Port seeks to mine old insurance policies to cover some Budd Inlet remediation costs

The Port of Olympia will have a full report on possible insurance coverages for the contamination of Budd Inlet by late spring or early summer, Shawn Gilbertson, director of environment planning and programs, told the Port Commission on Monday, February 12.

The Port hired consultant Chris Reive in April 2023 to analyze the port's previous insurance policies throughout the 1990s and 2000s. The money that could potentially be generated from these insurance policies will be used as additional funding sources for the cleanup of Budd Inlet.

As part of its consent agenda, commissioners approved an amendment to Reive’s contract on Monday to increase his contract’s not-to-exceed amount to $225,000.

The additional budget will allow Reive to complete his work and determine which policies apply to the port. Gilbertson explained at a commission meeting in January that the additional work was needed due to the scope of the work, which was further complicated when Reive had to start searching for physical paper documents.

“Forensic investigations are expensive by their nature. There's a lot of sleuthing of old files with a technical eye to determine whether the policies apply to the port and whether they offer coverage for the Budd Inlet remediation work,” Gilbertson had said.

“My assessment since coming on board is that the original estimate that you see on your screen was based on digital retrieval of all of the insurance documents and policies, but what happened is digital recovery of these documents was very complicated and it ended up being a paper file search, which contributed heavily to the workload and significantly slowed the process to identify insurance policies that may be relevant,” he added.

Gilbertson also noted that the extended search has helped the port discover more potential policies than they originally expected.

The planning director said that Reive has so far produced a policy chart and report summarizing all possible policies during the timeframe of the analysis. The Port has also notified 17 insurers and brokers to ask them for records that the port does not have access to.

The next step would be for Reive to compile and analyze these responses to determine the port’s next steps, such as whether to litigate or invoke the insurer's duty to defend the port.

The scope of Reive’s work includes an analysis of previous settlements to determine which insurance coverages have and have not been fully exhausted, as well as insurance policies issued through a third party.

The timeframe of the investigation is from 1997 to 2008. Policies after 2008 are not applicable as this was when the Washington Department of Ecology determined the Port as one of the liable parties for the contamination in Budd Inlet.

Gilbertson previously said that are also considering studying insurance coverage from 1990 to 1996, but this work would be more of an internal investigation. Coverages before 1990 are considered exhausted as they predated the settlement for the Cascade Pole site, according to Gilbertson.