LITIGATION OF NATURAL RESOURCE DAMAGE CLAIMS
| Jurisdiction | United States |
(Apr 1997)
LITIGATION OF NATURAL RESOURCE DAMAGE CLAIMS
Kristin Tita *
Ballard Spahr Andrews and Ingersoll
Denver, Colorado
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TABLE OF CONTENTS
Page
Litigation of Natural Resource Damage Claims
I. Natural resources under CERCLA and their trustees
A. Definition of natural resources
B. Who may bring suit for damage to these resources
C. Preliminary issues relating to CERCLA natural resources and trustees
1. Determining whether a trustee has standing to claim damages for a particular natural resource
2. Co-trustee issues
II. Scope of Liability
A. Elements of Liability
1. "Facility"
2. "Release" of a "hazardous substance" from the facility
3. Incurrence of response costs
4. Defendant as a PRP for the facility involved
5. Injury, destruction or loss of a natural resource
6. Causation
B. Defenses to Liability
1. Section 107(b) defenses
2. Statute of limitations
3. Damages incurred wholly before enactment of CERCLA
4. Federally-permitted releases
5. Identified commitment of natural resources
6. No double recovery
7. Equitable defenses
8. Per release limitation
III. Definition and Measurement of Natural Resource Damages
A. Components of a CERCLA natural resource damage award
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1. Damages
2. Assessment costs
3. Prejudgment interest
4. What is not included: Attorneys' fees?
B. Monetization of natural resource damages
1. Natural resource values
a. Use value
b. Nonuse values
2. Economic valuation methods
a. Diminution of value
b. Restoration or replacement cost
3. Proper measure of damages under CERCLA
a. Statutory language
b. DOI interpretation before and after Ohio v. DOI
c. Utah v. Kennecott Corp.
C. DOI's Assessment Regulations
1. Overview
2. Rebuttable presumption for NRD assessments complying with DOI regulations and Record Review
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Litigation of Natural Resource Damage Claims
Beginning in 1973, Congress has enacted a number of federal statutes that authorize governmental representatives to recover natural resource damages in various circumstances. See, e.g., Trans-Alaska Pipeline Authorization Act, 43 U.S.C. §§ 1651 -1655 (natural resource damages relating to pipeline activities); Federal Water Pollution Control Act ("Clean Water Act" or "CWA"), 33 U.S.C. § 1321(f)(4), (5) (natural resource damages resulting from the discharge of oil or hazardous substances); Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), as amended, 42 U.S.C. §§ 9607(a)(4)(C), 9607(f) (natural resource damages resulting from the release of hazardous substances); Oil Pollution Act of 1990 ("OPA"), 33 U.S.C. § 2706 (natural resource damages resulting from oil spills). Some states have also granted their representatives statutory authority to bring such claims. See, e.g., Puerto Rico v. SS Zoe Colocotroni, 628 F.2d 652, 673 (1st Cir. 1980), cert. denied, 450 U.S. 912 (1981) (natural resource damages assessed under state statute); see also Landreth & Ward, "Natural Resource Damages: Recovery Under State Law Compared With Federal Laws," 20 Env't L. Rep. 10134 (1990). Common law doctrines such as negligence, public nuisance and the public trust doctrines such as also permit states to seek damages and other relief for injury to certain natural resources. See Idaho v. Southern Refrigerated Transp. Inc., No. 88-1279, 1991 WL 22479 (D. Idaho Jan. 24, 1991) (state may bring a parens patriae action based on negligence); Carlson, "Making CERCLA Natural Resource Damage Regulations Work: The Use of the Public Trust Doctrine and Other State Remedies," 18 Env't L. Rep. 10,299 (1988). Private parties may also assert natural resource damage claims under common law theories such as negligence and strict liability. See, e.g., In re Exxon Valdez Oil Spill Litigation, No. 3AN-892533 (Alaska Super. Ct. 3rd Dist.); In re Exxon Valdez, No. A89-095 (D. Alaska).
A defendant's liability for natural resource damages ("NRD") under any of these theories is potentially significant. In 1991, for example, the City of Seattle and another defendant agreed to pay and contribute property and services valued at more than $24 million to settle natural resource damage claims arising from sewer and storm water discharges. See United States v. City of Seattle, No. C90-395 WD Consent Decree (W.D. Wash., entered Dec. 26, 1991). Exxon Corporation has agreed to pay at least $900 million to settle natural resource damage claims associated with the Exxon Valdez oil spill in Alaska's Prince William Sound, United States v. Exxon Corp., No. A91-082 CIV, Consent Decree (D. Alaska; entered Oct. 8, 1991). Ashland Oil Co. paid $4 million to Pennsylvania in 1991 for natural resource damages arising from a fuel spill in the Monongahela River. Marten & McFarland, "Litigating Natural Resource Damage Claims," 22 Env't Rep. (BNA) 670 (July 19, 1991). By way of further example, in
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1986, several mining companies paid $4.5 million to Idaho to settle its claim for mining-related damages in the Coeur d'Alene River drainage, see id., and, Idarado Mining Company and its parent, Newmont Mining Corporation, agreed to pay $1.1 million to settle the State of Colorado's natural resource damage claims arising from mining activities near Telluride and Ouray, Colorado. Colorado v. Idarado Mining Co., No. 83-C-2385, Consent Decree (D. Colo.; entered July 7, 1992).1 More recently, ARCO Pipeline agreed to pay $7.1 million in natural resource damages relating to a ruptured pipeline near Los Angeles, California. U.S. v. ARCO Pipeline Co., No. CV 97-0361, Proposed Consent Decree, 62 Fed. Reg. 5,248 (Mar. 4, 1997).
In spite of this relatively lengthy statutory history, the historical antecedents and the potential significance of NRD claims, there are still few cases, particularly at the federal level, that have addressed and defined even the preliminary issues raised by such claims. Nonetheless, there is increasing public and governmental interest in NRD claims, and in CERCLA-related claims in particular, that may signal the beginning of increased NRD litigation.2 Accordingly, this paper will outline and examine legal and strategic issues that are raised in such litigation, using CERCLA's NRD provisions as the paradigm.3
I. Natural resources under CERCLA and their trustees
A. Definition of natural resources
CERCLA allows for the recovery of "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 a release [of a hazardous substance]." 42 U.S.C. § 9607(a)(4)(C).
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1. The statute defines "natural resources" subject to this provision as "land, fish, wildlife, biota, air, water, ground water, drinking water supplies, and other such resources belonging to, managed by, held in trust by, appertaining to, or otherwise controlled by the United States..., 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." 42 U.S.C. § 9601(16).
2. Courts interpreting this provision have held or implied that the following are public resources for which a state may recover damages under CERCLA:
a. Ground water aquifers, Artesian Water Co. v. New Castle County, 851 F.2d 643, 650 (3d Cir. 1988), and groundwater more generally, see Ohio v. Georgeoff, 562 F. Supp. 1300, 1316 (N.D. Ohio 1983); see also Utah v. Kennecott Corp., 801 F. Supp. 553 (D. Utah 1992) (assuming that State is trustee for groundwater).
b. Wildlife and sport fish located within a state. Idaho v. Southern Refrigerated Transp. Inc., No. 88-1279, 1991 WL 22479, slip op. at 11-12 (D. Idaho Jan. 24, 1991); and
c. All drinking water within a state, Lutz v. Chromatex, Inc., 718 F. Supp. 413, 419 (M.D. Pa. 1989) (dicta).
3. "[P]urely private" resources or property are excluded from the definition of CERCLA natural resources. Ohio v. U.S. Dep't of Interior, 880 F.2d 432, 460 (D.C. Cir. 1989).
B. Who may bring suit for damage to these resources
1. Liability for natural resource damages under CERCLA potentially runs to three identified parties:
a. The United States government;
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b. Any State, "for natural resources within the State or belonging to, managed by, controlled by, or appertaining to such State;" and
c. Any Indian tribe, "for natural resources belonging to, managed by, controlled by, or appertaining to such tribe, or held in trust for the benefit of such tribe, or belonging to a member of such tribe if such resources are subject to a trust restriction on alienation."
42 U.S.C. § 9607(f)(1).
2. Only designated "trustees" for each of these parties may bring an NRD suit.
a. Federal trustees
Federal trustees are designated pursuant to the National Contingency Plan ("NCP"), 40 C.F.R. Part 300 (1996). The NCP states that the Secretary of the Interior is the federal trustee for the resources it manages, including: federally owned minerals; migratory birds and endangered species; certain federally managed water resources, marine mammals and anadromous fish; and all resources otherwise managed or controlled by the DOI. NCP, § 300.600(b)(2); see executive Order 12580, 52 Fed. Reg. 2923 (Jan. 29, 1987). The Secretary of Commerce, acting through the National Oceanic and Atmospheric Administration ("NOAA"), is designated by EPA as the federal trustee for natural resources found in, under or using navigable waters. NCP, § 300.600(b)(1). The Secretaries of Defense, Agriculture and Energy are also designated by EPA as the federal trustees for resources located on, over or under lands under their respective jurisdictions. Id. § 300.600. EPA is not a trustee for federal natural resources but is required to notify...
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