Who gains from saving nature
Ledger 1 : 33 — For each dollar financing nature-based solutions in 2023, about $33 financed activities harmful to nature. (UNEP)
Cases / Pesticides and agrochemicals · United States · 1947–2020

Montrose DDT insurance case

Nature's voice · report
No measurement of the harm done to me here is on record.
Did nature suffer? Not measured.
Not on record
  • The record does not name which of my species, waters, soils or forests were harmed.
What the record lacks: 1 none on record · 1 insufficient · 1 not measured · 2 disputed · 1 unclear See the gaps

Montrose Chemical, a DDT producer, sued its liability insurers in California over cover for the contamination its operations caused. The state Supreme Court ruled against the insurers in 1995 and again in 2020, and the industry then added a clause to exclude damage known before a policy.

about 1,800 tonnesDDT released to Los Angeles sewers by Montrose, 1947–1971
As reported by the US Department of Justice on 19 December 2000. Settlement the same month: $73 million with three other companies.

Status As of 2020: the California Supreme Court had ruled for Montrose against its insurers in 1995 and 2020; no later ruling or insurer payment figure was found.

What?
Montrose Chemical's insurers refused it defence and indemnity for DDT contamination; the California Supreme Court ruled against the insurers in 1995 and 2020. IRMI
Where?
Torrance and Los Angeles, California. US Department of Justice (archive)
When?
Discharges 1947–1971; policies 1961–1985; rulings 1995 and 2020; settlement December 2000. US Department of Justice (archive)
Who?
Gained
  • Montrose Chemical Corporation — Won both California Supreme Court rulings on insurance cover (1995, 2020). HBB Law
  • US insurance industry — Added the 'Montrose endorsement' excluding damage known before the policy. IRMI
Lost
  • Admiral Insurance and other insurers — Lost on the known-loss rule (1995) and on exhaustion (2020). HBB Law
  • Montrose and three other companies — Agreed to a $73 million settlement in December 2000. US Department of Justice (archive)
Harmed
None on record
Why?
Admiral denied cover because Montrose's conduct predated the policies and because Montrose knew of the contamination before they were issued. IRMI
How?
Montrose sued its insurers; the California Supreme Court held in 1995 that the known-loss rule did not bar cover while liability was uncertain, and in 2020 applied vertical exhaustion to excess layers. HBB Law
6 of 6 questions answered from the record

What happened

The record, in order.

Montrose Chemical Corporation produced DDT. Its site at Torrance, California, was covered by liability policies running from 1961 to 1985, and the cleanup of the contamination was put at over $100 million in secondary insurance-law summaries. According to a US Department of Justice announcement of 19 December 2000, Montrose discharged about 1,800 tonnes of DDT into the Los Angeles sewer system between 1947 and 1971.

Admiral Insurance denied Montrose both a defence and indemnity. It gave two grounds: that Montrose's conduct predated its policies, and that the 'known loss' or 'loss in progress' rule applied because Montrose knew of the contamination before the policies were issued.

In 1995 the California Supreme Court, in Montrose Chemical Corp. v. Admiral Insurance Co. (10 Cal.4th 645), held that the known-loss rule does not bar cover while the extent of the damage or the insured's liability is still uncertain, and that a continuous-injury trigger applies. The insurance industry then added the 'Montrose endorsement', a clause excluding damage known before the policy began.

In 2020, in Montrose v. Superior Court, the court ruled that 'vertical exhaustion' applies to excess layers of cover, rejecting the insurers' argument for horizontal exhaustion. The insurers lost on both points.

Separately, in December 2000 Montrose and three other companies agreed to a $73 million settlement over the DDT in Los Angeles: $30 million for restoration and $43 million for cleanup, according to the Department of Justice.

  1. 1947Montrose begins the DDT discharges to the Los Angeles sewer system that continue to 1971 (about 1,800 tonnes)
  2. 1961Start of the liability policies at issue; they run to 1985
  3. 1972EPA bans DDT in the United States
  4. 1995California Supreme Court, Montrose v. Admiral: known-loss rule does not bar cover; industry later adds the 'Montrose endorsement'
  5. 200019 December: Montrose and three other companies agree a $73 million settlement ($30 million restoration, $43 million cleanup)
  6. 2020California Supreme Court, Montrose v. Superior Court: vertical exhaustion applies to excess cover

What was said

Claims, in the words of those who made them.

Where accounts differ

Each party's account, side by side, with its source. The record does not settle these points; it shows them.

Did Montrose's prior knowledge of the contamination bar insurance cover?
Company or project
Admiral Insurance

Denied defence and indemnity because the conduct predated its policies and the known-loss rule applied, since Montrose knew of the contamination before the policies were issued.

IRMI
Courts
California Supreme Court (1995)

The known-loss rule does not bar cover while the extent of damage or the insured's liability is still uncertain; a continuous-injury trigger applies.

IRMI
Must lower layers of insurance be used up before excess layers respond?
Company or project
Insurers

Argued for horizontal exhaustion of excess layers.

HBB Law
Courts
California Supreme Court (2020)

Applied vertical exhaustion to excess layers.

HBB Law

How it looked

What was shown, beside what was recorded.

Shown

    Recorded

    • The California Supreme Court held in 1995 that the known-loss rule does not bar cover while the extent of damage or the insured's liability is uncertain.
      IRMI
    • In 2020 the court applied vertical exhaustion to excess layers and rejected the insurers' horizontal-exhaustion argument.
      HBB Law
    • About 1,800 tonnes of DDT were discharged to Los Angeles sewers in 1947–1971; the December 2000 settlement was $73 million ($30 million restoration, $43 million cleanup).
      US Department of Justice (archive)

    Who gained

    Money that reached nature, beside money that stayed elsewhere.

    Reached nature or the ground

    $73m
    Settlement by Montrose and three other companies, as announced by the US Department of Justice. Which party paid what is not given.
    Restoration$30m
    Cleanup$43m

    Gained elsewhere

    Not totalled
    Reached the ground
    $73m
    Currency: USD · Window: December 2000 settlement. All figures cover the same period. * Estimate built from cited figures.

    Responses on record

    • admiral-insurance: Denied Montrose a defence and indemnity on two grounds: that Montrose's conduct predated its policies, and that the known-loss or loss-in-progress rule applied. · IRMI
    • us-insurance-industry: After the 1995 ruling, added the 'Montrose endorsement' to policies, excluding damage known before the policy. · IRMI

    In court and with insurers

    Every proceeding and every insurer decision on record.

    Lawsuits and rulings

    1. 1995Claimant won
      Montrose Chemical Corp. v. Admiral Insurance Co., 10 Cal.4th 645
      California Supreme Court · Civil · Montrose Chemical Corporation → Admiral Insurance

      The court held that the known-loss rule does not bar cover while the extent of the damage or the insured's liability is still uncertain, and that a continuous-injury trigger applies. The sources are secondary summaries, not the opinion. IRMI

    2. 2020Claimant won
      Montrose v. Superior Court (vertical exhaustion)
      California Supreme Court · Civil · Montrose → Insurers (excess layers)

      The court applied vertical exhaustion to excess layers of cover and rejected the insurers' horizontal-exhaustion argument. The source is a law-firm summary, not the opinion. HBB Law

    3. 2000-12-19Settled$73m $73 million: $30 million restoration, $43 million cleanup
      DDT settlement, Los Angeles
      Not stated in the source (announced by the US Department of Justice) · Civil · Not stated in the source → Montrose and three other companies (not named in the source)

      Settlement over about 1,800 tonnes of DDT discharged to the Los Angeles sewer system in 1947–1971. US Department of Justice (archive)

    Insurers

    1. 1995In litigation
      Admiral Insurance → Montrose Chemical Corporation
      Stated reason: Conduct predated the policies; known-loss or loss-in-progress rule.

      Admiral denied defence and indemnity. In 1995 the California Supreme Court held that the known-loss rule does not bar cover while the extent of damage or liability is uncertain. The insurers lost on this point; the source does not record payments. IRMI

    2. 2020In litigation
      Excess-layer insurers (not named in the source) → Montrose
      Stated reason: Insurers argued for horizontal exhaustion of lower layers.

      The California Supreme Court applied vertical exhaustion to excess layers in 2020. The insurers lost on both points; the source does not record payments. HBB Law

    What nature saw

    Outcomes measured on the ground, and nature's note.

    Nature's report opens this page. Below: further outcomes measured on the ground.

    DDT released to Los Angeles sewers (1947–1971)
    about 1,800 tonnes
    Department of Justice, 19 December 2000
    Bald eagle nesting pairs in the 48 contiguous states
    417 (1963) to 71,467 breeding pairs (2018–2019)
    The EPA banned DDT in 1972 because it thinned eggshells; the species left the protected list in 2007. This is a DDT-wide outcome and is not tied in the source to Montrose's discharges.

    What we don't know

    Undisclosed, unproven, untried: recorded as data.
    Court ruling exists

    Nature

    • Not measured Harm to nature: The record holds no measurement of harm to nature.

    Figures

    • Insufficient Cleanup cost: Torrance site cleanup as stated in secondary insurance-law summaries; no primary source.

    Accounts

    • Disputed Did Montrose's prior knowledge of the contamination bar insurance cover?
    • Disputed Must lower layers of insurance be used up before excess layers respond?

    Record

    • None on record Montrose's profit from DDT: no figure appears in the record, so the $73 million settlement cannot be compared with it.
    • Unclear Whether insurers ultimately paid for Montrose's defence or indemnity under the 1995 and 2020 rulings, and how much: the rulings are recorded, the payments are not.

    Did the harm stop?

    The EPA banned DDT in the United States in 1972. Montrose's discharges to the Los Angeles sewers are recorded for 1947–1971.

    Who paid?

    Montrose and three other companies agreed in December 2000 to a $73 million settlement ($30 million for restoration, $43 million for cleanup). The record does not show what the insurers paid.

    Sources

    Voices on record: — Company or project✓ Government and regulators— Courts✓ Press and investigations— Communities and civil society— Researchers

    Government and regulators

    1. US Department of Justice announcement on the DDT settlement, Los Angeles
      US Department of Justice (archive) · 2000-12-19

    Press and investigations

    Connected cases

    Related matters, and cases linked to this one through the same organisations, with the role each played in both.
    Terms used on this page

    Institutions

    EPA
    The US Environmental Protection Agency.
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