State Actions For Natural Resource Damages: Enforcement of the Public Trust

Howard Kenison, Carolyn L. Buchholz, and Shawn P. Mulligan

Editors' Summary: When Congress enacted the Superfund statute in 1980, it authorized the federal and state governments to recover for natural resource damages caused by hazardous substances. The potential of this legal doctrine went virtually unrecognized for several years, in part because of the ambiguity of what was included in the new cause of action, and in part because of executive branch delay in implementing the laws' mandates on natural resource damages. Now, particularly after congressional reaffirmation of the doctrine in the 1986 Superfund Amendments, natural resource damages are clearly an important part of environmental law: the Interior Department has promulgated regulations fleshing out the meaning of the doctrine, and many lawsuits have been filed seeking recovery for natural resource damages. In this Article, the authors outline how the doctrine can be applied by state governments and detail specific deficiencies in the Interior Department's regulations. Natural resource damages, the authors argue, is a far more powerful and encompassing doctrine than the Interior Department's regulations presently allow. The authors suggest that states may, if they choose, recover for natural resource damages even to resources that are privately owned, and present an innovative approach to ensure that private interests are nonetheless compensated.

Howard Kenison is Deputy Attorney General and Chief of the CERCLA Litigation Section of the Colorado Attorney General's Office. Carolyn L. Buchholz and Shawn P. Mulligan are Assistant Attorneys General in the CERCLA Litigation Section. The views and opinions expressed in this article do not necessarily reflect the views and opinions of the Colorado Department of Law. The authors wish to thank Dr. John Boland of Johns Hopkins University, Dr. Jerry Milliman of the University of Florida, Dr. Robert Rowe of Energy Resource Consultants, Boulder, Colorado, and Dr. William Schulze of the University of Colorado for their assistance with the critique of the DOI regulations.

[17 ELR 10434]

The resources which have required ages for their accumulation, to the intrinsic value and quality of which human agency has not contributed, [for] which there are no known substitutes, must serve as the welfare of the nation. In the highest sense, therefore, they should be regarded as property held in trust for the use of the race rather than for a single generation and for the use of the nation, rather than for the benefit of the few individuals who may hold them by right of discovery or by purchase.¹

In enacting the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA),² Congress created broad causes of action for federal and state governments as trustees of natural resources. In general, government trustees may recover against polluters whenever releases of hazardous substances have injured natural resources. Congress intended wide-ranging, comprehensive relief to protect the environment and to compensate the public.

The Department of the Interior's (DOI's) new Natural Resource Damage Assessment Regulations,³ promulgated pursuant to CERCLA § 301(c), on the other hand, artificially limit the scope and nature of the state trusteeship role. They contravene the plain language of CERCLA and its legislative history, as well as the common law's broad state authority over natural resources.

Examining the pertinent CERCLA provisions, legislative history, applicable common law theories, and the DOI regulations, this article suggests the scope of states' natural resource public trusteeship under CERCLA and outlines serious shortcomings in the DOI regulations. Recognizing that many natural resource damage cases involve injuries both to public and private interests in natural resources, the article then identifies several policy issues raised by these overlapping interests.

CERCLA Recognizes State Trusteeship Over Natural Resources

Natural resource damage provisions are scattered throughout CERCLA.⁴ The two key provisions are § 101(16), which [17 ELR 10435] defines "natural resources," and § 107(f), which recognizes the state public trusteeship for natural resources and creates a federal cause of action for states.⁵ Section 101(16) provides:

"[N]atural resources" means 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 … any member of an Indian tribe.

Section 107(f) creates a federal cause of action for government (including state) trustees against responsible parties identified in § 107(a), and explicitly recognizes the common law powers and authorities states have over natural resources within their borders:

In the case of an injury to, destruction of, or loss of natural resources under subparagraph (C) of subsection (a) of this section liability shall be to the United States Government and to any State for natural resources within the State or belonging to, managed by, controlled by, or appertaining to such State …. Sums recovered by a State as trustee under this subsection shall be available for use only to restore, replace, or acquire the equivalent of such natural resources by the State. The measure of damages in any action under subparagraph (C) of subsection (a) shall not be limited by the sums which can be used to restore or replace such resources.

These CERCLA natural resource damage provisions are expansive. Section 107(f) further mandates that state government representatives "shall act on behalf of the public as trustee of such natural resources" and authorizes damages recovery for injury to natural resources "within the state." CERCLA's recognition of the state trusteeship is also confirmed in the National Contingency Plan (NCP) (CERCLA's implementing regulations): "States may act as trustee for natural resources within the boundary of a State or belonging to, managed by, controlled by, or appertaining to such state as provided by CERCLA."⁶

Thus, Congress explicitly recognized in §§ 101(16) and 107(f) the underlying state interest, as public trustee, in all natural resources "within the state" and authorized states to recover damages for injury to natural resources. CERCLA builds on the existing and long-established principle of state sovereignty, which is at the core of the common law concepts of state police power and state public trusteeship. The legislative history of CERCLA also shows a congressional intent to give a broad reading to the state's traditional public trusteeship.

CERCLA Builds on Common Law

The language of CERCLA § 107(f) recognizes the full scope of state powers and authorities developed by common law concepts of police power and the public trust. These common law doctrines evolved, recognizing the already broad authority states have over natural resources within state boundaries. For example, in State of Georgia v. Tennessee Copper Co.,⁷ United States Supreme Court Justice Oliver Wendell Holmes wrote that "the state has an interest independent of and behind the titles of its citizens, in all the earth and air within its domain. It has the last word as to whether its mountains shall be stripped of their forests and its inhabitants shall breathe pure air."⁸ Accordingly, as the Supreme Court later noted, the state may assert a claim to protect "the atmosphere, the water, and the forests within its territory, irrespective of the assent or dissent of the private owners of the land most immediately concerned."⁹ The powers of states, as sovereigns, have been further defined through the common law development of police power and public trust doctrines.

States enjoy extremely broad authorities under the umbrella of state police powers. States exercise police power for the protection of public health and welfare¹⁰ pursuant to the powers reserved to states by the Tenth Amendment to the United States Constitution. Through the police power a state may regulate the release of contaminants into the air,¹¹ protect the quality of water,¹² control land use through zoning regulations, regulate storage and disposal of solid and hazardous substances,¹³ and protect the public interest in wildlife.¹⁴

The public trust doctrine has its origins in ancient common law. During its early development the doctrine was used to retain fisheries and land under navigable waters [17 ELR 10436] in trust for the use and benefit of the public.¹⁵ The general scope of the doctrine is well articulated in the seminal United States Supreme Court case of Illinois Central Railroad Co. v. Illinois:¹⁶

That the state holds the title to the lands under the navigable waters of Lake Michigan, within its limits, in the same manner that the state holds title to soils under tide water, by common law, we have already shown … it is a title held in trust for the people of the state, that they may enjoy the navigation of the waters … and have liberty of fishing therein…. The trust devolving upon the state for the public, and which can only be discharged by the management and control of property in which the public has an interest, cannot be relinquished by a transfer of the property. The control of the state for the purposes of the trust can never be lost.¹⁷

More recent cases have extended the trust to national parks¹⁸ and have recognized that the trust is active, not passive, and imposes a responsibility on states to preserve and promote the trust corpus.¹⁹

Despite the broad authorities conferred by police power and the advances in the application of the public trust doctrine in environmental contexts, these doctrines are merely part of the scope of responsibility imposed on states, as public trustees, by CERCLA. These common law doctrines have developed differently in each state, and there is no evidence that CERCLA intended to recognize these differences. Moreover, the public trust doctrine speaks in terms of duties, not natural resource damages. CERCLA extends the public trusteeship obligation beyond protection of soils, navigable waters, parks, and wild animals to all natural resources within the state.

Legislative History Shows Congress Intended a Broad State Trusteeship

Several themes in CERCLA's legislative history show that Congress intended a broad scope for state trusteeship. First, Congress determined the natural resource provisions of CERCLA are necessary because traditional common law tort theories do not adequately address the problems caused by the release of oil or hazardous substances, and do not adequately redress the victims of such releases.²⁰ Second, "[t]he manufacture, use, transportation, treatment, storage, disposal, and release of hazardous substances are ultrahazardous activities."²¹ Third, all costs of environmental damage caused by hazardous substance or oil spills or incidents shall be borne by responsible parties.²²

In addition, CERCLA's congressional hearings are filled with testimony that the natural resource damage provisions should measure society's full loss from damaged or destroyed natural resources, not just damages capable of market valuation.²³ This broader concept is reflected in CERCLA § 301(c)(2), which requires damage assessment procedures to identify the extent of short- and long-term, direct and indirect injury, destruction, or loss. Thus, Congress explicitly stated that recoverable injuries were not limited solely to use or market value but also indirect injury (e.g., the intrinsic value of a natural resource). Comments also urged that the legislation shift the burden of any such losses from victims to responsible parties, consistent with concepts of strict liability.²⁴

The congressional deliberations emphasize, time and again, the severity and magnitude of the natural resource damages caused by the release of oil or hazardous substances.²⁵ Indeed, Congress recognized that damage to certain natural resources would constitute a loss to the entire nation.²⁶ In light of these expressions of concern, it is not surprising that Congress granted broad authority to states (and federal officials) to address the problem.

Despite this broad congressional mandate of CERCLA and states' traditional common law foundation, the DOI regulations fail to recognize the breadth of state authority and responsibility.

The DOI Regulations

Pursuant to CERCLA § 301(c), the Department of the Interior promulgated natural resource damage assessment regulations on August 1, 1986, effective September 2, 1986.²⁷ The DOI regulations establish methodologies for assessing damages for injury to, destruction of, or loss of natural resources resulting from a release of oil or hazardous substances. Their procedures are not mandatory although they must be used by federal officials acting as trustees to obtain the rebuttable presumption offered by CERCLA § 107(f)(2)(C).²⁸ That section provides that a damage assessment performed consistent with DOI regulations "shall have the force and effect of a rebuttable presumption on behalf of the trustee in any administrative or judicial proceeding."²⁹ However, even with the rebuttable [17 ELR 10437] presumption, the burden of proof in a natural resource damage case (unlike a "cost recovery" case) will be on the government.

The DOI regulations specify the procedures for determining "proper" compensation to the public for injury to natural resources. The DOI regulations include "Type A" procedures³⁰ (simplified, standard procedures for minor releases) and "Type B" procedures (to be applied on a case-by-case basis in connection with more complex response actions).³¹

In CERCLA § 301(c), Congress directed DOI to specify for the Type B regulations:

Alternative protocols for conducting assessments in individual cases to determine the type and extent of short-and long-term injury, destruction, or loss. 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, and ability of the ecosystem or resource to recover.

In general terms, a Type B natural resource damage assessment includes three principal steps: (1) establishing that an injury has occurred and that the injury results from a discharge or release of oil or hazardous substance; (2) quantifying the effects of the discharge or release on the services provided by the injured resource; and (3) determining the damage.³²

The regulations make useful contributions to damage assessment practice. For instance, the rules provide a logical step-by-step procedure for damage assessments, with opportunity for participation by all interested parties, and they attempt to coordinate damage assessments with the Remedial Investigation and Feasibility Study process. Fundamentally, however, the DOI regulations manage a very difficult and complex task by simplification and arbitrary limitation. The regulations fail to apply and "identify the best available procedures" to determine and measure damages for injury to natural resources. They also contain several incorrect economic concepts that, if applied, will lead to significant bias in the final damage valuation.

Limited Definition of Injury

The DOI regulations state flatly that "the criteria for what constitutes a measurable injury are strict."³³ In several instances, these strict criteria are substantially more limiting than Congress intended or required.

The DOI regulations focus on the physical, chemical, or biological property of the resource to define an injury before damages are recoverable.³⁴ The regulations define injury as "a measurable adverse change in the chemical or physical quality or viability of a natural resource."³⁵ This definition lays the foundation for the narrow measure-of-damages procedures that follow in the regulations.

There is no question that, in the first instance, a resource's physical, chemical, or biological property must be affected by the release of a hazardous substance for there to be an "injury." However, the injury to the service provided to a private owner or the public by the resource may be different than, and continue long after, the physical, chemical, or biological "injury" has abated.

For example, a potential drinking water supply such as a groundwater aquifer that is contaminated by a released hazardous substance can, theoretically at least, be restored to its natural or baseline level; i.e., to the point where there is no "injury" to its physical, chemical, or biological properties. However, local residents may not want to use the previously contaminated groundwater aquifer as a source of drinking water until some time after the physical, chemical, or biological "injury" to the resource has abated. The citizens' unwillingness to use the previously contaminated resource could result from lack of confidence in monitoring and testing procedures and test results, or the citizens' need to psychologically "readjust" to the restored resource.

Thus, while the direct "injury" to the physical, chemical, and biological property of the resource as defined in the DOI regulations has abated, the indirect injury to the resource, i.e., the service flowing from the resource (use as a drinking water source) remains and, therefore, the public interest is damaged. The DOI definition of injury ignores, first, congressional intent that the regulations identify procedures to determine "indirect injury," and, second, the fundamental concept of natural resource economics that injury (and ultimately the damages recoverable) occurs when the release of a hazardous substance reduces the services derived by the public from the resource.³⁶ Thus, the first step of DOI's damage assessment procedures lays a narrow, limiting foundation for the measurement steps that follow.

Damage Measurement Procedures Ignore Congressional Intent

It is clear that Congress sought to allow state trustees to recover for all consequences, direct and indirect, of hazardous substance releases into the environment and that costs be borne by responsible parties.³⁷ In no areas have the DOI regulations ignored this congressional decision more than in the damage determination and measurement phases of the assessment. In particular, the requirements that: (a) restrict measurements of natural resource damages to resources that have "committed uses," (b) limit damages to cost of restoration or lost value of "public" services, (c) limit use of intrinsic values only as a substitute for use value rather than as an additional category of value, (d) set an arbitrary and mandatory preference among measurement methods and (e) fail to include a flexible measure of damages for "special resources," will significantly bias the damages recoverable by state and federal trustees.

Committed uses: Section 11.84(b) limits natural resource damages to injured resource services having [17 ELR 10438] "committed" uses, which is defined in § 11.14(h) to mean "either a current public use; or a planned public use for which there is a documented legal, administrative, budgetary, or financial commitment established before the discharge … is detected."³⁸ This exclusion is arbitrary and, at the outset, undermines the fundamental concept on which damage recovery is based — that natural resources are held in trust by and for the public — and has no basis in economic theory.

Many cases of natural resource services being used by the public occur spontaneously, without prior government action or investment. For example, recreational use may occur in and around a stream where no public funds have been committed to build public access points, or groundwater may be withdrawn where the state does not regulate such use. An example of a likely, and illogical, application of this exclusion would be a stream so degraded, for a long period of time, to be unsuitable for recreational use. Certainly, no government would make a public commitment to a stream so seriously degraded when no public use appears feasible. Since no planned or beneficial use of the stream is contemplated, a state could not, under the DOI regulations, recover damages for the serious injury to this resource. Thus, the most seriously degraded resources, the very resources that Congress intended, under CERCLA, to "restore, replace, and rehabilitate," are excluded from damage recovery.

Public uses: The DOI regulations limit the natural resource damages recoverable by a government to the cost of restoring a public service of the damaged resource or the lost value of the public use, whichever is less.³⁹ This restriction limits recovery of damages by incorrectly requiring that a public use of the resource exist as a precondition to recognizing a loss to society. Adherence to the DOI regulations would not allow recovery of damages for injury to the underlying public interest in the resource where there was no prior public use or service. For example, the DOI regulations would not allow recovery for damages to the underlying public interest, such as lost future development or lost tax revenues, if a parcel of land was permanently contaminated but had no prior public use or service.

The regulations provide no definition to distinguish public and private uses. Private uses are assumed to be "essentially synonomous with for-profit uses."⁴⁰ The example provided points out the theoretical flaw in DOI's rationale and suggests an additional downward bias that will result from following the DOI regulations. The regulations contrast payments by individuals to a private boat rental firm (a "private" use) to fees paid to a public agency for access to a lake (a "public" use). A government trustee may not have a cause of action to recover damages incurred by a boat rental firm resulting from contamination of a lake. However, the loss incurred by the boat rental firm may accurately reflect a portion of the amount the public is willing to pay to restore the lake. To exclude these "forprofit" uses is to arbitrarily give a downward bias to the public's natural resource damages. It is axiomatic that all damages are ultimately "private" since the public can have an interest in, but only individual members of the public can act or use, that resource. It is the combined use, public and private, that truly measures the willingness to pay to restore an injured natural resource.

Intrinsic values: In one of the most crucial limitations on state trustees, the DOI regulations allow intrinsic values only as a substitute for use value, not as an additional category of value. Lost use values reflect the diminution in use of services from the resource, e.g., lost fisherman days. Lost intrinsic values measure values lost, not from reduced use, but from the knowledge that those services have been injured. A natural resource may have intrinsic value because options to use the resource in the future are available (option value), because the mere existence of the resource has value to non-users (existence value), or because the resource will be available to succeeding generations (bequest value). These intrinsic values are diminished or lost when the natural resource is injured. Thus, while local residents and tourists may lose the use of a resource because of a leaching tailings pile, the residents of the state or region who are familiar with the tailings pile problem may lose one or more intrinsic values.

The DOI regulations attempt to create a relationship between use and intrinsic values where none exists. Section 11.83(d)(5)(ii) states: "The use of contingent valuation methodology to explicitly estimate option and existence values should be used only if the authorized official determines that no use values can be determined." Thus, DOI interprets CERLCA to limit damages to use values except for "those extraordinary circumstances when the authorized official cannot determine a use value for the resource."⁴¹ If state trustees follow DOI's regulations they would, in most instances, ignore intrinsic values — a fundamental category of damages for public trustees.

Arbitrary preference among damage measurement methods: The DOI regulations impose a mandatory preference for estimating the value of resource service use.⁴² The "market price" method must be used where markets exist and they are reasonably competitive; the "appraisal" method is required where sufficient data exist and the market price method is not appropriate.⁴³

Market price methodology, when used to value lost natural resource service use, fails to measure the loss in consumer willingness to pay for resource restoration. This is measured by the amount the public is willing to pay for an uninjured resource that exceeds the willingness to pay for the degraded service: market price generally will not illuminate this value. In addition, intrinsic values, such as the desire to pass on a clean environment to succeeding generations, have no market. The market price method will not ascertain these values although the public's willingness to pay to restore a resource necessarily includes an intrinsic value component.

The market price method also assumes that reasonable competition (i.e., a large number of sellers) in the natural resources market exists, which is highly unlikely. Natural resources such as a trout fishing stream are typically unique, scarce, and not reproducable. Unlike industrial products, there are usually no other producers or competitors.

[17 ELR 10439]

Special resources: Another of the more egregious problems in the DOI regulations is DOI's failure to include a flexible measure of damages for "special resources," despite DOI's finding that

if agencies were held to the strict rule of the lesser of: restoration or replacement costs; or diminution of use values, some of these resources could be left unrestored or unreplaced to the level of their original protection, thereby being contrary to the Congressional or state legislature's intent.⁴⁴

In order to alleviate this problem, the draft regulations had incorporated a category of "special resources" for which the strict compensation rule would not apply. However, in the final DOI regulations the "special resource" exception was deleted. Yet, the DOI regulations erroneously conclude that "the rule follows the common law principle that the injured parties should be made whole again."⁴⁵ DOI recently reaffirmed its decision not to provide special attention for unique resources.⁴⁶

DOI Regulations Leave Public Trust Unprotected

The DOI regulations, in effect, narrow the focus of what trustees may look at in assessing natural resource damages. Consequently, strict compliance with the DOI procedures may not fully protect the natural resources trust corpus. Since the DOI regulations are optional, each state must determine whether the benefit of the rebuttable presumption warrants the probable result of lower total damage recoveries. In general, use of the DOI regulations is not recommended. As a viable alternative, state trustees may forego the rebuttable presumption, apply the more flexible, workable procedures set out in the DOI regulations, and implement alternative injury identification and measurement methodologies. For example, where the case involves injury to "special resources," the provisions in the proposed DOI regulations could be implemented. In this way, states can utilize the acceptable portions of the regulations to avoid "reinventing the wheel," but at the same time, ensure full protection of state natural resources and the public trust by obtaining a complete damages recovery.

Fundamental Policy Issues in CERCLA Damage Provisions

The natural resource damage provisions of CERCLA fundamentally affect the relationship between individual citizens and their federal and state governments. Although there are many policy considerations embodied in the statute and the DOI regulations, one major policy issue and one enforcement issue stand out. First, the statutory creation of a government trusteeship over the country's natural resources raises the fundamental, perhaps constitutional, issue of whether there is a recoverable public interest in privately owned property. Second, as a matter of statutory construction, CERCLA arguably authorizes states to seek recovery for all injured interests, public and private, in natural resources provided steps are taken to avoid constitutional prohibitions.

Public and Private Interest

The broad public trusteeship created in CERCLA by Congress, having as its roots the traditional common law police power and public trust authorities of the states, establishes at minimum a public interest in all natural resources. This public interest underlies all other interests in the resource, including private ownership.

CERCLA establishes one of the first damage schemes not based solely on traditional ownership theories. In determining the right to recover for the public interest, ownership, whether private or public, is only one factor to be considered. It is not determinative of the right of the state to recover for injury to the public interest. As indicated above, states have an interest in all natural resources within the state, including those privately owned. Thus, an exclusive private "ownership" — one that ignores the underlying public interests — does not exist under the common law or the policy established by Congress in CERCLA. Private property owners acquire a "bundle of rights" or collection of interests in property,⁴⁷ but this "bundle" does not comprise every conceivable interest in the owned natural resource.

The relationship between public and private interests in natural resources can be best explained by example. There is clearly a public interest in a resource, such as land, owned by the state. If the land is injured by the release of a hazardous substance, CERCLA creates a statutory cause of action for states to recover for the injury to the public interest. If this same state-owned land is leased to a private person to graze cattle, that person has a private interest in the public land. If the land is so contaminated as to be unsuitable for grazing, the leasehold interest has been injured. The injury to both interests can, theoretically, be valued and damages measured.

Even if the land is privately owned, the public interest still exists. If a privately owned wooded tract is badly contaminated, the public can be damaged by the loss of this tract's contributions to the ecosystem as a whole. The tract may have provided habitat for wildlife, groundwater recharge for the local aquifer, and erosion control, for example. While the public interest may be difficult to ascertain and the injury to the resource complicated to measure, the public interest remains. That interest may be in future government-planned use through zoning of the now-injured land for development, or the interest in a visual amenity associated with the land, or the desire of the citizens of the region to maintain a contamination free environment for their grandchildren. If the privately owned land is contaminated, these and perhaps other public interests have been injured.

Further, each natural resource is different, so that the public/private relationship may turn on different issues. For example, air cannot be privately owned — contamination of the air clearly injures the overriding public interest in clean air. There is an overlap of private interests — each individual's health — but in air there is no private ownership interest. Water is not "owned" in the sense that land is owned ("ownership" of water is the right to use), but it also has a public interest element. Even states that apply the riparian doctrine retain a public interest in water and, under common law, state laws may prohibit unreasonable [17 ELR 10440] use to the detriment of downstream users. Under CERCLA, injury to this public interest is compensable to the public. The constitution, laws, and policy of each state will determine how the public and private interest in natural resources are defined.

State Recovery for Injury to Private Interest

The underlying concepts and congressional intent of the CERCLA damage provisions — that a state is trustee for all natural resources within its boundaries and that common law tort theories are inadequate to redress hazardous substance injuries — raise the potential for states to recover damages for injury to all interests, public and private, in natural resources. There may also be sound public policy and economic reasons for such an enforcement policy, or for state legislatures to consider natural resource "compensation funds" to enforce on behalf of and compensate individuals who have natural resources that have been injured by the release of hazardous substances.

Although Congress recognized that common law theories are inadequate to redress hazardous substance injuries, private citizens cannot use the natural resource damage recovery provisions of CERCLA. Instead, they must rely on tort theories.⁴⁸ Moreover, it is very likely that private citizens may find the costs of litigating complex technical cases, in light of traditional causation and burden of proof problems, to be prohibitive. Privately litigated natural resources cases simply may not be practical in many cases.

Further, if a private litigant does recover damages, states have no assurance that the individual will restore or replace the injured or destroyed resources, since private litigants are not so constrained by CERCLA. The trust corpus is not adequately protected nor is the trust made whole, if natural resource damages recovered by individuals are not used to restore or replace the injured or lost natural resources. Consequently, states may decide to recover under CERCLA for all natural resource damages, public and private, in one cause of action.

However, if recovery for both public and private interest is sought under CERCLA, a compensation system must be in place⁴⁹ to avoid statutory or constitutional challenges such as double recovery, and taking or due process violations. Some may argue that since CERCLA §§ 107(f) and 114(b) prohibit "double recovery," the state cannot sue for both public and private injuries. However, these sections do not prohibit two parties suffering injuries to different interests, public and private, from each recovering for such injuries; there is no double recovery. That states and private litigants can have different interests in the same natural resources is beyond dispute. CERCLA simply prohibits double recovery by the same government for the same interest in a natural resource. Double recovery can be avoided by implementation of a compensation scheme that would necessarily preclude private claims.

If the state precludes individual litigants from seeking compensation, this may amount to a taking of property.⁵⁰ Similarly, where states seek recovery of all natural resource damages, individuals who have suffered injury, destruction, or loss of "private" interest in natural resources are denied their day in court. These arguments are resolved through a compensation mechanism.

There are at least two viable compensation mechanisms: a court imposed constructive trust, or a legislatively created administrative compensation program. A compensation program would consist of funds recovered by the state for private interest in natural resource damage actions. Money in the fund would be equivalent to the pecuniary private interest in the injured natural resources. The state would administer the fund to allow claimants to seek compensation for damage suffered by them for the release of oil or hazardous substances. Such fund mechanisms have been statutorily established by several states.⁵¹

Conclusion

The broad language in CERCLA § 101(16) defining natural resources and in the public trustee provision of CERCLA § 107(f), together with the absence of limiting statutory language or legislative history, recognizes the expansive authority of states over all natural resources within their boundaries. Against a backdrop of common law principles, CERCLA calls for an active role for state public trustees, full payment by responsible parties for all consequences of their actions, and natural resource damages in an amount sufficient to compensate society for the full extent of its loss.

In contrast, the DOI regulations narrowly interpret the state public trusteeship. In an effort to avoid the monetary impacts and burden-shifting effect of a true strict liability application, the regulations misguidedly attempt to limit liability for natural resources damages by application of medieval property principles. Protection of the natural resource trust corpus and fulfillment of states' obligations as natural resource public trustees preclude a strict application of these optional DOI regulations.

CERCLA's natural resource damage provisions establish a public interest in all natural resources in the United States. The creation of a statutory public trusteeship over the nation's natural resources fundamentally affects an individual citizen's ownership of property. Enforcement of the public trust will determine whether we as a nation regard our natural resources "as property held in trust for the use of the race rather than for a single generation and for the use of the nation, rather than for the benefit of a few individuals."⁵²

1. REPORT OF THE NATIONAL CONSERVATION COMMISSION, S. DOC. NO. 676, 60th Cong., 2d Sess. 109 (1909).

2. 42 U.S.C. §§ 9601-9675, ELR STAT. 44001.

3. 43 C.F.R. § 11 (1986). Proposed changes appear at 52 Fed. Reg. 12886 (1987).

4. On CERCLA's natural resource damage provisions generally, see Atkeson et al., An Annotated Legislative History of the Superfund Amendments and Reauthorization Act of 1986 (SARA), 16 ELR 10360, 10365 (1986); Breen, CERCLA's Natural Resource Damage Provisions: What Do We Know So Far?, 14 ELR 10304 (1984); and Yang, Valuing Natural Resources Damages: Economics for CERCLA Lawyers, 14 ELR 10311 (1984). Local governments may also be able to serve as natural resource trustees. See Maraziti, Local Governments: Opportunities to Recover for Natural Resource Damages, 17 ELR 10036 (Feb. 1987).

5. Other provisions of CERCLA pertaining to natural resources or natural resource damages include: § 104(b)(2), 42 U.S.C. § 9604(b)(2), ELR STAT. 44012 (requires notification of federal and state natural resource trustees of any natural resource damages discovered during response investigations); § 107(a), 42 U.S.C. § 9607(a), ELR STAT. 44024 (identifies who is liable and for what they are liable); § 107(c), 42 U.S.C. § 9607(c), ELR STAT. 44024 (establishes $50,000,000 liability limit, per responsible party, per release or incident, with certain exceptions); § 107(j), 42 U.S.C. § 9607(j), ELR STAT. 44027 (provides that damages caused by federally permitted releases are not recoverable under CERCLA); § 111, 42 U.S.C. § 9611, ELR STAT. 44034 (pertains to uses of the fund); § 113(g)(1), 42 U.S.C. § 9613(g)(1) (statute of limitations for damage claims); and § 301(c), 42 U.S.C. § 9651(c), ELR STAT. 44067 (requires that natural resource damage assessment regulations be promulgated). In addition, Internal Revenue Code § 9507(c) added by the 1986 CERCLA amendments effectively prohibits use of the Superfund to administratively pay natural resource damage claims.

6. 40 C.F.R. § 300.73 (1986) (emphasis added).

7. 206 U.S. 230 (1907). See also Alfred L. Snapp & Son, Inc. v. Puerto Rico, 458 U.S. 592, 604, 102 S. Ct. 3260, 3267 (1982).

8. 206 U.S. at 237 (1907).

9. Hudson County Water Co. v. McCarter, 209 U.S. 349, 355 (1908).

10. Similarly, the common law theory of parens patriae is illustrative of states' power and authority to protect the interests of its citizens. Through parens patriae suits, states have sought redress for injuries to "quasi-sovereign" interests. These "quasi-sovereign" interests include state interest in its general economy or environment (Late Corporation of the Church of Jesus Christ of Latter-Day Saints v. United States, 136 U.S. 1, 56 (1890)); interstate water management (Wyoming v. Colorado, 286 U.S. 494, 509 (1932)); pollution-free interstate waters (State of Missouri v. State of Illinois, 180 U.S. 208, 241, (1901)); protection of the air and earth from interstate pollutants (State of Georgia v. Tennessee Copper Co., 206 U.S. 230, 238 (1907)); and the general economy of the state (State of Georgia v. Pennsylvania Railroad Co., 324 U.S. 439, 447 (1945), reh'g denied, 324 U.S. 890 (1945)).

11. See, e.g., COLO. REV. STAT. §§ 25-7-101-505 (1982).

12. See, e.g., COLO. REV. STAT. §§ 25-8-101-703 (1982 & 1986 Supp.).

13. See, e.g., COLO. REV. STAT. §§ 25-15-101-313 (1982 & 1986 Supp.); and COLO. REV. STAT. §§ 30-20-101-118 (1986).

14. "It is the policy of the State of Colorado that the wildlife and their environment are to be protected, preserved, enhanced, and managed for the use, benefit, and enjoyment of the people of this state and its visitors." COLO. REV. STAT. §§ 33-1-101(1) (1986 as amended).

15. Sax, The Public Trust Doctrine in Natural Resource Law: Effective Judicial Intervention, 68 MICH. L. REV. 471 (1970); Yannacone, Cohen & Davidson, Environmental Rights and Remedies 1, § 2:3 (1972).

16. 146 U.S. 387 (1892).

17. 146 U.S. at 452 (emphasis added).

18. Sax, supra n. 15, at 485; Davenport v. Buffington, 97 F. 234 (8th Cir. 1899).

19. See, e.g., National Audubon Society v. Superior Court of Alpine County, 33 Cal. 3d 419, 658 P.2d 709, 724-725, 13 ELR 20272 (1983), cert. denied, 464 U.S. 977, 104 S. Ct. 413 (1983); City of Milwaukee v. State, 193 Wis. 423, 214 N.W. 820 (1927).

20. H.R. REP. NO. 172, part 1, 96th Cong., 1st Sess. 17 (1979); S. REP. NO. 848, 96th Cong., 2d Sess. 84 and 233 (1980).

21. 126 CONG. REC. S14972 (daily ed. Nov. 24, 1980) (statement of Senator Tsongas). See also id. at S14973 (statement of Senator Mitchell).

22. Id. at S14972 (statement of Senator Tsongas).

23. See, e.g., OIL AND HAZARDOUS SUBSTANCES LIABILITY AND OIL POLLUTION LIABILITY: EXCERPTS FROM HEARINGS ON H.R. 29 AND H.R. 85 BEFORE THE SUBCOMM. ON COAST GUARD AND NAVIGATION OF THE HOUSE COMM. ON MERCHANT MARINE AND FISHERIES, 96th Cong., 1st Sess. 119 (1979) (statement of James N. Barnes, Center for Law and Social Reform).

24. Id. at 213, 214, n. 23 (statement of Sarah Chasis, National Advisory Committee on Oceans and Atmosphere).

25. See, e.g., supra nn. 23 and 24.

26. S. REP. NO. 848, 96th Cong. 2d Sess. 84 (1980).

27. 43 C.F.R. § 11 (1986). Proposed changes appear at 52 Fed. Reg. 12886 (1987).

28. 43 C.F.R. § 11.10; see also Preamble Discussion at 51 Fed. Reg. 27694, 27697, 26698 (1986).

29. 42 U.S.C. § 9607(f)(2)(C), ELR STAT. 44026. Former CERCLA § 111(h)(2) has been repealed. On the role of the rebuttable presumption, see Meneffee, Recovery for Natural Resource Damages Under Superfund: The Role of the Rebuttable Presumption, 12 ELR 15057 (1982). In their current form, the DOI Regulations do not afford a rebuttable presumption to state natural resource damage public trustees. See, e.g., 43 C.F.R. §§ 11.10 and 11.11; see also Preamble at 51 Fed. Reg. 27694 (1986). However, on April 17, 1987, DOI proposed amendments to modify the regulations to conform with the changes enacted in SARA that extend the rebuttable presumption to state natural resource public trustees. 52 Fed. Reg. 12886 (1987). The proposed regulatory amendments extend the rebuttable presumption to assessments performed by state trustees. Id.

30. 52 Fed. Reg. 9042 (1987).

31. 51 Fed. Reg. 27674 (1986).

32. Id. at 27679 (1986).

33. Id. 27682 (1986).

34. 43 C.F.R. § 11.14(v) (1986). See also Preamble at 51 Fed. Reg. 26679 (1986), and 43 C.F.R. § 11.14 (nn) (1986).

35. 43 C.F.R. § 11.14(v) (1986). See also Preamble at 51 Fed. Reg. 26679, 27682, and 27683 (1986).

36. 42 U.S.C. § 301(c).

37. See, e.g., 126 CONG. REC. S14973 (daily ed. Nov. 24, 1980) (statement of Senator Mitchell).

38. 43 C.F.R. § 11.14(h) (1986).

39. 43 C.F.R. §§ 11.81(a), 11.83(b) (1986); 51 Fed. Reg. 27696 (1986).

40. 51 Fed. Reg. 27969 (1986).

41. Id. at 27719 (1986).

42. 43 C.F.R. §§ 11.83, 11.83(c), 11.83(d) (1986).

43. 43 C.F.R. §§ 11.83(c), 11.83(d) (1986).

44. 51 Fed. Reg. 27724 (1986).

45. Id. at 26688.

46. 52 Fed. Reg. 12886 (1987).

47. Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1011-1012, 14 ELR 20539 (1984).

48. Only a government may use the natural resource damage provisions of CERCLA § 107(f). However, private litigants may seek damages pursuant to "any other State or Federal Law." CERCLA § 114(b), 42 U.S.C. § 9614(b), ELR STAT. 44043.

49. A constructive trust remedy could be imposed temporarily while compensation legislation is enacted. See, e.g., Liken v. Shaffer, 141 F.2d 877 (8th Cir. 1944), cert. denied sub nom. Wilson v. Shaffer, 323 U.S. 756 (1944).

50. Litigation by the government will not necessarily preclude a private litigant from vindicating an individual wrong. Southwest Airlines Co. v. Texas International Airlines, Inc., 546 F.2d 84, 98 (5th Cir. 1977).

51. See, e.g., N.J. STAT. ANN., Lt. 58:10-23:11a-g (1982) (establishes compensation fund for persons damaged by discharge of oil or hazardous substances); ME. REV. STAT. ANN. tit. 38, §§ 541-560 (1969) (establishes fund to compensate persons suffering damages to real estate, personal property or loss of income as a result of oil discharge); 3 MINN. STAT. §§ 115B.26-115B.37 (1986) (establishes a hazardous substances injury compensation fund).

52. REPORT OF THE NATIONAL CONSERVATION COMMISSION, supra n. 1.