Nick Dolejsi | Zelle
The Illinois Supreme Court recently provided much-needed clarity on the scope and application of pollution exclusions in commercial general liability insurance policies. In Griffith Foods v. National Union Fire Ins. Co. of Pittsburgh, PA, Case No. 131710 (Ill. Jan. 23, 2026), the court considered the following certified question: “what relevance, if any, does a permit or regulation authorizing emissions (generally or at any particular levels) play in assessing the application of a pollution exclusion within a standard-form commercial general liability policy.” The court answered: none.
The background and context that led to this certified question is instructive. The policyholders were facing mass tort claims brought by residents who lived near the policyholders’ medical-equipment sterilization facility. The plaintiff-residents alleged that the policyholders emitted ethylene oxide (EtO) from this facility for more than 35 years, which caused the plaintiff-residents to suffer a range of maladies, including cancer and other serious diseases. However, the Illinois Environmental Protection Agency (IEPA) had issued the policyholders a permit to emit EtO from the same facility.
The policyholders tendered the mass tort claims to their liability carrier. The liability carrier denied coverage under a standard pollution exclusion in its policy, which barred coverage for:
“bodily injury or property damage arising out of the discharge, dispersal, release or escape of smoke, vapors, soot, fumes, acids, alkalis, toxic chemicals, liquids or gases, waste materials or other irritants, contaminants or pollutants into or upon land, the atmosphere or any water course or body of water.”
In response, the policyholders brought a declaratory judgment action in federal district court seeking an order that the insurer had a duty to defend the underlying mass tort claims. The federal district court sided with the policyholder and found that the pollution exclusion did not apply because “the policyholder had emitted the EtO pursuant to a permit issued by the Illinois Environmental Protection Agency.” The insurer appealed to the Seventh Circuit, and the Seventh Circuit recognized an apparent conflict under the Illinois law:
- In American States Insurance Co. v. Koloms, 177 Ill. 2d 473, 687 N.E.2d 72 (1997), the Illinois Appellate Court found that standard pollution exclusions “only apply to injuries caused by traditional environmental pollution,” and, therefore, held that a pollution exclusion did not bar coverage for carbon monoxide emissions from a defective furnace.
- However, in Erie Insurance Exchange v. Imperial Marble Corp., 957 N.E.2d 1214 (2011), the Illinois Appellate Court found that a standard pollution exclusion did not apply to the “emission of hazardous materials in levels permitted by the IEPA.”
Thus, on the one hand, the pollution exclusion applies to injuries caused by traditional environmental pollution (Koloms), but on the other hand, the exclusion does not apply to traditional environmental pollution when permitted by the IEPA (Imperial Marble). Faced with this uncertainty under Illinois law, the Seventh Circuit certified the question to the Illinois Supreme Court.
The Illinois Supreme Court answered the certified question as follows: “a permit or regulation authorizing emissions (generally or at any particular levels) has no relevance in assessing the application of a pollution exclusion within a standard-form commercial general liability policy.” The court reasoned that the IEPA permit did not change the character or substance of the EtO emissions as pollution. Thus, under the current state of Illinois law, the application of a pollution exclusion in a commercial general liability policy does not depend upon whether a government agency granted a policyholder permission to emit hazardous materials.
Griffith Foods v. National Union Fire is a significant decision for liability insurers who write policies in Illinois. Under this ruling, the application of a standard pollution exclusion can no longer depend upon whether the policyholder had the government’s permission to emit hazardous materials. And, for policyholders, it affirms that compliance with government regulations and permits will not overcome the plain language of a pollution exclusion in Illinois.
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