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NAAGazette

State Attorneys General Play Leading Role in Natural Resource Damage Cases

Paula Cotter, Environment Project Director and Chief Counsel

Paula Cotter, Environment Project Director and Chief Counsel

The federal government’s Natural Resource Damage Assessment and Restoration Program (NRDAR) works to restore natural resources injured as a result of oil spills or hazardous substance releases into the environment.

Damage assessments provide the basis for determining the restoration needs that address the public's loss and use of these resources.

State Attorneys General often serve as counselors to state government agencies and legislatures and must act as representatives of the public interest. Restoration efforts can have an enormous impact on a state’s environmental resources and affect the public’s health and safety. As natural resource damage assessments and restoration play a growing role in the much larger scheme of environmental protection, Attorneys General are increasingly taking the lead in these types of cases.

Managed by the Department of the Interior (DOI), the Restoration Program assesses the damages and injuries to natural resources and negotiates legal settlements or takes other legal actions against the responsible parties for the spill or release. Funds from these settlements are then used to restore the injured resources at no expense to the taxpayer. Settlements often include the recovery of the costs incurred in assessing the damages. These funds are then used to fund further damage assessments.

Now, more recent trends indicate that many state Attorneys General have been actively involved in litigation and settlements of natural resource damage (NRD) cases and are progressively leading the way.

For instance, the state of Montana has recovered approximately $200 million in settlement of its claims for mining-related NRDs in the Clark Fork River. The state of New Jersey is currently pursuing more than 100 claims for injury to its resources, primarily groundwater.

Virtually every state in the country has brought or settled claims, or is considering pursuing NRD, and an increasing number are actively building programs to handle such claims on a more routine basis. In almost every state the Attorney General plays an important part in natural resource damage cases.

Natural resource damage suits emerge from a concept of public stewardship reflected in the common law. Today, however, natural resource damage actions are largely creatures of statute --- most prominently the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA or Superfund, as amended (42 U.S.C. §§ 9601, et seq.)) and the Oil Pollution Act (OPA, 33 U.S.C. §§ 2701, et seq.)). The policy embodied in those statutes (and other less frequently used laws) is that governments are entrusted with protection and management of natural resources on behalf of the people. These federal laws allow state, federal and tribal trustees to recover damages for the injury, loss or destruction of natural resources due to releases of hazardous substances or oil.

All natural resource damage recoveries under the federal laws must be used to restore, replace or acquire resources equivalent to those lost. NRD claims differ from common environmental enforcement by states pursuant to authorized pollution programs in that they do not regulate on-going activities and are not considered punitive, unlike civil and criminal actions. Nor are natural resource damage claims intended to abate threats to humans and the environment, which is the purpose of the remedial provisions of CERCLA. Rather, the objective of NRDs is to replace or restore injured resources to conditions under which such resources can provide human and ecological services equivalent to those that would have been available had the release of hazardous substances or oil not occurred, and to compensate the public for the period of time between the release and the achievement of full restoration.

To give a simple example, a CERCLA suit for remediation might require a polluting company to dig up the chemicals that were leaking into the groundwater, which seeped out into a riverbank and into the water. The related natural resource damage suit might recover money to re-vegetate the riverbank and restore the fish population that was injured by the leaking chemicals either at the contaminated site, or at another location as trustees determine appropriate.

Under CERCLA and OPA, the state trustees are designated by the governors of the states. In some states, the governor has created a specific office to fulfill natural resource trustee duties. For instance, the Louisiana legislature created the Louisiana Oil Spill Coordinator’s Office, which was made a part of the Governor’s office and designated as the state trustee for all natural resource damage matters arising from oil spills. That office acts as a point of contact, pulling in the appropriate state agencies after a spill occurs. In Colorado, the Governor has designated three trustees for natural resource damage matters: the Attorney General; the executive director of the Colorado Department of Public Health and Environment; and the director of the Division of Reclamation, Mining and Safety in the Colorado Department of Natural Resources.

Federal trustees are identified in Executive Order 12580, as amended by Executive Order 12777, and include not only the U.S. Fish and Wildlife Service and the National Oceanic and Atmospheric Administration, but also the Departments of Defense and Energy for their own federal facilities.

Often state, federal and tribal trustees work together at a site, because each has overlapping trusteeship over the resources at a site. For instance, at the Fox River site, the Oneida and Menominee tribes, Michigan and Wisconsin, the U. S. Fish & Wildlife Service and the National Oceanic and Atmospheric Administration combined to develop a restoration plan. Such co-trusteeship has also been present at the Tri-State site in Oklahoma, Kansas and Missouri, and in the Coeur d’Alene Basin in Idaho.

In 1994, DOI issued rules governing the assessment of NRDs under CERCLA. (43 CFR 11 ) Trustees are not required to comply with these regulations; however, they obtain a rebuttable presumption if they do. The 1994 rules have been widely criticized by trustees for a variety of reasons --- vagueness, impracticality, obsolescence and internal inconsistency are a few of the problems alleged by critics. DOI convened a Federal Advisory Committee in the hope of benefiting from a balanced and knowledgeable group of people who have experience with natural resource damages. Attorneys General were a logical choice to sit on the committee, because they represent legal interests distinct from those of the federal trustee agencies that were already represented on the government’s Federal Advisory Committee, especially those agencies that are liable for NRDs, such as the Department of Defense.

The committee met for two years to discuss and analyze a series of questions about probing different aspects of the existing rules. For purposes of providing expert advice, the advisory committee divided into itself into four groups to consider four questions. Utah Attorney General Shurtleff and Colorado Senior Assistant Attorney General Vicky Peters (acting as alternate), who were later honored for their efforts, participated on the subcommittee on the identification and selection of appropriate restoration alternatives. The four subcommittees then met as the full committee to consider the recommendations. DOI then designated representatives to draft an integrated report. A full discussion of the recommendations in the Report is beyond the scope of this article, but the list on the right highlights some of the subjects considered and the strategies endorsed by the advisory committee. General information about the committee and its membership is available on DOI’s website. The text of the report is available online at http://restoration.doi.gov/pdf/facamtg5_finalreport.pdf.

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Subcommittee Questions

Natural Resource Injury Determination and Quantification

What are the best available procedures for quantifying natural resource injury on a population, habitat or ecosystem level, as set forth in the DOI NRDAR regulations at 43 CFR 11.71(1)? What guidance is appropriate for the utilization of these procedures?

The committee could not reach consensus on this issue in the time available, and recommended that DOI sponsor a series of workshops and research papers to develop guidance about what level of biological scale is appropriate for quantifying injuries – i.e., whether the study be done at the level of individual organisms or, for instance, at a population level. The committee believes the guidance should not be excessively prescriptive, should be subject to peer review, and should keep pace with the evolving field.

Restoration Action Selection

Should DOI’s Natural Resource Damage Assessment and Restoration regulations provide additional guidance --- beyond the current factors to consider found at 43 CFR 11.82 --- for determining whether direct restoration, rehabilitation, replacement or acquisition of equivalent resources is the best strategy for addressing natural resource injury?

Choosing an appropriate restoration activity can be problematic. The regulated community, the public and the trustees have all wrestled with the task of identifying and choosing appropriate restoration projects. Communities long affected by contaminated sites often want to use NRD recoveries to generate funds or create recreational opportunities unrelated to restoration, such as ball-fields. Educational programs and signage related to contamination are other frequent suggestions. Others believe that the highest priority should be to directly restore the injured resource, no matter how expensive or infeasible, rather than finding replacements. As an example, direct restoration of the injured resource seems like an intuitively inviting approach --- but direct restoration may not be possible or wise in a specific situation. If trustees look at a wider range of ideas, a whole variety of factors affect the connection between lost or injured resource and the chosen activity.

The committee recommended that the Department revise its regulations to clarify that legality, reasonable likelihood of success and a demonstrable relationship between the injury and the restoration alternative are threshold factors that must be present in order to justify a specific restoration alternative. The committee further recommended that revised rules require consideration of balancing factors such as the strength of the relationship between the injured resource and the restoration alternative, and the long-term, sustainable benefits to natural resources and services of each proposed project or group of projects.

Compensating for Public Losses Pending Restoration

Should DOI revise the Natural Resource Damage Assessment and Restoration Regulations to allow for compensating for interim losses with additional restoration projects in lieu of monetary damages for the economic value of the loss? If so, how should project-based interim loss claims be calculated?

CERCLA and the current regulations authorize natural resource trustees to recover compensatory damages for the interim loss of natural resource services that would have been available to the public if the hazardous substance release had not occurred. The current regulations have been interpreted by some to create a preference for calculating compensatory damages, meant based on the economic value of the lost resources and services based on the public’s willingness to pay (43 CFR 11.83(c)). For instance, damages for interim losses at a contaminated lake could be calculated through travel cost models that would reveal how much money people were willing to spend to avail themselves of the services of the injured lake, or to be able to catch bigger or different types of fish that might no longer be present due to contamination. Some economists have conducted surveys to determine how much the public would be willing to pay merely to know that a valued resource exists or would provide services to future generations.

The perceived problems with the lost-economic-value approach are that a) economic valuation can be controversial, divisive and sometimes expensive; and b) it delays consideration of restoration alternatives that often inspire settlements. In contrast, the rules under the Oil Pollution Act authorize trustees to choose the restoration activities that would recompense the public for interim loss of resources, and the damages are set at the cost of performing the restoration activities.

The committee recommended that DOI undertake a narrow revision of the regulation to make clear that trustees may calculate compensation for interim public losses based on the cost of restoration. The committee went on to recommend that the department refrain from prescribing a particular methodology for calculating interim losses, but that it set general principles of reliability that will be applied to all methodologies. Most, if not all, of the committee members supported restoration-based assessment of NRD and early consideration of appropriate restoration projects, rather than the current emphasis on economic valuation of interim losses.

Timely and Effective Restoration after Natural Resource Damage Assessment and Restoration Claims are Resolved

What measures should DOI consider to expedite restoration planning and ensure cost effective and efficient restoration after awards or settlements are secured?

To assist the DOI in its goal of actual restoration, the advisory committee made several recommendations, all of which were meant to achieve restoration in a more timely fashion. For instance, the committee recommended that DOI take steps to ensure that federal trustees perform NEPA review concurrently with natural resource restoration planning. Likewise, the committee recommended the department develop an inventory of restoration actions and categories of restoration actions, which trustees could use as a resource, and compile lists of potential partners that could facilitate restoration through funding or in-kind contributions.

To obtain a copy of the advisory committee’s report, contact Paula Cotter at pcotter@naag.org, or 202-326-6250.