The North Dakota Supreme Court has not determined whether pollution exclusions bar coverage for damage outside of traditional environmental pollution. However, the United States Court of Appeals for the Eighth Circuit recently analyzed the issue, interpreting the pollution exclusion broadly to bar coverage for injuries resulting from carbon monoxide poisoning and an industrial explosion.
North Star Mutual Insurance Company v. Rodin
In North Star Mutual Insurance Company v. Rodin, 171 F.4th 1136 (8th Cir. 2026), the insureds were sued by a plaintiff alleging injury when a portable heater in the insureds’ farm shop emitted dangerous levels of carbon monoxide. The insurer, North Star Mutual Insurance Company (“North Star”), filed a declaratory judgment action alleging that the pollution exclusion in the policy issued to the insureds barred defense and indemnity coverage for the underlying suit.
The pollution exclusion in North Star’s policy barred coverage for bodily injury “that results from the actual, alleged, or threatened discharge, dispersal, seepage, migration, spill, release, or escape of ‘pollutants’ into or upon land, water, or air.” “Pollutants” was defined as “any solid, liquid, gaseous, thermal, or radioactive irritant or contaminant, including acids, alkalis, chemicals, fumes, smoke, soot, vapor, and waste.” The district court held that the pollution exclusion barred coverage to the insureds for the underlying suit.
On appeal, the insureds requested that the Eighth Circuit certify the pollution exclusion issue to the North Dakota Supreme Court, which had not yet interpreted a pollution exclusion. The Eighth Circuit declined, reasoning that North Dakota had ample case law on policy interpretation to render an opinion. The court noted that state courts differ in their approach to the pollution exclusion. The first approach narrows the pollution exclusion to traditional environmental pollution cases, reasoning that the exclusion is either ambiguous or that a reasonable policyholder would expect the provision to only apply to traditional environmental pollution. The second approach, based on an unambiguous reading of the exclusion, extends application of the exclusion to claims involving damage other than environmental pollution. The Eighth Circuit reasoned that North Dakota law would adopt the latter approach. It concluded that carbon monoxide was a “contaminant,” which it defined as making something “unfit for use.” Since carbon monoxide is a gas that can render air unfit for use when introduced at high levels, it was a “contaminant” within the definition of “pollutant.” Because the underlying suit arose out of bodily injury resulting from the discharge of a pollutant, the insureds were not entitled to defense or indemnity.
XTO Energy, Inc. v. Commerce and Industry Insurance Company
Months after the Rodin decision, the Eighth Circuit was presented with another opportunity to interpret the pollution exclusion under North Dakota law. In XTO Energy, Inc. v. Commerce and Industry Insurance Company, No. 24-3101, 2026 WL 2607472 (8th Cir. Sept. 3, 2026),the dispute centered around the application of the pollution exclusion to an oil and gas explosion. The insured owned an oil and gas well and hired a contractor to perform “company man” services surrounding the well. The insured agreed to add the contractor as an additional insured on its policy and to indemnify the contractor for claims made by the insured’s employees and subcontractors. The insured purchased several policies, including an umbrella policy issued by Commerce and Industry Insurance Company (“CIIC”).
The umbrella policy contained a pollution exclusion precluding coverage for damages arising out of the “release or escape of pollutants anywhere at any time.” It also contained a time element exception restoring coverage if, among other requirements, the damage was reported to CIIC “within (21) calendar days of becoming known to the Insured.”
On June 18, 2016, oil and gas escaped the well owned by the insured, causing an explosion and killing and injuring several workers. After a lawsuit was brought against the insured and its contractor, the insured fulfilled its indemnification obligations and sought coverage from its insurers, including CIIC. CIIC denied coverage citing the pollution exclusion, and litigation ensued. The federal district court granted summary judgment to the insured, reasoning that the insurer failed to establish prejudice from the insured’s failure to provide notice within twenty-one days and that the insurer waived the ability to deny the claim when it failed timely object to the insured’s late notice.
On appeal, the insured argued that the pollution exclusion did not apply to personal injuries. The Eighth Circuit reasoned that oil and gas were “pollutants” and that it was undisputed that the plaintiffs suffered injuries when the oil and gas caught fire and exploded. Since the injuries arose out of the release of a pollutant, the allegations in the underlying suit fell within the scope of the pollution exclusion.
The court also reasoned that the insured failed to establish that coverage was restored by the exception because it did not timely report the damage to CIIC. It rejected the insured’s argument that CIIC was required to establish prejudice if the notice condition in the time element exception was not met. It declined to insert an unwritten prejudice requirement that was not agreed upon by the parties at the time of contract. Moreover, CIIC did not waive the exclusion because it had no obligation to object to the insured’s failure to satisfy the notice condition of the time element exception. Since the injuries in the underlying suit fell within the scope of the pollution exclusion and the notice condition in time element exception was not met, the insured was not entitled to coverage.
Conclusion
The recent decisions highlight the Eighth Circuit’s broad textual reading of the pollution exclusion under North Dakota law in the absence of contrary interpretation from a North Dakota appellate court. Notably, jurisdictions remain divided over whether pollution exclusions apply to accidental releases that result in fires, explosions, or other industrial accidents. XTO Energy is consistent with the Eighth Circuit’s prior reasoning in another case that where the injuries are the result of an explosion, the nature of the harm “is directly related to the nature of the [flammable] contaminant.” Hiland Partners GP Holdings, LLC v. Natl. Union Fire Ins. Co. of Pittsburgh, PA, 847 F.3d 594, 600 (8th Cir. 2017). Since application of the pollution exclusion varies widely across jurisdictions, insurers should carefully assess interpretation of the exclusion in the applicable jurisdiction when making coverage decisions.
