Natural Resource Damage Assessment: Methods and Cases

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I. Introduction Chapter 4 Natural Resource Damages: Legal Overview and Sample Cases When the state exercises its statutory authority to bring natural resource damage claims against responsible parties under the federal (and in some cases, state) legislation, there can be great benefit. However, there are costs to any state associated with this activity. Among other things, the state can incur substantial administrative costs in the process of reaching an appropriate final settlement with a polluting firm. Both the costs of negotiation and the probability that a case will lead to expensive litigation are greater when a firm’s beliefs about reasonable damages diverge widely from the judgment made by state officials. This document presents information that may be useful in narrowing the gap between the bargaining positions of the state and potentially responsible parties (PRPs). First, it presents an overview of key features of the federal statutes under which any state may bring natural resource damage (NRD) claims. Second, it gives extensive summaries of five settled NRD cases in a manner consistent with the legal overview, such that the reader can quickly get a sense of the key features of the cases and their settlements. Cases were chosen for inclusion in this chapter from a pool of settled cases that satisfied two criteria. First, this chapter focuses entirely on cases that were settled after 1995. That restriction helps ensure that the cases included here are relevant to any future NRD activity, since the statutory and regulatory environment for NRD cases changed substantially in the mid-1990s. Second, this chapter summarizes only cases that were not pursued under any particular state law, since similar legislation may not be present in other states. II. Natural Resource Damages: Legal Overview A. The Federal Statutes Natural resource damage (NRD) claims are statutory causes of action. They are designed to compensate the public for the loss of services when publicly owned natural resources are damaged or destroyed. Any compensation awarded in an NRD suit is used to restore or replace the damaged site. There are several federal statutes that authorize NRD claims. The best known of these is the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). Section 107 of CERCLA, 42 U.S.C. § 9607, provides that “damages for injury to, destruction of, or loss of natural resources, including the reasonable costs of assessing such injury, destruction, or loss resulting from such release.” CERCLA § 107(a)(4)(C). The Clean Water Act (CWA) also provides a cause of action for recovery of NRDs. Under § 311(f)(4) of the CWA, 33 U.S.C. § 1321(f)(4), if a party is liable under CWA § 311(b) for the discharge of “oil or hazardous substances” “into or upon the navigable waters of the 81
United States, adjoining shorelines, or into or upon the waters of the contiguous zone,” or in connection with activities under either the Outer Continental Shelf Lands Act or the Deepwater Port Act of 1974, that party is also liable for the costs and expenses incurred by the federal or state government “in the restoration or replacement of natural resources damaged or destroyed as a result of [the] discharge.” CWA § 311(b)(3), (f)(4). Section 1002 of the Oil Pollution Act of 1990 (OPA), 33 U.S.C. § 2702, also provides a cause of action for NRDs. When oil is discharged “into or upon the navigable waters or adjoining shorelines or the exclusive economic zone” and the discharge is not exempted from liability as a discharge authorized by permit, a release from a “public vessel,” or an onshore facility subject to the Trans-Alaska Pipeline Authorization Act, a United States trustee, a State trustee, and Indian Tribe trustee, or a foreign trustee may recover for “[d]amages for injury to, destruction of, loss of, or loss of use of, natural resources, including the reasonable costs of assessing the damage.” OPA § 1002(b)(2)(A). There are other statutes that authorize recovery of NRDs. Most of these, however, do so in the context of certain designated natural resources under the jurisdiction of the federal government. For example, the National Park System Resource Protection Act provides that “any person who destroys, causes the loss of, or injures any park system resource is liable to the United States for response costs and damages resulting from such destruction, loss, or injury.” 16 U.S.C. § 19jj-1(a) “[P]ark system resources” are limited in scope; the term is defined as “any living or non-living resource that is located within the boundaries of a unit of the National Park System, except for resources owned by a non-Federal entity.” 16 U.S.C. § 19jj(d). CERCLA, the CWA, and OPA designate trustees to recover NRDs. Under CERCLA, the designated trustees include the United States government, the State, if the State controls, manages, or owns the natural resources that were damaged, and an Indian tribe, if the tribe controls, manages, or owns the natural resources or if the natural resources are held in trust for the Indian tribe, or if a member of the tribe owns the land and there is a trust restriction on alienation on the resources. CERCLA § 107(f)(1). The President designates the federal officials who act on behalf of the public as trustees. CERCLA § 107(f)(2)(A). Likewise, the Governor of each State designates State officials to act as trustees under this statute. CERCLA § 107(f)(2)(B). The duties of the trustees are outlined in each of the statutes. See CERCLA § 107(f)(1), CWA § 311(f)(5), OPA § 1012(a)(2). But in general, as the National Association of Attorneys General has stated: “The states and the Federal Governments [sic] are trustees for the people, and . . . their trust corpus includes this nation's glorious natural resources. We, as trustees, have an obligation to protect these often irreplaceable resources from harm, and those that harm them have the obligation to restore them for all the people.” That is, “NRD trustees do indeed have a fiduciary duty to protect and restore the public's resources, as well as to refrain from abusing their power in carrying out their responsibilities.” Kevin R. Murray et al., Natural Resource Damage Trustees: Whose Side Are They Really On?, 5 Envtl. L. 407, 423 (2000). Because CERCLA, the CWA, and OPA are the only NRD statutes that allow a State to act as a trustee and recover NRDs, we will only focus on the NRD provisions of those statutes. 82
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WMRC Reports Waste Management and R
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RR-108 Natural Resource Damage Asse
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Acknowledgments Funding was provide
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Chapter 1: Tables and Figures Table
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staff of agencies that are just beg
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All: 64 Nevada Division of Environm
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Table 1.5 Number of Cases Settled b
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Table 1.9 Number of Potentially Res
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Table 1.14 Cost to Trustee of Perfo
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Mean Settlement (million $) 90 80 7
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V. Conclusions Trustees have had re
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Appendix: Materials in Information-
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NRD: Natural resource damages. Guid
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Survey of State Natural Resource Da
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19) Has this case been settled? (Ch
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I. Introduction Chapter 2 Simplifie
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Number of Spills 1,000 800 600 400
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Page 41 and 42: % of All Cases 35 30 25 20 15 10 5
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Page 57 and 58: References Cozine, M. H. 1999. “N
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Page 63 and 64: Comprehensive Environmental Respons
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Page 71 and 72: Table 3.1: Summary of Studies Estim
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Page 75 and 76: Table 3.3: Using Benefits Transfer
Page 77 and 78: Number of Cases 30 25 20 15 10 5 0
Page 79 and 80: Table 3.4 Groundwater Case Studies
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Page 83 and 84: References Abdalla, C. W. 1991. “
Page 85: Nielson, E. G. and L.K. Lee. Octobe
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Page 97 and 98: Damages: The trustees calculated th
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