Do Liability Policies, Particularly Pollution Liability Insurance Policies, Exclude Coverage For All Injunctions? The Fifth Circuit Says No

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.