Source: http://www.lexology.com, October 15, 2013
By: Brian Margolies, Traub Lieberman Straus & Shrewsberry LLP
In its recent decision in Prestige Properties, Inc. v. National Builders and Contractors Ins. Co., 2013 U.S. Dist. LEXIS 146738 (S.D. Miss. Oct. 10, 2013), the United States District Court for the Southern District of Mississippi had occasion to consider the application of a total pollution exclusion in a general liability policy to underlying claims involving Chinese-manufactured drywall.
The insured, Prestige Properties, was a Mississippi contractor hired to perform repairs on a client’s home that had been damaged as a result of Hurricane Katrina. Part of these repairs involved replacing damaged drywall. Prestige later was named as a defendant in the Chinese drywall multidistrict litigation pending in the Eastern District of Louisiana. Prestige’s client alleged that Prestige had used defective Chinese manufactured drywall in their home and that the drywall resulted in bodily injury (eye irritation, nausea, respiratory ailments, etc.) and property damage (corrosion and damage to appliances, wiring and object with metal surfaces).…
Source: http://www.lexology.com, October 7, 2013
By: Ruth S. Kochenderfer and Kate M. Riggs, Steptoe & Johnson LLP
In Lodwick, L.L.C. v. Chevron U.S.A., Inc., No. 48,312-CA, 2013 WL 5477240 (La. Ct. App. Oct. 2, 2013) (applying Louisiana law), the Second Circuit Court of Appeal of Louisiana granted summary judgment in favor of commercial general liability (CGL) and excess insurers, holding that pollution exclusions barred coverage for pollution liability arising from gas and oil exploration and production activities.
The underlying liability arose when a group of land owners sued oil and gas operators for alleged property damage associated with oil and gas activities, including the operation of oil wells and disposal of oil field waste. In particular, plaintiffs allege that predecessors of the policyholder, Oracle, conducted oil and gas activities from 1978 to 1990 that caused pollution that migrated and damaged soil and groundwater underneath plaintiffs’ property. Id. at *1. The policyholder filed third-party claims seeking indemnification and defense from three CGL and excess liability insurers.1 The trial court granted partial summary judgment against two of the three insurers, agreeing with the policyholder that some of the underlying plaintiffs’ causes of action, such as breach of contract and trespass, could be unrelated to pollution damage, thus triggering the duty to defend and not falling within the scope of a pollution exclusion. Id. at *4. The trial court denied the policyholder’s summary judgment motion as to the third insurer on the basis that the insurer’s “other insurance” clause provided that the third insurer did not owe a defense if another insurer has a duty to defend. Id. at *2.…
Read here about Louisiana companies being sued over groundwater contamination that may leach into a city’s water supply.
Source: UAE Government News, August 28, 2013
Posted on: http://envfpn.advisen.com
An international team of scientists, led by Dr. Tony Gutierrez of Heriot-Watt University, has revealed the first evidence that certain species of bacteria thrived on the oil that was released into the Gulf of Mexico during the Deepwater Horizon spill.
The Deepwater Horizon Spill
The blow-out of the Deepwater Horizon oil rig off the Louisiana coast on April 20 of 2010 is marked as the worst environmental disaster in US history and one of the most devastating maritime accidental spills worldwide.
Around 700,000 tonnes of crude oil leaked into the Gulf of Mexico over a period of nearly three months, impacting vast stretches of coastline and open waters in the Gulf. Microbes, in particular bacteria, are known to perform a fundamental role in the degradation and ultimate removal of oil after it enters the marine environment, and this was certainly the case at Deepwater Horizon.
How the microbial community responded
Several scientific publications have described how the microbial community in the Gulf responded to the massive influx of oil released from the Deepwater Horizon blowout, however, little evidence was presented to confirm that any of the identified bacteria were capable of degrading the oil.
Using sophisticated molecular techniques and a collection of hydrocarbon molecules containing specially-labelled carbon atoms, the international team of scientists identified various species of bacteria in surface oil slicks and deeper waters in the Gulf and confirmed their ability to degrade the oil.
This work presented unequivocal evidence on the capacity for some of the most dominant bacteria found in the Gulf during the spill to have contributed a significant role in the removal of the oil. The team is also the first to report on the isolation of the most dominant oil-degrading bacteria from the surface oil slicks.
The important role of micro-organisms
Dr Gutierrez’s team’s findings further increase our understanding on the fate of the oil that spilled into the Gulf of Mexico, and reinforces the important roles that micro-organisms play in our environment, such as in cleaning up oil spills. Without oil-degrading bacteria, the Gulf of Mexico, and the world’s oceans and seas for that matter, would be continuously covered in a slick of oil.
In Louisiana Generating LLC v. Illinois Union Ins. Co., No. 12-30651 (5th Cir. May 15, 2013), the United States Court of Appeals for the Fifth Circuit held that a lawsuit brought by the Environmental Protection Agency (“EPA”) alleging violations of the Clean Air Act (“CAA”) obligated an insurer to defend its insured. The court found that the EPA suit sought potentially covered “remediation costs,” as defined in the policy, and that the policy did not exclude coverage for the injunctive relief sought by the EPA.
Louisiana Generating LLC (“LaGen”) owns and operates a coal-fired electric steam generating plant in Louisiana called Big Cajun II. In 2005 and 2006, the EPA sent LaGen Notices of Violation (“NOVs”) alleging that major modifications to the plant had not been completed with the proper permits and that the modifications were causing emissions levels in violation of the CAA. In January 2009, LaGen’s parent company, NRG Energy, Inc., purchased a Custom Premises Pollution Liability Policy (the “Policy”) from Illinois Union Insurance Company (“ILU”) covering a number of facilities, including Big Cajun II.…
Source: http://www.lexology.com, May 30, 2013
By: Manatt Phelps & Phillips LLP
In a coverage dispute based on underlying environmental litigation, the 5th U.S. Circuit Court of Appeals held that Illinois Union Insurance Co. must defend Louisiana Generating LLC in an action brought by the Environmental Protection Agency and the Louisiana Department of Environmental Quality.
“Big Cajun II,” a coal-fired electric steam-generating plant owned by LaGen, was targeted by the EPA and Louisiana’s state equivalent for allegedly toxic emissions. The agencies filed suit seeking a variety of relief, including an order for LaGen to “remedy, mitigate, and offset the harm to public health and the environment” caused by the alleged violations of the Clean Air Act, the assessment of a civil penalty for each day in violation of the CAA, an order to mitigate emissions and an injunction to repair emission control equipment to comply with regulatory standards.
LaGen turned to Illinois Union to defend and pay liability, if any. The applicable state law was again an important consideration, and here the court applied New York law.
Analysis of the policy language at issue covered “Claims, remediation costs, and associated legal defense expenses… a result of a pollution condition.” The Fifth Circuit took great pains to match up the specific policy language at issue with its reading of New York law. The court determined that the policy covered remediation costs and nothing under New York law limited such coverage whether these costs were incurred voluntarily or as a result of a government demand. The insurance company further sought to apply an exclusion for fines and penalties, which the company argued was the context in which these costs were incurred. The court rejected that outcome, holding that the exclusion could not swallow up and nullify the clear grant of coverage for remediation costs.
To read the decision in Louisiana Generating LLC v. Illinois Union Insurance Co., click here.
Why it matters: What does a policy actually pay for? That is the question at the heart of the dispute in the 5th Circuit case, which again serves to remind policyholders to read the policy to understand the terms of coverage. The court’s opinion also emphasizes that under New York law, an insurer has a broad duty to defend and policyholders will be entitled to a full defense as long as some of the underlying allegations are covered by the terms of the policy. The policyholder must be armed with this understanding before it presses its demands for coverage.
Source: http://www.lexology.com, May 22, 2013
By: Robert S. Sanoff, Foley Hoag LLP
The Fifth Circuit handed down an important decision last week, Louisiana Generating LLC v. Illinois Union Insurance Company, clarifying the scope of coverage under a Premises Pollution Liability Insurance Policy. The policyholder sought coverage for a Clean Air Act suit by the United States alleging unpermitted major modifications that resulted in increased emissions of sulfur dioxide and nitrogen oxide. The insurer disputed coverage on the ground that the government under the Clean Air Act was seeking not remediation costs or compensatory damages but an injunction to repair emission control equipment to comply with regulatory standards. According to the insurer, injunctions were excluded from coverage under the Fines and Penalties exclusion to the policy.
Applying New York law, consistent with the insurance policy’s choice of law provision, the Fifth Circuit affirmed the District Court’s summary judgment decision requiring the insurer to provide a duty to defend. The Fifth Circuit noted that the complaint by the United States was not limited to an injunction requiring repairs to the emissions control equipment but also sought remedial costs to address the release into the atmosphere of unpermitted levels of certain pollutants.
While the possibility of remediation costs was sufficient to trigger the insurer’s duty to defend, the Fifth Circuit went on in perhaps its most significant holding to reject the insurer’s argument (which had been adopted by the lower court) that the policy excluded all injunctive relief in its Fines and Penalties exclusion which precluded coverage for ”Payment of criminal fines, criminal penalties, punitive, exemplary or injunctive relief.” The Fifth Circuit construed that exclusion narrowly limiting it only to injunctions that were part of a criminal or punitive fine or penalty. As the Fifth Circuit explained, many environmental laws, like the Clean Air Act, are structured to obtain compliance through either voluntary remediation work or court ordered injunctions, and it would make little sense if a Premises Pollution Liability Insurance Policy provided coverage for voluntary remediation work but did not cover the same work when done under a court order:
If the Fines and Penalties exclusion is a complete bar for coverage of costs associated with injunctive relief, the exception would potentially swallow the coverage afforded by the policy. The policy would not cover claims under major federal environmental statues, such as the CAA and the Clean Water Act, when they are enforced by the EPA or state agencies seeking injunctive relief to mitigate and remediate past pollution.
Source: http://stateimpact.npr.org, March 18, 2013
By: Susan Phillips
Pipeline expansions serving the Marcellus Shale gas boom have helped boost production rates above seven billion cubic feet a day, according to an analysis by IHS. The report says the Marcellus now leads the Haynesville Shale as the most productive shale play in the country. The Haynesville Shale formation stretches beneath northwestern Louisiana, eastern Texas and southwestern Arkansas.
“These companies have created significant shareholder value through low-cost, efficient growth that has been commensurate with the explosion of production coming from the Marcellus,” said Bryan McNamara, principal energy analyst at IHS.
But McNamara also says not every driller has enjoyed this type of success.
The report says low natural gas prices have driven down the number of rigs operating in the Marcellus resulting in a 30 percent drop in the number of wells drilled in 2012, as compared to the previous year. The number of permits to drill, however only dropped by five percent in 2012. Gas prices are expected to rise in 2013, according to the report. So, Marcellus production may rise as well.
The top five drilling counties include Bradford, Lycoming, Susquehanna, Tioga and Washington county.
“In this case, we anticipate drilling activity picking up across all five counties,” said Bryan McNamara in an IHS release. “As for Range Resources and Cabot Oil and Gas, with both companies holding non-proven Marcellus resource potential nearly five times current proved reserves, we expect continued operational success and high production growth to remain value drivers.”
Cabot Oil and Gas concentrates its efforts in the northeast part of the state with about 368 active wells. The company faced lawsuits and criticism after a number of residential water wells in Dimock were contaminated after drilling began. The Department of Environmental Protection blamed Cabot for faulty well construction. The company says their actions did not cause the contamination, which they say was present before drilling began.
Range Resources has also run into trouble with their neighbors in Washington County, where the company actively drills. Range has about 882 active wells, primarily in the western part of the state. Range Resources has also been accused of contaminating water and air by residents living near their drilling sites. And the company has battled local officials over zoning.…