Ninth Circuit Revives Insurance Coverage for Environmental Cleanup at Contaminated Airport Site

A newly issued Ninth Circuit decision—County of San Bernardino v. Insurance Company of the State of Pennsylvania(April 23, 2026)—has meaningful implications for environmental remediation, Water Board enforcement actions, contaminated sites, and insurance disputes. The Court reversed a lower court ruling that had limited insurance coverage for groundwater contamination at the Chino Airport, opening the door to significantly broader recovery for cleanup costs.

The Facts: A Legacy Contaminated Site and Water Board Enforcement

This case centers on the Chino Airport, a property with a long industrial and military history dating back to World War II. Over decades, operations including aircraft dismantling, industrial manufacturing, and wartime production activities resulted in the discharge of hazardous substances into soil and groundwater. Among the most concerning contaminants was trichloroethylene (TCE), a common solvent that continues to drive remediation obligations across California.

In 1990, the Santa AnaRegional Water Quality Control Board determined that contamination from the site had impacted groundwater and exceeded drinking water standards. The Water Board issued cleanup and abatement orders requiring investigation and remediation—orders that evolved over time as new data emerged. With those changes came increased costs.

The work required of the County of San Bernardino reflects the reality of modern contaminated site work: extensive investigation across multiple potential source areas, installation of numerous monitoring wells, removal of underground storage tanks and hazardous materials, and ongoing compliance efforts. These are exactly the types of long-term, high-cost obligations that lead property owners, municipalities, and operators to look to historical insurance policies for relief.

The Insurance Dispute: How Much Coverage Is Actually Available?

The dispute turned on how much coverage the County could access under insurance policies issued between 1966 and 1975. The policies provided up to $9 million per “occurrence,” but also referenced an annual “aggregate” limit. This conflict and ambiguity created a fundamental disagreement:

The County’s argument was that, based on the language in the policies, each separate contamination event or condition could trigger its own $9 million limit, with no overall annual cap for property damage.

The insurer argued that, instead, the language was to be read that all claims in a given year were capped at $9 million total, regardless of how many occurrences were involved.

In environmental remediation cases, this distinction between whether and how a policy is capped can be, as the Court notes, incredibly confusing. Contaminated sites often involve multiple releases, multiple tenants, and decades of activity. Whether those conditions are treated as one occurrence or many—and whether aggregate limits apply—can dramatically change the amount of insurance coverage available.

The Ninth Circuit’s Holding: Ambiguity in the Policy Language Provides for Expanded Coverage

The Ninth Circuit concluded that the policy language governing aggregate limits was ambiguous, particularly as applied to property damage claims arising from environmental contamination. Because the arguments presented by the County and the insurers were both reasonable interpretations of the policies, the Court applied California’s well-established rule of contract law that ambiguities in insurance policies should be resolved using extrinsic evidence, and must be resolved in favor of the policyholder.

As a result, the Court held that the policies did not clearly impose an aggregate limit on property damage, effectively allowing the possibility of significantly greater coverage for the County’s remediation costs. The case was sent back to the district court for further proceedings.

Why This Matters for Environmental Remediation and Water Board Cases

This decision fits squarely within the landscape of contaminated site litigation and Water Board enforcement. Many cleanup cases involve legacy contamination that predate modern environmental laws, meaning responsible parties often rely on decades-old insurance policies to offset costs.

The Ninth Circuit’s analysis is especially important because it recognizes a historical reality: liability policies issued in the 1960s and 1970s were not drafted with long-tail environmental liabilities in mind. In some cases, they did not clearly include aggregate limits for property damage at all.

For parties dealing with polluted sites, this reinforces a critical point—insurance coverage is not always as limited as insurers initially claim. A careful legal analysis of policy language, supported by historical context and extrinsic evidence, can materially expand available funding for cleanup.

What Issues Are Less Likely to Shape Future Cases

Not every aspect of the decision will carry forward into other environmental disputes. The Court addressed several procedural and case-specific issues that are unlikely to have broader impact. These included the district court’s dismissal of the County’s declaratory relief claim, the insurer’s withdrawal of an earlier admission during litigation, and the role of a prior California appellate decision interpreting similar policy language.

While these issues were important to the outcome, they are highly fact-dependent and do not meaningfully change how a court will approach insurance disputes involving contaminated or polluted sites. The lasting significance of the case lies in its treatment of ambiguous policy language and its application to environmental property damage.

What This Means for Businesses, Property Owners, and Developers

For businesses, municipalities, and real estate stakeholders dealing with environmental liabilities, this decision offers several practical takeaways. First, it underscores the importance of revisiting historical insurance coverage. Policies issued decades ago—which can be overlooked—may provide meaningful funding for cleanup obligations, particularly where contamination is tied to long-term industrial or commercial use.

Second, the case highlights that insurers’ interpretations of policy limits should not be automatically taken as the final word. Where policy language is unclear, courts may allow broader recovery, especially in California. This is particularly relevant for sites dealing with claims of groundwater contamination and those with legacy industrial impacts, where costs can escalate over time, and sometimes with no end to ongoing monitoring obligations in sight.

Finally, the decision reinforces the strategic value of early coverage analysis in environmental matters. Understanding the scope of available insurance coverage can shape how a party approaches regulatory negotiations, remediation planning, and overall risk management. In some cases, it can mean the difference between absorbing cleanup costs and securing substantial third-party funding.

Bottom Line

The Ninth Circuit’s ruling is meaningful for environmental remediation and insurance disputes involving contaminated sites. It confirms that older insurance policies, those drafted before environmental laws existed, may provide broader coverage than expected, particularly where policy language is ambiguous.

For anyone facing cleanup obligations tied to polluted property, this case is a reminder that insurance coverage should not be treated as an afterthought. It can be a central component of strategy for managing environmental liability—and, when properly analyzed, a significant source of recovery.

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