Natural Resources Damages

• Author: Allison Rumsey/Michael Daneker
• Pages: 69-80

Page 69

V.Natural Resources Damages

Federal, state, territorial, and tribal governments may seek compensation for natural resources that are

injured or destroyed when property becomes contaminated with certain pollutants, including hazardous

substances and petroleum. As a general rule, the compensation for natural resource damages (NRD) is

intended to restore the natural environment to its prior condition (also known as “baseline”) and compen-

sate the public for the interim lost use from the time of contamination until restoration.

e authority to seek NRD compensation is rooted in common-law principles, including the public

trust doctrine and others. Nonetheless, most modern NRD claims are brought pursuant to state or federal

environmental statutes, such as the Comprehensive Environmental Response, Compensation, and Liability

Act (CERCLA) and the Oil Pollution Act, which authorize relevant government agencies to act on behalf

of the public as natural resource trustees. e statutory framework authorizing NRD compensation pro-

vides trustees with a signicant enforcement mechanism for obtaining monetary damages at contaminated

sites. In addition to the large sums sometimes needed to restore natural resources a nd compensate for lost

use, the statutes generally impose a strict liability regime upon a class of parties. e combination of large

compensatory damages and strict liability means that liable parties often face signicant exposure from

NRD claims.

A. Brief Summary of Key Points

Within the life cycle of a contaminated site, unlike a site cleanup or remediation, NRD claims seek the

restoration of damaged natural resources. e focus is on compensation to the public from contamination,

not the protection of human health and the environment from current or future risk. One way to consider

the distinction is that the remedy removes or isolates the contaminants, while the restoration replaces

the lost natural resources. In this way, the NRD eort is somet imes said to be the residua l work needed

after implementation of the remedy.

A distinction betwe en NR D and the toxic tort phase of a contaminated site is also important.

A toxic tort claimant is a n individual or class. A n NRD claimant is the public through a governmental

trustee. Furthermore, the damages sought in an NRD matter are tied to the lost resources, while the dam-

ages in a toxic tort matter are tied to the imposition on the plainti and the culpability of the defendant.

A potentially responsible party (PRP) may be liable under CERCLA for three broad categories of dam-

ages in relation to natural resources: (1) the costs of assessing the extent of damages to natural resources;

(2) the cost of restoring, rehabilitating, replacing, or acquiring the equivalent of the damaged natural

resource (primary restoration); and (3) the interim loss in value of the damaged natural resource pending

restoration (compensatory restoration). If damages to natural resources are understood as a “debit,” then

restoration, rehabilitation, and/or replacement generate “credits” to the PRP that oset the debit. When

credits equal debits, then the public has been compensated for its loss to natural resources. It is important

to note that the public is not entitled to restoration of resources to pristine condition but rather to their

baseline condition.

Under CERCLA, injury is dened as an observable or measurable adverse change in a natural resource

or impairment of a natural resource service, occurring either directly (e.g., sh are injured by the toxic

Authors’ Note: is is intended as a brief overview of the application of NRD provisions and process. For a more detailed discussion, please see

Valerie Ann Lee et al., N R D A D: A L  T A (2d ed. 2014).