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Volume 29, Issue 3 — March 1999


The California Supreme Court's Decision in Foster-Gardner and Its Impact on Insurance for Environmental Defense and Remediation Expenses

by Michele Y. Horton and Meredith M. Newton

Editors' Summary: In environmental insurance litigation, coverage is often determined by the court's interpretation of key policy terms. This was just the case in Foster-Gardner, Inc. v. National Union Fire Insurance Co. of Pittsburgh, a recent suit decided by the California Supreme Court. Under the standard-form comprehensive general liability policies at issue, the insurer was required to defend a "suit" but not a "claim." The court was asked to resolve a dispute — whether administrative proceedings constituted a claim or a suit-over these two terms. In an unexpected decision, the California Supreme Court held that a suit is triggered by the filing of a complaint that initiates a civil action, and, thus, defense costs incurred in responding to a state environmental administrative order are not covered by the policies at issue. This Article reviews the facts and procedural history surrounding Foster-Gardner and details the California Supreme Court's analysis, holding, and remodification of its decision. While Foster-Gardner is sure to affect environmental enforcement and insurance recovery efforts in California, the ultimate impact of the decision on policyholders and insurers remains uncertain. Nevertheless, the Article discusses the potential ramifications of the Foster-Gardner decision. Included in this discussion are the likely impacts on environmental enforcement, access to umbrella and excess insurance, indemnity coverage, past defense costs, and judicial temperament in environmental insurance coverage litigation. The Article concludes that the California Supreme Court's decision in Foster-Gardner created more insurance coverage issues than it resolved.


Reinventing Environmental Regulation: The Only Path to a Sustainable Future

by Karl Hausker

Editors' Summary: In response to the debate on ways in which our environmental protection system should be improved, Enterprise for the Environment, Yale University, and the National Academy of Public Administration each issued "next generation" reports calling for evolutionary change of the current system. In the July 1998 issue of ELR's News & Analysis, Rena I. Steinzor presented a critique of those reports in a Dialogue entitled Reinventing Environmental Regulation: Back to the Past by Way of the Future and concluded that implementing the ideas set forth therein would likely degrade the quality of the environment. In this Dialogue, Karl Hausker responds to Steinzor's critique. It addresses the issues raised in that critique and finds that while it raised legitimate concerns regarding next generation policies, the critique more often mischaracterized the reports' contents in order to support its conclusions. First, the author discusses the reports' recommendations for a goal and milestone approach to environmental regulation. Contrary to the findings set forth in Steinzor's critique, the author argues that the CAA NAAQS and the FWPCA total maximum daily load programs reinforce rather than undermine this approach. The author further argues that the reports' call for better information and data systems is feasible, and he describes some of these systems that are already being built. The author also examines the reports' recommendations for a more integrated, multimedia system and for an expanded set of policy tools. The author concludes that adhering to the next generation of environmental policy advocated in the reports is the only sustainable path to the future.

Dodging a Bullet: Lessons From the Failed Hazardous Substance Recycling Rider to the Omnibus Appropriations Bill

by Adam Babich

Editors' Summary: It has become regular practice for federal legislators to insert into annual appropriations bills riders having little to do with the appropriations process. Last year, under the sponsorship of the Senate Majority and Minority Leaders, a bill that would have exempted recyclers from CERCLA "arranger" and "transporter" liability was almost enacted as a rider to the omnibus appropriations bill for fiscal year 1999. This Dialogue examines that rider and the changes it would have wrought to CERCLA. The Dialogue begins with a description of the rider's provisions, then analyzes the policy behind exempting recyclers from CERCLA liability. The Dialogue then examines the rider's distinction between certain kinds of CERCLA violations, as well as the likely impact of the rider's attorney fees provision and the consequences the rider's recycler exemption would have had for other liable parties. Finally, the Dialogue evaluates the rider's approach of exempting a particular type of party from liability without engaging in more comprehensive reform of the Superfund statute.

Superfund: The Keynote Address at the 20th Annual Advanced American Law Institute-American Bar Association Course of Study on Hazardous Wastes, Superfund, and Toxic Substances

by Thomas S. Udall

Editors' Summary: In the last several years, CERCLA has been the subject of a multitude of proposals for revising its more controversial provisions. One of the groups with a major interest in efforts to revise the statute is composed of state attorneys general. This Dialogue contains the text of a speech on CERCLA reform delivered by a former Attorney General of New Mexico, who is currently the U.S. Representative from the Third District of New Mexico. The Dialogue begins by explaining the origins of the statute and describing some of its key provisions. The Dialogue then discusses some of the accomplishments that have resulted from the law's enactment. The Dialogue concludes by examining the position that the state attorneys general have taken on various proposals to amend the statute.