The U.S. District Court for the District of Oregon has held that an EPA letter requesting information under Section 104(e) of CERCLA was a “suit” under an insured’s Comprehensive General Liability (CGL) insurance policies which triggered the insurers’ duty to defend.
In Ash Grove Cement Co. v. Liberty Mutual Ins. Co., et l., 2010 U.S. Dist. Lexis 103763 (D. Or. Sept. 30, 2010), the insured Ash Grove owned and operated plants within the Portland Harbor Superfund Site. Although the site was on the National Priorities List since 2000, EPA did not send a 104(e) request to Ash Grove until several years later, seeking a great deal of information about the site. Like all 104(e) requests, EPA’s letter stated Ash Grove had a legal obligation to provide the information requested and could be fined up to $32,000 per day if it did not comply. The letter did not name Ash Grove a potentially responsible party (“PRP”) at the Superfund site.
Ash Grove notified its carriers and requested reimbursement of its costs to respond to EPA’s letter, including legal fees. The carriers argued the 104(e) letter was not a covered “suit” and denied any duty to defend.
Requiring the carriers to “defend” the EPA letter and pay for the response, the Court cited the Oregon Environmental Cleanup Assistance Act (“OECCA”). The OECCA establishes specific rules of interpretation for general liability polices, including the rule that any action by EPA directing an insured to “take action with respect to contamination…is equivalent to a suit.” Or. Rev. Statute § 480(2) (b). The Court viewed the EPA letter not merely as a request for information, but as a threat of legal action with substantial penalties for non-compliance, with the same implications of liability as a PRP notice. The carriers in Ash Grove will almost certainly appeal to the Ninth Circuit Court of Appeals.
In comparison, Indiana has long held that 104 requests coupled with a specific allegation of liability, 106 orders, 107 demands, and 122(e) offers, as well as analogous proceedings by state and local agencies, are “suits” triggering an insurer’s duty to defend. Hartford Accident & Indem. Co. v. Dana Corp., 690 N.E.2d 285 (Ind. Ct. App. 1997). Kentucky law is similar to that of Indiana. Aetna Cas. & Sur. Co. v. Commonwealth of Ky., 179 S.W.3d 830 (“we would not allow ANI to avoid their duty to defend the insureds … by clinging to an archaic definition of ‘suit.’”) Ohio, on the other hand, has held that receipt of mere PRP notice is not “the functional equivalent of a ‘suit.’” Professional Rental, Inc. v. Shelby Ins. Co., 599 N.E.2d 423 (Ohio Ct. App. 1991). Instead, a suit is triggered when EPA issues an administrative order pursuant to 104(e), 106(a), or 107.