The opinion of the court was delivered by: Sand, District Judge.
Faced with a rising tide of lawsuits stemming from the
alleged chemical contamination of the areas surrounding a
number of its chemical plants, the Olin Corporation ("Olin")
filed suit in 1984 against its primary and excess liability
insurance carriers, seeking a declaration that they were
obligated to defend and indemnify in the underlying lawsuits.
Now, after seven years of discovery and motion practice, the
case again comes before this Court.*fn1 Presently at issue are
motions for partial summary judgment by fourteen of Olin's
primary and excess insurers. These motions relate to the
insurers' duty to defend and indemnify Olin for losses stemming
from alleged dichlorodiphenyltrichloroethane ("DDT")
contamination in areas near Olin's Huntsville, Alabama plant
Defendant Employers Insurance of Wausau ("Wausau"), a primary
insurer, moves for partial summary judgment on the ground that
a so-called "pollution exclusion" clause in its policies with
Olin absolves it of any obligation to defend or indemnify Olin.
Twelve excess liability carriers*fn2 (collectively, "the
Excess Insurers") also move for partial summary judgment. They
claim that they have no obligation to indemnify on the grounds
that there was no "occurrence" within the meaning of their
policies with Olin, and that in any event at least part of
their liability is absolved by the pollution exclusion clauses
in their policies. Defendant Hanover Insurance Company
("Hanover"), a primary insurer, moves for judgment on the
occurrence issue and on the additional ground that Olin did not
notify it of the alleged Huntsville occurrence in a timely
For the reasons given below, Wausau's motion for summary
judgment is granted. The motions of the Excess Insurers are
granted to the extent they are based on the pollution exclusion
clause issue, but denied insofar as they are based on the
occurrence issue. Hanover's motion is granted on the late
In 1954, Olin purchased the Calabama Chemical Company
("Calabama"), which operated a manufacturing plant near
Huntsville, Alabama. The plant, which produced industrial-grade
DDT for commercial use, was located on land owned by the United
States Army in an area known
as the Redstone Arsenal.*fn3 Calabama had leased the plant and
the surrounding land from the Army, and Olin assumed the lease
when it bought Calabama. Benton Wilcoxin, a member of the
partnership that owned Calabama, continued on as the manager of
the plant after the Olin acquisition.
Olin manufactured DDT at the Huntsville plant from 1954 until
1970, at which time Olin voluntarily ceased operations there.
During much of that time the plant operated on a continuous
seven day a week schedule, producing one to two million pounds
of industrial-grade DDT per month.
A. The DDT Manufacturing Process
The DDT manufacturing process at the Huntsville plant began
with the manufacture of a chemical called chloral. After being
created through a chemical reaction, the chloral was purified
through a process which produced two byproducts, sulfuric acid
and sodium hypochlorite (bleach). After being purified, the
chloral was rinsed with water in a process which resulted in
the creation of a third byproduct, hydrochloric acid. The three
byproducts — sulfuric acid, bleach and hydrochloric acid —
were released into waste water trenches running alongside the
plant which eventually led into a creek known as the Huntsville
Spring Branch. See Deposition of Benton H. Wilcoxin, Ex. 1 to
Cover affidavit ("Wilcoxin Dep. I"), pp. 46-57.
After manufacturing the chloral, Olin started the process of
making DDT. DDT was made by mixing the chloral with
monochlorobenzene ("MCB") in a process which created molten
DDT. The molten DDT was then subjected to three "washings" in
water solutions. After the washings, the process water also was
released into the waste water trenches. See id. at 58-72.
The molten DDT was then placed into a "steam stripper" which
used steam to remove any remaining MCB from the DDT. After
being stripped, the molten DDT was allowed to cool and
solidify. The steam, now laced with MCB, condensed into a
liquid with two layers, a layer of process water and a heavier
layer of MCB. The MCB layer was transferred to a storage tank
for reuse and the process water was dumped into the waste water
trenches. See id. at 70-71.
As described above, the DDT manufacturing process involved
the release of process waters and three byproducts
(collectively, the "effluent"). The effluent was expelled into
brick-lined waste water trenches running alongside the plant.
The trenches carried the effluent 50 to 75 feet south of the
plant to a 200 foot long drainage ditch. At the end of the
drainage ditch the effluent flowed into an acid-neutralization
pit and then flowed through a three-quarter mile long drainage
ditch which emptied into the Huntsville Spring Branch.
See Deposition of Donald E. Morgan, Ex. 2 to Cover affidavit,
B. Discharge of DDT from the Huntsville Plant
According to Olin, it believed that the Huntsville plant was
a "closed" plant — that is, "a plant which did not, as part of
its regular operations, allow its product, DDT, to escape into
the effluent or waterways." Memorandum of Law of Olin
Corporation in Opposition to Wausau's Motion for Partial
Summary Judgment ("Olin's Memorandum of Law"), p. 16. However,
the undisputed facts show that DDT was escaping from the plant
on a more or less continuous basis during the sixteen years
Olin operated the plant. In 1965, when Olin installed a
"settling tank" through which the effluent passed, the tank
filled up with 12,000 pounds of DDT-bearing material in four
months. See United States Army Preliminary Sanitary Engineering
Survey, Ex. 8 to Gimer affidavit ("Army Sanitary Survey
Report"), p. 9. On the basis of this event, it is clear that
substantial quantities of DDT were leaving the plant during the
entire period of its operation.
As early as 1948, Mr. Benton Wilcoxin, the plant manager,
knew that some DDT was escaping from the plant. At that time,
Wilcoxin saw DDT in the waste water ditches running alongside
the plant. Deposition of Benton H. Wilcoxin, Ex. 1 to Gimer
affidavit ("Wilcoxin Dep. II"), p. 1.
By 1952 the United States Army, which owned the land on which
the plant was situated, had become concerned about chemical
discharges from the Olin plant. On June 23, 1952, Niles
Prestage, the Army Chief of Utilities at the Redstone Arsenal,
wrote a memorandum in which he set a maximum limit of DDT in
Olin's effluent at 10 ppm (parts per million). He also
established the permissible level of DDT in the Huntsville
Spring Branch, into which the drainage ditch emptied, as
"none". See Memorandum of Niles Prestage, Ex. 32 to Gimer
affidavit, p. 1.
In 1955 two engineers, Donald Morgan and Thomas Trapane, were
assigned to the Huntsville plant by Olin. Their duties included
the task of monitoring the discharge of waste water from the
plant. When the two arrived at the plant in 1955, they observed
DDT in the waste water trenches near the plant. Deposition of
Donald E. Morgan, Ex. 11 to Gimer affidavit ("Morgan Dep."),
pp. 14, 102. Trapane began analyzing the plant effluent on a
daily basis. He determined that small concentrations of DDT
were present in the effluent due to the ordinary operations of
the plant. Deposition of Thomas Trapane, Ex. 40 to Gimer
affidavit ("Trapane Dep."), p. 115.
During the mid-1950s, a body of scientific literature began
to develop concerning the possible dangers of DDT to the
environment and to humans. Olin executives at the Huntsville
plant were familiar with this literature, although they
disagreed that DDT was dangerous.*fn4 See id. at 71-72.
In 1957, the Army hired a chemist named Jimmie Reid to work
in the Sanitation Section at the Redstone Arsenal. His duties
included monitoring the operations of Olin and other companies
located on the Redstone Arsenal property. Reid began monitoring
the effluent from the Olin plant in 1957. At that time he
noticed white material, "which appeared to be DDT," on the
bottom of Olin's waste water ditches. Deposition of Jimmie G.
Reid, Ex. 28 to Gimer affidavit ("Reid Dep. I"), pp. 9-10;
see also Deposition of Jimmie G. Reid, Ex. 44 to Gimer
affidavit ("Reid Dep. II"), p. 33. A sample of the material was
sent to a NASA laboratory for analysis, where it was determined
to be DDT. See Deposition of Knowlen F. Knowles, Ex. 45 to
Gimer affidavit, p. 11.
In 1961, Reid inspected the drainage ditch leaving the Olin
plant. He observed DDT in the ditch. He also observed a delta
of white material, which appeared to be DDT, at the confluence
of the Olin drainage ditch and the Huntsville Spring Branch.
Deposition of Jimmie G. Reid, Ex. 43 to Gimer affidavit ("Reid
Dep. III"), pp. 224-25. Reid later tested the white material
and confirmed that it was DDT. On instructions from his
supervisor at the Redstone Arsenal, Reid took pictures of the
DDT deposits in the drainage ditch and in the Huntsville Spring
Branch. Reid showed these photos to Mr. Wilcoxin, the Olin
plant manager, but Wilcoxin took no action to determine how
much DDT was in the Huntsville Spring Branch. See Reid Dep. I
at 44; Wilcoxin Dep. II at 330-31.
During the period 1962-63, concern about the potentially
harmful effects of DDT grew in the scientific community and
among the public at large. Rachel Carson's book Silent Spring,
which made serious allegations regarding the harmful effects of
DDT on wildlife and humans, was published in 1962. In 1963, an
official of the National Cancer Institute testified in a
Senate hearing that DDT was carcinogenic. See Testimony of Dr.
Hueper, Ex. 51 to Gimer affidavit, p. 34. Management personnel
at Olin were aware of these developments. See Deposition of
Richard Henderson, Ex. 19 to Gimer affidavit, p. 182;
Deposition of Leonard A. Krause, Ex. 52 to Gimer affidavit, pp.
In August, 1963, Jimmie Reid again visited the Olin plant. He
observed a DDT "bar" at the confluence of the Olin drainage
ditch and the Huntsville Spring Branch. See Reid Dep. I at 64.
He also observed DDT some two hundred feet downstream. In
addition, Reid noticed "an extensive DDT build-up along the
lower bank" of the Branch. Id. at 49. Reid's observations were
reported to Olin's management at the Huntsville plant. See id.
at 71-72. Reid, concerned about the possible DDT contamination
of the Branch, recommended that the United States Public Health
Service ("Health Service") become involved. See id. at 90.
The Health Service visited the Olin plant in the fall of
1963. Concern within the Health Service grew when it was
discovered that traces of DDT were found at a dam more than 100
miles downstream from the Olin plant. See Deposition of Billy
G. Isom, Ex. 61 to Gimer affidavit, p. 56. The Health Service
issued a report on the Redstone Arsenal area in late 1963. The
report found that Olin's effluent contained DDT. The report
also noted that the Huntsville Spring Branch was substantially
polluted, resulting in fish kills. Toxicity studies contained
in the report showed that all fish exposed to a 25%
concentration of Olin's effluent were killed within an hour of
exposure. See Health Service Preliminary Report, Ex. 65 to
Gimer affidavit, pp. 1, 8. In a subsequently issued report, the
Health Service concluded that wastes from the Olin plant
contained "toxic concentrations of DDT. . . ." Health Service
Interim Report, Ex. 7 to Gimer affidavit, p. 10. On March 26,
1964, Wilcoxin and another Olin executive attended a meeting in
Atlanta called by the Health Service. At the conference, a
Health Service official summarized the results of the 1963
Health Service report and described the Service's concerns
about the effect of DDT on fish and wildlife, and on members of
the public who might consume affected fish or wildlife, such as
squirrels or waterfowl. See Wilcoxin Dep. II at 377; see also
Conference Summary Report, Ex. 70 to Gimer affidavit, pp. 2-5.
At about this time, the Army sent a warning letter to Olin's
legal department regarding the pollution situation at the
Huntsville plant. The Army's lease with Olin provided that Olin
was forbidden from "discharg[ing] waste or effluent from the
Leased Property in such a manner that such discharge will
contaminate streams or other bodies of water or otherwise
become a public nuisance." See Memorandum of V.H. Hartmann, Ex.
129 to Gimer affidavit, p. 1. In its letter, the Army advised
Olin that its continued discharge of hazardous waste might
constitute a violation of the lease.
In May, 1964, the Army again wrote to Olin. This letter,
addressed to Wilcoxin, proposed a limit of 80 ppb (parts per
billion) with respect to the DDT in Olin's effluent.
See Letter of United States Army (5/15/64), Ex. 73 to Gimer
affidavit, pp. 1-4. Wilcoxin responded with a letter in which
he stated that "the most serious area, with respect to
pollution, is that of DDT concentration." Wilcoxin Letter
(5/22/64), Ex. 74 to Gimer affidavit, p. 1. Olin management
began planning methods to reduce the DDT problem, including the
installation of a "settling tank" between the waste water
trenches and the drainage ditch, the purpose of which would be
to permit the DDT to settle out of the effluent before it
reached the Huntsville Spring Branch. See Morgan Letter
(7/8/64), Ex. 10 to Gimer affidavit, p. 2.
On July 11, 1964, the Olin plant was shut down temporarily to
permit the construction of the settling tank. While
construction was underway, the Tennessee Valley Authority
("TVA") completed a study which showed that the Huntsville
Spring Branch was "highly polluted with DDT." Deposition of
Charles Davidson, Ex. 64 to Gimer affidavit, pp. 70-71.
Construction of the settling tank was completed on January
8, 1965. The tank was large, measuring eight feet wide,
thirty-two feet long and eight feet deep. From the tank, the
plant effluent flowed into the plant's drainage ditch and then
onward to the Huntsville Spring Branch. After the tank was
completed, Olin reopened the plant but operated it at only 50%
of capacity. See Morgan Dep. at 267.
Despite the addition of the settling tank, Olin's effluent
exceeded the 80 ppb limitation on many occasions. See Olin
Letter (5/18/65), Ex. 88 to Gimer affidavit, pp. 1-2. When a
team of Army inspectors visited the Olin plant in September,
1965, they noticed that the settling tank was "completely
filled with DDT solids." Army Sanitary Survey Report at 9.
Plant personnel estimated that there were more than 12,000
pounds of DDT solids in the tank, which had been cleaned
approximately four months before. Id. When a specialist from
Olin visited the Huntsville plant three months later, in
December, 1965, he also found that "the tank area and the area
around it looked as though the DDT solids had overrun the
tank." Memorandum of Louis Rozmay, Ex. 100 to Gimer affidavit,
On December 14, 1965, a meeting was held between an official
of the Army Corps of Engineers and Olin personnel, including
Wilcoxin. At that meeting the Army set a limit of 10 ppb of DDT
in the Huntsville Spring Branch and retained the 80 ppb limit
for the effluent. See Wilcoxin Dep. II at 462. In an effort to
meet these limits, Olin built a "settling pond" in the drainage
ditch area. Completed in approximately May, 1966, the pond was
190 feet long, 20 to 30 feet wide and 9 feet deep. See Morgan
Dep. at 59-60. Olin also began constructing a new drainage
ditch during this period.
On October 26-27, 1967, a conference was held regarding water
pollution in the Redstone Arsenal area. Present at the meeting,
among others, were Olin representatives and an official from
the Federal Water Pollution Control Agency. The official
reported that a DDT level of 10 ppb in the Huntsville Spring
Branch was dangerous to aquatic life and that the limit would
have to be reduced. See Memorandum (10/30/67), Ex. 10 to Gimer
affidavit, p. 1.
Despite Olin's remedial measures, the DDT levels in the plant
effluent and in the Huntsville Spring Branch exceeded the
applicable limitations on many occasions. See, e.g., Wright
Report on Redstone Arsenal, Ex. 113 to Gimer affidavit, p. 1;
Wilcoxin Letter (12/12/67), Ex. 114 to Gimer affidavit, p. 1;
Report on Waste Disposal Facilities, Ex. 121 to Gimer
affidavit, p. 5. The DDT levels in the mud in the drainage
ditches and in the Branch were higher still. By May, 1969, the
TVA had concluded that "too much DDT [was] still leaving the
Redstone Arsenal plant." Memorandum of Charles Chance, Ex.
124 to Gimer affidavit, p. 1.
In August, 1969, the Army inspected the Olin plant. This
inspection led the Army to believe that Olin was in violation
of its lease, based upon its emission of DDT and other
pollutants. Following the inspection, the Army began procedures
to shut down the Olin plant. See Summary Report of DDT
Contamination, Ex. 9 to Gimer affidavit ("DDT Summary Report"),
p. 3; Letter of General McBride (9/5/69), Ex. 127 to Gimer
affidavit, p. 1. When the plant was closed for maintenance on
August 18, 1969, the Army informed Olin that it would not be
permitted to reopen the plant until more effective pollution
controls were in place. See id.
Olin subsequently established additional pollution control
measures at the plant, including improved settling ponds and
the installation of a carbon filter system. See Letter of V.H.
Hartmann (11/4/69), Ex. 134 to Gimer affidavit, pp. 1-2. On
January 10, 1970, the plant reopened. Despite the presence of
the additional controls, DDT levels in the effluent and in the
Huntsville Spring Branch continued to exceed the limits
established by the Army. See Letter of Kenneth Knapp (1/20/70),
Ex. 136 to Gimer affidavit, pp. 3-4; Deposition of David
Delavan, Ex. 109 to Gimer affidavit, p. 89.
In April, 1972, the Army conducted a water quality survey in
the areas surrounding the Olin plant site. The study showed
extensive land and water contamination with DDT. See id. at 6.
An analysis of fish in the waters surrounding the old plant
site revealed DDT levels in excess of Food and Drug
Administration limits. Id. Based on these findings, the
Environmental Protection Agency ("EPA") authorized the Army to
clean up the plant site. Id. at 7.
In 1978, the TVA conducted a study of the extent of DDT
contamination downstream from the Redstone Arsenal and produced
a report, at the request of the EPA. The report found high
levels of DDT in fish in the waters downstream from the old
Olin plant. The report also expressed concern about the
possible effects of DDT on persons ...