As we all know, the body of case law addressing the pollution exclusion is gargantuan.  But, as a Texas federal Magistrate Judge recently said in a Report and Recommendation in Atain Specialty Ins. Co. v. Triple PG Sand Development, No. 21-2122 (S.D. Tex. Feb. 28, 2023), that’s not where you look when determining whether the exclusion applies to a claim.

At issue in Triple PG was the applicability of the pollution exclusion to claims asserted against Triple PG, and dozens of other defendants, for damage caused by flooding in Houston, in 2017, from Hurricane Harvey.  It was alleged that Triple PG – engaged in the business if sand mining- “discharged ‘processed water, silt, sand, sediment, dirt, and other materials’ into Houston-area waterways and lowered their capacity—effectively displacing potential floodwater with discharge.”  In other words, the materials discharged by Triple PG allegedly caused flood control channels to have decreased volume.  As a result, they could not hold the water from the hurricane and overflowed.

The court noted that these materials were not expressly included in the policies’ definition of “pollutants” – the standard one that we’ve all seen many times.  However, the insurer pointed to cases where courts concluded that these materials were pollutants under substantially similar pollution exclusions.

But that, the court concluded, “would allow the tail to wag the dog,” and rejected the insurer’s reliance on these cases: “The Court cannot look to prior applications of pollution-exclusion clauses and then search the Underlying Lawsuits for mentions of the same materials. Rather, the Court must look to the specific factual allegations in the Underlying Lawsuits and then apply policy language and its plain meaning to those allegations.”

In other words, even if the asserted pollutants -- processed water, silt, sand, sediment, dirt – were found to be within the pollution exclusion in other cases, that was not the manner for determining if they were pollutants here.

Rather, examining the specific factual allegations in the suits, and applying it to the policy language, led to a determination that the pollution exclusion did not apply.  The court had several explanations for its conclusion -- some complex, quite fact-specific and beyond the scope here. 

However, an important part of the opinion, that led to the court’s decision, is as follows.  After examining some definitions of “contaminants,” the court concluded that, “[f]or these definitions to foreclose a duty to defend, the Underlying Lawsuits would need to complain that Triple PG released substances that rendered the waterways and lakes impure, either by mixing with the existing water or soiling or staining it upon contact. That is not what the Underlying Lawsuits allege. Instead, they allege the mere presence of the released substances reduced the capacity of the waterways, thereby exacerbating flooding during Hurricane Harvey.”

For this court, the outcome was not dictated by decisions where processed water, silt, sand, sediment and dirt were found to be within the pollution exclusion.  Rather, the issue was whether, under the circumstances at hand, the materials were acting as pollutants.