Hazardous Waste and Hazardous Materials I
Insurance for environmental claims
- rules of construction
- duty to pay defense or indemnity costs
(1)As used in this section:
(a)“Long-tail environmental claim” means an environmental claim covered by multiple general liability insurance policies.
(b)“Suit” or “lawsuit” includes but is not limited to formal judicial proceedings, administrative proceedings and actions taken under Oregon or federal law, including actions taken under administrative oversight of the Department of Environmental Quality or the United States Environmental Protection Agency pursuant to written voluntary agreements, consent decrees and consent orders.
(c)“Uninsured” means an insured who, for any period of time after January 1, 1971, that is included in an environmental claim, failed to purchase and maintain an occurrence-based general liability insurance policy that would have provided coverage for the environmental claim, provided that such insurance was commercially available at such time. A general liability insurance policy is “commercially available” if the policy can be purchased under the Insurance Code on reasonable commercial terms.
(2)Except as provided in subsection (8) of this section, in any action between an insured and an insurer to determine the existence of coverage for the costs of investigating and remediating environmental contamination, whether in response to governmental demand or pursuant to a written voluntary agreement, consent decree or consent order, including the existence of coverage for the costs of defending a suit against the insured for such costs, the following rules of construction shall apply in the interpretation of general liability insurance policies involving environmental claims:
(a)Oregon law shall be applied in all cases where the contaminated property to which the action relates is located within the State of Oregon. Nothing in this section shall be interpreted to modify common law rules governing choice of law determinations for sites located outside the State of Oregon.
(b)Any action or agreement by the Department of Environmental Quality or the United States Environmental Protection Agency against or with an insured in which the Department of Environmental Quality or the United States Environmental Protection Agency in writing directs, requests or agrees that an insured take action with respect to contamination within the State of Oregon is equivalent to a suit or lawsuit as those terms are used in any general liability insurance policy.
(c)Insurance coverage for any reasonable and necessary fees, costs and expenses, including remedial investigations, feasibility study costs and expenses, incurred by the insured pursuant to a written voluntary agreement, consent decree or consent order between the insured and either the Department of Environmental Quality or the United States Environmental Protection Agency, when incurred as a result of a written direction, request or agreement by the Department of Environmental Quality or the United States Environmental Protection Agency to take action with respect to contamination within the State of Oregon, shall not be denied the insured on the ground that such expenses constitute voluntary payments by the insured.
(d)A general liability insurance policy that provides that any loss covered under the policy must be reduced by any amounts due to the insured on account of such loss under prior insurance may not be construed to reduce the policy limits available to an insured that has filed a long-tail environmental claim, or to reduce those policies from which an insurer that has paid an environmental claim may seek contribution. Such provisions may be a factor considered in the allocation of contribution claims between insurers under subsection (4) of this section.
(e)The release of a hazardous substance into the waters of this state, as defined in ORS 196.800 (Definitions for ORS 196), or onto real property owned by a party other than the insured constitutes damage, destruction or injury to property. Any remedial action costs, as defined in ORS 465.200 (Definitions for ORS 465), that an insured incurs as a result of any action taken to cut off a pathway by which a hazardous substance threatens to, or has, migrated, leached or otherwise been released into the waters of this state, as defined in ORS 196.800 (Definitions for ORS 196), or onto real property owned by a party other than the insured are remedial action costs that the insured is legally obligated to pay as damages because of the damage, destruction or injury to such property even though such action also involves the property of the insured.
(b)If an insured who makes an environmental claim under one or more general liability insurance policies that provide that an insurer has a duty to pay all sums arising out of a risk covered by the policies has more than one such general liability insurance policy that is triggered with one or more insurers, the insured shall provide notice of the claim to all such insurers for whom the insured has current addresses. If the insured’s claim is not fully satisfied and the insured files suit on the claim against less than all the insurers, the insured may choose which of the general liability insurance policies respond to the loss if not all are required to satisfy the insured’s claim. The insured or the insurers have a right to contribution as specified in subsection (4) of this section from all other insurers whose policies are triggered, and an insurer that has an obligation to pay may not fail to make payment to the insured on the grounds that another insurer has not made payment, unless the insurer has no obligation to respond to a claim until the limits of the underlying policy have been paid. The insured must choose that insurer based on the following factors:
(A)The total period of time that an insurer issued a general liability insurance policy to the insured applicable to the environmental claim;
(B)The policy limits, including any exclusions to coverage, of each of the general liability insurance policies that provide coverage or payment for the environmental claim; or
(C)The policy that provides the most appropriate type of coverage for the type of environmental claim for which the insured is liable or potentially liable.
(c)If requested by an insurer chosen by an insured under paragraph (b) of this subsection, the insured shall provide information regarding other general liability insurance policies held by the insured that would potentially provide coverage for the same environmental claim.
(d)An insurer chosen by an insured under paragraph (b) of this subsection may not be required to pay defense or indemnity costs in excess of the applicable policy limits, if any, on such defense or indemnity costs, including any exclusions to coverage.
(b)There is a rebuttable presumption that all binding settlement agreements entered into between an insured and an insurer are good-faith settlements. A settlement agreement between an insured and insurer that has been approved by a court of competent jurisdiction after 30 days’ notice to other insurers is a good-faith settlement agreement with respect to all such insurers to whom such notice was provided.
(c)For purposes of ascertaining whether a right of contribution exists between insurers, an insurer that seeks to avoid or minimize payment of contribution may not assert a defense that the insurer is not liable or potentially liable because another insurer has fully satisfied the environmental claim of the insured and damages or coverage obligations are no longer owed to the insured.
(d)Contribution rights by and among insurers under this section preempt all common law contribution rights, if any, by and between insurers for environmental claims.
(5)If a court determines that the apportionment of recoverable costs between insurers is appropriate, the court shall allocate the covered damages between the insurers before the court, based on the following factors:
(a)The total period of time that each solvent insurer issued a general liability insurance policy to the insured applicable to the environmental claim;
(b)The policy limits, including any exclusions to coverage, of each of the general liability insurance policies that provide coverage or payment for the environmental claim for which the insured is liable or potentially liable;
(c)The policy that provides the most appropriate type of coverage for the type of environmental claim;
(d)The terms of the policies that related to the equitable allocation between insurers; and
(e)If the insured is an uninsured for any part of the time period included in the environmental claim, the insured shall be considered an insurer for purposes of allocation.
(6)If an insured is an uninsured for any part of the time period included in the environmental claim, an insurer who otherwise has an obligation to pay defense costs may deny that portion of defense costs that would be allocated to the insured under subsection (5) of this section.
(b)There is a rebuttable presumption that payment of the costs of removal actions or feasibility studies, as those terms are defined by rule by the Department of Environmental Quality, are indemnity costs and reduce the insurer’s applicable limit of liability on the insurer’s indemnity obligations, subject to the provisions of the applicable general liability insurance policy or policies.
(8)The rules of construction set forth in this section and ORS 465.481 (General liability insurance policies) and 465.483 (General liability insurance policies) do not apply if the application of the rule results in an interpretation contrary to the intent of the parties to the general liability insurance policy. [1999 c.783 §4; 2003 c.799 §2; 2013 c.350 §4]
Notes of Decisions
Where insurer completely settles its liability with insured, settling insurer is no longer “liable or potentially liable” for purposes of paying contribution to other insurers. Fireman’s Fund Insurance Co. v. Ed Niemi Oil Co., 436 F. Supp. 2d 1174 (D. Or. 2006)
Insurer that pays environmental claim may seek contribution from other insurers that covered risk, whether or not liability of those other insurers has been determined. Certain Underwriters v. Massachusetts Bonding and Insurance Co., 235 Or App 99, 230 P3d 103 (2010), Sup Ct review denied
Where Environmental Protection Agency sent letters to insured entity and letters were hostile and directed entity to take action, letters were “suits” for purposes of Oregon Environmental Cleanup Assistance Act. Anderson Brothers, Inc. v. St. Paul Fire & Marine Insurance Co., 729 F3d 923 (9th Cir. 2013)