Oregon Supreme Court to hear environmental insurance case
Before the Oregon Supreme Court in March 2006 is a case where Schnitzer Investment Corp. in Portland is seeking to reverse a lower court’s decision that says the company’s insurance policy doesn’t cover contamination that occurred on site.
The company owns land on the west bank of the Willamette River. Over the course of decades, contamination occurred in the soil and groundwater. While some contamination was found in the groundwater, it was not extensive. The Oregon Department of Environmental Quality determined that no ground water remediation was required. The soil, however, on the property had to be cleaned up at a great cost to Schnitzer to protect public health and the environment.
Representatives for Schnitzer argue if the soil isn’t cleaned up, the groundwater will become more contaminated, to the point that remediation must take place. This would affect neighboring property.
The insurance company, Lloyd’s of London, argues because Schnitzer wasn’t required to remedy existing groundwater contamination, no third party was affected at that time. So, it does not have to pay for cleanup costs, the insurance company argues.
The Oregon Supreme Court will decide whether an insurer that has issued a liability policy covering damage to property owned by a third party, but excluding damage to property owned by the insured, is liable for the cost of pollution cleanup, when pollution to soil owned by the insured is inextricably linked to pollution to groundwater owned by a third party, and the remedy to clean up the soil and groundwater pollution are one and the same.
