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Ash Grove Cement Co. v. Liberty Mut. Ins. Co.

ELR Citation: 40 ELR 20269
Nos. No. 09-239, (D. Or., 09/29/2010)

A district court held that a request for information from EPA to a cement company under CERCLA §104(e) constitutes a "suit" under the terms of the company's insurance policies, thereby triggering the insurers' duty to defend. Under the Oregon Environmental Cleanup Assistance Act (OECAA), the EPA letter was equivalent to a "suit seeking damages." The insurers argued that a §104(e) letter does not constitute a "suit" under the OECAA because the statute requires either an "action" by EPA "against" the insured, or an "agreement" between EPA and the insured, in which EPA requests that the insured take action with respect to contamination. Here, the §104(e) letter says that while EPA seeks the company's "voluntary cooperation," compliance with the request is required by law, and that if the company fails to respond fully within a certain time, EPA can commence an action for civil penalties of up to $32,500 per day for noncompliance. Thus, the letter is not merely a request that the company provide information; it contains a threat of legal action and substantial penalties for failure to comply with the request. The insurers, therefore, have a duty to defend the company.