November 26, 2013

Absolute pollution exclusion does not unambiguously exclude coverage for Chinese Drywall claims under Massachusetts law

Source:, October 31, 2013
Bby: Jan A. Larson, Jenner & Block

A Colorado state court applying Massachusetts law recently denied an insurer’s motion for summary judgment, holding that its absolute pollution exclusion and the term “pollutant” are ambiguous as applied to Chinese Drywall and should be construed in favor of coverage for the insured. ProBuild Holdings, Inc. v. Travelers Prop. Cas. Co. of America, No. 10-0378 (Colo. Dist. Ct. Oct. 4, 2013). In general, Massachusetts looks to the reasonable expectations of the insured in determining coverage, and has refused to apply the absolute pollution exclusion to activities that arise in the course of normal activities simply because the accident happens to involve a “discharge, dispersal, release or escape of an irritant or contaminant,” as those terms commonly appear in an insurance policy’s exclusionary language. Appreciating the nuances of Massachusetts law, the court distinguished external environmental contamination from internal property damage and personal injury, even where caused by the same substance. The court noted that “context is key” and held that the term “pollutants” is ambiguous as applied to any substances potentially emitted from Chinese Drywall installed in a residential home. In so holding, the court distinguished a contrary, unpublished decision from the Eleventh Circuit interpreting Massachusetts law – Granite State Ins. Co. v. American Building Materials, Inc., 504 F. App’x 815 (11th Cir. 2013).


November 12, 2013

CO regulators consider stricter spill rules

Read here about oil and gas regulators in Colorado who are considering stricter spill rules.


November 12, 2013

Colorado Fracking Fight Looms

Source: Dow Jones News Service, November 7, 2013
Posted on:


Energy companies in Colorado are girding for a statewide battle over fracking next year after voters in three communities passed bans on hydraulic fracturing and a fourth town voted to continue to allow the practice by just a handful of votes.

Despite heavy spending by the Colorado Oil & Gas Association, Boulder and Fort Collins passed five-year moratoriums Tuesday, and voters in Lafayette strongly favored an outright ban. All three are in north-central Colorado near the Niobrara Shale oil field, where production has been rising rapidly.

In nearby Broomfield, which has experienced more drilling than the other towns, voters defeated a moratorium by 13 votes out of 20,519. The tally remains unofficial and, if certified, would trigger a recount.

The vote in Broomfield, a suburban community north of Denver, was watched most closely because its residents have the most experience with the pros and cons of drilling, and because its politics mirror Colorado’s.

The antifracking effort, spearheaded by Frack Free Colorado, was supported by Washington, D.C., nonprofits Clean Water Action and Food & Water Watch. Patagonia Inc. also gave a grant to Frack Free Colorado. Petitions to get the issue on ballots were gathered by local organizers, some of them with affiliations to these environmental groups.…

October 18, 2013

Water contamination remains a big concern for farmers

Source:, October 16, 2013
By: Dana Rimington

A problem may be lurking beneath the surface of farmland soil, and farmers are worried.

The problem, they say, is contaminants that are being sent into storm drains and eventually reach farm irrigation ditches. Farmers pay a high price if they discover their edible crops have been polluted — such a situation forces them to destroy the crop and start over.

“It’s expensive to destroy a crop, but it’s cheaper than a lawsuit on our end if we get people sick,” said Jeremy East, operator of eight farms he leases throughout Davis County.

“In the back of our minds, we know there could be the potential for problems by not knowing what’s in the irrigation water. There is the potential for bad stuff to happen.”

To avoid some problems, East spends around $2,000 to test his water numerous times throughout the year.

He hasn’t encountered any contamination yet, but he is constantly aware of the possibility, knowing his career would pay the ultimate price if his farmland were affected.

“There’s a lot invested into these crops every year, and you don’t normally get a lot back, so it’s scary, because one bad crop could bankrupt anybody,” East said.

When building homes on farmland, developers have to be mindful of the old farm’s drains and irrigation ditches that still reach out to other farmers.…

October 16, 2013

United States: Is The Absolute Pollution Exclusion Absolute? It Depends On Which State Answers The Question

Source:, October 14, 2013
By: Robert S. Sanoff, Foley Hoag LLP

The battle over the scope of the absolute pollution exclusion in general liability policies continues to be fought in the context of defective drywall manufactured in China. An earlier blog entry discussed a Virginia court that had concluded that there was no coverage for defective drywall claims, rejecting decisions from a number of states that had ruled that the absolute pollution exclusion should be limited to industrial pollution claims, particularly Superfund claims.

In Probuild Holdings, Inc. v. Travelers Property Casualty Company of America, a Colorado court relying on Massachusetts and Florida law recently took the other side from the Virginia court. The Colorado court denied a summary judgment motion by an insurer in a defective drywall claim. Citing the Massachusetts case that suggested that the absolute pollution exclusion should be limited to industrial pollution claims, particularly Superfund claims, and not defective product claims involving residential properties, the court concluded that the meaning of the exclusion was at best ambiguous and ambiguity would typically be construed against the insurer. Although suggesting that the policyholder appeared at summary judgment to have the stronger position, the Colorado court left for trial the final resolution.

For the moment at least, the scope of the absolute pollution exclusion depends on which jurisdiction’s law applies.

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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

October 8, 2013

Colorado flooding implicates insurance coverage for energy companies

Source:, September 30, 2013
By: John D. Shugrue, Kevin B. Dreher and Emily Garrison, Reed Smith LLP

The damage caused by the recent flooding in Colorado is catastrophic and has evermore changed the lives of many who live in and around the affected communities. As the waters recede, the impact of the destruction is being uncovered. Many roads, houses, and businesses have forever been washed away, and the recovery effort will take years to rebuild what has been lost.

Among the businesses hit the hardest were the oil and gas industry. There are about 20,000 oil and gas wells across Weld County, Colorado, and about 1,900 of them had to be closed off — “shut in” — as the floodwaters poured down from the mountains and spread out across the plains. When the floodwaters reached Colorado’s drilling center, they poured into wells, broke pipes and swept huge oil tanks off their foundations. The state has counted at least a dozen “notable” spills stemming from the catastrophic floods. According to officials, the heavy floodwaters caused more than 37,000 gallons of oil to spill into or near rivers, and the state’s oil and gas industry is racing to assess and fix the damage to wells, pipelines, and storage facilities that occurred during the storm.

While the resulting environmental impact caused by the recent Colorado flooding may pale in comparison to other catastrophic disasters, such as the Deepwater Horizon blowout or the Exxon Valdez oil spill, the physical damage and loss of operations sustained by many oil and gas companies that operate in the affected area will be significant. Fortunately, the affected companies likely have insurance coverage in place to assist with physical repairs to wells, pipelines, and storage facilities, as well as coverage to assist with any environmental cleanup, resultant third-party claims, and loss of business income and production.…

September 27, 2013

Opinion: Energy Industry Liability May Cover Contamination Claims From Colorado Flooding

Source:, September 24, 2013
By: Jared Zola and Clark Schweers

Colorado residents and businesses face devastating water inundation that many are dubbing a one-in-500-years weather event. Early reports confirm nearly 2,400 square miles saturated with water causing massive dislocation and loss of life.

As recovery efforts begin, some environmental groups are turning their attention to the Wattenberg field north of Denver that is home to more than 20,000 oil and natural gas wells in Weld County and parts of Boulder, Adams, Larimer and Broomfield counties—counties that have experienced flooding, washed out roads, and evacuations. Several large oil and gas companies currently operate hydraulically fractured wells in the area.

For those businesses that may face potential liability from environmental contamination claims, liability insurance may be an important asset to help manage defense costs and remediation payments—even if contamination claims prove to be wholly without merit.

According to a Sept. 14 Denver Post article, Colorado flooding: Evacuations, broken oil pipeline in Weld County: “Oil drums, tanks and other industrial debris mixed into the swollen river flowing northeast. County officials did not give locations of where the pipeline broke and where other pipelines were compromised. . . .One pipeline has broken and is leaking . . . other industry pipelines are sagging as saturated sediment erodes around the expanding river.”…

September 26, 2013

Floods Exacerbate Damage of Fracking in Colorado

Source: Targeted News Service, September 24, 2013
Posted on:

As floodwaters continue to rage across the Front Range, our first thoughts are with the victims and their families. And to add insult to injury, Coloradans now have reason to be concerned about their water quality. Oil and gas industry infrastructure in the region has been severely compromised. Toxic wastewater tanks have been spotted floating in the floodwaters, pipelines are broken and sagging, and the state is now tracking several oil and gas spills.

“We were concerned about fracking before the flooding,” said Lindsey Wilson, field associate with Environment Colorado. “But now, oil and gas spilling into the floodwaters, contaminating drinking water, is an added exclamation point to the long list of dangers that fracking has brought to Colorado.”

The largest spill occurred on Wednesday when about 5,225 gallons of crude oil flowed into the South Platte River near Milliken. Nearly 2 million residents of Denver rely on the South Platte for their drinking water and just over 70 percent of Coloradans rely on the South Platte as their main water source.

“Toxic chemicals, such as cancer-causing benzene, have mixed with floodwaters posing a severe public health hazard,” said Wilson. “While we do not know the full extent of the contamination, we know that thousands of Coloradans’ drinking water could be affected.”

The oil and gas industry is currently exempt from some key provisions of our nation’s bedrock environmental laws such as the Safe Drinking Water Act and our nation’s hazardous waste law. The thousands of gallons of drilling waste mixing with floodwaters reinforces the need to close these toxic loopholes that leave communities vulnerable to water contamination.

Environment Colorado will be releasing a report Oct. 3, entitled “Fracking by the Numbers,” which will quantify key measures of fracking threats to our environment and health.


September 26, 2013

Pro-frackers try to stem leak claims

Sources:, September 25, 2013
By: Valerie Richardson

Anti-fracking groups drumming up alarm over oil leaks from last week’s epic Colorado floods are running into pushback from those who say the activists are overstating the problem to advance a political agenda.

Figures released Tuesday by the Colorado Oil and Gas Conservation Commission show that 34,524 gallons of oil and condensate, or about 822 barrels, have leaked into floodwaters and rivers, stemming mainly from 11 notable tank ruptures that occurred during the historic floods.

As oil spills go, that’s pretty small — the 1989 Exxon Valdez spill exceeded 257,000 barrels — but anti-fracking activists have seized on the leaks to demand a statewide moratorium on hydraulic fracturing, insisting the leaks represent “widespread contamination” that “place the public and environment in immediate danger.”

Such claims draw attention from real post-flood problems, says Amy Oliver Cooke, director of the Energy Policy Center at the free-market Independence Institute in Denver, who accused the anti-fracking groups of “taking a play from the Rahm Emanuel playbook: ‘You never want a serious crisis to go to waste.’”

“[T]he eco-left is claiming the sky is falling because 35,000 gallons of oil have also spilled into the flood waters,” said Ms. Cooke. “That’s like worrying about a single drop of water in an Olympic-sized swimming pool.”

The Colorado flooding comes as one of the first real-world tests of the booming fracking industry’s ability to survive a natural disaster, which could influence the national debate over the safety of a technique that has touched off a global energy revolution.…

September 25, 2013

More oil, gas damage reported throughout Weld County

Source: Greeley Tribune (CO), September 21, 2013
Posted on:

The oil and gas carnage in Weld County has grown, now with three exploration companies noting problems due to flooding and almost 22,000 gallons of oil either on the ground or in floodwaters.

As of Friday afternoon, four spills had been reported by Anadarko Petroleum Corp., and one by Bayswater Exploration. Additionally, oil production equipment at a PDC Energy site has largely washed away.

The Colorado Oil and Gas Conservation Commission estimates roughly 22,000 gallons of oil have been spilled thus far.

But that may not be the half of it. Only 30 percent of the impacted areas has been assessed, reported Todd Hartman, of the Department of Natural Resources, which oversees the COGCC. Many areas, he reported, continue to be inaccessible due to either closed roads or floodwaters.

“The COGCC is tracking five notable releases, with volume amounts confirmed for four of those,” Hartman wrote.

Those include releases of 323 barrels (13,566 gallons) and 125 barrels (5,250 gallons) from Anadarko locations, reported Thursday. Two additional releases of 56 barrels (2,352 gallons) at an Anadarko location and 21 barrels (882 gallons) at a Bayswater Exploration and Production location also have been confirmed, Hartman reported.…