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Insurer on Hook for Emission-Reduction Costs
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On August 5, the U.S. District Court for the Middle District of Louisiana ruled that a power company's costs of installing technology to reduce emissions under a consent decree are recoverable from its insurer as remediation costs.  The court rejected the insurer's argument that coverage is barred because the technology will only address future emissions, rather than remediate past contamination.

 

EPA and the Louisiana Department of Environmental Quality filed a Clean Air Act suit against Louisiana Generating LLC alleging violations at its plant in New Roads, Louisiana.  LA Gen filed a declaratory judgment action seeking coverage from Illinois Union, and in January 2012, the court found the insurer had a duty to defend, but deferred on the issue of indemnification.  LA Gen ultimately entered into a consent decree, which required that it install Selective Non-Catalytic Reduction (SNCR) technology.  La Gen sought indemnification from Illinois Union, and the parties filed cross motions for summary judgment.  Granting LA Gen's motion, the court said the insurer's distinction between past and future costs is misplaced.  Based on a plain reading of the terms “mitigate,” “abate,” and “remediation costs,” the court found, the policy covers the costs of installing the SNCR.

 

Judge James J. Brady wrote the opinion.  To see the opinion, go to http://www.bloomberglaw.com/public/document/Louisiana_Generating_LLC_et_al_v_Illinois_Union_Insurance_Company.

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