Natural Resource Damages: Frequently Asked Questions
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1. What are Natural Resources?
Under both the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) and the Oil Pollution Act (OPA), there are two parts to the "natural resources" definition. First, natural resources are defined broadly to include land, fish, wildlife, biota, air, water, groundwater, drinking water supplies and other such resources. Second, the resource must belong to, be managed by, held in trust by, appertain to or otherwise be controlled by the United States, any State, an Indian Tribe, a local government or a foreign government [CERCLA §101(16); OPA §1001(20)].
2. What are Natural Resource Damages (NRD)?
Damages are defined as injury to, destruction of, or loss of natural resources [CERCLA §§101(6); 107(a)(4)(C); 111(b); OPA §§1001(5); 1002(b)(2)]. The measure of damages under CERCLA and OPA is the cost of restoring injured natural resources to their baseline condition, compensation for the interim loss of injured resources pending recovery, and the reasonable costs of a damage assessment [CERCLA §§107(a)(4)(C); 107(f)(1); OPA §§1001(5); 1002(b)(2); 43 CFR §11.15; 15 CFR §990.62].
3. Who are Natural Resource Trustees?
CERCLA §107(f)(2)(A) and OPA §1006(b)(2) require that the President designate federal officials who shall act on behalf of the public as Trustees for natural resources. Section 300.600 of the National Contingency Plan (NCP) states that the Secretaries of Agriculture, Commerce, Defense, Energy, Interior and others shall act as Trustees for the natural resources subject to their respective management or control.
CERCLA §107(f)(2)(B), OPA §1006(b)(3), and Section 300.605 of the NCP allow the Governor of each State to designate state officials who may act on behalf of the public as State Trustees for natural resources.
Section 300.610 of the NCP calls for Tribal chairmen (or heads of governing bodies) of Indian Tribes to also act on behalf of the Indian Tribes as Tribal Trustees for the natural resources, including their supporting ecosystems, belonging to, managed by, controlled by or appertaining to such Indian Tribe, or held in trust for the benefit of such Indian Tribe, or belonging to a member of such Indian Tribe, if such resources are subject to a trust restriction on alienation.
OPA Sections 1006(b)(5) and 1007 authorize foreign Trustees to recover NRD in some circumstances.
4. What is EPA's Role?
Under CERCLA, EPA's NRD role is one of notification and coordination. EPA is required to notify Trustees of potential injuries to natural resources at sites where releases or threats of releases are under investigation. EPA is also required to coordinate assessments, investigations and planning with Trustees [CERCLA §104(b)(2)]. In addition, EPA is required to notify Federal Natural Resource Trustees of negotiations with potentially responsible parties (PRPs) and to encourage their participation in negotiations, if the release under investigation may potentially injure Trust Resources [CERCLA §122(j)(1)]. Under OPA, EPA is the lead agency in responding to oil spills in inland waters.
5. What is a Natural Resources Damage Assessment (NRDA)?
An NRDA is the process of collecting, compiling and analyzing information, statistics or data to determine the extent of injuries to natural resources from hazardous substance releases or oil discharges, and to determine appropriate ways of restoring and compensating for those injuries [43 CFR Part 11; 15 CFR Part 990].
6. Can Multiple Trustees Be Involved at a Site?
Yes. There may be multiple Natural Resource Trustees because of coexisting or contiguous natural resources or concurrent jurisdictions. Where there are multiple Trustees, they should coordinate and cooperate in carrying out their joint responsibilities [40 CFR §300.615(a)]. Federal and State agencies and Indian Tribes may be co-Trustees for the same natural resource. For example, in cases where a CERCLA release could potentially impact migratory birds, the Department of the Interior (DOI) and a State could be co-Trustees.
7. How Does a CERCLA Response Action Differ from Natural Resource Damage Assessment and Restoration?
CERCLA directs two types of activities – cleanup and natural resource damage assessment and restoration – at sites contaminated by hazardous substances. EPA is the lead agency, in cooperation with individual states and tribal governments, to investigate and clean up hazardous waste sites, as part of its response authority. EPA's goal is to prevent further contamination and cleanup sites to levels protective of human health and the environment [CERCLA §104; Executive Order 12580 §2(g) (January 23, 1987)]. Natural Resource Trustees have delegated authority to perform NRDAs and recover costs beyond cleanup to restore or replace natural resources to the conditions that would have existed without the hazardous substance release [CERCLA §107(f)(1); 40 CFR §300.615(c)(3), (4)].
8. What Does "Double Recovery" Mean?
Both CERCLA and OPA prohibit Trustees from recovering the same damages twice. This means that if a Trustee has received NRD for a particular natural resource loss or injury caused by a release or discharge, that Trustee cannot sue in the same or in a different court for additional NRD for the same loss or injury [CERCLA §107(f)(1); OPA §1006(d)(3)].
9. What Is a "Rebuttable Presumption"?
CERCLA provides Federal and State Trustees and OPA provides Federal, State and Tribal Trustees with "the force and effect of a rebuttable presumption" for the determination and assessment of damages to natural resources if they take place in accordance with the assessment regulations promulgated under the respective statute [CERCLA §107(f)(2)(C); OPA §1006(e)(2)]. This means that, if Trustees perform an NRDA in accordance with the regulations, the results of the assessment will be presumed to be correct, and that the PRP would have to disprove the findings. This effectively places the burden of proof on the PRP [Natural Resource Damage Assessment Primer, DOI, February 1993].
10. How Are Damages Calculated for Interim Lost Use?
Under the DOI regulations, valuation methodologies are used to calculate "compensable values" for interim lost public uses. Valuation methodologies include several economic methods such as marketed methodologies (e.g., market price and/or appraisal) or non-marketed methodologies (e.g., factor income, travel cost, hedonic pricing, contingent valuation or unit values) [43 CFR §11.83]. Under the NOAA regulations, Trustees base damages for interim lost use on the cost of "compensatory restoration" actions. Trustees can determine the scale of these actions through methodologies that measure the loss of services over time or through valuation methodologies [15 CFR §990.53(d)].
11. What Is "Contingent Valuation"?
Contingent valuation is one of several methods used in NRDAs to quantitatively measure damages or scale restoration. The method relies on hypothetical questions posed by surveys to ascertain how much respondents would be willing to pay to preserve the natural resources or to reduce the amount of injury to resources caused by the release or discharge (Environmental and Natural Resource Economics, Tietenberg, 1992). Contingent valuation can be used to measure use values alone or use values plus non-use values. Its use to measure non-use value has been controversial. Natural Resource Trustees have rarely used it for this purpose.
12. What Are "Use" and "Non-Use" Values?
The term "use value" seeks to capture values for the public's use of natural resources, many of which are not actually traded in the marketplace, but can be assigned a dollar value. For example, consumptive value attributes a value to lost resource uses of sportsmen and tourists who would have taken wildlife in hunting or fishing pursuits, while non-consumptive uses include the ecosystem's value to photographers, bird watchers and other users.
Valuation of natural resources is not based solely on "use" of a particular resource or set of resources. People may derive value from simply knowing that the resource is there, even if they never actively use it. "Bequest" value, for example, is an element of non-use value and reflects the value of the resource as a legacy passed from the present generation to its children. In the economics literature, natural resource values not related to present use of the resource have been termed "existence," "intrinsic," "passive" and "non-use" values. There is disagreement among economists and policymakers on a precise definition of this concept [Environmental Law and Policy: Nature, Law, and Society, Plater, et. al., 1992].
Courts have held that Natural Resource Trustees may recover damages for the public's lost use and non-use values, provided those damages can be reliably calculated.
13. When May the Hazardous Substance Superfund or the Oil Spill Liability Fund Be Used to Make Expenditures for Natural Resource Damages?
Superfund resources may not be used for the payment of NRD claims. Superfund resources are available for a limited number of purposes, including but not limited to, the payment of governmental response costs incurred under CERCLA Section 104; the payment of any claim for necessary response costs incurred by any other person as a result of carrying out the national contingency plan; the cost of public participation grants for technical assistance; the costs of a program to identify, investigate, and take enforcement and abatement action against releases of hazardous substances subject to the amounts provided in the appropriation acts; and the costs of epidemiological and health studies, equipment and overhead, health and safety programs for employees involved in a hazardous substance release response, facility evaluations relating to petitions for assessments of releases, contracts to oversee and review the conduct of remedial investigations, acquisition of real estate or interests in real estate, local government reimbursement, and worker training and education grants. While CERCLA provides authority for the Hazardous Substance Superfund to pay NRD claims [CERCLA §111(a)(3) and §111(b)], the Superfund Amendments and Reauthorization Act of 1986 and the Internal Revenue Code prohibit Superfund monies from being appropriated to pay such claims [26 U.S.C. §9507(c)(1)(A)].
The Oil Spill Liability Trust Fund may be used for limited purposes. These include, but are not limited to, the payment of costs incurred by Trustees in carrying out their functions under OPA Section 1006 for assessing NRD and for developing and implementing plans for the restoration, rehabilitation, replacement or acquisition of the equivalent of injured resources, as well as the payment of removal costs, including the costs of monitoring removal actions [26 U.S.C. §9509(c)(1)(A)].
14. What Natural Resources Damage Claims Are Recoverable from PRPs?
Under both CERCLA and OPA, damages for injury to, destruction of or loss of natural resources, including the reasonable costs of assessing damages, are recoverable from PRPs [CERCLA §107(a)(4)(C); OPA §1002(b)(2)(A)].
15. How Are the Funds Recovered by Trustees for Natural Resource Damages Used?
Sums recovered for NRD are available for use only to restore, replace or acquire the equivalent of a natural resource and to reimburse the Trustees' cost of assessing damages [CERCLA §107(f)(1); OPA §1006(f)]. Under OPA, any amounts in excess of those required for these reimbursements and costs are to be deposited in the Oil Spill Liability Trust Fund [OPA §1006(f)].