ELR Citation: ELR 20956
No(s). s. 84-4041 et al (9th Cir. Aug 14, 1986)

The court holds that the port of Portland, Oregon, is entitled to recovery from its insurers for the cost of responding to an oil slick from the sinking of a port-owned dredge. The court first notes that the port's insurance coverage is coextensive with its Federal Water Pollution Control Act (FWPCA) liability, and that FWPCA liability excludes publicly owned vessels unless they are engaged in commerce. Observing that the dredge was used to perform contracts for the Army Corps of Engineers and was available for contract to third parties, the court holds that the dredge was engaged in commerce. The court then holds that the port's insurance broker's telephone reports and letter to the insurance company, together with the company's failure to suggest its consent was withheld, satisfied the insurance contract's requirements for notice and insurer consent to cleanup measures.

Next, the court applies Oregon insurance law in allocating liability between the port's two insurers, and holds that water pollution is injury to tangible property within the meaning of the insurance contract. The court holds that the cost of pumping fuel out of the sunken dredge is part of salvage, not cleanup, and hence not recoverable from insurers, but that pier and shoreline cleaning are part of cleanup. Finally, the court holds that the port is entitled to attorney fees under Oregon law.

[Related opinion at 13 ELR 20960].

Counsel for Defendants-Appellants
Joe D. Bailey
Landis, Aebi, Bailey & Mercer
1516 Georgia-Pacific Bldg., 900 SW Fifth Ave., Portland OR 97204-1276
(503) 224-6532

Alex L. Parks
Parks, Montague, Allen & Greif
Suite 800, 621 SW Morrison St., Portland OR 97205
(503) 224-4840

Counsel for Plaintiff-Appellee
Katherine H. O'Neil
Wood, Tatum, Mosser, Brook & Holden
Suite 1300, 1001 SW Fifth Ave., Portland OR 97204
(503) 224-5430

Before Nelson and Boochever, JJ.