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Natural Resource Damages: The Assessment Battle

Strategies for Valuing and Contesting NRD Injury and Damagespresents

Today's panel features:Valerie A. Lee, President, Environment International Ltd., Seattle

Michael R. Thorp, Summit Law Group, Seattle

Thursday, October 15, 2009

The conference begins at:1 pm Eastern12 pm Central

11 am Mountain10 am Pacific

The audio portion of this conference will be accessible by telephone only. Please refer to the dial in instructions emailed to registrants to access the audio portion of the conference.

A Live 90-Minute Teleconference/Webinar with Interactive Q&A

1 Environnent International Ltd. © 2009 ▪ www.eiltd.net

Natural Resource Damage Assessment (NRDA)

Valerie Ann Lee, J.D., M.S. Civ. Eng.Environment International Ltd.Seattle, WAwww.eiltd.net

206-525-3362

Injury Assessment∑

Interdisciplinary Creativity of Law and Science

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Topics of FocusNRDA

I. Overarching Legal Principlesand Technical Concepts

II. Federal Regulations III. Injury Determination and Quantification

Environnent International Ltd.© 2009 ▪ www.eiltd.net

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I: Legal Principles & Technical Concepts of NRDA

Environnent International Ltd. © 2009 ▪ www.eiltd.net

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NRDA Claims Five federal statutes – CERCLA, OPA, CWA, MPRSA, 19jj

State statutes mostly of sparse direction – WA, Maine, NJ, TX,

Right of action held only by governments (trustees)

- Federal, State & Tribal

Purpose is compensation, not punishment

Common body of law and science

The nature of the endeavor

interdisciplinary


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Trustees Damage assessments performed by

federal, state or tribal governments designated as natural resource “trustees”

Trustees bring claims for injuries to resources under their respective management or control

Damage assessments are most frequently conducted by inter-governmental teams (trustee councils)


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Federal Agencies: Trustees/PRPs

• Dept of Interior• NOAA• Dept. of Energy (Hanford, most visible)• DoD units, Navy and other

branches


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Tribal Trustees & Cases• Commencement Bay• Coeur D’Alene• Tulalip• Hanford• Clark Fork• Suquamish and Cultural Resources• St. Lawrence River• Saginaw Chippewa


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MA, ME, NJ, TX, CA, WA, OR, etc.

States Active in NRDA



Types of Cases




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Objectives and Liability

costs of restoration, replacement or acquisition of like-kind resources to restore natural resources and their associated services to “baseline”

interim loss for the period it takes to restore or replace assessment costs monitoring costs interest from time of demand (federal law makes

explicit)

Objective of the AssessmentTranslate injuries to money or activities to make the public or environment whole

Responsible Parties liable for


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Nature of Liability Under All Statutes

Strict, joint and several

– where the harm is indivisible


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Limited Defenses

Statutes have similar limited defenseso Act of God or waro Act of omission of a third party (no RP fault,

due care) o Activity authorized by federal or state law


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Injury and Damage

Injury – a scientific conceptadverse impact on resources or services resulting from an incident like an oil spill or release of hazardous substances

Damage – a legal term of arttranslation of injuries into what a liable party must do or pay to make the public and environment “whole”


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Natural/Public Resources

Natural Resources -- Land, fish, wildlife, biota, air, water, groundwater, drinking water supplies and other such resources belonging to, or otherwise controlled by, the U.S. … any state or local government, any foreign government, any Indian tribe, or, if such resources are subject to a trust restriction on alienation, any member of an Indian Tribe. CERCLA § 101(16)

OPA has nearly identical language.


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Other Covered Resources/Uses

Under CERCLA and OPA, cultural and spiritual resources if linked to a use or service provided by a natural resource.


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Services

Ecological and HumanFunctions performed by a natural resource for the benefit of another natural resource and/or the public. 15 CFR §990.30

The physical and biological functions performed by the resource including the human uses of those functions. 43 CFR §11.14 (nn)


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Restoration and Baseline

Return the injured resource (or services) to the condition they would have been in but for the incident – return to the pre-incident “baseline”


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NRDA Elements

Pre-assessment

Injury assessment

Damage assessment

Restoration implementation



II. Federal NRDA RegulationsA Federal Framework for Assessments


Federal Regulations

40 CFR Part 11 – Promulgated by DOI under CERCLA to address NRDAs hazardous substances releases and discharges under CERCLA and the CWA

15 CFR Part 990 – Promulgated by NOAA under OPA to address NRDAs discharges of oil under OPA and the CWA


The Regulations

Regulations under CERCLA and OPA Both sets of regulations involved long

history and legal challenges NOAA’s OPA regulations are brief DOI’s CERCLA regulations are lengthy

and more prescriptive regarding tools and techniques

OPA regulations previously focus more on projects as the metric for assigning damage for interim losses; however, DOI recent modifications emphasize efficient resolution and “restoration over economic damages.”


Rebuttable Presumption

Regulations are voluntary, Trustees obtain a “rebuttablepresumption” for any determination or assessment of damages

“Burden-shifting exercise;” not clear it gives the trustees a “powerful advantage” – D.C. Circuit


Injuries as Defined by DOI Regulations Violations of standards (e.g., drinking water, water

quality criteria ,etc.) Bioassays showing elevated toxicity Death, disease, behavioral abnormalities, cancer, genetic

mutations, physiological malfunctions or physical deformities (e.g., fin erosion, lesions)

Egg shell thinning Habitat avoidance behavior Exceedances of action or

tolerance levels in food consumed by humans


CERCLA Regulations Injury both “direct and indirect” Monetary value as basis of recovery

for interim losses (contrast with OPA regulations)

Type A Assessment Procedures (Limited applicability)

Type B Assessments Procedures (Extensive literature review, sampling, and field observation)

Public involved in Assessment Plan and Restoration Plan


Type B Assessment Procedures(1) Injury determination

Resources (Surface water, groundwater, air, geologic and biologic)“Definitions” for injury“Acceptance criteria”Exposure pathway

(2) Injury quantification(3) Damage determination(4) Report of Assessment (60 days for PRPs to

respond)

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III. Injury Assessment –


Determination and Quantification

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What is an Injury?No statute defines “injury”Under CERCLA regulations: “measurable, adverse

change”OPA regulations include “observable” change Injuries: direct and indirect adverse consequences There are some states with similar approaches, e.g.,

WA.


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“Scale” of the Injury

Individual Population – what’s a population?WatershedEcosystemGlobal


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Scale of Injury Amount of Data and Difficulty of

Proof


Global

Amount of Data

Individual/cellular

HeapsNot Much

Injury

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What’s Proof?


Amount ofEvidence

$250,000 $50,000,000

ExpectedLiability

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Injury Determination and Quantification

Injury determination considers whether an activity has resulted in injury

Injury quantification determines the magnitude of injury to natural resources

In many assessments, no clear division between determination and quantification


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Injury Assessment Framework

• Review readily available information• Identify possible injuries• Identify data gaps and develop a

focus for the injury assessment


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Integration of NRDA with RI/FS


Remedial Investigation/Feasibility Study

(RI/FS)

Nature and extent of contamination

Human Health Risk Assessment Ecological Risk Assessment

Results to NRDA


Possible InjuriesDetermination requires:• A pathway between discharge and

natural resource of concern• The resource was exposed to the

discharge• Exposure has caused adverse effect

on the resource

Quantification requires:• Measurement of injury scope and

extent• Identification of baseline conditions




Are assessment procedures available and what are their costs?

What is the natural recovery period for the resource?

How important is the resource to the environment and the public?

Is the resource endangered/ threatened or of tribal/cultural significance?

Develop a Focus


Assessment Techniques Selection Considerations

CostReliability and acceptance in the

scientific communityAppropriateness to study the injuryAppropriateness for the locationAppropriateness of the time frame

for the study Statistical and evidentiary power of

the information gained


Methods to Determine Injury

Literature ReviewModeling Techniques Field StudiesLaboratory StudiesAnalysis of Information

on Use (human and ecological)


Methods to Determine BaselineHistorical Baseline LevelsLocal Reference ApproachReference Population ApproachGradient Designs


Minimizes costs for PRPsAvoids duplicative studiesReduces time required for full restoration and

restitution of damages and enhance public image

Cooperative Assessment?…. Next speaker!

CoordinatingNRDA and Response Activities

DAMAGE DETERMINATIONDAMAGE DETERMINATION

COOPERATIVE NATURAL COOPERATIVE NATURAL RESOURCE DAMAGE RESOURCE DAMAGE

ASSESSMENTSASSESSMENTS

Michael R. Thorp

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DAMAGE DETERMINATIONDAMAGE DETERMINATION

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StatuteStatute

“The measure of damages in any action under subparagraph (C) of subsection (a) of this section shall not be limited by the sums which can be used to restore or replace such resources.” CERCLA §107(f)(1).

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Statute Statute (cont(cont’’d)d)

“Such regulations shall identify the best available procedures to determine such damages, including both direct and indirect injury, destruction, or loss and shall take into consideration factors including, but not limited to, replacement value, use value, and ability of the ecosystem or resource to recover.”CERCLA § 301(c)(2).

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RegulationsRegulations

Interior Department: 43 CFR §§11.80-11.84.

43 CFR §11.83 Lists Accepted Methodologies:

• Market Price • Appraisal• Factor Income • Travel Cost• Hedonic Pricing • Unit Value/Benefits• Contingent Valuation • Conjoint Analysis• Habitat Equivalency

Analysis• Resource Equivalency

Analysis• Random Utility Model

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Case LawCase LawNRD Trustees are entitled to seek damages for both restoration

costs (the cost of restoring, rehabilitating, replacing, or acquiring the equivalent of lost or injured resources) and the lost use (including lost “passive-use”) of injured or lost resources during the interim pending the completion of restoration. State of Ohio v. Interior, 880 F.2d at 448.

The cost of restoration is the preferred measure of the damage recovery in an NRD case. However, in some cases a different method of damage calculation may be more appropriate such as where restoration is infeasible or the cost of restoration is grossly disproportionate to or excessively costly compared to the lost use value. State of Ohio v. Interior, 880 F.2d at 443.

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Case Law Case Law (cont(cont’’d)d)

While market price may be used as one factor in determining the lost use value, these values should be derived by summing up allapplicable and reliably calculated use values, however measured.This should include, where appropriate, non-consumptive values. State of Ohio v. Interior, 880 F.2d at 462.

As a general matter, contingent valuation methodology may be used to calculate lost use values “so long as the technique produces . . . valid and reliable results for the particular incident. General Electric v. Dept. of Commerce, 128 F.2d at 773.

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Costs of AssessmentCosts of Assessment

CERCLA §107(a)(4)(C), 42 U.S.C. §9607(a)(4)(C) provides that in addition to natural resource damages, trustees are entitled to seek “the reasonable costs of assessing such injury, destruction, or loss resulting from such a release.”

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COEUR DCOEUR D’’ALENE EXAMPLEALENE EXAMPLE

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COOPERATIVE NATURAL RESOURCE COOPERATIVE NATURAL RESOURCE DAMAGE ASSESSMENTSDAMAGE ASSESSMENTS

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StatutesStatutes

• Comprehensive Environmental Response, Compensation and Liability Act of 1980,42 U.S.C. § 9601 et. seq. (CERCLA)• § 9607(f)(2)(A): “[Trustees] shall assess damages for

injury to, destruction of, or loss of natural resources….”

• Oil Pollution Act of 1990, 33 U.S.C. §§ 2701 et. seq. (OPA)• § 2706(c)(1): “The Federal Officials… shall assess

natural resource damages … for natural resources under their trusteeship.”

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Statutes Statutes (cont(cont’’d)d)

• National Marine Sanctuaries Act, 16 U.S.C. §§ 1431 et. seq.• § 1443(b)(2): “The Secretary shall assess damages to sanctuary

resources.”

• Park System Resources Protection Act, 16 U.S.C. §§ 19jj• § 19jj-2(b)(2): “The Secretary shall assess and monitor

damages to park system resources.”

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RegulationsRegulations

“The authorized official shall send a Notice of Intent to Perform an Assessment to all identified potentially responsible parties. The Notice shall invite the participation of the potentially responsible parties . . . in the development of the type and scope of the assessment and in the performance of the assessment.”43 CFR §11.32(a)(2)(iii)(A).

“Trustees must invite the responsible parties to participate in the natural resource damage assessment.” 15 CFR §990.14c

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What Is A Natural Resource Damage What Is A Natural Resource Damage Assessment?Assessment?

“The process of collecting, compiling, and analyzing information, statistics, or data through prescribed methodologies to determine damages for injuries to natural resources.” 43 CFR §11.14(aa).

NRDA Process: (1) Screening and Assessment Plan;(2) Injury Determination; (3) Injury Quantification; (4) Identification of Reduction in Services;(5) Determine Damages.

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What Is A Cooperative Assessment?What Is A Cooperative Assessment?

• No standard definition

• The degree of “cooperation” is very broad and specific to trustees

• Significant advantages and disadvantages

• No industry consensus on advisability or approach

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AdvantagesAdvantages• The opportunity for the PRPs to influence the scope,

direction and outcome of the NRDA• Some degree of NRDA cost control• The process serves as a pathway to settlement• The development of a common database• The opportunity for the PRPs to focus the assessment

on PRP issues such as baseline and causation• Focus on restoration• For the trustees-an opportunity to get up front funding

for the NRDA from the PRPs

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DisadvantagesDisadvantages

• By providing funding, PRPs may actually accelerate or increase the scope of the NRDA

• The NRDA may not be truly “cooperative” as the trustees may take the PRP’s money and then simply go through the motions of considering PRP input into the process

• A cooperative NRDA may compromise the PRP’sability to challenge the NRDA results

• Involvement by the PRPs may improve the quality of the NRDA making it harder to challenge

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Disadvantages Disadvantages (cont(cont’’d)d)

• Cooperation is a two-way street. The PRPs may have to give up positions they would otherwise maintain

• Science may be compromised in order to expedite the process: non-scientific, simplifying assumptions, absence of rigorous analysis of baseline or causation, little or no connection between restoration projects and injury

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Common CooperativeCommon CooperativeAssessment IssuesAssessment Issues

• Is there a standard process?

• Is there a standard written agreement?

• Is there flexibility?

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Keys to SuccessKeys to Success

1. The parties should be realistic about the chances of success. Four factors seem to be critical: (1) How big is the “incident” and potential claim?; (2) Is it a historical incident or recent?; (3) What is the historical relationship between the trustees and thePRPs?; and (4) How enthusiastic are the primary players to engage in the process?

2. There must be effective leadership for both the trustees and the PRPs. These people should be problem solvers with good consensus building skills.

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Keys to Success Keys to Success (cont(cont’’d)d)

3. The cooperative assessment process must be initiated before positions are carved in stone. Most importantly, the trustee must not have taken a public position on the dollar amount of the damage claim.

4. There must be some provision for public involvement. This does not mean that the public must be at the negotiating table but there should be regular briefings and a mechanism for public input at important points, particularly regarding possible restoration projects. It is important to keep local government informed.

5. There should be an early focus on restoration. Restoration should be the constant theme of discussions

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6. The parties should create a process which attempts to avoid “hot button” words.

7. The process should allow for the issues of both sides to be addressed.

8. There should be a realistic approach to restoration. Restoration should be linked to injury. Re-openers and performance standards can be problems.

9. The process works best if it is funded in part by both sides.

10. Individuals with authority should be personally involved in the process.

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11. The parties should establish a definite schedule and stick to it.

12. Consideration should be given to use of a third party mediator.

13. The collection of new data should be limited to critical items, not trustee research projects.

Documents

Natural Resource Damages: The Assessment Battlemedia.straffordpub.com/products/natural-resource-damages-the... · Natural Resource Damages: The Assessment Battle ... Natural Resources