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Textron6/22/2000
ented it to regulators -- was to deny coverage to reckless or intentional polluters. We note first that the President of INA himself announced his company's intention to adopt the pollution-exclusion clause with these comments:
"INA will continue to cover pollution which results from an accidental discharge of effluents -- the sort of thing that can occur when equipment breaks down. We will no longer insure the company which knowingly dumps its wastes. In our opinion, such repeated actions -- especially in violation of specific laws -- are not insurable exposures. * * * We at INA hope that our anti-pollution exclusion may help encourage many companies to take the first, crucial steps toward improving their manufacturing processes -- the steps that will lead eventually to a cleaner, healthier and, we hope, happier life for all." Morton, 629 A.2d at 850 (quoting Charles K. Cox, Liability Insurance in an Era of the Consumer, Address Before the Annual Conference of the American Society of Insurance Management, (Apr. 9, 1970), quoted in Robert S. Soderstrom, The Role of Insurance in Environmental Litigation, 11 Forum 762, 767 (1976)).
The Insurance Rating Board represents the insurance industry before state regulators. When seeking approval from the Rhode Island Department of Business Regulation (Insurance Division) for the policy language at issue, it submitted a circular containing an explanatory memorandum that read in part: "Coverage for pollution or contamination is not provided in most cases under present policies because the damages can be said to be expected or intended and thus are excluded by the definition of occurrence. The above exclusion clarifies this situation so as to avoid any question of intent. Coverage is continued for pollution or contamination caused injuries when the pollution or contamination results from an accident * * *." (Emphasis added.)
Moreover, the above representations are consistent with those the insurance industry made to other states when seeking approval of the pollution-exclusion clause. For example, the secretary of Travelers Insurance Company's Product Management Division, in a letter to New York State's associate insurance examiner dated January 13, 1982, assured that state's Insurance Division that "there is nothing in the term 'sudden and accidental' which requires the elimination of gradually occurring events from the collective. A number of court decisions in many jurisdictions have essentially reached the same conclusion: there is nothing which prevents gradually occurring events from being construed to be 'sudden and accidental' as long as there is no intent to cause injury or damages."
As these cases suggest, state regulators as a practical matter often are the only parties who are in a position to negotiate language changes in proposed commercial insurance contracts. Under these circumstances, it is reasonable to hold insurers to the representations they made to regulators when seeking approval for a pollution-exclusion clause like this one, which is susceptible to more than one plausible interpretation.
Many of the cases INA cites in support of its position deal with manufacturers who entrusted the disposal of their waste to third-party waste haulers. See, e.g., Stamford Wallpaper Co. v. TIG Insurance, 138 F.3d 75, 80 (2nd Cir. 1998) (holding that the mere fact that the manufacturer had handed its waste over to a third party did not automatically cause the release of waste to fall within the "sudden and accidental" exception to the pollution exclusion); St. Paul Fire and Marine Insurance Co. v. Warwick Dyeing Corp., 26 F.3d 1195, 1204 (1st Cir. 1994) (holding that a manufacturer's use of a waste disposal compan
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