09 NRD postconference full binder .pdf - Law Seminars International
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L A W S E M I N A R S I N T E R N A T I O N A L<br />
The Third Annual Advanced Conference on<br />
Natural Resource<br />
Damages Claims<br />
New case law and legislation, and best strategies<br />
July 9 and 10, 20<strong>09</strong><br />
Santa Fe, NM<br />
Copyright 20<strong>09</strong> by <strong>Law</strong> <strong>Seminars</strong> <strong>International</strong>
Featuring Speakers From:<br />
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The Third Annual Advanced Conference on<br />
Natural Resource<br />
Damages Claims<br />
New case law and legislation, and best strategies<br />
July 9 & 10, 20<strong>09</strong><br />
Santa Fe, New Mexico<br />
La Fonda Hotel in Santa Fe<br />
Credits: <br />
Quick when/where: <br />
Natural Resource Damages Claims Conference<br />
July 9 & 10, 20<strong>09</strong> | Santa Fe, New Mexico<br />
La Fonda Hotel in Santa Fe<br />
Yes!<br />
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800 Fifth Avenue, Suite 101, Seattle, WA 98104<br />
tel (206)567-4490 or (800)854-80<strong>09</strong><br />
fax (206)567-5058 | www.lawseminars.com<br />
<strong>09</strong><strong>NRD</strong>NM WS
Thursday, July <strong>09</strong>, 20<strong>09</strong><br />
8:00 Registration and Continental Breakfast<br />
8:30 Introduction and Overview<br />
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8:45 The U.S. Department of Justice’s Perspective on Natural<br />
Resource Damage (<strong>NRD</strong>) Claims<br />
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9:15 Sources, Nature, and Relative Strength of <strong>NRD</strong> Claims<br />
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10:15 Break<br />
10:30 Case <strong>Law</strong> Update and <strong>NRD</strong> Claims Around the Country<br />
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11:15 Determining Natural Resource Injury and Strategies for<br />
Conducting/Resisting <strong>NRD</strong> Assessments<br />
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Natural Resource Damages Claims Conference<br />
12:15 Lunch (on your own)<br />
1:30 Lessons Learned from Managing Complex <strong>NRD</strong> Cases<br />
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2:45 Defenses to Claims of Natural Resource Damages<br />
3:30 Break<br />
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3:45 Rule 702/Daubert and <strong>NRD</strong><br />
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4:30 Economic Valuation of Natural Resource Damages<br />
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5:30 Continue the Exchange of Ideas: Reception for<br />
Attendees and Faculty Sponsored by Curley &<br />
Associates LLC and Farella Braun + Martel LLP<br />
About the Conference<br />
LAW SEMINARS<br />
INTERNATIONAL<br />
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www.lawseminars.com
8:00 Registration and Continental Breakfast<br />
8:30 Strategies for Determining Baseline<br />
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9:15 Counterclaims and Third Party Claims<br />
10:00 Break<br />
Friday, July 10, 20<strong>09</strong><br />
10:15 Settlement of <strong>NRD</strong> Litigation<br />
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11:15 What’s Next in <strong>NRD</strong> Litigation?<br />
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11:45 Establishing Trusteeship Over Injured Resources<br />
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12:30 Evaluations and Adjourn<br />
Natural Resource Damages Claims Conference<br />
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Upcoming <strong>Seminars</strong>:<br />
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See more at www.lawseminars.com<br />
Registration & Other Conference Information<br />
To Register:<br />
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Continuing Education Credits:<br />
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If You Cannot Attend:
Faculty: Natural Resource Damages Claims Conference July 9 & 10, 20<strong>09</strong><br />
James A. Bruen, <br />
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Richard O. Curley, Jr.,<br />
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Mark Barash,<br />
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Nathaniel Barber,<br />
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Peter C. Chestnut<br />
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Brian J. Cleary,<br />
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John C. Cruden, <br />
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John K. Dema, <br />
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William H. Desvousges, Ph.D.,<br />
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Donald W. Fowler, <br />
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Ira Gottlieb,<br />
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Brian D. Israel, <br />
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Kenneth Jenkins, Ph.D., <br />
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Robert W. (Rob) Johnson<br />
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Steven G. Jones, <br />
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Allan Kanner,<br />
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Scott E. Kauff, <br />
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Angus Macbeth,<br />
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Jean Martin<br />
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Vicky L. Peters, <br />
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Deborah K. Tellier, <br />
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Michael R. Thorp, <br />
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Robert Unsworth,<br />
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Santa Fe, New Mexico<br />
La Fonda Hotel in Santa Fe<br />
100 E. San Francisco Street<br />
(505) 982-5511<br />
Who Should Attend:<br />
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You Will Learn About:<br />
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To Register:<br />
Mail<br />
800 Fifth Ave., Suite 101<br />
Seattle, WA 98104<br />
Phone<br />
(206) 567-4490<br />
or (800) 854-80<strong>09</strong><br />
Fax<br />
(206) 567-5058<br />
Email<br />
registrar@lawseminars.com<br />
www.lawseminars.com
The Third Annual Advanced Conference on<br />
Natural Resource Damages Claims<br />
New case law and legislation, and best strategies<br />
July 9 and 10, 20<strong>09</strong>, in Santa Fe, NM<br />
Table of Contents<br />
Topic Speaker #<br />
Introduction and Overview<br />
James A. Bruen 1<br />
Richard O. Curley, Jr. 2<br />
The U.S. Department of Justice's Perspective on Natural Resource Damage (<strong>NRD</strong>) Claims<br />
John C. Cruden 3<br />
Sources, Nature, and Relative Strength of <strong>NRD</strong> Claims<br />
Vicky L. Peters 4<br />
Brian J. Cleary 5<br />
Case <strong>Law</strong> Update and <strong>NRD</strong> Claims Around the Country<br />
Peter C. Chestnut 6<br />
John K. Dema 7<br />
Scott E. Kauff 8<br />
Determining Natural Resource Injury and Strategies for Conducting/Resisting <strong>NRD</strong><br />
Assessments<br />
Angus Macbeth 9<br />
Lessons Learned from Managing Complex <strong>NRD</strong> Cases<br />
Kenneth Jenkins 10<br />
Mark Barash 11<br />
Jean Martin 12<br />
Robert W. Johnson 13<br />
Defenses to Claims of Natural Resource Damages<br />
Nathaniel Barber 14<br />
James A. Bruen 15<br />
Page 1 of 2<br />
800 Fifth Avenue, Suite 101, Seattle, WA 98104 | 206 567 4490 | 800 854 80<strong>09</strong> | fax 206 567 5058<br />
www.lawseminars.com
Table of Contents<br />
Topic Speaker #<br />
Rule 702/Daubert and <strong>NRD</strong><br />
Donald W. Fowler 16<br />
Economic Valuation of Natural Resource Damages<br />
Robert E. Unsworth 17<br />
Strategies for Determining Baseline<br />
Counterclaims and Third Party Claims<br />
Settlement of <strong>NRD</strong> Litigation<br />
What's Next in <strong>NRD</strong> Litigation?<br />
Establishing Trusteeship Over Injured Resources<br />
William H. Desvousges 18<br />
Brian D. Israel 19<br />
Richard O. Curley, Jr. 20<br />
Allan Kanner 21<br />
Steven G. Jones 22<br />
Ira Gottlieb 23<br />
Deborah K. Tellier 24<br />
Michael R. Thorp 25<br />
Brian J. Cleary 26<br />
Page 2 of 2
Faculty<br />
Natural Resource Damages Claims<br />
July 9 and 10, 20<strong>09</strong><br />
Santa Fe, NM<br />
Mr. Mark Barash<br />
U.S. Department of the Interior<br />
1 Gateway Center<br />
Suite 612<br />
Boston, MA 02458<br />
T: (617) 527-2103 F: (617) 527-6848<br />
Email: mark.barash@sol.doi.gov<br />
Mr. James A. Bruen<br />
Farella Braun + Martel LLP<br />
235 Montgomery Street<br />
30th Floor<br />
San Francisco, CA 94104<br />
T: (415) 954-4430 F: (415) 954-4480<br />
Email: jbruen@fbm.com<br />
Mr. Brian J. Cleary<br />
The Cleary <strong>Law</strong> Group, P.C.<br />
101 W. Prarie Ctr.<br />
#362<br />
Hayden, ID 83835<br />
T: (208) 762-1081 F: (208) 772-8360<br />
Email: brian@clearylawgroup.com<br />
Mr. Nathaniel Barber<br />
New York State Department of<br />
Environmental Conservation<br />
625 Broadway<br />
14th Floor<br />
Albany, NY 12233-0001<br />
T: (518) 402-9502 F: (518) 402-9018<br />
Email: nhbarber@gw.dec.state.ny.us<br />
Mr. Peter C. Chestnut<br />
Chestnut <strong>Law</strong> Offices<br />
121 Tijeras Ave Ne<br />
Suite 2001<br />
Albuquerque, NM 87102-3465<br />
T: (505) 842-5864 F: (505) 843-9249<br />
Email: pcc@chestnutlaw.com<br />
Mr. John C. Cruden<br />
U.S. Department of Justice<br />
950 Pennsylvania Ave., N.W.<br />
Environmental and Natural Resources<br />
Division<br />
Washington, DC 20530<br />
T: (202) 514-2000 F:<br />
Email: john.cruden@usdoj.gov<br />
800 Fifth Avenue, Suite 101, Seattle, WA 98104 | 206 567 4490 | 800 854 80<strong>09</strong> | fax 206 567 5058<br />
www.lawseminars.com
Faculty for Natural Resource Damages Claims (con't)<br />
Mr. Richard O. Curley, Jr.<br />
Curley & Associates LLC<br />
21982 Paradise Circle<br />
Golden, CO 80401<br />
T: (720) 746-<strong>09</strong>01 F:<br />
Email: rcurley@curleylegal.com<br />
Dr. William H. Desvousges<br />
W.H. Desvousges & Associates<br />
700 Exposition Place<br />
Suite 141<br />
Raleigh, NC 227615<br />
T: (919) 847-7101 F: (919) 847-7445<br />
Email: william.desvousges@whdesvousgesa<br />
ssociates.com<br />
Mr. Ira Gottlieb<br />
McCarter & English LLP<br />
100 Mulberry St.<br />
Four Gateway Center<br />
Newark, NJ 07102<br />
T: (973) 639-7984 F: (973) 297-3976<br />
Email: igottlieb@mccarter.com<br />
Dr. Kenneth Jenkins<br />
ARCADIS<br />
140 Second Street<br />
Suite 200<br />
Petaluma, CA 94952<br />
T: (707) 776-0865 F: (707) 776-0850<br />
Email: ken.jenkins@arcadis-us.com<br />
Mr. Steven G. Jones<br />
Marten <strong>Law</strong> Group PLLC<br />
1191 Second Ave<br />
Suite 2200<br />
Seattle, WA 98104<br />
T: (206) 292-2629 F: (206) 292-2601<br />
Email: sjones@martenlaw.com<br />
Mr. John K. Dema<br />
<strong>Law</strong> Offices of John K. Dema, P.C.<br />
1236 Strand Street<br />
Suite 103<br />
Christiansted, VI 00820<br />
T: (340) 773-6142 F: (340) 773-3944<br />
Email: jdema@lojkd.com<br />
Mr. Donald W. Fowler<br />
Hollingsworth LLP<br />
1350 I St. N.W.<br />
Washington, DC 20005<br />
T: (202) 898-5800 F: (202) 682-1639<br />
Email: dfowler@spriggs.com<br />
Mr. Brian D. Israel<br />
Arnold & Porter LLP<br />
555 Twelfth Street, NW<br />
Washington, DC 20004-1206<br />
T: (202) 942-6546 F:<br />
Email: Brian.Israel@aporter.com<br />
Mr. Robert W. Johnson<br />
Exxon Mobil Corporation<br />
800 Bell Street<br />
Room 1841-J<br />
Houston, TX 77002<br />
T: (713) 656-3554 F:<br />
Email: robert.w.johnson@exxonmobil.com<br />
Mr. Allan Kanner<br />
Kanner & Whiteley, L.L.C.<br />
701 Camp Street<br />
New Orleans, LA 70130<br />
T: (504) 524-5777 F:<br />
Email: a.kanner@kanner-law.com<br />
Faculty Page 2 of 3
Faculty for Natural Resource Damages Claims (con't)<br />
Mr. Scott E. Kauff<br />
<strong>Law</strong> Offices of John K. Dema, P.C.<br />
11300 Rockville Pike<br />
Ste 112<br />
Rockville, MD 20852-3042<br />
T: (301) 881-5900 F:<br />
Email: skauff@lojkd.com<br />
Ms. Jean Martin<br />
BP<br />
4101 Winfield Road<br />
Cantera 3 MC 412E<br />
Warrenville, IL 60555<br />
T: (630) 821-2445 F: (630) 821-3406<br />
Email: jean.martin@bp.com<br />
Ms. Deborah K. Tellier<br />
Farella Braun + Martel LLP<br />
235 Montgomery Street<br />
Russ Building, 17th Floor<br />
San Francisco, CA 94104<br />
T: (415) 954-4970 F: (415) 954-4480<br />
Email: dtellier@fbm.com<br />
Mr. Angus Macbeth<br />
Sidley Austin LLP<br />
1501 K Street, N.W.<br />
Washington, DC 20005<br />
T: (202) 736-8271 F:<br />
Email: amacbeth@sidley.com<br />
Ms. Vicky L. Peters<br />
Attorney at <strong>Law</strong><br />
2025 Field Street<br />
Lakewood, CO 80215<br />
T: (303) 238-5752 F:<br />
Email: vlfp@comcast.net<br />
Mr. Michael R. Thorp<br />
Summit <strong>Law</strong> Group<br />
315 Fifth Avenue South<br />
Suite 1000<br />
Seattle, WA 98104<br />
T: (206) 676-7000 F: (206) 676-7001<br />
Email: miket@summitlaw.com<br />
Mr. Robert E. Unsworth<br />
Industrial Economics, Incorporated<br />
2067 Massachusetts Avenue<br />
4th Floor<br />
Cambridge, MA 02140<br />
T: (617) 354-0074 F:<br />
Email: reu@indecon.com<br />
Faculty Page 3 of 3
L A W S E M I N A R S I N T E R N A T I O N A L<br />
The Third Annual Advanced Conference on<br />
Natural Resource Damages Claims<br />
New case law and legislation, and best strategies<br />
July 9 and 10, 20<strong>09</strong><br />
Santa Fe, NM<br />
Introduction and Overview<br />
James A. Bruen, Esq.<br />
Farella Braun + Martel LLP<br />
San Francisco, CA<br />
Richard O. Curley, Jr., Esq.<br />
Curley & Associates LLC<br />
Golden, CO
James A. Bruen of Farella Braun + Martel LLP Speaker 1: 1<br />
R~ N o t e s ~<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
James A. Bruen of Farella Braun + Martel LLP Speaker 1: 2<br />
R~ N o t e s ~<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Richard O. Curley, Jr. of Curley & Associates LLC Speaker 2: 1<br />
R~ N o t e s ~<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Richard O. Curley, Jr. of Curley & Associates LLC Speaker 2: 2<br />
R~ N o t e s ~<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
L A W S E M I N A R S I N T E R N A T I O N A L<br />
The Third Annual Advanced Conference on<br />
Natural Resource Damages Claims<br />
New case law and legislation, and best strategies<br />
July 9 and 10, 20<strong>09</strong><br />
Santa Fe, NM<br />
The U.S. Department of Justice's Perspective on<br />
Natural Resource Damage (<strong>NRD</strong>) Claims<br />
John C. Cruden, Esq.<br />
U.S. Department of Justice<br />
Washington, DC
John C. Cruden of U.S. Department of Justice Speaker 3a: 1<br />
UNITED STATES DEPARTMENT OF JUSTICE<br />
ENVIRONMENT AND NATURAL RESOURCES DIVISION<br />
SUMMARY OF LITIGATION ACCOMPLISHMENTS<br />
FISCAL YEAR 2007<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
John C. Cruden of U.S. Department of Justice Speaker 3a: 2<br />
CONTENTS<br />
FOREWORD<br />
i<br />
PROTECTING OUR NATION’S AIR, LAND AND WATER 1<br />
ENSURING CLEANUP OF OIL AND HAZARDOUS WASTE 6<br />
PROMOTING RESPONSIBLE STEWARDSHIP OF<br />
AMERICA’S NATURAL RESOURCES AND WILDLIFE 8<br />
CRIMINAL ENFORCEMENT OF OUR NATION’S<br />
POLLUTION AND WILDLIFE LAWS 13<br />
DEFENDING VITAL FEDERAL<br />
PROGRAMS AND INTERESTS 17<br />
PROMOTING NATIONAL SECURITY<br />
AND MILITARY PREPAREDNESS 26<br />
PROTECTING INDIAN RESOURCES<br />
AND RESOLVING INDIAN ISSUES 27<br />
SUPPORTING THE DIVISION’S LITIGATORS 28<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
John C. Cruden of U.S. Department of Justice Speaker 3a: 3<br />
FOREWORD<br />
I am honored to present this summary of the Environment and Natural Resources<br />
Division’s litigation accomplishments for Fiscal Year 2007. This has been an extraordinary<br />
year. The Division both brings affirmative civil and criminal enforcement actions and defends<br />
federal agencies when their actions or decisions are challenged on the basis of our environmental<br />
or public lands and resources laws. As in past years, the Division achieved significant victories<br />
for the American people in each of the many areas for which it has responsibility. These<br />
responsibilities include protecting the Nation’s air, water, land, wildlife and natural resources,<br />
upholding our trust responsibilities to American Indians, acquiring needed lands for federal<br />
agencies, and otherwise defending important federal programs.<br />
The Division’s vigorous enforcement of our environmental laws again resulted in<br />
recordbreaking achievements in both the civil and criminal arenas. Enforcement is a critical<br />
component of environmental protection and helps ensure that our citizens breathe clean air, drink<br />
clean water, and will be able to enjoy the country’s public lands, wildlife and other natural<br />
resources for generations to come.<br />
In civil enforcement, the Division obtained nearly $6.7 billion in injunctive relief,<br />
through contested judgments or judicially approved consent decrees – the second largest single<br />
year amount ever. The injunctive measures secured will ensure that harmful sediments are<br />
removed from rivers, state of the art pollution control devices are added to factories to provide<br />
cleaner air, sewage discharges are eliminated, and damaged land and water aquifers are restored.<br />
This record result does not include one of the largest enforcement cases of all time, the massive<br />
case against American Electric Power for alleged Clean Air Act violations, which was resolved<br />
by consent decree lodged on October 9, 2007. Working jointly with eight states and thirteen<br />
environmental groups, the Division led the effort to bring the company into compliance with the<br />
law and obtain extraordinary pollution reduction. The settlement will require American Electric<br />
Power to undertake remedial actions to reduce its emissions of pollutants at an estimated cost of<br />
$4.6 billion, the highest value of injunctive relief ever obtained in an environmental case. The<br />
environmental impact is enormous. When <strong>full</strong>y implemented, the settlement will secure more<br />
than 800,000 tons per year of air pollution reductions. The foundation for this result was laid by<br />
the Supreme Court’s recent – and unanimous – decision in which the Division vindicated the<br />
Environmental Protection Agency’s position on a key liability issue related to power plant<br />
emissions.<br />
The Division also secured a record penalty in a settlement with the East Kentucky Power<br />
Cooperative that included the highest fine ever imposed under the Clean Air Act’s acid rain<br />
program. And in a wide range of other cases, the Division continued to protect the nation’s air<br />
quality by success<strong>full</strong>y pursuing Clean Air Act claims against oil refineries, automobile<br />
manufacturers, and diverse industrial facilities.<br />
The Division also worked success<strong>full</strong>y to ensure the integrity of municipal wastewater<br />
treatment systems. Each year, hundreds of billions of gallons of untreated sewage are discharged<br />
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John C. Cruden of U.S. Department of Justice Speaker 3a: 4<br />
into the nation’s waters from municipal wastewater treatment systems that are overwhelmed by<br />
weather conditions that they are not adequate to handle. This year, the Division reached<br />
settlements with several cities – including two of the largest sewer treatment settlements ever,<br />
encompassing Indianapolis and the Pittsburgh region – that will collectively provide for more<br />
than $4 billion in expenditures to bring these systems into compliance with the Clean Water Act.<br />
These settlements will ultimately reduce the volume of untreated sewage discharged into our<br />
streams and rivers by tens of billions of gallons. The Division also protected the nation’s waters<br />
and wetlands from illegal fill through Clean Water Act enforcement actions.<br />
The Division this year also success<strong>full</strong>y concluded the first court action ever brought<br />
under the Pipeline Safety Act. The settlement of this case – which arose out of a tragic<br />
explosion of an El Paso Natural Gas Company pipeline which killed twelve people – will require<br />
the defendant to pay a $15.5 million civil penalty and to spend at least $86 million on<br />
comprehensive upgrades of its pipeline system.<br />
The Division’s critical enforcement successes in the civil arena were paralleled in the<br />
criminal arena. As part of the Division’s ongoing initiative to prosecute those who dump waste<br />
oil and other chemicals from ships into the oceans and coastal waterways and who keep false<br />
records to hide those activities, the Overseas Shipholding Group was sentenced to pay $37<br />
million in penalties – the largest ever penalty for concealing vessel pollution. The Division also<br />
obtained plea agreements, convictions, substantial terms of imprisonment, and criminal fines<br />
against violators who intentionally violated the Clean Air Act, Clean Water Act, laws<br />
safeguarding the public from exposure to hazardous waste, and laws protecting wildlife. For<br />
example, the Division recently reached plea agreements with two British Petroleum subsidiaries<br />
for environmental crimes relating to a fatal explosion at a Texas refinery and to leaks of crude oil<br />
from pipelines. In agreements announced in October 2007, British Petroleum agreed to pay $50<br />
million in criminal fines for Clean Air Act violations relating to a catastrophic explosion that<br />
killed 15 employees and injured at least 170 others, and, in a second case, agreed to $12 million<br />
in criminal fines, $4 million in community service payments, and $4 million in restitution to the<br />
state for Clean Water Act violations relating to pipeline leaks onto the tundra and into a frozen<br />
lake in Alaska. In another case, the Division secured convictions against Citgo Refining and<br />
Chemical Company for having operated open oil tanks that lacked proper emission controls and<br />
in which birds protected by the Migratory Bird Treaty Act were trapped and killed, due to the<br />
company’s failure to install inexpensive protective equipment.<br />
Record-breaking sentences and enforcement cases are impressive but they are only a part<br />
of the Division’s work. An equally important aspect of the Division’s work is its defense of vital<br />
federal programs, including military and national security programs. For example, the Division<br />
success<strong>full</strong>y defended the Army against challenges to its chemical weapons demilitarization<br />
program. We assisted the military in its training, preparations and deployment in the war on<br />
terrorism with a court victory that allowed the Army to resume activities critical to converting<br />
the 2nd Brigade, 25th Infantry Division into a Stryker Brigade as part of the Army’s<br />
modernization plan. The Division also acquired property essential to military and homeland<br />
security needs.<br />
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John C. Cruden of U.S. Department of Justice Speaker 3a: 5<br />
The Division promotes responsible stewardship of our natural resources by defending<br />
federal agencies charged with such tasks as determining whether a species should be listed as<br />
endangered or threatened, managing fishery resources in a way that balances various interests,<br />
overseeing water conservation projects, managing activities on federal lands that range from<br />
grazing to oil and gas leasing, and protecting the nation’s forests from the risks of wildfire. This<br />
year, the Division had important successes in facilitating the work agencies do in all these areas.<br />
The Division’s work also secures critical water rights for the United States. This year,<br />
the Division reached important settlements and secured favorable judgments ensuring access to<br />
the water necessary to maintain the vitality of natural resources and uses of the public lands,<br />
national forests, national parks, wildlife refuges, wild and scenic rivers, military bases, and<br />
federal reclamation projects throughout the West. Another primary responsibility of the<br />
Division is the implementation of the United States’ trust responsibility to Indian tribes and the<br />
resolution of the issues pertaining to American Indians. We work to protect tribal fishing and<br />
water rights, this year, for example, reaching a comprehensive settlement that resolves litigation<br />
ongoing since the 1970s and vindicating the hunting and fishing rights of five tribes under the<br />
1836 Treaty of Washington.<br />
The Division currently has a docket of over 6,800 active cases and matters. The cases the<br />
Division handles arise under more than 150 different statutes, including the Clean Water Act, the<br />
Clean Air Act, the Safe Drinking Water Act, the Comprehensive Environmental Response,<br />
Compensation and Liability Act, the National Forest Management Act, the Federal Land Policy<br />
and Management Act, the National Environmental Policy Act, and the Endangered Species Act.<br />
The Division litigates in every judicial district in the Nation.<br />
As someone who has served more than a decade in the Department of Justice but is<br />
relatively new to the Division, I have been impressed with, but unsurprised by, the dedication<br />
and hard work of the Division’s attorneys and support staff. The service and commitment of our<br />
people is in perfect keeping with the Department’s highest traditions. The Division’s exemplary<br />
record in protecting the environment, American Indian rights, and the Nation’s natural resources,<br />
wildlife, and public lands is due to the hard work of these people, as well as our client agencies,<br />
the United States Attorney’s Offices, and state and local officials around the country. The<br />
Division’s work is a powerful demonstration that our national government can – and does –<br />
make a positive difference in the lives of Americans.<br />
Ronald J. Tenpas<br />
Assistant Attorney General<br />
Environment and Natural Resources Division<br />
March 2008<br />
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John C. Cruden of U.S. Department of Justice Speaker 3a: 6<br />
PROTECTING OUR NATION’S AIR,<br />
LAND AND WATER<br />
Reducing Air Pollution from Power<br />
Plants. During the past year, the Division<br />
continued to success<strong>full</strong>y litigate Clean Air<br />
Act (CAA) claims against operators of coalfired<br />
electric power generating plants. The<br />
violations arose from companies engaging in<br />
major life extension projects on aging<br />
facilities without installing required state of<br />
the art pollution controls, resulting in tens of<br />
millions of tons of excess air pollution that<br />
has degraded forests, damaged waterways,<br />
contaminated reservoirs, and adversely<br />
affected the health of the elderly, the young,<br />
and asthma sufferers.<br />
This year, the Division achieved a<br />
notable Supreme Court victory upholding<br />
the Environmental Protection Agency (EPA)<br />
interpretation of the CAA that underlies<br />
many of these enforcement efforts. In<br />
Environmental Defense v. Duke Energy<br />
Corp., the Supreme Court, in a 9-0 decision,<br />
agreed with the United States that the lower<br />
courts had impermissibly reviewed the<br />
validity of EPA’s Prevention of Significant<br />
Deterioration (PSD) regulations, which they<br />
lacked authority to do under the CAA. The<br />
Supreme Court also reasoned that EPA was<br />
not required to give the same meaning in its<br />
regulations to different statutory uses of the<br />
term “modification” and that, for the<br />
program at issue, it was reasonable for EPA<br />
to measure emission increases based on<br />
hourly rates even though another program<br />
measured emission rates on an annual basis.<br />
The two programs had distinctly different<br />
purposes, and EPA was free to choose<br />
different ways to measure pollution outputs.<br />
In United States v. East Kentucky<br />
Power Cooperative, the Division obtained a<br />
consent decree that resolved claims under<br />
the CAA’s New Source Review<br />
(NSR)/PSD provisions, under which EKPC<br />
agreed to system-wide tonnage limits on its<br />
emissions of sulfur dioxide (SO 2 ) and<br />
nitrogen oxide (NOx), reducing annual<br />
emissions by approximately 50,000 tons<br />
per year. The reductions will be achieved<br />
by the installation of controls estimated to<br />
cost $650 million. The decree also requires<br />
EKPC to pay a civil penalty of $750,000,<br />
and to conduct an environmental mitigation<br />
project at a cost of at least $5 million. In a<br />
separate landmark settlement, EKPC also<br />
agreed to settle claims under the CAA’s<br />
acid rain program and pay the largest civil<br />
penalty to date under that program – $11.4<br />
million – as well as take steps to reduce<br />
approximately 400 tons of harmful<br />
emissions annually and offset another<br />
approximately 20,000 tons of emissions<br />
released from its facility located in Clark<br />
County, Ky.<br />
In United States v. Wisconsin<br />
Electric Power Company, the district court<br />
entered an amended consent decree, nearly<br />
four years after its lodging. This<br />
system-wide power plants settlement<br />
requires WEPCO to install pollution<br />
control equipment at an estimated cost of<br />
$620 million and pay a $3.1 million civil<br />
penalty.<br />
The Division also obtained the first<br />
consent decree with an electric utility,<br />
Nevada Power Co., for violations at a gasfired<br />
plant. Pursuant to the consent decree,<br />
Nevada Power will install approximately<br />
$60 million in pollution controls to secure<br />
significant reductions of NOx from four of<br />
its operating units.<br />
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John C. Cruden of U.S. Department of Justice Speaker 3a: 7<br />
In addition, the Division secured an<br />
amendment of a 2002 consent decree<br />
stemming from the failures of certain<br />
coal-fired power plants owned by Public<br />
Service Electric Gas in New Jersey to meet<br />
emissions reduction requirements in the<br />
2002 consent decree. The newly achieved<br />
air pollution reductions are equal or in<br />
certain respects superior to those that would<br />
have been achieved under the 2002 consent<br />
decree. PSEG will also pay a civil penalty<br />
of $6 million and perform environmental<br />
mitigation measures valued at $3.25 million<br />
to reduce particulate matter from diesel<br />
engines in New Jersey.<br />
The settlements achieved thus far<br />
will, when <strong>full</strong>y implemented, remove<br />
almost two million tons of pollutants from<br />
the air each year.<br />
Addressing Air Pollution from Oil<br />
Refineries. The Division also made<br />
progress in its national initiative to combat<br />
CAA violations within the petroleum<br />
refining industry by obtaining consent<br />
decrees with three more refiners, Total<br />
Petrochemical USA Inc., Valero Energy<br />
Corporation, and Hunt Refining Co.<br />
Total agreed to pay a $2.9 million<br />
penalty and upgrade pollution controls to<br />
resolve claims under the CAA. The changes<br />
to its facility, estimated to cost $37 million,<br />
will significantly reduce the facility’s<br />
emissions of air pollutants, ultimately<br />
reducing annual emissions of NOx, SO 2 , and<br />
carbon monoxide by more than 180, 800,<br />
and 120 tons, respectively.<br />
Valero agreed to pay a $4.25 million<br />
penalty and install $232 million worth of<br />
new and upgraded pollution controls at<br />
refineries in three states. The controls will<br />
eventually reduce annual emissions of NOx<br />
and SO 2 by more than 1,870 and 1,810 tons<br />
per year, respectively, and will result in<br />
additional reductions of carbon monoxide,<br />
volatile organic compounds, and particulate<br />
matter from each of the refineries. Valero<br />
will also spend $1.6 million on mitigation<br />
projects.<br />
Hunt agreed to pay a $400,000 civil<br />
penalty and spend more than $48.5 million<br />
for new and upgraded pollution controls at<br />
three refineries to resolve claims under the<br />
CAA. The work is expected to reduce<br />
more than 1,250 tons of harmful emissions<br />
annually from the company’s refineries.<br />
The States of Alabama and Mississippi<br />
joined in the settlements.<br />
With these settlements, the<br />
Division’s petroleum refinery enforcement<br />
initiative will have addressed more than 92<br />
individual refineries – comprising<br />
approximately 85% of the Nation’s refining<br />
capacity – and will reduce air pollutants by<br />
more than 325,000 tons a year.<br />
Reducing Air Pollution from Mobile<br />
Sources. The Division obtained a consent<br />
decree in United States v. Mercedes-Benz<br />
USA and DaimlerChrysler, AG, resolving<br />
claims that the defendants failed to<br />
promptly notify EPA of eight separate<br />
emission-related defects in a number of<br />
different Mercedes vehicles. The CAA<br />
requires such prompt notification by auto<br />
manufacturers so that the government can<br />
consider whether a recall is necessary. In<br />
response to the investigation, Mercedes<br />
began voluntary recalls for two of the<br />
defects at issue and notified owners that it<br />
would extend the warranty coverage to<br />
address a third defect, at an estimated cost<br />
of about $59 million. Under the consent<br />
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John C. Cruden of U.S. Department of Justice Speaker 3a: 8<br />
decree, Mercedes agreed to pay a penalty of<br />
$1.2 million and to improve its investigation<br />
and reporting system to ensure future<br />
compliance, at an estimated cost of about<br />
$5.4 million.<br />
Reducing Air Pollution at Other Diverse<br />
Industrial Facilities. The Division<br />
improved the Nation’s air quality by<br />
concluding enforcement actions against a<br />
variety of other facilities in diverse<br />
industries including secondary aluminum<br />
production, sulfuric acid manufacturing,<br />
natural gas production, metal forming, and<br />
oil seed processing.<br />
Those efforts, addressing similarly<br />
diverse CAA violations, secured<br />
commitments by defendants to perform<br />
more than $236 million in facility<br />
improvements, to undertake supplemental<br />
environmental projects valued at $1.375<br />
million to provide local environmental<br />
improvements, and to pay more than $10.1<br />
million in civil penalties. The states of<br />
Alabama, California, Colorado, Illinois,<br />
Indiana, Iowa, Kansas, Louisiana,<br />
Mississippi and Virginia intervened as<br />
plaintiffs and signed many of these consent<br />
decrees.<br />
Controlling Contaminated Storm Water<br />
Run-off. The Division also fought for<br />
cleaner water by enforcing Clean Water Act<br />
(CWA) provisions governing discharge of<br />
storm water. Storm water can harm the<br />
environment because it contains pollutants<br />
such as suspended solids, lead, and copper.<br />
The Division achieved a settlement<br />
with several St. Louis-area developers<br />
responsible for polluting streams and lakes<br />
with runoff from three construction sites in<br />
United States v. J.H. Berra Construction Co.<br />
The defendants have agreed to adhere to a<br />
strict compliance program at future<br />
construction projects, clean up past<br />
pollution, and pay one of the largest<br />
environmental penalties of its kind in the<br />
state’s history, $590,000. The United<br />
States was joined in the decree by the city<br />
of Wildwood and the state of Missouri.<br />
Ensuring the Integrity of Municipal<br />
Wastewater Treatment Systems.<br />
Through its aggressive national<br />
enforcement program, the Division<br />
continued to protect the Nation’s<br />
waterways by ensuring the integrity of<br />
municipal wastewater treatment systems.<br />
The settlements the Division reached this<br />
year will ultimately reduce the volume of<br />
untreated sewage discharged into our<br />
waterways by tens of billions of gallons.<br />
The Division lodged a consent<br />
decree with the city of Indianapolis,<br />
resolving claims relating to discharges from<br />
the city’s sanitary sewers and overflows<br />
from the portions of its sewer system<br />
where storm water and sanitary sewage are<br />
combined (combined sewer overflows or<br />
CSOs). The city will implement a longterm<br />
control plan at an estimated cost of<br />
$1.86 billion, perform a pollution reduction<br />
supplemental environmental project valued<br />
at $2 million, and pay a civil penalty of<br />
$1.17 million. The injunctive relief<br />
provided under the settlement will<br />
ultimately reduce the volume of<br />
Indianapolis’ CSO discharges by over 90<br />
percent, or 7.2 billion gallons per average<br />
year out of its current average of 7.9 billion<br />
gallons/year.<br />
In a landmark settlement with<br />
federal, state, and county authorities, the<br />
defendant in United States v. Allegheny<br />
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John C. Cruden of U.S. Department of Justice Speaker 3a: 9<br />
County Sanitary Authority agreed to a<br />
comprehensive plan to greatly reduce the<br />
annual discharge of billions of gallons of<br />
untreated sewage into local waterways.<br />
ALCOSAN has agreed to a multi-year<br />
strategy to upgrade the sewage systems<br />
serving Pittsburgh and 82 surrounding<br />
municipalities at a cost in excess of $1<br />
billion. The settlement also requires<br />
ALCOSAN to pay a $1.2 million penalty for<br />
past CWA violations, and to undertake $3<br />
million in environmental projects.<br />
The Division also lodged an interim<br />
consent decree with the City and County of<br />
Honolulu (CCH) that will correct the most<br />
significant problems in Honolulu’s<br />
wastewater collection system. Because the<br />
interim settlement addresses only the most<br />
urgent problems in CCH’s collection<br />
system, the United States and the State of<br />
Hawaii are continuing to work actively with<br />
CCH to reach a comprehensive resolution to<br />
CCH’s remaining wastewater collection and<br />
treatment challenges.<br />
The Division lodged its final,<br />
comprehensive consent decree in United<br />
States v. City of San Diego, resolving our<br />
CWA action against the City relating to the<br />
unlawful discharges of sewage from the<br />
City’s sewer system. Two previous decrees<br />
with the City had required it to take interim<br />
measures at an estimated cost of $274<br />
million. The third and final consent decree<br />
will require the city to continue to undertake<br />
capital projects and perform operations and<br />
maintenance through 2013, at a cost of an<br />
additional $1 billion, to prevent future spills<br />
of raw sewage from its system.<br />
Assuring Environmental Compliance in<br />
the Petrochemical Industry. The Division<br />
lodged a consent decree in United States v.<br />
Equistar Chemicals LP under which the<br />
defendant has agreed to spend more than<br />
$125 million on pollution controls and<br />
cleanup to address myriad air, water and<br />
hazardous waste violations at seven<br />
petrochemical plants in Texas, Illinois,<br />
Iowa and Louisiana. Equistar will also pay<br />
a civil penalty of $2.5 million (to be<br />
divided among the United States and state<br />
co-plaintiffs, Iowa, Illinois and Louisiana)<br />
and spend $6.56 million on supplemental<br />
environmental projects. Under the consent<br />
decree, Equistar will be the first in the<br />
petrochemical industry to adopt certain<br />
environmental measures, many of which go<br />
beyond what the regulations would require.<br />
Defending a Novel Enforcement<br />
Approach to Address Pollution from<br />
Factory Farms. In Association of Irritated<br />
Residents v. EPA, the District of Columbia<br />
Circuit rejected challenges to a series of<br />
administrative consent agreements that<br />
EPA entered to settle potential violations of<br />
the CAA and the Emergency Planning and<br />
Community Right to Know Act caused by<br />
air emissions from large animal feeding<br />
operations. Previously, there was no<br />
existing methodology to reliably measure<br />
factory farms’ air emissions, which has<br />
hampered EPA’s ability to enforce the<br />
CAA and other environmental statutes.<br />
Under the consent agreements, which are<br />
designed to bring the facilities into<br />
compliance with the permitting and<br />
reporting requirements of the statutes,<br />
participating farms will pay a penalty and<br />
agree to cooperate in the development of<br />
pertinent emissions data and monitoring<br />
protocols. Those data and protocols will<br />
then provide the basis for an emissions<br />
estimating methodology to be used to<br />
ensure future compliance.<br />
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John C. Cruden of U.S. Department of Justice Speaker 3a: 10<br />
Ensuring the Supply of Safe Drinking<br />
Water to Residents of Trailer Parks and<br />
Other Multi-Unit Properties. In<br />
Manufactured Housing Institute v. EPA, the<br />
Fourth Circuit upheld EPA’s determination<br />
to apply Safe Drinking Water Act<br />
regulations to owners of multi-unit<br />
properties other than apartment buildings<br />
who separately meter and bill for water<br />
delivered to their tenants. The court found<br />
that EPA reasonably determined that the<br />
water systems of trailer parks and similar<br />
multi-unit properties require regulation to<br />
ensure a safe drinking water supply.<br />
Protecting the Nation’s Waters and<br />
Wetlands. The Division obtained a number<br />
of favorable settlements in enforcement<br />
actions to protect the Nation’s waters and<br />
wetlands from illegal fill.<br />
United States v. Pala Band of<br />
Mission Indians involved violations of the<br />
CWA in connection with a sand and gravel<br />
mining operation and a levee built in the bed<br />
of the San Luis Rey River in California.<br />
Pursuant to a consent decree, the Pala Band<br />
of Mission Indians will pay a $370,000 civil<br />
penalty and fund a $545,000 mitigation<br />
project. A separate consent decree requires<br />
three additional defendants to pay a civil<br />
penalty of $65,000. In United States v. Toy<br />
Arnett, et al., the Division obtained a<br />
consent decree settling a CWA enforcement<br />
action concerning property in Santa Rosa<br />
Beach, Florida. The five defendants there<br />
were the present or former owners of two<br />
properties, one where wetlands were<br />
converted into pasture, and the other where<br />
an Army Corps of Engineers permit was<br />
violated. The defendants at the first site will<br />
pay a civil penalty of $65,000, restore the<br />
site, and place a conservation easement to be<br />
held by the State of Florida over the restored<br />
site. For the violations at the second site,<br />
the defendants must convey title to a<br />
nearby 20-acre mitigation parcel to an<br />
entity designated by the United States. In<br />
United States & State of Maryland v.<br />
Costello, the Division obtained a consent<br />
decree under which the defendants will<br />
restore 8,000 square feet of the Chesapeake<br />
Bay damaged by their construction of an<br />
unpermitted erosion control structure. They<br />
will also pay $20,000 in civil penalties to<br />
the United States and $30,000 to a state<br />
tidal wetlands fund established to pay for<br />
state-sponsored restoration projects.<br />
Enhancing Pipeline Safety. The Division<br />
lodged a consent decree in United States v.<br />
El Paso Natural Gas Co., the first court<br />
action brought to enforce the Pipeline<br />
Safety Act. The action resulted from a<br />
tragic explosion of an EPNG pipeline<br />
which killed twelve people in New Mexico<br />
in 2000. As a result of the settlement,<br />
EPNG will spend at least $86 million to<br />
implement widespread and comprehensive<br />
modifications of its 10,000-mile natural gas<br />
pipeline system and pay a $15.5 million<br />
civil penalty to resolve claims that it did<br />
not adequately monitor and minimize<br />
internal corrosion in two of its pipelines<br />
transporting corrosive gas.<br />
ENSURING CLEANUP OF OIL AND<br />
HAZARDOUS WASTE<br />
Cleaning Up Contaminated River<br />
Systems. The Division continued its<br />
aggressive efforts to secure cleanup of our<br />
Nation’s most contaminated rivers under<br />
the Comprehensive Environmental<br />
Response, Compensation and Liability Act<br />
(CERCLA). The Division achieved a<br />
settlement of unprecedented size and scope<br />
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John C. Cruden of U.S. Department of Justice Speaker 3a: 11<br />
with the General Electric Company (GE) to<br />
provide for cleanup of contamination from<br />
polychlorinated biphenyls (PCBs) that two<br />
GE plants discharged directly into the upper<br />
Hudson River for years. The settlement was<br />
lodged in Fiscal Year 2006 but entered in<br />
Fiscal Year 2007 after a comment period<br />
that drew extensive and wide-ranging public<br />
responses. Since entry of the consent<br />
decree, the Division has resisted various<br />
legal challenges to the settlement.<br />
In United States v. NCR Corp. and<br />
Sunoco-U.S. Mills, the Division obtained a<br />
consent decree that requires these two<br />
defendants to perform the first phase of<br />
remedial action for one section of the Lower<br />
Fox River and Green Bay site in<br />
northeastern Wisconsin. The site is<br />
contaminated with PCBs discharged into the<br />
Fox River from several paper manufacturing<br />
and recycling facilities and will cost more<br />
than $500 million to address overall. The<br />
remedial action required by this consent<br />
decree – which is with only two of eight<br />
potentially responsible parties (PRPs) at the<br />
site – is expected to cost about $30 million<br />
and features dredging, dewatering, and<br />
landfill disposal of PCB-contaminated<br />
sediments from a hot-spot of contamination.<br />
The Division also lodged a supplement to a<br />
consent decree in United States et al v. P.H.<br />
Glatfelter Co. and WTM I Co. to document<br />
the commitment of these two defendant<br />
PRPs to provide an additional $12 million<br />
for performance of CERCLA response<br />
activities in another section of the site, in<br />
addition to the approximately $60 million<br />
provided by these parties pursuant to a 2004<br />
consent decree addressing remedial actions<br />
in that section of the site.<br />
Conserving the Superfund by Securing<br />
Cleanups and Recovering Superfund<br />
Monies. The Division secured the<br />
commitment of responsible parties to clean<br />
up additional hazardous waste sites, at costs<br />
estimated in excess of $270 million, and<br />
recovered approximately $200 million for<br />
the Superfund to help finance future<br />
cleanups. Examples of some of the major<br />
Superfund cases resolved by the Division<br />
this year include: United States v.<br />
Kennecott Utah Copper Corporation<br />
(defendant to spend approximately $15<br />
million to remedy groundwater<br />
contamination caused by past mining<br />
operations at the Bingham Canyon mine in<br />
Utah); United States v. MidAmerican<br />
Energy Company (defendants to pay $4.6<br />
million in past costs and assist EPA’s<br />
response actions at the LeMars Coal Gas<br />
Superfund site in Iowa); United States v.<br />
Frazer Exton Development Corp.<br />
(defendant to perform $22 million remedial<br />
action and pay 50% of EPA’s unreimbursed<br />
costs at the Foote Mineral Superfund site in<br />
Chester, PA); United States v. Exxon Mobil<br />
Corporation (101 defendants to ensure a<br />
site-wide $48 million cleanup of the Beede<br />
Waste Oil site in Plaistow, NH, pay more<br />
than $9 million for future federal and state<br />
oversight costs, and $17 million in past<br />
federal and state response costs); United<br />
States v. EPEC Polymers, Inc. (defendant<br />
to remediate two of the three remaining<br />
known contaminated areas of the Turtle<br />
Bayou site in Liberty County, TX, at an<br />
estimated cost of $13.4 million; reimburse<br />
the United States for $6.9 million of past<br />
costs and interim costs estimated at $1<br />
million; and pay the United States’s future<br />
response costs, estimated at $2.1 million).<br />
Enforcing Cleanup Obligations In<br />
Bankruptcy Cases. The Division’s<br />
bankruptcy practice has continued to grow<br />
and this year achieved notable success in<br />
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John C. Cruden of U.S. Department of Justice Speaker 3a: 12<br />
several proceedings. In the Eagle Picher<br />
bankruptcy, the Division secured the<br />
agreement of the debtor to deposit $13.6<br />
million into a custodial trust to fund<br />
environmental cleanup work at sites in<br />
several states and obtained a judgment for<br />
an allowed claim of over $8.7 million for a<br />
site in New Mexico. In the Gurley<br />
bankruptcy, the Division recovered over $20<br />
million for two sites in Arkansas through the<br />
avoidance of fraudulent transfers.<br />
The Division has lodged additional<br />
proposed settlements in various bankruptcy<br />
courts, including in the Asarco, Fruit of the<br />
Loom, Gulf States Steel, W.R. Grace,<br />
Armstrong and Saltire Industrial<br />
bankruptcies. In these proceedings, the<br />
Division expects to receive millions of<br />
dollars of recoveries towards past and future<br />
cleanup costs. In one of the most<br />
challenging proceedings, In re: Asarco LLC,<br />
the United States asserted two kinds of<br />
claims for over 50 Superfund sites: (1)<br />
recovery of funds used for cleanup by other<br />
agencies, and/or (2) natural resource<br />
damages on behalf of federal natural<br />
resources trustee agencies.<br />
Defending the Constitutionality of the<br />
Superfund <strong>Law</strong>. In addition to its<br />
enforcement actions to secure the cleanup of<br />
hazardous waste sites, the Division has also<br />
success<strong>full</strong>y defended lawsuits aimed at<br />
interfering with cleanup actions by EPA and<br />
other federal agencies. For example, in<br />
United States v. Capital Tax Corp., a<br />
Superfund cost recovery and penalty action<br />
involving the National Lacquer and Paint<br />
site in Chicago, the defendant brought<br />
counterclaims alleging an EPA pattern and<br />
practice of unconstitutional implementation<br />
of its administrative order authority under<br />
section 106 of CERCLA. The Division<br />
prevailed on a motion to dismiss. The<br />
court found that the company lacked<br />
standing and, in the alternative, that there is<br />
no due process violation because the<br />
unilateral administrative order recipient<br />
gets a pre-deprivation hearing, thus<br />
upholding the constitutionality of key<br />
enforcement provisions of an important<br />
environmental statute.<br />
Similarly, in Raytheon Aircraft Co.<br />
v. United States, the Division prevailed<br />
against a claim that the administrative<br />
enforcement provisions of section 106 of<br />
CERCLA violate due process. The court<br />
held that section 106 provides an adequate<br />
opportunity for judicial review before any<br />
deprivation of property occurs and does not<br />
affect any protected liberty interests. The<br />
court also rejected the argument that the<br />
penalties authorized by section 106 are so<br />
coercive as to deprive the administrative<br />
order recipient of a meaningful opportunity<br />
to challenge the order in court.<br />
Defending the Government’s Cleanup<br />
Actions. In Steven Pollack v. Department<br />
of Defense, a citizen sued the Army and<br />
Navy, alleging they had failed to perform<br />
certain nondiscretionary duties in<br />
connection with the remediation of a<br />
landfill at Fort Sheridan, Illinois. The<br />
Division prevailed on a motion to dismiss.<br />
The court held that “the relief [plaintiff]<br />
seeks in his lengthy complaint is directed at<br />
halting the current work at the site and<br />
changing the direction of any additional<br />
work there. Accordingly, it is premature”<br />
under the Superfund law. This win is<br />
important because it allows the cleanup at<br />
the site to go forward without being<br />
delayed by litigation.<br />
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John C. Cruden of U.S. Department of Justice Speaker 3a: 13<br />
Addressing Oil Spills. The Division lodged<br />
a consent decree in United States v.<br />
Meridian Resource & Exploration, LLC<br />
resolving claims under the CWA in<br />
connection with five unauthorized<br />
discharges of crude oil into waters of the<br />
United States from two pipelines and one oil<br />
production well at Meridian’s facility during<br />
2005-2006. Meridian will expand and<br />
improve its pipeline monitoring, inspection,<br />
and maintenance program and pay a<br />
$504,000 civil penalty.<br />
PROMOTING RESPONSIBLE<br />
STEWARDSHIP OF AMERICA’S<br />
NATURAL RESOURCES AND<br />
WILDLIFE<br />
Defending Endangered Species Act<br />
Listings and the Critical Habitat<br />
Program: The Endangered Species Act<br />
(ESA) requires either the Fish and Wildlife<br />
Service (FWS) or the National Marine<br />
Fisheries Service (NMFS), depending on the<br />
species, to determine whether a species<br />
should be listed as endangered or threatened<br />
under a set of five criteria and to designate<br />
critical habitat for listed species. In FY 07,<br />
we had notable success defending such<br />
determinations.<br />
In Alabama-Tombigbee Rivers<br />
Coalition v. Kempthorne, the Eleventh<br />
Circuit rejected an industry trade group’s<br />
challenges to the FWS’s listing of the<br />
Alabama sturgeon under the ESA as an<br />
endangered species. The court found that<br />
there was substantial evidence in the record<br />
that the Alabama sturgeon was not the same<br />
fish as the shovelnose sturgeon, a much<br />
more plentiful species. It also held that the<br />
Service’s failure to designate critical habitat<br />
for the Alabama sturgeon at the same time<br />
that it listed the fish as endangered did not<br />
require the court to order the delisting of<br />
the species, which was nearly extinct. The<br />
court also rejected the argument that the<br />
listing was unconstitutional under the<br />
commerce clause as there was no evidence<br />
that the Alabama sturgeon had any<br />
interstate nexus. The court held that the<br />
proper focus of analysis should be on the<br />
purposes of the ESA itself, not just on the<br />
particular species being listed, and<br />
concluded that the ESA had a substantial<br />
relation to commerce.<br />
In American Wildlands et al. v.<br />
Norton et al., the court upheld a FWS<br />
listing determination for the westslope<br />
cutthroat trout on the basis that the<br />
Service’s use of morphological data, as<br />
well as genetic data, to identify the species<br />
was reasonable. In National Association of<br />
Homebuilders v. Kempthorne, the court<br />
agreed with the Division’s argument that<br />
the FWS’s decision not to list the pygmy<br />
owl was reasonable, where the population<br />
in the United States was peripheral to a<br />
large pygmy-owl population in northern<br />
Mexico. In Home Builders of N. Cal. v.<br />
FWS, the court upheld FWS’s designation<br />
of critical habitat for 15 vernal pool<br />
species, where certain California lands had<br />
been excluded because they already had<br />
adequate management plans. In Alsea<br />
Valley Alliance v. Lautenbacher, the<br />
Division prevailed against a challenge to<br />
the NMFS’s decision to list 16<br />
“Evolutionarily Significant Units” of<br />
salmon. The decision hinged on the<br />
Service’s policy regarding consideration of<br />
hatchery-origin fish in making listing<br />
determinations. In Tucson Herpetological<br />
Society v. Kempthorne, the Division<br />
success<strong>full</strong>y defended a FWS decision to<br />
withdraw the proposed listing rule for the<br />
flat-tailed horned lizard, establishing the<br />
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John C. Cruden of U.S. Department of Justice Speaker 3a: 14<br />
legitimacy of the Service’s evaluation of lost<br />
historical habitat in consideration of the<br />
species’ current persistence.<br />
Defending National Marine Fisheries<br />
Service’s Ocean Harvest Management.<br />
NMFS is charged, under the Magnuson-<br />
Stevens Fishery Conservation and<br />
Management Act, with the difficult task of<br />
managing ocean commercial fishing to not<br />
only provide for conservation and<br />
sustainable fishing, but also to optimize<br />
yield. In several cases, the Division<br />
success<strong>full</strong>y defended the Service’s<br />
balancing of these objectives. In Legacy<br />
Fishing Co. et al. v. Gutierrez, plaintiffs<br />
challenged Bering Sea fishery measures<br />
which reduce bycatch and waste of fishery<br />
resources. The court accepted the<br />
Division’s arguments that the Service had<br />
adequately considered costs to industry to<br />
the maximum extent practicable consistent<br />
with Magnuson Act conservation standards.<br />
In Coastal Conservation Ass’n v. Gutierrez,<br />
the Division prevailed against allegations by<br />
the fishing industry that Magnuson Act<br />
standards for rebuilding the red snapper<br />
fishery and for reducing bycatch were<br />
violated. The court there also held that the<br />
Service complied with its obligations under<br />
the National Environmental Policy Act<br />
(NEPA) to analyze alternatives to the<br />
rebuilding plan. In Sherley v. NOAA, the<br />
Division success<strong>full</strong>y defended NMFS’s<br />
denial of a recreational fishing permit<br />
against multiple challenges. The court held<br />
that the expectation of participating in a<br />
federal fishery was not a protected liberty<br />
interest and that denial of the permit thus did<br />
not violate the right to procedural due<br />
process, that 42 U.S.C. § 1983 was<br />
inapplicable, that the court lacked<br />
jurisdiction over a takings claim, and, in any<br />
event, that the administrative record<br />
supported the denial.<br />
Ensuring the Limitations of Federal<br />
Jurisdiction Are Enforced. The<br />
Administrative Procedure Act and other<br />
special review provisions circumscribe<br />
federal jurisdiction, as do the requirements<br />
of standing and other jurisdictional<br />
prerequisites. The Division prevailed in<br />
several wildlife cases on these defenses. In<br />
Washington State Farm Bureau v. NMFS,<br />
the court dismissed a complaint where<br />
plaintiffs failed to establish standing and<br />
did not demonstrate that they were injured<br />
by the Service’s listing of a population of<br />
killer whales. In Oregon Natural<br />
Resources Council v. Hallock, the Division<br />
prevailed on summary judgment. The court<br />
held that EPA’s oversight of the Oregon<br />
state National Pollutant Discharge<br />
Elimination System (NPDES) program and<br />
its provision of funds to the Oregon<br />
Department of Environmental Quality did<br />
not “federalize” the state program so as to<br />
require ESA consultation on state-issued<br />
NPDES permits regarding the effects on<br />
endangered sucker fish of the discharge of<br />
an herbicide. In Defenders of Wildlife v.<br />
Gutierrez, plaintiffs filed ESA claims<br />
against the Coast Guard for failure to<br />
consult with NMFS regarding the impact of<br />
its recommended traffic separation schemes<br />
on whales. The court dismissed the claims<br />
on the ground that the recommendations,<br />
which went to an international body that set<br />
the schemes, were not final agency actions<br />
subject to judicial review. Similarly, in<br />
Save Our Springs v. Norton, a court held<br />
that a letter from FWS interpreting a Texas<br />
Commission on Environmental Quality<br />
voluntary guidance document was not final<br />
agency action subject to judicial review;<br />
FWS had stated that compliance with the<br />
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John C. Cruden of U.S. Department of Justice Speaker 3a: 15<br />
letter, which discussed mitigation of the<br />
effects of storm water runoff, would avoid<br />
“take” of the Barton Springs Salamander<br />
under the ESA. In Conservation Northwest<br />
v. Kempthorne, the Division prevailed<br />
against a claim that FWS should be<br />
compelled to implement specific provisions<br />
of the Grizzly Bear Recovery Plan; the court<br />
held that FWS’s implementation of recovery<br />
plans is committed to agency discretion and<br />
thus not reviewable under the APA. In Gulf<br />
Fishermen Ass’n v Gutierrez, the Division<br />
defended a challenge to Vessel Monitoring<br />
System for Gulf Reef Fish, and the court<br />
dismissed plaintiff’s claims on the ground<br />
that a jurisdictional 30-day limitations<br />
period of Magnuson Act barred suit on all<br />
related claims. In Sea Hawk Seafoods v.<br />
Carlos M. Gutierrez, the Division<br />
success<strong>full</strong>y argued that a challenge brought<br />
by certain seafood industry plaintiffs to<br />
limits on the Bering Sea fishery were barred<br />
by the Magnuson Act’s 30-day statute of<br />
limitations because the restrictions were<br />
implemented by rule under the Act.<br />
Restoring the Florida Everglades. The<br />
Division continued to contribute to the<br />
restoration and protection of the Everglades<br />
ecosystem – including the 1.3 million-acre<br />
Everglades National Park, the largest, most<br />
important subtropical wilderness in North<br />
America. In United States v. South Florida<br />
Water Management District, court entered a<br />
consent decree in 1992 requiring the State of<br />
Florida to restore water quality in the<br />
Everglades through regulation of<br />
agricultural runoff and construction of vast<br />
wetland treatment systems. The consent<br />
decree’s “ambitious strategy to restore and<br />
preserve the Everglades ecosystem” – and<br />
the federal-state collaboration that produced<br />
it – have heralded a new era of<br />
intergovernmental cooperation on<br />
Everglades restoration that culminated in<br />
2000 when Congress and the Florida<br />
legislature approved an historic, 30-year,<br />
$7.8 billion restoration effort, fulfilling a<br />
top priority of the past three federal<br />
administrations. This year, the Division<br />
participated in the proceedings of the South<br />
Florida Ecosystem Restoration Task Force,<br />
the intergovernmental body codified by<br />
Congress in 1996 to coordinate the<br />
restoration of the Everglades. The Division<br />
also continued negotiating over additional<br />
water quality restoration measures to<br />
complement those specified in the consent<br />
decree.<br />
In addition, the Division continues<br />
to contribute to protection of the<br />
endangered Everglades ecosystem by<br />
acquiring lands within Everglades National<br />
Park and the Big Cypress National<br />
Preserve, as well as lands critical to the<br />
Army Corps of Engineers’ project to<br />
improve water deliveries in the area.<br />
Restoring the San Joaquin River and<br />
Securing Bureau of Reclamation Project<br />
Water Supplies. The Bureau of<br />
Reclamation’s California Central Valley<br />
Project is one of the Nation’s major water<br />
conservation developments. Seventy years<br />
ago, Congress authorized construction of<br />
the Friant Division of the Project. Friant<br />
Dam diverts all but a fraction of the waters<br />
of California’s second-longest river, the<br />
San Joaquin – de-watering a lengthy reach<br />
of the River for most of the year – for<br />
storage in Miller Lake and eventual<br />
distribution, primarily for agricultural use<br />
in the Central Valley. Earlier, in Natural<br />
Resources Defense Council v. Rodgers, the<br />
Division negotiated a historic settlement of<br />
longstanding litigation over Reclamation<br />
water supply contracts affecting the San<br />
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John C. Cruden of U.S. Department of Justice Speaker 3a: 16<br />
Joaquin. When implementing legislation is<br />
enacted, the historic goals of this settlement<br />
will be realized through funding and<br />
implementation of one of the largest river<br />
restoration projects in United States history.<br />
Defense of Federal Property Interests in<br />
Environmentally Sensitive Areas. In<br />
Kingman Reef Atoll Investments, LLC v.<br />
United States, plaintiff sought a ruling that it<br />
has fee simple title to Kingman Reef, a reef<br />
located nine hundred miles off the coast of<br />
Hawaii on which FWS has established a<br />
wildlife refuge of magnificent scope. The<br />
court dismissed the case on limitations<br />
grounds, rejecting plaintiff’s argument that<br />
the government had abandoned Kingman<br />
Reef and should be equitably estopped from<br />
asserting the limitations defense.<br />
Balancing Appropriate Management of<br />
the Missouri River System. The Army<br />
Corps of Engineers has the difficult task of<br />
managing the Missouri River System, which<br />
consists of six dams and reservoirs, for a<br />
variety of overlapping purposes, such as<br />
navigation, flood control, irrigation, and<br />
hydropower. In order to ensure that water<br />
resources decisions best serve these varied<br />
needs, the Corps issued a Master Manual<br />
that describes its water control plan. In<br />
2006, the Corps made changes to the Master<br />
Manual to comply with FWS suggestions in<br />
its biological opinion as to how to protect<br />
the endangered pallid sturgeon. The State of<br />
Missouri sued the Corps, alleging that it had<br />
violated NEPA. The Division success<strong>full</strong>y<br />
defended the Corps on all claims.<br />
Upholding Grazing Management<br />
Decisions on Federal Land. In Western<br />
Watersheds Project v. Abbey, environmental<br />
organizations challenged a Bureau of Land<br />
Management grazing management decision<br />
for the 325,000-acre Soldier Meadows<br />
Allotment in Nevada, which includes<br />
wilderness areas. The Division prevailed<br />
on summary judgment, with the court<br />
holding that the environmental assessment<br />
on the management decision satisfied<br />
NEPA and that the decision did not permit<br />
new grazing or increased grazing in<br />
violation of the Wilderness Act or the<br />
legislation creating the wilderness areas.<br />
In Stevens County, Washington v.<br />
Department of the Interior, a county and<br />
ranchers challenged a Habitat Management<br />
Plan that eliminated grazing in the Little<br />
Pend Oreille National Wildlife Refuge,<br />
claiming violations of the National Wildlife<br />
Refuge System Administration Act (Refuge<br />
Act), NEPA, and their Fifth Amendment<br />
due process rights. The Division prevailed<br />
on all claims. The district court held that<br />
the agency had exercised the required<br />
“sound professional judgment” under the<br />
Refuge Act; that the FWS complied with<br />
NEPA since plaintiffs had failed to show<br />
that the Plan caused impacts that were not<br />
already examined in a programmatic<br />
environmental impact statement; and that<br />
there was no due process violation because<br />
plaintiffs had no protected interest in<br />
renewal of a grazing permit under the<br />
Refuge Act.<br />
Protecting the Sierra Nevada Range<br />
from the Risks of Wildland Fire. In<br />
2004, the Forest Service amended the<br />
Sierra Nevada Forest Plan Amendment<br />
(“Framework”) governing 11.5 million<br />
acres in eleven national forests in the Sierra<br />
Nevada region of California in an attempt<br />
to increase desperately needed fuel<br />
treatments to reduce the threats of<br />
catastrophic wildfire while meeting the<br />
habitat needs of species dependent on old<br />
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John C. Cruden of U.S. Department of Justice Speaker 3a: 17<br />
growth forests. This amendment is the<br />
subject of four related lawsuits which<br />
threaten to paralyze forest management<br />
efforts on 11 million acres of federal land.<br />
Recent success in our continued defense of<br />
the Framework includes the denial of a<br />
preliminary injunction sought against three<br />
projects designed to reduce fire risks near<br />
communities in the Sierra Nevada.<br />
Litigating Federal Forest Land<br />
Management Programs and Policies. The<br />
Division continued to have success in<br />
defending against a variety of challenges to<br />
land management plans and projects. In<br />
Lands Council v. Martin, the Division<br />
prevailed against challenges to the School<br />
Fire Salvage Recovery Project in the<br />
Umatilla National Forest. The court found<br />
the environmental impact statement<br />
adequate under NEPA, and upheld the<br />
Forest Service’s use of a model to estimate<br />
soil erosion. Under the National Forest<br />
Management Act, the court found reliance<br />
on the widely used Scott Guidelines to<br />
determine the probability of tree survival<br />
was reasonable, as was use of the Decayed<br />
Wood Advisor (DecAID) tool. The court<br />
also upheld the Forest Service’s emergency<br />
situation determination and its use of a sitespecific<br />
plan amendment to modify the<br />
Forest Plan. The decision as to the Scott<br />
Guidelines, DecAID, and emergency<br />
situation determinations was particularly<br />
important for the agency’s national timber<br />
management program.<br />
The Division reached a beneficial<br />
settlement in Idaho Wildlife Federation v.<br />
Tower, involving management of the sage<br />
grouse under the Management Plan for the<br />
Curlew National Grassland in Idaho. The<br />
Management Plan will continue to stay in<br />
effect and the Forest Service will be able to<br />
achieve its land management objectives for<br />
the Grassland. The Division also<br />
success<strong>full</strong>y defended the decision to allow<br />
snowmobiles in the proposed West Hoover<br />
Wilderness Addition of the Humboldt-<br />
Toiyabe National Forest. In addition, the<br />
Division obtained a decision allowing the<br />
Bureau of Land Management to proceed<br />
with two timber sales in Klamath Siskiyou<br />
v. BLM. There, the court upheld BLM’s<br />
determination that FWS’s 2004<br />
identification of the Pacific fisher as a<br />
“warranted but precluded” species was not<br />
a significant new circumstance that<br />
required supplementation under NEPA.<br />
The court deferred to the BLM’s decision<br />
to use northern spotted owl habitat as a<br />
surrogate for Pacific fisher habitat in its<br />
impact analysis and distinguished an earlier<br />
case where the court had held that the<br />
Forest Service violated NEPA by failing to<br />
take a hard look at the impact of logging on<br />
the Southern Sierra fisher.<br />
The Division also quickly and<br />
decisively prevailed in a challenge to an<br />
administrative decision staying a Bureau of<br />
Land Management order closing a livestock<br />
grazing pasture for the 2007 grazing season<br />
for resource protection purposes. In<br />
Oregon Natural Desert Assn. v. United<br />
States Department of the Interior, the court<br />
granted our request to convert the<br />
preliminary injunction papers into summary<br />
judgment papers, ruling in our favor from<br />
the bench and entering final judgment. The<br />
court held that the administrative decision<br />
to stay closure was supported by substantial<br />
record evidence.<br />
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<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
John C. Cruden of U.S. Department of Justice Speaker 3a: 18<br />
CRIMINAL ENFORCEMENT OF OUR<br />
NATION’S POLLUTION AND<br />
WILDLIFE LAWS<br />
Vessel Pollution Prosecutions. The<br />
Vessel Pollution Initiative is an ongoing,<br />
concentrated effort to detect, deter, and<br />
prosecute those who illegally discharge<br />
pollutants from ships into the oceans, coastal<br />
waters and inland waterways and who lie<br />
about such activities. The Division<br />
continues to have great success prosecuting<br />
deliberate violations.<br />
In United States v. Overseas<br />
Shipholding Group, the defendant pled<br />
guilty to and was sentenced on charges that<br />
it engaged in conspiracy, obstructed justice,<br />
made false statements, and violated the Act<br />
to Prevent Pollution from Ships (APPS) and<br />
the Clean Water Act, as amended by the Oil<br />
Pollution Act of 1990. The crimes –<br />
involving twelve OSG oil tankers – occurred<br />
between June 2001 and March 2006. The<br />
offenses involved intentional falsification of<br />
oil record books to conceal the discharge of<br />
sludge and oil contaminated waste, as well<br />
as bypassing required pollution prevention<br />
equipment. OSG was sentenced to pay a<br />
total of $37 million in penalties, the largestever<br />
penalty involving deliberate vessel<br />
pollution, to serve a three-year term of<br />
probation, and to implement a stringent<br />
environmental compliance plan. Of the $37<br />
million, $9.2 will fund environmental<br />
projects coast-to-coast as part of the<br />
corporation’s required community service.<br />
In United States v. Pacific Gulf<br />
Marine, Inc., the defendant, an American<br />
shipping company, pled guilty to four APPS<br />
violations involving the illegal discharge of<br />
hundreds of thousands of gallons of oilcontaminated<br />
bilge waste from four of its<br />
ships. PGM was sentenced to pay a $1<br />
million fine, to pay $500,000 to fund<br />
environmental projects on the Chesapeake<br />
Bay and provide environmental education,<br />
to complete a three-year term of probation,<br />
and to implement an environmental<br />
compliance plan. As part of the ongoing<br />
investigation, four PGM Chief Engineers<br />
have been convicted of offenses including<br />
APPS violations for falsifying oil record<br />
books, conspiracy, and making false<br />
statements. Three pled guilty and one was<br />
convicted after trial.<br />
In United States v. Ionia<br />
Management S.A., et al., the defendant<br />
company, a Greek operator, was convicted<br />
by a jury on 18 counts, including falsifying<br />
records and presenting false oil record<br />
books to the Coast Guard, for overboard<br />
dumping of waste oil into international<br />
waters. The second engineer pled guilty<br />
and was sentenced to serve a one-year term<br />
of probation and to pay a $1,000 fine.<br />
In United States v. Petraia<br />
Maritime Ltd., et al., the defendant, a<br />
Swedish owner and operator of the M/V<br />
Kent Navigator, was convicted on three<br />
APPS violations for failure to maintain an<br />
accurate oil record book. Coast Guard<br />
investigators discovered evidence of illegal<br />
bilge waste discharges and concealment of<br />
the discharges. Two chief engineers pled<br />
guilty to making false entries in the oil<br />
record book. Each was sentenced to serve<br />
one month’s home confinement as part of a<br />
two-year term of probation and ordered to<br />
pay a $3,000 fine.<br />
In United States v. Chian Spirit<br />
Maritime Enterprises, Inc., et. al., the<br />
named defendant and its Greek<br />
owner/operator each pled guilty to one<br />
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John C. Cruden of U.S. Department of Justice Speaker 3a: 19<br />
APPS violation, and each was sentenced to<br />
pay $1.25 million for misleading Coast<br />
Guard investigators during an inspection of<br />
the M/V Irene E.M. The ship’s master pled<br />
guilty to presenting false information to the<br />
Coast Guard, and was sentenced to serve a<br />
one-year term of unsupervised probation.<br />
The Chief Engineer pled guilty to one APPS<br />
violation and was sentenced to serve a oneyear<br />
term of unsupervised probation.<br />
In United States v. Kassian Maritime<br />
Navigation Agency Ltd., et al., the corporate<br />
defendant pled guilty to one APPS violation<br />
for maintaining a false oil record book and<br />
was sentenced to pay a $1 million fine, to<br />
serve 30 months probation, and to pay<br />
$300,000 to fund community service<br />
projects. The chief engineer pled guilty to<br />
making a false statement to the Coast Guard<br />
and was sentenced to pay a $1000 fine.<br />
In United States v. Sun-Ace Shipping<br />
Company, et al., the corporate defendant<br />
pled guilty to one APPS violation for failing<br />
to maintain an accurate oil record book.<br />
The company was sentenced to pay a<br />
$400,000 fine and an additional $100,000 in<br />
community service to protect and restore the<br />
natural resources of the Delaware Estuary.<br />
The Chief Engineer pled guilty to<br />
obstruction of justice and was sentenced to<br />
serve five months in prison followed by two<br />
months of supervised probation. The second<br />
engineer pled guilty to one APPS violation<br />
and was sentenced to serve a three-year term<br />
of probation.<br />
In United States v. Nicanor Jumalon<br />
et al., the defendant, captain of the M/V<br />
Sportsqueen, pled guilty to obstruction of<br />
justice and was sentenced to serve eight<br />
months in prison for illegally dumping oilcontaminated<br />
ballast water from the ship.<br />
The India-based shipping company, Accord<br />
Ship Management Inc., pled guilty and was<br />
sentenced to pay a $1.75 million fine and<br />
serve a three-year term of probation for<br />
conspiracy, an APPS violation, and two<br />
counts of obstruction for dumping sludge,<br />
bilge wastes, and oil contaminated ballast<br />
water from the ship. The Chief Engineer<br />
also pled guilty to two obstruction<br />
violations and was sentenced to serve five<br />
months incarceration.<br />
Prosecuting Hazardous Waste and Clean<br />
Air Act Violations. In United States v.<br />
Dennis Rodriguez, the defendant, president<br />
and chief operator of North American<br />
Waste Assistance, pled guilty to three<br />
Resource Conservation and Recovery Act<br />
(RCRA) violations, and was sentenced to<br />
five months incarceration, followed by five<br />
months of house arrest, and a two-year term<br />
of probation. Rodriguez generated a<br />
manifest that stated 84 drums contained<br />
“Non RCRA, Non-regulated hazardous<br />
waste” when the drums actually contained<br />
an expired petroleum-based compound<br />
which was an ignitable hazardous waste.<br />
Using the false manifest, he delivered the<br />
waste to non-RCRA landfills.<br />
In United States v. Dylan Starnes, et<br />
al., the defendant, who had been convicted<br />
in 2005 on 15 counts, including Clean Air<br />
Act (CAA) and false statement violations,<br />
was sentenced to serve 33 months’<br />
incarceration, followed by a three-year<br />
term of probation. Starnes and his codefendant<br />
did not follow asbestos work<br />
practice regulations, and filed false air<br />
monitoring reports related to a remediation<br />
project in a HUD-funded housing project.<br />
In United States v. Citgo Petroleum<br />
Corporation, et al., Citgo Petroleum and<br />
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John C. Cruden of U.S. Department of Justice Speaker 3a: 20<br />
Citgo Refining and Chemical Company<br />
were convicted on two CAA violations.<br />
Between 1994 and 2003, the defendants<br />
operated tanks that contained oil without<br />
installing the proper emission controls.<br />
Citgo Refining and Chemical Company was<br />
also convicted on three misdemeanor<br />
violations of the Migratory Bird Treaty Act.<br />
The tanks attracted migratory birds, several<br />
of which (including cormorants, pelicans,<br />
and several species of ducks) were killed<br />
after they landed in the open tanks and<br />
became trapped in the oil.<br />
Prosecuting Clean Water Act Violations.<br />
In United States v. Moses, the defendant, an<br />
Idaho real estate developer, used a bulldozer<br />
and other heavy equipment to channelize<br />
and reroute Teton Creek in an attempt to<br />
prevent periodic flooding of an adjacent<br />
subdivision that he had developed. When he<br />
continued these actions despite repeated<br />
orders to stop from state and federal<br />
officials, he was indicted for multiple<br />
violations of the Clean Water Act (CWA).<br />
He was convicted and sentenced to 18<br />
months in prison and fined $9,000. On<br />
appeal, he argued that he was not required to<br />
obtain a CWA dredge and fill permit<br />
because he only worked in the riverbed<br />
when water had been diverted out of the<br />
river for irrigation purposes. He asserted<br />
that under the Supreme Court’s 2006<br />
decision in Rapanos v. United States, which<br />
was decided after his conviction, the Army<br />
Corps of Engineers lacked regulatory<br />
authority over his actions. The Ninth<br />
Circuit disagreed, holding that the<br />
intermittent flow of the creek resulting from<br />
the upstream division of water for irrigation<br />
purposes did not divest the creek of its status<br />
as a “water of the United States” subject to<br />
the Corps’ regulatory authority under the<br />
CWA.<br />
In United States v. Sinclair Tulsa<br />
Refining Company, et al., the defendant, a<br />
subsidiary of Sinclair Oil, pled guilty to<br />
two felony CWA violations. Two company<br />
managers each pled guilty to one felony<br />
CWA count for manipulating the sampling<br />
and discharges of wastewater into the<br />
Arkansas River in violation of Sinclair’s<br />
NPDES permit. Sinclair was sentenced to<br />
pay a $5 million fine, pay $500,000 to fund<br />
a community service project on the<br />
Arkansas River, and serve a two-year term<br />
of probation. The managers were each<br />
sentenced to complete a three-year term of<br />
probation, including six months home<br />
confinement. One was ordered to pay a<br />
$160,000 fine and perform 100 hours of<br />
community service, the other an $80,000<br />
fine and 50 hours of community service.<br />
In United States v. Acquity<br />
Speciality Products, et al., the defendant<br />
pled guilty to one CWA violation and was<br />
sentenced to pay a $3.8 million fine and<br />
complete a three-year term of probation.<br />
Acquity admitted that from September<br />
1998 until November 2002, while<br />
inspectors conducted sampling, employees<br />
altered the wastewater flow in order to<br />
distort the sampling results. The Director<br />
of Environmental Compliance pled guilty<br />
to conspiracy to violate the CWA and was<br />
sentenced to pay a $5,000 fine and serve a<br />
five-year term of probation.<br />
Enforcing the <strong>Law</strong>s Protecting Wildlife.<br />
In United States v. James Miller, et al., the<br />
defendant was sentenced for his role in<br />
running an illegal, unlicensed big-game<br />
hunting guide operation in Alaska between<br />
1999 and 2001. Miller had previously pled<br />
guilty to one felony Lacey Act charge and<br />
one felony false statement charge and was<br />
sentenced to serve 18 months’ incarceration<br />
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John C. Cruden of U.S. Department of Justice Speaker 3a: 21<br />
followed by a three-year term of probation<br />
and to pay $10,650 in restitution. He also<br />
will forfeit his Super Cub aircraft, a hunting<br />
rifle, and several hunting trophies from<br />
illegally-killed big game.<br />
In United States v. Antonio Vidal<br />
Pego, et al., Pego and Vadilur S.A., a<br />
Uruguayan corporation, each pled guilty to<br />
and was sentenced on charges involving the<br />
illegal importation of Patagonian and<br />
Antarctic toothfish (also known as Chilean<br />
Sea Bass). The government seized more<br />
than 53,000 pounds of toothfish, valued at<br />
$314,397. Pego pled guilty to obstruction of<br />
justice and was sentenced to serve a fouryear<br />
term of probation and pay a $400,000<br />
fine. Vadilur pled guilty to false labeling,<br />
importation of illegally possessed fish, and<br />
attempted sale of those fish. The company<br />
was sentenced to a four-year term of<br />
probation and ordered to pay a $100,000<br />
fine, cease all corporate activities, and<br />
dissolve as a business.<br />
In United States v. Jan Swart, d/b/a<br />
Trophy Hunting Safaris, et. al., Swart, a<br />
South African big-game outfitter, pled guilty<br />
to one felony smuggling violation, and was<br />
sentenced to serve 18 months’ incarceration<br />
followed by a three-year term of probation.<br />
The charge stems from his involvement in a<br />
scheme to import five hides and three skulls<br />
of leopards illegally killed in South Africa<br />
and smuggled to Zimbabwe, before being<br />
imported through Denver. His co-defendant<br />
pled guilty to one felony Lacey Act false<br />
labeling violation and was sentenced to pay<br />
a $5,000 fine and serve 19 days<br />
incarceration, followed by a three-year term<br />
of probation in South Africa.<br />
In United States v. Jeffrey Diaz, the<br />
defendant pled guilty on November 28,<br />
2006, to two felony smuggling counts and<br />
two felony false statement counts for<br />
smuggling 12 Australian Eagle Owl eggs,<br />
and lying about it on customs forms. He<br />
was sentenced to serve 21 months’<br />
incarceration, followed by a three-year<br />
term of probation, and pay a $5,000 fine.<br />
The smuggling of the fertile eggs into the<br />
United States from Australia without the<br />
required quarantine period posed a tangible<br />
threat of disease transmission to humans,<br />
including bird flu, as well as a threat to the<br />
commercial poultry industry in the form of<br />
Newcastles Disease.<br />
In United States v. Michael<br />
Sofoulis, et al., Sofoulis pled guilty to a<br />
misdemeanor violation of the Marine<br />
Mammal Protection Act (MMPA) and was<br />
sentenced to six months’ incarceration,<br />
followed by a one-year term of probation,<br />
ordered to pay a $15,000 fine, plus $5,000<br />
in restitution to the State of Alaska. His<br />
co-defendant pled guilty to conspiracy to<br />
violate the Lacey Act and the MMPA, and<br />
to making false statements, and was<br />
sentenced to serve eight months’<br />
incarceration, followed by a one-year term<br />
of probation. The convictions stemmed<br />
from a scheme to sell walrus headmounts<br />
made from tusks and skulls and<br />
falsification of registration documents.<br />
In United States v. Princess Cruise<br />
Lines Inc., Princess pled guilty to one<br />
violation of the Endangered Species Act<br />
and was sentenced to pay a $200,000 fine,<br />
pay an additional $550,000 to fund research<br />
in Glacier Bay, Alaska, and serve a fiveyear<br />
term of probation. Princess failed to<br />
operate its vessel in a slow, safe speed near<br />
humpback whales in waters near Glacier<br />
Bay National Park. After the event,<br />
Princess imposed a permanent 10-knot<br />
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John C. Cruden of U.S. Department of Justice Speaker 3a: 22<br />
speed restriction on all its vessels in nearby<br />
waters.<br />
In United States v. Panhandle<br />
Trading Inc., et al., one individual and two<br />
corporate defendants pled guilty to<br />
conspiracy to violate the Lacey Act and<br />
conspiracy to commit money laundering, for<br />
their roles in an illegal catfish importation<br />
scheme. The individual was sentenced to<br />
serve 51 months’ incarceration followed by<br />
a three-year term of supervised release.<br />
Both companies will complete five-year<br />
terms of probation, and all three defendants<br />
will be held jointly and severally liable for<br />
$1,139,275 in restitution to the Department<br />
of Homeland Security.<br />
DEFENDING VITAL FEDERAL<br />
PROGRAMS AND INTERESTS<br />
Protecting the Federal Fisc – Royalties<br />
Due to the United States. In BP America<br />
Production Co. v. Burton, oil and gas<br />
companies that hold federal oil and gas<br />
leases on which they owe production<br />
royalties to the federal government argued<br />
that the Interior Department’s Minerals<br />
Management Service (MMS) could not<br />
enforce orders to the companies to reaudit<br />
past payments for inadequacies for more<br />
than the six-year period in the general<br />
statute of limitations in 28 U.S.C. 2415(a).<br />
The Supreme Court disagreed, holding that<br />
the limitations period pertained only to<br />
damage actions founded on contract brought<br />
by the United States, not to an agency’s<br />
issuance of administrative orders. This<br />
holding will require the oil companies<br />
involved in the law suit to reaudit their<br />
accounts for the years 1989-1996 and could<br />
potentially result in tens of millions of<br />
dollars of royalty payments owed to the<br />
federal government.<br />
Balancing Statutory Mandates -- The<br />
Clean Water Act and the Endangered<br />
Species Act. In National Association of<br />
Home Builders v. Defenders of Wildlife,<br />
et.al; EPA v. Defenders of Wildlife, et.al,<br />
environmental groups argued that the EPA<br />
must comply with the procedural and<br />
substantive requirements of Section 7 of the<br />
Endangered Species Act (ESA) when<br />
deciding whether to delegate to a state its<br />
authority under Section 402 of the Clean<br />
Water Act (CWA) to issue pollution<br />
discharge permits. The ESA requires<br />
federal agencies to consult and assess the<br />
impact of their proposed decisions on listed<br />
species. The CWA requires EPA to<br />
delegate the Section 402 program if a state<br />
satisfies nine criteria, none relating to<br />
endangered species protection. The<br />
Supreme Court, in a 5-4 decision, held that<br />
the ESA did not apply. The majority held<br />
that the court of appeals had erred in<br />
holding that EPA had acted arbitrarily and<br />
capriciously by taking allegedly<br />
contradictory positions on the application<br />
of Section 7 of the ESA. On the merits, the<br />
majority held that the ESA obligations did<br />
not apply because a regulation jointly<br />
promulgated by the agencies charged with<br />
administering the ESA provided that<br />
Section 7 did not apply to agency actions<br />
that were mandatory in nature. Because the<br />
pertinent CWA provisions required EPA to<br />
delegate the permitting program if a state<br />
met the CWA’s requirements, EPA was not<br />
required to comply with ESA Section 7.<br />
Defending Against Encroachment on<br />
Federal Agencies’ Regulatory Authority.<br />
In Missouri v. Westinghouse, the state and<br />
the corporate defendant sought entry of a<br />
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John C. Cruden of U.S. Department of Justice Speaker 3a: 23<br />
proposed consent decree to govern the<br />
cleanup of a former nuclear fuels<br />
manufacturing site. However, federal law<br />
gives the Nuclear Regulatory Commission<br />
exclusive authority to regulate cleanup of<br />
nuclear materials at decommissioned<br />
nuclear facilities. The Division success<strong>full</strong>y<br />
intervened on behalf of NRC and the<br />
Department of Energy to oppose the<br />
proposed consent decree. The court<br />
accepted the Division’s argument that the<br />
proposed decree would impinge upon the<br />
federal government’s exclusive authority to<br />
regulate nuclear materials. The court<br />
explained that the Atomic Energy Act<br />
preempts state regulation of nuclear<br />
facilities that are being decommissioned and<br />
preempts state regulation of the radiological<br />
portion of mixed wastes.<br />
Ensuring Consistency of United States<br />
Aircraft Engine Emission Standards with<br />
<strong>International</strong> Standards. In National<br />
Association of Clean Air Agencies v. EPA,<br />
the court affirmed EPA’s decision under the<br />
CAA to conform United States aircraft<br />
engine emission standards to international<br />
consensus standards, against challenges<br />
contending that domestic standards should<br />
be the most stringent possible. The court<br />
held that, in declining to adopt more<br />
stringent standards, EPA reasonably<br />
balanced the costs and additional time<br />
involved in developing and implementing<br />
such standards against the benefits of<br />
conforming domestic aircraft engine<br />
emission standards with existing<br />
international standards and reasonably opted<br />
in favor of the latter.<br />
Defending EPA’s Authority to Interpret<br />
State <strong>Law</strong> and Regulations in Clean Air<br />
Act Title V Permitting Proceedings. In<br />
two Eleventh Circuit cases, Sierra Club v.<br />
Johnson and Glynn Environmental<br />
Coalition v. EPA, the court affirmed EPA’s<br />
decisions not to object to title V operating<br />
permits issued to sources by the State of<br />
Georgia. In both cases, the court confirmed<br />
that EPA’s interpretations of state laws and<br />
regulations that were part of a federallyapproved<br />
State Implementation Plan were<br />
entitled to deference.<br />
Defending EPA’s Interpretation of the<br />
Clean Water Act. In June 2006, the<br />
Supreme Court issued a splintered opinion<br />
in Rapanos v. United States on the extent of<br />
federal jurisdiction under the CWA to<br />
regulate wetlands and upstream tributaries<br />
of navigable waters. In numerous cases in<br />
district and appellate courts during FY<br />
2007, the Division has litigated the<br />
meaning of the Rapanos decision and the<br />
extent of federal regulatory jurisdiction.<br />
After Rapanos, the Sixth Circuit Court of<br />
Appeals remanded United States v. Cundiff,<br />
a civil enforcement action for the illegal<br />
filling of wetlands, to the district court,<br />
which ruled that the United States had<br />
established jurisdiction over the<br />
defendants’ wetlands based on both the test<br />
enunciated by the plurality and the test put<br />
forth in Justice Kennedy’s concurring<br />
opinion in Rapanos. The court ordered<br />
defendants to perform the government’s<br />
proposed restoration plan.<br />
United States v. Fabian is a CWA<br />
civil enforcement action in connection with<br />
the unauthorized filling of wetlands located<br />
along the Little Calumet River in Indiana.<br />
The Division obtained a favorable decision<br />
on summary judgment. The court found<br />
that the United States had demonstrated<br />
that defendant’s property contained<br />
wetlands that were within federal<br />
jurisdiction under the CWA and that<br />
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John C. Cruden of U.S. Department of Justice Speaker 3a: 24<br />
defendant had added pollutants to the<br />
wetlands. Regarding regulatory jurisdiction,<br />
the court followed Justice Kennedy’s<br />
concurring opinion in Rapanos and held that<br />
the wetlands were adjacent to a navigablein-fact<br />
water (notwithstanding being<br />
separated hydrologically by a 130-foot wide<br />
levee) and, thus, did not require a specific<br />
showing of a significant nexus between the<br />
wetlands and the navigable river.<br />
In United States v. Bailey, the<br />
Division worked with the U.S. Attorney’s<br />
Office to obtain a favorable ruling in a civil<br />
enforcement action for violations of the<br />
CWA in wetlands adjacent to Lake of the<br />
Woods in Minnesota. The defendant<br />
constructed a one-quarter mile long road in<br />
wetlands abutting the lake. In granting<br />
summary judgment for the government, the<br />
court held that the United States can<br />
establish regulatory jurisdiction under either<br />
Justice Scalia’s plurality opinion, or Justice<br />
Kennedy’s concurring opinion in Rapanos.<br />
The court found the filled areas to be<br />
adjacent wetlands under Justice Kennedy’s<br />
“significant nexus” test and issued a<br />
restoration order requiring removal of fill,<br />
filling drainage ditches, seeding, and<br />
monitoring.<br />
In P&V Enterprises v. Army Corps<br />
of Engineers, plaintiff sought to challenge,<br />
under the Commerce Clause, the Corps’<br />
regulation defining jurisdiction under<br />
section 404 of the CWA over certain<br />
intrastate waters that “could affect interstate<br />
or foreign commerce.” The Division<br />
prevailed on its motion to dismiss. The<br />
court found that plaintiff had not identified<br />
any basis for equitable tolling of the<br />
limitations period for its facial challenge,<br />
which had long since expired.<br />
Defending the Army Corps of Engineers’<br />
Clean Water Act Permits. The Division<br />
success<strong>full</strong>y defended permitting decisions<br />
by the Corps under Section 404 of the<br />
CWA in a number of cases.<br />
In Natural Resources Defense<br />
Council v. Army Corps of Engineers,<br />
plaintiffs challenged a regional general<br />
permit issued by the Corps regulating<br />
discharges of dredged and fill material into<br />
waters of the United States in a 48,000-acre<br />
area in the Florida Panhandle. The<br />
Division prevailed on summary judgment.<br />
Bering Strait Citizens v. Army Corps of<br />
Engineers was a challenge to a CWA<br />
permit issued in connection with the<br />
construction and operation of the Rock<br />
Creek Mine/Mill Complex and the Big<br />
Hurrah Mine, near Nome, Alaska. The<br />
Division success<strong>full</strong>y defended the permit.<br />
In Friends of Magurrewock v. Army<br />
Corps of Engineers, the Division defeated a<br />
motion for preliminary injunction seeking<br />
to enjoin a Corps permit issued to the<br />
Maine Department of Transportation to fill<br />
6.8 acres of wetlands and riverbed in<br />
connection with the construction of an<br />
international border crossing between<br />
Calais, Maine, and St. Stephen, New<br />
Brunswick. The district court found that<br />
the Corps had reasonably assessed<br />
practicable locations for the international<br />
border crossing and reasonably concluded<br />
that impacts of the bridge on a nearby<br />
wildlife refuge were speculative. The<br />
Division also defeated a preliminary<br />
injunction motion in Northwest Bypass<br />
Group v. Army Corps of Engineers, an<br />
action seeking judicial review of a permit<br />
issued by the Corps authorizing the filling<br />
of wetlands adjacent to the Turkey River in<br />
Concord, New Hampshire, for construction<br />
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John C. Cruden of U.S. Department of Justice Speaker 3a: 25<br />
of the Langley Parkway South. The court<br />
rejected numerous challenges, including<br />
allegations that the Corps acted improperly<br />
in balancing competing traffic studies,<br />
analyzing alternatives, and considering<br />
cumulative and secondary impacts. This<br />
victory allows a long-planned, important<br />
road construction project to proceed.<br />
Defense of Offshore and Onshore Oil and<br />
Gas Leasing and Operations. Domestic<br />
energy exploration and production continues<br />
to play a critical role in the Nation’s energy<br />
policy as our energy needs grow and access<br />
to foreign energy becomes more uncertain.<br />
The Division has been instrumental in<br />
implementation of the Nation’s energy<br />
policy. For instance, in North Slope<br />
Borough v. MMS, an Alaska native<br />
corporation and another native interest<br />
group sought to stop an offshore oil and gas<br />
lease sale in the Beaufort Sea for alleged<br />
violations of NEPA. The Division defeated<br />
a motion for preliminary injunction to halt<br />
the lease sale.<br />
The search for new energy resources<br />
is critical to energy independence. In<br />
Northern Plains Resource Council v. BLM<br />
and Northern Cheyenne Tribe v. Norton,<br />
environmental groups challenged the Bureau<br />
of Land Management’s decision authorizing<br />
coal bed methane development in Montana.<br />
They alleged that the decision violated<br />
NEPA, the Federal Land Policy<br />
Management Act, and the National Historic<br />
Preservation Act. Although the district<br />
court held that further environmental<br />
analysis was needed, it agreed with the<br />
Bureau that some continued development<br />
should be allowed consistent with the option<br />
to elect phased development after the<br />
supplemental analysis was performed. On<br />
appeal, the Ninth Circuit rejected plaintiffs’<br />
argument that NEPA required a prohibition<br />
on any development pending the<br />
supplemental analysis and upheld the<br />
narrowly tailored injunction, which allowed<br />
development consistent with the phased<br />
development approach to be studied.<br />
In Chihuahuan Grasslands Alliance<br />
v. Norton, environmental groups challenged<br />
an oil and gas lease sale in the Nutt<br />
Grasslands in Luna County, New Mexico,<br />
alleging that the Bureau’s sale decision<br />
violated the Federal Land Policy<br />
Management Act for failure to properly<br />
solicit public comment and NEPA for,<br />
among other things, relying on a<br />
programmatic environmental impact<br />
statement rather than a sale-specific<br />
environmental analysis. The Division<br />
prevailed on summary judgment on all<br />
counts, obtaining an important holding that<br />
a lease sale does not necessarily mark the<br />
point of irretrievable commitment of<br />
resources because an agency’s subsequent<br />
review of applications for permits to drill<br />
on a leasehold are also subject to further<br />
environmental analysis.<br />
In Te-Moak Tribe of Western<br />
Shoshone v. Department of the Interior, a<br />
tribe and two environmental groups<br />
challenged the Bureau of Land<br />
Management’s approval of a three-phase<br />
oil and gas exploratory drilling operation<br />
on approximately 30,000 acres in Nevada<br />
under NEPA, the National Historic<br />
Preservation Act, and the Federal Land<br />
Policy Management Act. The Division<br />
secured summary judgment in the Bureau’s<br />
favor on all counts.<br />
Defeating Efforts to Avoid Royalty<br />
Obligations in Mineral Leases. Sound<br />
administration of the Nation’s energy<br />
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John C. Cruden of U.S. Department of Justice Speaker 3a: 26<br />
policy also includes assuring that the<br />
government is appropriately paid by those<br />
who benefit from development of our<br />
mineral resources. The Division’s work has<br />
been important in meeting this goal. In<br />
Devon Energy Corp. v. Norton, an oil<br />
company challenged an Interior Department<br />
decision ordering a restructured accounting<br />
and payment of additional royalties on coal<br />
bed methane produced from federal leases in<br />
Wyoming because the company had<br />
improperly deducted certain costs in<br />
calculating royalties. The district court<br />
granted the Division’s motion for summary<br />
judgment, allowing the recovery of proper<br />
royalties to the benefit of the American<br />
public.<br />
Resolving Challenges to the<br />
Modernization of the Nation’s Airways<br />
and Seaways. Keeping pace with<br />
increasing demands and technological<br />
advancements is a national priority. The<br />
Division aided this effort in a number of<br />
ways. We negotiated a settlement in <strong>NRD</strong>C<br />
v. Army Corps of Engineers, which will<br />
permit the Corps to proceed with a critically<br />
important project designed to deepen the<br />
navigational channels of the New York/New<br />
Jersey Harbor. On two occasions, the court<br />
found the Corps’ NEPA analysis regarding<br />
this project to be inadequate and remanded<br />
for additional work. The Division thus<br />
worked to reach a settlement that will allow<br />
the Corps to complete its harbor-deepening<br />
project without the threat of future requests<br />
for injunctive relief. The settlement was<br />
based, in part, on pre-existing Corps<br />
obligations and practices and was tailored to<br />
preserve the Corps’ discretion in future<br />
decisions.<br />
Modernization of the “world’s<br />
busiest airport” is the subject of a $6 billion<br />
project designed to make Chicago’s O’Hare<br />
Airport no longer the “nation’s most<br />
delayed airport.” In National Mitigation<br />
Banking Ass’n v. Army Corps of Engineers,<br />
several wetlands mitigation banking groups<br />
brought an action challenging the Corps’<br />
compliance with NEPA and the CWA. The<br />
plaintiffs specifically attacked the Corps’<br />
decision to allow the permittee, the City of<br />
Chicago, to pay a provider $26.4 million to<br />
purchase wetlands mitigation in lieu of<br />
selecting the plaintiffs to provide the<br />
required mitigation. The Division<br />
prevailed on summary judgment against<br />
NEPA and CWA challenges, success<strong>full</strong>y<br />
defending the controversial in-lieu-fee<br />
mitigation arrangement approved by the<br />
Corps.<br />
Maintaining and Enhancing the Nation’s<br />
Energy Infrastructure. The Division is<br />
often called upon to litigate challenges to<br />
the Nation’s energy infrastructure. For<br />
example, in Border Power Plant Working<br />
Group v. Dep’t of Energy, we success<strong>full</strong>y<br />
defended a CAA and NEPA challenge to<br />
decisions by the Department of Energy and<br />
Bureau of Land Management to issue<br />
Presidential Permits and rights-of-way over<br />
federal land for transmission lines which<br />
cross the international border in southern<br />
California and connect to power plants in<br />
Mexico. The Division prevailed on all<br />
claims.<br />
Management of the wastes resulting<br />
from the Nation’s needed energy<br />
production is an important component of<br />
federal energy responsibilities. The<br />
Division defends waste management<br />
decisions from challenges that could<br />
hamper federal efforts to appropriately<br />
direct waste practices. For example,<br />
Coalition on West Valley Nuclear Waste<br />
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John C. Cruden of U.S. Department of Justice Speaker 3a: 27<br />
and Joanne E. Hameister v. Bodman<br />
concerned a challenge to the Department of<br />
Energy’s decision about waste management<br />
at the West Valley Demonstration Project<br />
site. The Division prevailed on summary<br />
judgment, with the court finding that the<br />
Department acted appropriately by<br />
completing the interim waste management<br />
process under the circumstances.<br />
Finally, in perhaps the most<br />
ambitious nuclear waste project ever, for<br />
seven years the Division has been<br />
prosecuting litigation in United States v.<br />
State of Nevada, challenging the Nevada<br />
State Engineer’s ruling summarily denying<br />
the Department of Energy’s applications for<br />
permits to use water at Yucca Mountain to<br />
carry out the Department’s mandate under<br />
the Nuclear Waste Policy Act to develop the<br />
Nation’s first high-level nuclear waste and<br />
spent fuel repository. This year, the<br />
Division success<strong>full</strong>y limited the reach of a<br />
state order seeking to prohibit the<br />
Department’s continuing use of water to<br />
collect data in support of the license<br />
application it intends to submit next year to<br />
the Nuclear Regulatory Commission.<br />
Supporting the Federal Highway<br />
Administration’s Traffic Control<br />
Projects. As our Nation’s population and<br />
cities grow, enhancing the ability of our<br />
highways to safely and efficiently transport<br />
passengers and cargo in an environmentally<br />
sensitive manner has become a more<br />
important and delicate federal task. The<br />
Division plays a significant role in the<br />
Federal Highway Administration’s (FHWA)<br />
efforts to address traffic control and safety<br />
issues. In Davis v. Mineta, plaintiffs<br />
challenged two much needed highway<br />
projects in a rapidly growing urban area near<br />
Salt Lake City, Utah. In addition to projectspecific<br />
claims under NEPA, plaintiffs<br />
broadly challenged the manner in which<br />
FHWA fulfills its environmental analysis<br />
obligations. Plaintiffs asserted that the<br />
Agency should be required to conduct<br />
broad programmatic analyses on the entire<br />
State Transportation Improvement<br />
Program, not just on individual projects.<br />
Such an obligation would have broad<br />
ramifications agency-wide. With close<br />
coordination with our co-defendant, the<br />
State of Utah, we ultimately prevailed on<br />
all issues.<br />
In Conservation <strong>Law</strong> Foundation v.<br />
FHWA, the court issued a largely favorable<br />
decision on summary judgment regarding<br />
NEPA and Federal-Aid Highway Act<br />
(FAHA) challenges to a FHWA decision to<br />
fund the widening of a 19.8-mile stretch of<br />
Interstate 93 between Salem and<br />
Manchester, New Hampshire. This matter<br />
was litigated jointly with the State of New<br />
Hampshire. The court found in favor of<br />
defendants on NEPA claims regarding<br />
consideration of alternatives and the<br />
analysis of direct and cumulative impacts<br />
and on the FAHA claims. The court<br />
ordered a limited remand for preparation of<br />
a supplemental environmental impact<br />
statement on certain issues, but allowed the<br />
project to proceed.<br />
Securing Needed Water Rights for the<br />
United States. This year the Division<br />
entered into numerous settlements, or<br />
secured favorable judgments, that will<br />
protect the water supplies and flows<br />
necessary to maintain the vitality of natural<br />
resources and uses of the public lands,<br />
national forests, national parks, wildlife<br />
refuges, wild and scenic rivers, military<br />
bases, and federal reclamation projects<br />
throughout the West. For example, in the<br />
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John C. Cruden of U.S. Department of Justice Speaker 3a: 28<br />
Klamath Basin Adjudication, the major<br />
general stream adjudication in the State of<br />
Oregon, the Division secured rulings<br />
granting FWS’s claims in their entirety for<br />
the Lower Klamath and Tule Lake National<br />
Wildlife Refuges. These rulings recognize<br />
the United States’ right to divert and use<br />
hundreds of thousands of acre-feet of water<br />
per year to meet Refuge purposes. In State<br />
of Washington Department of Ecology v.<br />
Acquavella, a general stream adjudication of<br />
water rights in the Yakima River Basin, the<br />
Division secured a favorable decision<br />
confirming the Bureau of Reclamation’s<br />
state-based water rights, both for its<br />
federally owned facilities and for its water<br />
delivery obligations to other parties, on<br />
terms that provide the Bureau with extensive<br />
discretion in managing the Yakima Project.<br />
The Division’s successes do not<br />
always take the form of water rights<br />
determinations. Sometimes, collateral<br />
issues are critical too, as illustrated by In Re<br />
Snake River Basin Adjudication, the general<br />
stream adjudication covering 87% of the<br />
State of Idaho. There, the Idaho Supreme<br />
Court upheld a decision denying an award of<br />
attorney’s fees against the United States. In<br />
this case of first impression, the court ruled<br />
that Congress has not authorized state courts<br />
to impose liability on the United States for<br />
other parties’ attorney’s fees. This decision<br />
will protect the public fisc from substantial<br />
potential liabilities in Idaho, where the<br />
United States is litigating in support of<br />
federal water interests in adjudications<br />
involving thousands of potential claimants.<br />
Upholding Government to Government<br />
Relations with Tribes. The Division<br />
success<strong>full</strong>y defended Bureau of Indian<br />
Affairs (BIA) decisions affecting its<br />
government to government relations with<br />
tribes. In St. Pierre v Kempthorne, the<br />
Division prevailed in a case involving a<br />
longstanding dispute over the government’s<br />
action in approving a constitutional<br />
amendment that altered the membership<br />
standards of the tribe. The court found the<br />
tribe an indispensable party to the<br />
adjudication of the validity of challenges to<br />
the tribal constitution and, alternatively,<br />
gave res judicata effect to tribal court<br />
adjudications that sought to resolve the<br />
same issues. This ruling is strong<br />
precedent to prevent dissident tribal<br />
members from interfering with the<br />
government’s dealings with tribal<br />
governments and provides substantial<br />
support for the finality of tribal court<br />
resolutions for intra-tribal disputes.<br />
In Vann v. Kempthorne, we<br />
success<strong>full</strong>y resisted two preliminary<br />
injunctions that would have limited our<br />
ability to engage in government to<br />
government relations with the Cherokee<br />
Nation, prevented the BIA from<br />
recognizing a tribal election, and prohibited<br />
distributing money to the tribe. Plaintiffs<br />
claimed the Cherokee Nation’s leadership<br />
took actions to eliminate Cherokee<br />
Freedmen (descendants of former slaves of<br />
the tribe) from tribal membership and<br />
deprive them of voting rights contrary to a<br />
treaty with the United States. The court,<br />
while concerned about the treatment of the<br />
Cherokee Freedmen by the Cherokee<br />
Nation, chose to allow the BIA to provide<br />
funding to the tribe and deal with the<br />
Nation’s leadership. This allowed the BIA<br />
to take actions it believes to be both in the<br />
interest of the Cherokee Nation as a whole<br />
and in the interests of the Freedmen, while<br />
respecting tribal sovereignty.<br />
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John C. Cruden of U.S. Department of Justice Speaker 3a: 29<br />
Protecting Taxpayers Against<br />
Unwarranted or Excessive Claims. An<br />
important part of the Division’s work is<br />
defending against unwarranted claims that<br />
federal actions impinge upon private<br />
property interests and, in cases where<br />
private property has been taken in<br />
furtherance of public purposes, determining<br />
the proper compensation due to property<br />
owners. The Division has an exemplary<br />
record in these cases in ensuring that the<br />
United States does not pay unwarranted<br />
claims or excessive amounts.<br />
In Stockton East Water District v.<br />
United States, plaintiffs sought $500 million<br />
based on the alleged failure of the Bureau of<br />
Reclamation to deliver water to several<br />
California water districts under their water<br />
service contracts. The United States<br />
prevailed after a multi-week trial. The court<br />
held that the water districts did not show<br />
that the Bureau made unreasonable<br />
decisions in operating the reservoir and<br />
allocating water under a contract that<br />
required the Bureau to “use all reasonable<br />
means to guard against” water shortages.<br />
Similarly, Klamath Irrigation District v.<br />
United States involved claims for<br />
compensation in the amount of $100 million<br />
based on the alleged failure of the Bureau of<br />
Reclamation to deliver water from the<br />
Klamath Project, based on the Bureau’s<br />
compliance with the ESA. Following<br />
previous decisions holding for the United<br />
States as to specific claims, the United<br />
States obtained a decision this year holding<br />
that the Sovereign Acts Doctrine provided a<br />
complete defense, since the ESA was passed<br />
for the benefit of the public and did not<br />
involve the government acting as a<br />
contractor.<br />
In Testwuide v. United States,<br />
approximately 3400 plaintiffs owning<br />
property in Virginia near two naval bases<br />
alleged Fifth Amendment takings claims<br />
based on an increase in military aircraft<br />
overflight activity as a result of mandated<br />
base closures and consolidations. The<br />
United States settled these claims under<br />
favorable terms, thus avoiding the risk of a<br />
far greater monetary cost.<br />
On occasion, the Fifth Amendment<br />
takings claims faced by the Division rise to<br />
staggering levels. In Nicholson v. United<br />
States, which arose out of the flooding<br />
caused by Hurricane Katrina, plaintiffs<br />
alleged that the faulty design and<br />
construction of the New Orleans levee<br />
system caused a taking of their properties.<br />
Plaintiffs sought class certification and<br />
asserted claims of $100 billion. The United<br />
States prevailed on summary judgment,<br />
with the court finding that the flooding was<br />
not the natural and probable consequence<br />
of governmental action.<br />
Acquiring Property for Public Purposes.<br />
The Division exercises the federal<br />
government’s power of eminent domain to<br />
enable agencies to acquire land for various<br />
purposes, including property needed for<br />
new or expanded courthouses, for flood<br />
control projects, for federal office<br />
buildings, and for access to federal<br />
facilities.<br />
In the course of this work, the<br />
Division is mindful of its goal to achieve<br />
results just to individual landowners and to<br />
the taxpayers of the United States.<br />
Through settlements and trials, the Division<br />
achieved results that amounted to savings<br />
of some $18.6 million dollars. It also<br />
achieved beneficial results by working with<br />
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John C. Cruden of U.S. Department of Justice Speaker 3a: 30<br />
agencies to avoid the expense of litigation<br />
where possible. For example, in a situation<br />
requiring installation of security measures<br />
around the federal district courthouse in<br />
Manhattan, the Division worked with GSA<br />
to devise a right of use that avoided<br />
litigation altogether.<br />
Enforcing Environmental <strong>Law</strong>s Through<br />
<strong>International</strong> Capacity Building. The<br />
Division frequently provides training on<br />
civil and criminal environmental<br />
enforcement to judges, prosecutors and<br />
other government attorneys, and other legal<br />
practitioners in foreign countries. Division<br />
attorneys engaged in such capacity building<br />
traveled to numerous countries, including<br />
Panama, China, Taiwan, Indonesia,<br />
Thailand, Hungary, Denmark, the<br />
Netherlands, the United Arab Emirates, the<br />
Kingdom of Bahrain, Egypt, Tanzania, and<br />
Mexico. The Division worked with<br />
government attorneys from Mexico and<br />
Canada to develop and present a conference<br />
in February 2007 on environmental<br />
enforcement issues for Mexican judges and<br />
magistrates in Mexico City. The<br />
symposium was sponsored by the<br />
Enforcement Working Group of the<br />
Commission on Environmental Cooperation,<br />
an international organization created under<br />
the North American Agreement on<br />
Environmental Cooperation. Division<br />
attorneys also served as instructors in<br />
workshops for judges and prosecutors in the<br />
Philippines and Indonesia on prosecuting<br />
cases to combat illegal trade in wildlife and<br />
wildlife parts. These workshops were<br />
organized in conjunction with the<br />
Association of Southeast Asian Nations<br />
Wildlife Enforcement Network (ASEAN-<br />
WEN). Division attorneys also participated<br />
in several capacity building efforts to<br />
strengthen enforcement responses to oil<br />
pollution from vessels; attorneys planned<br />
and staffed a multi-agency training mission<br />
to Taiwan which provided in-depth training<br />
to several Taiwanese agencies concerning<br />
identification of and investigation of vessel<br />
pollution violations. The Division also<br />
helped organize meetings with visiting<br />
foreign enforcement and other government<br />
officials from countries such as China,<br />
Japan, Indonesia, Vietnam, and Chile.<br />
Protecting the Interests of the United<br />
States in Litigation Involving Third<br />
Parties. The Division at times participates<br />
in cases in which the United States is not a<br />
party to protect the interests of the United<br />
States and its component agencies. Such<br />
participation may be in district court, in a<br />
court of appeals, or in the Supreme Court;<br />
we also participate at times in state court<br />
proceedings. The Division has filed briefs<br />
in a number of such proceedings in the past<br />
year. In Northwest Environmental Defense<br />
Center v. Brown, we filed a brief in federal<br />
district court on the issue of whether a<br />
CWA NPDES permit is required for<br />
forestry roads. The court agreed with our<br />
view that such permits are not required.<br />
Another example is BGA/Western Mohegan<br />
Tribe v. Ulster County. In that case, a<br />
group of Native Americans sought a ruling<br />
from a federal district court that could have<br />
suggested that they had some of the<br />
attributes of a federal Indian tribe. The<br />
Division filed an amicus brief explaining<br />
that recognition as a federal Indian tribe<br />
could be granted only by the Department of<br />
the Interior and that the suit was improper.<br />
The court agreed.<br />
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John C. Cruden of U.S. Department of Justice Speaker 3a: 31<br />
PROMOTING NATIONAL SECURITY<br />
AND MILITARY PREPAREDNESS<br />
Defending the Army’s Chemical Weapons<br />
Demilitarization Program. The Division<br />
has success<strong>full</strong>y defended the Army against<br />
challenges to its program to destroy aging<br />
stockpiles of chemical weapons pursuant to<br />
international treaty obligations. In Sierra<br />
Club v. Army, plaintiffs challenged the<br />
Army’s destruction of a chemical nerve<br />
agent under the Resource Conservation and<br />
Recovery Act. The destruction process<br />
involves neutralizing the deadly liquid agent<br />
at one location, then shipping the resulting<br />
product to a commercial hazardous waste<br />
incinerator. Plaintiffs alleged that the<br />
chemical agent is not <strong>full</strong>y neutralized in the<br />
treatment process and that trucking the<br />
resulting product thus presents risks. The<br />
Division defeated plaintiffs’ motion for a<br />
preliminary injunction. The court held that<br />
the Army properly considered all the<br />
available evidence when it concluded that<br />
the post-neutralization product could be<br />
classified as a caustic hazardous waste after<br />
treatment and that the Army took the<br />
necessary hard look at the environmental<br />
impact of its plan to ship that product. This<br />
decision allows this important program, vital<br />
to national security, to proceed without<br />
interruption.<br />
An Oregon court issued a largely<br />
favorable decision in G.A.S.P. v. Army,<br />
upholding state-issued permits for the<br />
incineration of chemical weapons at the<br />
Army’s facility in Umatilla, Oregon. The<br />
court remanded to the state permitting<br />
agency on two relatively minor issues, but<br />
held that the facility may continue<br />
incinerating chemical weapons during the<br />
remand because petitioners had not shown<br />
that the operations were having an adverse<br />
effect on public health or the environment.<br />
Aiding the Military’s Training,<br />
Preparations and Deployment in the<br />
War on Terrorism. After nearly three<br />
years of litigation in Ilioulaokalani<br />
Coalition v. Gates, the Division this year<br />
achieved an important victory in its defense<br />
of a key component of the Army’s 30-year<br />
modernization plan, “Stryker conversion”<br />
activity at an Army training facility in<br />
Hawaii. The Division secured partial relief<br />
from an injunction that had prohibited all<br />
conversion and training activity while the<br />
Army worked to complete additional<br />
documentation under NEPA. With this<br />
relief, the Army was able to immediately<br />
resume every conversion project and<br />
training activity it had identified as critical<br />
for ensuring that the 2nd Brigade, 25th<br />
Infantry Division is provided with training<br />
and weapons systems needed to<br />
success<strong>full</strong>y fight the global war on<br />
terrorism.<br />
Protecting the Navy’s Ability to Use<br />
Sonar in Training Exercises. The<br />
Division represents the Navy in several<br />
cases that challenge the Navy’s use of midfrequency<br />
active sonar throughout the<br />
world and in specific training exercises off<br />
the coast of California and Hawaii, as well<br />
as its use of low-frequency sonar, a new<br />
technology for anti-submarine warfare that<br />
is still in the experimental phase. These<br />
high-profile cases are critically important to<br />
the Nation’s security and military<br />
readiness.<br />
Property Acquisitions to Improve<br />
Military Readiness and National<br />
Security. As requested by federal agencies<br />
acting under authority of Congress, the<br />
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John C. Cruden of U.S. Department of Justice Speaker 3a: 32<br />
Division exercised the federal government’s<br />
power of eminent domain to initiate<br />
litigation enabling land acquisitions for<br />
military readiness and national security.<br />
The Division filed new cases for<br />
such diverse military installations as the<br />
Navy’s Air Facility, El Centro; the Harvey<br />
Point Defense Testing Facility; the Naval<br />
Computer and Telecommunications Area<br />
Master Station; the Army’s Gowen Field<br />
Training Area in Idaho; and the Air Force’s<br />
Seymour Johnson Air Force Base and Travis<br />
Air Force Base. In addition, it continued its<br />
litigation efforts in existing cases such as<br />
that involving property at Eielson Air Force<br />
Base in Alaska, a case which concerns<br />
complex lease issues arising from the<br />
military’s “section 801 housing” project,<br />
pursuant to which the military leased land<br />
on installations to private developers who<br />
constructed military housing that was leased<br />
back to the military.<br />
In addition, the Division has filed<br />
nine new cases to provide national security<br />
along the country’s northern and southern<br />
borders. For example, at the northwestern<br />
and northeastern borders, it filed actions to<br />
acquire property for two new or expanded<br />
ports of entry. One suit, which seeks land<br />
for the expanded border station at Blaine,<br />
Washington, involved the condemnation of<br />
the State’s interest in portions of Interstate-5<br />
just south of the boundary between the<br />
United States and Canada; the plan is to<br />
construct the border station and then<br />
reconstruct the affected portions of<br />
Interstate-5 as a bridge over the border<br />
station, all on an expedited basis in<br />
anticipation of 2010 Winter Olympics in<br />
Vancouver. At the southwestern border, the<br />
Division has filed suit to acquire part of the<br />
property needed for the Multi-Tiered Fence<br />
Project.<br />
PROTECTING INDIAN RESOURCES<br />
AND RESOLVING INDIAN ISSUES<br />
Protecting Tribal Hunting, Fishing, and<br />
Gathering Rights. The Division litigates<br />
to defend treaty-protected tribal hunting<br />
and fishing rights. In United States v.<br />
Michigan, the United States, five tribes, the<br />
State of Michigan, and Michigan hunting<br />
and conservation groups success<strong>full</strong>y<br />
negotiated a comprehensive settlement that<br />
affirms the existence and extent of the<br />
inland hunting and fishing rights of the Bay<br />
Mills Indian Community, the Sault Ste.<br />
Marie Tribe of Chippewa Indians, the Little<br />
Traverse Bay Bands of Odawa Indians, the<br />
Grand Traverse Band of Ottawa and<br />
Chippewa Indians, and the Little River<br />
Band of Ottawa Indians. The agreement<br />
resolves a long-standing dispute over<br />
whether the Tribes retained hunting and<br />
fishing rights pursuant to the 1836 Treaty<br />
of Washington. The agreement resolves<br />
litigation ongoing since the 1970s.<br />
In United States v. Washington, a<br />
long-running case involving tribal treaty<br />
fishing rights in Western Washington, the<br />
court issued a decision in favor of the<br />
United States and numerous Indian tribes,<br />
holding that the Tribes’ treaty-secured<br />
rights of taking fish impose a duty on the<br />
State of Washington to improve culverts<br />
that hinder fish passage and diminish fish<br />
populations.<br />
Defending Tribal and Federal Interests<br />
in Water Adjudications. During the past<br />
year, the Division success<strong>full</strong>y represented<br />
the interests of Indian tribes in complex<br />
water rights adjudications. The Division,<br />
27<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
John C. Cruden of U.S. Department of Justice Speaker 3a: 33<br />
working with the Interior Department, the<br />
State of Washington, private water users,<br />
and the Lummi Indian Nation, negotiated a<br />
comprehensive settlement of a significant<br />
water rights lawsuit involving groundwater<br />
underlying the Lummi Reservation in<br />
United States v. Washington Department of<br />
Ecology. In another major water rights case,<br />
the Division success<strong>full</strong>y argued in both<br />
federal and state court for entry of a consent<br />
decree effectuating the Gila River Indian<br />
Community Water Rights Settlement. The<br />
settlement brings critical water resources to<br />
the Gila River Indian Community’s<br />
Reservation and resolves long-standing<br />
issues regarding water use.<br />
The Division also prevailed in two<br />
trials that focused on amending two 1991<br />
consent decrees settling decades-old<br />
litigation involving water rights on the<br />
Animas and La Plata Rivers in Colorado. In<br />
four consolidated cases brought on behalf of<br />
the Southern Ute and Ute Mountain Tribes,<br />
the court agreed, over objections, to amend<br />
consent decrees in order to make them<br />
consistent with legislation concerning the<br />
Animas-La Plata water project.<br />
State of Maine v. EPA involved a<br />
petition for review of EPA’s decision<br />
authorizing the State of Maine to administer<br />
the CWA permitting program in the<br />
territories of the Penobscot Nation and<br />
Passamaquoddy Tribe, but retaining federal<br />
authority to issue permits for certain<br />
tribally-owned facilities with operations that<br />
EPA concluded are internal tribal matters.<br />
The First Circuit affirmed EPA’s decision<br />
granting authority to the State to administer<br />
the program within the Tribes’ territory, but<br />
vacated EPA’s decision to retain permitting<br />
authority as to certain tribally-owned<br />
facilities. The decision, which turned on<br />
construction of the Maine Indian Claims<br />
Settlement Act, clarifies the respective<br />
roles of the State and the Tribes in<br />
administering the CWA in Maine.<br />
Upholding Agencies’ Authority to<br />
Implement Indian Policies. The Division<br />
has achieved considerable success in<br />
defending the Secretary of the Interior’s<br />
trust land acquisition authority against<br />
numerous constitutional and administrative<br />
law challenges. These decisions have<br />
strengthened the authority of the Secretary<br />
to provide for tribes’ physical, economic,<br />
and political well-being.<br />
Defending Tribal Trust Claims. The<br />
Division represents the United States in<br />
numerous cases that tribes have brought<br />
demanding accountings and alleging breach<br />
of trust and other claims relating to funds<br />
and non-monetary assets (such as timber<br />
rights, oil and gas rights, grazing, mining<br />
and other interests) on some 45-million<br />
acres of land that the United States holds in<br />
trust for tribes. There are more than 100<br />
cases ongoing in several courts and these<br />
cases are in various stages of discovery,<br />
active pretrial preparation, and formal or<br />
informal settlement discussions.<br />
SUPPORTING THE DIVISION’S<br />
LITIGATORS<br />
Award Winning Quality of Life. The<br />
Division was voted the second best place to<br />
work in the federal government (out of the<br />
222 agency component offices) in the “Best<br />
Places to Work in the Federal Government<br />
2007” survey.<br />
The Division also was honored to<br />
receive the “Constance L. Belfiore Quality<br />
of Life” Award from the Bar Association of<br />
28<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
John C. Cruden of U.S. Department of Justice Speaker 3a: 34<br />
the District of Columbia – the first<br />
government law office to be so honored in<br />
the 10-year history of the award. This<br />
award recognized the Division for its quality<br />
of work, collegiality, attorney development<br />
and mentor programs, and service to the<br />
community.<br />
The Human Resources staff also<br />
completed the second year of its innovative<br />
“Honors Paralegal Program,” which makes<br />
use of the hiring authority in the Federal<br />
Career Intern Program. Each new Honor<br />
Paralegal was provided a three-day<br />
orientation program and paired with an<br />
attorney mentor, which has proven<br />
enormously helpful in getting the new staff<br />
integrated into the work of the Division.<br />
The Office of Human Resources has<br />
implemented an on-line orientation program<br />
that allows new employees to complete<br />
time-consuming forms in advance of their<br />
first day, saving valuable time and<br />
resources.<br />
In 2007, the Division had an<br />
outstanding performance fulfilling the<br />
President’s Management Agenda, with the<br />
highest “green” performance scores in every<br />
rating category for which the Division is<br />
monitored.<br />
New Technology Resources and<br />
Upgrades. The Division upgraded all<br />
printers and servers, increased bandwidth,<br />
updated our backup equipment, and made<br />
additional improvements to our system<br />
architecture and network structure. The<br />
upgrades will pave the way for a new<br />
desktop system in the near future. The<br />
Division also upgraded and replaced its<br />
BlackBerry PDAs, enabling staff to remain<br />
highly efficient with the use of current<br />
mobile technology.<br />
The Division also rolled out a new<br />
Intranet module with resources for<br />
environmental enforcement litigators. The<br />
new EESNet contains a wealth of<br />
information and resources relevant to work<br />
under various environmental statutes.<br />
Substantive legal resources include EPA<br />
and DOJ guidance to litigators, judicial and<br />
administrative models, policies, outlines,<br />
overviews, and case updates. Management<br />
resources provide trial schedules, staffing<br />
lists, and consent decree and complaint<br />
libraries sorted by year and statue. This<br />
site will serve as a prototype for other<br />
practice area intranet pages.<br />
The Division expanded its unique<br />
mail scanning program this year to provide<br />
greater technical capability. Mail now is<br />
scanned directly into the Division’s<br />
document management software, ensuring<br />
that electronic copies are made available<br />
immediately to multiple recipients in their<br />
offices or in remote locations while<br />
teleworking, on travel, or during<br />
emergencies requiring employees to work<br />
from offsite locations.<br />
The Division’s Office of Litigation<br />
Support provided outstanding automation<br />
support services for our largest and most<br />
complex cases. Our Litigation Support<br />
program combines cutting edge legal<br />
technology, experienced contract staff, and<br />
extensive in-house expertise. OLS<br />
expanded the Division’s Extranet, allowing<br />
trial teams to more effectively collaborate<br />
on case materials with agency counsel,<br />
investigators, and expert witnesses by<br />
routinely making new cases available<br />
through our secure Internet portal.<br />
29<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
John C. Cruden of U.S. Department of Justice Speaker 3b: 1<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
John C. Cruden of U.S. Department of Justice Speaker 3b: 2<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
L A W S E M I N A R S I N T E R N A T I O N A L<br />
The Third Annual Advanced Conference on<br />
Natural Resource Damages Claims<br />
New case law and legislation, and best strategies<br />
July 9 and 10, 20<strong>09</strong><br />
Santa Fe, NM<br />
Sources, Nature, and Relative Strength of <strong>NRD</strong><br />
Claims<br />
Vicky L. Peters, Esq.<br />
Attorney at <strong>Law</strong><br />
Lakewood, CO<br />
Brian J. Cleary, Esq.<br />
The Cleary <strong>Law</strong> Group, P.C.<br />
Hayden, ID<br />
Peter C. Chestnut, Esq.<br />
Chestnut <strong>Law</strong> Offices<br />
Albuquerque, NM
Vicky L. Peters of Attorney at <strong>Law</strong> Speaker 4a: 1<br />
Vicky Peters<br />
LSI Conference, July, 20<strong>09</strong><br />
Find good project[s]<br />
Pay good money<br />
Love and respect<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Vicky L. Peters of Attorney at <strong>Law</strong> Speaker 4a: 2<br />
Depends<br />
1)Conservation/Reuse<br />
2)Enhanced recharge<br />
3)Water quality<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Vicky L. Peters of Attorney at <strong>Law</strong> Speaker 4a: 3<br />
Water efficiency upgrades<br />
Low-flow showerheads,<br />
toilets, washers,<br />
irrigation systems<br />
1)Upgraded cooling<br />
towers<br />
2)Underground storage<br />
3)Energy efficiency<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Vicky L. Peters of Attorney at <strong>Law</strong> Speaker 4a: 4<br />
Reuse – more services with less<br />
water/less environmental cost<br />
Non-potable water supplies<br />
for non-potable uses<br />
Preservation<br />
Improvement<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Vicky L. Peters of Attorney at <strong>Law</strong> Speaker 4a: 5<br />
Source controls<br />
Septic systems<br />
Agricultural or urban runoff<br />
Unrelated contaminated sites<br />
Land use controls<br />
Open-space easements<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Vicky L. Peters of Attorney at <strong>Law</strong> Speaker 4a: 6<br />
Remediation of unrelated<br />
groundwater contamination<br />
Hazardous releases<br />
Nitrates<br />
Oil and gas abandoned wells<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Vicky L. Peters of Attorney at <strong>Law</strong> Speaker 4a: 7<br />
Restore similar issue at unrelated site<br />
Debit = contaminated surface &<br />
groundwater<br />
Credit= contaminated surface &<br />
groundwater<br />
Western water law treats surface<br />
water and alluvial groundwater<br />
interchangeably<br />
Donated water right could replace<br />
services lost to contamination<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Vicky L. Peters of Attorney at <strong>Law</strong> Speaker 4a: 8<br />
Instream water rights<br />
Improve aquatic habitat<br />
Recreational use services, e.g. rafting<br />
Dilution of pollution<br />
Change of use<br />
Feed wetlands<br />
Feed treatment systems<br />
Create/Enhance recharge<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Vicky L. Peters of Attorney at <strong>Law</strong> Speaker 4a: 9<br />
Fernald<br />
MMR<br />
South Valley<br />
AT&SF<br />
Groundwater Cashouts<br />
Fernald. OH<br />
Site Settlement Injury Comments/Issues<br />
$13.75 M<br />
Trial was looming when settled<br />
Trustee estimated: 89,920,015 to<br />
Alleged lost drinking H20<br />
1,265,326,325 gallons (3900 a/f) per yr.<br />
Approximately 100 acres areal extent;<br />
Total about 12,000 a/f over 3 yrs<br />
MMR, MA $1.3 M Unquantified Sole source aquifer for Cape Cod, incl<br />
drinking water<br />
Partial settlement w/ Textron<br />
S. Valley, NM $7.635 M Subset of 100 – 500,000 a/f plume, incl<br />
deep, bedrock aquifers<br />
6 – 7000 a/f per yr estimated S/Y<br />
Settled while case on appeal<br />
Alleged lost drinking water<br />
Partial settlements w/ Chevron etc.<br />
AT&SF, S.Valley, NM $655,000 59 – 70,000 gal.s of DNAPL; contamination<br />
migrated 65’ deep, across several aquifers;<br />
ROD estimated plume to be 233’ static<br />
volume; duration estimated between 10 –<br />
40 yr.s<br />
Industrial zoning, but threatened sole<br />
source aquifer for Albuquerque if<br />
uncontrolled; Also may have migrated to<br />
surface wtr<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Vicky L. Peters of Attorney at <strong>Law</strong> Speaker 4b: 1<br />
<br />
<br />
Trustee estimated:<br />
89,920,015 to<br />
1,265,326,325<br />
gallons (3900 a/f)<br />
<br />
<br />
<br />
<br />
<br />
per yr.<br />
Approximately 100<br />
acres areal extent;<br />
Total about 12,000<br />
a/f over 3 yrs<br />
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<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Brian J. Cleary of The Cleary <strong>Law</strong> Group, P.C. Speaker 5: 1<br />
R~ N o t e s ~<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Brian J. Cleary of The Cleary <strong>Law</strong> Group, P.C. Speaker 5: 2<br />
R~ N o t e s ~<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Peter C. Chestnut of Chestnut <strong>Law</strong> Offices Speaker 6: 1<br />
Tribal Government<br />
Natural Resource Damages<br />
PETER C. CHESTNUT<br />
CHESTNUT LAW OFFICES<br />
ALBUQUERQUE, NEW MEXICO<br />
TO<br />
NATURAL RESOURCES DAMAGE CLAIMS<br />
CONFERENCE<br />
JULY 9, 20<strong>09</strong><br />
SANTA FE, NEW MEXICO<br />
Sovereigns<br />
Indian tribes are separate sovereigns<br />
In general, states do not share natural resource<br />
trusteeship with tribe for reservation resources<br />
All federal agencies, including each DOI bureau,<br />
have a trust responsibility for tribal trust resources<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Peter C. Chestnut of Chestnut <strong>Law</strong> Offices Speaker 6: 2<br />
Sovereigns in the United States Federal System<br />
3 Kinds, each with its own roots and limits<br />
Kind<br />
Number<br />
Federal 1<br />
State 50<br />
Tribes 562*<br />
Each is unique<br />
* List updated annually. 25 U.S.C. 479.<br />
* 73 Fed. Reg. 18553 (April 4, 2008)<br />
Natural Resource Damages by U.S. Department<br />
of Energy affecting Indian Tribal Governments<br />
at Hanford, WA and Los Alamos, NM<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Peter C. Chestnut of Chestnut <strong>Law</strong> Offices Speaker 6: 3<br />
Tribes Affected by U.S. DOE Hanford Site<br />
Yakama Indian Nation<br />
Confederated Tribes of Umatilla Indian Reservation<br />
Nez Perce Tribe<br />
Treaty of 1855<br />
Confederated Tribes and Bands of Yakama Nation v.<br />
U.S.A. 2007 WL 2570437 (E.D. Wash.)<br />
Tribes Affected by U.S. DOE Los Alamos Site<br />
Pueblo de San Ildefonso<br />
Santa Clara Pueblo<br />
Pueblo of Jemez<br />
Pueblo de Cochiti<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Peter C. Chestnut of Chestnut <strong>Law</strong> Offices Speaker 6: 4<br />
Exhibit 2-1<br />
Map of LANL<br />
Source:<br />
(Haagenstad 2008)<br />
Note: Exhibit does not reflect<br />
recent land transfers to San<br />
Ildefonso Pueblo or Santa Clara<br />
Pueblo from the Bureau of Land<br />
Management pursuant to Public<br />
<strong>Law</strong> 108-66 (2003).<br />
Map of LANL, San Ildefonso Pueblo<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Peter C. Chestnut of Chestnut <strong>Law</strong> Offices Speaker 6: 5<br />
View of Jemez Mountains, Pajarito Plateau, and<br />
Canyon Systems from San Ildefonso Pueblo<br />
Major Concerns<br />
San Ildefonso – only Indian Tribe to share a common<br />
boundary with a Federal Nuclear Research Facility – LANL<br />
LANL has been in operation for 60 years –occupying San<br />
Ildefonso traditional Ancestral Domain<br />
LANL has a continuing mission with DOE for many years<br />
into the future<br />
Past and present operations have released radioactive and<br />
chemical contaminants into the environment<br />
Evidence of contamination found in surface water, ground<br />
water, air, and soil<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Peter C. Chestnut of Chestnut <strong>Law</strong> Offices Speaker 6: 6<br />
Major Concerns Cont.<br />
Contaminants of Concern – Pu, Am, H 3 , Sr, Cs, Pb,<br />
Be, Cr, PCBs, Perchlorate<br />
Four major canyon systems pass through LANL<br />
operations and onto San Ildefonso lands<br />
LANL has impacted the traditional/religious uses of<br />
Pueblo lands<br />
Regional groundwater is located at a depth of 1500-<br />
2000ft. below the surface<br />
LANL generated contaminants have been detected in<br />
the regional groundwater<br />
Flood Retention Structure in Los Alamos Canyon Constructed<br />
after Cerro Grande Fire to settle out contaminated sediments<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Peter C. Chestnut of Chestnut <strong>Law</strong> Offices Speaker 6: 7<br />
Monitoring Wells under Flood Retention<br />
Structure to monitor shallow groundwater<br />
San Ildefonso Sacred Area<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Peter C. Chestnut of Chestnut <strong>Law</strong> Offices Speaker 6: 8<br />
View of LANL/LANSC Facility from Sacred Area<br />
View of LANL/TA 54-Radioactive Waste Disposal<br />
Area from Sacred Area<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Peter C. Chestnut of Chestnut <strong>Law</strong> Offices Speaker 6: 9<br />
Formal Designation of Trustees<br />
Created in Comprehensive Environmental Response,<br />
Compensation, and Liability Act (CERCLA), 42<br />
U.S.C. 9601 et seq., and<br />
Oil Pollution Act (OPA), 33 U.S. C. 3301 et. seq.<br />
Designated Federal Trustees<br />
Secretary of the Interior<br />
Secretary of Commerce<br />
Secretary of Agriculture<br />
Secretary of Defense<br />
Secretary of Energy<br />
40 CFR 300.600<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Peter C. Chestnut of Chestnut <strong>Law</strong> Offices Speaker 6: 10<br />
Natural Resources - Definition<br />
“Land, fish, wildlife, biota, air, water, ground water,<br />
drinking water supplies, and other such resources…”<br />
CERCLA Sect. 101 (16)<br />
CERCLA Definition of Indian Tribe<br />
Section 101(36) – definition of “Indian tribe” – “any<br />
Indian Tribe, band, nation, or other organized group<br />
or community, including any Alaska Native Village<br />
but not including any Alaska Native regional or<br />
village corporation, which is recognized as eligible<br />
for the special programs and services provided by the<br />
United States to Indians because of their status as<br />
Indians.” (federally recognized tribe)<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Peter C. Chestnut of Chestnut <strong>Law</strong> Offices Speaker 6: 11<br />
Tribal Trusteeship - CERCLA<br />
Section 107(f)(1) – “…for natural resources belonging<br />
to, managed by, controlled by, or appertaining to<br />
such tribe, or held in trust for the benefit of such<br />
tribe, or belonging to a member of such tribe if such<br />
resources are subject to a trust restriction on<br />
alienation…”<br />
Tribal Lands – Federal Recognition<br />
Treaties – may create or affirm rights<br />
Congress – may establish reservations<br />
Executive Orders – may establish reservations<br />
Aboriginal Rights – on or off reservation<br />
Statutes/Settlement Acts – may extinguish or<br />
confirm certain aboriginal or treaty rights and/or<br />
claims based on interest in natural resources<br />
and/or land<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Peter C. Chestnut of Chestnut <strong>Law</strong> Offices Speaker 6: 12<br />
Tribe as Trustee<br />
Tribe can act as a separate Trustee<br />
United States acts as Trustee on its behalf<br />
CERCLA Section 107(f)(1), 42 U.S.C. 9607(f)(1)<br />
Tribal <strong>NRD</strong> Claims<br />
Tribal damages likely to include proportionately<br />
large claim for lost cultural use of natural<br />
resources<br />
Quantification is difficult because lost cultural use of<br />
natural resources is “priceless”<br />
Other Trustees (DOI, USDA, DOE, State) will not be<br />
claiming damages for tribal lost cultural use of<br />
natural resources, so consolidated claims are<br />
important<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Peter C. Chestnut of Chestnut <strong>Law</strong> Offices Speaker 6: 13<br />
Federal Trust Responsibility<br />
United States has trust responsibility to protect tribal<br />
resources.<br />
Extends to entire federal government.<br />
Los Alamos Natural Resources Trustee Council<br />
1998-1999 Efforts<br />
Memorandum of Agreement signed in 2008 by:<br />
Pueblo de San Ildefonso<br />
State of New Mexico<br />
U.S. Department of Energy<br />
U.S. Department of the Interior<br />
U.S. Department of Agriculture<br />
Consensus decision-making<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Peter C. Chestnut of Chestnut <strong>Law</strong> Offices Speaker 6: 14<br />
Pre-Assessment Screen<br />
43 CFR Part 990 subpart D – Pre-assessment phase<br />
Completion 20<strong>09</strong> for Los Alamos<br />
U.S. DOE funded<br />
What Tribes Contribute to <strong>NRD</strong> Process<br />
Long-term vision – “different sense of time”<br />
Can’t move – center of its world view<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Peter C. Chestnut of Chestnut <strong>Law</strong> Offices Speaker 6: 15<br />
Tribal Goals<br />
Restoration to prior use conditions to greatest extent<br />
feasible<br />
Access for use even while damaged<br />
e.g. human remains, reburial<br />
Thank You<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
L A W S E M I N A R S I N T E R N A T I O N A L<br />
The Third Annual Advanced Conference on<br />
Natural Resource Damages Claims<br />
New case law and legislation, and best strategies<br />
July 9 and 10, 20<strong>09</strong><br />
Santa Fe, NM<br />
Case <strong>Law</strong> Update and <strong>NRD</strong> Claims Around the<br />
Country<br />
John K. Dema, Esq.<br />
<strong>Law</strong> Offices of John K. Dema, P.C.<br />
Christiansted, VI<br />
Scott E. Kauff, Esq.<br />
<strong>Law</strong> Offices of John K. Dema, P.C.<br />
Rockville, MD
John K. Dema of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Scott E. Kauff of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Speaker 7a: 1<br />
Speaker 8a: 1<br />
Natural Resource Damage<br />
Case <strong>Law</strong> Update<br />
John K. Dema<br />
Scott E. Kauff<br />
<strong>Law</strong> Offices of John K. Dema, P.C.<br />
Disclaimer<br />
The views expressed are those of John K. Dema<br />
and Scott E. Kauff and may or may not reflect<br />
the views of clients of the<br />
<strong>Law</strong> Offices of John K. Dema, P.C.<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
John K. Dema of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Scott E. Kauff of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Speaker 7a: 2<br />
Speaker 8a: 2<br />
Quapaw Tribe of Oklahoma<br />
(N.D. Okla.)<br />
2 Significant Decisions in Past Year<br />
Quapaw Tribe of Oklahoma<br />
(N.D. Okla.)<br />
1 st DECISION – July 7, 2008 – 2008 WL 2704482<br />
Facts – Defendants filed motions pursuant to Fed.R.Civ.P.<br />
12(b)(6) and 12(c) on the grounds that Tribe’s CERCLA<br />
<strong>NRD</strong> claim is premature.<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
John K. Dema of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Scott E. Kauff of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Speaker 7a: 3<br />
Speaker 8a: 3<br />
Quapaw Tribe of Oklahoma<br />
(N.D. Okla.)<br />
1 st DECISION – July 7, 2008 – 2008 WL 2704482<br />
Holdings<br />
1 st Holding – Timing of <strong>NRD</strong> Claim – No interim or<br />
loss of use damages available until EPA selects final<br />
remedy on all OUs if EPA is diligently proceeding with<br />
RI/FS on any OU.<br />
2 nd Holding – Future Assessment Costs –Not available<br />
until incurred and EPA’s work (i.e., selection of the<br />
remedy) is complete.<br />
Quapaw Tribe of Oklahoma<br />
(N.D. Okla.)<br />
2 nd DECISION – February 23, 20<strong>09</strong> – 20<strong>09</strong> WL<br />
455260<br />
Facts – Motion for Judgment on the Pleadings on the<br />
grounds that CERCLA preempts state law claims for<br />
<strong>NRD</strong>.<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
John K. Dema of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Scott E. Kauff of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Speaker 7a: 4<br />
Speaker 8a: 4<br />
Quapaw Tribe of Oklahoma<br />
(N.D. Okla.)<br />
2 nd DECISION – February 23, 20<strong>09</strong> – 20<strong>09</strong> WL<br />
455260<br />
Holding 1 – No Preemption – CERCLA does NOT<br />
preempt state common law claims seeking interim and<br />
loss of use damages where no conflict present between<br />
CERCLA and common law claims.<br />
Holding 2 – Remedies Unavailable Under CERCLA<br />
Available Under State <strong>Law</strong> – CERCLA does not<br />
preempt state laws that provide remedies unavailable<br />
under CERCLA, including claims for <strong>NRD</strong> that occurred<br />
wholly before December 11, 1980.<br />
Commissioner of DPNR v. Century<br />
Alumina (D.V.I.)<br />
2 Significant Decisions in Past Year<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
John K. Dema of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Scott E. Kauff of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Speaker 7a: 5<br />
Speaker 8a: 5<br />
Commissioner of DPNR v. Century<br />
Alumina (D.V.I.)<br />
1 st DECISION – Oct. 22, 2008 – 2008 WL 4693550<br />
Facts<br />
Joint motion to approve consent decree filed by USVI Trustee,<br />
DPNR, and St. Croix Renaissance Group.<br />
Holding<br />
Consent Decree Rejected – Insufficient information regarding<br />
total damages, total response costs, and apportionment for Court<br />
to find consent decree substantively fair or unfair.<br />
Commissioner of DPNR v. Century<br />
Alumina (D.V.I.)<br />
2 nd DECISION –Oct. 31, 2008, 2008 WL 4693550<br />
Facts – Defendants filed joint motions to dismiss<br />
Trustee’s Territorial and CERCLA <strong>NRD</strong> claims.<br />
CERCLA Holdings<br />
Holding 1 – Sixty Day Notice – requirement in CERCLA §<br />
113(g)(1) only applies to NPL-listed sites, certain federal<br />
facilities, and facilities where a remedial action under CERCLA is<br />
scheduled.<br />
Holding 2 – Statute of Limitations – Trustee’s complaint does<br />
not provide basis for dismissal of CERCLA on 3-year statute of<br />
limitations grounds and Court would not consider documents at<br />
this stage.<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
John K. Dema of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Scott E. Kauff of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Speaker 7a: 6<br />
Speaker 8a: 6<br />
Commissioner of DPNR v. Century<br />
Alumina (D.V.I.)<br />
2 nd DECISION –Oct. 31, 2008, 2008 WL 4693550<br />
CERCLA Holdings (cont.)<br />
Holding 3 – Petroleum Exclusion – Waste oil containing TCE<br />
is not subject to the petroleum exclusion.<br />
Holding 4 – Pleading Requirements – Trustee is not required<br />
to plead specific releases of specific hazardous substances; it is<br />
sufficient to plead that a release or threatened release of a<br />
hazardous substance from a facility has caused <strong>NRD</strong>.<br />
Commissioner of DPNR v. Century<br />
Alumina (D.V.I.)<br />
2 nd DECISION –Oct. 31, 2008, 2008 WL 4693550<br />
Territorial <strong>Law</strong> Claim Holdings<br />
Holding 1 – Exercises Supplemental Jurisdiction – Because<br />
Territorial law claims are not particularly complex or novel, do<br />
not predominate over the CERCLA claim, and the federal and<br />
Territorial causes of action are all premised on allegations of<br />
contamination, the Court exercises supplemental jurisdiction.<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
John K. Dema of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Scott E. Kauff of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Speaker 7a: 7<br />
Speaker 8a: 7<br />
Commissioner of DPNR v. Century<br />
Alumina (D.V.I.)<br />
2 nd DECISION –Oct. 31, 2008, 2008 WL 4693550<br />
Territorial <strong>Law</strong> Claim Holdings (cont.)<br />
Holding 2 – Conflict Preemption – If the USVI were to seek an<br />
unrestricted award of damages for harm to natural resources that<br />
would also be available under CERCLA, the claim would be<br />
preempted. However, because there is no indication at this early<br />
stage that the USVI Trustee seeks such an unrestricted award for<br />
damages that would otherwise be available under CERCLA, the<br />
Court finds the preemption arguments premature.<br />
Commissioner of DPNR v. Century<br />
Alumina (D.V.I.)<br />
2 nd DECISION –Oct. 31, 2008, 2008 WL 4693550<br />
Territorial <strong>Law</strong> Claim Holdings (cont.)<br />
Holding 3 – Parens Patriae – Territory of the Virgin Islands<br />
may bring suits as parens patriae like states, but it is the<br />
Government of the Virgin Islands and not the DPNR that is the<br />
real party in interest.<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
John K. Dema of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Scott E. Kauff of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Speaker 7a: 8<br />
Speaker 8a: 8<br />
Commissioner of DPNR v. Century<br />
Alumina (D.V.I.)<br />
2 nd DECISION –Oct. 31, 2008, 2008 WL 4693550<br />
Territorial <strong>Law</strong> Claim Holdings (cont.)<br />
Holding 4 – Public Trust – A sovereign has the power to define<br />
the nature and extent of its trust properties. By law, “all waters<br />
within the United States Virgin Islands are…public waters<br />
belonging to the people….” Accordingly, the allegedly<br />
contaminated groundwater and coastal waters are held by the<br />
Government in trust for its people and the Government may<br />
bring common law actions for <strong>NRD</strong>.<br />
Commissioner of DPNR v. Century<br />
Alumina (D.V.I.)<br />
2 nd DECISION –Oct. 31, 2008, 2008 WL 4693550<br />
Territorial <strong>Law</strong> Claim Holdings (cont.)<br />
Holding 5 – Sovereign Immunity – The sovereign Government<br />
of the Virgin Islands is not subject to statute of limitations or<br />
laches defenses unless sovereign immunity is expressly waived.<br />
Because not waived, the Territorial law causes of action are not<br />
time-barred.<br />
Holding 6 – Trespass – Under USVI law, the tort of trespass<br />
does not lie when the only interest invaded is water.<br />
Furthermore, the public trust ownership of the Government is<br />
not a sufficient possessory interest in the water for the<br />
Government to maintain a trespass action.<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
John K. Dema of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Scott E. Kauff of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Speaker 7a: 9<br />
Speaker 8a: 9<br />
Commissioner of DPNR v. Century<br />
Alumina (D.V.I.)<br />
2 nd DECISION –Oct. 31, 2008, 2008 WL 4693550<br />
Territorial <strong>Law</strong> Claim Holdings (cont.)<br />
Holding 7 – Public Nuisance – A special harm need only be<br />
shown if suing for damages. The Government’s sovereign<br />
interests in its natural resources as parens patriae are separate and<br />
distinct from the interests of its individual citizens. Thus, the<br />
Government may pursue a public nuisance action because it<br />
suffers a different kind of harm from that of members of the<br />
public.<br />
NJDEP v. Exxon Mobil Corp.<br />
1 st Decision – Superior Court of NJ, <strong>Law</strong> Division,<br />
August 29, 2008 (Letter Opinion)<br />
Facts<br />
Two major oil refineries and related facilities were operated on<br />
the Bayonne and Bayway sites since the late 1800’s and early<br />
1900’s respectively by Exxon (and its predecessors).<br />
The State of New Jersey in the late nineteenth and early<br />
twentieth centuries had authority to sell grants or leases for the<br />
State’s riparian lands through the Riparian Commission. Some<br />
of the lands owned and operated by Exxon were transferred to it<br />
in fee simple by the Riparian Commission.<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
John K. Dema of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Scott E. Kauff of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Speaker 7a: 10<br />
Speaker 8a: 10<br />
NJDEP v. Exxon Mobil Corp.<br />
1 st Decision – Superior Court of NJ, <strong>Law</strong> Division,<br />
August 29, 2008 (Letter Opinion)<br />
Facts (cont.)<br />
DEP filed motion for:<br />
Partial summary judgment on public nuisance and trespass;<br />
and<br />
A judgment that Exxon’s behavior constituted an<br />
abnormally dangerous activity and that DEP is entitled to<br />
damages for loss of use, restitution, and unjust enrichment.<br />
NJDEP v. Exxon Mobil Corp.<br />
1 st Decision – Superior Court of NJ, <strong>Law</strong> Division,<br />
August 29, 2008 (Letter Opinion)<br />
Holding 1 – Public Trust<br />
“[T]itle to such ‘public trust property’ is subject to the public’s<br />
right to use and enjoy the property, even if such property is<br />
alienated to private owners… This right of the public to use and<br />
enjoy such ‘public trust lands’ does not disappear simply because<br />
the land that was once submerged is filled in.”<br />
The State’s rights as public trustee exist even if the property has<br />
been alienated.<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
John K. Dema of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Scott E. Kauff of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Speaker 7a: 11<br />
Speaker 8a: 11<br />
NJDEP v. Exxon Mobil Corp.<br />
1 st Decision – Superior Court of NJ, <strong>Law</strong> Division,<br />
August 29, 2008 (Letter Opinion)<br />
Holding 2 – Public Nuisance Present<br />
A public agency has the right to assert a claim of public nuisance<br />
independent of the special injury requirement.<br />
A “right to an uncontaminated environment” is a right held in<br />
common by the public.<br />
After applying Restatement (Second) of Torts criteria, the Court<br />
concluded Exxon unreasonably interfered with this common<br />
right and is liable for public nuisance.<br />
NJDEP v. Exxon Mobil Corp.<br />
1 st Decision – Superior Court of NJ, <strong>Law</strong> Division,<br />
August 29, 2008 (Letter Opinion)<br />
Holding 3 – Public Nuisance Damages<br />
Damages unavailable to public agency pursuant to public<br />
nuisance claim.<br />
Loss of use damages not available on public nuisance claim.<br />
Injunctive relief to abate nuisance available.<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
John K. Dema of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Scott E. Kauff of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Speaker 7a: 12<br />
Speaker 8a: 12<br />
NJDEP v. Exxon Mobil Corp.<br />
1 st Decision – Superior Court of NJ, <strong>Law</strong> Division,<br />
August 29, 2008 (Letter Opinion)<br />
Holding 4 – Abnormally Dangerous<br />
“[A] landowner is strictly liable to others for harm caused by<br />
toxic wastes that are stored on his property and flow onto the<br />
property of others.” NJDEP v. Ventron Corp., 94 N.J. 473, 488<br />
(1983).<br />
Exxon’s activities are abnormally dangerous.<br />
NJDEP v. Exxon Mobil Corp.<br />
1 st Decision – Superior Court of NJ, <strong>Law</strong> Division,<br />
August 29, 2008 (Letter Opinion)<br />
Holding 5 – Trespass Unavailable<br />
State not in exclusive possession of land subject to public trust.<br />
“If the State is deemed to be in exclusive control of land in the<br />
public trust for purposes of trespass, than [sic] almost any<br />
invasion, by anyone, could give the State grounds for a trespass<br />
action. Moreover, the land in the public trust is held by the State<br />
on behalf of a second party, the people.”<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
John K. Dema of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Scott E. Kauff of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Speaker 7a: 13<br />
Speaker 8a: 13<br />
NJDEP v. Exxon Mobil Corp.<br />
1 st Decision – Superior Court of NJ, <strong>Law</strong> Division,<br />
August 29, 2008 (Letter Opinion)<br />
Holding 6 – Unjust Enrichment<br />
Only available when no adequate remedy at law.<br />
Because there is an adequate remedy at law pursuant to common<br />
law and Spill Act, unjust enrichment unavailable.<br />
Allowing unjust enrichment would allow a windfall double<br />
recovery.<br />
NJDEP v. Exxon Mobil Corp.<br />
2 nd Decision – Superior Court of NJ, <strong>Law</strong> Division,<br />
January 22, 20<strong>09</strong> (Letter Opinion)<br />
Facts<br />
Exxon filed motion for partial summary judgment on:<br />
Spill Act retroactivity;<br />
Common law statute of limitations; and<br />
Counsel fees.<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
John K. Dema of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Scott E. Kauff of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Speaker 7a: 14<br />
Speaker 8a: 14<br />
NJDEP v. Exxon Mobil Corp.<br />
2 nd Decision – Superior Court of NJ, <strong>Law</strong> Division,<br />
January 22, 20<strong>09</strong> (Letter Opinion)<br />
Holding 1 – Spill Act is Retroactive for <strong>NRD</strong>.<br />
Holding 2 – 10-year Statute of Limitations Applies to<br />
Common <strong>Law</strong> Claims.<br />
Holding 3 – Attorneys’ fees associated with pursuit of<br />
restoration of sites available under Spill Act, but fees<br />
associated with recovery of damages not available,<br />
although litigation costs are available.<br />
US v. Viking Resources, Inc.<br />
607 F.Supp.2d 808 (S.D. Tex. Feb. 11, 20<strong>09</strong>)<br />
Facts<br />
Oil flowed from a leaking tank battery into wetlands<br />
immediately adjacent to Highland Bayou, a navigable<br />
tributary to Galveston Bay.<br />
The United States brought an action for response costs<br />
and <strong>NRD</strong>, alleging that Viking and its president, Roger<br />
Chambers, were responsible parties under OPA.<br />
United States moved to strike jury demand pursuant to<br />
Fed.R.Civ.P. 39(a)(2).<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
John K. Dema of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Scott E. Kauff of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Speaker 7a: 15<br />
Speaker 8a: 15<br />
US v. Viking Resources, Inc.<br />
607 F.Supp.2d 808 (S.D. Tex. Feb. 11, 20<strong>09</strong>)<br />
Holding – Motion to strike jury demand denied<br />
because of <strong>NRD</strong> claim. Jury trial available for<br />
<strong>NRD</strong> because damages sought for diminution<br />
in value of resources. The entire case will be tried<br />
to a jury, but the jury’s verdict will be advisory as to<br />
the issues that are equitable in nature.<br />
Pharmacia Corp. v. Motor Carrier Serv. Corp.<br />
20<strong>09</strong> WL 323154 (3d Cir. Feb. 10, 20<strong>09</strong>)<br />
Facts<br />
A 1994 purchase and sale agreement provides that<br />
purchaser is responsible for:<br />
“(i) any and all costs and expenses…of Clean-up….”<br />
“Clean-up” is defined to mean “investigatory, remedial and<br />
monitoring work mandated by the Requirements of <strong>Law</strong> or a<br />
Governmental Agency to investigate, remediate, remove, treat,<br />
clean-up, contain or prevent the escape of Substances on, within,<br />
generated by or emitted from [the Site].”<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
John K. Dema of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Scott E. Kauff of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Speaker 7a: 16<br />
Speaker 8a: 16<br />
Pharmacia Corp. v. Motor Carrier Serv. Corp.<br />
20<strong>09</strong> WL 323154 (3d Cir. Feb. 10, 20<strong>09</strong>)<br />
Facts (cont.)<br />
NOAA sought “compensatory damages for natural<br />
resource injury” and “costs of assessing injury to natural<br />
resources.”<br />
Holding<br />
NOAA <strong>NRD</strong> falls squarely within the definition of<br />
“Clean-up” under the Agreement because “restoration” is<br />
“remedial.”<br />
Burlington Northern and Santa Fe Railway Co. v. US<br />
129 S.Ct. 1870 (May 4, 20<strong>09</strong>)<br />
Arranger Liability<br />
Knowledge alone is insufficient to prove that an entity<br />
arranged (i.e., planned for) the disposal.<br />
Party must enter into sale of product with the intention<br />
that at least a portion of the product be disposed.<br />
Apportionment of Response Costs<br />
Applying Restatement (Second) of Torts § 433A, the<br />
Court concluded that facts regarding volume, chronology,<br />
and area could be used to conclude harm was divisible.<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
John K. Dema of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Scott E. Kauff of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Speaker 7a: 17<br />
Speaker 8a: 17<br />
Contact Info<br />
<strong>Law</strong> Offices of John K. Dema, P.C.<br />
John K. Dema<br />
(340) 773-6142<br />
jdema@lojkd.com<br />
Scott E. Kauff<br />
(301) 881-5900<br />
skauff@lojkd.com<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
John K. Dema of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Scott E. Kauff of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Speaker 7b: 1<br />
Speaker 8b: 1<br />
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<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
John K. Dema of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Scott E. Kauff of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Speaker 7b: 2<br />
Speaker 8b: 2<br />
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<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
John K. Dema of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Scott E. Kauff of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Speaker 7b: 3<br />
Speaker 8b: 3<br />
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<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
John K. Dema of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Scott E. Kauff of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Speaker 7b: 4<br />
Speaker 8b: 4<br />
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<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
John K. Dema of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Scott E. Kauff of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Speaker 7b: 5<br />
Speaker 8b: 5<br />
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<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
John K. Dema of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Scott E. Kauff of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Speaker 7b: 6<br />
Speaker 8b: 6<br />
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<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
John K. Dema of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Scott E. Kauff of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Speaker 7b: 7<br />
Speaker 8b: 7<br />
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<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
John K. Dema of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Scott E. Kauff of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Speaker 7b: 8<br />
Speaker 8b: 8<br />
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<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
John K. Dema of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Scott E. Kauff of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Speaker 7b: 9<br />
Speaker 8b: 9<br />
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<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
John K. Dema of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Scott E. Kauff of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Speaker 7b: 10<br />
Speaker 8b: 10<br />
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<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
John K. Dema of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Scott E. Kauff of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Speaker 7b: 11<br />
Speaker 8b: 11<br />
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<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
John K. Dema of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Scott E. Kauff of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Speaker 7b: 12<br />
Speaker 8b: 12<br />
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<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
John K. Dema of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Scott E. Kauff of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Speaker 7b: 13<br />
Speaker 8b: 13<br />
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<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
John K. Dema of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Scott E. Kauff of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Speaker 7b: 14<br />
Speaker 8b: 14<br />
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<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
John K. Dema of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Scott E. Kauff of <strong>Law</strong> Offices of John K. Dema, P.C.<br />
Speaker 7b: 15<br />
Speaker 8b: 15<br />
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<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
L A W S E M I N A R S I N T E R N A T I O N A L<br />
The Third Annual Advanced Conference on<br />
Natural Resource Damages Claims<br />
New case law and legislation, and best strategies<br />
July 9 and 10, 20<strong>09</strong><br />
Santa Fe, NM<br />
Determining Natural Resource Injury and<br />
Strategies for Conducting/Resisting <strong>NRD</strong><br />
Assessments<br />
Angus Macbeth, Esq.<br />
Sidley Austin LLP<br />
Washington, DC<br />
Kenneth Jenkins, Ph.D.<br />
ARCADIS<br />
Petaluma, CA
Angus Macbeth of Sidley Austin LLP Speaker 9: 1<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Angus Macbeth of Sidley Austin LLP Speaker 9: 2<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Angus Macbeth of Sidley Austin LLP Speaker 9: 3<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Angus Macbeth of Sidley Austin LLP Speaker 9: 4<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Angus Macbeth of Sidley Austin LLP Speaker 9: 5<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Angus Macbeth of Sidley Austin LLP Speaker 9: 6<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Angus Macbeth of Sidley Austin LLP Speaker 9: 7<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Angus Macbeth of Sidley Austin LLP Speaker 9: 8<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Angus Macbeth of Sidley Austin LLP Speaker 9: 9<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Angus Macbeth of Sidley Austin LLP Speaker 9: 10<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Angus Macbeth of Sidley Austin LLP Speaker 9: 11<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Angus Macbeth of Sidley Austin LLP Speaker 9: 12<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Angus Macbeth of Sidley Austin LLP Speaker 9: 13<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Angus Macbeth of Sidley Austin LLP Speaker 9: 14<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Angus Macbeth of Sidley Austin LLP Speaker 9: 15<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Angus Macbeth of Sidley Austin LLP Speaker 9: 16<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Angus Macbeth of Sidley Austin LLP Speaker 9: 17<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Angus Macbeth of Sidley Austin LLP Speaker 9: 18<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Angus Macbeth of Sidley Austin LLP Speaker 9: 19<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Angus Macbeth of Sidley Austin LLP Speaker 9: 20<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Angus Macbeth of Sidley Austin LLP Speaker 9: 21<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Kenneth Jenkins of ARCADIS Speaker 10a: 1<br />
Evaluation of Injuries to<br />
Ecological Resources<br />
Kenneth D. Jenkins, Ph.D.<br />
Third Annual Advanced Conference<br />
on Natural Resource Damages<br />
Claims<br />
July 9 th & 10 th 20<strong>09</strong><br />
Santa Fe, NM<br />
Imagine the result<br />
Overview<br />
• Relationship between common measures of ecological<br />
injuries and potential ecological service losses<br />
• Measures used to estimate ecological injuries include<br />
• Chemical benchmarks<br />
• Biomarkers<br />
• Other measures of injury<br />
• Population modeling<br />
• Conclusions regarding the use and miss use of these<br />
measures of injury<br />
Slide 2<br />
27 July 20<strong>09</strong><br />
© 20<strong>09</strong> ARCADIS<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Kenneth Jenkins of ARCADIS Speaker 10a: 2<br />
DOI Regulations<br />
• Quantification of ecological injuries based on:<br />
• “analysis of the population, or the habitat or the<br />
ecosystem level (43 CFR § 11.71(f)(1)).<br />
• Focus on populations and higher levels is consistent<br />
with wildlife management practices<br />
• Injury determination based on individual organisms:<br />
• death, disease, behavioral abnormalities, cancer,<br />
genetic mutations, physiological malfunctions<br />
(reproduction) or physical deformations (43 CFR §<br />
11.62(l)(1)).<br />
• How do injuries to individual organisms relate to<br />
populations, habitat or ecosystems?<br />
Slide 3<br />
27 July 20<strong>09</strong><br />
© 20<strong>09</strong> ARCADIS<br />
Chemical Benchmarks<br />
- Water Quality Criteria<br />
- Sediment Quality Benchmarks<br />
Slide 4<br />
27 July 20<strong>09</strong><br />
© 20<strong>09</strong> ARCADIS<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Kenneth Jenkins of ARCADIS Speaker 10a: 3<br />
Water Quality Criteria<br />
• DOI guidance specifies that exceedances of promulgated<br />
standards, such as water quality criteria (WQC), constitute<br />
injuries<br />
• Promulgated WQC have also been used as a basis for<br />
quantify injuries<br />
• What does the exceedance of a promulgated WQC mean<br />
for the sustainability of local populations, habitats or<br />
ecosystems?<br />
•What is the technical basis of a WQC?<br />
Slide 5<br />
27 July 20<strong>09</strong><br />
© 20<strong>09</strong> ARCADIS<br />
Slide 6<br />
27 July 20<strong>09</strong><br />
© 20<strong>09</strong> ARCADIS<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Kenneth Jenkins of ARCADIS Speaker 10a: 4<br />
Water Quality Criteria<br />
• Metal concentrations exceeded WQC throughout the Coeur<br />
d’Alene basin<br />
• Exceedances of WQC used by trustees as a basis for<br />
claiming 100% loss of ecological services<br />
• Field studies demonstrated substantial ecological services<br />
where WQC were exceeded<br />
• Fish and invertebrate populations were consistent with<br />
reference sites at most locations<br />
• Sustainable salmonid populations with multiple age classes<br />
found at 3 to 7 times WQC<br />
Slide 7<br />
27 July 20<strong>09</strong><br />
© 20<strong>09</strong> ARCADIS<br />
Water Quality Criteria<br />
Conclusions<br />
• Surface waters are considered injured when promulgated<br />
WQCs are exceed.<br />
• WQC exceedances provide no information on the actual<br />
conditions of ecological resources at a site<br />
• Significant ecological services may exist at chemical<br />
concentrations several time that of a WQC<br />
• WQC provide no information non-chemical baseline<br />
conditions that effect ecological resources<br />
Slide 8<br />
27 July 20<strong>09</strong><br />
© 20<strong>09</strong> ARCADIS<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Kenneth Jenkins of ARCADIS Speaker 10a: 5<br />
Sediment Quality Benchmarks<br />
• Sediment quality benchmarks (SQB)<br />
• Developed to evaluate potential ecological effects of<br />
chemicals on sediment dwelling invertebrates<br />
• Most distinguish multiple levels of effects<br />
• ERL & ERM; TEL and PEL<br />
• SQBs are based on correlations between chemical<br />
concentrations and biological effects in large sediment data<br />
bases<br />
• Data bases contain multiple chemicals and other variables<br />
that preclude evaluation of causation<br />
Slide 9<br />
27 July 20<strong>09</strong><br />
© 20<strong>09</strong> ARCADIS<br />
Sediment Quality Benchmarks<br />
Slide 10<br />
27 July 20<strong>09</strong><br />
© 20<strong>09</strong> ARCADIS<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Kenneth Jenkins of ARCADIS Speaker 10a: 6<br />
Sediment Quality Benchmarks<br />
• SQOs are based on measure of effects on sediment dwelling<br />
invertebrates<br />
• Relationship between SQG level and amphipod mortality is<br />
marginal particularly mid-range exposures<br />
• SQC provide no information on potential injuries to other<br />
resources such as wetland and submerged aquatic<br />
vegetation<br />
Slide 11<br />
27 July 20<strong>09</strong><br />
© 20<strong>09</strong> ARCADIS<br />
Sediment Quality Benchmarks<br />
Slide 12<br />
27 July 20<strong>09</strong><br />
© 20<strong>09</strong> ARCADIS<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Kenneth Jenkins of ARCADIS Speaker 10a: 7<br />
Sediment Quality Benchmarks<br />
• SQBs were developed to screen sediments to determine if<br />
further studies should be undertaken<br />
• SQBs do not account for site-specific factors that control<br />
contaminant bioavailability and toxicity<br />
• SQBs provide no information on non-chemical baseline<br />
conditions that effect ecological resources<br />
• SQBs provide no information on the actual conditions of<br />
ecological resources at a site<br />
Slide 13<br />
27 July 20<strong>09</strong><br />
© 20<strong>09</strong> ARCADIS<br />
Sediment Quality Benchmarks<br />
Conclusions<br />
• SQBs are useful for screening out chemicals that pose no<br />
potential harm<br />
• In the absence of site-specific data, SQBs are often used in<br />
estimating injuries to ecological resources<br />
• SQBs serve more as a negotiating tool rather than a<br />
scientifically rigorous measure of injury<br />
• A mater of balancing transaction costs of site-specific<br />
sediment studies against uncertainties with use of SQOs<br />
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Kenneth Jenkins of ARCADIS Speaker 10a: 8<br />
•Biological Measures of Injury<br />
- Biomarkers<br />
- Molecular Toxicology<br />
- Other Measures of Injury<br />
- Population Modeling<br />
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Biomarkers<br />
• Measures of change in an organism at the molecular, cellular or<br />
tissue level. Examples include:<br />
• Modifications to DNA<br />
• Changes in enzyme concentrations or function<br />
• Histopathological changes to tissues<br />
• Called out in DOI regulations and NOAA guidance<br />
• Increasingly employed by Trustees to establish injury to<br />
ecological resources. Examples include<br />
• Changes in enzymes: Coeur d’Alene, Exxon Valdez, Clark<br />
Fork, Fox River<br />
• Histological changes: Hylebos, Montrose<br />
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Kenneth Jenkins of ARCADIS Speaker 10a: 9<br />
Biomarkers - Conclusions<br />
• Many biomarkers are better measures of exposure then effects<br />
(e.g. EROD induction)<br />
• Most function in normal physiological processes as well as stress<br />
responses (e.g. metallothionein)<br />
• Most are not stressor-specific (e.g., histological lesions)<br />
• Responses difficult to relate to fitness of individual organisms<br />
• Provide no information on the conditions of populations, habitats<br />
or ecosystems<br />
• Biomarkers are not useful measures of ecological injury<br />
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Molecular Toxicology<br />
• Molecular toxicology can improve our ability to assess ecological<br />
injuries<br />
• Sensitivity of birds to dioxin like compounds varies by 4 orders of<br />
magnitude<br />
• Most avian toxicity studies have been conducted with chickens,<br />
the most sensitive species tested<br />
• Life cycle toxicity tests on site-related avian species are not<br />
practical<br />
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Kenneth Jenkins of ARCADIS Speaker 10a: 10<br />
Molecular Toxicology<br />
• Dioxin like compounds exert toxicity by binding to AHR protein<br />
• Recent studies have demonstrated that variations in avian<br />
sensitivity to these compounds is due to mutations in AHR gene<br />
• AHR gene has been sequenced in almost 100 avian species<br />
• Mutations fall into discrete groups that correlate with specie<br />
sensitivity<br />
• For new species, AHR genes can be obtained from blood<br />
samples, sequenced and relative sensitivity determined<br />
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Other Measures of Injury<br />
• Site-specific rates of mortality, growth and reproduction based on<br />
site specific bioassays<br />
• Provide direct site-specific measures of the fitness individual<br />
organisms<br />
• Bioassays are not stressor-specific making it difficult to evaluate<br />
causation<br />
• Changes in rates of mortality, growth and reproduction do not<br />
translate directly to effects on populations, habitats or ecosystems<br />
• Population modeling can be used to extrapolate from effects on<br />
individuals to populations<br />
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<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Kenneth Jenkins of ARCADIS Speaker 10a: 11<br />
Population Modeling<br />
Population<br />
Model<br />
Toxicity<br />
Data<br />
Combined<br />
Model<br />
Injury<br />
Assessment<br />
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Population Modeling<br />
Population Growth Comparisons-unlimited growth<br />
500000<br />
450000<br />
400000<br />
Population Size<br />
350000<br />
300000<br />
250000<br />
200000<br />
150000<br />
baseline<br />
fecundity reduced<br />
survival reduced<br />
both reduced<br />
100000<br />
50000<br />
0<br />
0 2 4 6 8 10 12 14 16 18 20 22<br />
Year<br />
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Kenneth Jenkins of ARCADIS Speaker 10a: 12<br />
Conclusions<br />
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Conclusions<br />
• Chemical benchmarks are useful in screening out chemicals that<br />
pose no harm but provide no information on the site-specific status<br />
of ecological resources<br />
• Biomarkers are not useful measures of ecological injury<br />
• Molecular toxicology provides a cost effective basis for evaluating<br />
the sensitivity of avian species to dioxin-like compounds<br />
• It is difficult to relate results of bioassays to specific chemicals or<br />
to effects on populations, habitats or ecosystems<br />
• Population modeling can be used to extrapolate from effects on<br />
individuals to populations<br />
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<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Kenneth Jenkins of ARCADIS Speaker 10a: 13<br />
Imagine the result<br />
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<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Kenneth Jenkins of ARCADIS Speaker 10b: 1<br />
EvaluationofInjuriestoEcologicalResources<br />
KennethD.Jenkins,Ph.D.<br />
ARCADIS<br />
6<strong>09</strong><br />
<br />
<br />
DeterminationofinjuriestoecologicalresourcesisacentraltothequantificationofNatural<br />
ResourceDamages.YetthemethodsemployedbyTrusteesininjuryassessmentsareoften<br />
contentiousandmaysignificantlyoverestimatethenatureandextentofinjuries.Several<br />
factorshavecontributedtothisproblem.<br />
FirsttherearesignificantinconsistencyintheU.S.DepartmentofInterior(DOI)<strong>NRD</strong>A<br />
regulationsregardingthedeterminationofinjuriestoecologicalresourcesandthe<br />
quantifyingservicelosses.Anecologicalresourceisconsideredinjuredifhas“undergoneat<br />
leastoneofthefollowingadversechangesinviability:death,disease,behavioral<br />
abnormalities,cancer,geneticmutations,physiologicalmalfunctions(including<br />
malfunctionsinreproduction),orphysicaldeformations(43CFR§11.62(l)(1)).Notethat<br />
themeasurementsusedininjurydeterminationfocusonbiochemicalandphysiological<br />
changesthataffectthefunctionofindividualorganisms.Thesebiochemicaland<br />
physiologicalparametersareoftenreferredtoasbiomarkers.<br />
Incontrast,injuryquantificationisdeterminedbasedupon“analysisofthepopulation,or<br />
thehabitatortheecosystemlevel(43CFR§11.71(f)(1)).Injuriesarethusappropriately<br />
quantifiedevaluatedathigherlevelsoforganizationthatbetterreflectecosystemfunction.<br />
Althoughinjurydeterminationisaprerequisitetoinjuryquantification,noguidanceis<br />
providedforbridgingthegapfromthedeterminationofinjuriestoindividualorganismsto<br />
thequantificationofinjuriesatthelevelofpopulation,habitatorecosystemfunction.<br />
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<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM<br />
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Kenneth Jenkins of ARCADIS Speaker 10b: 2<br />
Fromapracticalstandpoint,thisgapisoftenignoredbythetrustees.Injurydetermination<br />
andquantificationareoftenevaluatedseparatelyandchangesquantifiedathigherlevelsof<br />
organization(e.g.,populations,habitatsandecosystems)areassumedtobeaconsequence<br />
ofbiochemicalorphysiologicalchangesobservedinindividualorganismswithnorigorous<br />
evaluationofcausation.<br />
Thisproblemhasbeenexacerbatedbytheincreaseduseofcooperativeassessments.<br />
Cooperativeassessmentsoftenemployvariousexpeditedapproachesthatrelyon<br />
biomarkersandrelatedlinesofevidencetobothdetermineandquantifyinjuries.Inso<br />
doingtheseexpeditedstrategiesmaycompletelyforgoanyevaluationInjuriesathigher<br />
levelsoforganizationthatbetterreflectecosystemfunctionsandserviceflows.<br />
Inthefollowingsectionswewilllookmorecloselyatvariousparametersthathavebeen<br />
usedtoevaluateandquantifyecologicalinjuries,discusstheirstrengthsandlimitationsand<br />
provideexamplesoftheiruseandmisuse.Thesearesummarizedbelowbeginningwith<br />
chemicalmeasurementsofbiologicalmedia,followingwithbiomarkersandothermeasures<br />
oftheappliedtoindividualorganismsandthentodirectmeasuresandmodelingstrategies<br />
forevaluationthestatusoflocalpopulationsoforganisms,habitatandcomplexbiological<br />
communities.<br />
<br />
1) Chemicalbenchmarks:Chemicalbenchmarksforenvironmentalsuchassurfacewater,<br />
sedimentsareoftenusedinthepreliminaryevaluationofpotentialinjuries.<br />
a) PromulgatedCriteriaandStandards:<br />
i) Exceedancesofpromulgatedbenchmarkssuchaswaterqualitycriteriaareby<br />
definitionindicationsofinjurytothatresource.Howevermoderateexceedancesof<br />
promulgatedwaterqualitystandardsneednotresultinsignificantquantifiable<br />
injuriestoaquaticresources.<br />
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Kenneth Jenkins of ARCADIS Speaker 10b: 3<br />
b) Nonpromulgatedbenchmarks:<br />
i) Nonpromulgatedbenchmarksareoftenusedforscreeningforenvironmentalmedia<br />
suchassoilsandsediments.(Ausefulsummaryofthesebenchmarkscanbefound<br />
at(http://response.restoration.noaa.gov/book_shelf/122_NEWSQuiRTs.<strong>pdf</strong>).A<br />
numberofrecentcooperative<strong>NRD</strong>ARshaverelieduponsedimentscreening<br />
benchmarksasevidenceofinjuriestosedimentdwellingorganismsandabasisfor<br />
quantifyingtheextentofthatinjury.<br />
c) Advantages:<br />
i) Chemicalbenchmarksarereadilyavailableandcanbeusedtoscreenexisting<br />
chemicaldataforpotentialinjuriestoecologicalresourcesandtoguidethe<br />
collectionofnewchemicaldata.<br />
ii) Theyaregenerallyconservativesothatchemicalsthatfallbelowachemical<br />
benchmarkcanoftenbeeliminatedasasourceofpotentialinjury.<br />
d) Disadvantages:<br />
i) Chemicalbenchmarksarebasedonlargegenericdatasetsthatdonottakeinto<br />
accountsitespecificfactorsthatmayaffectbioavailabilityandtoxicityofthe<br />
chemicalsandpotentialinjuriesassociatedwithexposuretothosechemicals<br />
(USEPA.OfficeofResearchandDevelopment,Washington,DC.EPA600R02011).<br />
ii) Chemicalbenchmarksprovidenoinformationontheactualstatusofthe<br />
biologicalresourcesatasite.Estimatesofinjuryarethusinferredbasedon<br />
genericdatarelatingconcentrationsinsedimentstosomemeasureofbiological<br />
effects.<br />
iii) Chemicalbenchmarksprovidenoinformationonnonchemicalstressorsthat<br />
maysignificantlycontributetobaselineconditions(e.g.,elevatedtemperature<br />
riverwatertemperatureduetoagriculturaldiversions).<br />
3<br />
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<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Kenneth Jenkins of ARCADIS Speaker 10b: 4<br />
iv) Chemicalbenchmarksareoftenbasedondataforasinglespeciesorgroupof<br />
speciesandmaynotaccountforthebroaderrangeofservicesprovidedby<br />
environmentalmediasuchassediments.Asanexample,sedimentbenchmarks,<br />
whicharenormallybasedonestimatesoftoxicitytobenthicinvertebrates,have<br />
beenusedasthesolemetricforevaluatinginjuriestowetlandswheremuchof<br />
thehabitatvalueisprovidedbytheplantcommunityratherthanthebenthic<br />
community.<br />
2) BiologicalMeasuresofInjury<br />
a) Measuresofhealthofindividualorganisms:<br />
i) Biomarkerdataareincreasinglybeingusedbythetrusteestoevaluateinjuriesto<br />
ecologicalresources.Biomarkersincludemeasuresofmolecular,cellularand<br />
tissuelevelparametersincludingpointmutations,enzymeinductionand<br />
histologicalobservationsoftissues.<br />
(a) Advantages:<br />
(i) Biomarkersrepresentdirectmeasuresofsensitiveparametersin<br />
individualorganismsthatmayhavebeenexposedtoachemicalrelease.<br />
(ii) Biomarkerdataarerelativelyinexpensivetoobtainfromfieldcollected<br />
biologicalsamples.<br />
(iii) Biomarkersmayprovidesupportinginformationinamultiplelineof<br />
evidenceevaluationofecologicalinjuries.<br />
(b) Disadvantages:<br />
(i) Biomarkersoftenrespondtonormalphysiologicalregulatoryprocessas<br />
wellasexogenouschemicalexposuremakingitdifficulttoevaluate<br />
causation.Thisalsomakesitdifficulttorelatechangesinbiomarker<br />
levelstothehealthofindividualorganisms.<br />
4<br />
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<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Kenneth Jenkins of ARCADIS Speaker 10b: 5<br />
(ii) Biomarkermeasurementsprovidenoinformationontheconditionsof<br />
populations,habitatsorecosystemsinwhichtheseindividualorganisms<br />
function.Biomarkerdataarethereforenotusefulinofthemselvesfor<br />
identifyingorquantifyingecologicalinjuries.<br />
(iii) Biomarkerresponsesdemonstratingchemicalspecificityareoftenmore<br />
usefulasmeasuresofexposuretothosechemicalsthanasevidence<br />
injuryduetothatexposure.<br />
ii) Ratesofgrowthandmortality,andreproductiveoutputareclassicallyusedas<br />
measuresofthefitnessofindividualorganisms.Theseparametershavebeen<br />
measuredinfieldbioassaysorlaboratorybioassaysusingmediafromthesite<br />
(e.g.,soil,sedimentsand/orsurfacewater).Theycanalsobeestimatedbased<br />
onsitespecificexposuredataandliteraturebasedtoxicitystudiesasisoften<br />
seeninecologicalriskassessments.<br />
(a) Advantages:<br />
(i) Growth,reproductionandmortalitydataprovidedirectsitespecific<br />
measuresofthefitnessofindividualorganisms.<br />
(ii) Datacanbeusedinpopulationmodelstoestimateconditionsoflocal<br />
populations.Thecombinationofsitespecificdataongrowth,<br />
reproductionand/ormortalityalongwithpopulationmodelingcan<br />
providearelativelycosteffectivemethodforthesitespecific<br />
determinationandquantificationofpotentialinjuries.<br />
(b) Disadvantages:<br />
(i) Laboratoryandfieldbioassayscanoftenrespondtoavarietyofstressors<br />
makingitdifficulttorelatetheresultingdatatoaspecificchemical<br />
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Kenneth Jenkins of ARCADIS Speaker 10b: 6<br />
release.Wellcontrolledstudiesutilizingexposuregradientsandcare<strong>full</strong>y<br />
chosenreferencelocationscanaddressthistosomedegree.<br />
(ii) Laboratorybioassaysandliteraturebasedevaluationsoftoxicityprovide<br />
noinformationonnonchemicalstressorsthatmaysignificantly<br />
contributetobaselineconditions.<br />
(iii) Smallscaleheterogeneityincontaminantconcentrationsin<br />
environmentalmediacancomplicatetheevaluationsofexposure<br />
responserelationshipsandassociateddeterminationofcausation.<br />
(iv) Trusteesoftenassumethatperturbationsingrowth,mortalityand<br />
reproductionaredirectlyrelevanttoinjuryquantification.However,<br />
withoutadditionalanalyses(e.g.,populationmodeling)itisdifficultto<br />
extrapolatefromthesemeasuresofeffectsonindividualstoquantifiable<br />
injuryatthepopulation,habitatorecosystemlevels.<br />
(v) Design,implementationandinterpretationofgrowth,reproductionand<br />
mortalitystudiescanincreasethecostofinjurydeterminationand<br />
quantification.<br />
iii) Directevaluationsofpopulation,habitatandcommunityconditions,relativeto<br />
referencesites,havebeenconductedbybothtrusteesandresponsibleparties.<br />
Thesestudieshavebeenmorecommonatlargersiteswithhigherpotentialliability.<br />
(1) Advantages:<br />
(a) Thesestudieshavethepotentialtoprovideadirectmeasureofthe<br />
population,communityandhabitatparametersthatarecentraltothe<br />
quantificationofinjury.<br />
(2) Disadvantages:<br />
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<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM<br />
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Kenneth Jenkins of ARCADIS Speaker 10b: 7<br />
(a) Populations,communitiesandhabitatparametersthataretypically<br />
evaluatedinthesetypesoffieldstudiesareoftenquitevariable,responding<br />
tomanyfactorsthatareunrelatedtothechemicalreleasesthatareof<br />
concerninan<strong>NRD</strong>AR.Rigorousimplementationofthesehigherlevelfield<br />
studiesarechallengingandresultscanoftenbeambiguousduetoinherent<br />
variabilityinthesetypesofdata.<br />
<br />
Additionalperspectiveontherelativestrengthsandweaknessofthesevariousapproaches<br />
forevaluatingandquantifyinginjuriestoecologicalresourcesispresentedinAttachment1.<br />
ThistablewasdevelopedbySubcommittee1ofthe2007DOINaturalResourceInjury<br />
DeterminationandRestorationFederalAdvisoryCommittee.<br />
Inconclusion,eachofthesestrategiesfortheevaluationofpotentialinjuriestonatural<br />
resourceshasinherentadvantagesanddisadvantages.Chemicalbenchmarksmayhave<br />
someutilityinscreeningoutchemicalsthathavenopotentialforinjurybutdonotprovide<br />
anappropriatebasisfordeterminingorquantifyingbiologicalinjuries.Ofthebiological<br />
measures,thebiomarkersaremostproblematic.Theyareinexpensivetoimplementand<br />
arequitesensitive.However,theyarenotoftenstressorspecificandprovidenoinsightas<br />
totheconditionsofpopulations,communitiesorhabitats.Asaconsequence,biomarker<br />
databyitselfhashighpotentialtomisrepresentoroverstatepotentialinjurytoecological<br />
resources.Directevaluationofindividualinjuriestoindividualorganisms,populations,<br />
communitiesandhabitatsmayeachprovideusefulinformationiftheirinherentlimitations<br />
areproperlyaddressed.Oftentheselimitationsarebestaddressedbycombiningseveralof<br />
thesebiologicalmethods,withdifferentstrengthsandweaknesses,aslinesofevidenceina<br />
weightofevidenceanalysis.<br />
<br />
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Kenneth Jenkins of ARCADIS Speaker 10c: 1<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Kenneth Jenkins of ARCADIS Speaker 10c: 2<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Kenneth Jenkins of ARCADIS Speaker 10c: 3<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
L A W S E M I N A R S I N T E R N A T I O N A L<br />
The Third Annual Advanced Conference on<br />
Natural Resource Damages Claims<br />
New case law and legislation, and best strategies<br />
July 9 and 10, 20<strong>09</strong><br />
Santa Fe, NM<br />
Lessons Learned from Managing Complex <strong>NRD</strong><br />
Cases<br />
Mark Barash, Esq.<br />
U.S. Department of the Interior<br />
Boston, MA<br />
Jean Martin, Esq.<br />
BP<br />
Warrenville, IL<br />
Robert W. Johnson, Esq.<br />
Exxon Mobil Corporation<br />
Houston, TX<br />
Nathaniel Barber, Esq.<br />
New York State Department of Environmental Conservation<br />
Albany, NY
Mark Barash of U.S. Department of the Interior Speaker 11: 1<br />
R~ N o t e s ~<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Mark Barash of U.S. Department of the Interior Speaker 11: 2<br />
R~ N o t e s ~<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Jean Martin of BP Speaker 12: 1<br />
R~ N o t e s ~<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Jean Martin of BP Speaker 12: 2<br />
R~ N o t e s ~<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Robert W. Johnson of Exxon Mobil Corporation Speaker 13: 1<br />
Managing Complex <strong>NRD</strong> Cases<br />
LSI Conference on<br />
Natural Resource Damage Claims<br />
Santa Fe, New Mexico / July 9-10, 20<strong>09</strong><br />
Robert W. Johnson<br />
Chief Attorney – Environment and Safety<br />
Exxon Mobil Corporation<br />
July 9, 20<strong>09</strong><br />
Topics for Discussion Today<br />
• <strong>NRD</strong> Litigation Decision<br />
• Actions to Take Before a Claim<br />
• Immediate Response<br />
• Actions to Take During the Claim<br />
• Staying on Track<br />
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<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Robert W. Johnson of Exxon Mobil Corporation Speaker 13: 2<br />
<strong>NRD</strong> Litigation Decision<br />
Why Litigate?<br />
• Resist claims brought for<br />
revenues rather than restoration<br />
• Challenge allegations that are<br />
not well supported<br />
• Address liability issues that lack<br />
a clear basis<br />
• Develop precedent if needed<br />
• Ensure adherence to<br />
fundamental liability principles<br />
(causation, baseline,<br />
significance of injury, effects,<br />
service losses, etc.)<br />
• Reach an equitable outcome<br />
Why Not Litigate?<br />
• Uncertain outcome<br />
• Long time frames<br />
• Transaction costs<br />
• Need to fund separate studies<br />
3<br />
Before a Claim<br />
• Assess likelihood of <strong>NRD</strong> claims in connection with<br />
incidents (e. g., oil spills) and historical events (e.g.,<br />
Superfund sites)<br />
• Analyze and develop positions on key issues<br />
• Develop relationships with trustees and regulators<br />
• Educate company management<br />
• Develop a legal team (including technical resources) and<br />
an incident response team<br />
• Train your teams in emergency response, effective<br />
communications, confidentiality, and privileges<br />
• Prepare your teams to deploy promptly and effectively<br />
4<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Robert W. Johnson of Exxon Mobil Corporation Speaker 13: 3<br />
Immediate Response<br />
5<br />
• First things first<br />
– Make sure everyone is safe and accounted for<br />
– Remove the threat<br />
• Seek to understand: identify who has been impacted,<br />
community needs, and immediate actions to mitigate or<br />
eliminate fears, concerns or economic harm<br />
• Evaluate your case early and often<br />
– Make immediate contact with trustees and other PRPs<br />
– Identify data needs, necessary studies, cooperative<br />
opportunities and gather ephemeral data while<br />
possible<br />
– Coordinate remediation and restoration activities<br />
During the Claim<br />
• Ensure seamless communications and clear<br />
responsibility within your team<br />
– Assign responsibility for tracking deliverables<br />
– Assign responsibility for document management<br />
• Handle public relations aspects effectively<br />
• Do not let the tail wag the dog<br />
– Do not let media concerns, third-party litigation, or<br />
unreasonable trustee demands control your case<br />
– Be prepared to do what is reasonable<br />
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<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Robert W. Johnson of Exxon Mobil Corporation Speaker 13: 4<br />
During the Claim (continued)<br />
• Anticipate a plethora of regulators and trustees who may<br />
provide conflicting direction<br />
• Give your on-scene coordinator time to coordinate and authority to<br />
makes necessary on-scene decisions<br />
• Distinguish between necessary and requested studies<br />
• Conduct cooperative studies if possible<br />
• Manage expectations: Clients / Trustees / Communities<br />
7<br />
Staying on Track<br />
• Be prepared to say “no” to unreliable or unnecessary<br />
studies<br />
• CERCLA says you are liable for damages “resulting<br />
from” a release<br />
• Causation is an important element of a complex<br />
matter<br />
• You are only responsible for damages to baseline<br />
conditions, but not for other anthropomorphic impacts<br />
• Keep good science in the forefront<br />
8<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Robert W. Johnson of Exxon Mobil Corporation Speaker 13: 5<br />
Staying on Track (continued)<br />
• Insist on the Rule of <strong>Law</strong><br />
• Remember:<br />
– “Polluter pays”<br />
– But only for damages above baseline caused by<br />
its release of oil or hazardous substances<br />
– Not for harm to private resources<br />
• Bottom Line: accept only fair settlements based on<br />
the law<br />
• The goal is appropriate restoration, not the mere<br />
payment of money; results, not projects or studies<br />
9<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Nathaniel Barber of New York State Department of Environmental Conservation Speaker 14: 1<br />
R~ N o t e s ~<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Nathaniel Barber of New York State Department of Environmental Conservation Speaker 14: 2<br />
R~ N o t e s ~<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
L A W S E M I N A R S I N T E R N A T I O N A L<br />
The Third Annual Advanced Conference on<br />
Natural Resource Damages Claims<br />
New case law and legislation, and best strategies<br />
July 9 and 10, 20<strong>09</strong><br />
Santa Fe, NM<br />
Defenses to Claims of Natural Resource Damages<br />
James A. Bruen, Esq.<br />
Farella Braun + Martel LLP<br />
San Francisco, CA
James A. Bruen of Farella Braun + Martel LLP Speaker 15a: 1<br />
FEDERAL <strong>NRD</strong> CLAIMS UNDER<br />
CERCLA, CWA, OPA, ET AL.<br />
James A. Bruen<br />
Farella, Braun + Martel LLP<br />
San Francisco<br />
jbruen@fbm.com<br />
1<br />
<strong>NRD</strong> REGIMES: Bases for Recovery<br />
____________________________________________<br />
Federal Claims for <strong>NRD</strong> exist under 5 statutory regimes:<br />
–CERCLA, 42 USC 9607<br />
–Clean Water Act, 33 USC 1321(f)<br />
–Oil Pollution Act of 1990, 33 USC 2710(b)(2)(A)<br />
–Marine Protection, Research and Sanctuaries Act,<br />
16 USC 1443<br />
–Park System Resources Protection Act, 16 USC 19<br />
Some states/territories also have local <strong>NRD</strong> statutes.<br />
States (not trustees) may also file common law claims -<br />
–Nuisance<br />
–Trespass to resources owned by the state/territory<br />
–Negligence<br />
2<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
James A. Bruen of Farella Braun + Martel LLP Speaker 15a: 2<br />
<strong>NRD</strong> REGIMES: Nature of the Claim<br />
__________________________________<br />
•<strong>NRD</strong> claim is a cause of action is grounded in one/more 5 regimes<br />
•<strong>NRD</strong> claim arises from<br />
–injury to, destruction of, or past or future loss of ….<br />
–of natural resources ….<br />
–resulting from a release (not threatened release*) of ….<br />
–(in the case of CERCLA) hazardous substances.<br />
•Natural resources are defined in CERCLA as<br />
“…land, fish, wildlife, biota, air, water, ground water, and<br />
other such resources belonging to, managed by, held in<br />
trust by, appertaining to, or otherwise controlled by the<br />
United States … any State or local government, any foreign<br />
government, any Indian tribe, or, if such resources are<br />
subject to a trust restriction, any member of an Indian<br />
tribe…”. CERCLA 9601(16).<br />
*But see Coeur d”Alene at 1102-1103.<br />
3<br />
<strong>NRD</strong> REGIMES: Essence of the Claim<br />
____________________________________<br />
“….(N)atural resources damages are viewed<br />
as the difference between the natural resource<br />
in its pristine [or baseline] condition and the<br />
natural resource after the cleanup, together<br />
with the [past or future] lost use value and the<br />
costs of assessment. As a residue of the<br />
cleanup action, in effect, [damages] are thus<br />
not generally settled prior to a cleanup<br />
settlement.” In Re Acushnet River & New<br />
Bedford Harbor, 712 F. Supp. 1019, 1035 (D.<br />
Mass. 1989). Bracketed language and<br />
underlining added.<br />
4<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
James A. Bruen of Farella Braun + Martel LLP Speaker 15a: 3<br />
<strong>NRD</strong> REGIMES: Frequent Objectives of the Claims<br />
________________________________________________<br />
Permissible “Aims” of <strong>NRD</strong> claims have been:<br />
(a)<br />
(b)<br />
(c)<br />
(d)<br />
To restore, replace or acquire equivalent resources<br />
To recover for interim lost use of resource owned/held by trustee<br />
To recover non-use damages<br />
To recover assessment costs<br />
Impermissible “Aims” of <strong>NRD</strong> claims have been:<br />
• As a bargaining chip in remedial negotiations with an RP<br />
• To attack a contamination remedy – but see CERCLA 9613(h)<br />
• To augment general treasuries – as with tobacco litigation<br />
See, e,g, CERCLA 9607(f)(1) and<br />
State of New Mexico v. General Electric Company et al.<br />
467 F.3d 1223 (10 th Cir. 2006)<br />
5<br />
<strong>NRD</strong> REGIMES: Standing to Bring <strong>NRD</strong> Claim<br />
____________________________________________<br />
Remember that natural resources are defined by CERCLA as<br />
“…land, fish, wildlife, biota, air, water, ground water, and<br />
other such resources belonging to, managed by, held in<br />
trust by, appertaining to, or otherwise controlled by the<br />
United States … any State or local government, any foreign<br />
government, any Indian tribe, or, if such resources are<br />
subject to a trust restriction, any member of an Indian<br />
tribe…”. CERCLA 9601(16).<br />
Case law has accordingly defined trustees to include those mentioned in this<br />
definition plus –<br />
•Municipalities if authorized by Governor of State per CERCLA<br />
9607(f)(2)(B)<br />
Trustees do not include private parties.<br />
To prevent double recoveries, where trusteeships overlap, Coeur d’Alene<br />
court held that trusteeship is divisible.<br />
Coeur d’Alene Tribe v. Asarco, 280 F. Supp. 2d 1<strong>09</strong>4 (D. Idaho 2003)<br />
See also United States v Asarco, 28 F. Supp. 2d 1170 (D. Idaho 1998)<br />
vacated and remanded 214 F. 3d 1104 (9 th Cir. 2000)<br />
6<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
James A. Bruen of Farella Braun + Martel LLP Speaker 15a: 4<br />
<strong>NRD</strong> REGIMES: Principles of Liability<br />
_____________________________________________________<br />
CERCLA (and, e.g., OPA) said to impose strict liability for <strong>NRD</strong><br />
–Defendant may not avoid liability by showing due care/absence of fault<br />
CERCLA imposes liability that might be joint and several for <strong>NRD</strong><br />
–Defendant may have burden of showing divisibility<br />
–Or reasonable basis for apportionment under Restmt 2 nd Torts 433(a)<br />
7<br />
<strong>NRD</strong> REGIMES: Principles Of Damages<br />
_____________________________________________________<br />
Compensation may be available for –<br />
•Restoration or replacement or<br />
acquisition of equivalent injured resource<br />
•Past and future loss of use of the resource<br />
•Non-use damages<br />
•Assessment Costs<br />
•But significant limitations on recoveries.<br />
•Including those related to trustee’s interest<br />
in the resource.<br />
–See New Mexico v GE et al.<br />
8<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
James A. Bruen of Farella Braun + Martel LLP Speaker 15a: 5<br />
<strong>NRD</strong> REGIMES: Conventional Defenses to <strong>NRD</strong> Claims<br />
________________________________________________<br />
Lack of standing to sue on behalf of injuries to private party rights<br />
The applicable statutes of limitation – see, e.g. CERCLA 9613(g)<br />
*non NPL sites – 3 yrs from CERCLA regs or discovery of<br />
loss and its connection with the release<br />
*NPL sites - 3 yrs from after completion of remedy (x O+M)<br />
Releases and damages wholly before December 11, 1980 – CERCLA 9607(f)(1)<br />
Petroleum exclusion (as to CERCLA only)<br />
The baseline defense – liability only for loss of service but for defendant’s<br />
release<br />
Acts of god, war, act or omission of third party – CERCLA 9607(b)(3)<br />
Federally permitted release – CERCLA 9607(j)<br />
Identified irreversible and irretrievable commitment of resources – 9607(f)(1)<br />
No double recovery – CERCLA 9607(f)(1)<br />
Statutory cap on damages (response costs + $50MM) – CERCLA 9607(c)(1)(D)<br />
No punitive damages – Ohio v Dept of Interior, 880 F.2d 432 (D.C. Cir. 1989)<br />
No attorneys fees under for CERCLA (CWA? OPA?) <strong>NRD</strong><br />
Equitable defenses - ????????<br />
9<br />
<strong>NRD</strong> REGIMES: Recent Defenses to <strong>NRD</strong> Claims<br />
________________________________________________<br />
Conflict preemption …. a defense to state/territorial statutory and/or<br />
common law claims -<br />
–Savings clauses do not apply to preserve claims<br />
–Where claims conflicts with objective of CERCLA <strong>NRD</strong> scheme<br />
–Where claims conflict with methodology of CERCLA <strong>NRD</strong> scheme<br />
Impermissible attack on the CERCLA remedy – CERCLA 9613(h)<br />
10<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
James A. Bruen of Farella Braun + Martel LLP Speaker 15a: 6<br />
<strong>NRD</strong> REGIMES: Decision in<br />
New Mexico et al v. General Electric Co et al.<br />
___________________________________________________________<br />
Conflict Preemption – State Claim Conflicts w Purpose/Manner - <strong>NRD</strong><br />
1. Common law claims for <strong>NRD</strong> filed by a state trustee are preempted to the<br />
extent that they seek damages for something other than<br />
restoration/replacement of the injured resources.<br />
2. Common law claims that survive that ruling -- common law claims filed<br />
by the state with respect to resources as to which it has a conventional<br />
proprietary ownership interest (as in a claim of trespass to state-owned<br />
land).<br />
• 10th Cir. held that New Mexico could not recover for damage to the aquifer<br />
itself (as opposed to the groundwater contained in the aquifer).<br />
(a)<br />
(b)<br />
(c)<br />
(d)<br />
Key point – no money for attorneys fees<br />
Key point – no money for contingent fees<br />
Key point – limited use of recoveries<br />
Key point – likely no punitive damages<br />
11<br />
<strong>NRD</strong> REGIMES: Decision in<br />
New Mexico et al v. General Electric Co et al.<br />
___________________________________________________________<br />
Impermissible Attack on the Remedy<br />
CERCLA 9613(h) blocks claims for damages resulting from<br />
the inadequacy/failure of a CERCLA 9607 remedy.<br />
• True even if trustee/state does not seek to change<br />
remedy.<br />
Key Point – <strong>NRD</strong> claim may have to await completion of<br />
remedy.<br />
Blow to Any State Efforts to Make <strong>NRD</strong> “New Tobacco Litigation”<br />
12<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
James A. Bruen of Farella Braun + Martel LLP Speaker 15a: 7<br />
<strong>NRD</strong> REGIMES: Settlements<br />
________________________________________________<br />
Settlements may be by consent decree or<br />
by standard release<br />
Although many new <strong>NRD</strong> claims for huge<br />
sums – e.g. New Mexico claim against GE et al<br />
$5 BB plus punitive damages.<br />
Most settlements are for significantly less than $1 MM<br />
In fact, a surprising number of settlements for less than $100K<br />
13<br />
For Further Questions<br />
________________________________________________<br />
jbruen@fbm.com<br />
14<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
James A. Bruen of Farella Braun + Martel LLP Speaker 15b: 1<br />
________________________________________<br />
Lessons Learned Managing Complex <strong>NRD</strong> Cases<br />
James A Bruen<br />
Farella Braun + Martel, LLP<br />
jbruen@fbm.com<br />
Lessons Learned<br />
________________________________________<br />
Where there is an <strong>NRD</strong> Assessment – Begin preparation of defense early<br />
*Interact with, but do not necessarily co-sponsor, the <strong>NRD</strong>A<br />
**One school of thought – cooperative assessments<br />
historically focused on primary restoration only<br />
**Another school of thought – cooperation diminishes<br />
effectiveness of any subsequent challenge to assessment<br />
** Cooperative assessments may be much more risky for<br />
responsible party where<br />
- Trustee is aligned with AG intending common law<br />
claims<br />
-There are multiple trustees<br />
- Resource stakeholders do not participate<br />
*Perform your own work product assessment<br />
**Might be a <strong>full</strong> shadow assessment<br />
**Might be focused on specific assessment activities<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
James A. Bruen of Farella Braun + Martel LLP Speaker 15b: 2<br />
Lessons Learned<br />
________________________________________<br />
In anticipation of assertion of claim/filing of lawsuit:<br />
*Identify potential assertions of loss of natural resources services<br />
*Address those assertions of loss<br />
**Gather relevant media sampling and economic data<br />
**Upgrade contact with environmental regulators<br />
**Consider engaging resource owner/trustee in dialogue<br />
**Consider restoration of services with/without release<br />
*Develop a complete administrative record<br />
*Hope for resolution, but prepare for litigation<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
L A W S E M I N A R S I N T E R N A T I O N A L<br />
The Third Annual Advanced Conference on<br />
Natural Resource Damages Claims<br />
New case law and legislation, and best strategies<br />
July 9 and 10, 20<strong>09</strong><br />
Santa Fe, NM<br />
Rule 702/Daubert and <strong>NRD</strong><br />
Donald W. Fowler, Esq.<br />
Hollingsworth LLP<br />
Washington, DC
Donald W. Fowler of Hollingsworth LLP Speaker 16a: 1<br />
Rule 702/Daubert<br />
and <strong>NRD</strong><br />
Donald W. Fowler<br />
July 9, 20<strong>09</strong><br />
The Patron Saint of Daubert<br />
“There is something<br />
fascinating about<br />
science. One gets such<br />
wholesale returns of<br />
conjecture out of such a<br />
trifling investment of<br />
fact.”<br />
Mark Twain, Life on the<br />
Mississippi (1874).<br />
CONFIDENTIAL: Attorney Work Product<br />
Attorney-Client Communication<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Donald W. Fowler of Hollingsworth LLP Speaker 16a: 2<br />
The <strong>NRD</strong> Economist<br />
“I’d like you to meet Marty Thorndecker. He’s an<br />
economist, but he’s really very nice.”<br />
CONFIDENTIAL: Attorney Work Product<br />
Attorney-Client Communication<br />
Broken Ladders, Leaps of<br />
Faith, and Can Openers<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Donald W. Fowler of Hollingsworth LLP Speaker 16a: 3<br />
Broken Ladders<br />
“The Daubert ‘requirement that the expert testify<br />
to scientific knowledge-conclusions supported by<br />
good grounds for each step in the analysis-means<br />
that any step that renders the analysis unreliable<br />
under the Daubert factors renders the expert's<br />
testimony inadmissible.”<br />
McClain v. Metabolife Int’l, Inc., 401 F.3d 1233, 1245<br />
(11th Cir. 2005)<br />
CONFIDENTIAL: Attorney Work Product<br />
Attorney-Client Communication<br />
Leaps of Faith<br />
“[I]t would be a leap of faith to assume,<br />
based on performance for two quarters,<br />
that the projections would be equally<br />
accurate over the subsequent three years.”<br />
Celebrity Cruises Inc. v. Essef Corp., 434 F. Supp.2d 169, 184<br />
(S.D.N.Y. 2006)<br />
CONFIDENTIAL: Attorney Work Product<br />
Attorney-Client Communication<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Donald W. Fowler of Hollingsworth LLP Speaker 16a: 4<br />
Plaintiffs argue that McDonald’s use of Dover Township<br />
contamination site as a comparison was not unreliable.<br />
Specifically, Plaintiffs claim that there was no evidence to<br />
indicate that the stigma associated with the Dover site<br />
was significantly greater than the perception of Plaintiff’s<br />
residential area. However, the problem recognized by the<br />
District Court was that McDonald’s also has no evidence<br />
indicating that the contamination in Dover Township was<br />
similar to the contamination at issue in this case.<br />
Player v. Motiva Enterprises, LLC, No. 06-1663, 2007<br />
WL 2020086, *6 (3rd Cir. July 13,2007)<br />
CONFIDENTIAL: Attorney Work Product<br />
Attorney-Client Communication<br />
Can Openers<br />
An expert does not follow reliable<br />
methodology when he “assume[s] the very<br />
fact that he ha[s] been hired to prove”<br />
Allgood v. Gen. Motors Corp., 2006 WL 2669337, at *12<br />
(S.D. Ind., Sept. 18, 2006)<br />
CONFIDENTIAL: Attorney Work Product<br />
Attorney-Client Communication<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Donald W. Fowler of Hollingsworth LLP Speaker 16a: 5<br />
“Coming to a firm conclusion first and then doing<br />
research to support it is the antithesis of this<br />
[scientific] method. Certainly, scientists may form<br />
initial tentative hypotheses. However, scientists<br />
whose conviction about the ultimate conclusion of<br />
their research is so firm that they are willing to<br />
aver under oath that it is correct prior to<br />
performing the necessary validating tests could<br />
properly be viewed by the district court as lacking<br />
the objectivity that is the hallmark of the<br />
scientific method.”<br />
Claar v. Burlington N.R.R., 29 F.3d 499, 502-03<br />
(9th Cir. 1994)<br />
CONFIDENTIAL: Attorney Work Product<br />
Attorney-Client Communication<br />
Daubert Case Study<br />
Economic Testimony of Dr. David Brookshire<br />
in New Mexico v. General Electric<br />
Assumed hydrogeologist’s quantification of<br />
injured water<br />
Valued the injury by reference to market prices<br />
for sales and leases of water rights<br />
CONFIDENTIAL: Attorney Work Product<br />
Attorney-Client Communication<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Donald W. Fowler of Hollingsworth LLP Speaker 16a: 6<br />
Damage Assessment Process<br />
Determine Natural<br />
Resource Injury<br />
Quantify Natural<br />
Resource Service<br />
Reductions<br />
Calculate Damages<br />
from Service<br />
Reductions<br />
CONFIDENTIAL: Attorney Work Product<br />
Attorney-Client Communication<br />
Process for Service Quantification and<br />
Damage Estimation<br />
Process Steps<br />
Identify potentially affected services<br />
Estimate baseline for potentially affected services<br />
Quantify service reductions<br />
Evaluate extent of reduction<br />
Assess impact of substitution and other mitigating forces<br />
Identify changes in service reductions over time<br />
Evaluate 3 damage measures for service reductions: diminution in<br />
value, restoration cost, replacement cost<br />
Identify appropriate value/cost estimate<br />
Calculate present value of annual damages<br />
Select the lesser of the 3 damage measures<br />
Yes<br />
No<br />
RESULT: Appropriate quantity of service reductions<br />
RESULT: Reliable estimate of damages<br />
CONFIDENTIAL: Attorney Work Product<br />
Attorney-Client Communication<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Donald W. Fowler of Hollingsworth LLP Speaker 16a: 7<br />
4 Main Problems<br />
Fail to Identify and Quantify<br />
Service Reductions<br />
Improperly Assess Stocks<br />
and Flows of Water<br />
Violate the Economic Principle<br />
of Substitution<br />
Fail to Use Standard<br />
Economic Valuation Principles<br />
CONFIDENTIAL: Attorney Work Product<br />
Attorney-Client Communication<br />
Damage Time Period Not Linked to<br />
Service Reductions<br />
1992 2020<br />
1992<br />
2030<br />
2003 2030<br />
1981<br />
2030<br />
CONFIDENTIAL: Attorney Work Product<br />
Attorney-Client Communication<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Donald W. Fowler of Hollingsworth LLP Speaker 16a: 8<br />
Failure to Address Services<br />
No investigation of potential shortages or<br />
other responses resulting from contamination<br />
Failure to address Rio Grande Compact<br />
requirements<br />
Provided no basis for reduction in in situ<br />
services<br />
Included water that met drinking water<br />
standards<br />
CONFIDENTIAL: Attorney Work Product<br />
Attorney-Client Communication<br />
Almost All Alleged Damages Were<br />
From Water in Buffer Zone<br />
Plume 5%<br />
Buffer Zone 95%<br />
($575 Million)<br />
CONFIDENTIAL: Attorney Work Product<br />
Attorney-Client Communication<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Donald W. Fowler of Hollingsworth LLP Speaker 16a: 9<br />
4 Main Problems<br />
Fail to Identify and Quantify<br />
Service Reductions<br />
Improperly Assess Stocks<br />
and Flows of Water<br />
Violate the Economic Principle<br />
of Substitution<br />
Fail to Use Standard<br />
Economic Valuation Principles<br />
CONFIDENTIAL: Attorney Work Product<br />
Attorney-Client Communication<br />
Almost All Alleged Damages Were<br />
From Stock of Groundwater<br />
Flow Less than 2%<br />
Stock 98%<br />
($594 Million)<br />
CONFIDENTIAL: Attorney Work Product<br />
Attorney-Client Communication<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Donald W. Fowler of Hollingsworth LLP Speaker 16a: 10<br />
Drought Reserve Service Was Not<br />
Impaired<br />
There were ample substitutes for the South<br />
Valley groundwater in the Middle Rio Grande<br />
Basin.<br />
The likelihood that the South Valley<br />
groundwater would ever be needed as a<br />
drought reserve is infinitesimal.<br />
In any event, the groundwater could be<br />
extracted and wellhead treatment would<br />
ensure that water is suitable for drinking.<br />
CONFIDENTIAL: Attorney Work Product<br />
Attorney-Client Communication<br />
4 Main Problems<br />
Fail to Identify and Quantify<br />
Service Reductions<br />
Improperly Assess Stocks<br />
and Flows of Water<br />
Violate the Economic Principle<br />
of Substitution<br />
Fail to Use Standard<br />
Economic Valuation Principles<br />
CONFIDENTIAL: Attorney Work Product<br />
Attorney-Client Communication<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Donald W. Fowler of Hollingsworth LLP Speaker 16a: 11<br />
Substitutes Mitigate Losses<br />
“At the heart of these [valuation]<br />
methodologies is the concept that a use<br />
cannot be counted as lost and its money<br />
value counted as damages if a substitute<br />
resource is available that provides the same<br />
services.”<br />
(Kopp and Smith 1993)<br />
CONFIDENTIAL: Attorney Work Product<br />
Attorney-Client Communication<br />
Omitting Substitutes Causes Bias<br />
“When applying market methods to assess the benefits<br />
of environmental improvements, two types of market<br />
responses are important: the impacts of the<br />
environmental change on the relevant marketed good<br />
… and the response of producers and consumers to<br />
this change. When examining these responses, it is<br />
important to consider the range of market responses<br />
available to producers and consumers. Overlooking<br />
market adjustments can bias benefits assessment. For<br />
instance, the damage function approach, which<br />
derives benefits by applying a unit price to a physical<br />
measure of damage or loss, ignores consumer<br />
responses to market adjustments.”<br />
(EPA 2000)<br />
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Donald W. Fowler of Hollingsworth LLP Speaker 16a: 12<br />
4 Main Problems<br />
Fail to Identify and Quantify<br />
Service Reductions<br />
Improperly Assess Stocks<br />
and Flows of Water<br />
Violate the Economic Principle<br />
of Substitution<br />
Fail to Use Standard<br />
Economic Valuation Principles<br />
CONFIDENTIAL: Attorney Work Product<br />
Attorney-Client Communication<br />
Failure To Use Standard Economic<br />
Valuation Principles<br />
Failure to value the State’s interest.<br />
Failure to consider least costly, feasible<br />
alternative.<br />
Failure to use proper discount rate.<br />
Use of incorrect pricing data and unreliable<br />
methodology to predict future prices.<br />
CONFIDENTIAL: Attorney Work Product<br />
Attorney-Client Communication<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Donald W. Fowler of Hollingsworth LLP Speaker 16a: 13<br />
Damage Assessment Addresses Only<br />
Least Cost Feasible Alternatives<br />
“For a diminution of use value, the authorized<br />
official should select services for which clear<br />
relationships to human uses existed prior to the<br />
discharge or release and for which dollar values can<br />
be assigned.”<br />
“In terms of economics, compensation for damages<br />
would be the lesser of the diminution of use values<br />
or the cost of cost-effective restoration or<br />
replacement.”<br />
Source: Preamble to 43 CFR Part 11<br />
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Attorney-Client Communication<br />
Failure to Select Least Costly Feasible<br />
Alternative<br />
Dr. Brookshire leased rights to<br />
impossibly large and unnecessary<br />
quantities of water.<br />
Wellhead treatment and drilling a new<br />
well were both feasible and less costly<br />
alternatives.<br />
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Attorney-Client Communication<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Donald W. Fowler of Hollingsworth LLP Speaker 16a: 14<br />
Real World Data for 2001–2002 Refutes<br />
Dr. Brookshire’s Price Model<br />
Dr. Brookshire’s<br />
Prediction<br />
Actual<br />
Price<br />
2001<br />
2002<br />
$4,272 $4,004<br />
$4,710 $4,211<br />
Percent Predictions<br />
Exceed Actual<br />
12%<br />
10%<br />
8%<br />
6%<br />
4%<br />
2%<br />
6.7%<br />
11.8%<br />
0%<br />
2001<br />
2002<br />
CONFIDENTIAL: Attorney Work Product<br />
Attorney-Client Communication<br />
Arbitrary Price Predictions<br />
Predicted Water Rights Price (2000 $)<br />
18000<br />
16000<br />
14000<br />
12000<br />
10000<br />
8000<br />
6000<br />
4000<br />
2000<br />
0<br />
2001 2006 2011 2016 2021 2026<br />
Time<br />
Dr. Brookshire’s Price Trend<br />
Updated Brookshire<br />
2031<br />
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Donald W. Fowler of Hollingsworth LLP Speaker 16a: 15<br />
Process for Service Quantification and<br />
Damage Estimation<br />
Process Steps<br />
Identify potentially affected services<br />
Estimate baseline for potentially affected services<br />
Quantify service reductions<br />
Evaluate extent of reduction<br />
Assess impact of substitution and other mitigating forces<br />
Identify changes in service reductions over time<br />
Evaluate 3 damage measures for service reductions: diminution in<br />
value, restoration cost, replacement cost<br />
Identify appropriate value/cost estimate<br />
Calculate present value of annual damages<br />
Select the lesser of the 3 damage measures<br />
Yes<br />
No<br />
RESULT: INAPPROPRIATE quantity of service reductions<br />
CONFIDENTIAL: Attorney Work Product<br />
Attorney-Client Communication<br />
RESULT: UNRELIABLE estimate of damages<br />
Dr. Brookshire’s March 2003 Estimate<br />
$604 Million<br />
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Attorney-Client Communication<br />
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Donald W. Fowler of Hollingsworth LLP Speaker 16a: 16<br />
Dr. Brookshire’s March 2003 Estimate<br />
Remove Past Damages<br />
$464 $604 Million<br />
CONFIDENTIAL: Attorney Work Product<br />
Attorney-Client Communication<br />
Dr. Brookshire’s March 2003 Estimate<br />
Remove Past Damages<br />
Replace Stock Only Once<br />
$464 $27 Million<br />
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Attorney-Client Communication<br />
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Donald W. Fowler of Hollingsworth LLP Speaker 16a: 17<br />
Dr. Brookshire’s March 2003 Estimate<br />
Remove Past Damages<br />
Replace Stock Only Once<br />
Stop Replacing Stock<br />
$27 $14 Million<br />
CONFIDENTIAL: Attorney Work Product<br />
Attorney-Client Communication<br />
Dr. Brookshire’s March 2003 Estimate<br />
Remove Past Damages<br />
Replace Stock Only Once<br />
Stop Replacing Stock<br />
Remove Buffer Zone<br />
$2.2 $14 Million<br />
CONFIDENTIAL: Attorney Work Product<br />
Attorney-Client Communication<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Donald W. Fowler of Hollingsworth LLP Speaker 16a: 18<br />
Dr. Brookshire’s March 2003 Estimate<br />
Remove Past Damages<br />
Replace Stock Only Once<br />
Stop Replacing Stock<br />
Remove Buffer Zone<br />
Correctly<br />
Quantify<br />
Services<br />
$2.2 $0 Million<br />
CONFIDENTIAL: Attorney Work Product<br />
Attorney-Client Communication<br />
Daubert and <strong>NRD</strong> Valuation<br />
Methodologies in Court<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Donald W. Fowler of Hollingsworth LLP Speaker 16a: 19<br />
Hedonic/Contingent Valuation<br />
Damages Models<br />
<br />
<br />
“The willingness-to-pay model on the issue of<br />
calculating hedonic damages is a troubled science in<br />
the courtroom, with the vast majority of published<br />
opinions rejecting the evidence.” Saia v. Sears<br />
Roebuck and Co., 47 F. Supp. 2d 141, 146 (D. Mass.<br />
1999) (citing cases); see also Dorn v. Burlington<br />
Northern Sante Fe RR Co., 397 F.3d 1183, 1194-95 &<br />
n. 5 (9th Cir. 2005) (citing cases)<br />
Richman v. Burgeson, 2008 WL 2567132 (N.D. Ill. Jan.<br />
24, 2008) (admitting testimony as to concept of<br />
hedonic damages but not as to monetary value)<br />
CONFIDENTIAL: Attorney Work Product<br />
Attorney-Client Communication<br />
Hedonic/Contingent Valuation<br />
Damages Models<br />
<br />
Exclusion of hedonic and contingent valuation models<br />
in <strong>NRD</strong> litigation.<br />
Idaho v. Southern Refrigerated Transport, Inc., 1991 WL<br />
22479, *18-*19 (D. Idaho 1991) (excluding contingent<br />
valuation study of existence value of injured fish population in<br />
<strong>NRD</strong> case as speculation and conjecture);<br />
United States v. Montrose Chem. Corp., No. CV 90-3122-R<br />
(C.D. Cal. Apr. 17, 2000), Hrg. Tr. at 1 (rejecting contingent<br />
valuation study proffered in an <strong>NRD</strong> claim alleging injuries to<br />
fish and bird habitats and species because of numerous<br />
inconsistencies between the survey questions and the actual<br />
scientific evidence developed by the trustees own scientists).<br />
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Attorney-Client Communication<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Donald W. Fowler of Hollingsworth LLP Speaker 16a: 20<br />
Habitat Equivalency Assessment<br />
=<br />
CONFIDENTIAL: Attorney Work Product<br />
Attorney-Client Communication<br />
Habitat Equivalency Assessment<br />
United States v. Great Lakes Dredge & Dock Co,<br />
1999 WL 1293469 (S.D. Fla. July 28, 1999), aff’d,<br />
259 F.3d 1300 (11 th Cir. 2001).<br />
“[T]he HEA is not a scientific technique or principle that<br />
is subject to testing in the traditional sense. Rather, it<br />
is a mathematical equation that works, as any other,<br />
subject to the limitations of the data input into the<br />
equation.”<br />
Disputes over data go to credibility, not admissibility.<br />
United States v. Union Pacific Railroad Co., 565 F.<br />
Supp. 2d 1136, 1152 (E.D. Cal. 2008) (HEA is<br />
allowable measure of natural resource damages)<br />
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Donald W. Fowler of Hollingsworth LLP Speaker 16a: 21<br />
Practice Tip – Don’t Forget Rule 703<br />
“Facts or data that are otherwise<br />
inadmissible shall not be disclosed to the<br />
jury by the proponent of the opinion or<br />
inference unless the court determines that<br />
their probative value in assisting the jury to<br />
evaluate the expert’s opinion substantially<br />
outweighs their prejudicial effect.”<br />
MIL strategy<br />
CONFIDENTIAL: Attorney Work Product<br />
Attorney-Client Communication<br />
Generally, an inquiry under Rule 702 examines the<br />
expert’s testimony as a whole. The 702 inquiry typically<br />
does not examine the reliability or relevance of<br />
particular data sets that underlie the expert testimony,<br />
although this approach does no harm where the expert<br />
testifies on only one study or where no combination or<br />
addition of data could make the data in question a<br />
proper, reliable basis for making a given claim. In<br />
contrast to Rule 702’s holistic focus on an expert’s<br />
testimony, Rule 703 governs the inquiry into the<br />
reliability of particular data underlying expert testimony.<br />
United States v. W.R. Grace, 504 F.3d 745, 762 (9th Cir. 2007),<br />
on remand, 597 F. Supp. 2d 1143 (D. Mont. 20<strong>09</strong>)<br />
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Donald W. Fowler of Hollingsworth LLP Speaker 16a: 22<br />
An Interesting Question –<br />
Exxon v. Baker Footnote 17<br />
“The Court is aware of a body of literature<br />
running parallel to anecdotal reports,<br />
examining the predictability of punitive<br />
awards by conducting numerous ‘mock<br />
juries,’ where different ‘jurors’ are confronted<br />
with the same hypothetical case....<br />
Because this research was funded in<br />
part by Exxon, we decline to rely on it.”<br />
Exxon Shipping Company v. Baker, __ U.S. __, 128 S. Ct. 2605, 2626<br />
n.17 (2008) (Souter, J.) (emphasis added)<br />
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Attorney-Client Communication<br />
Rule 702 / Daubert<br />
“One very significant fact to be considered is<br />
whether the experts are proposing to testify<br />
about matters growing naturally and directly<br />
out of research they have conducted<br />
independent of the litigation, or whether they<br />
have developed their opinions expressly for<br />
the purposes of testifying.”<br />
Daubert v. Merrell Dow Pharmaceuticals, 43 F.3d 1311, 1317<br />
(9th Cir. 1995)<br />
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Donald W. Fowler of Hollingsworth LLP Speaker 16a: 23<br />
Rule 803 / Hearsay Exception For<br />
Learned Treatises<br />
“The basis for this ‘learned treatise exception’ to the hearsay rule is that<br />
learned treatises usually have ‘sufficient assurances of trustworthiness to<br />
justify equating them with the live testimony of an expert. …As the case<br />
law notes, however, the assumption underlying the learned<br />
treatise exception that the author has ‘no bias in a particular<br />
case’ is not always true. … [T]he author of a learned treatise<br />
whose statements are admissible in court under Rule 803(18)<br />
may also suffer prejudices or biases. The most obvious of these<br />
possible biases is receipt of money from one of the parties. Just<br />
as an expert who testifies live may reasonably be asked, for the purpose<br />
of revealing possible bias, whether and to what extent he has received<br />
remuneration from a party, it is reasonable for a litigant to want to<br />
reveal to the jury any financial incentives supplied by another party to<br />
the author of a learned treatise.”<br />
In re Welding Fume Products Liability Litigation, 534 F. Supp. 2d 761,<br />
765-66 (N.D. Ohio 2008) (O’Malley, J) (footnote omitted)<br />
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Donald W. Fowler of Hollingsworth LLP Speaker 16b: 1<br />
Rule 702/Daubert And Natural Resource Damages Litigation<br />
Donald W. Fowler & Eric G. Lasker<br />
The recent upsurge in trustee claims for natural resource damages under the <strong>NRD</strong><br />
provisions of CERCLA and state law have heightened the importance of the court’s role<br />
as gatekeeper against unreliable and irrelevant expert testimony. Daubert v. Merrell Dow<br />
Pharms., Inc., 5<strong>09</strong> U.S. 579 (1993). While there have only been a handful of adjudicated<br />
Daubert challenges in <strong>NRD</strong> litigation, recent experience in these and other environmental<br />
cases demonstrates that Daubert provides a powerful weapon against the often-novel<br />
methodologies put forth by <strong>NRD</strong> experts. These cases also place a premium on <strong>NRD</strong><br />
counsel who can frame the Daubert inquiry so as to present a convincing picture why<br />
experts who rely on untested modeling or suspect data do not withstand Daubert inquiry. 1<br />
Other articles have surveyed the substantive law of Daubert as applied in<br />
environmental litigation, and we will not be retreading that ground here. Instead, in this<br />
article, we seek to provide tactical guidance on how <strong>NRD</strong> counsel can approach the<br />
Daubert inquiry so as to maximize the likelihood of a favorable outcome. In Section I<br />
below, we set forth three general frameworks for attacking an expert’s opinion in <strong>NRD</strong><br />
and environmental litigation and provide examples from the recent case law in which<br />
these frameworks guided the Court’s Daubert opinion. In Section II, we discuss a case<br />
study from the seminal <strong>NRD</strong> Daubert opinion in New Mexico v. General Electric Co. that<br />
illustrates how defendants framed various aspects of the State’s hydrogeologist’s expert<br />
testimony in a successful effort to get his opinions excluded and the State’s <strong>NRD</strong> claims<br />
dismissed.<br />
1 The fact that <strong>NRD</strong> claims are tried before a judge rather than a jury does not lessen the importance of<br />
Daubert in excluding scientifically unreliable or irrelevant expert testimony. While a court may have some<br />
more flexibility in when it performs its gatekeeping function, it still must exclude expert testimony that<br />
does not satisfy the Daubert requirements. As one court recently explained:<br />
It is not that evidence may be less reliable during a bench trial; it is that the<br />
court’s gatekeeping role is necessarily different. Where the gatekeeper and the<br />
factfinder are one and the same – that is, the judge – the need to make such<br />
decisions prior to hearing the testimony is lessened…. That is not to say that the<br />
scientific reliability requirement is lessened in such situations; the point is only<br />
that the court can hear the evidence and make its reliability determination<br />
during, rather than in advance of, trial. Thus, where the factfinder and the<br />
gatekeeper are the same, the court does not err in admitting the evidence subject<br />
to the ability later to exclude it or disregard it if it turns out not to meet the<br />
standard of reliability established by Rule 702.<br />
United States v. Apex Oil Co., No. 05-CV-242, 2008 WL 2945399, at *1 (S.D. Ill. Jul. 28, 2008) (quoting<br />
In re Salem, 465 F.3d 767, 776-77 (7th Cir. 2006)). See also Attorney Gen. of Oklahoma v. Tyson Foods,<br />
565 F.3d 769, 779-80 (10th Cir. 20<strong>09</strong>) (affirming district court’s decision to admit but then disregard expert<br />
testimony regarding connection between poultry waste and polluted water under Daubert because theory<br />
was “novel and untested”).<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM<br />
1
Donald W. Fowler of Hollingsworth LLP Speaker 16b: 2<br />
I. Glass Houses, Houses of Cards, and Brick Walls<br />
By its nature, <strong>NRD</strong> litigation involves competing hypotheses about the nature and<br />
extent of past of future losses to natural resource services that rely on sophisticated<br />
modeling, the selective use of historical testing data, and often necessarily novel theories<br />
about how natural resource services should be valued. The expert opinions proffered by<br />
parties on both sides of <strong>NRD</strong> cases can stretch the bounds of testable science and,<br />
accordingly, are often ripe for challenge under the rigorous requirements of the scientific<br />
method of hypothesis testing enshrined in the law under Daubert v. Merrell Dow<br />
Pharmaceuticals Co., 5<strong>09</strong> U.S. 579 (1993). Whether or not such expert methodologies<br />
and models might be validated in the future, they should not be admissible before that<br />
occurs. As Judge Posner has explained: “<strong>Law</strong> lags science; it does not lead it.” Rosen v.<br />
Ciba-Geigy, 78 F.3d 316, 319 (7th Cir. 1996).<br />
Nonetheless, judges who are often lacking in scientific proficiency can be daunted<br />
by the apparent wizardry of modern scientific techniques and often shy away from the<br />
diligent gatekeeping requirements imposed under Daubert. For example, a survey of 400<br />
state trial judges found that while a large majority of judges agreed that the role of<br />
“gatekeeper” was an appropriate one for a judge, most judges did not have a proper<br />
understanding of the scientific principles set forth in Daubert. See Sophia I. Gatowski, et<br />
al., Asking the Gatekeepers: A National Survey of Judges on Judging Expert Evidence in<br />
a Post-Daubert World, 25(5) <strong>Law</strong> and Human Behavior 433 (2001). Thus, <strong>NRD</strong> counsel<br />
must not only themselves understand the flaws in the opposing side’s expert’s opinions,<br />
but they must present those flaws in such a way that the Court understands how they<br />
compel exclusion of the expert’s testimony.<br />
How can <strong>NRD</strong> counsel accomplish this tack? A crucial first step is to determine<br />
the best approach to dismantling the expert’s scientific construct. In that regard, expert<br />
opinions can be classified into three categories, that we call glass houses, houses of cards,<br />
and brick walls.<br />
A. Glass Houses<br />
A glass house opinion is one that looks impressive but that can be shattered by<br />
one well placed blow. Unfortunately, while <strong>NRD</strong> counsel with an intimate knowledge of<br />
how the expert’s opinion is constructed may often convince themselves of the fragility of<br />
the opposing expert’s opinions, counsel relying on one shattering blow to defeat an expert<br />
opinion under Daubert will often be disappointed.<br />
That fact notwithstanding, the relative novelty of <strong>NRD</strong> litigation and the often as<br />
yet unvalidated or incomplete analyses relied upon to link historical activities to a loss of<br />
natural resource services can lead many <strong>NRD</strong> experts to construct glass house opinions,<br />
particularly when viewed from the key Daubert perspective of “fit.” While Daubert<br />
challenges often focus on the reliability of an expert’s methodology – that is, whether the<br />
opinion is derived by the scientific method whereby a hypothesis is first generated, then<br />
tested, and then validated – a coequal requirement under Daubert is that the expert<br />
opinion is relevant or “fits” with the proposition that the expert is seeking to establish.<br />
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Donald W. Fowler of Hollingsworth LLP Speaker 16b: 3<br />
As the Supreme Court explained in Daubert, “‘[f]it’ is not always obvious, and scientific<br />
validity for one purpose is not necessarily scientific validity for other, unrelated<br />
purposes.” Daubert, 5<strong>09</strong> U.S. at 591.<br />
In <strong>NRD</strong> litigation, it is not sufficient for plaintiff experts to establish that<br />
defendant’s activities contributed to contamination of the site at issue, they must also<br />
establish how those alleged injuries in fact resulted in a loss of natural resource services,<br />
the sine qua non of an <strong>NRD</strong> claim. This was the case in the New Mexico v. General<br />
Electric Co. litigation, where defendants ultimately succeeded in defeating all of<br />
plaintiffs’ experts opinion with a well placed “doesn’t fit” blow, because the various<br />
hydrogeology, engineering, and economic opinions proffered by those experts failed to<br />
link the alleged contamination of groundwater to the requisite showing under their<br />
damages theory of a loss of drinking water services. When the Court recognized this<br />
fact, plaintiffs’ opinions were left in shards:<br />
As to the proffered opinions of Brookshire and Johnson on<br />
estimated natural resource damages, and of Dr. Williams as<br />
to the contaminant plume volume, content and location, as<br />
well as ‘buffer zone’ volume and ‘lost safe yield,’ the court<br />
has found a lack of ‘fit,’ i.e., a lack of relevance to the<br />
triable issues remaining in this case.<br />
New Mexico v. General Electric, 335 F. Supp. 2d 1266, 13<strong>09</strong>-10 (D.N.M. 2004).<br />
<strong>NRD</strong> expert opinions can also vulnerable to glass house treatment where it can be<br />
shown that the expert has slid into the role of advocate rather than scientist. As the Ninth<br />
Circuit has stated, “coming to a firm conclusion first and then doing research to support it<br />
is the antithesis of this [scientific] method.” Claar v. Burlington No. R. Co., 29 F.3d 499,<br />
502-503 (9th Cir. 1994). In In re Methyl Tertiary Butyl Ether (“MTBE”) Products Liab.<br />
Litig., 593 F.Supp.2d 549, 560 (S.D.N.Y. 2008), for example, the Court focused on this<br />
concern in excluding the testimony of plaintiffs’ expert that MTBE can be tasted and<br />
smelled in drinking water at levels as low as 1 ppb:<br />
Dr. Cain’s failure to present a consistent opinion about the<br />
percentage of the population he believes can detect MTBE<br />
at 1 ppb, or any other level, severely detracts from his<br />
reliability. Indeed, the only consistency in Dr. Cain’s<br />
testimony is that every well discussed in his reports has<br />
been contaminated to such an extent that plaintiffs were<br />
harmed – no matter what that level of contamination is. As<br />
a result, it appears Dr. Cain is reaching his conclusion first<br />
(i.e., MTBE in the well is detectable) and then providing<br />
whatever reasons are necessary to support it.<br />
The Court continued: “Courts are not naive about the fact that some attorneys will<br />
incorrectly instruct experts that their ‘first and most important role is to be an advocate<br />
for the party who calls him as a witness’. … [B]ecause some experts are misled by their<br />
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Donald W. Fowler of Hollingsworth LLP Speaker 16b: 4<br />
attorneys, or even just mistaken, about their role in litigation, courts must continue to<br />
act as a gatekeeper in determining whether to admit the testimony.” Id. at 564.<br />
<strong>NRD</strong> counsel can also try to frame opposing experts’ opinions as glass houses<br />
by arguing that the expert lacks the requisite expertise to offer the opinion proffered.<br />
As a general matter, this can be a risky approach, because courts are often loathe to<br />
reject seemingly credentialed experts on this ground, and requiring the Court to defend<br />
the expert’s credentials can hurt a party’s cause when it then seeks to attack the<br />
reliability and relevance of the expert’s opinions. This risk appears to have at least<br />
partially driven the result in Fisher v. Ciba Specialty Chemicals Corp., No. 03-0566,<br />
2007 WL 2302470, at *5 n.9, *6 (S.D. Ala. Aug. 8, 2007), in which the Court, having<br />
first admonished defendants for the “flimsiness of [their] challenge” to the<br />
qualifications of plaintiffs’ fate and transport expert, then rejected defendants’<br />
challenge to the expert’s admittedly circumstantial methodology as “one-sided and<br />
unfair.” However, because of the many expert issues in play in environmental and<br />
<strong>NRD</strong> litigation, an expert may often be tempted to stray into areas outside his specific<br />
expertise. In those cases, a tactful but well placed blow can shatter at least those<br />
outlying portions of the expert’s opinion. See, e.g., Valley View Angus Ranch v. Duke<br />
Energy Field Servs., LP., No. CIV-04-191-D, 2008 WL 2329169, at *9 (W.D. Okla.<br />
June 4, 2008) (excluding environmental sciences expert’s testimony to the extent he<br />
opined as to the adequacy of defendants gas pipeline gathering system).<br />
B. Houses of Cards<br />
The house of cards opinion rests on a foundational premise which, if removed,<br />
brings the rest of the expert’s opinion crashing down around it. These types of opinions<br />
can be particularly prevalent in <strong>NRD</strong> litigation, where expert opinions can rest on<br />
sophisticated groundwater, soil, or air dispersion modeling whose detailed machinations<br />
will often be completely indecipherable to judges, let alone lay juries. Often, even where<br />
the expert’s modeling methodology is robust and Daubert-defensible, the output of these<br />
models relies almost wholly on specific inputs for which there is no adequate scientific<br />
foundation. And in some <strong>NRD</strong> cases, plaintiffs may rely on multi-tiered houses of cards,<br />
where, for example, an expert economist relies in her opinion on a hydrogeologist who<br />
relies on a computer model that rests upon a handful (or even one) outlier data points.<br />
The opportunities provided defense counsel from plaintiff expert “house of cards”<br />
opinions was cogently described by the court in the Three Mile Island litigation:<br />
“Plaintiffs fashioned their expert testimony as a precarious house of cards with each<br />
expert relying on conclusions which other experts were responsible for generating and<br />
verifying. Because of this, the failure of even one of Plaintiffs' experts to produce a<br />
verifiable conclusion necessarily harms the conclusions of other of Plaintiffs' experts.”<br />
In re TMI Litig. Cases Consolidated II, 911 F. Supp. 775, 824-25 (M.D. Pa. 1996).<br />
In <strong>NRD</strong> and environmental litigation, an expert opinion can be success<strong>full</strong>y<br />
excluded as a house of cards when it is based on cherry picked data that is not shown<br />
through reliable evidence to be representative of general site conditions. For example, in<br />
Reeves v. Commonwealth Edison Co., No. 06 C 5540, 2008 WL 239030, at *6 (N.D. Ill.<br />
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Donald W. Fowler of Hollingsworth LLP Speaker 16b: 5<br />
Jan. 28, 2008), an expert geologist’s testimony regarding current contamination at a site<br />
was excluded where premised on an opined background level that “was based on just one<br />
sample from an upgradient pond” and the expert “conceded that he did not know whether<br />
his sample was statistically representative of the background titrium concentration in<br />
groundwater” in the area. In Sierra Club and Mineral Policy Center v. El Paso<br />
Properties, Inc., No. 01-cv-02163, 2007 WL 1630710, at *10 (D. Colo. June 4, 2007), the<br />
court excluded an expert’s opinions on similar grounds: “The record lacks credible<br />
evidence from which I can reliable conclude that the sample at RT-EP 4000 came from a<br />
seep in the granite wall of the Roosevelt Tunnel. Without that evidence, Plaintiffs have<br />
failed to establish the baseline water quality, and their natural tracer theory collapses<br />
because they cannot distinguish the water quality at the Portal from the baseline water<br />
quality.”<br />
Similarly, expert opinions that rest on untested or unverifiable assumptions should<br />
be excluded. In Allgood v. General Motors Corp., No. 102CV1077, 2006 WL 2669337,<br />
at *15 (S.D. Ind. Sept. 18, 2006), an expert based his opinion on the spread of<br />
contaminants upon an analyses of floodplain lines, but failed to provide an adequate<br />
foundation for the floodplain lines input into his analysis. In holding this opinion<br />
inadmissible, the court properly recognized it as a house of cards. “Even assuming that<br />
these strategies are appropriate for measuring floodplain lines, Dr. Dovantzis’s floodplain<br />
delineation cannot be considered sufficiently reliable because he relied on the unrecorded<br />
and untrained observations of Rohan to observe signs of flooding.”<br />
Likewise, in Attorney Gen. of Oklahoma v. Tyson Foods, 565 F.3d 769, 779-780<br />
(10th Cir. 20<strong>09</strong>), the State’s request for a preliminary injunction hinged on proof that<br />
fecal bacteria in waterways in the Illinois River Watershed derived from poultry wastes<br />
applied to the ground as fertilizer. Although the district court admitted the State’s expert<br />
testimony, it then disregarded the opinions as unreliable under Daubert and Rule 702<br />
because the underlying methodologies were novel and untested and procedurally flawed.<br />
The Tenth Circuit affirmed.<br />
C. Brick Walls<br />
A brick wall opinion is one in which an expert care<strong>full</strong>y constructs his opinion<br />
from numerous scientific bricks, none of which is independently sufficient to support his<br />
conclusion but which together creates at least the appearance of an impregnable whole.<br />
These can often be the most difficult expert opinions to attack, because they can<br />
withstand any frontal blow to the opinion as a whole.<br />
The secret in defeating the “brick of wall” opinion lies not in the one shattering<br />
blow or the removal of a necessary foundational card but rather on the disaggregation of<br />
the expert’s opinions into its individual bricks. As properly educated courts have<br />
recognized, “[o]ne cannot lump together lots of hollow evidence and reach a reliable<br />
conclusion.” Siharath v. Sandoz Corp., 131 F. Supp.2d 1347, 1371 (N.D. Ga. 2001). See<br />
Perry, 564 F.Supp.2d at 468-69 (E.D. Pa. 2008) (concluding that without linking<br />
accumulation of pimecrolimus to lymphoma, court will not allow expert to testify that<br />
dermal application of pimecrolimus causes cancer in humans).<br />
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Donald W. Fowler of Hollingsworth LLP Speaker 16b: 6<br />
[T]he Court has gone on to consider whether, in aggregate,<br />
the evidence cited supports the inference that would enable<br />
plaintiffs’ experts to offer an admissible causation opinion.<br />
The Court concludes that it does not. In this particular<br />
case, the data points pulled from each ‘type’ of evidence<br />
are too limited, too disparate and too inconsistent. It<br />
amounts to a hollow whole of hollow parts.<br />
Caraker v. Sandoz Pharms. Corp., 188 F. Supp. 2d 1026, 1040 (S. D. Ill. 2001).<br />
As recent experience in environmental litigation demonstrates, this is not an easy<br />
task. In United States v. W.R. Grace, 504 F.3d 745, 762 (9th Cir. 2007), for example, the<br />
Ninth Circuit reversed the Daubert exclusion of expert testimony based on historical<br />
ambient air testing data, holding that the district court had improperly examined each<br />
piece of evidence supporting the expert’s opinion in isolation:<br />
This document-based approach creates the problem that<br />
one cannot know <strong>full</strong>y whether or in what ways other<br />
information sources are meant to, in combination with the<br />
challenged data sources, form the premise for the expert<br />
testimony. Each document must be dispositive under the<br />
district court's approach, a requirement we do not impose<br />
under Rule 702. On remand, the district court shall conduct<br />
the Rule 702 analysis in light of the expert's reasoning and<br />
methodology as a whole.<br />
On remand, however, the defendants succeeded in excluding the same expert testimony<br />
under Rule 703, with the court observing that the government offered “no evidence at the<br />
Daubert hearing that an expert in any field would rely upon the data in question to<br />
opine…about the fiber concentration level.” U.S. v. W.R. Grace, 597 F.Supp.2d 1143,<br />
1149-50 (D. Mont. 20<strong>09</strong>). Thus, if the expert’s “bricks” are not relied upon in the field,<br />
their opinions may be excluded that way.<br />
Similarly, in Fisher, defendants were unsuccessful in their efforts to exclude the<br />
opinions of plaintiffs fate and transport expert as “a collection of factoids and conclusions<br />
with no cohesion.” 2007 WL 2302470, at *9. Defendants attacked the plaintiff for<br />
failing to perform any quantifiable analysis to test his opinion that DDT emissions from<br />
the defendant facility had contaminated plaintiffs’ property. But the Court admitted the<br />
testimony nonetheless, apparently swayed by the brick wall constructed by plaintiff’s<br />
expert from individual bricks which, in and of themselves, could not support the weight<br />
of the expert’s opinion. In so doing, the court highlighted the difficulty in attacking this<br />
type of expert opinion in Environmental and <strong>NRD</strong> litigation:<br />
We are dealing with alleged environmental contamination<br />
based on activities that may have occurred a half century<br />
ago. These are complex systems and complex pathways,<br />
with multiple potential sources, all veiled and obscured by<br />
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the sands of time in the intervening passage of a half<br />
century. …<br />
Daubert does not require scientists to be endowed with<br />
superpowers. Kaltofen has offered an inferential, scientific<br />
methodology that creates, analyzes and identifies trends in<br />
data (much of which he himself collected and produced);<br />
considers and rules out alternative sources; points to<br />
evidence that Ciba emitted DDTr; explains the various<br />
mechanisms through which Ciba-emitted contamination<br />
could have reached plaintiffs' property; and concludes that<br />
the contamination on plaintiffs' property originated from<br />
the Ciba plant. That is sufficient to satisfy Daubert's<br />
reliability standard.<br />
Fisher, 2007 WL 2302470, at *8.<br />
Notwithstanding the difficulties, even if counsel is not successful in knocking out<br />
each of the bricks in an expert’s opinion, the brick-by-brick approach can be an effective<br />
method in carving off parts of an experts opinions. Further, a successful attack on<br />
enough of these bricks can weaken the wall sufficiently so that the remaining opinion can<br />
be properly recharacterized as a glass house or house of cards and success<strong>full</strong>y attacked<br />
on those grounds.<br />
II.<br />
A Daubert Case Study – Plaintiffs’ Expert Hydrogeologist in New Mexico v<br />
General Electric Company<br />
To get an idea how counsel may use the general discussion above in responding to<br />
expert opinions in <strong>NRD</strong> litigation, let’s consider a case study from New Mexico v.<br />
General Electric Company, which resulted in the most detailed Daubert analysis in any<br />
<strong>NRD</strong> case to date. In New Mexico, the State sought a multibillion dollar <strong>NRD</strong> recovery<br />
based upon the allegation that groundwater contamination in the South Valley, New<br />
Mexico purportedly linked to the defendants’ historic manufacturing activities had<br />
resulted in the loss of hundreds of thousands of acre feet of water that otherwise would<br />
have been used for drinking water services.<br />
The State’s damages cases rested almost entirely on an expert analysis of the<br />
alleged impact of groundwater contamination conducted by the State’s expert<br />
hydrogeologist, Dr. Dennis Williams. Dr. Williams opined that groundwater<br />
contamination had spread outside the scope of the remediation system in the South<br />
Valley and had resulted in a loss of safe yield of 7,000 acre-feet/year and a loss of<br />
groundwater storage volume of 470,000 acre-feet. Dr. Williams generated these opinions<br />
through a variety of different scientific models, including a 3-dimensional kriging model,<br />
a groundwater flow model, and a solute transport model. He also used a variety of<br />
assumptions and foundational premises to support various aspects of his opinion.<br />
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Donald W. Fowler of Hollingsworth LLP Speaker 16b: 8<br />
Dr. Williams’ opinions contained elements of each of the various types of expert<br />
opinion constructs discussed above. His opinions were constructed with the use of a<br />
variety of different models and analyses, each of which individually suffered from<br />
significant flaws, but which together gave the appearance of an impenetrable brick wall.<br />
His opinions involved sophisticated analyses that rested on foundational premises that he<br />
could not support and without which his house of cards would collapse. And his<br />
conclusions were glass houses in that they were largely divorced from real world data and<br />
the historical fact that the lost drinking water services he predicted had not in fact<br />
occurred. In challenging Dr. Williams’ opinion, defendants thus were called upon to use<br />
the techniques appropriate in attacking each of the expert opinion types noted above.<br />
First, defendants disaggregated Dr. Williams’ opinions into its component bricks.<br />
While each of the defendants focused on different “bricks,” for this case study we will<br />
focus on the key arguments raised by General Electric. General Electric broke down Dr.<br />
Williams’ opinion into the following parts: (1) the generation of a modeled groundwater<br />
plume, (2) the alleged spread of that modeled plume over time, (3) the imposition of a<br />
buffer zone of clean but purportedly unavailable water around the plume, and (4) the<br />
measurement of the loss of safe yield of drinking water from the alleged unavailable<br />
contaminated plus buffer zone volume. Next, General Electric attacked each of these<br />
separate bricks as themselves being constructed either as glass houses or houses of cards:<br />
A. Dr. Williams’ generation of a groundwater plume<br />
Dr. Williams began his analysis by modeling a groundwater plume from fewer<br />
than 150 groundwater testing samples taken in 1992. Dr. Williams’ selection of this 1992<br />
data (to the exclusion of other historic testing data) was questionable in its own right, but<br />
an even bigger problem arose from the model he used to take this small data set and<br />
construct a contaminant plume of sufficient size and detail to support his subsequent<br />
analyses. For this purpose, Dr. Williams employed a geostastistical modeling approach<br />
called 3-dimensional kriging. Simply put – with simple here being an admittedly relative<br />
term – 3-dimensional kriging takes limited real world data points and seeks to extrapolate<br />
and interpolate what would have been found at other locations in 3-dimensional space<br />
between or outside the tested locations.<br />
3-D kriging is an iterative process, in which various estimates of missing data are<br />
repeatedly fitted or refitted to the historical data based upon a series of expert judgment<br />
calls. But despite the fact that this kriging model was the central methodology used by<br />
Dr. Williams to construct his plume, he readily acknowledged that he was not an expert<br />
in kriging and had relied wholly on a junior staff member to conduct the analysis. Dr.<br />
Williams opinion as to the contaminant groundwater plume that purportedly existed in<br />
1992 – not to mention his subsequent opinions as to the purported spread of that plume –<br />
thus was a house of cards. As another court explained in rejecting an expert opinion<br />
likewise resting on the expertise of other unnamed and unproduced experts, “without the<br />
independent expert testimony of the assistants "explaining and justifying the<br />
discretionary choices they made, [the expert's] testimony would have rested on air.”<br />
Dura Automotive Systems of Indiana, Inc. v. CTS Corp., 285 F.3d 6<strong>09</strong>, 615 (7th Cir.<br />
2002).<br />
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Donald W. Fowler of Hollingsworth LLP Speaker 16b: 9<br />
This argument was unsuccessful. While the court took note of the fact that the<br />
kriging analysis had not been conducted by Dr. Williams, see New Mexico v. General<br />
Electric Co., 335 F. Supp.2d 1266, 1278 n.17 (D.N.M. 2004), this fact did not play a<br />
significant role in the court’s Daubert analysis.<br />
B. Dr. Williams’ opinions as to the spread of the 1992 plume over time<br />
After thus generating his 1992 plume, Dr. Williams used a groundwater flow<br />
model and a solute transport model to predict the spread of this alleged plume over time.<br />
General Electric attacked this part of Dr. Williams’ opinion as being both a house of<br />
cards and a glass house.<br />
The predicted spread of contaminants was a house of cards because it rested in<br />
large part on plainly unfounded factual premises. Initially, Dr. Williams defined his<br />
contaminant plume as being that volume of groundwater that contained contaminants at<br />
or in excess of 1 part per billion, a level far below the state’s own regulatory standards for<br />
safe drinking water. (Recall that the State’s <strong>NRD</strong> claim was for loss of drinking water<br />
services). Dr. Williams was unable to provide any scientific foundation for his 1 ppb<br />
standard, testifying that he was “not aware how they arrived at the number” and that he<br />
used the number because it was “defensible.” This foundational card was knocked away<br />
by the Court in its first major substantive ruling when it required the State to base its<br />
claim on proper drinking water standards. New Mexico v. General Electric Co., 335 F.<br />
Supp.2d 1185, 1210 (D.N.M. 2004) (“groundwater that meets [the State drinking water]<br />
standards has not been lost to use as drinking water”). With his house of cards facing<br />
collapse, Dr. Williams pulled another card from his deck and adopted a new, indefensible<br />
premise to support his construct: that the presence of a modeled groundwater<br />
contaminant at any level of the aquifer rendered the entire vertical column of<br />
groundwater beneath that level likewise contaminated. In this way, Dr. Williams was<br />
able to add hundreds of vertical feet of “contaminated” groundwater to his modeled<br />
results, quadrupling or more the volume that his own models predicted. Again, the Court<br />
recognized that this foundational card was flawed: Much like Scotland's famed Loch<br />
Ness monster, the Plaintiffs' “deep, deep contaminant plume” is believed to be “down<br />
there somewhere,” and has not been conclusively proven not to exist, but its proponents<br />
have yet to come forward with significant probative admissible evidence of specific facts<br />
affirmatively demonstrating that it does exist.” New Mexico v. General Electric Co., 322<br />
F. Supp. 2d 1237, 1256 (D.N.M. 2004).<br />
GE also argued that Dr. Williams’ opined spread of contaminants was a glass<br />
house because it didn’t accurately predict the findings in real world testing at the site.<br />
While Dr. Williams had limited his analysis to a plume modeled solely from 1992 data,<br />
there was in fact an extensive body of groundwater data from tests conducted from 1992<br />
to 2001. When Dr. Williams’ opined spread of his modeled plume was compared to this<br />
real world data, it had in a false positive rate for the various tested contaminants (i.e. it<br />
predicted contamination where no such contamination was in fact found) ranging from<br />
42% to 67%. Remarkably, when Dr. Williams was confronted with these major<br />
discrepancies, he argued that the real world data should be discarded in favor of his<br />
model: “[I]f you start with ’92 with a big area and then in 2000 you have a small area,<br />
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Donald W. Fowler of Hollingsworth LLP Speaker 16b: 10<br />
and if you sat this [2000] information is correct, then you have to calibrate your model to<br />
make it fit that small area, and I believe that wouldn’t be correct.” But, of course,<br />
Daubert does not allow an expert to throw out the data in preference for his opinion. In<br />
similar circumstances, another court properly recognized that this type of discrepancy<br />
was a shattering Daubert blow: “[U]se of the groundwater flow model as a<br />
comparatively accurate predictor of the general direction of VOC migration doesn't<br />
support a finding of reliability when the model is used to support an opinion that VOC's<br />
traveled from one point (anywhere on the railyard) to a specific second point (the<br />
Ramsey's well) despite lack of support in years of actual testing.” Ramsey v.<br />
Consolidated Rail Corp., 111 F. Supp. 2d 1030, 1037 (N.D. Ind. 2000).<br />
In New Mexico, however, the court held that this discrepancy was not fatal.<br />
While noting that “[o]ne area of vulnerability of Williams' projected plume is its apparent<br />
conflict with actual below-MCL or ‘non-detect’ measurements obtained from samples<br />
collected in the field,” the court reasoned that “Dr. Williams' analysis gives some rough<br />
estimate of the nature, extent, and location of contaminated water beneath the South<br />
Valley Site based upon selected data, and the relationship between model and<br />
measurements in this instance is something more than purely ipse dixit.” New Mexico,<br />
335 F. Supp.2d at 1284. The court held that these discrepancies went to the “weight and<br />
credibility” of Dr. Williams’ opinion, but did not render it inadmissible. Id.<br />
C. Dr. Williams’ imposition of a buffer zone of clean but purportedly<br />
unavailable water around the plume.<br />
Even with the fatal flaws of his contaminant plume analysis, Dr. Williams was<br />
unable to generate a volume of water sufficient to support the multibillion dollar <strong>NRD</strong><br />
claim being pressed by the State. For this he needed to add another artificial construct,<br />
the imposition of a buffer zone of uncontaminated groundwater around his predicted<br />
plume by which Dr. Williams inflated his opinion as to the volume of unavailable<br />
groundwater in the South Valley by 800%. As Dr. Williams’ explanation and defense of<br />
this buffer zone changed over time, General Electric attacked it as both a house of cards<br />
and a glass house.<br />
Originally, Dr. Williams conceded that his buffer zone was not based upon any<br />
scientific analysis at all but was simply an assumption that had been dictated to him by<br />
counsel: “My 4,000 foot buffer zone was clearly stated, the underlying assumptions that<br />
came up to that, and that’s strictly under the direction that I was given to estimate not<br />
only the loss of yield and volume for the actual plume area and volume, but also to add a<br />
buffer zone around that.” This clearly was a house of cards opinion; it rested solely upon<br />
a foundational card that was dictated by counsel.<br />
Recognizing the weakness in this expert construct, Dr. Williams subsequently<br />
argued that he could construct a buffer zone based upon modeling that demonstrated that<br />
any placement of wells within the buffer zone would draw in contaminants and render the<br />
well unusable. But this transformed opinion was a glass house, because once again Dr.<br />
Williams’ opinions did not square with the real world data. In direct contravention to his<br />
contention, the City of Albuquerque was operating a number of municipal drinking water<br />
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Donald W. Fowler of Hollingsworth LLP Speaker 16b: 11<br />
wells within Dr. Williams’ opined buffer zone, each of which was producing clean water.<br />
The Court recognized it as such, and this opinion was excluded. See New Mexico, 335 F.<br />
Supp.2d at 1286 (“By definition, Dr. Williams' “buffer zone” volumes fall beyond the<br />
boundaries of the estimated “above-MCL” contaminant plume, and are usable as drinking<br />
water.”).<br />
D. Dr. Williams’ opinion of an alleged loss of safe yield<br />
The final brick in Dr. Williams’ expert analysis was the purported loss of safe<br />
yield from his opined groundwater plume plus buffer zone. Safe yield is the rate at<br />
which ground water can be withdrawn without causing long term depletion of storage.<br />
Dr. Williams purported to calculate the loss of safe yield by measuring the inflows and<br />
outflows of groundwater in the volume of groundwater he opined was unavailable.<br />
What Dr. Williams failed to acknowledge was that his methodology made no<br />
sense when examining only a portion of an aquifer. While the measure of inflows and<br />
outflows from an aquifer as a whole, and a concurrent analysis of water levels in the<br />
aquifer, can be used to determine whether the aquifer can safely yield the volume of<br />
groundwater being extracted, the measures of inflows and outflows in a subpart of the<br />
aquifer (particularly one as relatively small as that represented by Dr. Williams’ projected<br />
plume plus buffer zone) only reflects the volume of groundwater being extracted from<br />
that area and the volume of groundwater flowing in from other parts of the aquifer to<br />
replace that lost regional volume. In other words, what Dr. Williams was putting forth<br />
as a measure of safe yield was in fact a measure of historical groundwater pumping in the<br />
area (indeed the data on historical pumping and Dr. Williams’ alleged safe yield tracked<br />
almost exactly). Once this fact was made clear to the Court, Dr. Williams’ opinion was<br />
properly recognized as a glass house and it was excluded. See New Mexico, 335 F.<br />
Supp.2d at 1290 (“Dr. Williams' testimony suggests that existing “extractive services”<br />
account for all of his estimated “safe yield,” and more”).<br />
* * * *<br />
General Electric’s attack on each of the component bricks in Dr. Williams’ expert<br />
analyses enjoyed only mixed success. While Dr. Williams opinions as to the loss of safe<br />
yield and buffer zone were held inadmissible, his opinion as to the spread of groundwater<br />
contaminants was excluded only in part, and his modeling of a 1992 contaminant plume<br />
was allowed to stand. The remaining opinions, however, in no way resembled the “brick<br />
wall” opinion that Dr. Williams had sought to present.<br />
The ultimate success of General Electric’s approach became clear when the Court<br />
considered General Electric’s ultimate argument that Dr. Williams’ opinion failed<br />
because it did not fit the State’s theory of a loss of drinking water services. As noted<br />
above, this argument relied upon the Court recognizing Dr. Williams’ overarching<br />
opinion as a glass house, a recognition that was greatly facilitated by the success<strong>full</strong>y<br />
weakening of the brick wall façade.<br />
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Donald W. Fowler of Hollingsworth LLP Speaker 16b: 12<br />
Conclusion<br />
The difficulties posed by scientifically unreliable an irrelevant expert testimony in<br />
<strong>NRD</strong> litigation highlight the wisdom in the Supreme Court’s observation in Daubert that<br />
“[e]xpert evidence can be both powerful and quite misleading because of the difficulty in<br />
evaluating it.” 5<strong>09</strong> U.S. at 595. In challenging the admissibility of this evidence, <strong>NRD</strong><br />
practitioners can be well served by properly classifying expert opinions as glass houses,<br />
houses of cards, or brick walls and planning their Daubert challenges accordingly.<br />
12<br />
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L A W S E M I N A R S I N T E R N A T I O N A L<br />
The Third Annual Advanced Conference on<br />
Natural Resource Damages Claims<br />
New case law and legislation, and best strategies<br />
July 9 and 10, 20<strong>09</strong><br />
Santa Fe, NM<br />
Economic Valuation of Natural Resource<br />
Damages<br />
Robert E. Unsworth<br />
Industrial Economics, Incorporated<br />
Cambridge, MA<br />
William H. Desvousges, Ph.D.<br />
W.H. Desvousges & Associates<br />
Raleigh, NC
Robert E. Unsworth of Industrial Economics, Incorporated Speaker 17: 1<br />
IEc<br />
Economic Valuation of<br />
Natural Resource Damages:<br />
Groundwater<br />
By:<br />
Robert E. Unsworth<br />
President<br />
Industrial Economics, Incorporated<br />
For:<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong><br />
Natural Resource Damages Litigation<br />
Santa Fe, New Mexico<br />
July 9-10, 20<strong>09</strong><br />
INDUSTRIAL ECONOMICS, INCORPORATED<br />
Caveat Audiens<br />
•This presentation is<br />
provided solely to<br />
stimulate discussion<br />
within the setting of<br />
this conference.<br />
•The information<br />
provided and<br />
statements made do<br />
not necessarily<br />
reflect the opinions<br />
of our clients.<br />
INDUSTRIAL ECONOMICS, INCORPORATED 1<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Robert E. Unsworth of Industrial Economics, Incorporated Speaker 17: 2<br />
Introduction<br />
• Groundwater damage claims are common and likely to<br />
increase in number in the future.<br />
• As for all damage assessments conducted under CERCLA<br />
the goal is to establish the appropriate type and scale of<br />
restoration using value and cost-based techniques.<br />
• Groundwater <strong>NRD</strong>A does not differ from <strong>NRD</strong>A in other<br />
contexts, but there are some resource specific<br />
considerations:<br />
•Injury determination and quantification<br />
•Baseline<br />
•Valuation of damages<br />
INDUSTRIAL ECONOMICS, INCORPORATED 2<br />
Injury Determination<br />
• Injury to groundwater is determined based on<br />
demonstrated changes in the chemical quality of the<br />
resource.<br />
• Specific to groundwater:<br />
•Substances for which a standard or criterion are lacking but<br />
which renders groundwater unusable.<br />
•Groundwater precluded by administrative action.<br />
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<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Robert E. Unsworth of Industrial Economics, Incorporated Speaker 17: 3<br />
Injury Quantification<br />
• How much groundwater is injured and over what time<br />
period?<br />
• Specific to groundwater:<br />
•Stock versus flow.<br />
•Volume previously extracted.<br />
•Measures of potential sustainable yield.<br />
•Timeframe of injury.<br />
• A range of metrics can be used, but must be consistent<br />
with the metric used to scale restoration.<br />
• In some instances quantification of the volume of injured<br />
groundwater is not necessary to establish damages.<br />
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Baseline<br />
• Trustees generally limit groundwater claims to waters that<br />
were potable, available and economically viable under<br />
baseline conditions.<br />
• Specific to groundwater:<br />
• When is baseline achieved (e.g., MCL v. background)?<br />
• What if groundwater was not used prior to contamination (i.e., does<br />
no demonstrated loss of use = no damages)?<br />
• The economics literature and current practice recognize a<br />
range of services and values provided by groundwater.<br />
• Current use, planned or future use, option value, non-use values.<br />
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Robert E. Unsworth of Industrial Economics, Incorporated Speaker 17: 4<br />
Methods for Groundwater Valuation<br />
Approach<br />
Treatment Cost<br />
Added cost<br />
Market Price<br />
Stated<br />
preference<br />
Hedonic property<br />
analysis<br />
Benefits transfer<br />
Replacement<br />
cost<br />
Application<br />
The cost of treatment either in situ or at wellhead/point of<br />
use.<br />
Contamination can impose added costs on current and future<br />
water users (e.g., cost of treatment or access to a substitute<br />
source of water).<br />
The application of observed prices in competitive markets.<br />
Limited to locations with active water markets.<br />
Values derived through surveys of the public.<br />
Econometric analysis of patterns in residential property prices<br />
to reveal environmental amenity/disamenity.<br />
Application of existing valuation literature in a new setting.<br />
Values based on the methods listed above.<br />
Damages based on cost to restore, replace or acquire the<br />
equivalent of the injured resource, such as cost to protect an<br />
aquifer of equivalent yield and quality.<br />
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What is Restoration?<br />
“The Department has always intended ‘restoration…’ to refer<br />
to those actions taken to return a resource to baseline. As<br />
evidenced by the statutory provision allowing trustees to<br />
acquire equivalent natural resources, Congress did not<br />
envision that trustees would or could recreate the exact same<br />
injured resources. However, the Department does not believe<br />
that Congress intended to allow trustee agencies to simply<br />
restore the abstract services provided by a resource, which<br />
could conceivably be done through an artificial mechanism.<br />
For example, nothing in the language or legislative history of<br />
CERCLA suggests that replacement of a spring with a water<br />
pipeline would constitute “restoration….” CERCLA requires<br />
that natural resource damages be based on the cost of<br />
restoring…the equivalent of an actual natural resource.”<br />
(Federal Register, Volume 58, Number 139, 22 July 1993)<br />
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<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Robert E. Unsworth of Industrial Economics, Incorporated Speaker 17: 5<br />
Resource Equivalency Methods<br />
•Why did the field of <strong>NRD</strong>A move toward habitat and<br />
resource equivalency-based approaches?<br />
•Avoid controversial, expensive and time-consuming<br />
economic valuation approaches.<br />
•Explicitly balances service losses and gains.<br />
•Direct and early consideration of restoration options.<br />
•Transparent.<br />
•Resource equivalency-based approaches have been<br />
applied in a range of groundwater cases.<br />
INDUSTRIAL ECONOMICS, INCORPORATED 8<br />
Examples of Replacement Options<br />
• Land preserved to protect recharge (quantity or quality).<br />
• Water conservation programs to reduce demands on<br />
groundwater resources.<br />
• Recharge enhancement (e.g., recharge basins).<br />
• Reservoir construction / enhancement to better capture<br />
high surface water flows, reducing the demand for<br />
groundwater.<br />
• Relevancy of these options will vary by region and state<br />
policies.<br />
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<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
Robert E. Unsworth of Industrial Economics, Incorporated Speaker 17: 6<br />
Acceptance Criteria for Restoration Options<br />
• Replacement provides resource of equal type and<br />
quantity to what was lost.<br />
• Selected restoration actions should be consistent with<br />
previously demonstrated public preferences (thus also<br />
technically feasible).<br />
• Most cost effective option available that meets<br />
trustees criteria.<br />
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Rocky Mountain Arsenal<br />
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Robert E. Unsworth of Industrial Economics, Incorporated Speaker 17: 7<br />
Rocky Mountain Arsenal<br />
• State’s approach:<br />
•Flow model of groundwater (flux through the plume over<br />
time).<br />
•Forecast future extent of plume.<br />
•Dollar values based on water rights prices.<br />
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Rocky Mountain Arsenal<br />
• Major issues and areas of disagreement:<br />
•Rate of flow / whether a flow approach should be used.<br />
•Future water rights prices.<br />
•Replacement approach.<br />
•Baseline services.<br />
•Incorporating remedy: The 1998 Water Agreement.<br />
• The Federal Preassessment Screen.<br />
• Case settled.<br />
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Robert E. Unsworth of Industrial Economics, Incorporated Speaker 17: 8<br />
Fernald, Ohio<br />
INDUSTRIAL ECONOMICS, INCORPORATED 14<br />
Fernald, Ohio<br />
• State’s approach:<br />
•Quantified injured groundwater using flow approach.<br />
•Damages based on: (1) added cost of future well<br />
development, (2) replacement cost, and (3) “revealed<br />
preference” reflected in Federal government’s<br />
willingness to pay for remedy.<br />
• Benefits transfer of literature values used to<br />
corroborate damages.<br />
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Robert E. Unsworth of Industrial Economics, Incorporated Speaker 17: 9<br />
Fernald, Ohio<br />
• Major issues and areas of disagreement.<br />
•Injured quantity.<br />
•Time frame of injury.<br />
•Discount rate.<br />
•Use of “revealed preference” based on government<br />
expenditures.<br />
•Reliability of benefits transfer.<br />
• In context of negotiations focused on replacement, in<br />
which arguments were over how much land and cost<br />
per acre.<br />
• Case settled.<br />
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Massachusetts <strong>NRD</strong>A Sites<br />
• In 1990, Massachusetts undertook the Charles George<br />
case.<br />
• Since that time, the Commonwealth has developed<br />
claims for groundwater damages at several sites.<br />
• These claims are based on an equivalency-based<br />
replacement cost approach.<br />
•On the loss side: the area of the plume above an injury<br />
threshold (over time), and the estimated recharge rate<br />
in that area as a proxy measure for sustainable yield.<br />
•On the gain side: the area and cost of land required to<br />
protect a well of an equivalent present value yield.<br />
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Robert E. Unsworth of Industrial Economics, Incorporated Speaker 17: 10<br />
Massachusetts <strong>NRD</strong>A Sites<br />
• Restoration approach is based on programs and policies<br />
regarding groundwater within the Commonwealth.<br />
• Issues:<br />
•No current use.<br />
•Recharge rate.<br />
•Commonwealth’s approach to restoration.<br />
• Several cases have settled, and several more are in<br />
negotiations.<br />
INDUSTRIAL ECONOMICS, INCORPORATED 18<br />
Conclusions<br />
• Groundwater damage claims, pursued under both Federal<br />
and state causes of action, are likely to grow in number.<br />
• Both hydrological and economic methods exist that are<br />
widely used outside of <strong>NRD</strong>A.<br />
• Wellhead or point of use treatment is not restoration of a<br />
resource.<br />
• The public holds value for groundwater not used.<br />
• Replacement-based approaches provide the most costeffective<br />
means to make the public whole for injured<br />
resources.<br />
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Robert E. Unsworth of Industrial Economics, Incorporated Speaker 17: 11<br />
Conclusions<br />
• Approaches to restoration will vary across the US.<br />
• The time and cost required to complete economic<br />
valuation studies, including stated preference studies,<br />
may be justified in some circumstances.<br />
• If benefits transfer is performed, it must be high quality.<br />
• State causes of action may expand the scope of damages.<br />
• The effectiveness of remedial actions will impact these<br />
claims.<br />
INDUSTRIAL ECONOMICS, INCORPORATED 20<br />
IEc<br />
INDUSTRIAL ECONOMICS, INCORPORATED<br />
617.354.0074<br />
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<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
William H. Desvousges of W.H. Desvousges & Associates Speaker 18a: 1<br />
Groundwater Valuation and Restoration:<br />
One Economist’s Perspective<br />
Prepared by:<br />
William H. Desvousges, Ph.D.<br />
President<br />
W.H. Desvousges & Associates<br />
W.H. Desvousges &<br />
Associates, Inc.<br />
700 Exposition Place<br />
Suite 141<br />
Raleigh, NC 27615<br />
Phone: 919-847-7101<br />
Fax: 919-847-7445<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
William H. Desvousges of W.H. Desvousges & Associates Speaker 18a: 2<br />
INTRODUCTION<br />
Groundwater is likely to be an area of increased contentiousness, and<br />
potentially litigation, between natural resource Trustees and potentially responsible<br />
parties (PRPs). One of the reasons is the pervasive nature of potential groundwater<br />
injuries at various sites around the country. Many Superfund sites involve some type of<br />
groundwater remediation, which increases the likelihood that Trustees will make some<br />
type of natural resources damages claim. In some instances, State Trustees have<br />
developed various formulas to try to address groundwater damages on a widespread<br />
basis (NJDEP).<br />
Additionally, Trustees and PRPs often have very different perspectives about<br />
the nature and extent of injuries, and potential damages resulting from those injuries.<br />
Trustees often focus on the injury side of the equation and use various methods to<br />
determine an amount of water that must be restored or replaced. Sometimes the<br />
services associated with the groundwater, such as water for drinking or agricultural<br />
uses, are quantified and sometimes they are omitted from the calculation altogether. 1<br />
However, PRPs often embrace the services perspective and evaluate the extent to<br />
which any services associated with the injured groundwater have been impacted, and if<br />
so, to what extent.<br />
Another important difference in perspective that arises between natural<br />
resource Trustees and PRPs is over the role and extent to which the groundwater is<br />
being remediated as part of an existing CERCLA action at the site. In preparing<br />
damage claims, Trustees often fail to consider whether or not the on-going remediation<br />
will ultimately return the groundwater to its baseline condition; that is, the condition that<br />
would have existed but for the release of the hazardous substance (43 CFR Part 11.<br />
82). Such exclusions on the parts of Trustees can lead to far different conclusions as<br />
to both the nature and extent of potential damages at a site. As I discuss below,<br />
excluding the interrelationship between remediation and restoration also have important<br />
economic implications as to the types of services that are impacted as well as the types<br />
1 The State of Colorado claim in the ASARCO bankruptcy case is an example where groundwater services<br />
are not considered (ASARCO, LLC, et al., Case No. 05-21207, Southern District Of Texas Corpus Christi<br />
Division. California Gulch Superfund Site.)<br />
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William H. Desvousges of W.H. Desvousges & Associates Speaker 18a: 3<br />
of values that may apply to those services. Because of these differences, tensions<br />
between the two parties often increase raising the chances for litigation to ensue.<br />
Finally, natural resource Trustees and PRPs often have different perspectives<br />
on the types of restoration alternatives. Because the Trustees’ claims often focus on<br />
the quantity of water that has been “lost,” the nature of the restoration claims tend to<br />
follow that same path. For example, Trustees will attempt to define restoration in terms<br />
of land that would be acquired to increase the recharge of groundwater or to provide<br />
additional well-head protection areas (Lane, Carney, and Chapman 20<strong>09</strong>).<br />
Additionally, as I discuss below, many of the State of New Jersey claims are measured<br />
in terms of “lost water” and the acquisition of lands to provide recharge to groundwater<br />
to offset the “lost water.” PRPs tend to search for restoration alternatives that<br />
correspond more closely to the impacted services and are likely to be the most costeffective<br />
alternative. With such different perspectives, it is not surprising that Trustees<br />
and PRPs have widely divergent views as to the value of a particular case.<br />
In this paper, I provide an overview of the economic concepts that are critical to<br />
understanding groundwater valuation. With this overview, I use two case studies to<br />
highlight how Trustees and PRPs end up with very different perspectives about the<br />
potential magnitude of groundwater damages at a particular case.<br />
THE RELATIONSHIP BETWEEN REMEDIATION AND<br />
RESTORATION IN DAMAGE ASSESSMENT<br />
By the very nature of the definitions, concepts, cleanup, natural recovery,<br />
services, and natural resource damages are inextricably linked. Specifically, the type<br />
and extent of cleanup will directly affect the type and extent, if any, of the residual injury<br />
to natural resources that may remain after cleanup is completed. Figure 1 illustrates<br />
this linkage.<br />
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William H. Desvousges of W.H. Desvousges & Associates Speaker 18a: 4<br />
Moreover, as shown in Figure 1, to establish a basis for recovering natural<br />
resource damages, you would need to determine that there has been a reduction in<br />
services from the groundwater resource that has been injured. This requires a<br />
comparison between the current level of services to its baseline (i.e., what the state of<br />
services would be for a particular resource “but for” the release of hazardous<br />
substances). Determining the appropriate baseline is one of the most critical, and often<br />
most complex, steps in a natural resource damage assessment. As shown in Figure 1,<br />
the baseline conditions play several critical roles in a damage assessment.<br />
To <strong>full</strong>y understand the role of baseline, it is helpful to review the various steps<br />
in the assessment that are highlighted in Figure 1. As discussed above, injury<br />
determination is the first step in the assessment process. The second step in the<br />
process, which in many ways is the most important, is quantifying the extent of any<br />
injury.<br />
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William H. Desvousges of W.H. Desvousges & Associates Speaker 18a: 5<br />
It is in this second step, that the baseline emerges to the center stage along<br />
with the services provided by a particular resource. Once the relevant natural resource<br />
services are identified, which I discuss in more detail in the next section, it is then<br />
necessary to determine the baseline that would be relevant for natural resource<br />
damage assessments. Only if there were a reduction in services would a potential<br />
damages claim for groundwater injury arise.<br />
In addition to potential future damages, Trustees, at their discretion, also may<br />
recover damages for the loss of services between the time of the injury and the return<br />
of services to their baseline levels. The nature of the remediation alternative that is<br />
selected for the site can have important implications for the size of the interim service<br />
losses. For example, a monitored natural attenuation remediation option is likely to<br />
require a longer period of time for services to return to their baseline levels—assuming<br />
of course, that there are some services associated with the groundwater that is being<br />
remediation. By contrast, a pump and treat remediation where the treated water is<br />
either discharged to surface water or re-injected into the aquifer may significantly<br />
shorten the period of time for services to return to their baseline levels. As I discuss in<br />
more detail in the next section, any remediation alternative that reduces potential<br />
contaminants in groundwater to levels where services can be obtained will have<br />
important implications for the potential economic losses that might be incurred.<br />
Specifically, if groundwater is cleaned up to the level that supports services, then the<br />
potential for a long-term loss of services is minimized.<br />
THE ROLE OF SERVICES IN VALUING GROUNDWATER<br />
Groundwater services (e.g., drinking water, irrigation water, drought protection)<br />
are the key integrating concepts in a damage assessment. In particular, services link<br />
together the crucial economic and hydro-geological features of a site. It is impossible<br />
to develop any type of valid economic measure of damages without determining<br />
whether services are impacted. To better understand the importance of services, it<br />
may be helpful to review how economists view the concept of services.<br />
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William H. Desvousges of W.H. Desvousges & Associates Speaker 18a: 6<br />
Natural resources may provide services to people. Services are the most<br />
fundamental concept in natural resource economics, and as such, play a critical role in<br />
damage assessments (Kopp and Smith 1993; National Research Council 1997).<br />
Services are the flows that are derived from the resource. Services may include human<br />
use and ecological. Human use services for groundwater would include drinking water<br />
and other water uses (e.g., for lawns, irrigation, and the like). Groundwater also may<br />
provide a source of future supply for drought prevention. As shown in Figure 2 below,<br />
this would be an example of a buffer service from groundwater. Ecological services are<br />
the services that one resource provides to another. Habitat or food sources are two of<br />
the most prevalent forms of ecological services. For groundwater, ecological services<br />
would include the prevention of subsidence, and prevention of salt water intrusion<br />
(National Research Council 1997). It also is important to consider the time interval<br />
associated with groundwater services including past, current, and potential future<br />
services.<br />
Figure 2: Groundwater Services<br />
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William H. Desvousges of W.H. Desvousges & Associates Speaker 18a: 7<br />
A frequent argument of Trustees is that groundwater is also valuable because it<br />
often makes significant contributions to valuable ecological services. However, in<br />
damage assessments, it is important to distinguish between a natural resource service<br />
and a pathway. If injured groundwater were to release hazardous substances into<br />
surface water, and subsequently into a wetland area through some type of recharge,<br />
then the groundwater would be viewed as a pathway for the exposure and potential<br />
injury. The potential loss in services would be assessed for the wetlands and not the<br />
groundwater itself. Such an approach avoids the potential for double counting<br />
(43CFR11.63; 43CFR11.71; 43CFR11.84).<br />
Thus, any assessment of potential damages from groundwater should involve a<br />
careful consideration of the potential services that groundwater yields and the extent to<br />
which those services are impacted. As part of the services assessment, it is also<br />
critical to consider the legal and institutional aspects of groundwater. For example, in<br />
the State of New Mexico, et al. v. General Electric Company, et al., the Rio Grande<br />
Compact dictated the potential uses of water in New Mexico, which limited the State’s<br />
claim. Because the water in New Mexico was <strong>full</strong>y allocated under the Rio Grande<br />
Compact, the State could not claim that they would have rights to the allegedly<br />
contaminated water.<br />
ECONOMIC VALUATION CONCEPTS<br />
To an economist, natural resource services have measurable value, in that<br />
people will pay for the provision of such natural resource services - sometimes through<br />
fees, time, and travel costs (as in the case of the beach goers) and sometimes through<br />
payment of taxes voted in by government representatives. 2 How to measure those<br />
economic values - technically, how to measure the additional consumer surplus or the<br />
extra value people receive over and beyond what they would pay for a day at the beach<br />
or having cleaner drinking water - is a difficult and controversial question. But that does<br />
not alter the fact that the value of natural resources arises from the services that people<br />
can, or do, derive from those resources.<br />
2 Compensable value is measured by changes in consumer surplus, economic rent, and any fees or other<br />
payments collectable by a Federal or State agency (43CFR part 11.83(3)(c)(1)). Since there are no fees or<br />
economic rents for groundwater in this case, consumer surplus is the relevant measure.<br />
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William H. Desvousges of W.H. Desvousges & Associates Speaker 18a: 8<br />
Figure 3: Values of Groundwater<br />
As shown in Figure 3, for some natural resources, economics also recognizes<br />
services that may be attributable to existence values. These values are the value that<br />
people would place on a groundwater aquifer completely independent of any potential<br />
future use of that aquifer. However, for there to be a loss in existence values, there<br />
would have to be a loss in natural resource services. That is, a loss in existence values<br />
would require people to lose access to some future source of drinking water supply, or<br />
to a future supply for some other type of use such as agricultural, industrial or<br />
commercial water use. Of course, in making an argument that some type of aquifer is a<br />
future water supply, Trustees have to be able to establish that there is a commitment of<br />
that water for such use in the future (committed use provision of 43 CFR Part 11.) To<br />
an economist, this would seem to require that there be some type of water supply plan<br />
that documents the future water sources for a municipality or a region. 3<br />
With the remediation of the aquifer, there is no loss in use values, assuming that<br />
during the time that recovery is taking place there is a replacement water supply. In<br />
addition, either active or passive remediation of groundwater that reduces potential<br />
contaminants to their baseline levels, limits the potential for losses in existence value.<br />
3 I have found that finding and reviewing such plans is an integral step in assessing whether an aquifer has<br />
been designated a future water supply source. Determining the relevant planning body for a particular<br />
region can be a challenging task in and of itself. This task is even more complicated in areas where private<br />
companies are the main purveyors of water because they may prefer to keep their plans confidential.<br />
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William H. Desvousges of W.H. Desvousges & Associates Speaker 18a: 9<br />
That is, if the groundwater is remediated, then the long term existence of the<br />
groundwater is not affected; therefore existence values are not affected. As I discuss in<br />
the second case study, Trustees often allege that existence values are impacted<br />
without taking into account the potential effects of the remediation that is on-going at a<br />
site.<br />
Additionally, existence values are usually associated with unique natural<br />
resources, such as the Grand Canyon. For groundwater, this would require the aquifer<br />
to be a primary source of drinking water with few alternative sources available. For<br />
other types of groundwater, the potential for existence values to arise are much more<br />
limited. For example, some shallow aquifers may actually be created by the installation<br />
of a landfill. Thus, in the baseline condition of the site, the shallow aquifer would not<br />
have existed. Nevertheless, some Trustees have alleged that shallow aquifers, which<br />
are not capable of providing drinking water or other extractive services, yield existence<br />
values. I find such arguments less than compelling from the nature of the limited<br />
services provided, the character of the baseline conditions, and the potential for many<br />
substitute resources that would provide both use and existence values.<br />
Finally, rigorous standards have been developed for even having the potential<br />
of a reliable measure of existence values in a natural resource damage assessment<br />
(Arrow, et al. 1993). There is no evidence in the economics literature that the<br />
existence value of groundwater can be reliably measured (Hausman 1993; Boyle, et al.<br />
1994). Given this uncertainty, it may not be possible to even measure existence values<br />
for even unique groundwater resources.<br />
Economists also have devoted considerable efforts to developing methods for<br />
measuring potential losses in consumer surplus. These methods are summarized in<br />
43CFR11.83, Desvousges and Skahen (1986), and Freeman (2003). For use services<br />
associated with groundwater, which would be the potentially relevant services in this<br />
case, it is possible to rely upon market-based methods to develop reliable estimates of<br />
consumer surplus (National Research Council 1997; Desvousges and Skahen 1986).<br />
As noted above, the methods for measuring nonuse values are not as well established<br />
and are considerably more controversial.<br />
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William H. Desvousges of W.H. Desvousges & Associates Speaker 18a: 10<br />
Furthermore, it is critical to emphasize that costs are not a measure of<br />
economic value. Costs measure the land, labor, and materials cost of developing some<br />
type of groundwater resource. They also may include the administrative costs<br />
associated with delivering the supply of water. However, costs bear little relationship to<br />
the basic economic measure of value, consumer surplus. For example, you may have<br />
a water supply that is very expensive to develop and produce. However, if consumers<br />
have a lower cost supply alternative available to them, they would not purchase the<br />
more costly source of supply. Thus, value is based on the interaction of supply and<br />
demand side forces. Consequently, important factors that influence the demand for<br />
water, including the availability of substitute water supplies, must be considered<br />
(Freeman 2003).<br />
CASE STUDIES<br />
The case studies highlight how Trustees and PRPs end up with very different<br />
perspectives about the potential magnitude of groundwater damages at a particular<br />
case. One case study is based on a site in the western United States that have figured<br />
prominently in a recent Chapter 11 bankruptcy case in the United States. 4 (I was<br />
retained by the parent company, ASARCO, Inc.) Another case study is based on a<br />
hypothetical site in New Jersey.<br />
California Gulch<br />
The California Gulch Superfund site consists of about 18 square miles in Lake<br />
County, Colorado, which is approximately 100 miles southwest of Denver. Towns<br />
within the site include Leadville and Stringtown. (See Figure 4.) The site includes the<br />
Leadville Historic Mining District and a section of the Arkansas River from the<br />
confluence of California Gulch to Two-Bit Gulch Creek.<br />
The site ranges in elevation from 9,300 ft near the southwestern boundary of<br />
the site to more 12,000 ft near Ball Mountain, which is just east of Leadville. Mining<br />
has taken place at the site for more than 140 years. Related activities have included<br />
mineral processing and smelting. Gold, silver, lead, and zinc are the most prominent<br />
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William H. Desvousges of W.H. Desvousges & Associates Speaker 18a: 11<br />
materials that were mined in the Leadville District with an estimated 26 million tons of<br />
ore produced between 1859 and 1986.<br />
California Gulch is a large complex Superfund site. As shown on Figure 4, it<br />
includes 12 operable units that range from the Yak Tunnel/Water Treatment Plant to<br />
the Arkansas River floodplain. The Trustee assessment included estimates of<br />
damages to groundwater/surface water, aquatic habitats, and terrestrial habitats. For<br />
the purposes of this case study, we will focus on the groundwater/surface water claim<br />
for the California Gulch and the aquatic damages in the 11-mile reach of the Arkansas<br />
River.<br />
Figure 4<br />
Groundwater/Surface Water and the Role of Services<br />
Trustee assessment<br />
The Trustee’s assessment, which was performed by Stratus, combined surface<br />
water and groundwater flux estimates to calculate the total injury for California Gulch<br />
based on estimates of the depth and width of the contaminated portion of the<br />
groundwater. They argued that because the surface water and groundwater were<br />
4 ASARCO, LLC, et al., Case No. 05-21207, Southern District Of Texas Corpus Christi Division<br />
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William H. Desvousges of W.H. Desvousges & Associates Speaker 18a: 12<br />
intermingled, it was appropriate to view them as one entity for damage assessment<br />
purposes. Specifically, California Gulch encompasses OU4 (Upper California Gulch)<br />
and OU8 (Lower California Gulch), and receives water from throughout the District,<br />
including Oregon Gulch, Stray Horse Gulch, the Yak Tunnel Water Treatment Plant,<br />
and Starr Ditch. The assessment assumed that the California Gulch area covers an<br />
area of 3.4 acres, and Stratus argued that the water samples from the mouth of<br />
California Gulch (spring runoff, 1994 to 2005) have routinely exceeded chronic<br />
thresholds for zinc and cadmium (CDOW 2006). Monthly average zinc and cadmium<br />
values are roughly ten times those measured downstream in Reach 1 of the Upper<br />
Arkansas (CDOW 2006). Stratus argued that concentrations in current shallow<br />
groundwater in the California Gulch alluvial aquifer greatly exceed the TVSs for drinking<br />
water, as well as for agricultural uses. They also exceed EPA’s water quality criteria for<br />
cold water aquatic life.<br />
Stratus concluded that the contamination has resulted in the loss of a benthic<br />
invertebrate community in California Gulch. Stratus, argued that from 1995 to 1997,<br />
mayfly densities were below one percent of values at reference locations in the<br />
Arkansas River and the East Fork of the Arkansas River. California Gulch sites also<br />
included a significantly reduced number of taxa relative to reference locations<br />
(Chadwick Ecological Consultants 2003). Stratus also based their analysis of<br />
groundwater losses on the exceedence of groundwater criteria.<br />
Stratus provided some limited information about human uses of the<br />
groundwater. Specifically, they noted that as of 1985, all of the Leadville domestic use<br />
wells and some California Gulch wells had been abandoned and replaced with the<br />
Parkville water district public water supply. The remaining nine groundwater users in<br />
Stringtown were surveyed in 1985, with several complaining of color, odor, or taste<br />
problems, and others using water sparingly because the EPA told them it contained<br />
cadmium (Engineering-Science 1986).<br />
The Stratus groundwater damage calculations are relatively straightforward.<br />
Specifically, they determined the total amount of contaminated surface water and<br />
groundwater that moves through California Gulch at a specific location and point in<br />
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William H. Desvousges of W.H. Desvousges & Associates Speaker 18a: 13<br />
time. This amount is referred to as the water “flux.” The quantity of surface water flow<br />
is based on average flow data from 1989 through 2005. The annual average surface<br />
water flow was calculated to be 2.48 cubic feet per second (cfs), which is equivalent to<br />
1,795 acre-feet/year (AF/yr). Groundwater flux estimates were developed using<br />
standard hydrological equations that reflect the volume and flow rates of groundwater.<br />
Stratus used the mid-range value of their flux calculations, 1,554 AF/yr. They then<br />
combined the surface water and groundwater to estimate that water resource losses<br />
are 1,795 AF/yr (surface) + 1,554 AF/yr (ground) = 3,349 AF/yr. Stratus then used a<br />
3% discount rate, and assumed that water resources have been injured since 1981 and<br />
will continue to be injured into the relevant planning future, the net present discounted<br />
quantity of injured water was found to be 234,939 acre-feet years (AFY).<br />
Additionally, Stratus identified representative restoration projects that could be<br />
undertaken to restore natural resources similar to those injured from the releases of<br />
hazardous substances. Stratus used two projects that the State of Colorado and the<br />
Bureau of Land Management Abandoned Mine Land program identified as examples of<br />
compensatory restoration project types in the upper Arkansas River basin, including<br />
two projects in the Lake Fork watershed (Dinero Tunnel/Sugarloaf Gulch and Tiger<br />
Complex). These projects involve rehabilitating abandoned mine lands that are<br />
contaminating surface water and groundwater in tributaries to the Arkansas River and<br />
are used as representative examples of restoration projects for purposes of developing<br />
restoration unit costs. Stratus assumed that these projects would provide a 100%<br />
improvement in water resource services for purposes of the equivalency analysis.<br />
Based on available data, Stratus estimated restoration costs of $21.8 million.<br />
Alternative Assessment<br />
The most glaring omission in the Stratus assessment is the lack of<br />
consideration for the services provided by the groundwater/surface water resources<br />
that were alleged to have been injured. Consequently, the total amount of injured<br />
groundwater does not necessarily equate to the total amount of groundwater service<br />
losses. For damages to occur, a reduction in groundwater services as a result of the<br />
injury must also occur. Moreover, any calculation of potential service losses are<br />
required to consider the baseline conditions of the natural resources. The Stratus<br />
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William H. Desvousges of W.H. Desvousges & Associates Speaker 18a: 14<br />
assessment did not establish that the baseline condition of the natural resources would<br />
have supported human uses.<br />
To evaluate the potential reduction in water services, it is important to determine<br />
the existing regulatory framework for water use in the Arkansas River Basin.<br />
Specifically, the Arkansas River Basin is a <strong>full</strong>y allocated basin. The basin is governed<br />
by both the Arkansas River Compact of 1948 and the Kansas vs. Colorado decree of<br />
1995. The Statewide Water Initiative Study Report (2004) indicates that there are no<br />
flows that are legally available for the Arkansas River (CWCB 2004, p. ES-21).<br />
Additionally, the Southeastern Colorado Water Conservancy District classifies the<br />
Upper Arkansas River as <strong>full</strong>y allocated. The <strong>full</strong> allocation of water within the basin<br />
limits potential damages to groundwater. For example, the Trustee’s analysis assumed<br />
that the water was, in effect, unavailable for use because it exceeded water quality<br />
standards at one location. What the analysis failed to acknowledge is that, although<br />
water is not withdrawn at the point where the calculation is made, it continues<br />
downstream where it is available for use because an increased flow from downstream<br />
tributaries dilutes the concentrations (SCR, p. ES-3).<br />
Moreover, the analysis did not consider that the water could only be used by<br />
those who have the most senior rights for the water. To the extent that water users<br />
were impacted by the hazardous substance releases, the Trustee’s analysis provides<br />
no evidence of such impacts or that any such individuals would have been able to bring<br />
a private tort claim. From a social well-being perspective, the only potential loss would<br />
be if higher value upstream users were impacted relative to potentially lower value<br />
downstream users who had access to the water. This situation could potentially result<br />
in a loss in producer surplus. No such loss had been alleged in this case, much less<br />
established. To the extent that downstream users were higher valued, society would<br />
actually be better off. Additionally, there are no groundwater service losses<br />
downstream in the Arkansas River. According to the Site Characterization Report<br />
(SCR), in the 11-Mile Reach, “although concentrations of cadmium exceed the drinking<br />
water MCL and zinc exceeds the secondary MCL, the exceedences are not influencing<br />
drinking water supplies. Elevated metals concentrations in shallow groundwater are not<br />
causing injury to surface water.”<br />
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William H. Desvousges of W.H. Desvousges & Associates Speaker 18a: 15<br />
Finally, the 43 CFR Part 11.84(b)(2) regulations only allow damages to be<br />
estimated based on committed uses of the resource, not on speculation of potential<br />
use. The trustee’s assessment did not demonstrate that any public uses have been<br />
impacted, which would result in damages. They noted that all of the domestic use wells<br />
and some California Gulch wells had been abandoned and replaced with public water<br />
supply (Lipton 2007, p. 22). Additionally, they said that there were nine groundwater<br />
users in Stringtown who complained of color, odor, or taste problems. They did not<br />
demonstrate that these problems were solely the function of cadmium and not from<br />
other factors. From an economic theory perspective, there is a potential loss from the<br />
abandonment of these wells if a high quality substitute were not made available. This<br />
would only be a public wellbeing loss if these wells were municipal wells. The loss of a<br />
private, non-public well would not constitute <strong>NRD</strong>s under the 43 CFR Part 11<br />
regulations.<br />
To determine the availability of substitutes, the Parkville Water District was<br />
contacted. According to Greg Teter, the General Manager, the Parkville Water District<br />
supplies everyone in Leadville and the nearby surrounding areas. The water comes<br />
from Big Evans Creek, the Elk Horn Mine Shaft, and some groundwater wells in the<br />
Arkansas River Valley. He predicted with the District’s current wells and water rights, it<br />
will be able to cover any new development that takes place in the next few decades. In<br />
addition, it plans to locate a couple of new wells and acquire some additional water<br />
rights to increase its supply (Teter 2007). Consequently, the contamination in the<br />
California Gulch groundwater/surface water does not affect the public water supply and<br />
will not affect it in the future. Therefore, there are no service losses to the public for this<br />
contamination. Thus, the <strong>NRD</strong>s for groundwater/surface water in California Gulch were<br />
zero.<br />
Case 2 Study: “Hypothetical site in NJ”<br />
The State of New Jersey alleges that natural resource damages have accrued<br />
for lost groundwater services at a 100-acre landfill site. The landfill operated from the<br />
1940s through the 1970s and contained hazardous wastes, which were disposed at the<br />
site. Remediation at the site consisted of capping and treating the groundwater and<br />
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William H. Desvousges of W.H. Desvousges & Associates Speaker 18a: 16<br />
pumping back to surface water. The groundwater under the site remains contaminated;<br />
however, the surrounding surface water is free from any substances from the landfill.<br />
Rather than identify groundwater services that have been lost, the State<br />
calculates the total volume of water contained in the aquifer under the site and<br />
multiplies it by the number of years the water would be “unavailable” for drinking water.<br />
Example:<br />
= 3,150,582,891 gal<br />
This figure is used to estimate the number of replacement acres that would be<br />
required to provide recharge area equal to the total volume of “lost” groundwater in<br />
perpetuity. The replacement acres are based on the surface recharge rate of the land<br />
and subsequently the volume of recharge that one acre of land would produce in<br />
perpetuity.<br />
Example continued:<br />
The total cost of these replacement acres would be in the neighborhood of $25<br />
million. The claim however has little merit and grossly overestimates the loss in natural<br />
resource services to the public.<br />
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William H. Desvousges of W.H. Desvousges & Associates Speaker 18a: 17<br />
In the complaint, New Jersey reviews the services provided by groundwater,<br />
insinuating that these services have been disrupted. The data and facts for the site tell<br />
a very different story. Below I list the State’s allegations and what the data for the site<br />
reveals.<br />
• NJ: Groundwater provides a drinking water source.<br />
The aquifer is too shallow to be used as a water supply.<br />
• NJ: Groundwater provides a base flow to streams and other surface water bodies.<br />
Base flow has been reduced less than 0.001% by capping.<br />
• NJ: Groundwater influences the health of aquatic ecosystems.<br />
There have been no adverse impacts to surface water, thus aquatic ecosystems<br />
are not impacted.<br />
• NJ: Groundwater provides cycling and nutrient movement.<br />
Service is unchanged.<br />
• NJ: Groundwater prevents salt water intrusion.<br />
Not relevant in this region of NJ, and would be unaffected nonetheless.<br />
• NJ: Groundwater provides ground stabilization.<br />
Service is unchanged.<br />
• NJ: Groundwater prevents sinkholes.<br />
Not relevant in this geologic region and would be unchanged nonetheless.<br />
• NJ: Groundwater provides maintenance of critical levels in freshwater wetlands.<br />
Service is unchanged.<br />
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William H. Desvousges of W.H. Desvousges & Associates Speaker 18a: 18<br />
The key factor in the measurement of natural resource damages is to provide<br />
evidence that there has been a reduction in natural resource services below baseline<br />
as the result of an injury. In this case, there is no evidence that groundwater services<br />
have been reduced. Furthermore, complete replacement of a resource is rarely<br />
necessary in the case of a groundwater injury.<br />
As noted above, groundwater provides a number of ecological services, in<br />
addition to drinking water. Not all aquifers provide drinking water services at baseline.<br />
Even if an aquifer that is contaminated to an extent that drinking water services have<br />
been lost, the groundwater will continue to provide ecological services. Therefore,<br />
replacement of the resource is unnecessary and an overcompensation for the lost<br />
resource services. In this case, the groundwater was unavailable for extraction as<br />
drinking water at baseline. The groundwater continues to provide in situ groundwater<br />
services and the discharge to surface water is uncontaminated. There is no evidence<br />
that a reduction in natural resource services has occurred. Consequently, there are no<br />
natural resource damages for groundwater.<br />
Thus, the focus on services is the key to conducting a natural resource damage<br />
assessment correctly. Frequently, in groundwater cases, the focus is not on the<br />
reduction of services but rather the cost of replacing the resource. Groundwater that<br />
cannot or would not be used for drinking water, and does not discharge to surface<br />
water, rarely experiences a loss in resource services in the case of injury. If<br />
groundwater does discharge to surface water resulting in a habitat service loss, the<br />
injury must be treated as a habitat injury and service loss rather than a groundwater<br />
service loss. The reduction in habitat services that occur on the surface would be<br />
estimated and valued rather than the volume of injured groundwater.<br />
REFERENCES<br />
Arrow, K., R. Solow, P.R. Portnoy, E.E. Leamer, R. Radner, and H. Schuman. 1993.<br />
“Report of the NOAA Panel on Contingent Valuation.” 58 Fed. Reg. 4601 et.<br />
seq. January 15.Boyle, K.J., W.H. Desvousges, F.R. Johnson, R.W. Dunford,<br />
and S.P. Hudson. 1994. “An Investigation of Part-Whole Biases in Contingent<br />
Valuation Studies.” Journal of Environmental Economics and Management<br />
27(1):64–83.<br />
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William H. Desvousges of W.H. Desvousges & Associates Speaker 18a: 19<br />
CDOW. 2006. Arkansas River Research Study Final Report for Period April, 1994 to<br />
December 30, 2005. Colorado Division of Wildlife. Submitted to: Bureau of<br />
Reclamation. April.<br />
Chadwick Ecological Consultants, Inc. 2003. Preliminary Report on the Biological Data<br />
for the Upper Arkansas River, 1994-2000.<br />
Code of Federal Regulations. 43 CFR 11<br />
Colorado Water Conservation Board. 2004. Statewide Water Initiative Study Report.<br />
November.<br />
Desvousges, W.H., and V.A. Skahen. 1986. Techniques to Measure Damages to<br />
Natural Resources: Final Report. Prepared for CERCLA 301 Task Force, U.S.<br />
Department of the Interior. Durham, NC: Research Triangle Institute.<br />
Freeman III, A.M. 2003. The Measurement of Environmental and Resource Values.<br />
Washington, DC: Resources for the Future.<br />
Hausman, J.A. ed. 1993. Contingent Valuation: A Critical Assessment. Amsterdam:<br />
Elsevier Science Publishers<br />
Kopp, Raymond J., and V. Kerry Smith, eds. 1993. Valuing Natural Assets: The<br />
Economics of Natural Resource Damage Assessment. Washington, DC:<br />
Resources for the Future.<br />
Lane, Diana, Karen Carney, and David Chapman. 20<strong>09</strong>. “Identifying, Scaling, and<br />
Evaluating Groundwater Restoration Projects as Compensation for<br />
Groundwater Injuries.” <strong>International</strong> Journal of Soil, Sediment and Water 2(1):<br />
Article 3.<br />
Lipton, Joshua. 2007. Expert Report of Joshua Lipton, Ph.D. for the ASARCO, LLC<br />
Chapter 11 Bankruptcy. Case No. 05-21207. California Gulch Site.<br />
National Research Council. Valuing Ground Water. Washington, DC: National<br />
Academy Press, 1997.<br />
New Jersey Department of Environmental Protection.<br />
http://www.nj.gov/dep/nrr/nri/nri_gw.htm<br />
Site Characterization Report for the Upper Arkansas River Basin. 2003.<br />
ASARC0029603 - ASARC0029659.Statewide Water Initiative Study Report<br />
(2004)<br />
Teter, Greg. 2007. Phone conversation with Greg Teter, Parkville Water District<br />
Manager. May 29.<br />
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William H. Desvousges of W.H. Desvousges & Associates Speaker 18b: 1<br />
Groundwater Valuation and<br />
Restoration:<br />
One Economist’s Perspective<br />
W.H. Desvousges & Associates, Inc.<br />
William H. Desvousges, Ph.D., President<br />
The Third Annual Advanced Conference on<br />
Natural Resource Damages Claims<br />
July 9, 20<strong>09</strong><br />
Introduction<br />
<br />
Many Superfund sites<br />
involve some type of<br />
groundwater remediation,<br />
which increases the<br />
likelihood that Trustees<br />
will make some type of<br />
natural resources<br />
damages claim.<br />
http://www.ngwa.org/20<strong>09</strong>summit/index.aspx<br />
http://www.doj.mt.gov/lands/naturalresource.asp<br />
W.H. Desvousges & Associates, Inc. 2<br />
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William H. Desvousges of W.H. Desvousges & Associates Speaker 18b: 2<br />
Trustees’ vs. PRPs’ Perspectives<br />
Trustees<br />
PRPs<br />
<br />
<br />
<br />
Focus on injury side of<br />
equation<br />
Fail to consider whether or<br />
not ongoing remediation will<br />
return groundwater to<br />
baseline condition<br />
Focus restoration claims on<br />
the quantity of water that<br />
has been “lost”<br />
<br />
<br />
<br />
Emphasize services<br />
Search for restoration<br />
alternatives that correspond<br />
more closely to the<br />
impacted services<br />
Stress cost-effective<br />
restoration<br />
W.H. Desvousges & Associates, Inc. 3<br />
The Role of Services in Valuing Groundwater<br />
Municipal<br />
Agricultural<br />
Industrial<br />
Institutions for Water Allocation<br />
Extractive Services<br />
current extraction<br />
return<br />
flow<br />
Waste Disposal<br />
Quality Impacts<br />
Remediation/<br />
Containment<br />
Groundwater Quantity<br />
and Quality Today<br />
Groundwater Quantity<br />
and Quality Tomorrow<br />
In Situ Services<br />
(magnitude of effects)<br />
Buffer value<br />
Waste assimilation<br />
Subsidence avoidance<br />
Salt water intrusion avoidance<br />
Ecological service<br />
Past Periods Current Period Future Periods<br />
W.H. Desvousges & Associates, Inc. 4<br />
Figure adapted from Valuing Ground Water: Economic Concepts and Approaches (p. 49) http://www.nap.edu/catalog/5498.html<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
William H. Desvousges of W.H. Desvousges & Associates Speaker 18b: 3<br />
Economic Valuation Concepts<br />
Total Economic Value of<br />
Groundwater<br />
Non-Use Values<br />
Use Values<br />
Current Use Value<br />
Future Use Value<br />
W.H. Desvousges & Associates, Inc. 5<br />
Case Studies<br />
Highlight how Trustees and PRPs end up<br />
with very different perspectives on potential<br />
groundwater damages<br />
Based on two sites<br />
California Gulch (western U.S.)<br />
Hypothetical site in New Jersey<br />
W.H. Desvousges & Associates, Inc. 6<br />
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William H. Desvousges of W.H. Desvousges & Associates Speaker 18b: 4<br />
California Gulch<br />
W.H. Desvousges & Associates, Inc. 7<br />
California Gulch: Groundwater Claim<br />
<br />
Stratus Assessment<br />
<br />
WHD Assessment<br />
<br />
<br />
Assumes that all<br />
groundwater and surface<br />
water in the first reach of<br />
California Gulch is injured<br />
and provides no services<br />
Estimates damages by<br />
multiplying the quantity of<br />
alleged amounts of injured<br />
water * the cost of restoring<br />
that amount of water<br />
<br />
<br />
<br />
Focuses on services<br />
Identifies that all municipal<br />
users were provided with<br />
alternative water supplies<br />
Includes the <strong>full</strong>y allocated<br />
nature of water supplies in<br />
the Arkansas River<br />
3,349 AF/yr. * $6,5<strong>09</strong> =<br />
$21.8M<br />
W.H. Desvousges & Associates, Inc. 8<br />
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William H. Desvousges of W.H. Desvousges & Associates Speaker 18b: 5<br />
California Gulch: Bottom Line<br />
Groundwater Claim<br />
Stratus Assessment<br />
$18.7M - $21.8M<br />
WHD Assessment $0<br />
W.H. Desvousges & Associates, Inc. 9<br />
Hypothetical Site in New Jersey:<br />
Site Overview<br />
100-acre landfill site<br />
Remediation at site: capping and treating the<br />
groundwater and pumping back to surface<br />
water<br />
Groundwater under site remains<br />
contaminated, but the surrounding surface<br />
water is free from any substances from<br />
landfill<br />
W.H. Desvousges & Associates, Inc. 10<br />
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William H. Desvousges of W.H. Desvousges & Associates Speaker 18b: 6<br />
Hypothetical Site in New Jersey:<br />
State’s Approach<br />
Example:<br />
=3,150,582,891 gal<br />
W.H. Desvousges & Associates, Inc. 11<br />
Hypothetical Site in New Jersey:<br />
State’s Approach<br />
Example (cont):<br />
Total Cost of Replacement Acres: ~$25 Million<br />
W.H. Desvousges & Associates, Inc. 12<br />
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William H. Desvousges of W.H. Desvousges & Associates Speaker 18b: 7<br />
Hypothetical Site in NJ:<br />
Allegations vs. Data<br />
<br />
<br />
<br />
<br />
NJ: Groundwater provides a drinking water source.<br />
<br />
The aquifer is too shallow to be used as a water supply.<br />
NJ: Groundwater provides a base flow to streams<br />
and other surface water bodies.<br />
<br />
Base flow has been reduced less than 0.001% by capping.<br />
NJ: Groundwater influences the health of aquatic<br />
ecosystems.<br />
<br />
There have been no adverse impacts to surface water, thus<br />
aquatic ecosystems are not impacted.<br />
NJ: Groundwater provides cycling and nutrient<br />
movement.<br />
<br />
Service is unchanged.<br />
W.H. Desvousges & Associates, Inc. 13<br />
Hypothetical Site in NJ:<br />
Allegations vs. Data (cont.)<br />
<br />
<br />
<br />
<br />
NJ: Groundwater prevents salt water intrusion.<br />
<br />
Not relevant in this region of NJ, and would be unaffected<br />
nonetheless.<br />
NJ: Groundwater provides ground stabilization.<br />
<br />
Service is unchanged.<br />
NJ: Groundwater prevents sinkholes.<br />
<br />
Not relevant in this geologic region and would be<br />
unchanged nonetheless.<br />
NJ: Groundwater provides maintenance of critical<br />
levels in freshwater wetlands.<br />
<br />
Service is unchanged.<br />
W.H. Desvousges & Associates, Inc. 14<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
William H. Desvousges of W.H. Desvousges & Associates Speaker 18b: 8<br />
Implications<br />
Replacement of the resource is unnecessary<br />
and an overcompensation for the lost<br />
resource services<br />
The focus on services is the key to<br />
conducting a natural resource damage<br />
assessment correctly<br />
W.H. Desvousges & Associates, Inc. 15<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/<strong>09</strong>/<strong>09</strong> in Santa Fe, NM
L A W S E M I N A R S I N T E R N A T I O N A L<br />
The Third Annual Advanced Conference on<br />
Natural Resource Damages Claims<br />
New case law and legislation, and best strategies<br />
July 9 and 10, 20<strong>09</strong><br />
Santa Fe, NM<br />
Strategies for Determining Baseline<br />
Brian D. Israel, Esq.<br />
Arnold & Porter LLP<br />
Washington, DC
Brian D. Israel of Arnold & Porter LLP Speaker 19: 1<br />
Natural Resource Damages:<br />
Understanding Baseline<br />
Brian D. Israel<br />
Arnold & Porter LLP<br />
July 20<strong>09</strong><br />
1<br />
Outline<br />
■ Baseline – The Basics<br />
■ A Few Very Hard Questions<br />
■ Baseline – From Theory to Practice<br />
■ A Few Concluding Thoughts<br />
Prepared by Brian D. Israel, Arnold & Porter LLP 2<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Brian D. Israel of Arnold & Porter LLP Speaker 19: 2<br />
What is Baseline?<br />
■ Baseline is the condition of the ecological services<br />
“but for” the release of oil or hazardous substances.<br />
■ Interior: Baseline is the “condition or conditions that<br />
would have existed at the assessment area had the<br />
discharge of oil or release of the hazardous<br />
substance under investigation not occurred.”<br />
43 CFR 11.14(e).<br />
■ NOAA: Baseline “means the condition of the natural<br />
resources and services that would have existed had<br />
the incident not occurred.” 15 CFR 990.30.<br />
Prepared by Brian D. Israel, Arnold & Porter LLP 3<br />
Pre-industrial<br />
Resource Services<br />
Baseline<br />
Degradation<br />
Baseline<br />
B<br />
Site<br />
Releases<br />
A<br />
Time<br />
Recovery to<br />
Baseline<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Brian D. Israel of Arnold & Porter LLP Speaker 19: 3<br />
What is the Basis of Baseline?<br />
■ All of the key operative statutes include an<br />
important “resulting from” limitation to <strong>NRD</strong> damage<br />
claims.<br />
■ CERCLA: trustees are only entitled to damages<br />
“resulting from such a release.” 42 USC 9607(4)(C)<br />
■ OPA: trustees only entitled to “damages…that<br />
result from such incident.” 33 USC 2702(a)<br />
■ CWA: recoverable costs include “any<br />
costs…incurred…in the restoration or replacement<br />
of natural resources damaged…as a result of a<br />
discharge of oil or a hazardous substance…” 33<br />
USC 1321(f)(4).<br />
Prepared by Brian D. Israel, Arnold & Porter LLP 5<br />
How is Baseline Used?<br />
■ Baseline conditions serve as the starting point for<br />
calculating natural resource damages:<br />
■ Interior: DOI shall “quantify for each resource<br />
determined to be injured…the effect of the<br />
discharge or release from the baseline condition<br />
in the quantity and quality of services...” 43 CFR<br />
11.70(a).<br />
■ NOAA: “Trustees must quantify the degree, and<br />
spatial and temporal extent of such injuries<br />
relative to baseline.” 15 CFR 990.52.<br />
Prepared by Brian D. Israel, Arnold & Porter LLP 6<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Brian D. Israel of Arnold & Porter LLP Speaker 19: 4<br />
How is Baseline Used (Part 2)?<br />
■ In addition to calculating damages, baseline<br />
establishes the restoration objective:<br />
■ Interior: “Restoration…means actions undertaken<br />
to return an injured resource to its baseline<br />
condition...” 43 CFR 11.14(ll).<br />
■ NOAA: The restoration goal of OPA “is achieved<br />
through the return of the injured natural resources<br />
and services to baseline…” 15 CFR 990.10.<br />
Prepared by Brian D. Israel, Arnold & Porter LLP 7<br />
How is Baseline Calculated?<br />
■ While DOI’s regulations are more detailed, both DOI<br />
and NOAA regulations contemplate review of nonimpacted<br />
areas (reference sites) and pre-impacted<br />
areas (historical data of assessment area) to<br />
calculate baseline.<br />
■ Interior: “Baseline data should be as accurate,<br />
precise, complete, and representative of the<br />
resource as data used” in quantifying the injury.<br />
43 CFR 11.72(b)(3).<br />
■ NOAA: “Baseline data may be estimated using<br />
historical data, reference data, control data, or data<br />
of incremental changes…alone or in combination.<br />
15 CFR 990.30.<br />
Prepared by Brian D. Israel, Arnold & Porter LLP 8<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Brian D. Israel of Arnold & Porter LLP Speaker 19: 5<br />
A Few Very Hard Questions<br />
■ Is Baseline Different Than Causation?<br />
■ Is Baseline Really Required?<br />
■ If so, is There Really Joint & Several Liability<br />
in <strong>NRD</strong> Actions?<br />
■ Can Baseline Concepts Address Concurrent<br />
Causes?<br />
Prepared by Brian D. Israel, Arnold & Porter LLP 9<br />
The Relationship Between Baseline & Causation<br />
■<br />
■<br />
■<br />
■<br />
■<br />
■<br />
■<br />
Both concepts derive from the “resulting from” statutory<br />
language.<br />
In theory, the two concepts are separate.<br />
Causation asks whether the injury was caused, in whole or<br />
in part, by the release.<br />
Baseline requires a quantification of the services that<br />
would have been provided “but for” the release. This is a<br />
hypothetical exercise (since the release did occur).<br />
For causation, there are two known conditions (release and<br />
impact) and the burden is to show a link.<br />
For baseline, there are two known conditions (release and<br />
impact), and the burden is to ascertain an unknown<br />
condition (i.e., condition without release).<br />
Baseline is harder to show than causation.<br />
Prepared by Brian D. Israel, Arnold & Porter LLP 10<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Brian D. Israel of Arnold & Porter LLP Speaker 19: 6<br />
<strong>NRD</strong> Issues of Proof -- Flowchart<br />
INJURY<br />
Are any<br />
natural<br />
resources<br />
injured?<br />
YES<br />
CAUSATION<br />
Are injuries due<br />
to release of oil or<br />
hazardous<br />
substances?<br />
YES<br />
BASELINE<br />
Would the injury<br />
exist to the same<br />
extent absent<br />
the release?<br />
NO<br />
DAMAGES<br />
What is the<br />
value of<br />
remaining<br />
injury?<br />
NO<br />
NO<br />
YES<br />
No <strong>NRD</strong> Claim<br />
No <strong>NRD</strong> Claim<br />
No <strong>NRD</strong> Claim<br />
11<br />
Prepared by Brian D. Israel, Arnold & Porter LLP<br />
The Relationship Between Baseline & Causation<br />
■ The distinction between baseline and causation is<br />
further supported by case law requiring a showing<br />
of causation in <strong>NRD</strong> matters.<br />
■ Thus:<br />
the regulations support the concept of baseline<br />
the courts support the concept of causation.<br />
■ While the distinction between baseline and<br />
causation is logical, is it two bites at the apple?<br />
■ In any event, a baseline analysis would, in most<br />
cases, incorporate and resolve the causation<br />
question.<br />
Prepared by Brian D. Israel, Arnold & Porter LLP 12<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Brian D. Israel of Arnold & Porter LLP Speaker 19: 7<br />
A Few Very Hard Questions<br />
■ Is Baseline Different Than Causation?<br />
■ Is Baseline Really Required?<br />
■ If so, is There Really Joint & Several Liability<br />
in <strong>NRD</strong> Actions?<br />
■ Can Baseline Concepts Address Concurrent<br />
Causes?<br />
Prepared by Brian D. Israel, Arnold & Porter LLP 13<br />
Is Baseline Really Required?<br />
■ The trustees could argue that the “resulting from”<br />
requirement is satisfied by a showing of causation.<br />
■ Furthermore, as is well-known, the <strong>NRD</strong> regulations<br />
are operative only to the extent that the trustees<br />
want the benefit of the rebuttable presumption.<br />
■ Nonetheless, PRPs possess the strong argument<br />
that “damages resulting from the release” should<br />
exclude damages resulting from other causes.<br />
■ Finally, a trustee decision to ignore baseline is<br />
unlikely given the litigation risk and potential inability<br />
to rely upon other provisions of the <strong>NRD</strong><br />
regulations.<br />
Prepared by Brian D. Israel, Arnold & Porter LLP 14<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Brian D. Israel of Arnold & Porter LLP Speaker 19: 8<br />
A Few Very Hard Questions<br />
■ Is Baseline Different Than Causation?<br />
■ Is Baseline Really Required?<br />
■ If so, is There Really Joint & Several<br />
Liability in <strong>NRD</strong> Actions?<br />
■ Can Baseline Concepts Address Concurrent<br />
Causes?<br />
Prepared by Brian D. Israel, Arnold & Porter LLP 15<br />
Does Baseline Eviscerate Joint & Several Liability?<br />
■ Trustees maintain that liability for natural resource<br />
damages -- like liability for response costs -- is joint<br />
and several.<br />
■ Some case law supports this proposition (see, e.g.<br />
Montrose, 104 F.3d at 1518-19) at least in dicta, but<br />
the Courts have not <strong>full</strong>y examined this point.<br />
■ Conceptually, a baseline analysis is inconsistent<br />
with joint and several liability since the defendant is<br />
only liable for damages resulting from its releases.<br />
■ The burden may be greater than showing divisibility<br />
since it could be argued that baseline is an element<br />
of the plaintiff’s claim, not an affirmative defense.<br />
Prepared by Brian D. Israel, Arnold & Porter LLP 16<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Brian D. Israel of Arnold & Porter LLP Speaker 19: 9<br />
A Few Very Hard Questions<br />
■ Is Baseline Different Than Causation?<br />
■ Is Baseline Really Required?<br />
■ If so, is There Really Joint & Several Liability<br />
in <strong>NRD</strong> Actions?<br />
■ Can Baseline Concepts Address<br />
Concurrent Causes?<br />
Prepared by Brian D. Israel, Arnold & Porter LLP 17<br />
Can Baseline Address Concurrent Causes?<br />
■ In one current matter, independent scientists have<br />
concluded that significant deforestation was due to<br />
the combined stress of metals releases and forest<br />
fires: “either stress alone would have caused much<br />
less damage.”<br />
■ In this case, the damage did not “result from” the<br />
metals release. On the other hand, “but for” the<br />
metals release, there would be less damage.<br />
■ Difficult for baseline analysis to tease out concurrent<br />
stressors combining to cause a single injury.<br />
■ May be necessary to use surrogates or estimates.<br />
Prepared by Brian D. Israel, Arnold & Porter LLP 18<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Brian D. Israel of Arnold & Porter LLP Speaker 19: 10<br />
BASELINE: FROM THEORY TO PRACTICE<br />
■ Common Baseline Factors<br />
■ Three Approaches:<br />
■ In Depth Evaluation<br />
■ Reference Sites<br />
■ Habitat Equivalency<br />
Prepared by Brian D. Israel, Arnold & Porter LLP 19<br />
Potential Baseline Factors<br />
■<br />
■<br />
■<br />
■<br />
■<br />
■<br />
■<br />
■<br />
■<br />
■<br />
■<br />
■<br />
Other industrial releases, including permitted and unpermitted<br />
Natural events (forest fires, floods, weather)<br />
Ecosystem trends (e.g., declining productivity, transitions, etc)<br />
Urbanization (development, stormwater runoff, mobile sources)<br />
Sewage discharge and overflows<br />
Invasive species and diseases<br />
Physical disturbances (highways, pavement, dredging, trespassers)<br />
Historic uses of property (recreational, agricultural, hunting)<br />
Non-recoverable releases by PRP (e.g., preenactment, permitted,<br />
or non-hazardous substances)<br />
Bioaccumulation (different sources over time)<br />
Acid precipitation<br />
Global climate change<br />
Prepared by Brian D. Israel, Arnold & Porter LLP 20<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Brian D. Israel of Arnold & Porter LLP Speaker 19: 11<br />
An Example for the Coeur d’Alene Trial<br />
■<br />
The Trustees Claimed that Mouth Deformities in<br />
Midge Larvae were Injuries Caused by Lead<br />
Contamination<br />
Prepared by Brian D. Israel, Arnold & Porter LLP 21<br />
Chironomid Midges<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Brian D. Israel of Arnold & Porter LLP Speaker 19: 12<br />
An Example for the Coeur d’Alene Trial<br />
■<br />
■<br />
And, Indeed, there Was a Greater Prevalence of the<br />
Deformity in the Assessment Area<br />
But the Deformity did Not Correlate with Lead<br />
Concentrations<br />
Prepared by Brian D. Israel, Arnold & Porter LLP 23<br />
Lead vs. Deformities in<br />
Laboratory Study<br />
Source: Martinez (2000) Adapted from Falter 4977<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Brian D. Israel of Arnold & Porter LLP Speaker 19: 13<br />
An Example for the Coeur d’Alene Trial<br />
■<br />
■<br />
The Defendant’s Experts Determined that the Cause of<br />
the Deformity was Mineralized Sand Grains which the<br />
Larvae Ate<br />
The Sand Grains Resulted from Mining Operations but<br />
were not a Hazardous Substance<br />
Prepared by Brian D. Israel, Arnold & Porter LLP 25<br />
Baseline Reference Sites<br />
■ The use of reference sites is, in theory, a useful way to<br />
ascertain baseline conditions.<br />
■ However, it is often very difficult to find appropriate sites<br />
or agree with the Trustees on appropriate sites.<br />
■ In one current case, the Court had previously sided with<br />
the Trustees on the selection of the appropriate<br />
reference location, holding that the issue was subject to<br />
the Trustee agency’s expertise and discretion.<br />
■ Possible solution is to select multiple reference locations<br />
to form a “reference envelope” around the site.<br />
Prepared by Brian D. Israel, Arnold & Porter LLP 26<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Brian D. Israel of Arnold & Porter LLP Speaker 19: 14<br />
Baseline in HEAs<br />
■ The Habitat Equivalency Analysis provides a common<br />
language for negotiating <strong>NRD</strong> settlements.<br />
■ Within the HEA, there is an input for percent service lost<br />
in the initial year.<br />
■ The percent service lost is an estimate that is based<br />
upon professional judgment and input from all parties.<br />
■ In the context of negotiations and a cooperative<br />
assessment, the value ascribed to “percent service lost”<br />
can – and should – incorporate baseline considerations.<br />
Prepared by Brian D. Israel, Arnold & Porter LLP 27<br />
Outline<br />
■ Baseline – The Basics<br />
■ A Few Very Hard Questions<br />
■ Baseline – From Theory to Practice<br />
■ A Few Concluding Thoughts<br />
Prepared by Brian D. Israel, Arnold & Porter LLP 28<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Brian D. Israel of Arnold & Porter LLP Speaker 19: 15<br />
A Few Concluding Thoughts…<br />
■<br />
■<br />
■<br />
■<br />
■<br />
PRPs Must Animate the Discussion of Baseline<br />
Considerations – the Trustees will Not<br />
The <strong>Law</strong> Related to Baseline is Largely Unsettled<br />
Both Legally and Factually, there are Tremendous<br />
Opportunities for Creative and Useful Arguments<br />
The Cooperative Approach is Sometimes Conducive to<br />
Ensuring Baseline Considerations are Incorporated<br />
In Litigation, There is No Substitute for Top-Quality<br />
Scientists – these are Expert Driven Inquiries<br />
Prepared by Brian D. Israel, Arnold & Porter LLP 29<br />
Natural Resource Damages:<br />
Understanding Baseline<br />
Brian D. Israel<br />
Arnold & Porter LLP<br />
July 20<strong>09</strong><br />
30<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
L A W S E M I N A R S I N T E R N A T I O N A L<br />
The Third Annual Advanced Conference on<br />
Natural Resource Damages Claims<br />
New case law and legislation, and best strategies<br />
July 9 and 10, 20<strong>09</strong><br />
Santa Fe, NM<br />
Counterclaims and Third Party Claims<br />
Richard O. Curley, Jr., Esq.<br />
Curley & Associates LLC<br />
Golden, CO
Richard O. Curley, Jr. of Curley & Associates LLC Speaker 20a: 1<br />
RICHARD O. CURLEY, JR.<br />
CURLEY & ASSOCIATES, LLC<br />
COUNTERCLAIMS AND THIRD-PARTY<br />
CLAIMS<br />
IN CERCLA <strong>NRD</strong> CASES:<br />
SHARING THE PAIN<br />
Santa Fe, New Mexico Natural Resource Damages Conference July 9 and 10, 20<strong>09</strong><br />
RICHARD O. CURLEY, JR.<br />
CURLEY & ASSOCIATES, LLC<br />
I. Introduction<br />
Dearth of Authority/Commentary regarding<br />
Counterclaims/Third-Party Claims in CERCLA <strong>NRD</strong><br />
Cases<br />
CERCLA Does Not Prohibit Such Claims<br />
Function of Relatively Few <strong>NRD</strong> Cases Filed –<br />
Most Settled Early<br />
Santa Fe, New Mexico Natural Resource Damages Conference July 9 and 10, 20<strong>09</strong><br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Richard O. Curley, Jr. of Curley & Associates LLC Speaker 20a: 2<br />
RICHARD O. CURLEY, JR.<br />
CURLEY & ASSOCIATES, LLC<br />
II. Counterclaims<br />
May a Counterclaim be Filed?<br />
<br />
United States<br />
Section 9620(a) provides explicit waiver –<br />
See Coeur d’Alene Tribe v. Asarco, Inc.<br />
280 F. Supp. 2d 1<strong>09</strong>4, 1125 (D. Id. 2003)<br />
Santa Fe, New Mexico Natural Resource Damages Conference July 9 and 10, 20<strong>09</strong><br />
RICHARD O. CURLEY, JR.<br />
CURLEY & ASSOCIATES, LLC<br />
II. Counterclaims (Continued)<br />
<br />
<br />
States<br />
Waive both Eleventh Amendment and Sovereign Immunity<br />
when they file <strong>NRD</strong> claim – See<br />
U.S. v. Montrose Chemical Corp. of California,<br />
788 F. Supp. 1485, 1493 (C.D. Cal. 1992)<br />
Waiver is for defensive claims in recoupment –<br />
Id.<br />
Santa Fe, New Mexico Natural Resource Damages Conference July 9 and 10, 20<strong>09</strong><br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Richard O. Curley, Jr. of Curley & Associates LLC Speaker 20a: 3<br />
RICHARD O. CURLEY, JR.<br />
CURLEY & ASSOCIATES, LLC<br />
II. Counterclaims (Continued)<br />
Whether to File a Counterclaim?<br />
<br />
<br />
Good faith basis?<br />
Potential benefits outweigh costs?<br />
Santa Fe, New Mexico Natural Resource Damages Conference July 9 and 10, 20<strong>09</strong><br />
RICHARD O. CURLEY, JR.<br />
CURLEY & ASSOCIATES, LLC<br />
II. Counterclaims (Continued)<br />
<br />
Pros<br />
<br />
<br />
<br />
<br />
May encourage trustee(s) to be more restrained in<br />
injury/damages claims<br />
Tends to level playing field in moral terms<br />
May increase the probability of settlement<br />
May result in portion of damages being allocated<br />
to trustee(s)<br />
Santa Fe, New Mexico Natural Resource Damages Conference July 9 and 10, 20<strong>09</strong><br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Richard O. Curley, Jr. of Curley & Associates LLC Speaker 20a: 4<br />
RICHARD O. CURLEY, JR.<br />
CURLEY & ASSOCIATES, LLC<br />
II. Counterclaims (Continued)<br />
<br />
Cons<br />
<br />
<br />
<br />
May distract the defendant/counterclaimant<br />
May create inconsistencies between<br />
defendant/counterclaimant’s defensive/offensive<br />
arguments<br />
Contrast between injuries caused by defendant<br />
and counterclaim defendant may not be<br />
flattering for defendant<br />
Santa Fe, New Mexico Natural Resource Damages Conference July 9 and 10, 20<strong>09</strong><br />
RICHARD O. CURLEY, JR.<br />
CURLEY & ASSOCIATES, LLC<br />
II. Counterclaims (Continued)<br />
Chances of Success on <strong>NRD</strong> Counterclaims<br />
Dearth of published cases on the merits<br />
But See Coeur d’Alene decision –<br />
Coeur d’Alene Tribe v. Asarco, Inc.<br />
280 F. Supp. 2d 1<strong>09</strong>4, 1125-1135 (D. Id. 2003)<br />
Counterclaims also survived motions practice in Clark Fork<br />
and Montrose cases<br />
Likely played a role in the settlements reached in these<br />
cases<br />
Santa Fe, New Mexico Natural Resource Damages Conference July 9 and 10, 20<strong>09</strong><br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Richard O. Curley, Jr. of Curley & Associates LLC Speaker 20a: 5<br />
RICHARD O. CURLEY, JR.<br />
CURLEY & ASSOCIATES, LLC<br />
III. Third-Party Claims<br />
May Third-Party Claims Be Filed?<br />
<br />
<br />
<br />
Section 9613(f)(1) – Contribution may be sought<br />
“during or following” any 106 or 107 action<br />
CERCLA does not express a preference for whether<br />
contribution claims against third parties should be<br />
severed – U.S. v. Kramer, 770 F. Supp. 954, 957<br />
(D. N.J. 1991)<br />
Whether to allow impleader – fact/case-specific<br />
inquiry<br />
Santa Fe, New Mexico Natural Resource Damages Conference July 9 and 10, 20<strong>09</strong><br />
RICHARD O. CURLEY, JR.<br />
CURLEY & ASSOCIATES, LLC<br />
III. Third-Party Claims (Continued)<br />
Whether to File Third-Party Claims?<br />
<br />
<br />
Good faith basis?<br />
Potential benefits outweigh costs?<br />
Santa Fe, New Mexico Natural Resource Damages Conference July 9 and 10, 20<strong>09</strong><br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Richard O. Curley, Jr. of Curley & Associates LLC Speaker 20a: 6<br />
RICHARD O. CURLEY, JR.<br />
CURLEY & ASSOCIATES, LLC<br />
III. Third-Party Claims (Continued)<br />
<br />
Pros<br />
<br />
<br />
<br />
May result in a portion of the damages being<br />
allocated to third parties<br />
May tend to level the playing field in terms of<br />
perceived equities<br />
May increase the probability of settlement<br />
Santa Fe, New Mexico Natural Resource Damages Conference July 9 and 10, 20<strong>09</strong><br />
RICHARD O. CURLEY, JR.<br />
CURLEY & ASSOCIATES, LLC<br />
III. Third-Party Claims (Continued)<br />
<br />
Cons<br />
<br />
<br />
<br />
Third-party defendants may help the plaintiff<br />
Third-party claims may distract the defendant<br />
and its counsel<br />
May significantly complicate case management/<br />
expense<br />
Santa Fe, New Mexico Natural Resource Damages Conference July 9 and 10, 20<strong>09</strong><br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Richard O. Curley, Jr. of Curley & Associates LLC Speaker 20a: 7<br />
RICHARD O. CURLEY, JR.<br />
CURLEY & ASSOCIATES, LLC<br />
IV. Conclusion<br />
Case Authority/Experience Indicate <strong>NRD</strong><br />
Counterclaims/Third-Party Claims May:<br />
<br />
<br />
Limit trustees’ claim inflation<br />
Spread the pain from <strong>NRD</strong> claims in a more<br />
equitable manner<br />
Santa Fe, New Mexico Natural Resource Damages Conference July 9 and 10, 20<strong>09</strong><br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Richard O. Curley, Jr. of Curley & Associates LLC Speaker 20b: 1<br />
Counterclaims and Third-Party Claims<br />
in CERCLA <strong>NRD</strong> Cases: Sharing the Pain<br />
Richard O. Curley, Jr.<br />
CURLEY & ASSOCIATES, LLC<br />
I. INTRODUCTION<br />
The use of counterclaims and third-party claims in Comprehensive Environmental<br />
Response Compensation and Liability Act (“CERCLA”) natural resource damages (“<strong>NRD</strong>”)<br />
litigation has received little treatment in either case law or from commenters. The dearth of<br />
authority or commentary concerning such issues is telling in and of itself. On the one hand,<br />
the lack of such authority and commentary makes sense given that CERCLA <strong>NRD</strong> claims<br />
may only be brought by natural resource trustees – the United States, states and certain<br />
Indian tribes. Thus, <strong>NRD</strong> liability may only initially arise in the event a trustee takes the<br />
initiative to bring an <strong>NRD</strong> claim.<br />
On the other hand, there is nothing in CERCLA that prohibits the assertion either of<br />
counterclaims or third-party claims against other PRPs, including governmental entities, that<br />
may be liable for <strong>NRD</strong>. However, to date, relatively few counterclaims or third-party claims<br />
have been filed within CERCLA <strong>NRD</strong> cases. For that reason, CERCLA <strong>NRD</strong> practitioners<br />
who are accustomed to operating in a world where there is often little, if any, relevant case<br />
law will find themselves in familiar territory when dealing with either counterclaims or thirdparty<br />
claims.<br />
The remainder of this paper focuses upon identifying and briefly evaluating some of<br />
the key legal and practical issues that counsel for defendants or potential defendants in<br />
CERCLA <strong>NRD</strong> cases may wish to consider as they evaluate the pros and cons of filing<br />
counterclaims or third-party claims in an <strong>NRD</strong> action.<br />
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Richard O. Curley, Jr. of Curley & Associates LLC Speaker 20b: 2<br />
II.<br />
COUNTERCLAIMS<br />
A. May a Counterclaim be Filed?<br />
Before filing a counterclaim against the United States or a state in a CERCLA <strong>NRD</strong><br />
action, counsel should consider whether sovereign immunity has been waived for the type of<br />
claims the defendant wishes to assert. Because the analysis is different for the United States<br />
and for states, they will be treated separately below.<br />
1. United States<br />
Section 9620(a) of CERCLA provides that:<br />
Each department, agency, and instrumentality of the United States (including<br />
the executive, legislative, and judicial branches of government) shall be<br />
subject to, and comply with, this chapter in the same manner and to the same<br />
extent, both procedurally and substantively, as any non-governmental entity,<br />
including liability under section 9607 of this title.<br />
The Court in Coeur D’Alene Tribe v. Asarco, Inc., 280 F. Supp. 2d 1<strong>09</strong>4, 1125 (D. Id.<br />
2003), in reliance on such language, held that: “CERCLA’s waiver of sovereign immunity is<br />
coextensive with the scope of liability imposed by 42 U.S.C. § 9607. If section 9607<br />
provides for liability, then section 9620(a)(1) waives sovereign immunity to that liability,”<br />
citing United States v. Shell Oil Co., 294 F.3d 1045 (9 th Cir. 2002), cert. denied; Atlantic<br />
Richfield Co. v. United States, 537 U.S. 1147 (2003), cert. denied; Shell Oil Co. v. United<br />
States, 537 U.S. 1147 (2003). The Coeur Court held that on the facts and claims of that case,<br />
the United States’ sovereign immunity was waived. Likewise, in U.S. ex rel. Dept. of Fish<br />
and Game v. Montrose Chemical Corp. of California, the Court held that “the United States<br />
waived its sovereign immunity as to Defendant’s counterclaims seeking recoupment by filing<br />
its complaint with the Court. See United States v. 2,116 Boxes of Boned Beef, 726 F.2d<br />
1481, 1490 (10 th Cir. 1984) (“[a]lthough the sovereign waives immunity as to claims of the<br />
defendant which are asserted in recoupment, it does not waive immunity as to claims of a<br />
different form or nature than that sought by it.”) cert. denied, 469 U.S. 825 (1984)).”<br />
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2. States<br />
The Court in Montrose also separately addressed the question of state Eleventh<br />
Amendment and sovereign immunity when it stated that:<br />
A state waives its Eleventh Amendment and sovereign immunities as to<br />
compulsory recoupment counterclaims by filing a complaint in federal court.<br />
Footnote omitted. United States v. Mottolo, 605 F. Supp. 898, 910 (D. N.H.<br />
1985) (“Filing suit as a plaintiff constitutes a waiver of Eleventh Amendment<br />
immunity as well as sovereign immunity with respect to any counterclaim<br />
asserted by a defendant which arises out of the same event underlying the<br />
state’s claim and which is asserted defensively in recoupment for the purpose<br />
of diminishing the state’s recovery.”) (citation omitted).<br />
788 F. Supp. 1485, 1493 (C.D. Cal. 1992). In Montrose, the Court denied the State of<br />
California’s motion to dismiss the defendants’ defensive recoupment claims and granted the<br />
State’s motion with respect to certain state tort claims act and injunctive relief claims that<br />
sought affirmative relief. Id. at 1494-95.<br />
B. Whether to File a Counterclaim?<br />
The decision of whether to file a counterclaim is obviously a strategic one that usually<br />
involves important legal, ethical and financial considerations. For instance, counsel must<br />
determine pursuant to FRCP 11 whether the factual and legal basis exists to file<br />
counterclaims in an <strong>NRD</strong> action just like in any other proceeding before the federal courts.<br />
Similarly, before filing counterclaims against an <strong>NRD</strong> trustee, counsel together with their<br />
clients should evaluate whether the potential offset generated by the counterclaim(s) in<br />
question is likely to be of sufficient magnitude to justify the substantial expense of<br />
prosecuting the counterclaim(s). In addition to such threshold issues, there are a number of<br />
pros and cons typically raised by the issue of whether to file counterclaims. Such pros and<br />
cons include the following:<br />
PROS<br />
1. Existence of credible counterclaims may encourage the trustee(s) to be more<br />
restrained in their estimation of injury/damages.<br />
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Richard O. Curley, Jr. of Curley & Associates LLC Speaker 20b: 4<br />
2. A credible counterclaim will tend to level the playing field in terms of the perceived<br />
equities between plaintiff and defendant. In other words, it will be much tougher for<br />
the trustee to claim the moral/environmental high ground and castigate the defendant<br />
as a “polluter” if a credible counterclaim is asserted.<br />
3. A credible counterclaim likely increases the probability that the case will settle and<br />
settle sooner.<br />
4. Of course, a viable counterclaim may also result in a portion of the damages being<br />
allocated to the trustee or related entity thereby reducing the defendant’s alleged<br />
liability.<br />
CONS<br />
1. One potential downside of filing a counterclaim in an <strong>NRD</strong> action is that it may<br />
distract the defendant and counterclaimant from defending against the plaintiff’s<br />
claims.<br />
2. Another related potential downside is that by filing a counterclaim, the defendant may<br />
signal to the trier of fact that the case is more about “who done it” and less about “is<br />
anything wrong.” In other words, by filing a counterclaim, the defendant may find<br />
itself arguing that the injury and damages complained of by the plaintiff trustee do not<br />
exist or are less than claimed, and in the alternative that releases of hazardous<br />
substances by the plaintiff caused injury to natural resources and resultant damages.<br />
Making the later offensive arguments without undermining the first defensive<br />
arguments may be difficult in some cases.<br />
3. If the plaintiff’s contribution to the injuries and damages are trivial and the<br />
defendant’s contribution is overwhelming, the trier of fact may punish rather than<br />
reward the counterclaimant for having brought what may seem like a nuisance<br />
counterclaim.<br />
C. Chances of Success on a CERCLA <strong>NRD</strong> Counterclaim.<br />
Given that there are only a handful of published CERCLA <strong>NRD</strong> cases that discuss<br />
counterclaims (some of them only in passing), it is difficult to say much about the chance of<br />
succeeding on such a counterclaim. As of the date of this paper, there appears to be only one<br />
published decision ruling on the merits of an <strong>NRD</strong> defendant’s counterclaim. In that<br />
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Richard O. Curley, Jr. of Curley & Associates LLC Speaker 20b: 5<br />
decision in the Coeur D’Alene litigation, the Court found that the United States was liable as<br />
an arranger, but not liable as an operator under CERCLA. Coeur at 1125-1135. However,<br />
there is reason to believe that in other cases, such as Montrose and State of Montana v.<br />
Atlantic Richfield Company, 266 F. Supp. 2d 1238 (D. Mont. 2003), where <strong>NRD</strong><br />
counterclaims were asserted and survived years of discovery and motions practice, the<br />
assertion of viable counterclaims against the trustees helped facilitate the settlement of those<br />
cases.<br />
III.<br />
THIRD PARTY CLAIMS<br />
Whereas in the counterclaim context there are few published CERCLA <strong>NRD</strong> cases, in<br />
the context of third-party <strong>NRD</strong> claims, there do not appear to be any published cases.<br />
Therefore, this paper will evaluate the issue of filing third-party claims in CERCLA <strong>NRD</strong><br />
cases based upon the language of CERCLA, decisions concerning third-party practice in<br />
CERCLA cost recovery cases and the Federal Rules of Civil Procedure.<br />
A. May Third-Party Claims be Filed?<br />
Section 9613(f)(1) of CERCLA provides that:<br />
Any person may seek contribution from any other person who is liable or<br />
potentially liable under section 9607(a) of this title, during or following any<br />
civil action under section 9606 of this title or under section 9607(a) of this<br />
title. Such claims shall be brought in accordance with this section and the<br />
Federal Rules of Civil Procedure, and shall be governed by Federal <strong>Law</strong>.<br />
The Court in United States v. Kramer noted that “on its face, the statute expresses no<br />
preference either way with regard to whether the contribution claims should be severed;<br />
rather, it provides only that those claims may be brought ‘during or following’ the primary<br />
action.” 770 F. Supp. 954, 957 (D. N.J. 1991). The Kramer Court found that in a case with<br />
more than 50 primary defendants and over 300 third-party defendants, the trial of defendants’<br />
claims against numerous third parties should be severed for purposes of discovery (with<br />
limited exceptions) and trial. Id. at 959-62.<br />
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However, the opposite result was reached in U.S. v. New Castle County where the<br />
Court stated that the United States “emphatically supports joinder of all potentially<br />
responsible parties in this case because its prior experience in superfund litigation suggests<br />
that such comprehensive actions expedite the settlement of claims and the cleanup of<br />
contaminated sites.” 111 F.R.D. 628, 632-33 (D. Del. 1986).<br />
What these cases underscore is that the question of whether to allow impleader of one<br />
or more third parties in CERCLA litigation is a fact specific inquiry that the courts undertake<br />
in light of the Federal Rules of Civil Procedure (See in particular FRCP 14 and 42), the<br />
underlying purposes of CERCLA and the court’s approach to case management.<br />
B. Whether to File Third Party Claims?<br />
The decision of whether to file third-party claims is obviously a strategic one that<br />
usually involves important legal, ethical and financial considerations. For instance, counsel<br />
must determine pursuant to FRCP 11 whether the factual and legal basis exists to file a thirdparty<br />
complaint in an <strong>NRD</strong> action. Similarly, counsel together with their clients should<br />
evaluate before filing a third-party complaint whether the potential recovery from or other<br />
impact of the third-party claims is likely to be of sufficient magnitude to justify the<br />
substantial expense of prosecuting the third-party claims. In addition to such threshold<br />
issues, there are a number of pros and cons typically raised by the issue of whether to file<br />
third-party claims. Such pros and cons include the following:<br />
PROS<br />
1. Viable third-party claims may result in a portion of the damages being allocated to the<br />
third-party defendants thereby reducing the defendants’ liability.<br />
2. Viable third-party claims against one or more entities, particularly if they are local<br />
governments or local industries, may tend to level the playing field in terms of the<br />
perceived equities between plaintiff and defendant. In other words, it will be tougher<br />
for the plaintiff trustee to castigate the defendant as a “polluter” if the third-party<br />
claims drive home the point that society as a whole has contributed to the injuries and<br />
damages alleged.<br />
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Richard O. Curley, Jr. of Curley & Associates LLC Speaker 20b: 7<br />
3. Credible third-party claims may also increase the probability that the case will settle<br />
and settle sooner.<br />
CONS<br />
1. Third-party defendants may, by defending against the third-party complaint or in<br />
filing their own counterclaims, significantly aid the plaintiff in its case against the<br />
defendant.<br />
2. The third-party claims may distract the defendant and its counsel from the task of<br />
defending against the plaintiff’s claims.<br />
3. The addition of third-party claims to the litigation, especially if the number of thirdparty<br />
defendants is numerous, may significantly complicate case management.<br />
IV.<br />
CONCLUSION<br />
Although at present there is little case authority or commentary concerning<br />
counterclaims and third-party claims in CERCLA <strong>NRD</strong> cases, the limited case law that exists<br />
makes it clear that both counterclaims and third-party claims are viable options for CERCLA<br />
<strong>NRD</strong> defendants to consider. Furthermore, viable counterclaims and third-party claims may<br />
serve to both restrain trustees, at least at the margin, from inflating their <strong>NRD</strong> claims and<br />
serve to spread the pain from such <strong>NRD</strong> claims in a more equitable manner.<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
L A W S E M I N A R S I N T E R N A T I O N A L<br />
The Third Annual Advanced Conference on<br />
Natural Resource Damages Claims<br />
New case law and legislation, and best strategies<br />
July 9 and 10, 20<strong>09</strong><br />
Santa Fe, NM<br />
Settlement of <strong>NRD</strong> Litigation<br />
Allan Kanner, Esq.<br />
Kanner & Whiteley, L.L.C.<br />
New Orleans, LA<br />
Steven G. Jones, Esq.<br />
Marten <strong>Law</strong> Group PLLC<br />
Seattle, WA
Allan Kanner of Kanner & Whiteley, L.L.C. Speaker 21: 1<br />
Understanding and Protecting Natural Resources<br />
by<br />
Allan Kanner <br />
701 Camp Street<br />
New Orleans, LA 70130<br />
(504) 524-5777 Phone<br />
(504) 524-5763 Fax<br />
a.kanner@kanner-law.com<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong><br />
Santa Fe, New Mexico<br />
July 10, 20<strong>09</strong><br />
Partner, Kanner & Whiteley, L.L.C., New Orleans, LA; Senior Lecturing Fellow, Duke <strong>Law</strong> School, and Adjunct<br />
Professor of <strong>Law</strong>, Tulane <strong>Law</strong> School, B.A., U. of Pennsylvania, 1975; J.D., Harvard <strong>Law</strong> School, 1979. The ideas<br />
expressed in this article are the author’s and do not reflect the views of any client.<br />
** The article first appeared in 17 DUKE ENVIRONMENTAL LAW & POLICY FORUM, p. 119 (Fall 2006), and was coauthored<br />
with Mary Ziegler.<br />
© i<br />
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Allan Kanner of Kanner & Whiteley, L.L.C. Speaker 21: 2<br />
Table of Contents<br />
I. Introduction ..…………………………………………………………………………1<br />
II. Bringing an <strong>NRD</strong> Claim …..……………………………………………...…………..5<br />
A. Who is the Proper Party to File Suit?...…………………………………………...5<br />
1. State Trustees ……………………...…………………………………………..6<br />
2. Federal Trustees …………………..…………………………...……………..11<br />
3. Overlapping Authority …………..…………………………………………...13<br />
4. Municipal and Local Trustees ..…...…………………………………………16<br />
5. Citizen Suits …………………….………………………………………..…..17<br />
B. Causes of Action …..…………………………………………………………….19<br />
1. State Statutory Causes of Action ………………..…………………………...19<br />
2. Common <strong>Law</strong> Causes of Action ………………..……………………………21<br />
C. Causation ……………………………………………..………………………….24<br />
D. Injury …………………………………………………..………………………...27<br />
E. Damages ………………………………………………..………………………..29<br />
1. Generally ……………………………………………..……………………….29<br />
a. Restoration ……………………………………….………………………30<br />
b. Compensatory Restoration ……………………….…...………………….30<br />
c. Costs ……………………………………………….…….. ………….......33<br />
2. Valuation ……………………………………………….…………...………...33<br />
F. Defenses …………………………………………………….……………....…....34<br />
1. Statutory Defenses………………………………………………………...…..34<br />
2. Applicability of CERCLA …………………………………………..……..…35<br />
3. <strong>NRD</strong> and Site Remediation are the Same ………………………..…..……….38<br />
4. Preemption of Federal <strong>Law</strong> …………….………………………………....…..39<br />
5. Scope of the Public Trust Doctrine …….…………………………………......41<br />
6. Government Contractor Defense ………………………………………...…...43<br />
7. Statutory Immunity…………………………………………………….....…...49<br />
8. Standing to Bring <strong>NRD</strong> Claims ………………………………………..……..52<br />
III. Conclusion ………………………………………………………………………..…….53<br />
© ii<br />
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Allan Kanner of Kanner & Whiteley, L.L.C. Speaker 21: 3<br />
“Some paintings become famous because, being durable, they are viewed<br />
by successive generations, in each of which are likely to be found a few<br />
appreciative eyes. I know a painting so evanescent that it is seldom<br />
viewed at all, except by some wandering deer. It is a river who wields the<br />
brush, and it is the same river who, before I can bring my friends to view<br />
his work, erases it forever from human view. After that it exists only in my<br />
mind’s eye.” 1<br />
I. INTRODUCTION<br />
Over the years, environmental pollution has spawned a great deal of public and private<br />
litigation and related governmental investigations. One type of claim, however, has seen little<br />
contemporary litigation: claims for natural resource damages (“<strong>NRD</strong>”). The relative dearth of<br />
<strong>NRD</strong> claims being pursued is unusual given the breadth of available legal theories and the<br />
compelling public interest at stake. The goal of this article is to explain the importance of <strong>NRD</strong><br />
programs and evaluate the process of bringing and defending <strong>NRD</strong> claims in the United States.<br />
A strong <strong>NRD</strong> program benefits society in many diverse ways. Economic enhancement<br />
and increased protection for environmental, recreational and historical interests are but a few<br />
examples 2 . A U.S. Fish & Wildlife Service article espoused the benefits of a strong <strong>NRD</strong><br />
program:<br />
<strong>NRD</strong>AR [Natural Resource Damage Assessment and Restoration Program]<br />
ensures healthy fish and wildlife populations, as well as healthy lands and<br />
waters on which they depend. <strong>NRD</strong>AR ensures healthy wetlands, which<br />
support more species of wildlife than any other habitat type. Wetlands are<br />
especially important to commercial saltwater fish and shellfish. Wetlands<br />
benefit people by providing recreational opportunities, recharging groundwater<br />
supplies, reducing flood damage, and controlling erosion. The economic<br />
benefits of wetland resources are estimated at more than $1 trillion annually.<br />
<strong>NRD</strong>AR benefits the nation’s 35 million anglers, 14 million hunters, and 63<br />
million wildlife viewers who rely on healthy fish and wildlife populations for<br />
their outdoor pursuits. <strong>NRD</strong>AR helps maintain a thriving economy by ensuring<br />
1 ALDO LEOPOLD, A SAND COUNTY ALMANAC (1949).<br />
2 See generally http://www.nj.gov/dep/nrr.<br />
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Allan Kanner of Kanner & Whiteley, L.L.C. Speaker 21: 4<br />
healthy resources that provide recreational opportunities. Fishing annually<br />
brings in $38 billion; hunting, $21 billion; and wildlife viewing, $27 billion.<br />
These earnings represent about 1.4% of the Gross Domestic Product. <strong>NRD</strong>AR<br />
helps safeguard more than 2 million <strong>full</strong>- and part-time jobs related to fishing,<br />
hunting, and wildlife viewing. <strong>NRD</strong>AR benefits a nearly $4 billion dollar per<br />
year commercial fishing industry. 3<br />
In addition, property owners and other real estate interests adjacent to restored areas<br />
benefit by removing stigmas that lower property values, promoting economic development and<br />
enhancing the use and enjoyment of property. The establishment of new natural resources, such<br />
as habitats for certain species, might create more development opportunities in other areas over<br />
time. Healthy natural resources are also important to Native American Tribes and help to<br />
maintain “their sovereign rights to land, water, fishing, hunting, and gathering, as well as cultural,<br />
spiritual, and traditional activities that depend on healthy resources.” 4<br />
For all Americans, there<br />
remains a strong desire to leave things better for the next generation.<br />
The overriding public interest in the preservation and reclamation of natural resources is<br />
one of the most important reasons for the development of <strong>NRD</strong> programs. As the nature of the<br />
public interest in natural resources has evolved, so has environmental legislation. The focus of<br />
the first significant environmental laws in the 1950s and 1960s was significantly different than<br />
the present day focus of environmental legislation. Initially, environmental efforts were<br />
prompted by preservationist ideals -- the desire to maintain the “great” natural resources and save<br />
such sites from exploitation. For example, in the 1960s, the proposed construction of a dam in<br />
the Grand Canyon raised awareness about environmental protectionism - - the need to preserve<br />
the legacy of our nation’s natural resources. Legislation was directed primarily at the behavior<br />
3 U.S. Fish & Wildlife Service, Beyond Cleanup: Restoring American’s Natural Heritage, Jan. 1, 1998, available at<br />
http://www.fws.gov/contaminants/Library.cfm<br />
4 Id.<br />
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Allan Kanner of Kanner & Whiteley, L.L.C. Speaker 21: 5<br />
of government agencies, as opposed to private individuals. 5<br />
Congress enacted environmental<br />
legislation in order to “ensure that government agencies respected social and cultural values<br />
when pursuing development projects,” 6 rather than to address the illegal conduct of polluters and<br />
the consequences of their actions.<br />
In effect, we have begun to move from a “great places” approach to natural resources to a<br />
“reclaiming” approach. While a few “great place” battles still continue, such as the effort to<br />
preserve the Arctic Wilderness, today environmental activism and legislation is inspired by the<br />
need to restore and prevent further exploitation of injured and diminishing natural resources such<br />
as the nation’s coastal areas. Environmentalism is motivated less by the need for preservation<br />
and more by the desire for reclamation. People now understand two things about natural<br />
resources. First, natural resources can be salvaged, even in seemingly impossible industrial and<br />
urban locales. The technology and the capacity to reclaim and recreate natural resources have<br />
improved exponentially and will continue to improve. The Meadowlands in New Jersey is a<br />
classic example of this type of transformation potential. 7<br />
Second, people take property rights<br />
5 Robert V. Percival, Environmental Federalism: Historical Roots and Contemporary Models, 54 MD. L. REv. 1141,<br />
1158 (1995).<br />
6 Id.<br />
7 At one time the world’s largest dump, “[t]he Hackensack Meadowlands is perhaps the largest urban wetland<br />
complex in the northeastern United States. It lies along the Hackensack River and is located within the New York-<br />
Newark metropolitan area. Given this location, the Meadowlands has been greatly impacted by urban and port<br />
development . . . The New Jersey Meadowlands Commission (“NJMC”) is acquiring wetlands and management<br />
rights and making zoning changes . . . in an effort to protect the remaining wetlands. Plans are underway to restore<br />
the Hackensack Meadowlands ecosystem . . . Wetland restoration and enhancement efforts include restoring tidal<br />
flow, removing contaminated soils, creating open water areas, controlling invasive species . . . and regulating water<br />
levels . . . The main hope for the future of Meadowlands wetlands as well as for other urban wetlands is that as many<br />
as possible will be set aside as open space for our benefit and for future generations and that wetland restoration<br />
efforts will be accelerated to revitalize significantly impacted wetlands and to rebuild lost wetlands wherever<br />
practicable. Wetlands are natural resources that, among other things, increase the quality of life for urban residents<br />
across America.” Ralph W. Tiner, John Q. Swords, & Bobbi Jo McLain, Wetland Status and Trends for the<br />
Hackensack Meadowlands, December 2002, available at http://library.fws.gov/Wetlands/Hackensack.<strong>pdf</strong>.<br />
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more seriously and also understand that the public’s right to its property or “commons” is<br />
important for both monetary and nonmonetary reasons. 8<br />
Finally, natural resources that were<br />
formerly viewed with little interest or real understanding, such as groundwater, have generated a<br />
special need for attention in light of the crucial role they will play in the future of this country’s<br />
survival. 9<br />
The enactment of the Comprehensive Environmental Compensation, Response and<br />
Liability Act of 1980 (“CERCLA” or “Superfund”) 10 was an attempt by Congress to respond to<br />
the massive pollution and contamination of the environment in the United States. However, as<br />
the past twenty-five years has demonstrated, CERCLA has not been effective in enabling the<br />
recovery of damages for pollution and restoring injured natural resources. 11<br />
In fact, CERCLA<br />
has actually enabled polluters to prolong any meaningful cleanup of natural resources by<br />
permitting them to engage in years of ineffective and mostly useless remediation and feasibility<br />
studies. 12<br />
Moreover, the response time of CERCLA is poor, thus prolonging what is already a<br />
tediously slow road to restoration. 13<br />
The pursuit of <strong>NRD</strong> is the last chance to accomplish what the United States originally<br />
wanted to do with Superfund - - to cleanup the nation’s natural resources and make the polluters<br />
8 See Allan Kanner, The Public Trust Doctrine, Parens Patriae and the Attorney General as the Guardian of the<br />
State’s Natural Resources, 16 DUKE J. ENVTL. L. & POL’Y F. Error! Main Document Only.57, 59 (2005).<br />
Historically, the public “common” was a public area used by villagers for livestock grazing. Additionally, the<br />
villagers had the right to “cut wood, to fish, and to cut peat or turf for fuel.” Id. The common area was used and<br />
regulated by the villagers for purposes of mutual sustainability and benefit.<br />
9 Id.<br />
10 42 U.S.C. §§ 9601-9675.<br />
11 See generally, Allan Kanner, Rethinking Superfund, 20 NAT’L ASS’N ENVTL. PROF’LS NEWS 19 (May-June 1995).<br />
12 Robert W. McGee, Superfund: It’s Time for Repeal After a Decade of Failure, 12 UCLA J. ENVTL. L. & POL’Y<br />
165, 170 (1993).<br />
13 Id. at 169.<br />
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compensate both the government and the public for the injuries that they have suffered and will<br />
continue to endure. Because our natural resources are being destroyed and disappearing at an<br />
alarming rate, <strong>NRD</strong> litigation has become increasingly important in order to preserve these<br />
natural assets for the public and for future generations.<br />
II.<br />
BRINGING AN <strong>NRD</strong> CLAIM<br />
A. Who is the Proper Party to File Suit?<br />
When an injured natural resource is privately owned, property laws dictate that the owner<br />
of that natural resource is entitled to file suit and recover damages from a potentially responsible<br />
party (“PRP”). In the United States, the Constitution, statutes and common law protect private<br />
property rights. However, when natural resources owned by the public are damaged, questions<br />
arise as to who is entitled to sue for damages on behalf of the public and what type of behavior<br />
constitutes permissible use of public property. For example, an individual’s right to operate a<br />
polluting facility on his private property must be balanced with the public’s right to have a river<br />
adjacent to the property free from contamination. Ultimately, it is the governmental trustees who<br />
have both the responsibility and affirmative obligation to protect natural resources held in trust<br />
for the benefit of the public and to decide when and how to do so.<br />
Natural resource trustees’ responsibilities include assessing the extent of injury to<br />
natural resources and restoring natural resources. In order to execute these<br />
responsibilities, a trustee can negotiate with PRPs to obtain PRP-financed or PRPconducted<br />
assessment and restoration of natural resource injury, sue PRPs for the<br />
costs of assessing and restoring the natural resource, or conduct the assessment<br />
and restore natural resources and then seek reimbursement from PRPs, and, in<br />
limited circumstances, from Superfund. 14<br />
14 Allan Kanner, Tribal Sovereignty and Natural Resource Damages, 25 PUB. LAND & RESOURCES L. REV. 93, 107<br />
(2004).<br />
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Both the federal and state governments are responsible for protecting and maintaining the natural<br />
resources that fall within their respective jurisdictions. 15<br />
1. State Trustees<br />
Traditionally, states have the responsibility of protecting natural resources for the benefit<br />
of the public. A state may use the common law public trust doctrine and police power authority<br />
to bring suit to recover damages for injured natural resources and to restore the same. 16<br />
These<br />
common law doctrines evolved in recognition of the inherently broad authority states have over<br />
natural resources within their boundaries. For example, in State of Georgia v. Tennessee Copper<br />
Co., United States Supreme Court Justice Oliver Wendell Holmes wrote that “the state has an<br />
interest independent of and behind the titles of its citizens, in all the earth and air within its<br />
domain. It has the last word as to whether its mountains shall be stripped of their forests and its<br />
inhabitants shall breathe pure air.” 17<br />
Accordingly, as the Supreme Court later noted, a state may<br />
assert a claim to protect “the atmosphere, the water, and the forests within its territory,<br />
irrespective of the assent or dissent of the private owners of the land most immediately<br />
concerned.” 18<br />
States exercise police power for the protection of public health and welfare pursuant to<br />
the powers reserved to states by the Tenth Amendment to the United States Constitution. 19<br />
15 In some cases, these rights have been passed to citizens under appropriate circumstances (i.e., through a federal<br />
citizen’s suit or pursuant to a state statute such as New Jersey’s Environmental Rights Act, N.J.S.A. 2A:35A-1, et<br />
seq.).<br />
16 See Kanner, supra note 8.<br />
17 206 U.S. 230 (1907); see also Alfred L. Snapp & Son, Inc. v. Puerto Rico, 458 U.S. 592, 604 (1982).<br />
18 Hudson County Water Co. v. McCarter, 2<strong>09</strong> U.S. 349, 355 (1908).<br />
19 Similarly, the common law theory of parens patriae is illustrative of states’ power and authority to protect the<br />
interests of its citizens. Through parens patriae suits, states have sought redress for injuries to “quasi-sovereign”<br />
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Through its police power a state may regulate the release of contaminants into the air, 20 protect<br />
the quality of water, 21 control land use through zoning regulations, 22 regulate storage and<br />
disposal of solid and hazardous substances, 23 and protect the public interest in wildlife. 24<br />
The public trust doctrine has its origins in ancient common law. 25<br />
During its early<br />
development in American jurisprudence, the doctrine was used to retain fisheries and land under<br />
interests. These “quasi-sovereign” interests include state interest in its general economy or environment, Late<br />
Corporation of the Church of Jesus Christ of Latter-Day Saints v. United States, 136 U.S. 1, 56 (1890); interstate<br />
water management, Wyoming v. Colorado, 286 U.S. 494, 5<strong>09</strong> (1932); pollution-free interstate waters, State of<br />
Missouri v. State of Illinois, 180 U.S. 208, 241, (1901); protection of the air and earth from interstate pollutants,<br />
State of Georgia v. Tennessee Copper Co., 206 U.S. at 238; and the general economy of the state, State of Georgia v.<br />
Pennsylvania Railroad Co., 324 U.S. 439, 447 (1945), reh’g denied, 324 U.S. 890 (1945).<br />
20 See, e.g., Northwestern Laundry v. City of Des Moines, 239 U.S. 486 (1916); Lees v. Bay Area Air Pollution<br />
Control District, 48 Cal. Rptr. 295, 299-300 (Cal. Ct. App. 1966)(holding that the regulation of air pollution is<br />
“essential and represents a lawful and proper exercise of the police power); State v. Burns, 591 P.2d 563 (Ariz. Ct.<br />
App. 1979); ARIZ. REV. STAT. § 49-401A (1987).<br />
21 See, e.g., Commonwealth of Pennsylvania v. Barnes and Tucker Company, 319 A.2d 871, 885 (Pa.<br />
1974)(“abatement of water pollution is unquestionably a reasonable exercise of the police power in the abstract”);<br />
Rochez Bros., Inc. v. Commonwealth of Pennsylvania, 334 A.2d 790, 796 (Pa. Commw. Ct. 1975); Morshead v.<br />
California Regional Water Quality Control Board, 119 Cal. Rptr. 586, 589 (Cal. Ct. App. 1975)(holding that<br />
“prevention of water pollution is a legitimate government objective in furtherance of which the police power may be<br />
exercised”).<br />
22 See, e.g., Johnson v. Village of Villa Park, 18 N.E.2d 887, 889 (Ill. 1938)(“Cities and villages have the right to<br />
adopt zoning ordinances as an exercise of their police power and thereby impose a reasonable restraint upon the use<br />
of private property.”); People v. Johnson, 277 P.2d 45, 49 (Cal. Ct. App. 1955)(“[z]oning is inherent in the police<br />
power”); Roselle v. Wright, 122 A.2d 506 (N.J. 1956).<br />
23 See, e.g., Meyers v. Town of Cornwall, 192 N.Y.S.2d 734, 738 (N.Y. 1959)(“a municipality may, in the exercise<br />
of its police power, adopt an ordinance which regulates the collection, storage or disposition of refuse and garbage”);<br />
Department of Transportation v. PSC Resources, Inc., 419 A.2d 1151 (N.J. Super. Ct. <strong>Law</strong> Div. 1980); State v. Byrd,<br />
708 So. 2d 401, 405 (La. 1998).<br />
24 People v. K. Sakai Co., 128 Cal. Rptr. 536, 539 (Cal. Ct. App. 1976); State v. Stewart, 253 S.E.2d 638, 639 (N.C.<br />
Ct. App. 1979)(“As the State’s wildlife population is a natural resource of the State held by it in trust for its citizens,<br />
the enactment of laws reasonably related to the protection of such wildlife constitutes a valid exercise of the police<br />
power vested in the General Assembly.”); Florida Game and Fresh Water Fish Commission v. Flotilla, Inc., 636 So.<br />
2d 761, 765 (Fla. Dist. Ct. App. 1994); COLO. REV. STAT. § 33-1-101(1) (1986 as amended)(“It is the policy of the<br />
state of Colorado that the wildlife and their environment are to be protected, preserved, enhanced, and managed for<br />
the use, benefit, and enjoyment of the people of this state and its visitors.” )<br />
25 See Kanner, supra note 8.<br />
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navigable waters in trust for the use and benefit of the public. 26<br />
The public trust doctrine was<br />
first applied in case law pertaining to disputes over navigable waters. These cases began with<br />
the premise that navigable beds, critical to commerce, were owned by the state and held in<br />
common by the state for public use. In the early American case of Home v. Richards, 27 the court<br />
held that the bed of a navigable river within the Commonwealth could not be granted to an<br />
individual. 28<br />
The general scope of the doctrine is well articulated in the seminal United States<br />
Supreme Court case of Illinois Central Railroad Co. v. Illinois:<br />
That the state holds the title to the lands under the navigable waters of Lake<br />
Michigan, within its limits, in the same manner that the state holds title to soils<br />
under tide water, by common law, we have already shown; . . . It is a title held in<br />
trust for the people of the state, that they may enjoy the navigation of the<br />
waters . . . and have liberty of fishing therein . . . The trust devolving upon the<br />
state for the public, and which can only be discharged by the management and<br />
control of property in which the public has an interest, cannot be relinquished by a<br />
transfer of the property. The control of the state for the purposes of the trust can<br />
never be lost . . . 29<br />
Although the public trust began with a more limited focus during an era of relatively<br />
weak environmental understanding, the trend over time has been to expand protection to an<br />
equally broad array of natural resources. Since the doctrine’s first application to navigable beds,<br />
26 Joseph L. Sax, The Public Trust Doctrine in Natural Resource <strong>Law</strong>: Effective Judicial Intervention, 68 MICH. L.<br />
REV. 471 (1970); V. YANNACONE, B. COHEN & S. DAVIDSON, ENVIRONMENTAL RIGHTS AND REMEDIES 1, § 2:3<br />
(1972).<br />
27 8 Va. (4 Call) 441 (Va. 1798).<br />
28 Over the years, because the doctrine was used in relation to waterways, some confusion arose about the public<br />
trust and its relation to riparians. See, e.g., Groner v. Foster, 27 S.E. 493 (Va. 1897) (emphasizing rights of<br />
riparians in navigable waters); Taylor v. Commonwealth, 47 S.E. 875 (Va. 1904)(reconciling rights of the riparian<br />
with public rights); Commonwealth v. Garner, 44 Va. (3 Gratt.) 655 (Va. Gen. Ct. 1846) (noting that navigable<br />
streams were the property of the Commonwealth, held for the public benefit). Nonetheless, the principle that<br />
government has a proprietary interest in natural resources survived. See, e.g., Toomer v. Witsell, 334 U.S. 385, 408<br />
(1948); Geer v. Connecticut, 161 U.S. 519, 534 (1986), overruled on other grounds by Hughes v. Oklahoma, 441<br />
U.S. 322 (1979).<br />
29 146 U.S. 387, 452-453 (1892)(emphasis added).<br />
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whose import to commerce is obvious, it has been extended to include state trusteeship over<br />
natural resources 30 with little or no commercial value, such as non-navigable waters, 31 and state<br />
parks. 32<br />
Additionally, although the public trust doctrine speaks in terms of duties and not <strong>NRD</strong>,<br />
the nexus between resources that are recognized as being held in trust by the state is their<br />
importance to the general public, aesthetically as well as commercially. This importance<br />
supersedes the natural resources’ potential value from exploitation by any one individual. More<br />
recent cases have recognized that the trust is active, not passive, and imposes a responsibility on<br />
states to preserve and promote the trust corpus. 33<br />
Thus, a pattern has emerged in which states are<br />
directed to take a more proactive approach in order to fulfill their obligations and responsibilities<br />
with regard to the protection of natural resources.<br />
Recognizing that the state has an important interest in conserving and protecting natural<br />
resources, the doctrine of parens patriae allows the state (in its capacity as “trustee”) to bring<br />
suit to protect those natural resources. This type of suit, recognized in many states, 34 allows the<br />
trustee (state) to sue to make the trust (natural resources) whole, whether by means of restoration<br />
30 The legal fiction of state ownership of natural resources was abandoned in Hughes as being inconsistent with the<br />
Commerce Clause, however, the Supreme Court in that case recognized the important interest at stake. The<br />
Supreme Court stated, “We consider the States’ interests in conservation and protection of wild animals as<br />
legitimate local purposes similar to the States’ interests in protecting the health and safety of their citizens.” Hughes,<br />
441 U.S. at 337.<br />
31 See National Audubon Society v. Superior Court of Alpine County, 658 P.2d 7<strong>09</strong> (Ca. 1983), cert. denied, 464<br />
U.S. 977 (1983).<br />
32 See Sax, supra n. 26, at 485; Davenport v. Buffington, 97 F. 234 (8th Cir. 1899); Gould v. Greylock Reservation<br />
Commission, 215 N.E.2d 114 (Mass. 1966).<br />
33 See, e.g., National Audubon Society, 658 P.2d at 724-725; City of Milwaukee v. State, 214 N.W. 820 (Wis. 1927).<br />
34 See, e.g., Maine v. M/V Tamano, 357 F. Supp. 1<strong>09</strong>9 (D. Me. 1973); Department of Natural Resources v.<br />
Amerada Hess, 350 F. Supp. 1060, 1067 (D. Md. 1972); Department of Fish & Game v. S.S. Bournemouth, 307 F.<br />
Supp. 922, 925 (C.D. Cal. 1969); Department of Envtl. Protection v. Jersey Cent. Power & Light Co., 336 A.2d<br />
750, 759 (N.J. Super. Ct. App. Div. 1975), rev’d on other grounds, 351 A.2d 337 (N.J. 1976); State v. Bowling<br />
Green, 313 N.E.2d 4<strong>09</strong>, 411 (Ohio 1974); State Department of Fisheries v. Gillette, 621 P.2d 764, 766-67 (Wash. Ct.<br />
App. 1980).<br />
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or compensation. Despite the fact that many states have no case law directly addressing a state’s<br />
parens patriae authority to sue, there is no evidence that any state has deemed the principle of<br />
parens patriae not to be a part of the state’s law. Furthermore, many state constitutions, such as<br />
Louisiana, impose upon the state a duty to protect the environment. 35<br />
A somewhat analogous common law doctrine available to redress <strong>NRD</strong> is the doctrine of<br />
public nuisance. Public nuisance is defined as “an unreasonable interference with the rights<br />
common to the general public;” it is “a substantial interference with the public health, the public<br />
safety, the public peace, the public comfort or the public convenience . . . ” 36 Moreover, it is not<br />
necessary that the individual be actually harmed. 37 Monetary damages for public nuisance,<br />
however, are not available. Depending on the jurisdiction, public nuisance may be statutorily<br />
defined, but nonetheless be available at common law. 38<br />
In a sense, the public trust doctrine and the public nuisance doctrine operate under the<br />
same principle. Both protect interests of the public in natural resources. The public trust<br />
doctrine protects natural resources held for all. Public nuisance protects those held by no one. In<br />
the case of United States v. Luce, the United States, as operator of a quarantine station for<br />
immigrants waiting to enter the country, brought a public nuisance action against a neighboring<br />
35 LA. CONST. art. IX, § 1; see also PA. CONST. art I, § 27; FLA. CONST. art. X, § 11; HAW. CONST. art. XII, § 4<br />
36 RESTATEMENT (SECOND) OF TORTS § 821B (Tentative Draft No. 17, 1974).<br />
37 Chicago v. Gunning System, 73 N.E. 1035 (Ill. 1905)(holding that the fact that landowners had not been injured is<br />
not a defense).<br />
38 See, e.g., Commonwealth of Pennsylvania v. Barnes and Tucker Company, 319 A.2d 871 (Pa. 1974). The State of<br />
Pennsylvania brought an action in equity to require the owner of closed mine to treat acid mine drainage that was<br />
discharging from the mine. The state asserted claims based on statutory and common law public nuisance. The<br />
court held that “[t]he third and fourth based upon which the Commonwealth claims relief should be granted are the<br />
doctrines of statutory and common law public nuisances. We find that relief may be granted under either of these<br />
theories.” Id. at 880.<br />
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fish factory. 39<br />
The government sought an injunction against the factory to abate foul smells that<br />
were making the quarantined individuals sick. 40 The court granted relief, enjoining the nuisance,<br />
in spite of the equitable right of the defendant. 41<br />
From this case, one can see the interaction of the public trust doctrine and public nuisance<br />
claims and their applicability to <strong>NRD</strong> with regard to the ability to file suit. In Luce, the court<br />
recognized that the United States had a responsibility to the quarantined individuals under its<br />
care. 42<br />
This responsibility is analogous to the responsibility of the government to protect natural<br />
resources which are held under its care for the common good. The Luce court also allowed the<br />
government to sue prospectively to stop an activity that was harming those under its care. 43<br />
Similarly, the government should be able to sue prospectively to protect natural resources under<br />
its care from damage, or, if the damage has already occurred, sue on behalf of the trust to recover<br />
compensation for injury.<br />
2. Federal Trustees<br />
Pursuant to the public trust doctrine, as first discussed by the United States Supreme<br />
Court in Martin v. Waddell, “when the revolution took place, the people of each state became<br />
themselves sovereign; and in that character hold the absolute right to all their navigable waters,<br />
and the soils under them, for their own common use, subject only to the rights since surrendered<br />
39 141 F. 385 (C.C.D. Del. 1905).<br />
40 Id. at 390.<br />
41 Id. at 422-423.<br />
42 Id. at 419.<br />
43 Id. at 422-23.<br />
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by the constitution to the general government.” 44<br />
On the contrary, there is no inherent right held<br />
by the federal government to act as trustee over natural resources. Historically, in order to<br />
pursue <strong>NRD</strong>, the federal government has been limited to actions permitted by legislative<br />
mandates that confer upon it trustee status over natural resources. 45<br />
Despite this fact, the federal<br />
government has managed to carve out a significant role as trustee in the pursuit of <strong>NRD</strong> claims.<br />
A variety of environmental legislation confers trustee status upon the federal government<br />
and its agencies. CERCLA, 46 the Oil Pollution Act (“OPA”) 47 and the Clean Water Act<br />
(“CWA”) 48 all permit the designation of both federal and state trustees to pursue <strong>NRD</strong> claims.<br />
The statutes do not identify specific trustees; however, particular trustees may be designated by<br />
other means. For example, pursuant to CERCLA, Executive Order 12580 and the amendment<br />
thereto designates certain federal trustees to implement the statute, including the Departments<br />
and Secretaries of State, Defense, Justice, Interior, Agriculture, Commerce, Labor, Health and<br />
Human Services, Transportation, Energy and the Environmental Protection Agency. 49<br />
One of the biggest problems associated with federal trustees is that they are not bound by<br />
any specific rules or principles requiring them to balance public interests - - a fact that can give<br />
rise to actions by federal trustees that are inconsistent with the fiduciary nature of trusteeship.<br />
“Instead of holding federal statutory <strong>NRD</strong> trustees to a strict fiduciary duty, courts have granted<br />
44 41 U.S. 367, 410 (1842).<br />
45 Laura Rowley, <strong>NRD</strong> Trustees: To What Extent Are They Truly Trustees? 28 B.C. ENVTL. AFF. L. REV. 459 (2001).<br />
46 42 U.S.C. § 9607(f)(1).<br />
47 33 U.S.C. § 2706(b).<br />
48 42 U.S.C. § 1321(f)(5).<br />
49 See Exec. Order No. 12580, 52 Fed. Reg. 2923 (Jan. 29, 1987) and No. 13016, 61 Fed. Reg. 45871 (Aug. 28,<br />
1996)); see also 40 C.F.R. § 300.600 et seq.<br />
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them agency deference.” 50<br />
Such inconsistency with principles of trusteeship and fiduciary duties<br />
is evidenced in cases where the trustee does not spend all monies recovered for <strong>NRD</strong> to restore<br />
or recreate the injured natural resource. 51<br />
While a trustee’s decision to not spend any monies<br />
recovered on the restoration of the damaged natural resource clearly violates the duties imposed<br />
upon federal agents as trustees, the most minimal restoration efforts seem to “satisfy” a trustee’s<br />
fiduciary duty despite the fact that the natural resource remains polluted. 52<br />
As a result, the public,<br />
as the beneficiary of the trust, is deprived of the <strong>full</strong> use and benefit of the natural resource and is<br />
left with no other recourse since damages have already been recovered for the natural resource’s<br />
injury.<br />
3. Overlapping Authority<br />
Since federal trusteeship is derived from a number of overlapping federal statutes, more<br />
than one federal trustee will likely be involved at a given site, and overlaps with state and Indian<br />
tribe trustees frequently occur as well. The Superfund Amendments and Reauthorization Act of<br />
1986 (“SARA”), which amended CERCLA, requires the EPA to notify trustees of possible<br />
natural resource impacts and to coordinate its investigatory work with the trustees. 53<br />
Despite this<br />
fact, an initial obstacle in the pursuit of <strong>NRD</strong> is the coordination of trustee activities at a given<br />
site and the determination of which trustee, if any, will be the lead.<br />
50 Rowley, supra note 45, at 486.<br />
51 “The best example of the futility in trying to identify where an <strong>NRD</strong> trustee has violated the bounds of the<br />
statutory authority, and thus violated its fiduciary duty, is found in the case of the 1989 Exxon Valdez oil spill. The<br />
Spill Trustee Council recovered nine hundred million dollars from the settlement of a suit under the CERCLA and<br />
CWA <strong>NRD</strong> provisions. Due to the magnitude of the disaster, the Spill Trustee Council used the money for a variety<br />
of purposes, but it is unclear whether all the uses were for the end result of natural resource restoration.” Id. at 487.<br />
52 Id. at 486.<br />
53 See 42 U.S.C. § 9604(b)(2).<br />
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The construction of federal environmental laws seems to indicate that particular natural<br />
resources are the responsibility of the federal government and other natural resources fall within<br />
the ambit of state responsibility. 54<br />
However, the language utilized in these statutes fails to clarify,<br />
for instance, whether natural resources located on federally-owned property belong to the federal<br />
government or the state wherein the property is located. 55<br />
One of the primary problems with<br />
regard to multiple trustees is linking the contamination problem of a particular resource to a<br />
particular trustee. For example, the Department of the Interior (“DOI”) and the Department of<br />
Commerce both have trustee status with regard to the protection of migratory birds. 56<br />
As a result,<br />
a state may share trustee status over natural resources when there has been an injury to migratory<br />
birds stemming from the contamination of wetlands. 57<br />
Presumably, the federal government may<br />
recover damage to the birds, while the state trustee may recover damages for injury to the<br />
wetlands, however, due to the principles prohibiting a double recovery for <strong>NRD</strong>, the two trustees<br />
are precluded from both recovering for the birds and the wetlands.<br />
While there are more attempts at coordination now, overlapping trustee authority still<br />
inhibits action. At some sites, parties have been unable to achieve prompt resolution of <strong>NRD</strong><br />
issues at the time that remedial issues are being settled with the EPA or a state, due to the need<br />
for multiple trustee signoffs. The difficulty of resolving overlapping jurisdictional issues is<br />
54 Marc G. Laverdiere, Natural Resource Damages: Temporary Sanctuary for Federal Sovereign Immunity, 13 VA.<br />
ENVTL. L. J. 589, 592 (1994)(“For example, under CERCLA, liability for damaging these resources is ‘to the United<br />
States Government and to any State for natural resources within the State or belonging to, managed by, controlled<br />
by, or appertaining to such State.’”).<br />
55 Id.<br />
56 Thomas L. Eggert & Kathleen A. Chorostecki, Rusty Trustees and the Lost Pots of Gold: Natural Resource<br />
Damage Trustee Coordination Under the Oil Pollution Act, 45 BAYLOR L. REV. 291, 305 (1993).<br />
57 Id.<br />
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evidenced in United States v. Asarco, Inc., in which the plaintiffs, the United States, the Coeur<br />
d’Alene Tribe of Idaho and the State of Idaho filed suit pursuant to CERCLA and the CWA for<br />
injury to natural resources in northern Idaho resulting from the defendants’ mining activities. 58<br />
A number of defendants moved for summary judgment, asserting that a settlement agreement<br />
they had entered into with the State of Idaho precluded recovery by the Tribe or the United<br />
States. 59<br />
The United States argued that the State of Idaho did not have the authority to settle the<br />
federal government’s claims regarding the same natural resources. 60<br />
The court agreed with the<br />
United States, stating “CERCLA does not give the state an exclusive right to bring a natural<br />
resource damages action if the state files the first lawsuit claiming natural resource damages and<br />
CERCLA does not prohibit more than one potential trustee from bringing a natural resource<br />
damages action.” 61<br />
The court’s decision that the record was insufficient to establish “the scope<br />
of trusteeship of the plaintiff over the land and water at issue . . . [and] a more extensive factual<br />
record needs to be reviewed regarding whether or not USA was in privity with the State and/or<br />
the Tribe when the settlement agreements were entered with the defendants” demonstrates that<br />
the occurrence of overlapping trustee authority is not an issue that can easily be resolved. 62<br />
The overlap of trustee authority also underscores the differences by which various federal<br />
trustees and their state or Indian tribe counterparts value <strong>NRD</strong> injuries and consider early dollar<br />
settlements. All trustees will place a different value on the same natural resource. For instance,<br />
natural resources may hold cultural or spiritual worth for an Indian tribe that are not considered<br />
58 1998 WL 1799392, No. CV 96-0122-N-EJL, CV 91-342-N-EJL (D. Idaho March 31, 1998).<br />
59 Id. at *5.<br />
60 Id.<br />
61 Id.<br />
62 Id.<br />
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by the state or federal government when valuing those resources for purposes of calculating<br />
damages. Similarly, a state’s loss of revenue derived from fishing licenses would not necessarily<br />
be a consideration by the federal government when valuing the loss of a river to pollution.<br />
4. Municipal and Local Trustees<br />
Although the federal government, state government and Indian tribes are empowered to<br />
recover <strong>NRD</strong>, prior to the SARA Amendments to CERCLA, courts broadly read the <strong>NRD</strong><br />
provision of the statute as granting municipalities standing to pursue <strong>NRD</strong> claims. 63<br />
However,<br />
with the enactment of the amendments, courts’ interpretation of a municipality drastically<br />
changed:<br />
As originally enacted, CERCLA called for authorized representatives of the<br />
state to act as natural resource trustees but did not outline a procedure for<br />
appointing such trustees. Under SARA, the governor of each state was charged<br />
with choosing an official to act on the public’s behalf as trustee and to assess<br />
damage to natural resources . . . [T]his change turned out to be significant to the<br />
courts dealing with standing for municipalities. The courts interpreted this<br />
trustee-appointing mechanism to be the only way a municipality could be a<br />
natural resource trustee under CERCLA. 64<br />
In Mayor and Council of the Borough of Rockaway v. Klockner & Klockner, the<br />
municipality filed suit under CERCLA for recovery of costs associated with the defendants’<br />
contamination of groundwater wells. 65<br />
The court ultimately determined that the SARA<br />
amendments had “clarified” the issue of standing with regard to CERCLA claims, stating that<br />
“only a ‘state official,’ specifically appointed by the governor of the state, may be an ‘authorized<br />
representative’ for purposes of bringing an action to recover for natural resource damages.<br />
63 Mayor and Board of Aldermen of the Town of Boonton v. Drew Chemical Corporation, 621 F. Supp. 663, 667<br />
(D.N.J. 1985).<br />
64 Michael J. Wittke, Municipal Recovery of Natural Resource Damages Under CERCLA, 23 B.C. ENVTL. AFF. L.<br />
REV. 921, 929 (1996).<br />
65 811 F. Supp. 1039 (D.N.J. 1993).<br />
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SARA thus confirms Congress’ intent that Section 107(f) inure only to the benefit of the states<br />
and not their political subdivisions.” 66<br />
Courts have reached a similar finding as to the standing<br />
of a municipality when a state statute is comparable or analogous to CERCLA. 67<br />
Municipalities,<br />
however, are not completely deprived of standing in the context of <strong>NRD</strong>. If a municipality<br />
wishes to recover <strong>NRD</strong> under CERCLA or a similar state statute, it may still seek designation as<br />
“trustee” by the state. In the alternative, municipalities may seek <strong>NRD</strong> by asserting common law<br />
claims. 68 5. Citizen Suits<br />
As noted earlier in the article, an individual who owns a natural resource has standing as<br />
a property owner to file suit to recover for any <strong>NRD</strong>. However, a private party’s capability of<br />
filing suit to recover damages for publicly owned natural resources is severely limited. One of<br />
the only avenues by which a private citizen or entity may pursue a claim for injury to publiclyowned<br />
natural resources is through a citizen suit. 69<br />
At the federal level, citizen suits generally<br />
occur in one of three contexts:<br />
66 Id. at 1049; see also Town of Bedford v. Raytheon Company, 755 F. Supp. 469, 472-473 (D. Mass. 1991); City of<br />
Toledo v. Beazer Materials and Services, Inc., 833 F. Supp. 646, 652 (N.D. Ohio 1993); Borough of Sayreville v.<br />
Union Carbide Corporation, 923 F. Supp. 671, 681 (D.N.J. 1996).<br />
67 City of Portland v. Boeing Company, 179 F. Supp. 2d 1190, 1202 (D. Or. 2001); The Consolidated City of<br />
Indianapolis v. Union Carbide Corporation, 2003 WL 22327832, No. 1:02-cv-1340-LJM-WTL, *3 (S.D. Ind. Oct.<br />
8, 2003).<br />
68 Peter H. Lehner, Act Locally: Municipal Enforcement of Environmental <strong>Law</strong>, 12 STAN. ENVTL. L. J. 50, 75 (1993).<br />
69 “All major environmental laws, specifically the Clean Air Act, the Federal Water Pollution Control Act,<br />
commonly known as the Clean Water Act, the Resource Conservation and Recovery Act, and the Comprehensive<br />
Environmental Response, Compensation and Liability Act, as well as a host of less well known environmental laws,<br />
such as the Toxic Substances Control Act, and the Surface Mining Control and Reclamation Act, contain essentially<br />
the same citizen suit provisions. They all trace their origin to section 304 of the Clean Air Act.” Robert D. Snook,<br />
Environmental Citizen Suits and Judicial Interpretation: First Time Tragedy, Second Time Farce, 20 W. NEW ENG.<br />
L. REV. 311, 313-314 (1998).<br />
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(1) suits brought by private citizens against persons alleged to be in violation of a<br />
federal environmental law; (2) suits brought by private citizens against the<br />
executive branch of the federal government, typically the Environmental<br />
Protection Agency (EPA) alleging that the federal government has failed to<br />
perform a nondiscretionary duty in implementing an environmental law; or (3)<br />
suits brought by private citizens against a federal agency directed at the agency’s<br />
own polluting activities. 70<br />
Because citizen suits are brought to vindicate rights held by the public, private<br />
individuals who pursue claims under these provisions do not have the same rights and relief as<br />
those afforded under private causes of action. 71<br />
In addition, under the natural resource<br />
provisions of federal laws, individual plaintiffs are precluded from recovering <strong>NRD</strong>. 72<br />
Thus,<br />
individual plaintiffs may file a citizen suit to compel a trustee to seek <strong>NRD</strong>; however, such<br />
plaintiffs may not recover <strong>NRD</strong>.<br />
Likewise, some state statutes may also have similar citizen suit provisions that permit<br />
individuals to file actions for environmental contamination. The New Jersey Environmental<br />
Rights Act (“ERA”), 73 for example, permits an individual to file an action against “any other<br />
person alleged to be in violation of any statute, regulation or ordinance which is designed to<br />
prevent or minimize pollution, impairment or destruction of the environment” for injunctive or<br />
equitable relief. 74<br />
The ERA, however, does not “confer any substantive rights . . . Rather, it<br />
70 Shay S. Scott, Combining Environmental Citizen Suits & Other Private Theories of Recovery, 8 J. ENVTL. L. &<br />
LITIG. 369, 372 (1994).<br />
71 Id. at 378. (“They thus do not include toxic tort suits for personal injury or property damage. They also do not<br />
include private suits for the personal losses suffered when public resources are damaged; for example, they do not<br />
include suits by fishermen when public fisheries are damaged by pollution. While losses to people from pollution<br />
are important, they are different from the losses to the environment itself.”).<br />
72 See, e.g., In re Burbank Environmental Litigation, 42 F. Supp. 2d 976, 980 (C.D. Cal. 1998)(“Under CERCLA,<br />
only natural resource trustees acting on behalf of the federal government, the state, and certain Indian tribes may<br />
bring an action for damage to natural resources.”).<br />
73 N.J.S.A. 2A:35A-1 et seq.<br />
74 N.J.S.A. 2A:35A-4.<br />
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grants private plaintiffs standing to enforce other New Jersey environmental statutes ‘as an<br />
alternative to inaction by the government which retains primary prosecutorial responsibility.’” 75<br />
Under the ERA, a citizen may file suit to compel the government to act to recover environmental<br />
damages, however, the citizen may not personally seek damages. Although citizen suits may be<br />
a useful tool in compelling government action, they may not be used to recover <strong>NRD</strong> - - the<br />
power to bring actions to recover <strong>NRD</strong> is vested solely with governmental trustees.<br />
B. CAUSES OF ACTION<br />
1. State Statutory Causes of Action<br />
In addition to <strong>NRD</strong> actions brought pursuant to federal laws, states may also bring<br />
actions under state statutes. It follows that if a state may sue on behalf of its natural resources, it<br />
may also legislate to protect them or provide for compensation in the event they are lost or<br />
destroyed. Accordingly, some forty-five states provide a public cause of action for damage to<br />
natural resources. 76<br />
These statutes vary widely in scope. New York’s statute, for example, applies only to<br />
criminal violations; 77 the laws of Maine and Massachusetts apply only to oil spills. 78 The most<br />
comprehensive of these statutes arguably are those of California and Minnesota. California’s<br />
75 Klockner & Klockner, 811 F. Supp. at 1054 (quoting Superior Air Products Company v. NL Industries, Inc., 522<br />
A.2d 1025, 1032 (N.J. Super. App. Div. 1987)).<br />
76 See William S. Roush, Jr., 2 TOXIC TORTS. PRAC. GUIDE § 25.11 (2005). For example, in Com. of Puerto Rice v.<br />
S.S. Zoe Colocotroni, 628 F.2d 652 (1st Cir. 1980), a Puerto Rican statute provided the basis for assessing damages<br />
for the discharge of oil. In that case, the circuit court stated, “where the Commonwealth of Puerto Rico has thus<br />
legislatively authorized the bringing of suits for environmental damages, and has earmarked funds so recovered to a<br />
special fund, such an action must be construed as taking the place of any implied common law action the<br />
Commonwealth as trustee, might have brought.” Id. at 672.<br />
77 See N.Y. Envtl. Conserv. <strong>Law</strong>. § 71-2723 (McKinney 1981).<br />
78 See, e.g., Maine Oil Discharge Prevention and Pollution Control Act, ME. REV. STAT. ANN. tit. 38 § 551 (1978);<br />
Massachusetts Rules for the Prevention and Control of Oil Pollution in the Waters of the Commonwealth § 9.02<br />
(1973).<br />
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statute provides liability for “any damage or injury to the natural resources of the state, including,<br />
but not limited to, marine and wildlife resources, caused by the discharge or leakage of<br />
petroleum, fuel oil, or hazardous substances.” 79<br />
Minnesota’s statute holds any discharger of<br />
hazardous substances liable for “[a]ll damages for any injury to, destruction of or loss of natural<br />
resources.” 80<br />
A summary of these statutes indicates that most are aimed at protecting the natural<br />
resources under the public trust. However, when definitions of natural resources are too narrow,<br />
there are resulting limitations on the recovery of <strong>NRD</strong>. Accordingly, these statutes suffer some<br />
of the same problems as the public trust relative to the scope of natural resources protected.<br />
Even the most comprehensive statutes limit recovery to hazardous substance damage. The issue<br />
of scope is one of the greatest limitations on the recovery <strong>NRD</strong>. Thus, the question then follows:<br />
how should this problem be addressed?<br />
New Jersey has managed to overcome the problem of scope by broadly defining natural<br />
resources in its Spill Compensation and Control Act (“Spill Act”). “Natural resources” are<br />
broadly defined as “all land, fish, shellfish, wildlife, biota, air, waters and other such resources<br />
owned, managed, held in trust or otherwise controlled by the State.” 81 Indeed, among the various<br />
state laws protecting natural resources, New Jersey has one of the most potent. The New Jersey<br />
Department of Environmental Protection is authorized by statute to commence civil actions for<br />
the “cost of restoration and replacement, where practicable, of any natural resource damaged or<br />
79 CAL. HARB. & NAV. CODE § 293 (West Supp. 1989).<br />
80 MINN. STAT. ANN. § 115B.04 (1)(c) (West 1985).<br />
81 N.J.S.A. 58:10-23.11b.<br />
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destroyed by a discharge.” 82 By enacting the Spill Act, the New Jersey Legislature intended to<br />
create additional remedies to protect the environment and compensate the public. The absolute<br />
liability provisions of the law are especially noteworthy. Defining natural resources to broadly<br />
encompass a wide variety of resources has proven to be successful in addressing the problem of<br />
scope with regard to any limitations upon <strong>NRD</strong> recovery.<br />
2. Common <strong>Law</strong> Causes of Action<br />
In addition to available statutory causes of action, state governments may pursue<br />
common law causes of action to recover for <strong>NRD</strong>. 83<br />
To protect or sometimes compensate a<br />
natural resource held in common, the state may sue in its trustee capacity. In the case of natural<br />
resources held by no one, the state may sue to enjoin under a public nuisance theory. Such<br />
causes of action are especially useful to close the gap where federal statutes do not provide<br />
adequate relief. 84<br />
Public nuisance actions, for example, were traditionally used to obtain injunctive relief,<br />
enjoining certain behavior deemed to constitute an “unreasonable interference with a right<br />
common to the general public.” 85<br />
Courts have increasingly held, however, that a state may<br />
utilize public nuisance actions to recover response costs incurred in the abatement of such a<br />
82 N.J.S.A. 58:10-23.11u.b(4).<br />
83 For a more detailed discussion, see generally, Kanner, supra note 8.<br />
84 Federal statutes are sometimes less desirable than other theories with regard to the recovery of <strong>NRD</strong>. CERCLA,<br />
for example, has more defenses and involves a slow and rigid process, thus state law theories are often better.<br />
Furthermore, a plaintiff may recover more damages bringing common law claims, rather than brining an action<br />
under CERCLA.<br />
85 RESTATEMENT (SECOND) TORTS § 821B (1979).<br />
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nuisance. 86<br />
If the state would like to recover for a pecuniary loss arising from contamination of<br />
a natural resource, however, it must allege a “special injury.” 87<br />
In New Mexico v. General<br />
Electric Company, the court discussed what constitutes a “special injury”:<br />
To satisfy the “special injury” requirement in this case and establish any<br />
entitlement to compensatory damages on their common-law public nuisance claim,<br />
the Plaintiffs must show that the State has suffered some discrete physical harm or<br />
pecuniary loss apart from the more generalized injury to the public’s interest that<br />
results from the public nuisance . . . Absent proof of some discrete “special<br />
injury” to the State’s interest apart from the injury to the public’s interest in<br />
unappropriated groundwater, Plaintiffs may be limited to equitable relief seeking<br />
the abatement of the claimed nuisance. 88<br />
New Jersey, in particular, has a rich common law tradition with respect to the imposition<br />
of liability for environmental injuries and the development of comprehensive and effective<br />
remedies. 89<br />
The common law has continued to develop despite the enactment of statutory law on<br />
both the federal and state levels addressing environmental liabilities. State v. Ventron makes<br />
clear that common law remedies remain available notwithstanding collateral or supplementary<br />
86 Town of East Troy v. Soo Line Railroad Company, 653 F.2d 1123, 1132 (7th Cir. 1980)(permitting recovery of<br />
expenses incurred cleaning up groundwater contamination); State of New York v. Shore Realty Corporation, 759<br />
F.2d 1032, 1043 n. 14 (noting in dicta that “New York law appears to provide the State with restitution costs in a<br />
public nuisance action.”); Camden County Board of Chosen Freeholders v. Beretta U.S.A. Corporation, 123 F. Supp.<br />
2d 245 (D.N.J. 2000) (“This Court agrees that for abatement of a public nuisance, New Jersey law permits cost<br />
recovery.”)<br />
87 New Mexico v. General Electric Company, 335 F. Supp. 2d 1185, 1239 (D.N.M. 2004).<br />
88 Id. at 1240-1241; see also Selma Pressure Treating Company v. Osmose Wood Preserving Company of America,<br />
Inc., 271 Cal. Rptr. 596 (Cal. Ct. App. 1990), the court held that “the State, acting in its capacity as property owner,<br />
and not merely in its representative capacity, can seek damages as well as injunctive relief . . .” Id. at 603. The<br />
court went on to determine that “the State does have a legally cognizable interest in the ground waters affected here<br />
which suffice to support a claim for damages.” Id. at 606.<br />
89 New Jersey’s proactive and continuous use of the common law in <strong>NRD</strong> recovery actions provides a valuable<br />
template for other states to utilize in their own <strong>NRD</strong> actions.<br />
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statutory remedies. 90 Ventron also provides a comprehensive discussion of the history of New<br />
Jersey law on these remedies 91 and specifically notes that:<br />
[T]oxic wastes are “abnormally dangerous,” and the disposal of them, past or<br />
present, is an abnormally dangerous activity. We recognize that one engaged in<br />
the disposing of toxic waste may be performing an activity that is of some use to<br />
society. Nonetheless, “the unavoidable risk of harm that is inherent in it requires<br />
that it be carried on at his peril rather than at the expense of the innocent person<br />
who suffers harm as a result of it.” 92<br />
The Ventron decision set forth what has become a founding principle in the development<br />
of environmental common law in New Jersey: “Those who poison the land must pay for its<br />
cure. ”93 In light of this principle, the New Jersey courts have emphasized that their primary<br />
concern in resolving environmental cases is to do so with underlying considerations of<br />
“reasonableness, fairness and morality” rather than the “formulary labels” which might be<br />
attached to particular causes of action. 94<br />
In addition to strict liability, other traditional tort<br />
theories remain viable. Nuisance, 95 trespass, 96 negligence, 97 and fraud 98 have all been<br />
90 State, Department of Environmental Protection v. Ventron Corp., 468 A.2d 150 (N.J. 1983).<br />
91 Id. at 157.<br />
92 Id. at 160 (quoting RESTATEMENT (SECOND) TORTS § 520 cmt. h, at 39 (1977)). Cases subsequent to Ventron<br />
have held that whether pollution activity is a basis for direct liability is to be determined on a case-by-case approach<br />
following the Restatement principles. See T & E Industries Inc. v. Safety Light Corporation, 546 A.2d 570 (N.J.<br />
Super. Ct. App. Div. 1988), aff’d as modified, 587 A.2d 1249 (N.J. 1991); Kenney v. Scientific, Inc., 497 A.2d 1310<br />
(N.J. Super. Ct. <strong>Law</strong> Div. 1985).<br />
93 Ventron, 468 A.2d at 160.<br />
94 T & E Industries Inc., 546 A.2d at 577(quoting Berg v. Reaction Motors Div., Thiokol Chemical Corp., 181 A.2d<br />
487 (N.J. 1962)); Kenney v. Scientific, Inc., 497 A.2d at 1324.<br />
95 Ventron, 468 A.2d at 157-158, overruling Marshall v. Welwood, 38 N.J.L. 339 (N.J. 1876); But see Kenney, 497<br />
A.2d at 1324.<br />
96 Ventron,, 468 A.2d at 158.<br />
97 Kenney, 497 A.2d at 1324, 1328.<br />
98 Ventron, 468 A.2d at 166.<br />
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success<strong>full</strong>y asserted in New Jersey environmental cases. Punitive damages are available in<br />
environmental actions involving deliberate acts or omissions committed with the knowledge of a<br />
high degree of probability of harm, reckless indifference to consequences, or where there has<br />
been “such a conscious and deliberate disregard of the rights of others that his conduct may be<br />
called willful or wanton.” 99<br />
Indeed, state statutory limitations on the availability of punitive<br />
damages have specifically excluded “environmental torts.”<br />
C. CAUSATION<br />
When a common law claim for <strong>NRD</strong> is brought, a plaintiff must prove causation with<br />
respect to the claim as required by the common law. When a trustee brings <strong>NRD</strong> claims under<br />
federal legislation, the degree of causation must be gleaned from the statute. If the statute does<br />
not specify the standard of proof necessary for causation, it is left to the courts to determine what<br />
is required. In both cases, causation is not an especially difficult hurdle. The causation<br />
requirement ensures that the conduct complained of is appropriately linked to the wrong<br />
claimed-the natural resource injury, nuisance or trespass.<br />
CERCLA, for example, does not specify the standard of proof necessary for showing that<br />
a particular discharge or release caused a particular injury to a <strong>NRD</strong> trustees seeking restoration<br />
under §107(a)(4)(c) must prove injury to natural resources “resulting from” a release of a<br />
hazardous substance. Courts have generally required only a minimal connection between the<br />
responsible party and the response costs incurred in connection with a release. 100<br />
99 Id.<br />
100 See, e.g., Dedham Water Co. v. Cumberland Farms Dairy, Inc., 889 F.2d 1146 (1st Cir. 1989).<br />
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In Ohio v. DOI, the D.C. Circuit held that CERCLA was ambiguous as to the standard of<br />
causation to be applied in determining whether a hazardous substance release caused a particular<br />
injury. 101<br />
The court concluded that DOI’s position that the traditional common law standard of<br />
causation should be applied was a permissible reading of the statute. 102 Consequently, trustees<br />
must be able to meet traditional causation standards when showing that a particular spill or<br />
release caused or, at the very least, was a “contributing factor” to a particular injury. 103<br />
In National Association of Manufacturers v. DOI, the court stated “CERCLA is<br />
ambiguous on the precise question of what standard of proof is required to demonstrate that<br />
natural resource injuries were caused by, or ‘resulting from,’ a particular release.” 104<br />
The same<br />
court stated in Kennecott Utah Copper Corp. v. DOI that “[w]hile the statutory language requires<br />
some causal connection between the element of damages and the injury - the damages must be<br />
‘for’ an injury ‘resulting from a release of oil or a hazardous substance’ - Congress has not<br />
specified precisely what that causal relationship should be.” 105<br />
This may require proof of a<br />
causal link between the defendant’s release and the injured resource. 106<br />
101 880 F.2d 432, 470 (D.C. Cir. 1989).<br />
102 Id.<br />
103 See, e.g., Coeur D’Alene Tribe v. Asarco, Inc., 280 F. Supp. 2d 1<strong>09</strong>4, 1124 (D. Idaho 2003)(requiring use of<br />
“contributing factor” causation test in <strong>NRD</strong> action by Native American tribe and United States against mining<br />
companies). In Coeur d’Alene Tribe, the court concluded that volumetric tailings production provided a sufficiently<br />
reasonable basis for apportionment to defeat joint and several liability. Id. at 1120-1121.<br />
104 134 F.3d 1<strong>09</strong>5, 1105 (D.C. Cir. 1998)(quoting State of Ohio v. DOI, 880 F.2d at 472).<br />
105 88 F.3d 1191, 1224 (D.C. Cir. 1996).<br />
106 Idaho v. Bunker Hill Co., 635 F. Supp. 665 (D. Idaho 1986).<br />
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In Castaic Lake Water Agency v. Whittaker Corp., 107 the district court held that where<br />
perchlorate contamination originated at one site and allegedly migrated to the wells owned by<br />
plaintiff water providers at a different site, plaintiffs can satisfy their burden of production with<br />
respect to CERCLA causation by: (1) identifying perchlorate at their site; (2) identifying<br />
perchlorate at defendant’s site; and, (3) providing “evidence of a plausible migration pathway by<br />
which the contaminant could have traveled from the defendant’s facility to the plaintiff’s site.” 108<br />
Where the plaintiffs satisfy this burden, the burden then shifts to the defendant to offer evidence<br />
“disproving causation.” 1<strong>09</strong><br />
In Coeur D’Alene Tribe v. Asarco Inc., the district court adopted a “contributing factor”<br />
causation test for the recovery of <strong>NRD</strong>. 110<br />
That is, where hazardous waste from multiple<br />
defendants has commingled, the plaintiff trustee has the burden of proving that each defendant’s<br />
release is a more than a de minimis, “contributing factor” to the natural resource injuries alleged<br />
by the trustee.<br />
One last causation burden exists for trustees in the context of assessing <strong>NRD</strong>. The DOI’s<br />
<strong>NRD</strong> assessment (“<strong>NRD</strong>A”) regulations 111 require that trustees determine the baseline condition<br />
of the injured resource and then compare that baseline with the injured status of the resource to<br />
quantify injury. “Baseline” is defined under the DOI <strong>NRD</strong>A regulations as “the condition or<br />
conditions that would have existed at the assessment area had the discharge of oil or release<br />
107 272 F. Supp. 2d 1053 (C.D. Cal. 2003).<br />
108 Id. at 1066.<br />
1<strong>09</strong> Id.<br />
110 280 F. Supp. 2d at 1114.<br />
111 43 C.F.R. § 11 (2005).<br />
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under investigation not occurred.” 112<br />
While the trustee has the burden of determining baseline<br />
under the <strong>NRD</strong>A regulations, defendants should ensure that the trustee is apprised of all<br />
appropriate conditions or factors impacting the resource other than the release of the hazardous<br />
substances at issue.<br />
These cases demonstrate a key issue with regard to causation-that ultimately, causation is<br />
not difficult to prove. Furthermore, even if the contamination is mingled between multiple PRPs,<br />
it will not be difficult to show causation sufficient to prevail in a suit for <strong>NRD</strong>. These cases also<br />
show the potential interplay of substantive law and case management issues. For example, it<br />
should be sufficient to prove wrongful misconduct and some causation so as to establish the<br />
liability of a responsible party and thereby shift the cost of a comprehensive <strong>NRD</strong>A to the<br />
wrongdoer as opposed to the trustee.<br />
D. INJURY<br />
A natural resource injury is “any adverse change or impact of a discharge on a natural<br />
resource or impairment of natural resource services, whether direct or indirect, long-term or<br />
short-term, and include the partial or complete destruction or loss of the natural resource.” 113<br />
Clarity with regard to assertion of the type of injury to a natural resource is an essential<br />
component of bringing a successful claim for <strong>NRD</strong>. If a plaintiff does not clearly and<br />
specifically define and quantify the nature of the injury, there is a significant risk that a claim for<br />
<strong>NRD</strong> will fail. In State of New Mexico v. General Electric Company, the plaintiffs were<br />
prevented from recovering <strong>NRD</strong> due to their failure to clearly and accurately set forth the nature<br />
112 43 C.F.R. § 11.14(e) (2005)(emphasis added).<br />
113 Kanner, supra note 14, at 98.<br />
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of the injuries they claimed. 114<br />
Plaintiffs asserted a claim for the loss of drinking water services<br />
as a result of chemical contamination emanating from the defendants’ operations. 115<br />
The court<br />
held that the drinking water standards promulgated by the New Mexico Water Quality Control<br />
Commission (“NMWQCC”) should be used to determine if there was an injury-the loss of<br />
drinking water services. 116<br />
Under these rules, water must only meet the requisite standards with<br />
regard to the level of contaminants; the water need not be pristine in order to qualify as<br />
potable. 117<br />
The plaintiffs, however, contended that the drinking water standards were not the<br />
proper means of identifying the injury. The court disagreed, stating:<br />
In effect, then, Plaintiffs now argue two different theories of injury: (1) that<br />
“[t]he standard for drinking water quality for the groundwater involved in this<br />
lawsuit is the more stringent NMWQCC health-based toxic pollutant standard”;<br />
and (2) that “the groundwater and aquifer will remain injured unless and until it<br />
is restored to its pre-contaminated condition.” These two assertions, often made<br />
together, are not wholly congruent . . . In this case, it may well be that the State<br />
of New Mexico has suffered an injury to its interest in the groundwater<br />
underlying the South Valley Site, notwithstanding the fact that much of the<br />
groundwater meets the New Mexico drinking water standards, but it may be that<br />
the injury is not the total and permanent loss of drinking water services that<br />
Plaintiffs now assert. To date, however, Plaintiffs have proffered no significant<br />
probative evidence of any diminution in value of the groundwater, measured by<br />
the difference between its current condition and its formerly pristine state, apart<br />
from the alleged loss of drinking water services. No expert witness has testified<br />
as to the economic value of water that may prove to be drinkable, but still not<br />
pristine . . .Plaintiffs’ own characterization of their alleged injury selects the<br />
legal standard to be applied to measure the existence and extent of that injury.<br />
Drinkability does not equate with pristine purity under New Mexico law, and<br />
the court remains convinced that a loss of drinking water services must be<br />
measured by applying New Mexico drinking water standards. 118<br />
114 335 F. Supp. 2d at 1212.<br />
115 Id.<br />
116 Id. at 1210.<br />
117 Id.<br />
118 Id. at 1211-1212 (emphasis original).<br />
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What this case demonstrates is that quantification of the type of natural resource injury is<br />
essential to a successful recovery. The plaintiffs may have had been successful had they<br />
considered what loss of use involves before asserting it as the primary injury. 119<br />
It also<br />
demonstrates that <strong>NRD</strong> claims for injury relating solely to loss of use are generally weaker and<br />
have a lower possibility of success then a claim for restoration where there is an injury by mere<br />
virtue of the existence of contaminants in the natural resource.<br />
One of the most critical factors in recovering <strong>NRD</strong> is the distinct nature and extent of the<br />
injury and what that means for damages. It must be remembered that proving how a natural<br />
resource has been injured is not the same as proving what amount of damages should be<br />
recoverable.<br />
E. DAMAGES<br />
1. Generally<br />
The method and manner of quantifying damages to a natural resource is perhaps the<br />
greatest challenge for <strong>NRD</strong> litigation, both presently and in the future. 120<br />
“Damage is a legal<br />
concept determining what a liable party has to do or pay to make the public or environment<br />
whole for the injuries to natural resources.” 121<br />
In addition, damages help to deter future<br />
119 Credibility with regard to <strong>NRD</strong> claims is essential, especially when non-traditional injuries are being asserted.<br />
“Before a lawyer can persuade a jury or any fact-finder, it is necessary to start at the beginning and decide what the<br />
case is about. Surprisingly, many lawyers never really know this fact, or they (or their experts) change their game<br />
plan so often that it seems they have no plan . . . In short, the case should be as planned as possible before going to<br />
court.” ALLAN KANNER, ENVIRONMENTAL AND TOXIC TORT TRIALS § 1.01 (2d ed. 2004).<br />
120 Because of the complex nature of damages, the damages phase may be bifurcated from the rest of the trial.<br />
“Bifurcation of an action is appropriate where . . . there are complicated issues of liability that must be resolved prior<br />
to the assessment of damages.” Witherbee v. Honeywell, Inc., 151 F.R.D. 27, 29 (N.D.N.Y. 1993).<br />
121 See Kanner, supra note 14, at 104.<br />
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misconduct. 122<br />
<strong>NRD</strong> is defined by CERCLA as the compensation for the “[i]njury to,<br />
destruction of, or loss of natural resources, including the reasonable costs of assessing such<br />
injury.” 123 CERCLA’s congressional hearings are filled with testimony that the <strong>NRD</strong> provisions<br />
should measure society’s <strong>full</strong> loss from damaged or destroyed natural resources, not just<br />
damages capable of market valuation. 124 This is fundamental to deterring wrongful conduct.<br />
125<br />
This broader concept is reflected in § 301(c)(2) of CERCLA, which requires damage assessment<br />
procedures to identify the extent of short- and long-term, direct and indirect injury, destruction,<br />
or loss. 126<br />
Thus, Congress explicitly stated that recoverable injuries were not limited solely to<br />
use or market value but also indirect injury (e.g., the intrinsic value of a natural resource).<br />
Comments also urged that the legislation shift the burden of any such losses from victims to<br />
responsible parties, consistent with concepts of strict liability. 127 If a response action fails to<br />
provide a complete and whole remedy for injury to a natural resource, damages may be<br />
122 See, e.g. Cipollone v. Liggett Group, Inc., 505 U.S. 504, 521 (1992)(quoting San Diego Bldg. Trades Council v.<br />
Garmon, 359 U.S. 236, 247 (1959))(“[t]he obligation to pay compensation can be, indeed is designed to be, a potent<br />
method of governing conduct and controlling policy.”).<br />
123 42 U.S.C. § 9601(6), 9607(a)(4)(C).<br />
124 See, e.g., OIL AND HAZARDOUS SUBSTANCES LIABILITY AND OIL POLLUTION LIABILITY: EXCERPTS FROM<br />
HEARINGS ON H.R. 29 AND H.R. 85 BEFORE THE SUBCOMM. ON COAST GUARD AND NAVIGATION OF THE HOUSE<br />
COMM. ON MERCHANT MARINE AND FISHERIES, 96th Cong., 1st Sess. 119 (1979) (statement of James N. Barnes,<br />
Center for <strong>Law</strong> and Social Reform).<br />
125 See generally Allan Kanner & Tibor Nagy, Measuring Loss of Use Damages in Natural Resource Damage Actions,<br />
30 COLUMBIA J. ENVTL. L. Error! Main Document Only.(2005) Vol. 30, No. 2, p. 417.<br />
126 42 U.S.C. § 9651(c)(2).<br />
127 Supra note 123, at 213, 214, n. 23 (statement of Sarah Chasis, National Advisory Committee on Oceans and<br />
Atmosphere).<br />
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recovered for such. 128<br />
Any recovery had by a trustee for <strong>NRD</strong> “must be used to restore, replace,<br />
or acquire the equivalent” of the injured natural resources. 129<br />
There are three primary categories of damages for a trustee to consider: restoration,<br />
compensatory restoration, and assessment and other transaction costs.<br />
a. Restoration<br />
Restoration, or primary restoration costs, involves the cost of any action, or combination<br />
of actions, to restore, rehabilitate, replace, or acquire the equivalent of the injured natural<br />
resources and services in a “baseline state.” Essentially, this is the cost of restoration of the<br />
resource to its pre-damage condition, taking into account natural recovery. Replacement can be<br />
a viable action in this context, so long as the citizens of a state do not otherwise suffer. For<br />
instance, replacing a North Louisiana greenspace with an equivalent one in South Louisiana does<br />
little to assuage the damage to residents of North Louisiana. A state should have the right to <strong>full</strong><br />
restoration of natural resources, however, even if it will ultimately be more costly than<br />
replacement. This idea is consistent with the notion that there is a preference for a complete<br />
restoration of the damaged natural resource, rather than the creation of an entirely new one.<br />
b. Compensatory Restoration<br />
In addition, there are use and non-use 130 compensatory restoration values that must be<br />
repaid. These damages involve the provision of additional restoration of injured resources in<br />
order to compensate for lost natural resource functions and services from the time of<br />
128 See Kanner, supra note 14, at 102.<br />
129 42 U.S.C. § 9607(f)(1).<br />
130 “Nonuse values are values people may hold for natural resource services that are independent of any anticipated<br />
use of the resource.” William H. Desvousges and Janet C. Lutz, Compensatory Restoration: Economic Principles<br />
and Practice, 42 ARIZ. L. REV. 411, 412 (2000).<br />
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contamination through the time the resource is restored. 131<br />
Compensatory restoration is not<br />
directly defined in the statutory language of the OPA and CERCLA, although it is discussed in<br />
the regulations developed under each of these statutes.<br />
The OPA regulations, promulgated by the National Oceanic and Atmospheric<br />
Administration (NOAA) define restoration as “any action or combination of<br />
actions, to restore, rehabilitate, replace or acquire the equivalent of injured<br />
natural resources and services.” These same regulations identify “compensatory<br />
restoration” as included within restoration generally and define it as “action(s)<br />
taken to make the environment and the public whole for services losses that<br />
occur from the date of the incident until recovery of the injured natural<br />
resources.” 132<br />
Due consideration must be given to discern the unique value of the natural resources of<br />
the state. Natural resources are more than mere property claims. They are inextricably<br />
interwoven into the fabric of our ecology and the quality of our lives as we steward them from<br />
one generation of our citizens to the next. Natural resources must be valued both in the present<br />
and prospectively. If these prospective consequences may, in reasonable probability, be<br />
expected to flow from the past harm, the state is entitled to be paid for them. 133<br />
Loss of use, or<br />
benefit to polluter, both damage the people during the period of impairment and restoration.<br />
These damages should be equal to the benefit derived or savings to the parties damaging the<br />
natural resource. If, for instance, a natural resource was damaged by one thousand dollars to<br />
save or make one million dollars, this should be recaptured to the extent not otherwise covered.<br />
This item of damages forces the wrongdoer to internalize the costs of pollution by usage fee or<br />
131 43 C.F.R. § 11.83 (2005).<br />
132 See Kanner, supra note 14, at 103 (citations omitted).<br />
133 See Coll v. Sherry, 148 A.2d 481, 486 (N.J. 1959).<br />
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unjust enrichment. 134<br />
c. Costs<br />
Another important measure of damages is the assessment and other transaction costs.<br />
These damages include all costs, expenses and fees incurred by the state, including due diligence<br />
and pre-litigation costs and attorney fees, in recovering the foregoing. Also included is the time<br />
value of money. 135<br />
Compensation for transaction costs means <strong>full</strong> restoration. It is important to<br />
note that costs are not necessarily available under non-CERCLA state law theories unless equity<br />
is involved.<br />
2. Valuation<br />
There are numerous approaches to determining value for <strong>NRD</strong>. One example is the<br />
valuation approach of the DOI. 136<br />
While it seeks restoration as its goal, the DOI program<br />
sometimes works in the opposite direction, i.e. when a defendant is permitted to purchase a<br />
cheaper replacement rather than restore the natural resource. Like many tort cases, it places an<br />
emphasis on assessing damage in a monetary framework, as opposed to restoration, as the means<br />
134 See Allan Kanner, Unjust Enrichment in Environmental Litigation, 20 J. ENVTL. L. & LITIG. Error! Main<br />
Document Only. p. 111 (Spring, 2005).<br />
135 See Natural Resource Damage Assessments, 43 C.F.R. Parts 11.84 (2001). Section 107 (a)(4)(c) provides that<br />
responsible parties may be held liable for “damages for injury to, destruction of, or loss of natural resources,<br />
including the reasonable costs of assessing such injury, destruction, or loss resulting from such a release.” However,<br />
under section 107(f), a trustee may not recover for natural resource loses occurring before the date of CERCLA’s<br />
enactment (December 11, 1980), or for losses identified in an environmental impact assessment, which are deemed<br />
to be authorized by permit or license. Likewise, under section 107(c), the trustee may not recover in excess of $50<br />
million unless a showing is made that the release resulted from willful misconduct or willful negligence, or from a<br />
violation of federal safety or operating standards.<br />
136 Under the DOI rules, the measure of damages “is the cost of restoration or replacement of the damaged resource.<br />
Additionally, compensable value, the value of the lost services of the resource during the time period from the injury<br />
until the baseline conditions have been reattained, is available for recovery at the discretion of the trustee. The<br />
trustee can chose between several valuation methods for estimating compensable value, including market valuation,<br />
appraisal, factor income, travel cost, hedonic pricing, unit value, contingent valuation, or other suitable valuation<br />
methods. The use of contingent valuation for measuring option and existence value is available only when the<br />
trustee determines there are no relevant use values.” James Peck, Measuring Justice for Nature: Issues in<br />
Evaluating and Litigating Natural Resource Damages, 14 J. LAND USE & ENVTL. L. 275, 302 (1999).<br />
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to making the public whole, and thus is perceived by the regulated community to be punitive<br />
rather than productive.<br />
On the other hand is the more Industry-friendly approach of NOAA. Under the NOAA<br />
approach, <strong>NRD</strong> now focuses on remediation of harm rather than monetization of claims. In<br />
addition, it utilizes an open process that requires public comment, and encourages cooperation<br />
with responsible parties rather than litigation. The NOAA regime is “restoration based,” that is,<br />
it establishes restoration of the damaged natural resources as the goal, and provides the agency<br />
and the responsible party a great deal of flexibility to develop a plan to move forward and<br />
achieve it. In general, there is more room for disagreement regarding valuation of loss of use<br />
claims. 137<br />
F. DEFENSES<br />
Because the pursuit of <strong>NRD</strong> is relatively new territory, one of the areas with the greatest<br />
potential for development and change is the defenses to liability. As <strong>NRD</strong> cases are more<br />
frequently litigated, new, creative and complex defenses will be asserted. Plaintiffs can<br />
anticipate a variety of defenses that may be offered by defendants in <strong>NRD</strong> cases. A defendant<br />
may argue, for example, that if a groundwater resource is not currently being used by the public,<br />
then there has been no harm suffered if it is contaminated. Defendants may also contest liability<br />
when there are multiple polluters of a single resource, thereby making it difficult to attribute<br />
particular contamination to specific source. Furthermore, a defendant may argue that a remedy is<br />
not reasonable or proportionate to the harm, i.e. when restoration costs far exceed the market<br />
value of the property.<br />
1. Statutory Defenses<br />
137 See Kanner supra note 124.<br />
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Most federal environmental statutes specifically enumerate defenses to liability available<br />
to a defendant in <strong>NRD</strong> actions. CERCLA, for example, provides that a person otherwise liable<br />
for contamination will not be liable in the event the damages resulting from the release or threat<br />
of release were caused “solely by-(1) an act of God; (2) an act of war; (3) an act or omission of a<br />
third party . . .” 138<br />
Similar provisions are found in the CWA 139 and OPA 140 Because of their<br />
limited application, however, these “formal” defenses are rarely successful. “Informal<br />
defenses,” such as those described below provide defendants with the opportunity to more<br />
success<strong>full</strong>y contest liability.<br />
2. Applicability of CERCLA<br />
One important issue with regard to defenses to CERCLA is the applicability of the statute.<br />
CERCLA does not apply retroactively. Section 107(f)(1) of CERCLA states “[t]here shall be no<br />
recovery . . . where such damages and the release of hazardous substance from which such<br />
damages regulated have occurred wholly before December 11, 1980 [enactment day of<br />
138 42 U.S.C. § 9607(b).<br />
139 33 U.S.C. § 1321(f)(1)(“Except where an owner or operator can prove that a discharge was caused solely by (A)<br />
an act of God, (B) an act of war, (C) negligence on the part of the United States Government, or (D) an act or<br />
omission of a third party without regard to whether any such act or omission was or was not negligence . . . such<br />
owner or operator of any vessel from which oil or a hazardous substance is discharged . . . shall . . . be liable to the<br />
United States Government for the actual costs incurred under subsection (c) of this section for the removal of such<br />
oil or substance by the United States Government . . .”). “CERLCA’s use of the word ‘omission’ in the phrase ‘act<br />
or omission’ of a third party suggests that the conduct of the third party must be wrongful. After all, an omission<br />
can only exist in relation to a duty to act. The Clean Water Act defense, however, expressly provides that the act or<br />
omission of the third party need not be negligent to qualify as the sole cause. The defense is available ‘without<br />
regard to whether any such act or omission was or was not negligent.’ One significant difference between the third<br />
party defense of the Clean Water Act and CERCLA is that the CERCLA does not contain this exception, suggesting<br />
perhaps that one way to distinguish the causation of the defendant and the third party is that the defendant must<br />
prove that the third party’s conduct was somehow wrongful.”). James R. MacAyeal, The Comprehensive<br />
Environmental Response, Compensation, and Liability Act: The Correct Paradigm of Strict Liability and the<br />
Problem of Individual Causation, 18 UCLA J. ENVTL. L. & POL’Y 217, 311 (2000/2001).<br />
140 33 U.S.C. § 2703(a)(“A responsible party is not liable for removal costs or damages under section 2702 of this<br />
title if the responsible party establishes, by a preponderance of the evidence, that the discharge or substantial threat<br />
of a discharge of oil and the resulting damages or removal costs were caused solely by-(1) an act of God; (2) an act<br />
of war; (3) an act or omission of a third party . . . ”).<br />
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CERCLA].” 141<br />
Thus, if <strong>NRD</strong> occurred on or before the December 11, 1980 date, a defendant is<br />
not liable under CERCLA. 142<br />
“[W]here damages are readily divisible [between pre and postenactment<br />
damages], the sovereigns cannot recover for such damages incurred prior to the<br />
enactment . . . In cases where the natural resource damages are not divisible and the damages or<br />
releases that caused the damages continue post-enactment, the sovereigns can recover for such<br />
non-divisible damages in their entirety.” 143<br />
In Coeur d’Alene Tribe v. Asarco, Inc., the United States and the Coeur d’Alene Tribe<br />
sought to recover <strong>NRD</strong> associated with releases of mine wastes. 144<br />
The defendants argued that<br />
no hazardous substance releases had occurred after CERCLA’s enactment in 1980, and no post<br />
enactment damages had occurred because environmental conditions in the Coeur d’Alene Basin<br />
had continuously improved. 145<br />
The trustees argued that the contaminants continued to be<br />
released and re-released, and maintained that the critical date, for purposes of CERCLA, is when<br />
an injury is quantified. 146<br />
The court ruled that CERCLA’s “wholly before” limitation did not bar the plaintiffs from<br />
recovery. 147<br />
The court found that “passive migration caused by leaching from variations in low<br />
and high water is a post-enactment release under CERCLA.” 148 Furthermore, the court concluded<br />
141 42 U.S.C. § 9607(f)(1).<br />
142 United States v. Reilly Tar and Chemical Corp., 546 F. Supp. 1100, 1120 (D. Minn. 1982).<br />
143 In re Acushnet River and New Bedford Harbor Proceeding, 716 F. Supp. 676, 685-686 (D. Mass. 1989).<br />
144 280 F. Supp. 2d at 1114.<br />
145 Id.<br />
146 Id.<br />
147 Id. at 1113.<br />
148 Id.<br />
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that the “passive movement and migration of hazardous substances by mother nature (no human<br />
action assisting in the movement) is still a ‘release’ for purposes of CERCLA in this case.” 149<br />
The court then relied on Aetna Casualty and Surety Co., Inc. v. Pintlar Corp., 150<br />
and In re<br />
Acushnet River and New Bedford Harbor Proceedings, 151 to conclude that “damages” for<br />
purposes of the “wholly before” limitation are defined as the “monetary quantification of the<br />
injury.” 152<br />
The court held that “damages occurred post-enactment when the federal government<br />
and Tribe began studying the ‘injury’ caused by the mining industry and how to clean up the<br />
injury to natural resources.” 153<br />
Distinguishing the Ninth Circuit’s 2002 en banc decision in<br />
Carson Harbor, 154 the court ruled that the defendants’ releases did not occur “wholly before”<br />
1980 because the continued, post-enactment passive migration of the contaminants constituted a<br />
“release” or “re-release” under the statute. 155<br />
The district court further held that even if all of the<br />
defendants’ releases occurred before 1980, the plaintiffs’ claim would still not be barred by<br />
section 9607(f) because “the damages associated with such releases occurred post-enactment . . .<br />
the statute only excuses liability if the release and the damages both occur pre-enactment.” 156<br />
149 Id.<br />
150 948 F. 2d 1507 (9th Cir. 1991).<br />
151 716 F. Supp. at 681.<br />
152 Coeur d’Alene, 280 F. Supp. 2d at 1114.<br />
153 Id.<br />
154 Carson Harbor Village, Ltd. v. Unocal Corporation, 270 F.3d 863 (9th Cir. 2001)(en banc).<br />
155 Coeur d’Alene, 280 F. Supp. 2d at 1113.<br />
156 Id. at 1114 (emphasis original).<br />
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In Montana v. Atlantic Richfield Company, Judge Haddon reached the opposite<br />
conclusion on CERCLA’s “wholly before” limitation. 157<br />
Montana brought an <strong>NRD</strong> action<br />
against Atlantic Richfield seeking to recover restoration costs at “upland areas” in the Clark Fork<br />
River Basin. 158<br />
The court rejected the theory that damages do not occur until expenses are<br />
incurred or costs are quantified, finding that such a theory is “unpersuasive” and would render<br />
the “wholly before” limitation in the statute meaningless. 159<br />
Instead, the court held that<br />
“damages accrue or occur, including restoration costs, when the underlying injury occurs.” 160<br />
The court barred the state of Montana’s claim for restoration cost damages because such<br />
damages occurred wholly before December 11, 1980.<br />
3. <strong>NRD</strong> and Site Remediation are the Same<br />
A defendant may also attempt to defend against its liability by taking advantage of the<br />
fact that most judges do not possess a significant degree of sophistication with regard to<br />
environmental issues. In the event a judge is not familiar with this highly specialized area of law,<br />
a defendant may attempt to blur the distinction between costs associated with site remediation<br />
and the recovery of <strong>NRD</strong>. There is, however, a clear distinction between the goals of<br />
remediation and those for the recovery of <strong>NRD</strong>. With regard to site remediation, a PRP is<br />
responsible for the costs associated with the remediation of the pollution. <strong>NRD</strong> is designed to<br />
compensate the public for the damage to its natural resources and the loss of use resulting from<br />
the resource’s contamination.<br />
157 Montana v. Atlantic Richfield Co., 266 F. Supp. 2d 1238 (D. Mont. 2003).<br />
158 Id. at 1239.<br />
159 Id. at 1243-1244.<br />
160 Id. at 1242.<br />
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In an effort to avoid the payment of damages for the destruction of natural resources, a<br />
defendant may argue that the site remediation must be completed before <strong>NRD</strong> can be assessed.<br />
While a defendant engages in countless site assessments and feasibility studies, the loss of use of<br />
the natural resource and the continued degradation of the site is being ignored. Consequently, a<br />
defendant is actually attempting to postpone a realization of its liability under the guise of<br />
“action.” However, as discussed earlier, site remediation can last for years without any actual<br />
cleanup occurring.<br />
A defendant may argue that since it is engaged in site remediation, a cost-benefit analysis,<br />
which is often used in the context of site remediation, is appropriate for the assessment of <strong>NRD</strong>.<br />
However, no court has ever used a cost-benefit analysis to value <strong>NRD</strong>. If a cost-benefit analysis<br />
is used to determine the amount of money that is recoverable for <strong>NRD</strong>, the public will almost<br />
never be <strong>full</strong>y restored because the nonmonetary value of the natural resources cannot be <strong>full</strong>y<br />
and fairly calculated.<br />
4. Preemption of Federal <strong>Law</strong><br />
When a trustee files a claim for <strong>NRD</strong> pursuant to state law, one common defense that a<br />
defendant may assert is that the law on which the claim is based is preempted by federal law.<br />
Generally, there are three ways in which a state law may be preempted by federal law. First,<br />
Congress can explicitly state in a federal statute that it preempts state law. 161<br />
Second, state law<br />
that legislates in an area that Congress has exclusively reserved to the federal government will be<br />
preempted. 162 Third, state law will also be preempted if it conflicts with federal law. 163 “The<br />
161 Attorney General v. Consumers Power Company, 508 N.W.2d 901, 902 (Ct. App. Mich. 1993).<br />
162 Id.<br />
163 Id.<br />
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presumption is that powers historically belonging to the states are not preempted by federal<br />
legislation unless that is the clear and manifest purpose of Congress.” 164<br />
The fact that the states<br />
have historically been entrusted with the protection of natural resources lends credence to the<br />
argument that federal laws will rarely preempt state law claims for <strong>NRD</strong>.<br />
In In the Matter of Allied Towing Corporation, a party who spilled oil into the<br />
Chesapeake Bay filed a complaint seeking limitation of liability pursuant to the Limitation of<br />
Liability Act 165 and § 1321(f) of the CWA. 166<br />
The United States responded by filing a claim for<br />
cleanup costs and the State of Virginia also responded by filing a claim seeking civil penalties,<br />
cleanup costs and damages for injury to natural resources. 167<br />
The court held that federal law<br />
does not supersede a valid exercise of a state’s police power unless there is a specific<br />
manifestation of Congress’s intent to preempt state law. 168<br />
With respect to the interaction<br />
between the CWA and Virginia state statutes, the court stated:<br />
Nothing in this scheme [of the CWA], however, conflicts with or otherwise<br />
preempts any state statute, such as Virginia’s, imposing liability on the owner or<br />
operator of any vessel which illegally discharges oil, nor does it limit the<br />
amount of liability. Similarly, nothing in the FWPCA precludes the states from<br />
imposing civil penalties upon vessel owners or operators who violate state<br />
statutes by discharging oil illegally. It merely provides the states with an<br />
alternative federal remedy which assures that, either through the action and<br />
expenditure of the state or Federal Government, the natural resources of this<br />
country will be preserved.” 169<br />
164 Id.<br />
165 46 U.S.C. §§ 181-189 (1976).<br />
166 In the Matter of Allied Towing Corporation, 478 F. Supp. 398, 400 (E.D. Va. 1979).<br />
167 Id. at 400.<br />
168 Id. at 401.<br />
169 Id. at 403.<br />
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Preemption of state law often arises in the context of <strong>NRD</strong> when the resource that has<br />
been injured is a navigable body of water, thus seemingly invoking admiralty and maritime<br />
issues. However, courts have consistently held that state actions are not preempted by federal<br />
law when state law does not conflict with federal law and Congress has not specifically<br />
legislated the issue. 170<br />
In general, federal environmental statutes are not enacted to supplant state<br />
statutory and common law causes of action; rather, they are meant to be supplements to ensure<br />
that trustees have adequate means by which they may seek and recover <strong>NRD</strong>.<br />
5. Scope of the Public Trust Doctrine<br />
When <strong>NRD</strong> claims are brought pursuant to the public trust doctrine, it is highly likely that<br />
a defendant will contest the scope of the doctrine’s application. As noted in section II.A.1, infra,<br />
in early American cases, the public trust doctrine was initially applied to suits involving the<br />
protection of navigable waters. 171<br />
The doctrine has evolved over time, however, and has been<br />
expanded to include the protection of, not only navigable waters, but other resources, including<br />
wildlife 172 and beaches. 173<br />
Some states have even extended the doctrine to include recreational<br />
170 In re Ballard Shipping Company v. Beach Shellfish, 32 F.3d 623, 631 (1st Cir. 1994)(holding that the Rhode<br />
Island Environmental Injury Compensation act that permits state law remedies for damage resulting from oil<br />
pollution is not preempted by federal maritime law); In the Matter of Nautilus Motor Tanker Co., Ltd., 900 F. Supp.<br />
697, 704 (D.N.J. 1995)(holding that New Jersey’s common law with respect to the recovery of purely economic<br />
losses “is not preempted as impermissibly prejudicing federal maritime law). But see State of Maryland v. Kellum,<br />
51 F.3d 1220, 1228 (4th Cir. 1995)(federal law preempts state natural resources code when it alters the rights and<br />
liabilities afforded to the parties under federal maritime law).<br />
171 For a more complete discussion of the evolution of the public trust doctrine, see generally Kanner, supra note 8.<br />
172 In re Steuart Transportation, 495 F. Supp. 38, 40 (E.D. Va. 1980).<br />
173 Borough of Neptune City v. Borough of Avon-By-The-Sea, 294 A.2d 47, 55 (N.J. 1972).<br />
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activities such as sailing, swimming, hunting and the enjoyment of scenic and aesthetic<br />
beauty. 174<br />
Despite the fact that there is a trend toward expansion, those who oppose an extension of<br />
the doctrine, contend that the inclusion of other resources is not consistent with the historic<br />
foundation of the doctrine. 175<br />
A prime example of this debate is the issue of whether or not<br />
groundwater should be protected by the public trust doctrine.<br />
The vital role groundwater plays in the survival and development of the United States is<br />
rapidly emerging as an important and visible issue in the American consciousness. Groundwater<br />
supplies approximately ninety-six percent of the water in the United States. 176<br />
Moreover, at least<br />
fifty percent of the “of the domestic water used in the United States is derived from<br />
groundwater.” 177 In some areas, populations are one hundred percent reliant on groundwater. 178<br />
Thus, it follows that groundwater is one of the nation’s most precious natural resources.<br />
Opponents to the extension of the public trust doctrine assert that the traditional<br />
application of the public trust doctrine extended only to surface water; however, advances in<br />
science and technology demonstrate that there is a significant interrelationship between ground<br />
and surface water. 179<br />
It follows from this fact and basic hydrogeologic concepts that<br />
contamination of surface water can ultimately lead to the contamination of groundwater. This<br />
174 Hixon v. Public Service Commission, 146 N.W.2d 577, 582 (Wis. 1966).<br />
175 See Kanner, supra note 8.<br />
176 Albert P. Barker & Richard B. Burleigh, Agricultural Chemicals and Groundwater Protection: Navigating the<br />
Complex Web of Regulatory Controls, 30 IDAHO L. REV. 443, 449 (1993/1994).<br />
177 Id.<br />
178 Blake Johnston, Dara Lum & Susan Curtis, Groundwater in the West, 8 U. Denv. Water L. Rev. 328, 335 (2004).<br />
179 Kanner, supra note 8.<br />
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understanding, coupled with the knowledge that the preservation of groundwater has become<br />
crucial to the survival of our communities, has paved the way for groundwater’s inclusion within<br />
the bounds of the public trust doctrine.<br />
Additionally, it can be argued that the same reason the public trust was first applied to<br />
navigable waters, in order to foster the development of early American settlements, is precisely<br />
the same reason that the public trust doctrine should now encompass the protection of<br />
groundwater. Because the public trust doctrine “should not be considered fixed or static, but<br />
should be molded and extended to meet changing conditions and the needs of the public it was<br />
intended to benefit,” 180 the scope of the doctrine should remain broad and should extend to all<br />
resources that provide some benefit to the public, especially when basic human survival is<br />
dependent on such a resource.<br />
6. Government Contractor Defense<br />
One of the greatest ironies when considering <strong>NRD</strong> is the fact that, frequently, pollution<br />
emanates from facilities that provide services or products that have significant value or are<br />
necessary to our society for purposes of economics and development. The pollution associated<br />
with these products or services may be characterized by polluters as a sort of “necessary evil.” 181<br />
It follows that some of these services and products required by the general public are also<br />
required by the government. A government’s need for such products or services is especially<br />
critical, for example, when the country is engaged in a war. Furthermore, it has often been the<br />
180 Borough of Neptune City, 294 A.2d at 54.<br />
181 This characterization of pollution begs the question of whether the evil was truly avoidable and necessary. There<br />
is a predisposition to assume that polluters “did not know any better” when polluting the environment prior to the<br />
enactment of environmental regulations. The reality, however, is that the notion of “necessary evil” cannot be taken<br />
at face value. Polluters must be held accountable for all of their actions, whether environmental regulations existed<br />
at the time of pollution or not.<br />
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case that such products and services are commissioned or rationed expressly by the government<br />
for use by the military during such times.<br />
When the government has requisitioned services or products from a defendant, a<br />
defendant might assert a government contractor defense to liability stemming from actions<br />
related to the provision of these services or products. 182<br />
This defense is based on the notion that<br />
when a PRP is compelled to provide services or products for the United States any injury or<br />
damage arising as a result of performance of that obligation is excusable. The government<br />
contractor defense is “a matter of federal common law which displaces state law . . . Because<br />
federal procurement actively implicates ‘uniquely federal interests’ in ‘getting the Government’s<br />
work done,’ when the three referenced elements are present, state tort law significantly conflicts<br />
with federal interests and federal common law preempts it, providing a complete defense against<br />
state law claims.” 183<br />
In Boyle v. United Technologies Corporation, the United States Supreme Court<br />
thoroughly discussed the application of the government contractor defense. 184<br />
In Boyle, a<br />
wrongful death suit was brought against an independent contractor who manufactured the<br />
helicopter and faulty escape-hatch system that ultimately resulted in a navy pilot’s death after the<br />
182<br />
Courts have held that this is not a viable third party defense with respect to CERCLA. See, e.g., United States v.<br />
Shell Oil Company, 1992 WL 144296, No. CV. 91-0589-RJK, at *10 (C.D. Cal. Jan. 16, 1992). In Shell, the oil<br />
company defendants argued “that the plaintiffs are not entitled to recover because defendants’ actions were<br />
undertaken pursuant to contracts between them and the United States . . . 42 U.S.C. § 9620 addresses the issues of<br />
government contractor liability in the CERCLA context. It provides that nothing in this section shall be construed to<br />
affect the liability of any person or entity under sections 9606 and 9607 . . . In light of § 9620 and the strict liability<br />
language of § 107, this affirmative defense is inappropriate and inconsistent with the third-party defense provided<br />
within § 107. As such, it is dismissed.”<br />
183 Yeroshefsky v. Unisys Corporation, 962 F. Supp. 710, 715 (D. Md. 1997)(citing Boyle v. United Technologies<br />
Corporation, 487 U.S. 500, 504, 512 (1988).<br />
184 487 U.S. 500 (1988).<br />
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helicopter crashed off the coast of Virginia. 185<br />
The court recognized the potential conflict<br />
between federal interests and state tort law with respect to government procurement contracts. 186<br />
The court examined the government contractor defense in the context of the Federal Tort Claims<br />
Act (“FTCA”), 187 which is a consent to suit against the United States for the negligent or<br />
wrongful conduct of Government employees, except as to those claims that are “based upon the<br />
exercise or performance or the failure to exercise or perform a discretionary function or duty on<br />
the part of the federal agency or an employee of the Government, whether or not the discretion<br />
involved be abused.” 188<br />
Accordingly, government contractors are not subject to liability “when<br />
(1) the United States approved reasonably precise specifications; (2) the equipment conformed to<br />
those specifications; and (3) the supplier warned the United States about the dangers in the use of<br />
the equipment that were known to the supplier but not to the United States.” 189<br />
Perhaps the most significant requirement of this three part test in the context of <strong>NRD</strong><br />
actions is the United States’ approval of “reasonably precise specifications.” The United States<br />
Supreme Court discussed the discretionary function exception in Berkovitz v. United States:<br />
In examining the nature of the challenged conduct, a court must first consider<br />
whether the action is a matter of choice for the acting employee. This inquiry is<br />
mandated by the language of the exception; conduct cannot be discretionary<br />
unless it involves an element of judgment or choice . . . Thus, the discretionary<br />
function exception will not apply when a federal statute, regulation, or policy<br />
specifically prescribes a course of action for an employee to follow. In this event,<br />
the employee has no rightful option but to adhere to the directive. And if the<br />
employee’s conduct cannot appropriately be the product of judgment or choice,<br />
185 Id.<br />
186 Id. at 511.<br />
187 28 U.S.C. § 1346(b).<br />
188 Boyle, 487 U.S. at 511 (quoting 28 U.S.C. § 2680(a)).<br />
189 487 U.S. at 512.<br />
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then there is no discretion in the conduct for the discretionary function exception<br />
to protect . . . The exception, properly construed, therefore protects only<br />
governmental actions and decisions based on considerations of public policy . . .<br />
In sum, the discretionary function exception insulates the Government from<br />
liability if the action challenged in the case involves the permissible exercise of<br />
policy judgment. 190<br />
Thus, in order for the government contractor defense to apply, the government must have made a<br />
decision relating to the conduct at issue, i.e. the government must have exercised a discretionary<br />
function.<br />
Courts have consistently held in environmental contamination cases where a defendant is<br />
asserting a government contractor defense that the United States never manifested the requisite<br />
approval of the manner and type of waste disposal activities that were responsible for the<br />
contamination of natural resources.<br />
In Lamb v. Martin Marietta Energy Systems, Inc., property owners brought a suit against<br />
a gaseous diffusion plant to recover for environmental damages caused by discharges of<br />
pollutants into the atmosphere, soil, bodies of water and ditches at the plant. 191<br />
The defendant<br />
moved for summary judgment based on its relationship with the United States as a government<br />
contractor. 192<br />
The defendants argued that the Department of Energy (“DOE”) exercised<br />
substantial control over operations at the facilities, and therefore, all activities fell within the<br />
discretionary function exception. 193<br />
In denying the defendant’s motion for summary judgment,<br />
the court held that “[t]he defendants have failed to present specific evidence regarding the<br />
190 486 U.S. 531, 536-537 (1988).<br />
191 835 F. Supp. 959 (W.D. Ky. 1993).<br />
192 Id. at 962.<br />
193 Id. at 966.<br />
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directions and orders that the DOE gave with respect to waste management units at the plant.” 194<br />
Therefore, the defendants did not satisfy the first element of the government contractor defense<br />
demonstrating that the pollution resulted from express approval and direction of the government.<br />
In Arness v. Boeing North American Inc., the plaintiffs filed suit against the defendant<br />
asserting violations of state environmental laws stemming from the release and disposal of<br />
trichloroethylene (“TCE”) which contaminated the groundwater, soil and subsurface soil of the<br />
area surrounding a facility which manufactured and tested rocket engines. 195<br />
The defendant<br />
argued that the contamination resulted from rocket engine contracts that were performed<br />
pursuant to the specific direction and control of the United States. 196<br />
The defendant argued that<br />
the United States had specifically required the use of TCE. 197<br />
The court ultimately determined<br />
that the defendant failed to prove that he was “acting under” the direction of a federal officer,<br />
stating,<br />
[The defendant’s] use of TCE did not cause Plaintiffs’ injuries. Rather, Plaintiffs’<br />
injuries were allegedly caused by [defendant]’s negligent disposal and storage of<br />
TCE, which activities were not performed at the government’s behest . . . “[t]he<br />
government did not specify safeguards to prevent the release of TCE to the air and<br />
ground in these flushing procedures” . . . Furthermore, . . . [the defendant] does<br />
not submit any evidence that the government required . . . [the defendant] to store<br />
194 Id. at 968.<br />
195 In this case, the court examined the issue of governmental direction and control in light of defendants’ removal of<br />
the case pursuant to the federal officer removal statute, 28 U.S.C. § 1442(a)(1), which states that an action filed<br />
against “[t]he United States or any agency thereof or any officer (or any person acting under that officer) of the<br />
United States or of any agency thereof, sued in an official capacity for any act under color of such office or on<br />
account of any right, title or authority claimed under any Act of Congress” may be removed to federal court.<br />
Although the court did not expressly address the likelihood that the defendant’s government contractor defense<br />
would actually succeed in light of the facts, the reasoning used by the court is parallel to that which a court would<br />
use to examine the discretionary function exception when considering the applicability of the government contractor<br />
defense.<br />
196 Id. at 1270.<br />
197 Id.<br />
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the TCE in a particular manner which resulted in the alleged release of TCE that<br />
caused Plaintiffs’ injuries. 198<br />
In New Jersey Department of Environmental Protection v. ExxonMobil Corporation, the<br />
State of New Jersey filed an <strong>NRD</strong> action in New Jersey state court against ExxonMobil for<br />
contamination resulting from refinery operations, alleging violations of the New Jersey Spill Act<br />
and common law nuisance and trespass claims. 199<br />
Defendant ExxonMobil Corporation removed<br />
the case to federal court, arguing jurisdiction under §1442, asserting the government contractor<br />
defense. 200<br />
The court remanded the case, stating with regard to the government contractor<br />
defense that “it is not entirely clear that this defense, which sounds in products liability, would<br />
apply here, to an issue turning on the construction of state environmental law.” 201<br />
In addition,<br />
the court stated that ExxonMobil’s claim that the Petroleum Administration for War exerted<br />
control over “the manufacture, production, storage, and transfer of petroleum products” failed to<br />
establish the government’s control over improper waste disposal methods, the action causing the<br />
injury of which the plaintiffs complained. 202<br />
198 Id. at 1275. Similarly, in Bahrs v. Hughes Aircraft Company, 795 F. Supp. 965 (D. Ariz. 1992), the defendant<br />
attempted to invoke federal jurisdiction by arguing it had acted under the direction of federal government when<br />
disposing of waste products that led to the contamination of the plaintiffs’ water supply. The court held that<br />
“[w]hile the government officials were undoubtedly most interested in the production of war materials, the record<br />
before this Court does not demonstrate the government’s necessary control over the method of waste disposal. The<br />
mere fact that the government possessed the power to exercise control over the project does not establish that the<br />
power was ever in fact exercised.” Id. at 970.<br />
199 New Jersey Department of Environmental Protection v. ExxonMobil Corporation, No. Hud-L 4415-04 (N.J.<br />
Super. Ct. filed Aug. 18, 2004).<br />
200 Notice of Removal at § 1.20, New Jersey Department of Environmental Protection v. ExxonMobil Corporation,<br />
No. Hud-L 4415-04 (N.J. Super. Ct. filed Aug. 18, 2004).<br />
201 New Jersey Department of Environmental Protection v. ExxonMobil Corporation, No. 04-CV-4897, slip op. at 7<br />
(D.N.J. March 24, 2005).<br />
202 Id. at 8.<br />
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As demonstrated by the reasoning of the courts in the aforementioned cases, a defendant<br />
must provide specific evidence demonstrating that any discharges or improper waste disposal<br />
occurred with the express approval and direction of the federal government in order to satisfy the<br />
first prong of the requirements of the government contractor defense. Given the overall lack of<br />
success defendants have historically had with such a defense in environmental contamination<br />
cases, it is unlikely that it will succeed in future <strong>NRD</strong> cases.<br />
A key consideration in this type of defense is absolute joint and several liability-it is<br />
ultimately irrelevant if a portion of <strong>NRD</strong> occurred during war. Furthermore, if a defendant raises<br />
this type of defense, he ultimately bears the burden of proof as to the degree of his contribution<br />
to the contamination.<br />
7. Statutory Immunity<br />
Along the same lines as the government contractor defense, defendants may also assert<br />
defenses based on immunity provisions found in certain federal statutes regarding government<br />
contracts. The Defense Production Act, the National Defense Act, the Navy Purchase Act, and<br />
the First and Second War Powers Acts contain immunity provisions for defendant contractors<br />
performing contracts entered into pursuant to those statutes. The Defense Production Act<br />
(“DPA”), for example, states in relevant part: “No person shall be held liable for damages or<br />
penalties for any act or failure to act resulting directly or indirectly from compliance with a rule,<br />
regulation, or order issued pursuant to this Act . . .” 203<br />
For purposes of this analysis, the<br />
application of DPA immunity will be examined in the context of the numerous “Agent Orange”<br />
suits.<br />
In Ryan v. Dow Chemical Company, civilians in Vietnam filed a suit against “Agent<br />
203 50 U.S.C. App. § 2157.<br />
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Orange” manufacturers, claiming injuries resulting from exposure to the chemical defoliant. 204<br />
The defendants argued that the case should be removed pursuant to § 1442, asserting the<br />
government contractor defense and immunity under the DPA. 205<br />
Although the court ruled that<br />
the DPA was a “colorable” defense for purposes of removal, the court questioned the validity of<br />
such claims of immunity, stating “[t]here is a dispute as to whether section 707 [of the DPA]<br />
provides immunity against tort suits based in strict liability and negligence of the sort the civilian<br />
plaintiffs wish to pursue. On a previous occasion, this court was inclined to view section 707 as<br />
immunizing contractors only for contract damages, although it did not rule on the issue.” 206<br />
The<br />
“previous occasion” referenced by the Ryan court, was the Eastern District of New York’s<br />
decision in In re “Agent Orange” Product Liability Litigation, in which the defendant<br />
manufacturers argued that, under the DPA, they should not be held liable for complying with<br />
“Agent Orange” production contracts entered into with the United States government. 207<br />
As<br />
noted in Ryan, the Agent Orange court held that immunity under the DPA did not necessarily<br />
extend to liability for torts:<br />
It is indisputable that the statutory ancestors of section 707 only immunized<br />
contractors from liability for breach of contract damages; the law was explicit on<br />
that point . . . It is telling that neither the Defense Production Act itself nor the<br />
legislative history made any reference to tort claims despite the fact that, as<br />
evidenced by this suit, the contracts “rated” under the Act “involve items, the<br />
production of which may . . . give[e] rise to the possibility of an enormous amount<br />
of claims. If section 707 is to be applied to tort claims at all, it should only be read<br />
to bar claims for strict liability, not negligence. The former involve holding a<br />
defendant liable despite the fact that it may not have been at fault and the liability<br />
thus truly “result[s] . . . from compliance with . . . this Act.” Whether this last<br />
204 781 F. Supp. 934 (E.D.N.Y. 1992).<br />
205 Id. at 938.<br />
206 Id. at 945.<br />
207 597 F. Supp. 740, 843 (E.D.N.Y. 1984).<br />
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interpretation or one not applying section 707 to tort suits altogether is adopted, the<br />
Defense Production Act would not bar plaintiffs’ claims. 208<br />
Similarly, in Hercules, Inc. v. United States, the federal circuit examined the scope of<br />
immunity of section 707 of the DPA. In Hercules, manufacturers sued the United States<br />
government in order to recover expenses incurred as a result of Agent Orange litigation. 2<strong>09</strong><br />
The<br />
defendants argued that because the government had compelled them to enter into contracts for<br />
the production of “Agent Orange” pursuant to section 101 of the DPA, the defendants were<br />
entitled to immunity under section 707 for both contract and tort suits. 210<br />
The court disagreed,<br />
stating:<br />
The language of section 101(a) makes it clear that the purpose of the statute is to<br />
authorize the President to dictate that preference be given the government<br />
contracts which are necessary to promote the national defense . . . Significantly,<br />
section 101(a) does not mention either the specific nature of performance under a<br />
DPA contract, or the subsequent use of goods produced under such a contract.<br />
Therefore, we conclude that, while the risk imposed by section 101(a) does<br />
include the possible need of a contractor to break its contracts with third parties in<br />
order to give preference to a DPA contract, it does not include the risk that the<br />
product produced under the DPA contract will be inherently unsafe to users. 211<br />
Consistent with the court’s reasoning in In re Agent Orange, immunity under the DPA<br />
would not apply to defendants who improperly dispose of waste or discharge hazardous<br />
substances despite the existence of a contract with the government. Unless a contract with the<br />
government explicitly directs and authorizes the waste disposal and discharge methods to be<br />
undertaken by a defendant, it is difficult to see how the DPA can success<strong>full</strong>y be asserted as a<br />
208 Id. at 845.<br />
2<strong>09</strong> 24 F.3d 188 (Fed. Cir. 1994).<br />
210 Id. at 202. 50 U.S.C. app. § 2071(a)(1964) authorizes the President “to compel contract performance as well as<br />
contract acceptance.” Id. at 202-203.<br />
211 Id. at 203.<br />
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defense to liability for <strong>NRD</strong>.<br />
8. Standing to Bring <strong>NRD</strong> Claims<br />
Defendants may also contend that the state does not have sufficient standing to bring<br />
<strong>NRD</strong> claims. In Department of Environmental Protection v. Jersey Central Power and Light Co.,<br />
the State of New Jersey filed suit against a public utility engaged in the operation of a nuclear<br />
power plant. 212<br />
The court held that the state, seeking to recover damages as parens patriae for<br />
damage to fisheries caused by the defendant’s cooling water discharges during plant operations,<br />
had standing to seek both an injunction and damages. 213<br />
The court rejected the defendant’s argument that the state did not have a proprietary right<br />
to the fish in its waters sufficient to support an action for damages. 214<br />
Affirming the judgment of<br />
the lower court, the court stated that the State of New Jersey has “not only the right, but also the<br />
affirmative fiduciary obligation to ensure that the rights of the public to a viable marine<br />
environment are protected, and to seek compensation for any diminution in the trust corpus.” 215<br />
The court further said that “absent some special interest in some private citizen, it was<br />
questionable whether anyone but the state could be considered the proper party to sue for<br />
recovery of damages to the environment.” 216<br />
212 336 A.2d 750 (N.J. Super. Ct. App. Div. 1975), aff’d., 336 A.2d 750 (N.J. Super. Ct. App. Div. 1975), rev’d on<br />
other grounds, 351 A.2d 337 (N.J. 1976).<br />
213 Id. at 759.<br />
214 Id. at 758-759.<br />
215 Id. at 759.<br />
216 Id.<br />
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Some defendants have even gone so far as to question a state’s inherent right to protect its<br />
natural resources as a public trustee. In New Jersey Department of Environmental Protection v.<br />
ExxonMobil Corporation, the defendant made the following argument:<br />
State ownership of natural resources derives from the sovereign rights of the<br />
British Crown and of the United States, and is governed by federal law, since<br />
under the equal footing doctrine these rights must be the same in all states.<br />
Plaintiffs’ expansive theories of natural resource ownership and damages go<br />
beyond the sovereign rights transmitted to New Jersey by the British Crown at<br />
independence in 1776, and would offend the equal footing doctrine if they were<br />
upheld. 217<br />
ExxonMobil essentially argued that New Jersey exceeded its authority by attempting to bring<br />
<strong>NRD</strong> claims pursuant to the New Jersey Spill Act and common law. This case is currently<br />
pending in New Jersey state court, however, given New Jersey’s historical pattern of upholding<br />
the State’s authority to bring <strong>NRD</strong> claims, it is unlikely this defense will be successful.<br />
III.<br />
CONCLUSION<br />
The preservation, protection and reclamation of natural resources have become<br />
increasingly more important as the devastating impact of contamination is revealed.<br />
The<br />
multiplying number of <strong>NRD</strong> cases that are filed each year serves as a testament to this fact. The<br />
process of resolving these cases will force the courts and litigants to take a hard look at the<br />
available universe of approaches. Because of the highly specific nature of each <strong>NRD</strong> case, the<br />
manner of application and the success of these claims will only be realized over time as <strong>NRD</strong> is<br />
examined on a case by case basis.<br />
217 Notice of Removal at 1.20(e), New Jersey Department of Environmental Protection v. ExxonMobil Corporation,<br />
No. Hud-L 4415-04 (N.J. Super. Ct. filed Aug. 18, 2004).<br />
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Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22a: 1<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong><br />
National Advanced Conference on Natural<br />
Resource Damage Litigation<br />
Santa Fe, New Mexico<br />
July 9-10, 20<strong>09</strong><br />
Settlement of Natural Resource<br />
Damage Claims: Update on New<br />
Defenses<br />
Steven G. Jones<br />
environmental law is what we do TM<br />
Marten <strong>Law</strong> Group PLLC<br />
1191 Second Avenue, Suite 2200<br />
Seattle, WA 98101<br />
206-292-2600<br />
bmarten@martenlaw.com<br />
www.martenlaw.com<br />
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Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22a: 2<br />
Settlement of Natural Resource Damage Claims:<br />
Update on New Defenses<br />
1. INTRODUCTION<br />
The Comprehensive Environmental Response, Compensation and Liability Act 1<br />
(“CERCLA” or “Superfund”) was adopted more than 25 years ago, and most<br />
environmental professionals are familiar with CERCLA – or at least part of it. The part<br />
that has received nearly all of the attention over the past quarter century is the<br />
“remedial” part of the statute, which creates “strict, joint and several” liability for property<br />
owners, waste generators, and transporters and requires them to pay “response” costs.<br />
Less well known are CERCLA’s provisions imposing liability on these same parties for<br />
“natural resource damages” (“<strong>NRD</strong>”). Sometimes described as Superfund’s “sleeping<br />
giant,” 2 the <strong>NRD</strong> provisions in CERCLA have been addressed in only a handful of<br />
published opinions. Over the last two to three years, however, there has been a<br />
substantial increase in <strong>NRD</strong> claims, settlements and judicial decisions.<br />
One of the most potentially important decisions affecting the assessment and the<br />
settlement of <strong>NRD</strong> claims was issued by the U.S. Supreme Court this past May in<br />
Burlington Northern & Santa Fe Railroad v. United States (“BNSF”). 3 The decision is<br />
primarily directed to both the standard for arranger liability and divisibility/apportionment<br />
under the remedial portion of CERCLA. The two primary holdings of BNSF are: (1) that<br />
EPA cannot hold parties liable under CERCLA as “arrangers” for disposal unless they<br />
“intended” their wastes to be disposed of; and, (2) that liable parties at a multi-party<br />
Superfund site are not jointly and severally liable if a “reasonable basis” exists to<br />
apportion their liability.<br />
Notwithstanding its primary focus, however, the decision has potential implications for<br />
<strong>NRD</strong> claims. These implications flow from two of the underlying elements of <strong>NRD</strong><br />
liability – (1) the concept of joint and several liability and (2) the “causation” element of<br />
<strong>NRD</strong> claims. Both of those implications are addressed below.<br />
In addition to BNSF, one of the few reported decisions involving allocation of liability for<br />
<strong>NRD</strong> claims, Coeur D’Alene Tribe v. ASARCO, Inc., 4 was implicated in a settlement of<br />
1 42 U.S.C. § 9601, et seq.<br />
2 Natural Resource Damages: A Legal, Economic and Policy Analysis at 1 (Richard B. Stewart, ed., Nat'l<br />
Legal Center for Public Interest 1995); see also B. Marten and C. McFarland, Liability for Natural<br />
Resource Damage Claims, 22 BNA Environmental Reporter No. 12,670 (July 19, 1991).<br />
3 07-1601. The case was consolidated with the case of Shell Oil Co. v. United States, No. 07-1607. The<br />
Court’s opinion in the BNSF case was handed down on May 4, 20<strong>09</strong>. The opinion can be viewed at 129<br />
S.Ct. 1870, 68 ERC 1161, 77 USLW 4366.<br />
4 280 F. Supp.2d 1<strong>09</strong>4 (D. Id. 2003).<br />
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<strong>NRD</strong> claims recently approved by the Bankruptcy Court for the Southern District of<br />
Texas in In re ASARCO LLC, et al. 5 In the ASARCO bankruptcy, a challenge was<br />
raised to ASARCO’s settlement of its <strong>NRD</strong> claims in Coeur D’Alene, based on an<br />
argument that ASARCO settled those claims for an amount in excess of its allocated<br />
share of liability, as determined by Judge Lodge.<br />
This paper will provide a general overview of <strong>NRD</strong> claims generally, discuss the<br />
potential implications for <strong>NRD</strong> claims arising from the Supreme Court’s BNSF decision,<br />
and conclude with an examination of the arguments raised against the ASARCO<br />
settlement grounded in the allocation decision in Coeur D’Alene.<br />
2. GENERAL OVERVIEW OF LIABILITY<br />
<strong>NRD</strong> claims are not claims brought by the Environmental Protection Agency (“EPA”).<br />
Instead, they are brought by “Trustees” – federal, state, and tribal governments or<br />
branches of government whose mission is to protect natural resources – public lands,<br />
surface water, groundwater, and species of all varieties.<br />
While some <strong>NRD</strong> claims are litigated simultaneously with remedial claims under<br />
CERCLA, it is common to view an <strong>NRD</strong> claim as the claim that is left over after a<br />
contaminated site has been remediated. Remediating a site – something EPA does –<br />
generally does not restore property to its pre-contaminated state. A deed restriction<br />
prohibiting the withdrawal of groundwater may satisfy an agency’s concerns about<br />
protecting human health, but it does not restore water quality. Trustees use <strong>NRD</strong><br />
claims to restore natural resources, and/or to recover damages for diminution in the<br />
value of the injured resources.<br />
Likewise, if groundwater is contaminated, the remedial action may be to install an<br />
impermeable cap, to reduce water infiltration to contaminated soils, and to facilitate<br />
gradual improvement of groundwater quality. While this might satisfy EPA and/or the<br />
state’s goal of protecting public health, it does not restore groundwater to its baseline<br />
condition or compensate water users for the loss of potable drinking water.<br />
3. ELEMENTS OF AN <strong>NRD</strong> CLAIM<br />
While it is not my purpose in this paper to provide a primer on <strong>NRD</strong> claims, some<br />
elements of <strong>NRD</strong> claims have particular relevance to the judicial developments<br />
discussed in the latter portion of these materials.<br />
3.1 Statutory Authority<br />
The three principal statutes that Trustees tend to use to support <strong>NRD</strong> claims are:<br />
(1) CERCLA, (2) the Clean Water Act (“CWA”), 6 and (3) the Oil Pollution Control Act<br />
5 No. 05-21207, Bankruptcy Court for the Southern District of Texas, Corpus Christi Division.<br />
6 33 U.S.C. §1251 et seq.<br />
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(“OPA). 7 Regulations for assessing <strong>NRD</strong> injuries have been promulgated by: (1) the<br />
U.S. Department of the Interior (“DOI”), and (2) the National Oceanic & Atmospheric<br />
Association (“NOAA”). 8 These statutes and regulations have state law counterparts in<br />
many states, which may give rise to a separate cause of action. 9<br />
3.2 Standing<br />
Trustees are the agencies that own, manage or otherwise control resources allegedly<br />
injured by a discharge of hazardous substances or oil. They include federal and state<br />
land management and resource agencies, such as the DOI, the Department of<br />
Agriculture, NOAA, and their state equivalents. EPA is not a Trustee agency and is not<br />
a party to <strong>NRD</strong> suits. Indian tribes can act as Trustees, and have brought a number of<br />
significant <strong>NRD</strong> claims. Cities can only serve as Trustees if authorized by the governor<br />
of a state. 10 Private parties cannot be Trustees, and do not have a contribution cause<br />
of action under the <strong>NRD</strong> provisions of CERCLA or the OPA.<br />
For one shining moment, it appeared that the courts would force trustee plaintiffs to sort<br />
out their resource claims among each other. In a 2003 decision, Judge Lodge of the<br />
federal district court in Idaho held that the question of Trusteeship “is to be determined<br />
on a case-by-case basis depending on who the resource belongs to, who it is managed<br />
by, who controls the same, and how the resource appertains to other resources.” 11<br />
The court went on to address the provision in CERCLA prohibiting double recovery, and<br />
concluded that wherever two or more Trustees claimed an interest in a particular injured<br />
7 There are also <strong>NRD</strong> provisions in the National Marine Sanctuaries Act, the Deepwater Ports Act, and<br />
the Park System Resources Protection Act.<br />
8 The DOI rules were initially issued in 1986 and 1987, and significantly revised in 1994 (59 Fed. Reg.<br />
14285) and 1996 (61 Fed. Reg. 20560). The NOAA rules were adopted in 1996, subsequently vacated in<br />
part by a federal court (General Electric Co. v. U.S. Department of Commerce, 182 F. 3d 767 (D.C. Cir.<br />
1997), and subsequently repromulgated in 2002 (67 Fed. Reg. 61483).<br />
9 For example, the <strong>NRD</strong> claim asserted by the state of New Jersey for the Lower Passaic River is<br />
brought under that state's Spill Compensation and Control Act, N.J. SA 58:10-23.11, et seq.<br />
10 CERCLA § 107(f)(2)(B); see, e.g., City of Indianapolis v. Union Carbide, 2003 WL 22327832 (S.D. Ind.<br />
2003). The City of Lodi, California adopted a municipal ordinance under which it could pursue natural<br />
resource damages, an approach that was ultimately sanctioned by the Ninth Circuit Court of Appeals in<br />
the face of an argument that the ordinance was preempted by CERCLA and that the City had not<br />
received appropriate delegation from the Governor of California to pursue such claims. See Fireman’s<br />
Fund Ins. Co. v. City of Lodi, 302 F.3d 928, 944-45 (9th Cir. 2002) (“Notwithstanding any authority under<br />
CERCLA or HSAA that Lodi may acquire by delegation, Lodi retains its independent authority to protect<br />
its proprietary interest in natural resources held in trust by the City.”); compare multiple decisions which<br />
have held that a municipality may not bring a CERCLA cause of action “as a public trustee” of a state's<br />
natural resources unless the municipality has been appointed by the governor of its respective state.<br />
See, e.g., Borough of Sayreville v. Union Carbide Corp., 923 F.Supp. 671, 680-81 (D.N.J.1996); Borough<br />
of Rockaway v. Klockner & Klockner, 811 F.Supp. 1039, 1049-51 (D.N.J.1993); City of Toledo v. Beazer<br />
Materials & Servs., Inc., 833 F.Supp. 646, 652 (N.D.Ohio 1993); City of Heath v. Ashland Oil, Inc., 834<br />
F.Supp. 971, 976-77 (S.D.Ohio 1993); Town of Bedford v. Raytheon Co., 755 F.Supp. 469, 471-73<br />
(D.Mass.1991)Ohio 1993); Town of Bedford v. Raytheon Co., 755 F.Supp. 469, 471-73 (D.Mass.1991).<br />
11 Coeur d'Alene Tribe v, ASARCO, Inc., 280 F. Supp, 1<strong>09</strong>4 (D. Idaho 2003) (hereafter "Coeur d'Alene"<br />
decision).<br />
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resource, their right to recovery would have to be proven by each at trial and<br />
apportioned among them by the court. Judge Lodge held – at the time – that the “only<br />
feasible way to compensate the co-Trustees and avoid a double recovery or unjust<br />
enrichment to one Trustee at the expense of another is to award damages in the ratio or<br />
percentage of actual management and control that is exercised by each of the various<br />
co-Trustees.”<br />
Having gone to great lengths to tell the Trustees to sort out their claims among<br />
themselves, Judge Lodge then reversed himself, sua sponte, two years later. 12 In an<br />
August 2005 decision, Judge Lodge found “after completing further research that it may<br />
have been in error with Its prior ruling” on Trustee standing. In reversing its previous<br />
ruling, the court held that “its reliance on traditional tort concepts in allocating<br />
trusteeship was misplaced.” It found that the “language of the statute dictates that a cotrustee<br />
acting individually or collectively with the other co-trustees may go after the<br />
responsible party or parties for the <strong>full</strong> amount of the damage, less any amount that has<br />
already been paid as a result of a settlement to another trustee by a responsible party.<br />
If there is later disagreement between the co-trustees, that disagreement would have to<br />
be resolved by successive litigation between the trustees, but it could in no way affect<br />
the liability of the responsible part of parties.” 13<br />
While Trustees may be pleased with Judge Lodge’s reversal, I consider the opinion an<br />
unfortunate decision for both the Trustees and <strong>NRD</strong> defendants. By allowing any<br />
Trustee to sue for any damages, the court put <strong>NRD</strong> defendants in the position of having<br />
little reason to settle with one Trustee (such as a state) without the participation of all<br />
Trustees. Getting all potential Trustees – including state, federal and tribal Trustees –<br />
to the table at one time is no easy task. Judge Lodge’s decisions may make settlement<br />
harder, and <strong>NRD</strong> defendants more litigious.<br />
In addition, as is elaborated more <strong>full</strong>y below, Judge Lodge’s approach of forcing a<br />
determination of the respective Trustees’ liability and also allocating a percentage of<br />
<strong>NRD</strong> liability to various defendants in Coeur D’Alene presented other problems for<br />
settlement of <strong>NRD</strong> claims. Irrespective of litigation risk and the complexity and<br />
likelihood of ultimate success and the attractiveness of certainty, if a defendant settles<br />
for a premium above its allocated percentage, it faces the possibility of a challenge to<br />
that settlement.<br />
3.3 Standard of Liability<br />
3.3.1 Strict Liability<br />
Prior to the BNSF decision, most practitioners would have assumed that, in remedial<br />
action litigation under CERCLA, it was well settled that liability was strict, joint and<br />
several. While there have been differing interpretations of BNSF advanced during the<br />
month the decision has been out, at least some parties are reading the decision as<br />
12 U.S. v. Asarco Inc., 471 F.Supp.2d 1063 (D. Idaho 2005)<br />
13 Id.<br />
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opening up a lot more leeway for arguments in favor of divisibility and apportionment.<br />
However, notwithstanding BNSF, the strict liability standard continues to be the default<br />
regime in CERCLA cases, including <strong>NRD</strong> claims. Under that standard, the government<br />
does not have to establish the breach of a regulation or standard of care, but only<br />
demonstrate that the defendant falls within the category of liable parties under CERCLA<br />
§ 107. 14 3.3.2 Joint and Several Liability<br />
Because of the causation element for natural resource damages, joint and several<br />
liability for <strong>NRD</strong> claims is a different matter. A defendant to an <strong>NRD</strong> claim may avoid<br />
the imposition of joint and several liability if it can show that the natural resource injury<br />
was caused by someone or something other than defendant’s release. This is because<br />
the <strong>NRD</strong> statute requires the Trustees to show that the injury “resulted from” the<br />
defendant’s release.<br />
Judge Lodge squarely rejected the government’s position in Coeur d’Alene that <strong>NRD</strong><br />
liability is joint and several, holding that the defendants could avoid the imposition of<br />
joint and several liability if they could establish a “reasonable basis” to apportion harm<br />
among Potentially Responsible Parties (“PRP”). 15 The burden of establishing divisible<br />
harm falls on the defendants.<br />
In Coeur d’Alene, the defendants were able to satisfy the court that there was a<br />
“reasonable relationship between the waste volume, the release of hazardous<br />
substances and the harm at the site.” The court went on to allocate liability among the<br />
two defendants based on the volume of mine tailings they had generated.<br />
A more thorough discussion of the implications of the BNSF decision for joint and<br />
several liability appears below.<br />
3.4 Causation<br />
The standard of causation is also different in an <strong>NRD</strong> action. Unlike in remedial actions,<br />
government plaintiffs in an <strong>NRD</strong> case must establish a nexus between injury observed<br />
and the defendant’s release.<br />
The use in Section 107(f) of the word “resulted” ties the damages to the<br />
releases. The proof must include a causal link between releases and postenactment<br />
damages which flowed therefrom. 16<br />
The quantum of proof needed to establish that “causal link” is the subject of continuing<br />
debate. Trustees argue that courts should adopt a low threshold – merely requiring a<br />
14 Coeur d'Alene at 1108.<br />
15 Coeur d'Alene at 1119.<br />
16 Idaho v. Bunker Hill, 635 F. Supp. 665, 674 (D. Idaho 1986).<br />
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showing that the release was a “contributing factor” to the injury. Defendants argue for<br />
the more stringent “substantially contributing factor” test.<br />
The courts are split. The less stringent “contributing factor” test was adopted in In re:<br />
Acushnet River & New Bedford Harbor Proceedings. 17 The more stringent “substantial<br />
contributing factor” test was adopted in U.S. v. Montrose Chemical Corp. 18<br />
The Coeur d’Alene case adopted the “contributing factor” standard advocated by the<br />
Trustees. It said that the government had to prove “that at least some of the injury<br />
would have occurred if only the defendant’s amount of release had occurred.” 19<br />
The <strong>NRD</strong> regulations contain “acceptance criteria” that allow an injury to be proven by<br />
reference to scientific literature, as opposed to case-specific studies. If a certain<br />
biological response is documented in the literature to result from a certain exposure,<br />
then the injury is “deemed” to be proved. In practice, however, both the parties to an<br />
<strong>NRD</strong> action and the courts use criteria other than the <strong>NRD</strong> regulations to establish<br />
causation. The court in the Coeur d’Alene decision stated that “[w]hile the Court will<br />
grant due deference to the agency’s decisions, the Court does not find it is bound to<br />
such definition....” 20<br />
The court went on to use criteria other than the regulations to evaluate whether the<br />
defendants’ releases of mining wastes caused injury to soils, sediments, fish, wildlife,<br />
and other resources. The quantification of the damages caused by the mining<br />
companies was left to a second trial. On August 31, 2005 the matter was stayed,<br />
pending resolution of ASARCO’s bankruptcy petition, filed August 9, 2005 in the<br />
Bankruptcy Court for the Southern District of Texas. 21 As noted above, the bankruptcy<br />
court approved ASARCO’s settlement of its <strong>NRD</strong> claims in Coeur d’Alene just last<br />
month and the implications of Judge Lodge’s allocation on the settlement and the<br />
debtor’s estimates of liability are discussed below in Section 4.2.<br />
3.5 Damages<br />
In a remedial claim, plaintiffs are seeking “response” costs – the costs of investigating<br />
and remediating a hazardous substance release. In an <strong>NRD</strong> claim, by contrast, the<br />
Trustees are seeking the costs of restoring natural resources injured or destroyed to<br />
their baseline condition. The Trustees typically conduct a natural resource<br />
“assessment” in order to quantify the injury, following the DOI or NOAA regulations.<br />
Based on the assessment, the Trustees typically seek to recover damages for: (1) the<br />
cost of the assessment, (2) the interim loss (diminution in value) of the resource<br />
between the time of the injury and the time the resource is restored to baseline<br />
17 722 F. Supp. 893, 897 (D. Mass. 1989).<br />
18 1991 WL 183147 (C.D. Cal. 1991).<br />
19 Coeur d'Alene at 1124.<br />
20 Id at 1123, fn 22.<br />
21 Case No. 05-21207.<br />
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condition, and (3) the actual cost of physically restoring the injured resources. If the<br />
injured resource cannot be restored (as often is the case) the Trustees may seek the<br />
cost of acquiring resources having an equivalent value.<br />
The mechanisms by which a chemical release does – or does not – harm a bird or a<br />
fish, and the economic value placed on that injury is an exercise that only an academic<br />
(or, more likely, your expert witness) would love, and both generally do. Quantification<br />
of damages is a two-step process. First, biologists and other scientists attempt to<br />
determine what type of lethal and sub-lethal (e.g., reproductive) injury resulted from a<br />
release. This exceedingly difficult, especially where there are multiple defendants and<br />
non-chemical factors (such as development or weather) that may have contributed to<br />
the injury observed. Once the scientists are done with their work, natural resource<br />
economists attempt to assign an economic value to the injury. This requires answering<br />
questions like, “what is a salmon worth?” and “what is a higher risk of reproductive<br />
failure in a peregrine falcon worth?” There is no generally accepted way to answer<br />
these questions. Instead, natural resource economists have developed a number of<br />
“surrogate” damage formulas with names like “hedonic pricing,” “contingent valuation,”<br />
and “travel cost pricing.” The fact that there is no single generally accepted economic<br />
model for valuing natural resource damages adds uncertainties to both sides in<br />
litigation.<br />
Since the U.S. Supreme Court’s decision in Daubert v. Merrell Dow Pharms., Inc., 22<br />
judges have been required to determine whether expert testimony offered in a case is<br />
“scientifically reliable” enough to be admitted as evidence. While I am currently<br />
unaware of Daubert challenges in the context of <strong>NRD</strong> litigation, it seems likely that they<br />
will be mounted in the future. The government continues to insist on using novel<br />
economic theories, such as contingent valuation, which defense counsel continue to<br />
attack as unreliable. Defense counsel have had some success in excluding testimony<br />
that relies on such sophisticated but untested methodologies. 23<br />
The complexity of assessing and valuing natural resource damages has led Trustees to<br />
look for “shortcuts.” In oil spill litigation, for example, it is common for the government to<br />
use an <strong>NRD</strong> table. The table determines damages by assigning values to the toxicity of<br />
the oil spilled, the sensitivity of the receiving waters, and the number of gallons spilled.<br />
While <strong>NRD</strong> tables add certainty, they may place too high, or too low, a value on the<br />
injury sustained.<br />
Here again, this is an area where the Supreme Court’s BNSF opinion may provide a<br />
fruitful ground for new arguments flowing from the sanctioning of the district court’s<br />
methodology of apportionment. While the case did not specifically articulate a new<br />
damages model, it is not hard to extrapolate damages arguments based on the<br />
rationale employed by the district court, which, while not accepted as the only<br />
appropriate methodology, was condoned by the Supreme Court.<br />
22 5<strong>09</strong> U.S. 579 (1993).<br />
23 See, e.g., Idaho v. Southern Refrigerated Transport, Inc., 1991 WL 22479 (D. Idaho 1991) (excluding<br />
contingent valuation as speculative).<br />
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4. CONSIDERATIONS REGARDING THE SETTLEMENT OF <strong>NRD</strong> CLAIMS<br />
RAISED BY BNSF AND FOLLOWING APPORTIONMENT OF LIABILITY<br />
4.1 The Implications of BNSF in <strong>NRD</strong> Litigation<br />
4.1.1 Case Background<br />
The BNSF case arose out of a fairly common fact pattern for CERCLA cases. A small<br />
chemical distributor in California, Brown & Bryant, Inc. (“B&B”) owned and operated a<br />
facility that repackaged agricultural chemicals. Its operations were located on a 3.8-<br />
acre parcel, of which about a 0.9-acre piece was leased from predecessors to BNSF<br />
and the Union Pacific Railroad (collectively, the “Railroads”). 24 The Railroads played no<br />
role in B&B’s operations and all parties agreed that the only basis for imposing liability<br />
on them was their status as “owners” under 42 U.S.C. § 9607(a). 25<br />
Shell Oil sold a soil fumigant to B&B which was used to kill microscopic worms that<br />
attack root crops. The chemical was shipped via commercial carrier FOB destination,<br />
meaning that the buyer was responsible for the product once it arrived at the facility. 26<br />
In deciding the case, the district court found that minor spills took place upon the<br />
delivery of the chemical, though much larger releases resulted when B&B washed out<br />
its equipment.<br />
In 1988, California’s Department of Toxics Substances Control ordered B&B to clean up<br />
soil and groundwater contamination on the site. Soon thereafter, B&B went out of<br />
business and EPA listed the site on the National Priorities List in 1989. The Railroads<br />
and Shell were both named PRPs. The Railroads were ordered to clean up the entire<br />
site, even though they owned only a small portion of it, and the portion that they owned<br />
did not require remediation. Shell was named a PRP for having delivered chemicals to<br />
the site which it knew or should have foreseen would be spilled by B&B. In 1996, the<br />
United States and the State of California filed a cost recovery action against the<br />
Railroads and Shell, seeking to recover over $8 million in response costs.<br />
24 BNSF opinion at 2. References to the opinion are to the version released on May 5, 20<strong>09</strong> and<br />
available from the Supreme Court’s website at: http://www.supremecourtus.gov/opinions/08<strong>pdf</strong>/07-<br />
1601.<strong>pdf</strong>.<br />
25 Id. at 9.<br />
26 United States v. Atchison, Topeka & Santa Fe Ry. Co., E.D. California Case Nos. CV-F-92-5068 OWW,<br />
CV-F-96-6226 OWW, CV-F-96-6228 OWW. The District Court’s opinion can be viewed at 2003 WL<br />
25518047 (E.D. Cal. July 15, 2003). The opinion was delivered by U.S. District Court Judge Oliver W.<br />
Wagner. See 2003 WL 25518047, at *5.<br />
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4.1.2 District Court Opinion<br />
After a six-week bench trail in 1999, the district court held in a 185-page opinion that the<br />
Railroads were liable as owners and agreed with the government that Shell was liable<br />
for “arranging” for the disposal of hazardous substances. However, when it came to the<br />
issue of damages, the court determined that liability could be apportioned among Shell,<br />
the Railroads and the defunct operator, B&B. While it agreed with the governments that<br />
the defendants’ burden to show an appropriate basis for apportionment “is heavy,” and<br />
that “[t]he evidence supporting divisibility must be concrete and specific,” 27 the district<br />
court concluded that a reasonable basis for apportionment existed. The district court<br />
declined to apportion the “orphan share” attributable to the defunct B&B – some 85% of<br />
the liability – to the PRPs, leaving it instead as an unrecovered cost for the government<br />
plaintiffs to absorb.<br />
With respect to the Railroad’s liability, the district court apportioned liability using three<br />
factors – the percentage of the facility that the Railroads owned, the duration of B&B’s<br />
business as a percentage of the Railroad’s lease, and the percentage of contaminants<br />
requiring cleanup that were found on the Railroad’s land (two-thirds). It came up with a<br />
allocation of 9% for the Railroads. In determining Shell’s liability, the district court<br />
estimated the amount of material resulting from leaks that occurred during product<br />
delivery, and then compared that with the total amount of chemicals spilled. Based on<br />
various assumptions, it determined that Shell was liable for 6% of the total cleanup<br />
costs. 28<br />
4.1.3 Ninth Circuit Opinion<br />
Reviewing the district court’s decision, the Ninth Circuit began by affirming, at least in<br />
concept, the validity of the divisibility doctrine, acknowledging that “apportionment is<br />
available at the liability stage in CERCLA cases.” 29 Nevertheless, the Ninth Circuit held<br />
that, in this case, the evidence was not “sufficiently clear” to justify apportionment. 30<br />
The Ninth Circuit found that the factors the district court used (percentages of land area,<br />
time of ownership and types of hazardous products) did not demonstrate what part of<br />
the contaminants found at the site were attributable to the Railroads’ parcel. The Ninth<br />
Circuit rejected the district court’s apportionment calculations, and held that the<br />
Railroads had failed to prove a “reasonable basis” for apportioning liability. 31<br />
Turning to Shell, the Ninth Circuit found that Shell had failed to prove whether its<br />
chemicals had contaminated the soil in any specific proportion, when compared with<br />
other chemicals spilled at the site. Similar to its conclusion with respect to the<br />
27 Id. at *83.<br />
28 United States v. Burlington Northern & Santa Fe Ry. Co., 502 F.3d 781, 792 (9th Cir. 2007).<br />
29 United States v. Burlington Northern, 502 F.3d at 793-95.<br />
30 Id. at 804.<br />
31 Id. at 801-04.<br />
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Railroads, the Ninth Circuit held that Shell’s evidence of leakage was insufficient to<br />
provide a “reasonable basis” for apportionment. 32<br />
Arranger Liability<br />
4.1.4 The Supreme Court’s Decision<br />
The Supreme Court affirmed that “arranger liability” has to be determined on a case-bycase<br />
basis, but reversed the Ninth Circuit’s finding that the standard for liability had<br />
been met in this case. The Court posited two ends of a continuum. On one end are<br />
cases where an entity entered into a transaction “for the sole purpose of discarding a<br />
used and no longer useful hazardous substance.” In such cases, there is a clear intent<br />
to discard the product, and there is liability under Section 9607(a)(3). On the other end<br />
of the continuum, “[i]t is similarly clear,” the Court said that “an entity could not be held<br />
liable as an arranger merely for selling a new and useful product if the purchaser of that<br />
product later, and unbeknownst the seller, disposed of the product in a way that led to<br />
contamination.” 33<br />
Less clear, said the Court, are the cases in the middle – the “many permutations of<br />
‘arrangements’ that fall between these two extremes.” In these cases, the Court said,<br />
“liability may not extend beyond the limits of the statute itself.” Based on a “plain<br />
reading” of the CERCLA statute, the Court held that “an entity may qualify as an<br />
arranger when it takes intentional steps to dispose of a hazardous substance.” 34<br />
Based on the facts in this case, the Court held that there was no evidence that Shell<br />
intended for B&B to dispose of its chemicals. To the contrary, “Shell took numerous<br />
steps to encourage its distributors to reduce the likelihood of such spills, providing them<br />
with detailed safety manuals, requiring them to maintain adequate storage facilities, and<br />
providing discounts for those that took safety precautions.” 35 Even if Shell’s efforts<br />
were “less than successful,” the Court found that Shell’s mere knowledge of the spills<br />
did not amount to an “intent” that they be spilled or otherwise disposed of. Accordingly,<br />
the Court reversed both the district court and the Ninth Circuit, and held that Shell was<br />
not liable under the Superfund law.<br />
Apportionment<br />
The CERCLA statute does not contain joint and several liability language. The notion<br />
that PRPs should be held jointly and severally liable is a judicial doctrine grounded in<br />
Section 433A of the Restatement (Second) of Torts, which states that:<br />
32 Id. at 805-06.<br />
33 BNSF at 9.<br />
34 Id. at 11.<br />
35 Id. at 12.<br />
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when two or more persons acting independently caus[e] a distinct or<br />
single harm for which there is a reasonable basis for division according to<br />
the contribution of each, each is subject to liability only for the portion of<br />
the total harm that he has himself caused. But where two or more persons<br />
cause a single and indivisible harm, each is subject to liability for the entire<br />
harm.<br />
Relying on this language, the Supreme Court held – as have several circuit courts —<br />
that “apportionment is proper when ‘there is a reasonable basis for determining the<br />
contribution of each cause to a single harm.” 36 See In re Bell Petroleum Services,<br />
Inc., 37 and United States v. Alcan Aluminum Corp., 38 O’Neil v. Picillo, 39 and United<br />
States v. Monsanto Co. 40<br />
In a case in which multiple parties cause a single harm, the burden of proving divisibility<br />
of that harm falls on the defendants: “CERCLA defendants seeking to avoid joint and<br />
several liability bear the burden of proving that a reasonable basis for apportionment<br />
exists.” 41 In this case, both the district court and the Ninth Circuit had found that<br />
apportionment of the harm was possible. The district court, using a relatively simple<br />
formula, came up with a 9 percent allocation to the Railroads. The Ninth Circuit, while<br />
agreeing that apportionment was “theoretically possible,” criticized the evidence on<br />
which the district court had relied, finding that it was insufficient to establish the “precise<br />
proportion” of the Railroads’ responsibility.<br />
In reversing the Ninth Circuit, the Supreme Court held that the evidence supporting<br />
apportionment need not be precise. There must simply be “facts contained in the<br />
record reasonably support[ing] the apportionment of liability.” 42 The district court, as<br />
noted above, had used a formula consisting of the percentages of land leased, the<br />
period of ownership and the types of hazardous chemicals spilled on the leased land.”<br />
This approach – which the Ninth Circuit had characterized as a “meat ax” 43 – was good<br />
enough for the Supreme Court. It found that the evidence in the record reasonably<br />
supported the district court’s allocation findings, affirmed its decision and reversed the<br />
circuit court. It was the third time in as many tries that the Supreme Court has reversed<br />
the Ninth Circuit in an environmental case this year.<br />
36 BNSF at 13.<br />
37 3 F.3d 889 (5th Cir. 1993).<br />
38 964 F.2d 252 (3rd Cir. 1992).<br />
39 883 F.2d 17 (1st Cir. 1989).<br />
40 858 F.2d 160 (4th Cir. 1988).<br />
41 BNSF at 14.<br />
42 Id. at 17.<br />
43 502 F.3d at 803.<br />
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With respect arranger liability, the Ninth Circuit agreed with the district court that an<br />
entity can be an “arranger” even if it did not intend to dispose of the product, because<br />
“spillage” is “disposal” and disposal of Shell’s chemicals by B&B was foreseeable.” 44<br />
4.1.5 Implications of the BNSF Decision in <strong>NRD</strong> Litigation<br />
While many have argued that BNSF’s largest implications flow from the arranger side of<br />
the opinion, for purposes of this seminar and perhaps from a policy standpoint, even<br />
greater implications flow from the Court’s holding on apportionment. Parties who have<br />
been traditional defendants in <strong>NRD</strong> cases – such as more “traditional” arrangers and<br />
landowners, still face liability notwithstanding the “Shell portion” of the Court’s decision.<br />
However, those parties may now wield a new and powerful argument in negotiations<br />
and/or litigation with Trustees – namely, that they can only be held responsible for the<br />
contamination they caused, and not that which was caused by other parties, assuming<br />
that a “reasonable basis for apportionment exists.”<br />
This argument makes early settlement much less appealing and makes it more likely<br />
that <strong>NRD</strong> defendants will be requiring Trustees to “prove it” before they will be willing to<br />
settle <strong>NRD</strong> claims. While the BNSF decision did not affect the “strict liability”<br />
component of CERCLA, it opened up a much broader area within which to argue that<br />
joint and several liability is not the default liability scheme.<br />
The rationale to wait and force Trustees to supply evidence supporting a particular<br />
apportionment of damages is also bolstered by the fact that contribution actions may be<br />
made more difficult by the BNSF decision. Traditionally, a private party that believed it<br />
had paid more than its fair share of cleanup costs or restoration costs could seek to<br />
recover its costs from others. Following BNSF, it seems possible that contribution<br />
actions premised on “joint and several” liability will have to be reexamined, and insurers<br />
may be less willing to fund early settlements and will be particularly wary of picking up<br />
“orphan” shares.<br />
These incentives may also have implications for Trustees, who must now determine<br />
whether prosecution of a claim is justified in a world where joint and several liability is<br />
not a foregone conclusion. At sites with multiple PRPs and messy facts, the<br />
defendants’ incentive will be to sit back and force the Trustees to, not only assert their<br />
claim and provide evidence sufficient to establish strict liability, but marshal enough<br />
evidence to support an allocation of a particular amount of damages to particular<br />
defendants. At many sites where historical facts are difficult to unearth, or where there<br />
are a number of defunct PRPs, the risks and costs of litigating allocation cases may<br />
make some Trustees wary of proceeding on weak facts or against de minimus<br />
defendants.<br />
44 Id. at 806-08.<br />
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4.1.6 The United States’ Position on BNSF in In re ASARCO<br />
I have been surprised in the month since the BNSF case came down that there have<br />
been no reported decisions citing the case, 45 and very little mention of the case in filed<br />
briefing. In fact, the only filed brief that contains anything approaching an extensive<br />
analysis of BNSF is the United States’ brief filed in support of the debtors’ settlement of<br />
multiple environmental claims in In re ASARCO. 46 While other parties in the ASARCO<br />
case referred to the BNSF decision in their briefing, no party provided the court with an<br />
elaboration of its implications. I have attached a copy of the United States’ brief to<br />
these materials for information as Exhibit 1. While this position is certainly not binding<br />
on State and Tribal Trustees, it does provide some insight into the United States’<br />
current reading of the implications of the decision.<br />
It is important to remember in reviewing the brief that, because the In re ASARCO LLC<br />
case was being conducted in the Southern District of Texas, the Fifth Circuit’s decision<br />
in In re Bell Petroleum Services, Inc., 47 provided the binding appellate law in the case,<br />
and in rejecting the Ninth Circuit’s decision in BNSF, the Supreme Court specifically<br />
cited the decision in In re Bell with approval. 48 Given this fact, it is hardly surprising that<br />
the United States would take the position that BNSF “confirmed [the] fundamental<br />
principles regarding joint and several liability” as outlined in In re Bell. 49<br />
While acknowledging that § 433A of the Restatement provides the “universal starting<br />
point for divisibility of harm” 50 the United States emphasized that BNSF “confirmed that<br />
not all harms are capable of being divided, and that the party seeking to avoid joint and<br />
several liability bears the burden of proving that a reasonable basis for apportionment<br />
exists.” 51<br />
Thus, both before and after Burlington, defendants face significant risk<br />
that they will be found jointly and severally liable for all of the<br />
government’s response costs and Natural Resource Damages. The fact<br />
that the Burlington court upheld the district court’s apportionment in that<br />
case does not mean an apportionment would be available in most or even<br />
45 I am excluding the mention of the decision in Yankee Gas Services Co. v. UGI Utilities, Inc., 20<strong>09</strong> WL<br />
1456385, *9 (D.Conn. May 22, 20<strong>09</strong>) (NO. 3:06-CV-01369MRK), which cited the decision, not for its<br />
substantive implications, but to support the innocuous proposition that “Congress enacted CERCLA in<br />
1980 to promote the "timely cleanup of hazardous waste sites and to ensure that the costs of such<br />
cleanup efforts were borne by those responsible for the contamination."<br />
46 Docket No. 11343, In re ASARCO, LLC, et al., United States Bankruptcy Court for the Southern District<br />
of Texas, No. 05-21207 (May 15, 20<strong>09</strong>). The United States’ brief is available online at 20<strong>09</strong> WL 1402382.<br />
47 3 F.3d 889 (5th Cir. 1993).<br />
48 BNSF at 13.<br />
49 U.S. brief at 6.<br />
50 Id.<br />
51 Id. at 6-7.<br />
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many other cases involving a single harm. . . . Indeed, the Burlington<br />
Court noted the Restatement’s comment that when two or more causes<br />
produce a single, indivisible harm, “courts have refused to make an<br />
arbitrary apportionment for its own sake.” 52<br />
Accordingly, while acknowledging that divisibility and apportionment were sanctioned by<br />
the Supreme Court, the United States has downplayed the significance of the opinion,<br />
stating that it merely confirmed the previously existing state of the law, and emphasizing<br />
that the defendant attempting to argue apportionment still bears the burden of producing<br />
evidence sufficient to overcome a presumption of joint and several liability.<br />
Having said that, however, the results in some of the settlements sanctioned in In re<br />
ASARCO are interesting. As is detailed below, despite arguing strenuously for joint and<br />
several liability, the United States was willing to accept a settlement in Coeur d’Alene<br />
where ASARCO paid an amount equivalent to something between 18% and 22% of the<br />
overall response costs and <strong>NRD</strong> restoration costs. At the Omaha lead site, even while<br />
arguing that ASARCO was jointly and severally liable for the entirety of the United<br />
States’ past and future response costs (excluding some small component needed to<br />
protect the remedy from re-contamination by lead based paint) and despite presenting<br />
expert testimony arguing that ASARCO was responsible for more than 90% of the lead<br />
deposited at that site, the United States accepted a settlement from ASARCO that<br />
equated to roughly 45% of the governments’ 53 predicted response costs. While some<br />
of this discount is no doubt attributable to litigation risk, such significant compromises<br />
acknowledge the strength of the evidence presented in both cases supporting<br />
ASARCO’s claims of divisibility and apportionment of liability.<br />
4.2 The ASARCO Settlements, the Significance of an Existing Allocation<br />
or Estimate of Liability and the Implications of BNSF<br />
The ASARCO case also highlights the impact that an existing allocation or experts’<br />
estimates can have on the settlement of an <strong>NRD</strong> claim from the defendants’<br />
perspective.<br />
In the Coeur d’Alene case, Judge Lodge found that it was appropriate to allocate<br />
responsibility for the response costs (including <strong>NRD</strong>) based on the parties’ proportionate<br />
share of the mine tailings produced within the Coeur d’Alene basin. Relying on expert<br />
testimony and calculations from both the United States and the defendants, Judge<br />
Lodge allocated ASARCO a 22% share of liability, based on its proportionate share of<br />
the “historical total releases of tailings which contained hazardous substances.” 54<br />
52 Id. at 7 (quoting BNSF at 14).<br />
53 The claim was asserted on behalf of both the United States and the State of Nebraska.<br />
54 Coeur d’Alene Tribe v. ASARCO, Inc., 280 F.Supp.2d 1<strong>09</strong>4, 1105 (D. Id. 2003). This percentage<br />
reflected the court’s acceptance of the defendants’ calculations of the overall total production in the basin,<br />
divided by ASARCO’s calculated production. See id. at 1105 n. 10 (elaborating calculations).<br />
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Fast forward to 20<strong>09</strong>, when the settlement in the case between ASARCO and the<br />
United States was presented to the bankruptcy court for approval. In response to<br />
ASARCO’s motion for approval, some of the creditors challenged the settlement on the<br />
grounds that ASARCO was paying an amount well beyond the 22% allocation<br />
previously determined by Judge Lodge. 55 This argument was primarily premised on the<br />
claim that the government’s overall claim was “wildly inflated” and did not reflect the<br />
current environmental conditions in the Coeur d’Alene basin or account for any<br />
weakness in EPA’s litigation position, and that a discount below 22% of EPA’s overall<br />
claim was necessary, if the settlement were to reflect an appropriate compromise. 56<br />
The United States responded to these attacks both on the merits (the government<br />
maintained that the settlement amount was actually closer to 18% of the U.S. total<br />
claim) and on the law, pointing out that joint and several liability was still the default<br />
regime and attacking Judge Lodge’s divisibility ruling and predicting it would be<br />
overturned on appeal. See United States Brief in Support of 9019 Settlement (Ex. 1) at<br />
58-65.<br />
In its Findings of Fact and Conclusions of <strong>Law</strong>, the court took pains to include the range<br />
of estimates of damages that had been presented by ASARCO, the government, any<br />
estimate offered by objecting parties and the ultimate amount of the settlement. A copy<br />
of the Court’s Findings of Fact and Conclusions of <strong>Law</strong> on Debtors’ Motion for Order<br />
Approving Settlement of Environmental Claims is attached to these materials as Exhibit<br />
2; the estimates referred to appear as Exhibit A to the Court’s Findings and<br />
Conclusions. Some of the creditors had relied on ASARCO’s estimates of liability to<br />
argue that a settlement that represented a significant premium over these estimates<br />
was not justified. Both the government and ASARCO countered these arguments by<br />
pointing both to the amount of the United States’ claims, and also the litigation risk<br />
faced by ASARCO.<br />
In articulating its legal position in favor of the settlement, the United States once again<br />
tried to limit the effect of the BNSF ruling, arguing both that the decision did not change<br />
the applicable law and that the BNSF case was inapposite. With respect to the law, the<br />
United States argued that BNSF “reaffirmed the longstanding principle that, once a<br />
defendant has been held liable to the United States under CERCLA, that defendant’s<br />
liability is joint and several unless the defendant carries the burden of demonstrating<br />
55 These arguments were lodged primarily, though not exclusively, by Asarco, Inc., the parent company of<br />
the debtor, ASARCO, LLC.<br />
56 In a particularly ironic twist, another of the PRPs at the Omaha Lead Site, Union Pacific Railroad,<br />
argued that it was appropriate for ASARCO to have paid a premium over what would have been its<br />
allocated share in order to obtain the protection of contribution protection and because to do otherwise<br />
would force a disproportionate burden on the taxpayers and other PRPs (notably, Union Pacific). These<br />
arguments came in a comment letter on the proposed settlement that was filed with the EPA on April 23,<br />
20<strong>09</strong> (copy in the author’s possession).<br />
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that ‘there is a reasonable basis for determining the contribution of each [defendant] to a<br />
single harm.” Ex. 1 at 62 (quoting BNSF).<br />
On the facts, the United States compared the site in BNSF (5 acres) to the Coeur<br />
d’Alene basin, which encompasses a large part of northern Idaho. It pointed out that<br />
BNSF involved a site with only one polluting enterprise, while Coeur d’Alene involved<br />
twenty mills and a number of polluting enterprises, with injuries alongside hundreds of<br />
miles of river and tributaries.<br />
Perhaps most significant was the United States’ argument with respect to the allocation<br />
of responsibility for orphan shares, which was one of the more striking aspects of the<br />
BNSF decision. The government attacked Judge Lodge’s ruling because “it would<br />
unjustly require the innocent taxpayers bear the burden of the substantial share of costs<br />
that would be allocated to defunct or bankrupt parties.” Ex. 1 at 64-65, citing United<br />
States v. Monsanto Co., 858 F.2d 160, 173 (4th Cir. 1988), for the argument that<br />
“making [the] government whole is the ‘primary consideration,’ [and the] more<br />
appropriate place for allocating costs among the polluters is a contribution action.” Id. at<br />
65.<br />
In its Findings and Conclusions, the court largely accepted the United States’ position.<br />
With respect to the binding nature of the percentages found by Judge Lodge, the Court<br />
noted that the settlement amount for the Coeur d’Alene <strong>NRD</strong> claim represented only<br />
13.6% of the United States’ total claim. Ex. 2 at 41 ( 113). And with respect to the<br />
impact of Judge Lodge’s ruling on divisibility, the Court noted the government’s position<br />
with respect to the continuing assumption of joint and several liability and the fact that<br />
ASARCO faced “significant risk that [it] will be found jointly and several liable for all of<br />
the government’s response costs and Natural Resource Damages.” Id. at 45 ( 125).<br />
The court also noted the United States’ arguments with respect to the legal flaws in<br />
Judge Lodge’s ruling. Id.<br />
5. CONCLUSION<br />
The stakes are high in natural resource damage litigation. PRPs see that the<br />
government faces difficulties in demonstrating actual injury to natural resources and in<br />
proving causation and other elements of their claims. PRPs will want to test their<br />
defenses, particularly now that many of those defenses have been favorably<br />
interpreted, as shown in particular in Coeur d’Alene decision.<br />
Some of those defenses have also been strengthened by the BNSF ruling, which<br />
provides a basis for defendants to argue for divisibility and apportionment of damages.<br />
While this position has no doubt been helped by the imprimatur placed on the argument<br />
by the Supreme Court, it still remains to be seen how these arguments will play out in<br />
the long-term. For its part, if the ASARCO case is any indication, the United States will<br />
take the position that BNSF has created no change in the law, and that the case should<br />
be limited to its particular facts. But in cases with multiple defendants or significant<br />
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orphan shares, there is no doubt that BNSF presents defendants with a new set of<br />
considerations that need to be evaluated in the context of <strong>NRD</strong> settlements.<br />
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<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 9<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 10<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 11<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 12<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 13<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 14<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 15<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 16<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 17<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 18<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 19<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 20<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 21<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 22<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 23<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 24<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 25<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 26<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 27<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 28<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 29<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 30<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 31<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 32<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 33<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 34<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 35<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 36<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 37<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 38<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 39<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 40<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 41<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 42<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 43<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 44<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 45<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 46<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 47<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 48<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 49<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 50<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 51<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 52<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 53<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 54<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 55<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 56<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 57<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 58<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 59<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 60<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 61<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 62<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 63<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 64<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 65<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 66<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 67<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 68<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 69<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 70<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 71<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 72<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 73<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 74<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 75<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 76<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 77<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 78<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 79<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 80<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 81<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 82<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 83<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 84<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 85<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 86<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 87<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 88<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 89<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 90<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 91<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 92<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 93<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 94<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 95<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 96<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 97<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 98<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 99<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 100<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 101<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 102<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Steven G. Jones of Marten <strong>Law</strong> Group PLLC Speaker 22c: 103<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
L A W S E M I N A R S I N T E R N A T I O N A L<br />
The Third Annual Advanced Conference on<br />
Natural Resource Damages Claims<br />
New case law and legislation, and best strategies<br />
July 9 and 10, 20<strong>09</strong><br />
Santa Fe, NM<br />
What's Next in <strong>NRD</strong> Litigation?<br />
Ira Gottlieb, Esq.<br />
McCarter & English LLP<br />
Newark, NJ
Ira Gottlieb of McCarter & English LLP Speaker 23: 1<br />
WHAT’S NEXT IN <strong>NRD</strong> LITIGATION?<br />
National Advanced Conference on Natural<br />
Resource Damage Litigation<br />
Santa Fe, New Mexico<br />
July 9-10, 20<strong>09</strong><br />
Ira Gottlieb, Esq.<br />
McCarter & English, LLP<br />
973.639.7984<br />
igottlieb@mccarter.com<br />
The Great Carnac of <strong>NRD</strong> ???<br />
2<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Ira Gottlieb of McCarter & English LLP Speaker 23: 2<br />
Overview<br />
• Sites to Watch<br />
• Case Developments<br />
• Cooperative Assessments<br />
• Climate Change & <strong>NRD</strong><br />
• Insurance<br />
3<br />
Sites to Watch …<br />
New Jersey Surface Water Sites<br />
• Passaic River<br />
<br />
<br />
2008 CAP By Subgroup<br />
2008 Litigation<br />
• Hackensack Meadowlands<br />
• Newark Bay<br />
4<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Ira Gottlieb of McCarter & English LLP Speaker 23: 3<br />
Sites to Watch …<br />
Portland Harbor<br />
• 2000 Federal, State and Tribal Trustees<br />
enter into a MOU with EPA regarding <strong>NRD</strong>A<br />
• 2003/04 efforts for CAP are unsuccessful<br />
• 2006 the EPA Study Area is expanded to a<br />
9 mile reach from River Mile 2 to river<br />
mile 11<br />
• 2008 a group of parties enter initial<br />
phased cooperative assessment with<br />
Trustees<br />
• 20<strong>09</strong> CAP delayed by internal dispute<br />
among Trustees<br />
5<br />
Case Developments…<br />
• Quapaw Tribe of Oklahoma v. Blue Tee Corp.,<br />
Quapaw 1 (N.D. OK July 7, 2008) 2008 WL 2704482<br />
Quapaw 2 (N.D. OK Feb. 23, 20<strong>09</strong>) 20<strong>09</strong> WL 455260<br />
• NJDEP v. Exxon Mobil Corp., Letter Opinions and Order:<br />
<br />
<br />
<br />
August 2008 – Rulings on Common <strong>Law</strong> Claims<br />
February 20<strong>09</strong> – Retroactivity, SOLs and Counsel Fees<br />
June 20<strong>09</strong> – Physical Modifications Not <strong>NRD</strong><br />
• Burlington Northern & Santa Fe Rwy. v. U.S., 129 S.Ct. 1870<br />
(May 4, 20<strong>09</strong>) – Causation and Divisibility Implications<br />
6<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Ira Gottlieb of McCarter & English LLP Speaker 23: 4<br />
Cooperative Assessments<br />
To Be or Not to Be . . .?<br />
Possible Pros:<br />
• PRP’s Seat at the Table<br />
• Input on Assessment Activities<br />
• Parallel Tracking RI/FS and <strong>NRD</strong>A<br />
• Reduce Costs of Assessment Activities<br />
• Early Restoration Based Settlements<br />
7<br />
Cooperative Assessments<br />
To Be or Not to Be . . .?<br />
Possible Cons:<br />
• Limited Input in Actual Assessment<br />
• PRP Funding may Lead to More Studies/Less Cost<br />
Savings<br />
• CAP may not be Based on Statutory or Regulatory<br />
Methodologies<br />
• Extra/Duplicative Costs<br />
• Unintended Admissions in Potential Litigation<br />
8<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Ira Gottlieb of McCarter & English LLP Speaker 23: 5<br />
Portland Harbor Example …<br />
Assessment Process in Four Phases:<br />
• Phase 1 – Develop Injury Assessment Plan (“IAP”)<br />
Literature Review<br />
3 limited field studies<br />
• Phase 2 – Implement IAP<br />
To estimate liability<br />
Reach early settlements with CAP IAP Participants<br />
• Phase 3 – Full Assessment Process<br />
• Phase 4 – Litigation<br />
9<br />
Climate Change and <strong>NRD</strong> … ?<br />
Definition of Natural Resources<br />
Under CERCLA<br />
“ land, fish, wildlife biota, air, water, ground<br />
water, drinking water supplies, and other<br />
such resources belonging to, managed by,<br />
held in trust by, appertaining to, or otherwise<br />
controlled by the United States, . . . any State<br />
or local government, any foreign<br />
government, any Indian tribe, or, if such<br />
resources are subject to a trust restriction on<br />
alienation, any member of an Indian tribe.”<br />
42 U.S.C § 9601 (16)<br />
10<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Ira Gottlieb of McCarter & English LLP Speaker 23: 6<br />
Climate Change and <strong>NRD</strong> …?<br />
The Basics<br />
<strong>NRD</strong> Claims Under CERCLA Must Be :<br />
• brought by a trustee<br />
• against a responsible party<br />
• for an alleged injury to natural resources<br />
• resulting from a release of a “hazardous substance” which is<br />
<br />
<br />
causally related to<br />
damages to the natural resource<br />
Do Climate Change <strong>Law</strong>suits Meet These Standards?<br />
11<br />
Climate Change and <strong>NRD</strong> …?<br />
Major Cases<br />
Climate Change <strong>Law</strong>suits (2004 to 2008)<br />
• Connecticut v. American Electric Power Co., Docket No. 1:04-CV-05669<br />
(S.D. NY July 21, 2004). State governments seeking injunctive relief against<br />
utilities under theories of public nuisance.<br />
• CA ex rel. Lockyer v. General Motors, Docket No. 06-CV-05755 (N.D. CA<br />
Sept. 20, 2006). State government seeking damages against automobile<br />
manufacturers under theories of public nuisance.<br />
• Comer v. Nationwide Mutual Ins., Docket No. 1:05-CV-00436 (S.D. Miss.<br />
Sept. 30, 2006). Private parties sought certification for class action for<br />
damages against oil and chemical company defendants under theories of<br />
public and private nuisance, unjust enrichment, negligence, conspiracy,<br />
fraudulent concealment, and trespass.<br />
• Native Village of Kivalina v. Exxon Mobil, Docket No. 08-CV-1138 (N.D.<br />
CA Feb 26, 2008). Native tribe and municipal government seek injunctive<br />
relief and damages against energy companies and utilities under theories of<br />
private and public nuisance and conspiracy.<br />
12<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Ira Gottlieb of McCarter & English LLP Speaker 23: 7<br />
Climate Change and <strong>NRD</strong> …?<br />
If it Walks Like a Duck …<br />
Do These Allegations Sound Like <strong>NRD</strong> Claims?<br />
General Motors Complaint:<br />
California’s natural resources, including water, snow pack,<br />
rivers, streams, wildlife, coastline, and air quality have been<br />
injured by global warming and face a near certainty of<br />
additional future harm. These resources belong to the State<br />
and the People of the State and are worth billions of dollars.<br />
Kivalina Complaint:<br />
Arctic vegetation zones are very likely to shift, causing wide<br />
ranging impacts. … Animal species’ diversity, ranges, and<br />
distribution will change. … Indigenous communities are facing<br />
major economic and cultural impacts.<br />
13<br />
Climate Change and <strong>NRD</strong> …?<br />
State Trustees Speak Out<br />
Montana Officials Express Concern About the Effects of<br />
Climate Change on the State’s Natural Resources<br />
Effected Resources<br />
Forestry<br />
Decreased<br />
crop yields<br />
Longer<br />
forest fire<br />
seasons<br />
Reduced<br />
snowpack<br />
Declining<br />
hydropower<br />
Reduced<br />
wildlife habitat<br />
Diminished<br />
water quality<br />
Diminished<br />
stream flow<br />
“When Glacier [National Park] was<br />
designated a national park 100<br />
years ago, 150 glaciers glittered<br />
along its mountaintops. Only 27<br />
remain today and they all may be<br />
gone by the year 2022, should<br />
current weather patterns continue.”<br />
http://deq.mt.gov/climatechange/<br />
14<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Ira Gottlieb of McCarter & English LLP Speaker 23: 8<br />
<strong>NRD</strong> – Insurance Coverage Considerations<br />
Insurance Policies<br />
• CGL – Occurrences Prior to 1986<br />
• PLL – Claims After 1996<br />
• Does <strong>NRD</strong> Result from Separate Occurrences?<br />
Prior Insurance Settlements<br />
• Are settlements for Policy Buy Backs, for Specific Lines of<br />
Coverage, Site Specific and/or Claim Specific?<br />
• Policy Buy Backs Will Likely Negate All Coverage,<br />
Including <strong>NRD</strong><br />
• Look for Carve Outs<br />
15<br />
Questions?<br />
Please contact me anytime with additional<br />
questions:<br />
Ira Gottlieb<br />
(973) 639-7984<br />
igottlieb@mccarter.com<br />
16<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Ira Gottlieb of McCarter & English LLP Speaker 23: 9<br />
Additional Sources of Information<br />
Trustee Websites:<br />
• http://www.darrp.noaa.gov/<br />
• http://www.darrp.noaa.gov/partner/cap/index.html<br />
• http://www.fws.gov/<br />
• http://www.fws.gov/northeast/njfieldoffice/Passaic/Passaic_Index.htm<br />
• http://www.doj.mt.gov/lands/naturalresource/default.asp<br />
• http://www.dec.ny.gov/regulations/2411.html<br />
• http://www.nj.gov/dep/nrr/<br />
17<br />
Additional Sources of Information<br />
Guides, Surveys and Articles:<br />
• Ira Gottlieb, Richard W. Dunford and Cynthia S. Betz, “A Practical<br />
Guide to Litigating Natural Resource Damages Claims:” Environmental<br />
Litigation: <strong>Law</strong> and Strategy, Cary R. Perlman, Editor (ABA 20<strong>09</strong>)<br />
• http://www.arnoldporter.com/resources/documents/State-by-<br />
StateGuideto<strong>NRD</strong>Programs1.<strong>pdf</strong><br />
•“Recovery of Natural Resource Damages Under Comprehensive<br />
General Liability Policies,” Mealey’s Litigation Reports: Insurance, Vol.<br />
17, No.3 (June 10, 2003)<br />
18<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
L A W S E M I N A R S I N T E R N A T I O N A L<br />
The Third Annual Advanced Conference on<br />
Natural Resource Damages Claims<br />
New case law and legislation, and best strategies<br />
July 9 and 10, 20<strong>09</strong><br />
Santa Fe, NM<br />
Establishing Trusteeship Over Injured Resources<br />
Deborah K. Tellier, Esq.<br />
Farella Braun + Martel LLP<br />
San Francisco, CA<br />
Michael R. Thorp, Esq.<br />
Summit <strong>Law</strong> Group<br />
Seattle, WA<br />
Brian J. Cleary, Esq.<br />
The Cleary <strong>Law</strong> Group, P.C.<br />
Hayden, ID
Deborah K. Tellier of Farella Braun + Martel LLP Speaker 24: 1<br />
R~ N o t e s ~<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Deborah K. Tellier of Farella Braun + Martel LLP Speaker 24: 2<br />
R~ N o t e s ~<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Michael R. Thorp of Summit <strong>Law</strong> Group Speaker 25: 1<br />
STATE<br />
TRUSTEESHIP<br />
Comprehensive Environmental Response,<br />
Compensation, and Liability Act<br />
(CERCLA)<br />
Section 107(f)(1) of CERCLA, 42 U.S.C. §9607(f)(1),<br />
provides in part:<br />
In the case of an injury to, destruction of, or loss of natural<br />
resources under subparagraph (C) of subsection (a) of this<br />
section liability shall be to the United States Government and<br />
to any State for natural resources within the State or<br />
belonging to, managed by, controlled by, or<br />
appertaining to such State and to any Indian tribe for<br />
natural resources belonging to, managed by, controlled by, or<br />
appertaining to such tribe, or held in trust for the benefit of<br />
such tribe, or belonging to a member of such tribe if such<br />
resources are subject to a trust restriction on alienation . . . .<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Michael R. Thorp of Summit <strong>Law</strong> Group Speaker 25: 2<br />
The term “natural resources” is defined in CERCLA<br />
§101(16), 42 U.S.C. §9601(16)<br />
[L]and, fish, wildlife, biota, air, water, groundwater, drinking<br />
water supplies, and other such resources belonging to,<br />
managed by, held in trust by, appertaining to, or<br />
otherwise controlled by the United States (including the<br />
resources of the fishery conservation zone established by the<br />
Magnuson-Stevens Fishery Conservation and Management<br />
Act [16 U.S.C.A. §1801 et seq.]) any State or local<br />
government, any foreign government, any Indian tribe, or, if<br />
such resources are subject to a trust restriction on alienation,<br />
any member of an Indian tribe.<br />
U.S. / TRIBE POSITION<br />
<br />
“Sovereign ‘actions’ are not the basis of CERCLA natural<br />
resource trusteeship. CERCLA confers natural resource<br />
trusteeship as a matter of law . . . . Therefore, trusteeship is<br />
absolute and cannot be measured by the relative weight of onground<br />
activity by sovereign governments (footnote omitted).<br />
Although specific actions may constitute evidence of the United<br />
States’ and the Tribe’s legal interests in natural resources, those<br />
actions are not dispositive of trusteeship. Furthermore,<br />
‘ownership’ of natural resources is a matter of law and not<br />
determined by actions.” 1<br />
1<br />
United States and Coeur d’Alene Tribe’s Briefing of Final Legal Issues, September 26, 2001 in<br />
U.S. v. Asarco, et al.<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Michael R. Thorp of Summit <strong>Law</strong> Group Speaker 25: 3<br />
U.S. / TRIBE POSITION (cont’d)<br />
<br />
U.S. / Tribe trusteeship is conferred by:<br />
• Cooperation with the State.<br />
• Federal statutes such as the Migratory Bird Treaty Act,<br />
Endangered Species Act and Clean Water Act.<br />
• Trusteeship over any natural resource confers trusteeship<br />
over that resource’s entire “supporting ecosystem.”<br />
• “Appertain” means “in any way connected with”;<br />
Trusteeship over any resource confers trusteeship over<br />
other resources “connected in any way” with that resource.<br />
• DOI regulations stated that they are trustees.<br />
• They are trustees of resources on private land.<br />
<br />
Opposing View:<br />
• Trusteeship is determined on a case by case basis<br />
and is primarily fact-based.<br />
• “Belong to, managed by, controlled by or<br />
appertain to” is the test.<br />
• Statutory authority is not enough.<br />
• “Appertain to” is the most limited test of<br />
trusteeship: something which is a part or attribute<br />
of something else.<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Michael R. Thorp of Summit <strong>Law</strong> Group Speaker 25: 4<br />
Under CERCLA, Trusteeship over natural<br />
resources is generally in the States.<br />
While not dispositive on this issue, many if not most<br />
States claim ownership of natural resources within their<br />
borders:<br />
New York: “The State of New York owns all fish, game,<br />
wildlife, shellfish, crustacea and protected insects in the state .<br />
. . .” §11-0105.<br />
Missouri: “The ownership of and title to all wildlife of and<br />
within the State, whether resident, migratory or imported,<br />
dead or alive, are hereby declared to be in the State of<br />
Missouri.” 252.030.<br />
Washington: “Wildlife, fish and shellfish are the property of<br />
the State.” RCW 77.04.012.<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Michael R. Thorp of Summit <strong>Law</strong> Group Speaker 25: 5<br />
Alabama: “The title and ownership to all wild birds and wild<br />
animals in the State of Alabama or within the territorial<br />
jurisdiction of the State are vested in the State . . . .” 9-11-<br />
230.<br />
Idaho: “All wildlife, including all wild animals, wild birds, and<br />
fish, within the State of Idaho, is hereby declared to be the<br />
property of the State of Idaho.” 36-103.<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
State Trusteeship<br />
Over Natural Resources<br />
Groundwater<br />
Issues permits and administer water rights.<br />
Administers rules for public drinking water supplies and<br />
general groundwater quality.<br />
Surface Water<br />
Issues permits and administers water rights to surface<br />
water.<br />
Issues permits for in stream activity.<br />
Sets water quality standards.<br />
Sets total maximum daily load (“TMDL”).<br />
Regulates encroachments to state-owned submerged lands.<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Michael R. Thorp of Summit <strong>Law</strong> Group Speaker 25: 6<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
State Trusteeship<br />
Over Natural Resources (cont’d)<br />
Fish<br />
Issues fishing licenses and fish collection permits.<br />
Sets fishing seasons.<br />
Sets catch limits and other fishing regulations.<br />
Enforces fishing regulations.<br />
Creates and carries out fish management plans.<br />
Operates fish hatcheries.<br />
Stocks lakes and streams.<br />
Conducts research.<br />
Conducts boat count interviews and creel census.<br />
Inventories and monitors fish populations.<br />
<br />
State Trusteeship<br />
Over Natural Resources (cont’d)<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
Birds<br />
Sets hunting regulations.<br />
Sets fees and issues hunting permits.<br />
Sets bag and possession limits.<br />
Sets hunting seasons and hours.<br />
Enforces regulations.<br />
Conducts hunter surveys.<br />
Owns and operates wildlife management areas.<br />
Creates and carries out management plans.<br />
Conducts bird stocking programs.<br />
Operates hunter check stations and conducts hunter<br />
surveys.<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Michael R. Thorp of Summit <strong>Law</strong> Group Speaker 25: 7<br />
State Trusteeship<br />
Over Natural Resources (cont’d)<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
Game<br />
Sets hunting seasons.<br />
Sets bag limits by species, geographical area and equipment.<br />
Collects biological data and conducts research.<br />
Monitors species populations.<br />
Creates and executes species management plans.<br />
Enforces hunting regulations.<br />
Conducts habitat assessments.<br />
Conducts winter feeding programs.<br />
Issues trapping regulations.<br />
State Trusteeship<br />
Over Natural Resources (cont’d)<br />
<br />
<br />
Bed and Banks of Navigable Rivers<br />
Ownership is in the State<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Michael R. Thorp of Summit <strong>Law</strong> Group Speaker 25: 8<br />
CASE LAW<br />
State of Ohio v. Dept. of Interior:<br />
The State argued that the phrase “within the State” that is<br />
contained in CERCLA §107(f)(1) means that the states have<br />
trusteeship over any natural resources found within the state,<br />
even on private property. The court of appeals rejected this<br />
argument stating:<br />
This interpretation, however, rips the ‘within the State’ phrase out of its<br />
statutory context. ‘[N]atural resources within the State’ incorporates<br />
§101(16)’s definition of ‘natural resources’ as resources ‘belonging to,<br />
managed by, held in trust by, appertaining to, or otherwise controlled by’<br />
the state. Thus it is this series of phrases, and not the ‘within the State’<br />
language, that controls the issue. (Footnote omitted.) 880 F.2d at 459.<br />
CASE LAW (cont’d)<br />
United States v. Asarco, et al. (Coeur d’Alene Litigation)<br />
<br />
Court’s First Decision:<br />
The court found that the issue of trusteeship is a question of both fact and<br />
law and that “the factual predicate of trusteeship . . . is to be determined on a case<br />
by case basis depending on who the resource belongs to, who is it managed by,<br />
who controls the same and how the resource appertains to the other resources.”<br />
The court stated that it “rejects the Government’s argument that mere statutory<br />
authority is sufficient to establish trusteeship over a natural resource,” and<br />
concluded: “It is what is done in practice, not the underlying ‘statutory authority,’<br />
that the courts must look to.”<br />
280 F. Supp. 2d at 115.<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Michael R. Thorp of Summit <strong>Law</strong> Group Speaker 25: 9<br />
CASE LAW (cont’d)<br />
United States v. Asarco, et al. (Coeur d’Alene<br />
Litigation) (cont’d)<br />
<br />
Court’s Second Decision:<br />
The Court revises its trusteeship ruling and the scope of the Phase 2<br />
trial. The Court finds the Plaintiffs are “trustees” for purposes of CERCLA<br />
over the federal and tribal land as well as the migratory natural resources of:<br />
fish, wildlife, birds, biota, water and groundwater based on their involvement<br />
in the management and control of such natural resources and applicable<br />
federal statutes give the United States trusteeship duties over fish, wildlife and<br />
birds. 471 F. Supp. 2d at 1068-1069.<br />
Motion for Reconsideration Pending.<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Michael R. Thorp of Summit <strong>Law</strong> Group Speaker 25: 10<br />
<br />
<br />
<br />
One Final Consideration: Local Government<br />
as Trustee<br />
§107(f)(2)(B): “The Governor of each State shall designate<br />
State officials who may act on behalf of the public as<br />
trustees for natural resources . . . .”<br />
Two part requirement:<br />
• Must be designated by Governor.<br />
• Must qualify as “state official” under applicable state<br />
law.<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Brian J. Cleary of The Cleary <strong>Law</strong> Group, P.C. Speaker 26: 1<br />
R~ N o t e s ~<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
Brian J. Cleary of The Cleary <strong>Law</strong> Group, P.C. Speaker 26: 2<br />
R~ N o t e s ~<br />
<strong>Law</strong> <strong>Seminars</strong> <strong>International</strong> | Natural Resource Damages Claims | 07/10/<strong>09</strong> in Santa Fe, NM
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