In a case with sweeping implications for pollution exclusions in commercial general liability insurance, the US Court of Appeals for the Seventh Circuit has certified a key question to the Illinois Supreme Court: whether emissions conducted under a regulatory permit fall within the scope of a pollution exclusion in a standard-form CGL policy.
The dispute arises from long-running tort litigation in Illinois involving alleged injuries caused by ethylene oxide (EtO) emissions in Willowbrook, Illinois. Griffith Foods International Inc., and later Sterigenics US, operated a sterilization plant that emitted EtO over a period of 35 years. In 1984, Griffith obtained a construction and operating permit from the Illinois Environmental Protection Agency, informing the agency of anticipated EtO emissions. The IEPA issued the permit without specifying a limit on the amount of emissions.
In 2018, a federal public health report identified high cancer rates in Willowbrook, allegedly linked to those emissions. Over 800 individuals subsequently filed lawsuits in Illinois state court, asserting claims based on bodily injury. Those suits were consolidated for pretrial purposes, leading to the filing of a Fourth Amended Master Complaint alleging decades of continuous EtO exposure resulting in cancer and other diseases.
At issue on appeal are two CGL policies issued by National Union Fire Insurance Company of Pittsburgh, PA, to Griffith Foods, covering the periods from September 30, 1983, to September 30, 1985. Each policy included a standard-form pollution exclusion, which bars coverage for: “bodily injury or property damage arising out of the discharge, dispersal, release or escape of... 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; but this exclusion does not apply if such discharge, dispersal, release or escape is sudden and accidental.”
In 2021, Griffith and Sterigenics filed federal actions in Chicago seeking declarations that National Union had a duty to defend them in the underlying litigation. The insurer denied coverage, invoking the pollution exclusion. The US District Court for the Northern District of Illinois ruled in favor of the policyholders, concluding that the emissions were permitted by the IEPA and that the exclusion therefore did not apply. The court relied on Erie Insurance Exchange v. Imperial Marble Corp., a 2011 decision by an Illinois appellate court, which held that emissions authorized by a regulatory permit created ambiguity as to whether they qualified as “traditional environmental pollution.”
On appeal, the Seventh Circuit reviewed whether the exclusion applies to the bodily injury claims in the Master Complaint. The court acknowledged that Koloms - a 1997 Illinois Supreme Court decision - limited the scope of pollution exclusions to traditional environmental pollution, excluding routine commercial emissions such as carbon monoxide from a furnace. In contrast, the emissions in Willowbrook were industrial, continuous, and alleged to have caused long-term harm to hundreds of residents, suggesting applicability of the exclusion.
However, the court found that Imperial Marble could be read to suggest that emissions made pursuant to a permit might fall outside the scope of the exclusion, particularly where regulatory compliance is at issue. The panel also considered its own prior decision in Scottsdale Indemnity Co. v. Village of Crestwood, which declined to exempt permitted emissions from exclusion, further underscoring the unresolved state of Illinois law.
The court refrained from making a definitive ruling and instead certified the following question to the Illinois Supreme Court:
“In light of the Illinois Supreme Court’s decision in American States Insurance Co. v. Koloms, 687 N.E.2d 72 (1997), and mindful of Erie Insurance Exchange v. Imperial Marble Corp., 957 N.E.2d 1214 (2011), what relevance, if any, does a permit or regulation authorizing emissions (generally or at particular levels) play in assessing the application of a pollution exclusion within a standard-form commercial general liability policy?”
The Seventh Circuit noted the significant financial consequences at stake—potentially $150 million in defense costs—and emphasized the question’s broader relevance to Illinois insurance law and the national insurance market. Because federal environmental law mandates permits for substantial emissions, the resolution of this legal issue could affect numerous future coverage disputes involving industrial policyholders.
Additionally, the court declined to reach National Union’s argument that its duty to defend should have been limited to only those claims alleging injuries during the two-year policy periods. That argument, the court held, had been waived because it was not properly preserved in the district court proceedings.
Until the Illinois Supreme Court answers the certified question, insurers and policyholders face continued uncertainty about how Illinois law treats pollution exclusions when emissions are made under the authority of a state-issued permit. The court’s guidance is likely to shape the interpretation of one of the most litigated clauses in general liability insurance.
Case: Griffith Foods International Inc., et al. v. National Union Fire Insurance Company of Pittsburgh, PA
Court: US Court of Appeals for the Seventh Circuit
Docket Nos.: 24-1217 and 24-1223
Date of Decision: April 11, 2025
Certified to: Illinois Supreme Court
