On June 13, 2013, the United States Court of Appeals, Eighth Circuit, issued a decision upholding the district court’s declaration in a diversity action that an absolute pollution exclusion in a lead producer’s commercial general liability (CGL) insurance policy excluded coverage for all claims in neighboring landowner’s underlying action alleging environmental damage resulting from the lead producer’s mine and mill operation. Doe Run Resources Corp. v. Lexington Ins. Co., — F.3d —-, 2013 WL 2631145 (8th Cir. (Mo.) 2013).

The Doe Run Company mines lead hundreds of feet below the ground (Source: www.doerun.com)

The Doe Run Company mines lead hundreds of feet below the ground (Source: http://www.doerun.com)

The lead producer, Doe Run, argued that it would be unreasonable to interpret the pollution exclusion as applying to lead concentrate, Doe Run’s primary product. At the very least, Doe Run asserted, there was ambiguity regarding the scope of coverage, which, under Missouri law, required the court to construe the policy against the insurer. The Eighth Circuit was not persuaded, noting, “discarded or abandoned lead concentrate and tailings are not products Doe Run intends to sell” (emphasis added); these materials are only valuable products if properly contained. The court also distinguished and discredited a state appellate court decision holding that an absolute pollution exclusion in a gas station’s CGL policy did not bar coverage for environmental damage caused by leaking gasoline. Hocker Oil Co. v. Barker–Phillips–Jackson, Inc., 997 S.W.2d 510 (Mo. Ct. App. 1999). The Eight Circuit stated that the Hocker decision was expressly limited to gasoline pollution and that it represented a minority position unlikely to be espoused by the Missouri Supreme Court.