26 ELR 10457 | Environmental Law Reporter | copyright © 1996 | All rights reserved

Natural Resource Damages Causation, Fault, and the Baseline Concept: A Quandary in Environmental Decisionmaking

Robert F. Copple

Editors' Summary: CERCLA and the Oil Pollution Act (OPA) create causes of action for damages to natural resources—for damages "resulting from" a release or threatened release of a hazardous substance, in the case of CERCLA, and for damages that "result from" a discharge or threatened discharge of oil in the case of the OPA. Thus, natural resource damages actions under these acts require a causal link between the release or discharge and the natural resource damage at issue. This Article traces the development of this causal link—from early judicial opinions to recent agency regulations. The Article analyzes how the federal natural resource trustees, the DOI and NOAA, have incorporated the causal link requirement into their natural resource damages assessment regulations. The Article concludes by highlighting causation issues that may permeate any assessment or subsequent litigation.

Robert F. Copple is environmental counsel for Motorola, Inc., in Scottsdale, Arizona. He received his J.D. from the University of Nebraska College of Law, and his Ph.D from the University of North Carolina at Chapel Hill. In addition to a more general environmental practice, Dr. Copple has extensive experience in natural resource damages litigation, Comprehensive Environmental Response, Compensation, and Liability Act response cost litigation, and the CERCLA process.

[26 ELR 10457]

Over the centuries, the common law concept of causation has evolved significantly. Often examined as a product of small "bites" of human behavior and transgressions, the meaning and scope of causation have been and are still sources of debate in American jurisprudence.1 When causation is examined in the context of environmental decisionmaking, however, traditional analytical problems are often magnified by complex legal and technical issues inherent in many environmental disputes. In particular, rigorous causation analysis is critical in environmental litigation involving questions of multiparty fault based on decades of diverse industrial activity. Causation2 in the context of liability for natural resource damages under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA),3 and the Oil Pollution Act of 1990 (OPA)4 is a case in point.

Both CERCLA and the OPA contain specific provisions creating causes of action for natural resource damages.5 Courts, commentators, and the relevant agencies have interpreted these natural resource damages provisions as requiring the designated public trustee to prove, as an element of its "case in chief," that a potentially responsible party (PRP) caused the natural resource damages at issue. As a result, the federal trustees—the U.S. Department of the Interior (DOI)6 under CERCLA, and the National Oceanic and Atmospheric Administration (NOAA)7 under the [26 ELR 10458] OPA—have proposed or promulgated natural resource damage assessment (NRDA) regulations that expressly require proof of a causal link or nexus between a PRP's release or discharge and the natural resource injury at issue. Further, as part of their respective regulatory schemes, both agencies exempt PRPs from liability for environmental or "baseline" conditions that would exist if the release or discharge at issue had not occurred. Under the NRDA regulations, baseline is the conceptual starting point for analyzing causation and the scope of a natural resource injury.8 How the causation/baseline concepts in the natural resource damages provisions define the scope and extent of PRP liability is crucial to virtually all natural resource damages actions and can mean the difference in the assessment of millions of dollars of restoration costs and compensable value damages.

This Article identifies the causation thread in CERCLA and the OPA, and follows it through the injury and baseline provisions of the DOI and NOAA NRDA regulations. It concludes by identifying additional natural resource damage issues and presents observations for the reader's consideration.

Causation Under CERCLA and the OPA

Within their respective spheres, both CERCLA and the OPA impose two related, but distinct types of liability: (1) response cost liability9 and (2) natural resource damages liability.10 Generally, under both CERCLA and the OPA, response cost liability addresses the costs of cleaning up releases or discharges (or abating threats of releases or discharges) from a hazardous substance facility (in the case of CERCLA) or an oil-containing facility (in the case of the OPA). While response actions may restore natural resources to prerelease conditions, they are intended to protect human health and the environment.11 Natural resource damages, on the other hand, are residual to response actions12 and are intended to compensate the public for actual injuries to statutorily defined natural resources caused by releases of hazardous substances or discharges of oil, and to make monetary damages available for restoration of the injured resources.13 This distinction between response cost liability and natural resource damage liability is reflected in the formulation of causation under both CERCLA and the OPA.

Causation Under CERCLA

Response Costs. The courts have generally held that the causation element for response cost liability under CERCLA is easily met. If there is any burden of proof on the plaintiff, it is little more than pro forma.14 It is usually sufficient that the PRP is a member of one or more of the statutorily identified classes of PRPs15 who are connected, as described by the statute, with a facility "from which there is a release, or a threatened release which causes the incurrence of response costs, of a hazardous substance …."16 Once these elements have been established, the majority of courts have interpreted CERCLA as requiring no further causal link or nexus between the PRP and the release or threatened release of the hazardous substance. In the response cost context, when multiple parties are tied to a hazardous waste facility as owners, operators, arrangers, and/or transporters, a release or threatened release of any hazardous substance from the facility generally is sufficient to impose several or joint and several liability on all of the parties.17

Natural Resource Damages. Causation within the context of CERCLA natural resource damages liability, however, begs an entirely different analysis. As demonstrated by the relevant provisions, in order to establish liability for natural resource damages under CERCLA, the public trustee must prove as an integral component of its prima facie case that the release of a hazardous substance attributable to the PRP is the cause in fact and the legal cause of the resulting injury to the natural resource.

[26 ELR 10459]

First, while CERCLA's response cost provisions only hint at a causation requirement, the parallel natural resource damages provisions expressly impose liability for "damages or injury to, destruction of, or loss of natural resources, including the reasonable cost of assessing such injury, destruction or loss resulting from such a release …."18 The "resulting from" language in the provision requires the establishment of a cause-and-effect relationship between the release and the injury to the natural resource at issue. The inclusion of this causation language in the liability provision of CERCLA is no legislative oversight, as demonstrated by the incorporation of similar language in the section of CERCLA that establishes a temporal cut-off for natural resource damage liability as follows: "There shall be no recovery under the authority of … this section where such damages and the release of a hazardous substance from which such damages resulted have occurred wholly before December 11, 1980."19

Second, courts have recognized that the causation requirements for a natural resource damages action necessarily differ from those for a response cost action. Several federal district courts have held, in a variety of procedural contexts, that the "resulting from" language in the CERCLA natural resources damages provisions creates a causation element that must be proven in the course of establishing natural resources damages liability. For example, in Idaho v. Bunker Hill Co.,20 the court, in discussing the state of Idaho's natural resources damages claims, stated:

Where the State's analysis goes astray is rooted in its misconception of the rule of causation under the CERCLA statute. The plaintiff has argued that since there is admittedly strict liability under the statute, there is no need for causation. However, strict liability does not abrogate the necessity of showing causation, but merely displaces any necessity for showing some degree of culpability by the actor. In other words, under strict liability, the mental state of the defendant is irrelevant, but the damage for which recovery is sought must still be causally linked to the act of the defendant…. Also, the use in Section 107(f) of the word "resulted" ties the damages to the releases. The proof must include a causal link between releases and post-enactment damages which flowed therefrom.21

Likewise, in United States v. Montrose Chemical Corp.,22 the court identified the plaintiff's failure to plead causation as a deficiency in its natural resource damages claim:

To prevail on any claim for release seeking to recover damages for alleged injury to natural resources under CERCLA § 107(a)(4)(C), 42 U.S.C. § 9607(a)(4)(C), plaintiffs must show that a defendant's release of a hazardous substance was the sole or substantially contributing cause of each alleged injury to natural resources. Accordingly, plaintiff shall allege … WHICH defendant's release(s) of WHAT hazardous substance was the sole or substantially contributing cause of each such injury, and by what pathway exposure to the hazardous substance occurred.23

Finally, and most relevant to the interpretation and effect of the DOI and NOAA natural resource damages regulations, the U.S. Court of Appeals for the District of Columbia in Ohio v. U.S. Department of the Interior24 upheld the authority of the DOI to promulgate NRDA regulations that incorporate a "causation in fact" element. In entertaining a challenge to the DOI's NRDA rule and the inclusion of a more traditional causation standard,25 the court concluded that based on CERCLA's legislative history, Congress could have explicitly chosen to eliminate traditional common law causation principles from the CERCLA natural resources damages provisions. By failing to do so, the DOI was left with the authority to establish a specific causation standard. As the court stated:

In sum, while we agree with the petitioners that Congress expressed dissatisfaction with the common law as a norm in several areas of damage assessment, we conclude that CERCLA is at best ambiguous on the question of whether the causation-of-injury standard under § 107(a)(C) must be less demanding than that of the common law. Consequently, we uphold Interior's plausible reading of CERCLA as adopting traditional causation standards in this context.26

Thus, it is clear that Congress intended, and the courts have read, the CERCLA natural resources damages provisions as retaining the traditional common law "causation in fact" and proximate causation elements as part of the plaintiff's case in chief. As discussed below, the DOI has acknowledged this requirement and incorporated it into its NRDA rules.27

Causation Under the OPA

The OPA's application of causation to discharges of oil into navigable waters28 is patterned after CERCLA and generally provides a parallel liability scheme.29 The OPA [26 ELR 10460] creates a dichotomy between removal cost (i.e., response cost) liability for actual or threatened discharges of oil to navigable waters30 and natural resource damages liability,31 while including similar defenses to or exemptions from liability.32 As such, commentators33 and NOAA34 have applied the rationale of Ohio to derive NOAA's authority to establish a causation standard for natural resource damages liability under the OPA.35

Agency Formulations of Natural Resource Damage Causation

The DOI and NOAA have firmly embraced causation as an integral part of their respective regulatory schemes for NRDAs. Thus, the real issue is not whether trustees must establish causation, but how each agency chooses to trace the necessary casual link through their injury determination and baseline requirements.

DOI Establishes Injury and Baseline Concepts

The DOI, as the first agency to attempt the formulation of natural resource damages regulations pursuant to its presidential and CERCLA mandates,36 has engaged in a litany of NRDA rulemaking efforts. Since the beginning of those efforts in 1985, the DOI's proposed and sometimes final NRDA rules have been subjected to repeated challenges and amendments.37 The most current rule was promulgated in 1994.38 In contrast to other portions of the DOI's proposed and final NRDA rules, the establishment of a causation principle through injury determination requirements and baseline calculations has remained constant in the DOI's NRDA regulatory scheme.

The DOI's NRDA regulations require a four-phase process for assessments: (1) a preassessment screen and development of an assessment plan; (2) an injury determination phase; (3) an injury quantification phase; and (4) a damage determination phase, during which a dollar value is attributed to the natural resource injury.39 Although causation issues permeate these four phases,40 the causal link between the release of a hazardous substance and the injury to a natural resource is initially addressed in the injury determination phase. The actionable baseline for natural resource injuries and the scope of liability for those injuries are addressed during the injury quantification phase.

Injury Determination Phase. In the NRDA regulations the DOI explains that "the purpose of the Injury Determination phase is to insure that only assessments involving well-documented injuries resulting from the discharge of oil or the release of a hazardous substance proceed through the … assessment."41 The relationship between the injury determination phase and the issue of causation is evident from the NRDA regulations, which require the public trustee who is conducting the assessment and bringing the claims to determine "whether injury to one or more of the natural resources has occurred; and that the injury resulted from the discharge of oil or release of a hazardous substance based upon the exposure pathway and the nature of the injury."42 The DOI defines "injury" as:

[A] measurable adverse change, either long- or short-term, in the chemical or physical quality or the viability of a natural resource resulting directly or indirectly from exposure to a discharge of oil or release of a hazardous substance, or exposure to a product of reactions resulting from the discharge of oil or release of a hazardous substance.43

The DOI defines "pathway" as "the route or medium through which oil or a hazardous substance is or was transported from the source of the discharge or release to the injured resource."44 Further, the DOI requires the establishment of a pathway through affirmative evidence as follows:

The pathway may be determined by either demonstrating the presence of the oil or hazardous substance in sufficient concentrations in the pathway resource or by using a model that demonstrates that the conditions existed in the route and in the oil or hazardous substance such that the route served as the pathway.45

Thus, pursuant to its statutory delegation, the DOI fleshes out a causation element that requires proof of a causal nexus between an actual release and an actual injury46 from the "resulting from" language contained in the CERCLA natural resource damages provisions.47 By doing so, the DOI [26 ELR 10461] distinguishes response cost actions from natural resource damage actions by incorporating into the latter an element of proof of injury synonymous with the proof of injury requirement under the common law.

Because this aspect of natural resource damages law is largely undeveloped by the courts, the acceptable level of proof of injury is uncertain.48 Nevertheless, it is at least clear that in order to make a prima facie case, public trustees must do more than simply identify a PRP in the same breath as a natural resource injury. Moreover, the public trustee must establish during the injury quantification phase the "without a release" baseline of environmental conditions associated with the resource at issue, in order to determine what portion of the injury is actually attributable to the specific PRP.

Injury Quantification Phase. In an NRDA analysis the injury quantification phase follows the injury determination phase.49 During this phase the public trustee must determine the scope of a PRP's liability for injuries to a natural resource by determining the baseline conditions that would exist in the absence of the release at issue. As part of this step in an NRDA, the trustee is required to "quantify for each resource determined to be injured and for which damages will be sought, the effect of the discharge or release in terms of the reduction from the baseline condition in the quantity and quality of services … provided by the injured resource …."50

As with the injury determination rules, the baseline concept was firmly established in the DOI's 1986 Final Rule, with little substantive change in subsequent rulemakings.51 The DOI defines "baseline" as "the condition or conditions that would have existed at the assessment area had the discharge of oil or release of the hazardous substance under investigation not occurred."52 In describing the baseline concept, the DOI stated:

Baseline is not intended to represent necessarily pristine conditions, nor is it intended to represent conditions in the absence of "any" discharge or release. Rather, the rule specifically requires that baseline represent conditions that would have existed in the absence of the specific discharge or release under investigation. Thus, effects of other discharges or releases, as well as any other natural or human-caused effects, are to be accounted for in determining the baseline against which the effects of the discharge or release under investigation are measured. The intent is to restrict liability to those effects resulting from the responsible party's actions, as in any other liability situation.53

Thus, the DOI's implementation of the baseline concept further emphasizes that the PRP is only liable for those injuries actually caused by its release.

In addition, under the DOI's formulation, the focus in the quantification of natural resource injuries is on the "services" provided by the resource at issue. The DOI defines services as the "physical and biological functions performed by the resource including the human uses of those functions. These services are the result of the physical, chemical, or biological quality of the resource."54 Thus, while the DOI requires the identification of environmental conditions, those conditions are to be quantified in the form of services.55

In the quantification phase, the public trustee is charged with "determining the extent to which natural resource services have been reduced as a result of the injuries determined in the Injury Determination phase of the assessment."56 In explaining why the focus of injury quantification is on changes in the level of services, the DOI stated:

An important distinction between services and the physical, chemical, or biological conditions existing in a resource is that the services represent interactions between resources, or between resources and humans. Traditionally humans have valued natural resources in monetary terms on the basis of services provided by the resources. This method logically may be extended to valuing damages to an injured resource on the basis of changes in services. This rule establishes the link between measured adverse changes in the condition of the resource, the injury, and the damages through the measurement of changes in the services provided by the injured resource. This method of determining damages is in accord with traditional economic measures of the value of natural resources.57

The DOI, in its 1986 rule, explained that during the injury quantification phase the trustee should consider baseline [26 ELR 10462] conditions "both for services and for biological or physical changes," such as changes in land use unrelated to the release of hazardous substances. The DOI explained that this broader definition of baseline would allow it to consider situations where significant changes in the resource or service occurred over the long term without a specific discharge or release.58

As a result, a natural resource damages PRP should not be liable, nor assessed damages, for injuries to natural resources that predate its release or for injuries to the natural resource that occurred concurrently with any injury caused by the PRP. Further, when a resource has been injured by multiple releases of hazardous substances attributable to parties other than the PRP, the public trustee arguably must include the injuries for which the PRP is not responsible within the baseline.59 Thus, the DOI's interpretation of baseline reflects the principle that "a natural resource damage claim should be limited to the damages caused by the injury resulting from actions of the party determined to be responsible."60

Injury and Baseline Under the NOAA Formulation

NOAA, in fulfilling its congressional mandate to promulgate regulations governing the assessment of natural resource damages related to discharges of oil, issued its first major NRDA proclamation in 1994,61 followed by a comprehensively reformulated proposed rule in 1995,62 and a final rule in 1996.63 Like the DOI, NOAA has assumed an OPA causation element for natural resource damage liability. Therefore, NOAA requires public trustees assessing natural resource damage claims to assess injury and baseline in a manner very similar to that required by the DOI NRDA regulations.64 That is, as part of NOAA's restoration planning phase, public trustees performing NRDAs are required to identify any actionable injury to natural resources (injury assessment) and to gauge the scope of that injury in relation to the baseline concept (injury quantification).65

NOAA's Injury Determination. In its injury determination requirement, NOAA emphasizes that the public trustee must link natural resource injury to a discharge: "If an injury cannot be determined or cannot be linked to the discharge, further assessment effort should be terminated …."66 NOAA defines "injury" as "an observable or measurable adverse change in a natural resource or impairment of a natural resource service. Injury may occur directly or indirectly to a natural resource and/or service."67

In general, NOAA's approach focuses on identifying an injury, documenting the exposure of the resource at issue to oil, and establishing a pathway between the discharge and the injured natural resource. NOAA's formulation of its injury determination requirement demonstrates the need for a causal link between the discharge and the injury. As prescribed in the final rule:

(b) Determining injury. To make the determination of injury, trustees must evaluate if:

(1) The definition of injury has been met, … and (2)(i) An injured natural resource has been exposed to the discharged oil, and a pathway can be established from the discharge to the exposed natural resource; …

(c) Identifying injury. Trustees must determine whether an injury has occurred and, if so, identify the nature of the injury….

(d) Establishing exposure and pathway…. Trustees must establish whether natural resources were exposed, either directly or indirectly, to the discharged oil from the incident, and estimate the amount or concentration and spatial and temporal extent of the exposure. Trustees must also determine whether there is a pathway linking the incident to the injuries. Pathways may include, but are not limited to, the sequence of events by which the discharged oil was transported from the incident and either came into direct physical contact with a natural resource, or caused an indirect injury.68

[26 ELR 10463]

Thus, as with the DOI regulations, NOAA's damage determination process requires more than mere proof that there has been a discharge and an injury. Instead, consistent with traditional concepts of causation, the trustee must establish that the discharge at issue is linked to, and caused, the injury at issue.

NOAA's Injury Quantification. After completion of the injury determination process, and satisfaction of the injury identification, exposure, and pathway requirements, NOAA public trustees must perform an injury quantification as the next step in the NRDA process. Like the DOI regulations, the proposed NOAA regulations incorporate the baseline concept within the injury quantification process. Thus, in conducting its injury quantification analysis, the trustee must determine the likely condition of the natural resource at issue in the absence of the discharge under investigation.69 NOAA defines baseline as "the condition of the natural resources and services that would have existed had the incident not occurred. Baseline data may be estimated using historical data, reference data, control data, or data on incremental changes (e.g., number of dead animals), alone or in combination as appropriate."70

With the inclusion of the baseline concept, NOAA's rule provides trustees the flexibility to perform injury quantification under one or more of several different conceptual approaches, all of which incorporate baseline considerations, including:

(1) The degree, and spatial and temporal extent of injury to a natural resource;

(2) The degree, and spacial and temporal extent of injury to a natural resource, with subsequent translation of that adverse change to a reduction in services provided by the natural resource; or

(3) The amount of services lost as a result of the incident.71

In addition to incorporating the baseline concept, two of the three approaches identified above also require quantification of an injury in the form of services provided by the natural resource.72 This focus on services73 allows public trustees to employ a service-to-service compensation analysis in order to determine the form and scope of additional services that should be provided to compensate the public for lost services, such as the loss of beach days due to an oil spill.74

Thus, by setting forth a relatively detailed injury determination requirement, and by affirming the baseline concept and its focus on services, NOAA, like the DOI, has incorporated a causation element into OPA natural resource damage assessments and claims. While the two regulatory schemes differ sufficiently to require specific reference for a case-by-case application of the causation elements, the approaches are functionally the same.

Questions and Observations

The following are a few of the many causation questions raised by natural resource damages injury and baseline concepts that warrant attention as natural resource damage assessments move through the agencies and courts.

Effect of Defenses and Exemptions

One of the first questions that arises in the application of the DOI and NOAA injury and baseline concepts is the effect of the statutory defenses and exemptions from natural resource damage liability that are set out in CERCLA and the OPA. It is only logical that liability defenses and exemptions should be considered by the public trustee in its injury determination and baseline analyses to limit the scope of actionable damages. However, natural resource damages assessments are often a precursor to adversarial proceedings. Accordingly, the natural tendency of trustees will be to ignore or understate the magnitude of such defenses and exemptions. Correspondingly, PRPs can be expected to vigorously argue an expansive view of such defenses. Consequently, the effect of applicable defenses and exclusions will likely be a focal point of argument throughout the NRDA and litigation process.

Nonetheless, both CERCLA and the OPA require public trustees to consider certain statutory exclusions (but not necessarily defenses) in baseline analyses. For example, the public trustee, as part of its injury quantification phase, must exclude: (1) any damages to natural resources resulting from an irreversible and irretrievable commitment of natural resource; (2) damages and releases which occurred wholly before the enactment of CERCLA; (3) damages caused by the application of a registered pesticide; and/or (4) any natural resource damages resulting from a federally permitted release.75 Public trustees should also consider the basic CERCLA and OPA statutory defenses as they apply to a particular release or discharge, both as a function of evaluating their jurisdiction and the strength of their claims. Certainly, PRPs in the course of challenging an NRDA, will focus on identifying and quantifying the effects of defenses and exemptions on injury determination, injury quantification, and baseline.

[26 ELR 10464]

Multiple Causes

A perplexing problem in the natural resource damages arena concerns the assessment of natural resource injuries resulting from multiple causes.76 This issue is particularly acute when dealing with causation issues of injury determination and baseline analyses. For simplicity's sake, two general examples of multiple causation are presented: (1) injuries resulting from a combination of hazardous substance releases and non-CERCLA causes; and (2) injuries resulting from hazardous substance releases from multiple PRPs.

Combined CERCLA and Non-CERCLA Causes. With respect to the combination of CERCLA and non-CERCLA causes of injury, the DOI has at least made it very clear that in order for an injury to be actionable, the injury must actually result from the release of a hazardous substance attributable to the PRP. Further, the determination of baseline for that injury must encompass all relevant environmental factors, including such factors as changes in land use.77

Consider for example, a stream subjected to both an actionable release of hazardous substances and sewer discharges, either of which alone would be sufficient to injure the fishery. If public trustees acted consistently with the DOI's mandate regarding inclusion of the effect of changes of land use and other anthropogenic causes of injury on baseline,78 the party responsible for the hazardous substance release would not be lible for natural resource damages; no fish would be present in the stream had the release of hazardous substances not occurred. This does not mean that the PRP would get off "scott free" for the hazardous substance release. On the contrary, under the general liability provisions of CERCLA § 107(a), or the injunctive provisions of § 106, the PRP may still be liable for response costs incurred in cleaning up a release of hazardous substances that pose a threat to human health and the environment, or for performing the cleanup itself. However, because there would be no separate compensable natural resource injury attributable to the PRP, there would be no natural resource damages, in addition to response costs, for which the PRP would be liable.

In response to a comment addressing the above hazardous substance/sewage hypothetical, the DOI has suggested that the PRP's liability, would be limited: "In the hypothetical case offered by the commentator, the presence of sewer overflows would not render restoration, rehabilitation, replacement, and/or acquisition of equivalent resources pointless; however, it would affect the baseline condition that must be re-established."79

A more difficult scenario involves the combination of a hazardous substance release and changes in the use of the affected natural resource. Suppose, for example, that a PRP's release of hazardous substances to a stream destroys the stream's value as a fishery. In this case, the PRP would be liable for any compensable damages attributable to the stream's lost capacity to support a fishery.80 Suppose also, however, that at some later date, the same stream begins to receive discharges of sewage. If these discharges diminish the stream's capacity to serve as a fishery, the PRP's liability should be limited to any incremental injury, beyond that injury that the sewage would cause anyway, resulting from the PRP's release of hazardous substances.

Eventually, the sewage alone might be sufficient to preclude the stream's use as a fishery. At this point, the PRP's liability should be limited to compensable damages attributable to two categories of past injury: (1) injury incurred before any sewage was discharged, and (2) incremental injury incurred before sewage discharges were sufficient to preclude use of the stream as a fishery. This is because the change in the use of this resource—into a conduit for sewage—changed the baseline, albeit gradually. The PRP's release can hardly be said to have caused an ongoing injury to a potential fishery that would not be viable even if all effects of the PRP's release were eliminated. Of course, the existence of sewage would not relieve the PRP of liability under CERCLA's provisions for remedial action and recovery of response costs.

Multiple PRP Releases. The problems of causation, and indeed of equity, become even more difficult in the second general example involving natural resource injuries attributable to individual releases by multiple PRPs. As discussed above, the DOI has made it clear that injury attributable to other discharges or releases should be accounted for in baseline calculations.81 The complexity of liability attributed to multiple releases can be demonstrated by reference to Figure 1, which shows a release by PRP A at Level 1 that by itself would not cause an injury to the fishery, and a release by PRP B at Level 2 that also by itself would not cause an injury. In combination at Level 3, however, the releases would injure the fishery. In such a case, the question is whether in an action against PRP A, the individual PRP A should be: (1) liable for the total Level 3 injury; (2) not liable at all because, but for PRP B's release, PRP A's release would not have caused an actionable injury to the fishery; or (3) liable for some portion of the Level 3 injury.

[26 ELR 10465]

Figure 1

[SEE GRAPH IN ORIGINAL]

Under the "resulting from" language in CERCLA and the DOI's baseline formulation, it can be argued that PRP A is not solely responsible for the total Level 3 injury, and, therefore, should not be solely liable for natural resource damages. While, at first blush, there may appear to be something inequitable about exempting from liability a PRP who has indeed released a hazardous substance into the environment, in such a case an equitable solution may be for the public trustee to conduct a comprehensive natural resource damage assessment that pulls within the assessment process all significant releases of hazardous substances that have a measurable adverse impact on the resources. By doing so, the "whole" of the problem can be addressed and the cost of restoration can be divided among all PRPs.82

Some courts have applied a "substantial factor" or "substantially contributing factor" analysis in circumstances similar to the previous hypothetical. In United States v. Montrose Chemical Corp.,83 the court held that a plaintiff seeking to recover damages for alleged injury to natural resources under CERCLA must show that a defendant's release was the "sole or substantially contributing cause of each alleged injury to natural resources."84 The court in Artesian Water Co. v. New Castle County,85 held that in circumstances of multiple sources of contamination, a defendant's conduct may be the cause of the harm "if it was a material element and a substantial factor in bringing it about." Id. In the negligence context, section 431 of the Restatement (Second) of Torts succinctly states the substantial factor analysis under the common law:

The actor's negligent conduct is a legal cause of harm to another if (a) his conduct is a substantial factor in bringing about the harm, and (b) there is no rule of law relieving the actor from liability because of the manner in which his negligence has resulted in the harm.86

While some courts hearing CERCLA response cost actions have rejected substantially contributing cause as a defense,87 these cases are distinguishable from natural resource damage cases where the plaintiff's causation burden clearly is prescribed by CERCLA § 107(a)(1)-(4)(C). Thus, a "substantially contributing factor" defense remains viable in natural resource damage cases under CERCLA. If the Restatement approach is followed, the plaintiff trustee would have at least the initial burden of proving that the PRP's conduct was a substantial contributing cause to the harm.88

Conclusion

Given the inherent complexity of NRDAs, whether under CERCLA or the OPA, it is no wonder that causation issues present difficult legal and technical analytical problems. In addition, given the high monetary stakes that can attach to natural resource damage liability, such claims are likely to be hotly contested at virtually every level in the NRDA process. Even if trustees do not perform their own thorough causation/baseline analysis to comply with the DOI/NOAA regulations, they should anticipate that PRPs will. To optimize the likelihood of successful natural resource damages litigation over the critical causation component of NRDA liability, trustees and PRPs would be wise to engage technical experts capable of rigorous and rational causation analyses. All significant limiting factors impacting the natural resources at issue should be identified; those factors that are not actionable under CERCLA's natural resource damages provisions should be included in the baseline. A rational approach will be harder to contest, more likely to lead to settlement, and more likely to win judicial favor if the case ultimately goes to trial. In any case, we can expect the interpretation of causation and baseline issues to be played out in natural resource damage assessments and litigation and to provide a constant source of debate between PRPs and trustees.

1. See generally H.L.A. HART & A.M. HONRE, CAUSATION AND THE LAW (1st ed. 1959).

2. It is important to distinguish "causation in fact" from proximate causation. At a basic level, "causation in fact" refers to the particular cause which produces an event, and without which the event would not have occurred. This Article focuses on the cause in fact and proximate causation analyses dictated by the "resulting from" language in CERCLA § 107(a)(1)-(4)(C). Determining the cause in fact of a particular injury may occur through various tests, the most prevalent being the "but for" test. Under the "but for" test, an act or omission is the cause in fact of an injury when the injury would not have occurred "but for" the act. Proximate causation, on the other hand, is a judicially prescribed concept that imposes a logical cutoff for liability in the fact/outcome continuum based on factors such as reasonable foreseeability of consequences resulting from a defendant's acts, and superseding or intervening factors.

3. 42 U.S.C. §§ 9601-9675, ELR STAT. CERCLA §§ 101-405.

4. 33 U.S.C. §§ 2701-2761, ELR STAT. OPA §§ 1001-7001.

5. CERCLA § 107(a)(1)-(4)(C) creates a cause of action for "damages for injury to, destruction of, or loss of natural resources … resulting from such a release [of hazardous substances]…." 42 U.S.C. § 9607(a)(1)-(4)(C), ELR STAT. CERCLA § 107(a)(1)-(4)(C). OPA § 1002(b)(2) creates a cause of action for "natural resource damages resulting from a discharge of oil into or upon the navigable waters or adjoining shorelines or exclusive economic zone…." 33 U.S.C. § 2702(a), (b)(2), ELR STAT. OPA § 1002(a), (b)(2).

6. By order of the President, the DOI is charged with promulgating natural resource damage regulations applicable to CERCLA and the Federal Water Pollution Control Act. Exec. Order No. 12316, § 8(c)(3), 46 Fed. Reg. 42237 (Aug. 20, 1981).

7. NOAA is charged by congressional mandate with independently developing natural resource damage assessment (NRDA) regulations under the OPA. 33 U.S.C. § 2706(e), ELR STAT. OPA § 1006(e). NOAA issued its final NRDA regulations on January 6, 1996. NOAA, Natural Resource Damage Assessments, Final Rule, 61 Fed. Reg. 440 (Jan. 5, 1996) (to be codified at 15 C.F.R. pt. 990).

8. See infra notes 49-60, 69-74 and accompanying text.

9. 42 U.S.C. § 9607(a)(1)-(4)(A), ELR STAT. CERCLA § 107(a)(1)-(4)(A); 33 U.S.C. § 2702(b)(1), ELR STAT. OPA § 1002(b)(1).

10. 42 U.S.C. § 9607(a)(1)-(4)(C), ELR STAT. CERCLA § 107(a)(1)-(4)(C); 33 U.S.C. § 2702(b)(2), ELR STAT. OPA § 1002(b)(2).

11. 42 U.S.C. § 9604(a)(1), ELR STAT. CERCLA § 104(a)(1).

12. Under both CERCLA and the OPA, natural resource damage liability is residual to response cost liability and response actions. The extent of natural resource injuries and the scope of necessary restoration in a natural resource damage action depends on the success of the required response action in remedying the effects of a release or discharge. For example, the release of a hazardous substance (or discharge of oil) in a public park might result in the contamination of the soil and the destruction of the grass and trees. The subsequent response action might focus on making the area safe to the public by removing and replacing the contaminated soil. The natural resource damage action might then focus on the residual harm—the restoration of the services provided by the vegetation. This demarcation of primary and residual actions is embodied in the CERCLA and OPA natural resource regulations. See 43 C.F.R. § 11.84(c)(2) (1995) (CERCLA Regulations); DOI, Natural Resource Damage Assessments, 51 Fed. Reg. 27674, 27681 (Aug. 1, 1986) [hereinafter 1986 DOI NRDAs]; NOAA, Natural Resource Damage Assessments; Final Rule, 61 Fed. Reg. 440, 443 (Jan. 5, 1996) (to be codified at 15 C.F.R. pt. 990) (OPA Regulations).

13. For a more comprehensive discussion of the distinction between response cost and natural resource damages liability, see Brian R. Binger et al., The Use Contingent Valuation Methodology in Natural Resource Damage Assessments: Legal Fact and Economic Fiction, 89 NW. U. L. REV. 1029, 1038-44 (1995).

14. See AMOCO Oil Co. v. Borden, Inc., 889 F.2d 664, 670, 20 ELR 20281, 20284 (5th Cir. 1989), clarified on denial of reh'g, 20 ELR 20526 (5th Cir. 1990); O'Neil v. Picillo, 883 F.2d 176, 179 n.4, 20 ELR 20115, 20117 n.4 (1st Cir. 1989), cert. denied, 492 U.S. 1071 (1990); United States v. Bliss, 667 F. Supp. 1298, 1311 n.12, 18 ELR 20055, 20060 n.12 (E.D. Mo. 1987); United States v. Monsanto Co., 858 F.2d 160, 170, 19 ELR 20085, 20088-89 (4th Cir. 1988), cert. denied, 490 U.S. 106 (1989); see also Mehron Azarmehr, Natural Resources Damages Under CERCLA § 107: How the Liability Rules Differ Between Actions for Natural Resource Damages and Response Costs, 22 ELR 10655 (Oct. 1992); Julie L. Mendel, CERCLA § 107: And Examination of Causation, 40 J. URB. & CONTEMP. L. 83 (1991).

15. CERCLA § 107(a) describes liability for past and/or present owners and/or operators of a hazardous waste facility, arrangers for the disposal of hazardous wastes, and transporters of hazardous wastes in connection with a facility "from which there is a release, or a threatened released which causes the incurrence of response costs, of a hazardous substance …." 42 U.S.C. § 9607(a), ELR STAT. CERCLA § 107(a). See In re Bell Petroleum, 3 F.3d 889, 23 ELR 21474 (5th Cir. 1993); United States v. Alcan Aluminum Corp., 990 F.2d 711, 23 ELR 20706 (2d Cir. 1993); United States v. Alcan Aluminum Corp., 964 F.2d 252, 22 ELR 21124 (3d Cir. 1992).

16. 42 U.S.C. § 9607(a), ELR STAT. CERCLA § 107(a).

17. See David M. Moore, The Divisibility of Harm Defense to Joint and Several Liability Under CERCLA, 23 ELR 10529 (Sept. 1993).

18. 42 U.S.C. § 9607(a)(1)-(4)(C), ELR STAT. CERCLA § 107(a)(1)-(4)(C) (emphasis added).

19. Id. § 9607(f)(1), ELR STAT. CERCLA § 107(f)(1) (emphasis added). In addition to the "wholly before" exemption from liability, CERCLA also exempts PRPs from natural resource damage liability for injured resources that "were specifically identified as an irreversible and irretrievable commitment of natural resources in environmental impact statement or other comparable environmental analyses …." Id. The more general CERCLA defenses and exemptions also apply to natural resource damage actions including: (1) defenses from liability for damages "caused solely by," an act of God, an act of war, or an act or omission of a third party; and (2) exemption for "response costs or damages resulting from a federally permitted release …." Id. § 9607(b), (j), ELR STAT. CERCLA § 107(b), (j).

20. 635 F. Supp. 665, 16 ELR 20879 (D. Idaho 1986).

21. Id. at 674, 16 ELR at 20882-83 (citations omitted); see also Dedham Water Co. v. Cumberland Farms Dairy, Inc., 889 F.2d 1146, 20 ELR 20334 (1st Cir. 1989) (stating that in a natural resource damage casethere must be a connection between the defendant and the damages to the natural resources, while in a cost recovery case there must be a connection between the defendant and the response costs incurred).

22. 33 ERC 1207 (C.D. Cal. 1991).

23. Id. at 1208.

24. 880 F.2d 432, 19 ELR 21099 (D.C. Cir. 1989). For a more extensive discussion of Ohio v. U.S. Department of the Interior, see Robert F. Copple, The New Economic Efficiency in Natural Resource Damage Assessments, 66 U. COLO. L. REV. 675, 684-89 (1995); Binger et al., supra note 13, at 1056-71.

25. Ohio, 880 F.2d at 472, 19 ELR at 21121.

26. Id., 19 ELR at 21120 (acknowledging the textual distinctions between the response costs and natural resource damage liability provisions as indicating Congress' intent to allow a causation element to remain as part of the natural resource damages liability scheme).

27. See infra notes 36-60 and accompanying text.

28. See 33 U.S.C. § 2702(a), ELR STAT. OPA § 1002(a).

29. Supra notes 18-26 and accompanying text.

30. 33 U.S.C. § 2702(a), (b)(1), ELR STAT. OPA § 1002(a), (b)(1).

31. Id. § 2702(b)(2), ELR STAT. OPA § 1002(b)(2).

32. The OPA like CERCLA, establishes liability defenses for "damages or removal costs which were caused solely by" an act of God, an act of war, and/or an act or omission of a third party. Id. § 2703, ELR STAT. OPA § 1003. Likewise, the OPA exempts from liability discharges "permitted by a permit issued under Federal, State, or local law …." Id. § 2702(c)(1), ELR STAT. OPA § 1003.

33. See Anton P. Giedt, Natural Resource Damages Under the Oil Pollution Act of 1990: Setting Standards for Causation-of-Injury by Agency Rule-Making, 45 BAYLOR L. REV. 373 (1993); Craig R. O'Connor, Natural Resource Damage Actions Under the Oil Pollution Act of 1990: A Litigation Prospective, 45 BAYLOR L. REV. 441 (1993).

34. See supra notes 61-64 and accompanying text.

35. Supra note 63.

36. See supra note 6.

37. See generally Binger et al., supra note 13, passim; Robert F. Copple, NOAA's Latest Attempt at Natural Resource Damages Regulation: Simpler … But Better?, 25 ELR 10671 (Dec. 1995).

38. DOI, Natural Resource Damage Assessments, Final Rule, 59 Fed. Reg. 14262 (Mar. 25, 1994) (codified at 43 C.F.R. pt. 11).

39. See generally 43 C.F.R. § 11.20-.84 (1994).

40. For example, even in the preassessment screen phase, the trustee must determine that "the quantity and concentration of the discharged oil or released hazardous substance is sufficient to potentially cause injury, as that term is used in this part, to those natural resources." Id. § 11.23(e)(3).

41. Id. § 11.61(b) (emphasis added).

42. Id. § 11.61(a)(1) (emphasis added). In the preamble to its 1986 rule, theDOI explains its rules in a manner that crystallizes the need for a causal nexus between the PRP and the injury: "To assert a natural resource damage claim, the authorized official must establish that an injury occurred and must link that injury to the discharge or release, otherwise no further assessment actions are to be taken and no assessment costs are to be recovered." 51 Fed. Reg. 27679.

43. 43 C.F.R. § 11.14(v) (emphasis added).

44. Id. § 11.14(dd).

45. Id. § 11.63(a)(2).

46. Throughout the many challenges and amendments to the DOI's NRDA rules, the injury requirement, as set out in the 1986 DOI NRDAs, has remained unchanged. See supra notes 38-39.

47. See supra notes 19-20 and accompanying text.

48. Along with developing the basic injury and pathway requirements, the DOI has established detailed regulations regarding the injury determination process for specific resources, including surface water, groundwater, air, and biological resources. 43 C.F.R. § 11.64. See 51 Fed. Reg. 27683-87.

49. See generally 43 C.F.R. §§ 11.70-.73.

50. Id. § 11.70(a). See also Kennecott Utah Copper Corp. v. U.S. Dep't of the Interior. No. 93-1700, 1996 WL 392929 (D.C. Cir. July 16, 1996) (limiting compensable restoration or replacement measures to actions that restore or replace resource services to no more than baseline).

51. In its subsequent rulemakings, the DOI emphasized that the concept of baseline remained virtually unchanged from the original 1986 rule and the focus of injury quantification continues to be on loss of services. See DOI, Preamble, Natural Resource Damage Assessments, Notice of Proposed Rulemaking, 56 Fed. Reg. 19752, 19755-56 (Apr. 29, 1991); DOI, Natural Resource Damage Assessments, Proposed Rule, 58 Fed. Reg. 39328, 39339-40, 39344 (July 22, 1993); DOI, Natural Resource Damage Assessments, Final Rule, 59 Fed. Reg. 14262, 14272 (Mar. 25, 1994) (emphasizing quantification of services and restoration focusing on replacement of services).

52. 43 C.F.R. § 11.14(e).

53. 51 Fed. Reg. 27716 (emphasis added).

54. 43 C.F.R. § 11.14(nn).

55. Under the DOI's formulation, actionable lost services include both resource to human services and resource to resource services. As the DOI explains: "To help make these changes [changed conditions] useful for the analyses in the Damage Determination Phase [where dollar values are attributed to injuries] they must be converted into services. Broadly speaking, a service refers to any function that one resource performs for another or for humans." 51 Fed. Reg. at 27686.

56. 43 C.F.R. § 11.71(a). As the DOI explained:

Because the purpose of the natural resource damage assessment is to determine compensation for injuries rather than a decision on a level of cleanup, this phase requires ascertaining the baseline level of the services provided by the resource prior to the discharge or release. The baseline level of services is then compared to the existing level of services or the anticipated level of services upon the completion of any response actions to determine the residual change resulting from the discharge or release. The baseline level of services should include consideration of the resource's natural cyclical changes.

51 Fed. Reg. at 27679.

57. Id. at 27686.

58. For example:

An area might have been primarily a farming community when a dump was first established, but land use changed during the period of hazardous waste dumping, and much of the area might have been converted to industrial use. These land use changes need to be considered in establishing baseline; it may be unreasonable to assess damages based in this case upon lost use as wildlife habitat. In addition to human-caused changes, consideration may have to be given to natural changes, such as ecological succession.

Id. at 27687. Accordingly, for the purposes of accurately tying a PRP's release to the natural resource injuries for which that PRP is being held responsible, the DOI requires that baseline data also take into consideration and reflect normal variation in resource services, such as cyclic wildlife populations or forest progressions. Id. at 27688; see 43 C.F.R. § 11.72(b)(2) (requiring consideration of the normal range of conditions, as well as extreme or unusual changes due to traumatic events such as hurricanes and storms).

59. As the DOI explained:

Where there is a series of releases, baseline is determined by looking to the condition of the injured resource in the absence of the release or any number of releases that can be included in the current assessment. Whether cumulative releases can be assessed will depend upon the application of the liability provisions of section 107 of CERCLA to the incident in question in accordance with governing case law.

51 Fed. Reg. at 27695. Although beyond the scope of this Article, the DOI's reliance on the injury determination and baseline requirements may place on trustees at least the initial burden of apportioning natural resource injuries among PRPs.

60. Id. This concept is also reflected in the NRDA regulations that state:

Baseline data should reflect conditions that would have been expected at the assessment area had the discharge of oil or release of hazardous substances not occurred, taking into account both natural processes and those that are the result of human activities.

43 C.F.R. § 11.72(b)(1).

61. NOAA, Natural Resource Damage Assessments, Notice of Proposed Rule Making, 59 Fed. Reg. 1062 (Jan. 7, 1994).

62. NOAA, Natural Resource Damage Assessments, Notice of Proposed Rule Making, 60 Fed. Reg. 39804 (Aug. 3, 1995).

63. NOAA, Natural Resource Damage Assessments, Final Rule, 61 Fed. Reg. 440 (Jan. 5, 1996) (to be codified at 15 C.F.R. pt. 990).

64. A comprehensive discussion of the NOAA NRDA regulations is beyond the scope of this Article. For further information concerning the NOAA regulations, see Copple, supra note 37.

65. 61 Fed. Reg. at 506-07 (to be codified at 15 C.F.R. §§ 990.51, .52).

66. 59 Fed. Reg. at 1068; see 60 Fed. Reg. at 39810.

67. 61 Fed. Reg. at 504 (to be codified at 15 C.F.R. § 990.30). This definition of "injury" represents NOAA's effort to narrow its previously proposed definition of "injury" as: "Any adverse change in a natural resource or impairment of a service provided by a resource …." 59 Fed. Reg. at 1169.

68. 61 Fed. Reg. at 506 (to be codified at 15 C.F.R. § 990.51(b)-(d); see also id. (to be codified at § 990.51(f)) (factors for trustees to consider when selecting potential injuries for assessment). This formulation of the injury determination requirement is somewhat more flexible than NOAA's previously proposed requirement. See 59 Fed. Reg. at 1072, 1179.

69. See NOAA, Natural Resource Damage Assessments, Notice of Proposed Rule Making, 60 Fed. Reg. 39809 (establishing baseline analysis requirement and setting forth types of data that may be considered in making baseline determination); 59 Fed. Reg. at 1129-30; 61 Fed. Reg. at 479.

70. 61 Fed. Reg. at 503 (to be codified at 15 C.F.R. § 990.30).

71. 61 Fed. Reg. at 506 (to be codified at 15 C.F.R. § 990-52(b)). As NOAA has emphasized, "in addition to determining sdeterminig whether injuries have resulted from the incident, trustees must quantify the degree, and spatial and temporal extent of such injuries relative to baseline." Id. (to be codified at 15 C.F.R. § 990.52(a)).

72. 61 Fed. Reg. at 505 (to be codified at 15 C.F.R. § 990.30) (definition of "services"); see id. at 475 (discussing link between human and nonhuman services provided by natural resources).

73. 61 Fed. Reg. at 507 (to be codified at 15 C.F.R. § 990.53).

74. 61 Fed. Reg. at 507 (to be codified at 15 C.F.R. § 990.53(c)(3)(ii)); see also Copple, supra note 37, at 10675.

75. See 43 C.F.R. § 11.24(b) (requiring the trustee to consider exclusions in the preassessment screen); 61 Fed. Reg. at 505 (to be codified at 15 C.F.R. § 990.41(a)(2)) (under the OPA, requiring public trustee to determine, as part of the preassessment phase, whether the discharge at issue is subject to OPA statutory exclusions); 61 Fed. Reg. at 476 (excluding from liability natural resource damages resulting from a discharge in compliance with a permit).

76. While NOAA's proposed baseline analysis process appears to be very similar to the DOI's, NOAA has not spoken in any detail about the multiple causes issue, with the exception of the following statement from the 1994 proposed rule: "Where multiple factors may have contributed to an indivisible injury to a natural resource and/or service, the discharge of oil may be considered a contributing factor to the injury." NOAA, Natural Resource Damage Assessments, Notice of Proposed Rule Making, 59 Fed. Reg. 1179. Nonetheless, given the parallel approach taken by NOAA to causation and baseline, it would appear that the DOI analysis should apply to multiple causation issues under the OPA.

77. See supra notes 56-58 and accompanying text.

78. See supra note 58 (discussing lack of natural resource damages liability where land use changes are incompatible with the natural resource use at issue).

79. DOI, Natural Resource Damage Assessments, Proposed Rule, 58 Fed. Reg. 39344.

80. This hypothetical assumes that the PRP's release occurred after 1980. See 42 U.S.C. § 9607(f)(1), ELR STAT. CERCLA § 107(f)(1) (precluding recovery for natural resource damages "where such damages and the release of hazardous substances from which such damages resulted has occurred wholly before December 11, 1980"); id. An analysis of the wholly before exclusion is beyond the scope of this Article.

81. See supra note 49 and accompanying text.

82. Equitable allocations amongst PRPs for natural resource damages is beyond the scope of this Article.

83. 33 ERC 1207 (C.D. Cal. 1991).

84. Id. at 1208; see In re Acushnet River & New Bedford Harbor, 722 F. Supp. 893, 897, 20 ELR 20204, 20205-06 (D. Mass. 1989).

85. 659 F. Supp. 1269, 18 ELR 20785 (D. Del. 1987), aff'd, 851 F.2d 643, 18 ELR 21012 (3d Cir. 1988).

86. RESTATEMENT (SECOND) OF TORTS § 431 (1957).

87. See, e.g., O'Neil v. Picillo, 883 F.2d 176, 20 ELR 20115 (1st Cir. 1989), cert. denied sub nom. American Cyanamid Co. v. O'Neil, 493 U.S. 1071 (1990).

88. RESTATEMENT (SECOND) OF TORTS § 433B(1) (1957).

26 ELR 10457 | Environmental Law Reporter | copyright © 1996 | All rights reserved