As a follow-up to the 2025 Q2 edition of Coverage Matters, which examined the Seventh Circuit’s certification of a question regarding the impact of regulatory permits on commercial general liability (CGL) pollution exclusions, the Illinois Supreme Court has now issued its decision in Griffith Foods International, Inc. v. National Union Fire Insurance Company of Pittsburgh, PA, Case No. 131710 (Ill. 2026), definitively resolving that issue. 

The decision provides long-awaited clarity on an issue that had divided Illinois courts and carries significant implications for insurers and policyholders facing environmental contamination claims.

Background
Griffith Foods International, Inc. and its successor, Sterigenics U.S., LLC (the “Insureds”), operated a medical supply sterilization facility in Willowbrook, Illinois, from 1984 to 2019. The facility used ethylene oxide (EtO), an allegedly carcinogenic gas, to sterilize medical equipment and devices. The companies emitted EtO into the air pursuant to a permit issued by the Illinois Environmental Protection Agency (IEPA).

Beginning in 2018, more than 800 residents near the facility filed lawsuits against the Insureds, alleging that they suffered bodily and personal injuries, including cancer, resulting from decades of exposure to EtO emissions from the facility. Those underlying claims ultimately settled for $408 million in January 2023.

The Insureds sought defense coverage under CGL policies issued by National Union Fire Insurance Company of Pittsburgh (“National Union”). National Union denied coverage based on the policies’ pollution exclusion, which barred coverage for damages caused by “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 Insureds filed suit in the U.S. District Court for the Northern District of Illinois, seeking a declaration that National Union owed a duty to defend. The District Court ruled in favor of the Insureds, finding the pollution exclusion ambiguous as to whether emissions authorized by a regulatory permit constituted traditional environmental pollution. In reaching that conclusion, the Court relied in part on Erie Insurance Exchange v. Imperial Marble Corp., 957 N.E.2d 1214 (Ill. App. Ct. 2011), which had found similar ambiguity. National Union appealed to the Seventh Circuit.

The Certified Question and Competing Precedent
In its review, the Seventh Circuit noted that the Illinois Supreme Court’s decision in American States Insurance Co. v. Koloms, 687 N.E.2d 72 (Ill. 1997), which Imperial Marble relied upon, “stand[s] centerstage in this dispute.” In Koloms, the Court held that the pollution exclusion applies to injuries caused by “traditional environmental pollution,” concluding that carbon monoxide emissions from a defective furnace did not fall within that category.

The central question before the Seventh Circuit was whether the Insureds’ permitted EtO emissions constituted “traditional environmental pollution under Koloms, or whether the regulatory permit altered the analysis.

The Seventh Circuit noted its own prior ruling in Scottsdale Indemnity Co. v. Village of Crestwood, 673 F.3d 715 (7th Cir. 2012), which held that permitted emissions were not exempt from pollution exclusions. Recognizing that Scottsdale Indemnity conflicted with Imperial Marble, the Seventh Circuit certified the question to the Illinois Supreme Court for definitive guidance on state law. 

The Illinois Supreme Court’s Decision
In a 6-0 opinion authored by Justice Joy Cunningham, the Illinois Supreme Court ruled that a permit or regulation authorizing the emission of pollutants is irrelevant to the applicability of a pollution exclusion. 

The Court determined that the plain language of the exclusion barred coverage for emissions and contained no exception for permitted or authorized pollution. The Court further emphasized that that it could not rewrite the policy to include terms the parties did not negotiate.

The Court reasoned that a permit allowing the emission of pollutants could not change the character or substance of those emissions as pollution. If EtO emissions were not pollution, the policyholders would not have needed a permit from the IEPA in the first place. A permit does not  render emissions “no longer pollution in the plain and ordinarily understood meaning of the word.”

The Court also grounded its decision in the purpose behind CGL pollution exclusions. As explained in Koloms, the pollution exclusion was drafted in response to the insurance industry’s concerns about increasing and costly environmental litigation. Declining to apply the exclusion simply because the emissions were permitted would undermine that purpose. 

Implications for Coverage Disputes
The Illinois Supreme Court's ruling provides important clarity on an issue that has generated conflicting authority within Illinois and the Seventh Circuit. By definitively holding that regulatory permits do not alter the applicability of pollution exclusions, the Court has resolved the tension between Imperial Marble and Scottsdale Indemnity in favor of insurers. 

For insurers, the ruling provides strong support for applying pollution exclusions to bodily injury claims arising from industrial emissions, even where those emissions were fully authorized by state environmental regulators. For policyholders, the decision underscores that regulatory compliance alone will not create an exception to standard pollution exclusions in CGL policies.

The ruling is particularly relevant given the increasing volume of litigation over emerging contaminants such as PFAS (per- and polyfluoroalkyl substances). Many industries that emit PFAS do so pursuant to regulatory permits or in compliance with existing standards. Under this decision, such permits are unlikely to prevent insurers from invoking pollution exclusions in coverage disputes.

More broadly, the Court reaffirmed that pollution exclusions will be enforced according to their plain language. Courts will not engraft exceptions based on regulatory authorization or compliance. Policyholders concerned about environmental liability exposure should carefully review their policies and consider negotiating specific coverage terms or endorsements that address permitted emissions, rather than relying on regulatory compliance to circumvent exclusionary language.