Environmental Law Alert: Oregon's Environmental Insurance Statute Amended and Expanded

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On June 10, Governor Kitzhaber signed Senate Bill 814, enacting several amendments to the Oregon Environmental Cleanup Assistance Act ("OECAA") relevant to Oregon businesses and public entities facing federal and state environmental cleanup liabilities at the Portland Harbor Superfund Site and at sites throughout the state. The full text of the Bill, sponsored by Senators Shields and Johnson, can be found online here.

The OECAA was originally enacted in 1999 to try to speed up and simplify handling environmental claims by codifying common law principles such as that a liability insurer's duty to defend extends to environmental cleanups required by written voluntary agreements with EPA or DEQ. In 2003, the Oregon legislature further amended the OECAA by adding provisions with respect to locating and proving lost policies, allocation and contribution as between insurers, and, to a limited extent, claims handling procedures.

The SB 814 amendments fill certain gaps in the statutory scheme. Specifically, through SB 814, the OECAA now includes provisions that:

  • Provide, consistent with the law of most states, that a provision in a general liability policy requiring the consent of the insurer before the assignment of the insurance policy generally does not apply to the assignment of an existing environmental claim for payment under that policy. See Section 2.
  • Provide rules of interpretation to be applied to "non-cumulation clauses" found in certain general liability policies. These clauses relate to allocation of a loss between earlier and later insurance policies. See Section 4(1)(a), (2)(d), and (5)(d).
  • Clarify Oregon law as to when insurers must respond to claims that hazardous substances have damaged the property of the state or another third party if some of the damage is also on the insured's own property. See Section 4(2)(e).
  • Clarify the processes already provided under existing law by which an insured may make claims with and recover payments from multiple insurers. See Section 4(3)(b).
  • In order to encourage settlements that will fund remedial action, provide a rebuttable presumption of good faith for settlements between policyholders and their insurers and a process for court-approved contribution protection for settling insurers. See Section 4(4).
  • Prohibit insurers from engaging in "unfair environmental claims settlement practices" such as late and incomplete payment of claims. SB 814 provides a private right of action (including treble damages) for these kinds of "unfair environmental claims settlement practices," and creates a nonbinding environmental claim mediation process to try to avoid the necessity of resorting to the court system. See Section 6.
  • Require that, in certain conflict of interest circumstances, an insurer must provide the insured with an experienced, competent lawyer to handle the environmental claim who is not also representing the insurer. See Section 7.

Because of an emergency provision included in the legislation, these provisions take effect immediately.

Should you have any questions about the OECAA or this Bill, please contact a key contributor.

Key Contributors

Louis A. Ferreira
Joan P. Snyder
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