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Natural Resource Damage Assessment: Methods and Cases

Natural Resource Damage Assessment: Methods and Cases

The Type B rules,

The Type B rules, however, have a more complicated history. The first set of Type B rules was promulgated in 1986. After a court challenge, the rules were amended and the amended rules were finally promulgated on May 25, 1994. See 59 Fed. Reg. 14,262 (codified at 43 C.F.R. §§ 11.60-.84). These rules were then challenged in Kennecott v. Department of the Interior, 88 F.3d 1191 (D.C. Cir. 1996), but the court upheld most of the new rules. The Type B rules set up a four stage administrative process. First, there is the “preassessment screen,” during which the trustee determines whether a hazardous substance release may have caused injury to a natural resource. Next, during “assessment planning,” the trustee decides what methodologies to apply during damage assessment and plans the assessment process, often with the help of the PRPs. The third step is the “damages assessment.” During this stage, the trustee determines the injury to the natural resources, quantifies the injury and the lost “services provided by the resources,” determines the release pathways of the hazardous substance to the injury (satisfying the causation requirement), and quantifies the damages. Finally, there is “post-assessment” phase that takes place after a settlement is reached or litigation has concluded. At this point, the trustee knows how much money is available and can develop the final plan for restoration, replacement, or acquisition of equivalent resources based on that amount. The goal of NRDs is to return the natural resources to their “baseline” condition. The baseline condition, however, is not necessarily the condition of the resource before the release of the hazardous substance. It is, instead, the condition the resource would have been in if it had not been exposed to the reservoir of hazardous substances to which the defendant contributed. See 43 C.F.R. § 11.14(e). Congress also realized, however, that trustees could not always restore the exact resources that were injured. As a result, there is no general preference expressed in the DOI rules for restoration over acquisition of replacement resources. See Kennecott v. Interior, 88 F.3d at 1224. But DOI has made clear that restoration/replacement is complete only if the services are returned to their baseline level. In addition, NRDs may also include lost use values (benefits derived from the availability of a resource for current and future uses by identifiable people), lost non-use or passive values (benefits derived from the knowledge of the existence of resources), and any other indirect costs so long as they are “necessary” to “support” the selected remedial option. Compliance with the DOI NRD regulations is optional with trustees. See 40 C.F.R. § 300.615(c)(4); 43 C.F.R. § 11.10. If the trustee conducts the damage assessment in accordance with the DOI rules, the assessment will be entitled to a “rebuttable presumption” in any legal proceeding. See 42 U.S.C. § 9607(f)(2)(C). It is unclear what the practical significance of this “rebuttable presumption” is. But it is clear that a trustee that is willing to forego this statutory presumption may use any injury tests and/or methods of damage quantification it chooses, even though the DOI has not adopted them. Trustees may settle NRD claims under CERLCA. Some have settled natural resource damages claims before the remediation process. While the statute does not prohibit settlement prior to remediation, courts have frowned upon this approach. See Utah v. Kennecott Corp., 801 F. Supp. 553, 568 (D. Utah 1992); In re Acushet River and New Bedford Harbor: Proceedings re Alleged PCB Pollution, 712 F. Supp. 1019, 1035 (D. Mass. 1989) (ultimately approving 87

settlement of NRD claim prior to and independent of the clean up and remediation process, but imposing conditions including a requirement to “protect and restore.”). In addition, if a federal trustee is involved in the settlement, it may include a covenant not to sue for additional money. CERCLA § 122(j)(2). But in order to receive such a covenant, the PRP must agree to “protect and restore the natural resources damaged” by the release. Id. And some courts have been quite strict when interpreting this phrase. See Kennecott Corp., 801 F. Supp. at 569-70 (holding that the settlement at issue did not satisfy the “protect and restore” standard because the agreement did not provide protection against further contamination of groundwater). Moreover, the DOI has adopted a policy of including a reopener provision for unknown NRDs in settlements of this sort under the “extraordinary circumstances” standard found in CERCLA § 122(f)(6)(B) is satisfied. C. CWA NRD Claims The CWA also allows for recovery of NRDs. Liability for NRDs attaches if one discharges “oil or hazardous substances” “into or upon the navigable waters of the 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. The CWA does not define “hazardous substance” but leaves the definition to regulations. See CWA § 311(b)(2)(A). The regulations, in turn, provide that “hazardous substance” has the same meaning that the term has under CERCLA. See 43 C.F.R. § 11.14(u). Therefore, the difference in coverage between CERCLA and the CWA is that the CWA applies only to certain bodies of water but the CWA includes discharges of both hazardous substances as well as oil. To be liable under the CWA, one must “discharge” oil or hazardous substances. “Discharge” includes such things as leaking, spilling, pumping, pouring, emitting, or dumping, but does not include those discharges that are permitted under the CWA. CWA § 311(2). In addition, the discharge must be in a quantity that the President has deemed harmful. See CWA § 311(b)(3). The amount of oil that has been designated as harmful is found in 40 C.F.R. § 110.3 (the discharge of oil not deemed harmful is found in 40 C.F.R. § 110.5); the amount of particular hazardous substances deemed harmful is found in 40 C.F.R. § 117.3. Aside from some difference in scope, NRD assessment under the CWA is the same as under CERCLA because both operate under the same set of DOI assessment regulations. As a result, a trustee should follow the same procedures to assess and recover NRDs under both statutes. D. OPA NRD Claims OPA allows for recovery for damages for “injury of, loss of, or loss of use of, natural resources including the reasonable cost of assessing the damages” recoverable by a trustee. OPA § 1002(b)(2)(A). Trustees are designated according to the process outlined in OPA § 1006(b). Unlike CERCLA, however, OPA also allows recovery for damages “for injury to, or economic losses resulting from destruction of, real or personal property by a claimant who owns or leases that property”. OPA § 1002(b)(2)(B). OPA also allows for other recovery as well such as for loss of revenue, loss of profits, and loss of subsistence use. See OPA § 1002(b)(2)(C)-(F). 88

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