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i Karen Kaika August 7, 1996 Page 8 The issue of whether an insurer has the duty to defend an administrative action, was recently commented on by a California Appellate court in Haskel v. Superior Court (1995) 33 Cal.AppAth 963, 39 Cal.Rptr.2d 520. That case was a declaratory relief action in which the insured sought a determination that its insurers had an obligation to defend it when the EPA notified the company that it was potentially responsible for groundwater contamination beneath and around a site. Haskel was also accused of soil and groundwater contamination by the state and was directed to remediate. These federal and state administrative directives were the only actions taken against Haskel and no judicial proceeding had been filed. (Neither side challenged whether the PRP letter was a "suit.") The court cited with approval the Ninth Circuit's decision in Aetna Casualty & Surety Company v. Pintlar Corp. (9th Cir.1991) 948 F.2d 1507, where the court, faced with the very same question, held that an insurer's duty to provide the defense to its insured is triggered once the EPA notifies the company that it is a PRP at a site. 33 Cal.App.4th at page 971, fn. 3 (modified 95 D.A.R. 5302 [April 25, 1995]). In Aetna Casualty & Surety Companmv. Pintlar Corp. (9th Cir.1991) 948 F.2d 1507, the Ninth Circuit held that under Idaho's "plain meaning" doctrine of contract interpretation (the same test applied in California), the insured's receipt of a PRP letter from the EPA triggered the insurer's duty to defend the insured in the administrative process. The Pintlar court recognized that in a CERCLA case, or similar state enforcement action, a potentially responsible party's substantive rights and ultimate liability are affected from the start of the administrative process. 948 F.2d at page 1516. For example, 'I[IJn order to influence the nature and cost of the environmental studies and clean up measures, the PRP must get involved from the outset." Id. at p. 1517. Thus, the commencement of the administrative enforcement process constitutes a "suit necessitating a legal defense" by the insurer which requires the retention of technical experts and attorneys to protect the insured's interest in connection with the government's actions. Id. The insurer has not only the interest in seeking to avoid or limit its liability to the enforcement agency but also an interest in seeking to limit the scope and cost of remediation required by the agency. Fireman's Fund Insurance CoMany v Ex-Cello Corp. (E.P. Mich. 1992) 790 F.Supp. 1318, 1334-1335. In Aetna Casualty & Surety Company v. Pintlar Corp. (9th Cir. 1991) 948 F.2d 1507, the Ninth Circuit also recognized an overriding policy concern: "...if the receipt of a PRP notice is held not to trigger a duty to defend under CGL policies, then insureds might be inhibited from cooperation with the EPA in order to invite the filing of a formal complaint." 948 F.2d at page 1517. The Ninth Circuit recognized that I'coverage should not depend on whether the EPA may choose to proceed with its IT .c • c� uT-lnccu ro 11naau I.INTnnTM oo.oT OC . )la -)nH