Illinois Supreme Court Finds Pollution Exclusion Applies Regardless of Government Permit

On January 23, 2026, the Illinois Supreme Court issued its long-awaited decision in Griffith Foods International, Inc. v. National Union Fire Insurance Company of Pittsburgh, PA, 2026 IL 131710, which significantly impacts companies operating under environmental permits in Illinois. The court held that “a permit or regulation authorizing emissions (generally or at any particular levels) has no relevance in assessing the application of a pollution exclusion within a standard-form commercial general liability policy.”

Summary of the Decision

The coverage case arose from underlying mass tort litigation against Griffith Foods and its successor, Sterigenics, in which residents of Willowbrook, Illinois alleged that ethylene oxide (EtO) emissions from the companies’ medical-equipment sterilization facility over more than 35 years caused cancer and other serious diseases. Citing the standard pollution exclusion, National Union refused to defend the insureds under their commercial general liability policies.

The federal district court in the Northern District of Illinois ruled in favor of the insureds, finding that the pollution exclusion did not apply because the EtO emissions were authorized under an Illinois Environmental Protection Agency permit. On appeal, the Seventh Circuit certified to the Illinois Supreme Court the question of what relevance a permit authorizing a certain level of emissions plays in assessing the application of a pollution exclusion.

The Illinois Supreme Court rejected the insureds’ argument and found that the pollution exclusion did apply, notwithstanding the permit. The Court found that the plain language of the pollution exclusion “says nothing about permitted or authorized pollution.” (Emphasis in original.) The Court reiterated that courts “must not inject terms and conditions different from those agreed upon by the parties.” The Court explained that the IEPA permit did not change the character of EtO emissions as pollution, emphasizing that “if the EtO emissions were not pollution, there would have been no need for the policyholders to obtain a permit from IEPA in the first place.” In so ruling, the Court overruled two Illinois appellate decisions, Erie Insurance Exchange v. Imperial Marble Corp., 957 N.E.2d 1214 (2011) and Country Mutual Insurance Co. v. Bible Pork, Inc., 2015 IL App (5th) 140211, which declined to apply pollution exclusions to claims involving alleged “pollution” resulting from permitted business operations.

Key Takeaways

• Consequences for Illinois Companies with Long-Tail Insurance Claims: Illinois companies facing long-tail environmental liabilities may no longer be able to overcome insurer pollution exclusion defenses simply because their business operations were in compliance with regulatory permits. Depending on the specific policy wording and underlying facts, the ruling likely forecloses CGL coverage for “pollution” liabilities arising out of permitted operations. The Court’s holding means that insurers may deny coverage under broad pollution exclusions in standard CGL policies subject to Illinois law even when the policyholder’s operations were authorized under applicable operating permits or regulations. The ruling leaves policyholders potentially exposed to substantial uninsured defense costs and damages even where such businesses were not acting as “polluters” in the ordinary sense. The decision, however, does not address other responses policyholders may have to pollution exclusion defenses, including those where the release may fall within the sudden and accidental exception to the exclusion.
• Alternative Coverage Options: Affected companies should evaluate whether specialized pollution or environmental liability coverage is available for their operations. The Illinois Supreme Court acknowledged that “insurance companies have developed entirely separate pollution liability policies for purchase, which allow the insurers to assess the risk of costly environmental litigation” and that “these separate policies generally provide the policyholders with coverage for environmental lawsuits.” Although such policies were not widely available to Griffith Foods at the time of the alleged EtO emissions, companies at risk of liability for environmental emissions should consult with experienced insurance brokers and coverage counsel to review existing policies and explore available options.
• National Ramifications: Illinois appears to be the first state to directly address the relevance of permits and authorized emissions to the application of standard CGL pollution exclusions. Insurers are likely to seize upon the Griffith Foods decision and seek to extend its holding to other jurisdictions. Notably, the insurer in Griffith Foods received amici support from Zurich American Insurance Company, Swiss Re, and major insurance trade associations, demonstrating the industry’s coordinated interest in limiting pollution coverage under CGL policies.

The attorneys in Honigman’s Insurance and Reinsurance Recovery and Advisory group are available to respond to any questions you may have related to the Griffith Foods decision and these issues.

Relevant Documents