HOUSE COMMITTEE ON JUDICIARY

July 01, 2003 Hearing Room 357

1:00 p.m. Tapes 229 - 231

MEMBERS PRESENT: Rep. Max Williams, Chair

Rep. Gordon Anderson, Vice-Chair

Rep. Robert Ackerman, Vice-Chair

Rep. Jeff Barker

Rep. Bob Jenson

Rep. Jerry Krummel

Rep. Greg Macpherson

Rep. Floyd Prozanski

Rep. Lane Shetterly

STAFF PRESENT: Bill Taylor, Counsel

Craig Prins, Counsel

Ann Martin, Committee Assistant

MEASURE/ISSUES HEARD: SB 59A Work Session

SB 297A Public Hearing

These minutes are in compliance with Senate and House Rules. Only text enclosed in quotation marks reports a speaker’s exact words. For complete contents, please refer to the tapes.

TAPE/#	Speaker	Comments
TAPE 229, A
004	Chair Williams	Calls the meeting to order at 1:07 p.m. Opens a work session on SB 59A.
SB 59A WORK SESSION
006	Rep. Ackerman	MOTION: Moves to SUSPEND the rules for the purpose of RECONSIDERING the vote on SB 59A.
		VOTE: 9-0
010	Chair Williams	Hearing no objection, declares the motion CARRIED.
017	Craig Prins	Committee Counsel. Introduces SB 59A which extends period during which forfeiture counsel must file criminal information or indictment for criminal forfeiture. Discusses the A6 amendments (EXHIBITS A & B).
047	Rep. Prozanski	Explains the A6 amendments.
067	Rep. Jenson	Says that he supports the A6 amendments.
069	Rep. Jenson	MOTION: Moves to ADOPT SB 59A-6 amendments dated 07/01/03.
		VOTE: 9-0
071	Chair Williams	Hearing no objection, declares the motion CARRIED.
075	Rep. Krummel	Asks about the selling of the forfeited weapons.
086	Rep. Prozanski	Refers to the formula on page 2 and 3, Section 4 of the A6 amendments.
115	Rep. Prozanski	MOTION: Moves SB 59A to the floor with a DO PASS AS AMENDED recommendation.
		VOTE: 9-0
120	Chair Williams	Hearing no objection, declares the motion CARRIED. REP. JENSON will lead discussion on the floor.
130	Chair Williams	Closes the work session on SB 59A and opens a public hearing on SB 297A.
SB 297A PUBLIC HEARING
140	Bill Taylor	Committee Counsel. Introduces SB 297A which requires insurer to pay all sums covered by general liability insurance policy unaffected by other insurance that may provide coverage for same environmental claim.
150	Bill Wyatt	Executive Director, Port of Portland. Testifies in support of SB 297A.
289	Tom Gallagher	Schnitzer Investment Corporation. Submits testimony and testifies in support of SB 297A (EXHIBIT C).
TAPE 230, A
003	Gallagher	Continues his testimony in support of SB 297A.
035	Chris Herman	Attorney. Testifies in support of SB 297A.
038	Vice Chair Ackerman	Says he is trying to conceptualize how this bill works and that if liability has been established then is it a question of allocation of that liability among insurance companies.
043	Herman	Explains that there are two categories of liability.
050	Vice Chair Ackerman	Asks if adjudication of liability takes place in a judicial or administrative proceeding.
060	Herman	Answers that it can take place in either, but the hopes of the proponents are that litigation is not required.
069	Vice Chair Ackerman	Asks since liability has been established in a judicial forum then would it be likely that those insurance companies would have participated in those proceedings representing their insurers.
070	Herman	Answers, yes.
075	Vice Chair Ackerman	Asks if the allocation process can take place through the contribution method in court.
077	Herman	Answers, that it probably would take place in the same proceeding.
081	Vice Chair Ackerman	Says that on page 2, line 36 of the bill, there is a situation in which the insured has more than one insurance policy. Asks if multiple landowners or predecessors of interest are liable.
090	Herman	Responds that the bill does not attempt to allocate between the parties that are liable on the environmental liability.
097	Rep. Shetterly	Asks for clarification of the allocation process. Asks if it raises the risk that an insurer has to pay out on a claim in which coverage expired.
112	Herman	Explains that an insurer only would have to pay out for a claim that happened when the property damage occurred.
122	Gallagher	Discusses an environmental case in Portland.
136	Rep. Macpherson	Asks if all insurers would be responsible for a clean-up and do the insurers have the opportunity to go after other insurers.
151	Herman	Answers yes, explains.
166	Rep. Macpherson	Says that each of these potentially responsible parties (PRP’s) may have one or more insurers that are responsible for different periods. Asks if this bill extends to other co-insurers with respect to that PRP or does it extend to all the potential insurers or all the potential PRP’s.
178	Herman	Answers that it extends to other insurers of that insured.
181	Rep. Prozanski	Asks if there are nine states that have adopted this legislation. Asks if they now have less litigation.
185	Herman	Responds those states have not adopted this rule legislatively, but through the Supreme Court on its allocation rule. Explains that there is still litigation but the litigation is on other coverage issues and not so much on the allocation rule.
211	Rep. Prozanski	Asks if any of these states offer any other forms of mediation.
218	Herman	Says that he is not aware of any states that have special statutes of regulation that require mediation in this area.
234	Chair Williams	Asks Mr. Herman to discuss the shift of burden of responsibility to the carriers and how that will affect public policy.
260	Herman	Explains that insurance carriers accepted responsibility when they wrote the policies.
284	Chair Williams	Asks Mr. Herman for the legal costs of a case he would deal with on a regular basis.
294	Herman	Says that a typical clean-up site costs $2,000,000 to $5,000,000. Discusses the phases of litigation.
338	Wyatt	Points out that as an insured, the greatest fear that you have is that all the assets are consumed in transaction costs and you have nothing to work with when it comes to the clean-up.
361	Jack Munro	American Insurance Association. Testifies in opposition to SB 297A.
373	Shawn Miller	National Association of Independent Insurers. Submits testimony and testifies in opposition to SB 297A (EXHIBIT D).
387	Diane Pulcer	Attorney. Testifies in opposition to SB 297A. Discusses the “all sums” issue. Believes that they are going into uncharted territory.
TAPE 229, B
010	Pulcer	Continues her testimony in opposition to SB 297A.
065	Laura Foggan	Complex Insurance Claims Litigation Association. Testifies in opposition to SB 297A and discusses the “lost policy period.” Wants Section 3 to be deleted. Urges two amendments to the bill.
175	Rep. Prozanski	Asks what other states require sanctions where there isn’t fairness followed by either party.
180	Foggan	Answers that there are provisions in the Washington regulations relating to sanctions.
194	Rep. Prozanski	Discusses Schnizter case (Exhibit C) and the “lost policy” problem that is addressed in this bill.
215	Foggan	Says that she cannot sanction conduct in which a known document is withheld.
229	Rep. Prozanski	Asks what the current state of law is in regards to a “lost policy”.
233	Foggan	Answers that it is parallel with any lost instrument law and explains.
253	Pulcer	Adds that Oregon Law generally is a “clear and convincing” standard.
265	Chair Williams	Asks Ms. Foggan why she thinks we should keep the “clear and convincing” standard.
282	Foggan	Explains that there are a host of reasons supporting the clear and convincing standard for any lost instrument.
305	Chair Williams	Says that clear and convincing is a very high standard. Asks Ms. Pulcer how it’s decided which insurance company pays for the environmental clean up.
346	Pulcer	Explains how they decide who pays for the clean up.
357	Chair Williams	Points out that as the bill is currently written, Oregon Mutual’s exposure would be no greater than its maximum policy limits.
360	Pulcer	Answers, yes, plus defense costs.
369	Rep. Macpherson	Says that he works with health insurance companies and they have “coordination of benefits.” Asks if these insurance companies have anything developing like this to determine who pays and how much.
396	Munro	Says that most policies have that kind of language, but says we are mixing up a couple of different factual situations. Explains that a health situation occurs and can be sorted out unlike an environmental situation.
424	Rep. Macpherson	Asks about the Portland Super Fund site and how many insurers are obligated with respect to the clean up costs.
434	Munro	Says he cannot comment on that.
TAPE 230, B
019	Rep. Prozanski	Asks what the changes will be if they change the law to the “clear and convincing” standard.
027	Foggan	Answers that she finds the language a little confusing and explains.
040	Vice Chair Ackerman	Comments on the 1^st page of the letter from Oregon Mutual Insurance Company (Exhibit D) and points out a misquote. Asks about 10-year period of pollution exposure with policy in effect for 1 year and if insurer has to pay for 10 years of pollution.
061	Foggan	Answers that she doesn’t think the statute says that. Explains.
070	Purcell	Talks about the obligation for the insurers to pay being established.
097	Munro	Comments on enforcement of insurance policies and multiple insurers.
151	John DiLorenzo	Attorney. Testifies in support of the A6 amendments to SB 297A (EXHIBITS E & F).
297	Mark Nelson	Oregon Metal Industries Counsel. Testifies on SB 297A.
360	Rep. Krummel	Asks if Mr. Nelson thinks that the bill puts the responsibility on the insurer.
374	Nelson	Says that discussion is in the question of lost policy and that it is in the interest of the insured to provide every piece of policy they have.
396	Rep. Shetterly	Talks about the lost policy issue.
TAPE 231, A
003	Rep. Shetterly	Asks what would show the policy limits in the absence of a policy.
005	Nelson	Answers that he is not sure, but thinks that some other reference to the policy limit would be acceptable.
015	Rep. Macpherson	Asks how many insurers are involved in the Portland Super Fund Site.
019	Herman	Says he thinks that there are about 10 carriers.
032	Rep. Macpherson	Asks how many are actively writing policies in Oregon today.
034	Herman	Responds that he doesn’t know, but pre-1986 general liability coverage is not being written by anyone in Oregon.
038	Chair Williams	Asks him to talk about what the bill would accomplish with the insurance carriers.
046	Herman	Says that there are two situations that they deal with factually. Explains one is a site in which the harm is visible and then talks about a situation when the harm is not visible.
079	Chair Williams	Asks about the lost policy issue.
081	Herman	Says that currently the Oregon law is being debated in front of the Oregon Court of Appeals. Adds that current state of law is that the standard is preponderance of the evidence.
094	Rep. Prozanski	Says that the trial court is applying “clear and convincing” and asks why they are using that higher standard.
102	Joan Snider	Attorney, representing Schnitzer. Says that the trial court did not give a rationale. Says that it is not clear that that issue will be resolved by the court.
108	Gallagher	Comments on the A5 amendments (EXHIBIT G).
120	Rep. Krummel	Asks for clarification on what Ms. Snider said.
129	Snider	Explains that what the judge said is that he thought the standard should be clear and convincing.
139	Rep. Krummel	Asks if the standard is explicit in the statute.
142	Snider	Says that the general rule in Oregon is to prove a contract through preponderance of evidence.
165	Foggan	Talks about the A5 amendments.
186	Taylor	Asks if Ms. Foggan has any suggested language.
187	Foggan	Says that she would work on some and be prepared to propose them.
201	Gallagher	Says that they have no disagreement with Ms. Foggan and are willing to look at their suggestions.
221	Chair Williams	Closes the work session on SB 297A and adjourns the meeting at 3:10 p.m.

EXHIBIT SUMMARY

A – SB 59A, A6 amendments, submitted by staff, dated 7/1/03, 3 pgs.

B – SB 59A, hand-engrossed bill, 8 pgs.

C – SB 297A, written testimony of Tom Zelenka, submitted by Tom Gallagher, 4 pgs.

D – SB 297A, written testimony of Micheal Keyes, submitted by Shawn Miller, 4 pgs.

E – SB 297A, written testimony submitted by John DiLorenzo, Jr., 4 pgs.

F – SB 297A, A6 amendments, submitted by staff, dated 6/27/03, 1 pg.

G – SB 297A, A5 amendments, submitted by staff, dated 6/27/03, 1 pg.