Natural Resource Damages in the Wake of the Ohio and Colorado Decisions: Where Do We Go From Here?

Erik D. Olson

Editors' Summary: Large oil spills during 1989 in Alaska and elsewhere focused attention on the government's authority to recover compensation for natural resource damages. As if oil spills were not enough, in July 1989 the issue became hotter yet, when two decisions of the Court of Appeals for the District of Columbia overturned key elements of the Interior Department's regulations for placing a value on the natural resources damaged. The court's decisions substantially increased corporations' liability for natural resource damages under CERCLA and the FWPCA, striking down several parts of the Interior Department rule that had the effect of biasing the measure of damages downward. Now, natural resource damage liability can easily be of the same magnitude as the more widely appreciated liability for response costs.

In this Article, the author, one of the lawyers who sued the Interior Department concerning the regulations, reviews what the court decisions mean in practical terms. He analyzes the administration of the natural resource damage program to date and recommends steps to improve it for the future.

Erik D. Olson is Counsel for the National Wildlife Federation's environmental quality program in Washington, D.C. He co-represented the NWF, other environmental groups, and states in Ohio v. United States Department of the Interior and Colorado v. United States Department of Interior, and he represented NWF in In Re Acushnet River and New Bedford Harbor, cases described in this Article. He and the Trial Lawyers for Public Justice recently filed suit on behalf of NWF, the Wildlife Federation of Alaska, and the Natural Resources Defense Council for damage to natural resources from the Exxon Valdez oil spill in National Wildlife Federation v. Exxon Corp. He previously was an attorney with the U.S. Environmental Protection Agency's Office of General Counsel. He thanks Leonard Schroeter, Jane Rissler, and Eric Glitzenstein for their comments on previous drafts of the Article. The views expressed in this Article are those of the author personally, and do not necessarily represent the views of the National Wildlife Federation or any other organization.

[19 ELR 10551]

Under § 107(f) of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA)¹ and § 311(f) of the Federal Water Pollution Control Act (FWPCA),² authorized representatives of state governments, the federal government, and Native American tribes are named "trustees" for natural resources. The trustees are to sue polluters to recover damages for natural resources destroyed or injured by oil spills and hazardous substance releases. In addition, CERCLA § 301(c) requires regulations to be developed to ease the trustees' burden in assessing the value of injured or destroyed resources.

In studying the intricacies of these legal provisions, it is easy to lose sight of their profundity. Congress has unambiguously told government officials that they have a duty to recover from polluters for the devastation pollution wreaks on fish and otters plying the streams and seas, birds on the wing, and teeming wildlife of the meadows and forests. In view of the gripping photographs of some of the more than 900 oil-soaked dead sea otters, tens of thousands of lifeless sea birds, and over 130 adult bald eagles that have been found killed by the Exxon Valdez spill in Alaska,³ the importance of these legal provisions would be lost on few U.S. citizens.

This Article discusses how these far-sighted legal provisions have worked in practice, or rather, how they have not worked. The Article then analyzes recent court decisions that have mandated an overhaul of the program. Finally, the Article concludes that there is now a real opportunity to use these provisions to their full potential.

Poor Progress in the Natural Resource Damage Program

Regrettably, with few exceptions, the natural resource damage provisions to date have been doing little more than gathering dust. Few natural resource damage assessments [19 ELR 10552] have been done, and even fewer damage claims have been collected. The fundamental reasons for this can be summarized in four basic points:

1. Interior's Rules. The Interior Department's damage assessment rules — which Congress intended to simplify and streamline trustee claims — so undervalue resources and so complicate recovery that to our knowledge they have never been used to file a claim, and they have discouraged trustees from bringing claims. However, the D.C. Circuit's recent decisions striking down Interior's rules, and Interior's recent announcement that it will not appeal those court decisions, offer a unique opportunity to bring the program to its feet and to revise the rules to make them accord with Congress' intent to streamline trustee recovery.

2. Lack of Assessment Money. The 1986 CERCLA amendments cut off the availability of damage assessment funds from the Superfund, and generally no money is being made available for oil spill or other damage assessments from other sources. Therefore, trustees cannot assess the degree to which natural resources have been harmed, so they often cannot file strong claims against polluters. Congress could readily solve this problem in the oil spill legislation now pending enactment by making CERCLA's Superfund and the new oil spill fund available to pay for damage assessments.

3. Trustees' Ignorance and Apathy. The management of the Department of the Interior, and that of most other federal trustees, has demonstrated remarkable apathy towards the program, giving it little or no budget or management priority. similarly, in part due to the vacuum in federal interest and leadership, and in part because most trustees seem uncomfortable with the unfamiliar task of assessing damage done by toxics, only a handful of states have vigorously pursued their own natural resource damage claims. However, the program's recent notoriety as a result of the D.C. Circuit's opinions and the Exxon Valdez spill, combined with the court-ordered overhaul of the Interior Department assessment rules, could change that apathy. Ultimately, citizens and environmental groups must be more involved in forcing natural resource restoration, through public pressure and as "private attorneys general."

4. The Environmental Protection Agency's (EPA's) and Justice Department's Insouciance. EPA and the Department of Justice (which in CERCLA cases views EPA as its primary client) traditionally have given little attention to natural resource damage issues or to trustees. However, recent court decisions, the adoption in 1986 of CERCLA § 104(b)(2) mandating coordination of damage assessments with cleanup activities, and the new management teams being installed at EPA, the Justice Department, and the Interior Department, create a novel opportunity to invigorate this program.

The shocking lack of progress in the natural resource damage program is especially troubling because CERCLA's three-year statute of limitations for filing natural resource damage claims — which Congress extended in 1986 in part because of poor government performance in assessing and claiming damages — soon could again cut off CERCLA trustee recovery at many sites.⁴ If damages are not assessed at thousands of sites nationwide before the statute of limitations runs out, CERCLA claims may be forever lost.

Just a small investment in an assessment at many sites would yield a many-fold larger damage recovery, but trustees generally do not have the money to do the assessments. For example, at the National Oceanic and Atmospheric Administration's (NOAA's) top priority pollution site, off the coast of Los Angeles, an assessment costing just $ 1-2 million would allow NOAA to file what is estimated to be up to an $ 80 million claim. But NOAA lacks the assessment money to develop the claim and may lose the claim because of the statute of limitations.

If the present course continues, claims against polluters across the country will be lost, and the taxpayer likely will be asked to foot the bill for the restoration of natural resources at hundreds of pollution sites. This is exactly the result Congress sought to avoid in adopting CERCLA's "polluter pays principle."

The Roots of the Natural Resource Damage Program

Under CERCLA § 107(a)(C),⁵ FWPCA § 311(f)(4) and (5),⁶ and several other federal environmental laws,⁷ state and federal government officials (and in some cases state subdivisions,⁸ Native American tribes,⁹ and individuals¹⁰) are authorized to recover from polluters for pollution-caused injuries to fish, wildlife, and other natural resources. Giving congressional recognition to the "public trust doctrine,"¹¹ the government and tribal officials are designated "trustees" for the natural resources under these laws.

The trustees, therefore, are vested with a heavy burden to protect the natural resources entrusted to their care. Presumably, the trustees' failure to perform their fiduciary duty to the environment is actionable by citizens, the beneficiaries of this congressionally-recognized public trust. For example, § 107(f)(1) of CERCLA¹² and § 311(f)(5) of the FWPCA¹³ both provide that state and federal officials "shall act on behalf of the public as trustee of [injured] natural resources to recover for" natural resource damages. The citizen suit provisions of these laws,¹⁴ administrative [19 ELR 10553] law principles, and mandamus law would be available to force reluctant trustees to perform these statutory duties. And of course, both CERCLA and the FWPCA specifically preserve the right of citizens to themselves resort to the courts under other provisions of law to sue polluters or otherwise assure the restoration and protection of the natural resources upon which they rely to sustain their livelihood or spirit.¹⁵ Indeed, under many state laws, polluters can be sued by citizens for injuries that toxic spills or releases have caused to natural resources.¹⁶

Conceptual Underpinnings

These legal provisions call to mind the aspiration, espoused so clearly by Justice William O. Douglas in his famous dissent in Sierra Club v. Morton, that trees and wildlife should be given standing to allow their protection by the courts.¹⁷ With the natural resource damage provisions, Congress has given new life to the public trust doctrine, without directly giving trees standing. Instead, under state and federal laws, humans are to act as stewards for the environment, or as trustees for those natural creatures and other parts of the environment injured by pollution, and to sue on their behalf. This is a major advancement in the law that had, until recently, received only sporadic attention from commentators.¹⁸

The CERCLA Natural Resource Damage Assessment Rules

CERCLA § 301(c)¹⁹ requires the President to issue regulations governing how trustees may assess damages to natural resources caused by releases of hazardous substances covered by CERCLA, or caused by oil and hazardous substance discharges covered by FWPCA § 311.²⁰ Trustees do not have to follow these regulations, but if they do they obtain a "rebuttable presumption" that the assessment is correct.²¹

CERCLA § 301(c)(2) requires two types of regulations. Rules under subparagraph (A), which came to be known as the "Type A" regulations, were to specify "standard procedures for simplified assessments requiring minimal field observation." The Type A rules were intended to govern "most minor" spills and releases.²²

Rules under subparagraph (B), which became known as the "Type B" regulations, are required by CERCLA to specify "alternative protocols for conducting assessments in individual cases to determine the type and extent of short and long-term injury, destruction, or loss." Congress intended that they "would be employed in large or unusually damaging" spills and releases."²³

In 1986²⁴ and 1987,²⁵ pursuant to a delegation from the President²⁶ and under a consent order deadline resulting from suits filed by the National Wildlife Federation (NWF), Public Citizen, Environmental Defense Fund (EDF), and certain states,²⁷ the Department of the Interior published the CERCLA natural resource damage regulations.²⁸

The Interior Department regulations were too stingy in their measure of damages,²⁹ and they were promptly challenged in the D.C. Circuit by a coalition of 10 states and the same three public interest groups that earlier sued to force their promulgation (NWF, EDF, and Public Citizen). The numerous suits filed ultimately were consolidated as two cases, those challenging the Type A regulations, and those challenging the Type B regulations. Oral argument on both cases was heard on February 22, 1989, and after the Exxon Valdez oil spill on March 24, 1989, the landmark D.C. Circuit decisions handed down in the cases on [19 ELR 10554] July 14, 1989, have raised natural resource damages to new prominence.

The D.C. Circuit Cases

Two separate decisions were handed down: Ohio v. United States Department of the Interior,³⁰ considering the Type B regulations, and Colorado v. United States Department of the Interior,³¹ considering the Type A regulations.

Ohio v. United States Department of the Interior: The Type B Regulations

The "Lesser of" Rule. Ruling on what the court labeled "the most significant issue in this case,"³² the D.C. Circuit struck down the Interior Department's rule limiting recovery by trustees to the lesser of: (a) the cost of restoring or replacing the equivalent of the injured resource, or (b) the lost use value of the resource.³³ The court found this provision "directly contrary to the clearly expressed intent of Congress."³⁴

The "lesser of" rule was the centerpiece of the regulations' undervaluation of natural resources. It would have limited trustee recovery, in most instances, to "lost use value," generally defined under Interior's rigid hierarchy of assessment methods as the market value of the resources. Thus, in most cases, the cost of restoring, replacing, or acquiring the equivalent of the injured natural resources (usually referred to collectively simply as "restoration") would not have been recovered.³⁵

The court stressed the "lesser of" rule's "enormous practical significance" by using an example reminiscent of the Exxon Valdez spill:

[I]magine a hazardous substance spill that kills a rookery of fur seals and destroys a habitat for seabirds at a sealife reserve. The lost use value of the seals and seabird habitat would be measured by the market value of the fur seals' pelts (which would be approximately $ 15 each) plus the selling price per acre of land comparable in value to that on which the spoiled bird habitat was located. Even if, as is likely, that use value turns out to be far less than the cost of restoring the rookery and seabird habitat, it would nonetheless be the only measure of damages eligible for the presumption of recoverability under the Interior rule.³⁶

The court found the "lesser of" rule to be contrary to CERCLA's text, structure, and legislative history, which "indicate clearly to us that Congress intended restoration costs to be the basic measure of recovery for harm to natural resources."³⁷ The court also found that the rules violate the natural resource damage provisions of the FWPCA, which also focus on restoration as a "standard measure of damages."³⁸ Thus, it held that the rules must be rewritten to comply with the law.³⁹

The Market Value Hierarchy. The rules⁴⁰ also established what the court described as "a rigid hierarchy of permissible methods for determining 'use values,' limiting recovery to the price commanded by the resource on the open market, unless the trustee determines that 'the market for the resource is not reasonably competitive.'"⁴¹ If the market is not competitive, an appraisal to estimate market value could be used. Only if neither market value nor an appraisal were available could other techniques be used. The rules prohibited trustees from using measures of option or existence values (sophisticated measures of the value people place on a resource aside from its possible value as a marketed commodity) unless there was no other method that could be used to put a price on the resource.⁴²

The court held unlawful the rules' extraordinary reliance on market values — which had given rise to Interior's $ 15 fur seal cited by the court, based on the market value of the pelt.⁴³ Noting that "[f]rom the bald eagle to the blue whale and snail darter, natural resources have values that are not fully captured by the market system,"⁴⁴ the court held that the rules did not comply with Congress' intent to broaden compensation for damages.

Rather than limiting trustees to recovering such narrow damages, the court found that "Congress intended the damage assessment regulations to capture fully all aspects of the loss."⁴⁵ Finding Interior's application of its market value rule at times "erroneous" and "quite obviously and totally fallacious,"⁴⁶ the court ordered the Department to issue a rule "that would permit trustees to derive use values for natural resources by summing up all reliably calculated use values, however measured, so long as the trustee does not double count."⁴⁷ The court also held that option and existence values "prima facie, ought to be included in a damage assessment"⁴⁸ to assure full compensation for the lost resource.

Public Versus Privately Owned Resources. The preamble to Interior's regulations took the position that there is "no doubt that resources owned by parties other than Federal, State, local, or foreign governments (i.e. privately-owned resources) are not included…. [D]amages to privately-owned natural resources are not to be included in natural resource damage assessments."⁴⁹

The court noted, however, that CERCLA states that trustees may recover for damages to natural resources "belonging to, managed by, held in trust by, appertaining to, or otherwise controlled by" a government or Native [19 ELR 10555] American tribe.⁵⁰ Since the preamble's reading of the statute "would ignore everything that comes after the words 'belonging to,'" the court remanded this issue for the Department to clarify its position.⁵¹ In remanding, the court pointed out that at oral argument the Interior Department's counsel backed away from the preamble's insistence that no recovery could be had by trustees for damage to privately owned resources, and suggested that adherence to the preamble's position would run afoul of CERCLA.⁵²

The "Committed Use" Requirement. The court narrowly construed and then upheld a provision in Interior's rules which requires that in order for a trustee to recover for damages to natural resources, those resources must have had a "committed use."⁵³ A "committed use" is defined in the rules as any current use or a planned future use for which there was "documented legal, administrative, budgetary, or financial commitment established before" the spill or release.⁵⁴

This requirement, broadly read, could have substantially limited damages in areas such as Alaska, where many resources may have no current use, and where it is likely that no one has formally documented a commitment to use the resources in the future. The "committed use" requirement also could have been problematic in areas such as long-polluted harbors or industrial sites, where longstanding pollution may have precluded current uses of natural resources, and would have discouraged any commitments for future uses as well.

Placing some judicial gloss on the rules, the court held that this "committed use" provision would be upheld based on the court's understanding that a resource need not have had a "committed use" for the trustee to recover from the polluter funds to restore the resource.⁵⁵ Under the court's interpretation of the rules, the committed use requirement only becomes relevant when the trustee seeks to recover for lost uses.

Contingent Valuation Method. Several industry representatives challenged the use in the rules of the "contingent valuation" method. Contingent valuation uses sophisticated surveys of individuals to establish a hypothetical market for the resource to determine how much they believe it is worth. For example, a contingent valuation study could be designed to determine how much individuals would be willing to pay to have the option (the "option value") to enjoy viewing a natural resource they are not now using, such as a sea otter colony. Contingent valuation also could be used to determine how much people would be willing to pay to know that a sea otter colony exists (the "existence value") for the benefit of current and future generations, even though they themselves do not intend to see or enjoy the resource personally.⁵⁶

Citing extensive support for contingent valuation in economics literature, the court found that Interior "intelligently and cautiously" chose contingent valuation as "a best available procedure" for damage assessment and upheld contingent valuation as consistent with due process and CERCLA.⁵⁷

Other Challenges. States and environmental groups also challenged the rules on several other grounds. The court upheld them in the face of these other challenges, but in a few cases put some additional judicial gloss on the rules.

1. Discount Rate. The court upheld the 10 percent discount rate (for converting the award for future damages to present value) in the face of an attack from the states and environmental groups.⁵⁸ In so doing, however, it held that this rate was legally acceptable since under another provision of the rules⁵⁹ the trustees may adjust their estimate of the expected future value of the resources to reflect uncertainties about possibly increasing future demand for the resources and resulting increases in the resources' value.⁶⁰

2. Responsible Party Participation. The court also upheld the rules' provisions allowing potentially responsible parties to participate in the damage assessment process.⁶¹ The court emphasized, however, Interior's commitment that a potentially responsible party "functions in a strictly ministerial role. The final choice of methodologies rests solely with the authorized [government] official."⁶²

3. Other Issues. The court rejected challenges to the rules based on arguments that they established unlawfully strict criteria for showing injuries, that the rules arbitrarily put a limit on assessment costs equal to the amount of damages, that they imposed unduly burdensome audit requirements on states, and that they misread CERCLA by failing to provide for punitive damages in the case of natural resource damage. On the latter issue, Interior noted in its brief that in light of the CERCLA savings clause,⁶³ punitive damages would continue to be available under other law, such as state common law.⁶⁴ The court did not disagree, but failed to address the issue of state punitive damage laws.

Colorado v. United States Department of the Interior: The Type A Regulations

In the challenge to the Type A simplified damage assessment rules, the court also remanded the regulations to Interior. The Court first held that contrary to the state and environmental petitioners' claim, Interior was under no immediate obligation to expand the scope of the Type A rules to cover additional types of environments other than coastal marine environments.⁶⁵

[19 ELR 10556]

However, in light of the Ohio decision striking down the Type B rules upon which the Type A rules were based, and especially the determination that restoration costs are a basic measure of damages under CERCLA and the FWPCA, and that the market value-based hierarchy is unlawful, the court remanded the Type A rules so that they too would be made consistent with CERCLA and the FWPCA.⁶⁶ For example, the Type A rules were based exclusively on the hierarchy of "lost use" values and must be revised to take account of restoration and other costs as well.

Thus, both the Type A and the Type B rules have been remanded. The Interior Department has announced it will not appeal the D.C. Circuit's decisions, with Secretary Manuel Lujan stating that he wants to "get on with the business of providing public trustees with damage assessment procedures which they the potentially responsible parties and the public" can rely on.⁶⁷ The full D.C. Circuit recently unanimously rejected a request by industry intervenors to review the panel decision in the Ohio case, so at this point there is no reason to delay immediate revisions to the rules.⁶⁸

Interior now has the opportunity to reissue the regulations and to fulfill Congress' mandate to streamline the trustees' efforts to assess and recover for damages to natural resources from oil spills and hazardous substance releases. The new attention accorded to natural resource damages must be harnessed into action.

Where Do We Go From Here? An Agenda for Action

As noted earlier, there have been four overarching impediments to the success of the natural resource damage program. Because the CERCLA statute of limitations is approaching, it is imperative that actions be taken immediately to eliminate these impediments to a vigorous natural resource damage program.

Improving the Regulations

In light of the D.C. Circuit's remand of the Interior Department's rules, Interior Secretary Lujan should carry through on his promise "to get on with" the program by issuing new rules swiftly. Among other things, the Secretary obviously must eliminate the "lesser of" rule and provide that trustees can recover the cost of restoration plus lost use and other values. The addition of restoration and all other lost values of the resources is required, since the court has made it clear that restoration "is the basic measure of damages," but that added to restoration costs⁶⁹ is the "summing up of all reliably calculated use values,"⁷⁰ and compensation for "other factors in addition to use values."⁷¹ The Secretary also must eliminate the hierarchy of assessment methods, allowing the trustees to choose the methods best suited to the injuries and resources. Moreover, the rules will have to eliminate the "public/private ownership" distinction.

Aside from these changes, the Secretary should consider the experience gained from the Exxon Valdez and other damage assessments. He should update the rules to assure, for example, that the acceptance criteria for showing injury are not unacceptably rigid, that the role of responsible parties is better controlled, and that the rules are streamlined to assure swift, full trustee recovery. Finally, in light of Interior's reluctance to set a timetable for completing Type A rules applicable to all environments, Congress should establish a schedule for the Type A rules' completion.

Providing Assessment Money

Trustees should be provided the desperately needed "seed money" to assess natural resource damages from Superfund. Section 517 of the 1986 CERCLA amendments⁷² cut off the availability of the Superfund to finance damage assessments, and no money is being made available for assessments from the FWPCA § 311(k) fund or other sources. Therefore, the trustees often decide not to prosecute claims, or they sign covenants not to sue polluters, based on paltry or virtually nonexistent knowledge of the damage done to natural resources at a site. At many sites with obvious damage to natural resources, no claims have been made due to lack of resources to conduct an assessment.

This lack of money also can encourage a subtle "blackmail" problem in which trustees may feel compelled to agree to only a very limited damage assessment, or only minimal damages, because of the trustees' weak factual record and resulting poor negotiating position. In the case of the recent Alaska spill, for example, the trustees initially have had to rely on Exxon to pay $ 15 million for the assessment. When the responsible party is paying, it likely will argue that it should have a lot to say about how the damages are calculated.

Thus, CERCLA should be amended to allow the Superfund to be tapped for assessment costs. The fund also should be available, subject to the existing strict limitations in CERCLA §§ 111 and 112, for payment of damages at orphan sites where no solvent responsible party can be located. However, payment of assessment costs is clearly of the highest priority, so claims against polluters are not inappropriately settled or completely lost due to lack of information or because the statute of limitations expires. Similarly, the new oil spill legislation now pending should provide for damage assessment money to be provided to trustees "up front" from the oil spill fund.

[19 ELR 10557]

Awakening the Trustees

Most state and federal trustees must be awakened from their slumber and educated about the natural resource damage program. The apathy of the Department of the Interior and most other state and federal trustees regarding the fulfillment of their public trust duties under CERCLA and the FWPCA must end. Interior should work with state government organizations and other federal agencies to inform all trustees of their authorities and responsibilities under the program. A formal national program to educate trustees about the program is essential. The National Wildlife Federation and others have proposed a National Center to undertake such a program in the future,⁷³ but in the meantime state and federal trustees and intergovernmental organizations must also take an active role in getting the word out to trustees about the natural resource damage program.

Involving the Public

Grassroots citizen organizations and national environmental groups must become more involved in pressuring state and federal trustees to vigorously prosecute natural resource damage claims. They should lobby the trustees, EPA, and the Justice Department to develop robust programs that will force responsible parties to pay for natural resource damages. Citizens also should directly and aggressively pursue the polluters to assure that full damages are collected, and to see that environment is restored.

Citizens can use several legal mechanisms to assure that the public natural resources are protected, particularly if the government is asleep at the switch or is actively shirking its duties. These include citizen suits against unresponsive government officials, actions as "private attorneys general" against polluters, and active citizen participation in all phases of damage assessment and litigation, including settlements. Only with citizens looking over the polluters' and the government's shoulders can we be assured of environmental restoration.

Prodding EPA and the Justice Department Into Action

EPA and the Department of Justice must focus more heavily upon natural resource damages and must make trustees full partners in the Superfund program. EPA and Justice often have seemed to regard natural resource damages as an afterthought, a troublesome stumbling block that can complicate their cleanup negotiations, or as a bargaining chip, rather than as an opportunity to ensure that there is full restoration of the injured ecosystem. This can and must change.

The recent decision in the case of In re Acushnet River and New Bedford Harbor: Proceedings Re Alleged PCB Pollution⁷⁴ should encourage more trustee involvement in CERCLA settlements and cleanups. In that case, the court held that all CERCLA settlements with federal government-approved covenants not to sue polluters for natural resource damages must include provisions assuring that the responsible party will protect and restore the injured natural resources. In addition, at the urging of the intervening National Wildlife Federation, the court took the unusual step of rejecting a partial settlement, because it was not clear that the federal trustee had agreed to it, and because it failed to include a "reopener" assuring that the responsible party would bear the risk of paying for unknown natural resource damages discovered in the future. This decision should make it clear to EPA, Department of Justice, and all trustees that a full partnership between trustees and the agencies overseeing CERCLA cleanups is essential.

This message also is reinforced by the D.C. Circuit's statement in the Ohio decision that under CERCLA § 122(j)(2) "a responsible party can settle only if it pays restoration costs."⁷⁵ Thus, as the New Bedford Harbor court held, restoration costs at a minimum must be recovered from responsible parties in settlements, and these costs can only be determined with full trustee participation in cleanup decisions and settlement negotiations. EPA and the Department of Justice should accustom themselves to this result, and should make sure that the trustees are full partners in the hazardous waste and oil spill cleanup process. CERCLA § 104(b)(2)⁷⁶ specifically provides full trustee-EPA cooperation in investigating and conducting cleanup at CERCLA sites; these recent court decisions simply reinforce that point.

Conclusion

To date, the natural resource damage program has failed to live up to its potential. Interior has had to be dragged into court to ensure its compliance with the law, and other federal agencies also have lacked the will or resources or both to make the program work. Relatively few state agencies have made a serious effort to implement these important provisions. Environmentalists, Interior, EPA, the Department of Justice, the states, and Congress should take the steps outlined above to rejuvenate this languishing but potentially powerful weapon in the effort to protect and restore our natural environment.

1. 42 U.S.C. §§ 9601-9675, ELR STAT. CERCLA 001-075.

2. 33 U.S.C. § 1321(f), ELR STAT. FWPCA 041.

3. On the Exxon Valdez spill generally, see Straube, Is full Compensation Possible for the Damages Resulting from the Exxon Valdez Spill?, 19 ELR 10338 (Aug. 1989).

4. CERCLA § 113(g)(1), 42 U.S.C. § 9613(g)(1), ELR STAT. CERCLA 039 (three-year statute of limitations begins running on date of discovery of loss and its connection with release, promulgation of CERCLA § 301(c) assessment rules, or completion of remedial action at a National Priorities List site, whichever is later). On the passage of the original statute of limitations in 1983, see Breen, Natural Resource Recovery by Federal Agencies: A Roadmap to Avoid Losing Causes of Action, 13 ELR 10324 (1983).

5. 42 U.S.C. § 9607(a)(C), ELR STAT CERCLA 024.

6. 33 U.S.C. § 1321(f)(4) and (5), ELR STAT. FWPCA 041.

7. See, e.g., Outer Continental Shelf Lands Act, 43 U.S.C. § 1813(a)(2)(C)-(E); Trans-Alaska Pipeline Authorization Act (TAPAA), 43 U.S.C. § 1653. See also 43 C.F.R. §§ 29.1-29.13 (TAPAA regulations).

8. See Maraziti, Local Governments: Opportunities to Recover for Natural Resource Damages, 17 ELR 10036 (1987).

9. See, e.g., CERCLA, 42 U.S.C. § 9607(f), ELR STAT. CERCLA 026.

10. See, e.g., 43 U.S.C. § 1813(a)(2)(D) and (E) (Outer Continental shelf Lands Act provisions authorizing individual suits for loss of use of natural resources and loss of profits from natural resource damages).

11. See Illinois Central Ry. Co. v. Illinois, 146 U.S. 387, 450-62 (1892); National Audubon Society v. Superior Court of Alpine County, 33 Cal. 3d 419, 658 P.2d 709, 13 ELR 20272, cert. denied, 464 U.S. 977 (1983). See also Sax, Liberating the Public Trust Doctrine From its Historical Shackles, 14 U. CAL. DAVIS L. REV. 185 (1980); Sax, The Public Trust Doctrine in Natural Resource Law: Effective Judicial Intervention, 68 MICH. L. REV. 471 (1970).

12. 42 U.S.C. § 9607(f)(1), ELR STAT. CERCLA 026 (emphasis added).

13. 33 U.S.C. § 1321(f)(5), ELR STAT. FWPCA 041.

14. CERCLA § 310, 42 U.S.C. § 9659, ELR STAT. CERCLA 067; FWPCA § 505, 33 U.S.C. § 1365, ELR STAT. FWPCA 059.

15. FWPCA §§ 311(o) and 505(e), and CERCLA § 114, for example, clearly state that remedies under other statutes or common law are preserved. Thus, citizens may sue polluters on behalf of themselves and the public for environmental restoration or other natural resource damage under state statutes and under common law doctrines such as nuisance and negligence. See, e.g., National Wildlife Federation v. Exxon, No. 89-6957 (Alaska Super. Ct., Anchorage, filed August 17, 1989) (citizens groups suing, under state law, those who caused and those who failed to adequately prepare for and to clean up or contain Exxon Valdez spill).

16. See, e.g., ALASKA STATUTES § 46.03.822.

17. Justice Douglas eloquently pled:

Contemporary public concern for protecting nature's ecological equilibrium should lead to the conferral of standing upon environmental objects to sue for their own preservation…. Inanimate objects are sometimes parties to litigation. A ship has a legal personality, a fiction found useful for maritime purposes. The corporation sole — a creature of ecclesiastical law — is an acceptable adversary and large fortunes ride on its cases….

So it should be as respects valleys, pine meadows, rivers, lakes, esturaries, beaches, ridges, groves of trees, swampland, or even air that feels the destructive pressures of modern technology and modern life. The river, for example, is the living symbol of all the life it sustains or nourishes — fish, aquatic insects, water ouzels, otter, fisher, deer, elk, bear, and all other animals, including man, who are dependent on it or who enjoy it for its sight, its sound, or its life. The river as plaintiff speaks for the ecological unit of life that is part of it.

405 U.S. 727, 741-43, 2 ELR 20192, 20196 (1972).

18. Anderson, Natural Resource Damages, Superfund, and the Courts, 16 B.C. ENVT'L AFF. L. REV. 405 (1989); Cross, Natural Resource Damage Valuation, 42 VAND. L. REV. 269 (1989); Atkeson & Dower, The Unrealized Potential of SARA: Mobilizing New Protection for Natural Resources, ENVIRONMENT, May 1987, at 6; Habicht, The Expanding Role of Natural Resource Damage Claims Under Superfund, 7 VA. J. NAT. RES. L. 1 (1987); Kenison, Buchholz & Mulligan, State Actions for Natural Resource Damages: Enforcement of the Public Trust, 17 ELR 10434 (1987); McKay, CERCLA's Natural Resource Damage Provisions: A Comprehensive and Innovative Approach to Protecting the Environment, 45 WASH. & LEE L. REV. 1417 (1988); Newlon, Defining the Appropriate Scope of Superfund Natural Resource Damage Claims: How Great an Expansion of Liability? 5 VA. J. NAT. RES. L. 197 (1985); Breen, CERCLA's Natural Resource Damage Provisions: What Do We Know So Far?, 14 ELR 10304 (1984); Dower, Spillers and Slickers Awake … Superfund Sleeper Sends Signals, ENVTL. F., March 1984, at 43; Menefee, Recovery for Natural Resource Damages Under Superfund: The Role of the Rebuttable Presumption, 12 ELR 15057 (1982); Yang, Valuing Natural Resource Damages: Economics for CERCLA Lawyers, 14 ELR 10311 (1984). See also Halter & Thomas, Recovery of Damages by States for Fish and Wildlife Losses Caused by Pollution, 10 ECOL. L.Q. 5 (1982).

19. 42 U.S.C. § 9651(c), ELR STAT. CERCLA 062.

20. 33 U.S.C. § 1321, ELR STAT. FWPCA 041.

21. CERCLA § 107(f)(2)(C); see generally Menefee, supra note 18.

22. S. REP. No. 848, 96th Cong., 2d Sess. 86 (1980).

23. Id.

24. 51 Fed. Reg. 27674 (Aug. 1, 1986) (Type B rules).

25. 52 Fed. Reg. 9042 (Mar. 20, 1987) (Type A rules).

26. Exec. Order No. 12,316, 46 Fed. Reg. 42237 (1981), superseded by Exec. Order No. 12,580, 52 Fed. Reg. 2923 (1987).

27. State of New Jersey v. Ruckelshaus, No. 84-1688 (D.N.J. 1984), aff'd mem., 782 F.2d 1031 (3d Cir. 1986).

28. The regulations are codified at 43 C.F.R. pt. 11.

29. See, e.g., Kenison, Buchholz & Mulligan, supra note 18.

30. 880 F.2d 432, 19 ELR 21099 (D.C. Cir. 1989).

31. Id. at 481, 19 ELR at 21127 (D.C. Cir. 1989).

32. Id. at 441, 19 ELR at 21102.

33. 43 C.F.R. § 11.35(b)(2).

34. 880 F.2d at 438, 19 ELR at 21101.

35. Id. at 441, 446 n. 13, 19 ELR at 21102, 21105 n. 13.

36. Id. at 442, 19 ELR at 21103.

37. Id. at 450, 19 ELR at 21108.

38. Id. at 450, 19 ELR at 21108.

39. The court noted in dictum that "this is not to say that DOI may not establish some class of cases where other considerations — i.e., infeasibility of restoration or grossly disproportionate cost to use value — warrant a different standard. We hold the "lesser of" rule based on comparing costs alone, however, to be … invalid." 880 F.2d at 459, 19 ELR at 21113.

40. 43 C.F.R. § 11.83(c).

41. 880 F.2d at 462, 19 ELR at 21115.

42. On option and existence values, see Cross, supra note 18, at 285-97, 315-20; Yang, supra note 18.

43. 880 F.2d at 463, 19 ELR at 21116.

44. Id. at 462-63, 19 ELR at 21115.

45. Id. at 463, 19 ELR at 21116.

46. Id.

47. Id. at 464, 19 ELR at 21116.

48. Id.

49. 51 Fed. Reg. at 27696.

50. 880 F.2d at 459, 19 ELR at 21113. See CERCLA §§ 101(16), 107(a)(C), 42 U.S.C. §§ 9601(16), 9607(a)(C), ELR STAT. CERCLA 008, 025.

51. 880 F.2d at 461, 19 ELR at 21114.

52. Id.

53. 43 C.F.R. § 11.84(b)(1).

54. Id. at § 11.14(h) (emphasis added).

55. 880 F.2d at 461-62, 19 ELR at 21114-15.

56. For more on contingent valuation, see Cross, supra note 18, at 315-20, and Yang, supra note 18.

57. 880 F.2d at 476, 19 ELR at 21124.

58. 43 C.F.R. § 11.84(e).

59. Id. at § 11.84(d).

60. 880 F.2d at 464, 19 ELR at 21116.

61. See, e.g., 43 C.F.R. § 11.32(d).

62. 880 F.2d at 467, 19 ELR at 21118 (quoting 51 Fed. Reg. at 27704).

63. CERCLA § 114, 42 U.S.C. § 9614, ELR STAT. CERCLA 041.

64. Brief of Respondents Department of the Interior et al. in State of Ohio case, at 121 (Nov. 21, 1988).

65. 880 F.2d at 486-490, 19 ELR at 21129-21132.

66. Id. at 490-491, 19 ELR at 21132.

67. U.S. Department of the Interior News Release, "Interior Secretary Lujan Says Government Will Revise Natural Resource Damage Assessment Rules to Conform With Court Decision," August 10, 1989.

68. See 54 Fed. Reg. 39013-18 (Sept. 22, 1989) (Interior Department Advanced Notices of Proposed Rulemaking announcing Department's intent to move forward with rulemaking in the wake of the Ohio and Colorado decisions).

69. 880 F.2d at 450, 19 ELR at 21108 (under CERCLA and the FWPCA, "restoration is the basic measure of damages, but damages can exceed restoration costs" (emphasis added)).

70. Id. at 464, 19 ELR at 21116.

71. Id.

72. Pub. L. No. 99-499, 100 Stat. 1613 (1986). This section amended the Internal Revenue Code chapter on trust funds, and the prohibition is now codified at 26 U.S.C. § 9507(c). See generally Atkeson et al., An Annotated Legislative History of the Superfund Amendments and Reathorization Act of 1986 (SARA), 16 ELR 10360, 10395 (1986).

73. See Hair, NWF Takes Up Call for Natural Resources Protection, 29 ENVIRONMENT, May 1987, at 9; Atkeson & Dower, supra note 18.

74. 712 F. Supp. 1019, 19 ELR 21210 (D. Mass. 1989).

75. 880 F.2d at 449, 19 ELR at 21107.

76. 42 U.S.C. § 9604(b)(2), ELR STAT. CERCLA 013.