On January 23, 2026, in a case involving an insurance coverage dispute, the Illinois Supreme Court answered a question certified by the Seventh Circuit Court of Appeals about whether and, to what extent, a permit or regulation authorizing emissions is relevant to the application of a pollution exclusion contained in a standard-form commercial general liability policy.

The Supreme Court found that a permit or regulation authorizing emission is “irrelevant” when determining whether a commercial general liability policy’s pollution exclusion applies to a claim made over those emissions.

In Griffith Foods International, Inc. v. National Union Fire Insurance Company of Pittsburgh, P.A., 2026 IL 131710, Illinois Supreme Court was asked to help the Seventh Circuit decide whether the U.S. District Court for the Northern District of Illinois had correctly concluded in August 2022 that insurer interests had a duty to defend and cover $150 million in defense costs over decades of ethylene oxide pollution that a Sterigenics plant sterilizing medical devices released into an Illinois community, because the pollution exclusion was ambiguous about whether the emission of ethylene oxide (EtO) permitted by the Illinois Environmental Protection Agency qualified as traditional environmental pollution under the policies.

In the Seventh Circuit’s order certifying a question to the Illinois high court, the appellate court said it was “‘genuinely uncertain’ as to how to proceed” with interpreting the exclusion, because the “exact scope of traditional environmental pollution remains unclear,” sending the dispute to the Illinois Supreme Court for guidance.

Sterigenics argued that it operated under permits from Illinois environmental regulators which expressly authorized their annual ethylene oxide (EtO) emissions. The Illinois Supreme Court determined that permit did not change the “character or substance” of the emissions as pollution.

In a unanimous 6-0 ruling (with one justice not participating) authored by Justice Joy Cunningham, the Illinois Supreme Court concluded the pollution exclusion says nothing about permitted or authorized pollution and courts should not insert their own terms and conditions that the parties have not agreed upon.

“Indeed, if the EtO emissions were not pollution, there would have been no need for the policyholders to obtain a permit from IEPA [Illinois Environmental Protection Agency] in the first place,” the justices reasoned. “In other words, the permit allowing the policyholders to emit EtO did not, in some manner, render those emissions no longer pollution in the plain and ordinarily understood meaning of the word.”

At issue in the case was how to apply American States Insurance Co. v. Koloms, an Illinois Supreme Court ruling that interprets the standard commercial general liability pollution exclusion to exclude coverage for bodily injuries caused by traditional environmental pollution, like industrial emissions of pollutants, but not by more commonplace emissions, like a carbon monoxide leak in a residence. A three-judge panel of the Seventh Circuit was unsure how to square the Koloms decision with an Illinois state appeals court’s 2011 ruling in Erie Insurance Exchange v. Imperial Marble Corp., which found a CGL policy’s pollution exclusion “arguably ambiguous” as to whether emissions authorized by regulatory permit are excluded from coverage.

The Illinois Supreme Court noted that the Seventh Circuit has already found that the discharge of emissions at issue in this case fits squarely within the plain language of the pollution exclusion, which bars coverage for litigation over “the discharge, dispersal, release or escape of smoke, vapors, soot, fumes, acids, alkalis, toxic chemicals, liquids or gases, waste materials or other irritants, contaminants or pollutants into or upon land, the atmosphere or any water course or body of water.”

The Illinois Supreme Court’s holding further concluded that a permit or regulation that greenlights emissions generally or at a particular level has “no relevance” in determining whether that exclusion applies.

“In addition, as explained by this court in Koloms, the pollution exclusion in CGL policies was drafted in response to the insurance industry’s concerns about increasing, costly environmental litigation,” the court said. “Declining to apply the pollution exclusion simply because the pollution was permitted by the state would undermine the pollution exclusion’s very purpose.”