Oregon Environmental Update: 9th Circuit Finds a Request for Information Letter From EPA Satisfies "Suit" Requirement and Triggers Duty to Defend

On May 11, 2016, in Ash Grove Cement Co. v. Liberty Mutual Ins. Co., No. 14-35298, in an unpublished Memorandum Opinion, the Ninth Circuit affirmed the District Court’s ruling that under Oregon Law, Liberty Mutual and USF&G had a duty to defend Ash Grove against a CERCLA Section 104(e) request for information letter from USEPA for the Portland Harbor Superfund Site.  In reaching this conclusion, the Ninth Circuit rejected the insurers' argument that the Section 104(e) request for information was not a “suit” triggering a duty to defend.  In reaching this conclusion, the Ninth Circuit relied on its earlier holding in Anderson Brothers Inc. v. St. Paul Fire & Marine Ins. Co., 729 F.2d 923 (9th Cir. 2013), which found that a Section 104(e) request for information was a “coercive information demand,” and was “an attempt to gain an end through legal process,” and was therefore the equivalent of a "suit" under Oregon law.

The Ninth Circuit’s decision is noteworthy, because  a request for information letter precedes a PRP designation and does not advise the insured of potential or actual liability.  Rather, a 104(e) letter requests information about the insured’s operations, waste disposal practices, possible releases, etc., and is designed to allow EPA to gather information from which a PRP determination can be made.  

In light of the Ash Grove decision, as well as the Court’s earlier decision in Anderson Brothers, general liability insurers in Oregon without an absolute pollution exclusion in the policy may well have a duty to defend the insured against not only PRP letters or other agency enforcement, but also with respect to Section 104(e) request for information letters from USEPA or similar letters from Oregon DEQ.

It bears noting the Ninth Circuit’s decision was also influenced by ORS 465.480(2)(b), part of the Oregon Environmental Cleanup Assistance Act (“OECAA”), which provides that “[a]ny action * * * 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.”  (Emphasis added).  The Court also rejected the insurers' argument that the OECAA was an unconstitutional impairment of rights under existing contracts since it materially expanded the scope of the duty to defend as set out in the insurance contracts. 

Please feel free to contact me if you have questions on this or want a copy of this unpublished memorandum decision from the Ninth Circuit. I can be reached at pmintzer@selmanlaw.com or 206.805.0206.