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Natural Resource Damage Assessment: Methods and Cases

Natural Resource Damage Assessment: Methods and Cases

B. Lower Fox River Site:

B. Lower Fox River Site: The site is the Lower Fox River in Wisconsin, which flows from Lake Winnebago into Green Bay, which in turn empties into Lake Michigan. The source of the contamination was the Appleton Coated Paper facility, as well as several other paper mills located in Appleton, Wisconsin, on the banks of the Lower Fox River. Release: Polychlorinated biphenyls (PCBs), which contain ink and solvent and are used to make carbonless copy paper, were released into the Lower Fox River. The Wisconsin Department of Natural Resources estimated that 660,000 lbs. of PCBs were released into the Fox River between 1950 and 1997. Injury: PCBs contaminated fish and other wildlife in the River. PCBs cause death, deformity and disease in fish and other wildlife. PCBs have been linked to a number of health problems in humans, including cancer. PCBs are bioaccumulative pollutants; low concentrations at low levels in the food chain lead to higher concentrations at higher levels. Attachment of Liability: CERCLA permits the recovery of NRDs because there was a “release” of “hazardous substances” that caused injury to natural resources. Trustees: Wisconsin Department of Natural Resources (WDNR) Potentially Responsible Parties: There were seven companies in the “Fox River Group”: • Fort James Corp., owner of Green Bay West Mill which processed waste and scrap NCR paper. The WDNR estimates that Fort James was responsible for 19 - 39% of the 660,000 lbs. of PCBs released into the river. • National Cash Register (NCR) Corporation, for which the mills were producing carbonless copy paper. • Appleton Papers, Inc. (API), which made the carbonless copy paper and which owned the facility from which the PCBs were released. • P.H. Glatfelter Co. • Riverside Paper Corp. • U.S. Paper Mills Corp. • Wisconsin Tissue Mills, Inc. Damages: Most information is available for the damage assessment done in support of the Fort James settlement. In general, these damage estimates were made using a compensatory restoration approach. Under this approach, damages are calculated as the money needed to fund projects that will both restore the injured resource and compensate society for interim or residual losses. A value is never explicitly placed on the lost resources. The Fort James settlement was based specifically on two kinds of natural resource damages: lost habitat services for birds (terns and bald eagles) and mammals (especially mink) and lost recreational services arising from formal advisories not to eat fish from the Fox River due to PCB contamination. 93

The State hired consultants (ARCADIS JSA, 2000) who used Habitat Equivalency Analysis (HEA) to calculate what the PRPs could fairly be required to do to compensate for the loss of habitat they had caused. HEA is based on the idea that it is possible to calculate, for each affected species, a quantity of restored or newly created habitat that has a present value equal to the present value of the quantity of habitat that has been injured and will render a lower level of “ecological services” to that species because of the contamination. Losses and gains in habitat services are measured in “acre years”. In order to estimate the damages associated with recreation losses, consultants used random-utility models to analyze recreational-trip data (Desvousges, MacNair, and Smith, 2000). They used survey data about both the actual and hypothetical recreational behavior of Wisconsin residents. That is, residents were asked both about what they had done during periods in which formal PCB advisories were in effect, and what they would do in response to such an advisory. Based on that data, the consultants calculated both the loss in utility or personal satisfaction from fishing recreation attributable to the release of PCBs and the gain in utility from the various facilities that Fort James is required to construct under the settlement. The trustees aimed to settle with Fort James for an amount of restoration that was equitable given that multiple PRPs contributed to the injury. Thus, they stipulated in the Consent Decree that Fort James must add features to various fishing sites – e.g. docks, boat ramps, picnic areas, and more fish – such that the present value of the utility added by those features will at least equal the present value of the utility that Fort James’s share of the PCBs removed. Similarly, the trustees sought to require habitat restoration of Fort James that was consistent with that company’s share of the initial release of contaminants. Settlement: Fort James agreed to the following terms in a Consent Decree: • Contribute to restoration of Cat Island habitat: $300,000 • Convey approximately 700 acres of wetlands along the Peshtigo Creek to the State • Expand a spotted muskellunge hatchery: $300,000 • Northern Pike habitat preservation and restoration: $200,000 • Recreation enhancement projects • Reimburse trustees for assessment costs: $50,000 The Fort James settlement was estimated to restore 32 – 65% of the recreational services that were lost as a result of the injury (Desvousges, MacNair, and Smith, 2000). More recently, API and NCR Corp. agreed to the following terms in a Consent Decree: References • Payments totaling $40 million over four years for restoration projects • Payments to DOI equaling $1.5 million over four years to pay for expenses incurred in the NRDA process. ARCADIS JSA. 2000. Lower Fox River and Green Bay Potential Natural Resource Damages and Restoration Offsets for Ecological Losses. Prepared for the Fort James Corporation 94

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