Failure to Provide Notice to Excess Insurer Dooms Insurance Recovery for Environmental Settlement

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By Steven M. Siros

A California appellate court recently affirmed a lower court decision that had concluded that an insured’s failure to obtain consent from its excess insurer barred it from recovering insurance proceeds from that insurer.  In 2001, a lawsuit was filed by residents of a Missouri town seeking damages against the insured relating to alleged contamination from a lead and cadmium smelting operation.  Zurich Insurance Company was the primary liability insurer and had agreed to provide a defense of the action.  Fidelity & Casualty of New York (“F&C”) was an excess carrier and had received notice of the underlying litigation.  The matter was resolved during a mediation and the insured agreed to settle the residents' claims for $55 million.  However, F&C was not notified of the settlement until a month later. 

SmokestacksThe insured sued both its primary and excess carriers seeking coverage for its $55 million settlement.  In response to the lawsuit, F&C pointed to a consent clause in its excess insurance policy that required the insured to seek consent from its insurer prior to settling any potential covered claim.  F&C argued that since its insured had not sought F&C’s consent prior to settling the lawsuit, it had no coverage obligation.  In response, the insured argued that it had notified F&C of the mediation session and that F&C could have participated in said session but elected not to do so.  The court rejected that argument, noting that not only had the insured  not sought authority from F&C but it also had not notified F&C of the time and place of  the mediation.  Instead, the court concluded that “the holder of a liability policy cannot present to a liability insurer a fait accompli in the form of a done-deal settlement of a case in contravention of an insurance policy’s consent clause.  Doing so forecloses the liability insurer from the ‘opportunity’ of disputing the amount of damages.”  Please click here to read the court’s opinion. 


You Are Invited—CBA Environmental Law Committee

GraysonBy E. Lynn Grayson

CBAThe Chicago Bar Association (CBA) Environmental Law Committee invites you to its regularly scheduled committee meeting on Tuesday, February 2 beginning at 12:15 p.m. At this meeting, Exponent’s Linda Cook will present “Weaving Data Into Gold: Optimizing Your Environmental Data Assets.” Ms. Cook is a Managing Scientist in Exponent’s Environmental and Earth Sciences practice in Maryland, MA. She is an environmental chemist with more than 25 years of experience specializing in the chemical analysis of environmental samples and investigating the fate and transport of contaminants in the environment.

Jenner & Block Partner, Allison Torrence, chairs the CBA’s Environmental Law Committee. If you have any questions about the work of the committee, suggested topics for future programs or this upcoming program, please feel free to contact Allison.

The program will be held at the CBA Headquarters, 321 South Plymouth Court from 12:15 to 1:30. The meeting also is available via webcast.


Steven Siros Presenting at a Webinar on Chemical Fingerprinting

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 By Allison A. Torrence

On Wednesday, February 10, 2015 from 1:00 p.m.-2:30 p.m. (Central), Partner Steven Siros will be presenting at a DRI webinar titled “Relying on Chemical Fingerprinting as a Line of Evidence in Allocation Proceedings”.  The webinar will provide insights on the technical aspects of chemical fingerprinting for a variety of contaminants, including PCBs, dioxins, and chlorinated solvents.  The webinar will also provide an overview of how courts have treated chemical fingerprinting from an expert witness standpoint as well as a case study demonstrating how this technique can be used to delineate co-mingled plumes. Michael Bock, with Ramboll Environ will also be presenting at the webinar.  Here is a link to the webinar brochure.


Allison Torrence Discusses Mobile-Source Emissions in Jenner & Block “Insights” Video

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By Steven M. Siros

Partner Allison Torrence discusses mobile-source emissions and the Clean Air Act in a new video in Jenner & Block’s “Insights” series. Allison focuses her discussion on enforcement and the EPA’s increasingly stringent standards. She also examines EPA actions that recently have been in the news regarding “defeat devices” that turn on vehicle emission controls during testing in EPA labs and turn off the controls when the vehicles are on the road.

Jenner & Block Insights: Allison Torrence Discusses Mobile Emissions from Jenner & Block LLP on Vimeo.


Lynn Grayson Profiled in Illinois Super Lawyers Magazine

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 By Allison A. Torrence

Partner E. Lynn Grayson, chair of Jenner & Block’s Environmental and Workplace Health & Safety Law Practice, is prominently featured on the cover of the 2016 Illinois Super Lawyers Magazine and in a lengthy profile in the publication.

Titled “Product of Her Environment: Environmental Lawyer E. Lynn Grayson Saves Companies Green,” the profile discusses Lynn’s career, starting with being hired by the Illinois Attorney General’s office out of law school in 1986 at a time when the office needed more environmental attorneys to handle the rash of newly defined regulatory violations. “I fell into environmental law,” she says. 

The article describes a major environmental litigation case she handled on behalf of client Tenneco Oil Co. against the Sac and Fox Nation shortly after she arrived at the firm as a partner in 1994 as well as other significant matters, including environmental work for General Dynamics and General Motors.  Opposing counsel interviewed for the article noted she was “…highly sophisticated, experienced, reasonable and, above all, commercial.”

The profile also highlights Lynn’s pro bono service, including, for instance, her work as pro bono counsel for organizations like Women in Need Growing Stronger (WINGS), the Alliance for the Great Lakes and others. The causes dearest to her heart, the article observes, are efforts to advance women in the law.  Jane DiRenzo Pigott, with whom Lynn created Call to Action, an initiative to promote women lawyers and a survey that measures trends in the number of women partners, associates and other lawyers, says of Lynn:  “She models professionalism, polish and a style that’s her own.  When junior women look at her, they see someone who has made it to the top and done so with a style that is authentic to her.”


President Obama Appoints Water Czar to Address Flint Water Issues

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By Steven M. Siros

 

Yesterday evening, the Department of Health and Human Services designated Dr. Nicole Lurie, an agency assistant secretary, to lead the federal government’s response to the elevated lead levels allegedly found in the drinking water being provided by the City of Flint, Michigan, to its residents.  This designation came on the heels of a meeting between Flint’s mayor and Valerie Jarrett in Washington, D.C.  The federal government has elected to play a significant role in addressing this crisis, with President Obama signing an emergency declaration on Saturday which provided Flint with access to up to $5 million in federal funds.  The crisis began in 2014 when Flint stopped getting water from Detroit and began obtaining its drinking water from the Flint River in an effort to lower costs. 

FlintThe appointment of a federal “czar” to coordinate a federal response to contamination of a local drinking water system is somewhat unusual.  However, it is likely that the political nature of this issue, coupled with the fact that  U.S. EPA may have been aware as far back as April 2015 that Flint’s water supply was at risk for lead contamination, likely contributed to this decision.  For those that watched the Democratic presidential debate on Sunday, the Flint water issues were discussed by the candidates, with blame not surprisingly being directed at Republican Governor Rick Snyder. 

Although Flint has stopped obtaining water from the Flint River, the risk has not necessarily been alleviated due to the damage that the corrosive water likely caused the City's water distribution system, including pipes leading to individual residences.  As such, there is a continuing effort to provide residents with bottled water and water filters for their homes while a more long-term solution is investigated.  Several class-action lawsuits have already been filed and more are likely as this crisis continues to evolve.  In addition, multiple investigations have been launched by both the Michigan State’s Attorney  and the U.S. Attorney’s Office for the Eastern District of Michigan.

 


Climate Change, Energy Addressed in State of the Union

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 By Allison A. Torrence

President Obama addressed the nation last night in his final State of the Union speech. While the President covered a wide range of topics, he spent time to discuss the often politicized and controversial topics of climate change and alternative energy. When outlining the “four big questions” he believes the nation has to address, Obama asked “how do we make technology work for us, and not against us, especially when it comes to solving urgent challenges like climate change?”

Later, Obama dismissed anyone who disputes the science of climate change, and framed the challenge of climate change as an opportunity for American businesses to invest in alternative energy. He claimed that the solar energy industry employs more Americans than the coal industry and pushed for giving homeowners the freedom to generate and store their own energy. Obama stated that he wants to accelerate the transition from “old, dirtier energy sources” by pushing to “change the way we manage our oil and coal resources so that they better reflect the costs they impose on taxpayers and our planet.”

The full transcript of the President’s State of the Union speech is available here and you can watch video of the speech at the White House's website.


It’s Official! No More Microbeads!

GraysonBy E. Lynn Grayson

Microbeads in waterPresident Obama recently signed The Microbead-Free Waters Act of 2015, phasing out the use of microbeads in health and beauty products. This legislation moved swiftly through Congress and was passed by the House and Senate in December 2015 and signed by President Obama on December 28, 2015.

The new law requires the manufacturing of products containing microbeads to end by July 1, 2017 and the sale of them to cease by July 1, 2018. This legislation was supported by various health and beauty products trade and industry groups, many of whose members already had voluntarily committed to replacing microbeads with viable alternatives. The new law amends the Federal Food, Drug and Cosmetic Act in general banning cosmetics that contain synthetic plastic microbeads.

Microbeads have been the focus of growing environmental and health-related concerns since the very small particles are washed down the drain into waterways, lakes, streams, and rivers. Since the plastic beads do not break down, they are eaten by fish and animals, who often die because these materials cannot be digested.

As discussed a number of times in this blog, microbeads have been the subject of growing regulatory scrutiny. A number of states, as well as Canada, have passed laws working to ban the use, manufacture, and sale of microbeads over time.

The Microbead-Free Waters Act of 2015 is another example of consumer driven changes in products to safeguard and improve the environment.


Are Stricter U.S. EPA Pesticide Registration Reviews on the Table for 2016?

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 By Steven M. Siros 

In 2015, the United States Court of Appeals for the 9th Circuit vacated U.S. EPA’s registration of the insecticide sulfoxaflor, finding that U.S. EPA lacked adequate data to ensure that its registration would not harm non-target species, and more specifically, bees.  Following the 9th Circuit’s decision in September 2015, U.S. EPA reversed its position on two other pesticide registrations.  In October 2015, U.S. EPA indicated that it planned to ban the agricultural use of chlorpyrifos notwithstanding U.S. EPA's previously stated intention to work with industry to mitigate the risks as opposed to an outright ban.  In November 2015, U.S. EPA sought to voluntarily vacate its prior registration of Enlist Duo on the basis that U.S. EPA had obtained new data suggesting that the combined toxicity of its two ingredients (glyphosate and 2,4-D) was higher than originally believed.  U.S. EPA was facing litigation in the 9th Circuit with respect to both of these pesticides which likely played a role in those decisions.  In addition, U.S. EPA’s anticipated decision with respect to the reregistration of glyphosate has been delayed on multiple occasions and is now expected sometime in 2016. 

These actions are all suggestive that U.S. EPA has elected to adopt a more stringent approach with respect to its risk reviews of pesticides under the Federal Insecticide, Fungicide and Rodentcide Act (FIFRA) and the Endangered Species Act (ESA).  Such an approach is likely to result in significant delays in getting pesticide products registered and to the market. We will continue to follow these issues as we await U.S. EPA’s glyphosate reregistration decision which is likely to be the next significant U.S. EPA action in the FIFRA arena.

 


U.S. Sues Volkswagen Over Clean Air Act Defeat Devices

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 By Allison A. Torrence


TailpipeOn Monday, January 4, 2016, the U.S. Department of Justice, acting on behalf of the U.S. Environmental Protection Agency, filed a civil lawsuit in federal district court against Volkswagen, Audi and Porsche (collectively referred to as Volkswagen). The lawsuit alleges that Volkswagen violated the Clean Air Act by installing defeat devices in approximately 580,000 diesel vehicles in the U.S. The defeat devices allegedly detected when vehicles were undergoing EPA emissions tests and turned on emissions controls during the tests so that emissions were reduced to permissible levels, but then turned off emissions controls during normal driving conditions on the road. The lawsuit seeks injunctive relief - including mitigation of excess NOx emissions - and civil penalties up to $60 billion.

The lawsuit contains only civil charges; the Clean Air Act does not provide for criminal penalties. However, as EPA noted in its news release, "A civil complaint does not preclude the government from seeking other legal remedies," and federal prosecutors are continuing their investigation into Volkswagen's actions related to the defeat devices. EPA also stated that it is in discussions with Volkswagen regarding potential remedies and recalls to fix the emissions controls in its diesel vehicles, but those discussions are still ongoing.