Editors' Summary: One of today's hottest legal battles is the ongoing dispute between corporations and their insurance companies over who will pay for hazardous waste cleanup. When Congress enacted the Comprehensive Environmental Response, Compensation, and Liability Act in 1980, it decided that the private sector, not government, would be liable for most of the cleanup costs. But within the private sector, Congress left open to what extent the standard insurance policies would cover this liability. Literally tens of billions of dollars in cleanup costs ride on the outcome, and well-financed corporate waste generators and corporate insurers have challenged one another with mixed success in courts all over the country.

In this Article, the author analyzes the case law interpreting the pollution exclusion clause, one of the standard form insurance clauses that are at the root of the controversy. He points out the subtle changes in the underlying facts that have led judges to shift their interpretations from favoring insureds to favoring insurers. He suggests that these factual distinctions, turning on whether the insured was active in causing the pollution, can provide a workable rule for determining when insurance covers the damage.