Update on 2013 Amendments to the Oregon Environmental Cleanup Assistance Act

by Cozen O'Connor

In June 2013, the Governor of Oregon signed into law Senate Bill 814, which created sweeping reforms on environmental claims handling regulations and available remedies for insureds facing liability for cleanup of contaminated property located in the state.

Cozen O’Connor previously provided summaries of the pertinent provisions of the legislation, which can be located here (May 7, 2013 Alert) and here (June 18, 2013 Alert).  In sum, the legislation amended the existing Oregon Environmental Cleanup Assistance Act (“OECAA”) under ORS 465.479, et seq. to impose stricter claims handling regulations, create a statutory cause of action for violation of the regulations, and allow punitive damages to be awarded if the court finds the insurer acted unreasonably.

The amendments are now codified, as follows:

  • ORS 465.479:  paragraph (9) specifies that an insurer’s failure to comply with the provisions set forth in paragraphs (1) through (8) of the section, which govern lost policies, is both an unfair environmental claims settlement practice under ORS 465.484 and an unfair claim settlement practice under ORS 746.230.
  • ORS 465.480:
    • paragraph (2)(d) places limitations on the application of non-cumulation clauses;
    • paragraph (2)(e) places limitations on the scope of the owned property exclusion;
    • paragraph (3)(b) specifies that, when more than one general liability policy is triggered for an environmental claim, an insurer that is obligated to pay may not fail to make payment to the insured on the grounds that another insurer has not yet made payment;
    • paragraph (4)(b) creates a rebuttable presumption that all binding settlement agreements between an insurer and an insured are made in good faith; and
    • paragraph (4)(d) specifies that contribution rights as defined in the statute preempt “all common law contribution rights, if any, by and between insurers for environmental claims.”
    • ORS 465.481:  places limitations on the application of anti-assignment clauses.
    • ORS 465.483:  discusses an insurer’s obligation to appoint independent counsel and environmental consultants; allows parties to pursue nonbinding mediation for disputes on these issues.
    • ORS 465.484:
      • paragraph (1) identifies specific unfair  environmental claims settlement practices, including (1)(e), which requires an insurer to pay interest to the insured on amounts the insurer is legally obligated to pay as defense or indemnity if the insured is not reimbursed within 30 days of the date it requests reimbursement or makes payment, whichever is later;
      • paragraph (2)(e) directs the attorney general to appoint a mediation service provider to operate a mediation program related to environmental claims, and requires an insurer to provide the insured with information concerning a nonbinding environmental claim mediation program upon request;
      • paragraph 4(a) specifies that any insured aggrieved by one or more unfair environmental claims settlement practices specified in this section may apply to the circuit court for the county in which the insured resides, or any other court of competent jurisdiction, to recover the actual damages sustained, together with the costs of the action, including reasonable attorney fees and litigation costs; and
      • paragraph (4)(e) permits the court to award treble damages for an action brought under the section “after finding that an insurer has acted unreasonably.”

There are no reported decisions analyzing or applying the amendments to the statute.  It thus remains to be seen how the legislation will be enforced.

The State of Oregon Department of Justice (DOJ) is working to implement the mediation program required under ORS 465.484(2)(e).  At present, the DOJ is finalizing temporary rules governing the program, which will be adopted in the near term.  Draft rules can be viewed here. The DOJ anticipates that permanent rules will be adopted in early 2015 following additional opportunities for public comment.  The rules anticipate appointment of a Mediation Service Provider (“MSP”) by the Attorney General, which will publish an Environmental Claims Mediator Roster “composed of those Mediators who meet or exceed the minimum qualifications.”  The parties will remain free to select a mediator who is not on the roster, provided they both agree.

Cozen O’Connor will continue to monitor the legislation and provide further updates as needed.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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