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Oregon Increases Access to Historical Insurance Assets for Cleanup Liabilities

On June 11, 2021, Oregon Governor Kate Brown signed a law, HB 2377, intended to make the insurance policies of dissolved Oregon corporations and limited liability companies available to fund contaminated site cleanups. The law creates an exception to a five-year period for filing claims against these entities if the claims can be satisfied partly or fully by insurance assets. The law will go into effect in September 2021.

The law was supported by a range of stakeholders, many of them citing the cleanup of the Portland Harbor Superfund Site, one of the most costly contaminated sites in the country, as an impetus for the change in law. 

Background and Overview of Changes to Oregon Law

To defray the expenses of addressing contaminated sites, parties performing cleanups frequently seek contribution from liable parties under federal and state law. Courts often divide these costs among liable parties based on equitable factors in an effort to allocate fairly the burden among responsible parties.[1] In many cases, companies operating in the past, sometimes long in the past, caused the greatest share of contamination at a site and therefore would bear primary responsibility for the cost of responding to that contamination. 

But, state law often bars lawsuits against historical companies if they have been dissolved, unless claims are filed within a specified time period.[2] The inability to recover costs from defunct parties, such as dissolved companies, can leave others holding their “orphan” shares. This places an even greater burden on viable parties that are meeting cleanup obligations. It also reflects a policy tension between efforts to hold parties responsible under environmental cleanup laws and to expedite cleanups by ensuring sufficient funding and the need to provide businesses with clarity as to the end of their potential liabilities.[3]  

To address these issues, Oregon amended its corporate laws to allow claims against dissolved corporations and limited liability companies after the state’s five-year survival period if the “claim … may be satisfied, in whole or in part, by insurance assets.”[4] Other key features include:

  • Recovery under the amendment – i.e., for claims filed after the five-year claims period – is limited to “the rights, benefits or proceeds available from the insurance assets.” 

  • The amendment lifts the bar on claims against long-dissolved corporations that may have been subject to earlier versions of Oregon’s corporate laws.[5] 

  • The amendment also applies to claims against dissolved corporations that arose before the effective date of the new law. 

  • The law specifies how these claims must be served, since company representatives may no longer be around to receive service of process. 

The recent changes, which were requested by the Oregon Attorney General, were supported by a broad coalition, including municipalities, utilities, and environmental groups. One of the driving forces identified by the law’s supporters is the cost of cleaning up the Portland Harbor Superfund Site – estimated at over a billion dollars. Although the Oregon Department of Environmental Quality did not take a position on the bill, the agency offered reasons why the availability of insurance assets would help to advance contaminated site cleanups in the state. 

The new law opens up an avenue for parties burdened with the costs of cleaning up a contaminated site to seek insurance proceeds from companies that have been dissolved. This change is good news for parties that might be stuck paying the equitable shares of otherwise liable companies that have gone out of business.  

© 2021 Beveridge & Diamond PC National Law Review, Volume XI, Number 168
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About this Author

Susan E. Smith Environmental Litigation Attorney Beveridge & Diamond San Francisco, CA
Principal

Susan maintains a national litigation practice focused on toxic tort, drinking water contamination, and related insurance coverage.

She defends environmental claims, counsels on environmental regulatory matters, advocates for companies before regulatory authorities and in investigations, and guides clients through incident response and clean up with a focus on minimizing the threat or impact of future litigation.

Susan has nearly 20 years of experience defending clients in various industries against claims alleging personal injury as a result of chemical or toxic exposures....

415-262-4023
Nicole B. Weinstein Insurance Recovery & Environmental Litigation Attorney Beveridge & Diamond New York, NY
Principal

Nicole B. Weinstein helps clients minimize and eliminate liability for contaminated sites in litigation, and to recover insurance proceeds across industries.

Nicole's practice focuses on insurance recovery and environmental litigation. She excels at identifying avenues of defense and coverage, and in distilling complicated issues into understandable terms.

Nicole has been interested in environmental matters for as long as she can remember, and has always enjoyed thinking through complex challenges. She planned to become an environmental lawyer as a student, and after...

212-702-5416
Eric Christensen Energy & Natural Resources Attorney
Of Counsel

Eric is a leading energy and natural resources attorney in the Pacific Northwest.

He assists renewable and traditional energy companies, as well as major energy consumers, to navigate the complex legal and regulatory systems governing the nation’s energy industry. With more than 30 years of experience, Eric has successfully represented clients in litigation and regulatory matters, ranging from the U.S. Supreme Court to proceedings before federal and state agencies. Before entering private practice, Eric served as Assistant General Counsel at Snohomish County (WA)...

206.620.3025
Rachel K. Roberts Land Use Attorney Beveridge & Diamond Seattle, WA
Associate

Rachel Roberts helps clients resolve complex matters involving contaminated sites, land use, and water rights.

Rachel’s practice focuses on contaminated site remediation under CERCLA and state laws, as well as water rights disputes and federal land use issues. Rachel helps clients steer complex and long-running cases to a successful resolution. She also enjoys helping clients navigate challenging regulatory environments.

Prior to joining Beveridge & Diamond, Rachel served as a Trial Attorney for U.S. Department of Justice’s Natural Resources Section of the Environment and...

206-315-4814
Augustus E. Winkes Environmental Attorney Beveridge & Diamond Seattle, WA
Associate

 

Augustus E. Winkes focuses his practice on contaminated site cleanup and litigation under CERCLA and state Superfund statutes. He is the deputy for the firm’s CERCLA, Brownfields, and Subsurface Contamination practice group.

He also advises clients on regulatory compliance and defends enforcement actions under federal and state hazardous waste, water quality, air quality, and climate change laws, and he has experience in natural resource management matters.

Mr. Winkes also serves on the Stakeholder and Tribal Advisory Group tasked with providing...

206-315-4813
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