Natural Resource Damage Assessment

Summary

Pursuant to the Oil Pollution Act of 1990, the President delegated natural resource damage assessment (“NRDA”) rulemaking responsibility to the National Oceanic and Atmospheric Administration (“NOAA”).[1] NOAA in turn promulgated regulations to guide the trustees through the NRDA process with the goal of promoting the “expeditious and cost-effective restoration of natural resources and services injured as a result of an incident.”[2] Prior to February 5, 1996, discharges of oil were governed by the Department of the Interior’s NRDA regulations under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”).[3]

The NRDA process has three phases. The first phase is the preliminary assessment phase to determine whether the oil spill caused injuries.[4] The trustees must be able to demonstrate connections between the release of the oil, the pathways the oil moves along from the release point to the resources, exposure of the resources to the oil, and finally a causal connection between exposure and resource injury.[5] The second phase is the injury assessment and restoration planning phase to quantify injuries, identify possible restoration projects (“restoration alternatives”),and develop a restoration plan.[6] The trustees must make a draft restoration plan available for public review and comment, and incorporate those comments into the final plan. The third phase is restoration implementation, during which time the trustees fund and implement restoration projects in accordance with the plan.[7]

Restoration

Generally, restoration projects begin with the third phase of NRDA. However, there are two forms of restoration that can take place earlier. Emergency restoration may be conducted prior to NRDA where the action is necessary to minimize injury or stop continuing damage, where such action is feasible and likely to minimize injury or stop continuing damage, and where the costs of such action are reasonable.[8] Early restoration may be conducted, as opportunities arise, to achieve restoration faster.[9] Early restoration efforts are funded by the party responsible for the oil spill, and if they are successful, can be used to offset that party’s total natural resource damage liability.

For restoration, NRDA requires the trustees to restore, rehabilitate, replace, or acquire the equivalent of the injured natural resources and services[10] and in doing so, seeks a nexus between the types and magnitude of the injury and the restoration.[11] Restore means to return the natural resource and services to the condition that would have existed had the oil spill not occurred.[12] Rehabilitate means to return injured natural resources or services to a state different from the pre-oil-spill condition, yet beneficial to both theenvironment and public.[13] Rehabilitation can be understood as partial restoration, which may be necessary where it is impossible to return the ecosystem to the pre-oil-spill condition. For example, if an oil spill causes a particular species to go extinct, only rehabilitation of the ecosystem is possible. Replacement refers to substituting natural resource or services for those that have been injured. For example, a recreational service can be created away from the site of impact that provides comparable services to the service that is no longer available. “Acquire the equivalent of” refers to obtaining ownership or other rights to natural resources and services.[14]

There are two acceptable forms of restoration: primary and compensatory. Primary restoration is any action, including natural recovery (i.e. no human intervention), that returns the injured natural resources and services to the condition they would be in had the spill not occurred.[15] Depending on the injury, the primary restoration actions may include actions to accelerate recovery or remove the conditions that would make recovery unlikely.[16] Compensatory restoration is “any action taken to compensate for interim losses of natural resources and services that occur from the date of the incident to recovery.”[17] Trustees must scale the compensatory restoration action to ensure that the present discounted value gain from the action equals the present discounted value of interim losses from the injury.[18] There are two major categories of scaling approaches. The first is the resource-to-resource or service-to-service approach, which requires equivalency between the service (or resource proxy) that is injured and the replacement service (or resource proxy). This approach relies on the implicit assumption that the public is willing to accept a one-to-one tradeoff between the services that the resources provide. Where this assumption does not apply, trustees use the valuation approach. Under the valuation approach, trustees use a variety of economic methods to determine the public’s willingness to forego lost services for services provided by compensatory restoration actions. This approach relies on the concept that value can be measured in units of exchange, including units of natural resources or dollars.

Each restoration alternative should be designed as a package of primary and compensatory restoration actions, so that the alternative would satisfy the Oil Pollution Act’s goal of returning natural resources and services to baseline and compensating the public for interim losses.[19] When selecting a restoration alternative, trustees must evaluate, at minimum: 1) the cost to carry out the alternative; (2) the extent to which each alternative is expected to meet the trustees' goals and objectives in returning the injured natural resourcesand services to baseline and/or compensating for interim losses; (3) the likelihood of success of each alternative;(4) the extent to which each alternative will prevent future injury as a result of the incident, and avoid collateral injury as a result of implementing the alternative;(5) the extent to which each alternative benefits more than one natural resource and/or service; and (6) the effect of each alternative on public health and safety.[20] Where factors for two or more alternatives weigh equally, trustees should choose the alternative with the lowest cost.[21]

NRDA actions must comply with all relevant laws including worker safety laws, and environmental laws with consultation, permitting, or review requirements, such as the National Environmental Policy Act, Endangered Species Act, the Coastal Zone Management Act, the Migratory Bird Treaty Act, the National Marine Sanctuaries Act, the National Historic Preservation Act, and the Archeological Resources Protection Act.

[1]See 33 U.S.C. §1006(e)(1).
[2]15 C.F.R. § 990.10.
[3]See 15 C.F.R. § 990.20.
[4]See 15 C.F.R. § 990.51.
[5]See id.
[6]See 15 C.F.R. § 990.52.
[7]See 15 C.F.R. § 990.53-990.56.
[8]15 C.F.R. 990.26.
[9]See NOAA, http://www.gulfspillrestoration.noaa.gov/assessment/restoration/.
[10] 15 C.F.R. §990.30.
[11]Written Statement of Tony Penn, Hearing on Assessing Natural Resource DamagesResulting From the BP Deepwater Horizon Disaster, Before the Committee onEnvironment and Public Works Water andWildlife Subcommittee, U.S. Senate, June 28, 2011, http://www.legislative.noaa.gov/Testimony/Penn062811.pdf.
[12]Damage Assessment and Restoration Program, Primary Restoration: GuidanceDocument for Natural Resource Damage Assessment Under the Oil Pollution Act of1990.
[13]See id.
[14]See id.
[15]Id.
[16]DamageAssessment and Restoration Program, Primary Restoration: Guidance Document forNatural Resource Damage Assessment Under the Oil Pollution Act of 1990.
[17]See 15 C.F.R. §990.30.
[18]Damage Assessment and Restoration Program, Scaling Compensatory ResourceActions: Guidance Document for Natural Resource Damage Assessment Under the OilPollution Act of 1990.
[19]Damage Assessment and Restoration Program, Scaling Compensatory ResourceActions: Guidance Document for Natural Resource Damage Assessment Under the OilPollution Act of 1990.
[20]15 C.F.R. § 990.54 (a).
[21]15 C.F.R. § 990.54 (b).