judge and say, we rely on the expert in this field. And, I don’t know, I think that would be a letter level of protection than what this case shows.
[0:13:31] CLARICE: Yeah. I agree. I just think it’s – no. I completely agree and I can’t help but thinking, you know, that idea of will you have to capture absolutely everything and it feels like an impossibility that I don’t think is being acknowledged in this decision.
MARISA: Yeah.
CLARICE: Like you said, there are definitions in place and yet we’re coming in and saying there’s ambiguity. It’s like trying to invest a wheel, but you come out with an oval and everybody’s like, well, it doesn’t work.
MARISA: Yeah. And the court is not going to look at subjective intent. If you’re looking at ambiguity in a contract, subjective intent or what the parties meant to say does not – it’s not allowed.
CLARICE: No.
MARISA: That argument, the court’s not going to consider. The other thing that I thought – I’m not as fired up about it, but I thought was interesting, on Page 14 of this decision, second paragraph, you’ve got a reference to something that the Superior Court judge stated either in her opinion or as part of the record where she said that there have been, quote, decades of litigation on this very issue, end quote. However, you’ve got the Rhode Island Supreme Court then saying, actually, no, this issue is one of first impression.
CLARICE: Oh.
MARISA: That makes me mental. Let me tell you why.
CLARICE: I didn’t catch that. Tell me.
MARISA: This is the heart of and a great example of why litigators sometimes want to drive off a bridge because you’ve got a Superior Court judge sitting and hearing the trial. She came up with decades of litigation on this very issue. She wouldn’t have just pulled that out of thin air. Granted, I didn’t go back and look at what she was actually referring to, but how can you have a very educated and smart judge say, well, no, we’ve got decades of litigation. And then the Supreme Court saying, actually, no, we’ve never addressed this issue. What I’m getting at is it’s so subjective when you’re litigating that it almost becomes insane. You think that you’re on a particular point and then you get in front of a judge and they take a hard right and you have no idea what just happened.
So reading this language I guess kind of triggered me in a certain respect that I also – I don’t disagree with the Superior Court judge because I know of several cases that have gone forward with the Department of Environmental Management where the discussion of pollutant and oil versus petroleum and what the definition of pollutant is under state law versus contaminant versus, you know, waste, versus – hazardous waste versus hazardous material. So there has been decades of litigation. You know, maybe the court is parsing out – the Rhode Island Supreme Court is parsing out a separate issue so that it can reach the conclusion that it did. I don’t know. But that particular type of analysis can drive an attorney crazy.
[0:17:26] CLARICE: I feel like that’s – I can feel the PTSD from that I had. I’m just sitting in this and like dwelling on my own experience. I, when I was in law school, was a student attorney under Rule – I believe it was Rule 2 or 202. For those of you who aren’t attorneys or didn’t go to law school, there’s a program where law students can practice partially under a supervising attorney as part of their education. And it was my first case and I had, you know, printed out binders and binders of information and I was ready to roll. And I presented my argument and then the judge took a left and the entire binder was useless.
MARISA: Oh, yeah. Yeah. I mean, you might as well just sit on it in front of the judge. And you’ve got no idea what the motivation is behind that and that’s what I find to be very frustrating is that you’re – especially in Rhode Island you’re dealing with a lot of various interests, let’s say, and you don’t necessarily know what those are. So you’ve prepared over here and you have no idea what the other areas for argument that are going to come up kind of behind your back. It’s really frustrating. And then you’ve got a client that you have to answer to and how do you explain that. Well, the judge just took a hard right on an issue that –
CLARICE: We really thought was going to be left.
MARISA: Yeah. So that’s just as a side bar. That can be really frustrating. Shout out to the litigators in Rhode Island that know what I’m talking about. And then, you know, I’ve been ranting here for a little bit, so I’ll try to wrap it up. But overall this case really turned on the discussion that the court gets to towards the end of the particular document where it, to me, looked like the court deciding that oil is a pollutant only when it enters the ground. There might be an argument here under insurance law that makes sense, but as an environmental attorney, no. That’s not how pollutant regulations work. A pollutant is a pollutant is a pollutant. Where it’s contained, what it’s contained in has no bearing on whether the compound or substance is a pollutant. Granted, under state and federal law it only becomes a violation of certain laws if it’s not maintained properly or labeled properly. If it leaks or discharges or explodes, then obviously it’s a violation of statute, but a pollutant is a pollutant. Do you know what I’m saying?
[0:20:42] CLARICE: Yeah. It is from the jump.
MARISA: Yeah.
CLARICE: I mean, granted, oil obviously has its uses, but that doesn’t – its use doesn’t change the fact that it’s a pollutant. It can be both.
MARISA: Yeah.
CLARICE: And it is both.
MARISA: Yeah. Yeah. I agree. And I think when you start looking at different environmental statutes the violation is triggered under different scenarios like the air pollution statute or the National Environmental Protection Act or the Clean Water Act. Those are all different regimes under which a violation occurs with a different set of facts for each one. But none of those statutes tell you oil is not a pollutant until it hits the ground. I mean, can you imagine a world in which you couldn’t label contaminants a certain way until a specific triggering event occurred. So, again, I would say just I think you got to fall back to what the environmental profession has already created in terms of a definition platform and enforcement mechanisms.
CLARICE: Yeah. Absolutely. And to wrap it up, do we know what – so, I mean, knowing that the homeowner isn’t a party in this case, do we know what happened with the insurance – between the insurance agency and the installer? I know they’ve ruled that it was ambiguous, but do they leave with any action items? What are they going to do?
MARISA: The Rhode Island Supreme Court vacated the judgment of the Superior Court and directed the Superior Court to enter judgment in favor of the installer on certain elements of its complaint. And then they remanded the case to Superior Court for further proceedings which means that the Superior Court is going to have to go back and take a look at its decision and figure out what it wants to do. But ultimately the installer won its appeal in the Rhode Island Supreme Court and it will be entitled to money to reimburse it for damages and repair work that it probably had to undertake for the homeowner.
[0:23:23] CLARICE: All right. Well, there you have it. Pollutants are apparently ambiguous and well defined all at once. The great it depends.
MARISA: That’s all I got today. I got to go lay down. I am spent.
CLARICE: All right, everybody. If you have any reactions to this, if you’ve ever had a case of, you know, does my insurance cover this because it’s not in a super long CVS receipt style definition, let us know. You can hit us up on the socials. We are at Desautel Browning Law on Twitter, Facebook, Instagram, and YouTube. You can also send us an e-mail Help@DesautelESQ.com. Thank you guys and have an awesome week.
MARISA: Thanks.
