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An appellate court in California has issued a decision in a case stemming from a massive explosion at a pipeline owned by Kinder Morgan, Inc., that further expands the reach of the "professional services" exclusion in commercial general liability ("CGL") insurance policies.

5 deaths, extensive property damage

On November 9, 2004, an excavator operated by Mountain Cascade, Inc. ("MCI"), a contractor for East Bay Municipal Utility District ("EBMUD") at a project at Walnut Creek, California, punctured a high-pressured petroleum line owned by Kinder Morgan. Gasoline was released into the pipe trench and was ignited by the welding activities of Matamoros Pipelines, Inc., a subcontractor working for MCI. The resulting explosion and fire killed five employees and seriously injured four other employees. Extensive property damage also occurred.

Following the explosion, the California Division of Occupational Safety and Health, better known as Cal/OSHA, conducted an investigation and concluded that the primary cause of the accident had been the failure to properly mark the petroleum pipeline. Cal/OSHA determined that "[s]everal employers failed to take required action and committed errors that contributed to the failure to determine and mark the location of the utility line."

Failure of employees

Cal/OSHA issued two "serious willful" citations to Kinder Morgan due to the failure of its employees to mark the location of the petroleum pipeline prior to the excavation activities. Cal/OSHA also determined that Kinder Morgan "employees were aware that an unsafe condition existed and failed to assure that the utility was clearly marked which would have resulted in its relocation or other appropriate measures to safeguard employees."