Hawaii Supreme Court Rules Pollution Exclusion Applies to Greenhouse Gases, Defeating Climate Change Coverage Suit
By Andrew J. Banathy
Hawaii’s highest court recently provided its interpretation of standard commercial general liability (“CGL”) policies for climate change suits when it determined that AIG owed no obligation to cover lawsuits accusing its insured, a Honolulu-based Sunoco subsidiary, of contributing to climate change. Aloha Petroleum, LTD. v. National Union Fire Insurance Co. of Pittsburgh, Pa. et al., case no. SCCQ-23-0000515. The Hawaii Supreme Court answered two certified questions in its ruling.
First, the Hawaii Supreme Court determined that an “accident” as defined in CGL policies include recklessness. The Court ruled that its interpretation aligned with Hawaii’s precedent, the plain meaning of “accident” supports the inclusion of reckless conduct, and to include reckless conduct honors the principle of fortuity.
Second, the Hawaii Supreme Court ruled that greenhouse gases constitute “pollutants” within the meaning of CGL policies, and were therefore excluded under the AIG policy’s pollution exclusion. The Hawaii Supreme Court specifically stated, “What makes a product a pollutant is that it causes damage due to its presence in the environment.” The Court found that climate-heating gases are an example of the “traditional environmental pollution” that the pollution exclusion is designed to exclude. The Court noted that greenhouses gases are “pollutants” under any reasonable interpretation and the pollution exclusion is not ambiguous as applied to greenhouse gases.
This decision is an important win for insurers as we continue to see an upward trend in climate change litigation.
Andrew J. Banathy