Executive Summary - NATURAL RESOURCE DAMAGES ASSESSMENT REGULATIONS FOR HAZARDOUS SUBSTANCES

Natural resource damages assessment (NRDA) is the process by which resource management agencies determine and collect restoration funds when hazardous material spills or hazardous waste sites harm natural resources. The Department of the Interior (Interior) has issued regulations to provide a framework and standards for this process (see 43 CFR part 11).

The Superfund law (CERCLA) authorizes NRDA when there is a release of a hazardous substance. The Clean Water Act (CWA) authorizes NRDA when there is a discharge of a hazardous substance into navigable waters. Certain categories of parties responsible for a release or discharge, known as "responsible parties" or "RPs," are liable for natural resource damages if the release or discharge results in injury to natural resources. Natural resources include land, fish, wildlife, plants, air, and water that the government manages on behalf of the public. Only Federal, State, and Tribal officials who have been designated as natural resource "trustees" may recover natural resource damages. The primary Federal trustees are Interior (including the Fish and Wildlife Service, the National Park Service, and the Bureau of Land Management), NOAA, and the Department of Agriculture's Forest Service. State and Tribal trustees commonly include fish and game, park, and water management authorities.

Trustees must use recovered damages to fund restoration, rehabilitation, replacement, or acquisition of the equivalent of the injured natural resources. These actions, often referred to collectively as "restoration," are principally designed to return injured resources to baseline (i.e., the condition that would have existed if the release or discharge had not occurred). Restoration may also compensate for the public's interim loss of injured resources from the onset of injury until baseline is restored. In contrast, response actions, normally conducted by the U.S. Environmental Protection Agency (EPA) or State or Tribal response agencies, focus on controlling exposure to a released substance and removing the substance in order to protect human health and the environment from threats of additional harm. Thus, although response can reduce or even eliminate the need for restoration in some cases, the two types of action are distinct.

The hazardous substance NRDA regulations are optional procedures that trustees may use to conduct their assessments. Trustees generally use the regulations as a framework for settlement negotiations with RPs. However, if trustees and RPs fail to reach settlement and trustees must file suit, Federal and State trustees who comply with the regulations have an advantage, known as a "rebuttable presumption," in litigation. The regulations provide an administrative process that involves preparation of various documents and coordination with interested parties. The regulations also include a range of technical procedures for the actual determination of injuries and damages.

Under the regulations, there are four phases of an NRDA: Preassessment, Assessment Plan, Assessment Implementation, and Post-Assessment. Once trustees discover or are notified of a release or discharge, they may enter the Preassessment phase. Based on certain criteria, trustees perform a Preassessment Screen to determine whether additional assessment work is warranted. They document their determination, and if work is warranted, they proceed to the Assessment Plan phase.

During the Assessment Plan phase, trustees prepare an Assessment Plan describing how they intend to determine injuries and damages. This phase also involves coordination among trustees and between trustees and response agencies, involvement of the RP, and opportunity for public comment on the Assessment Plan.

After the Assessment Plan is drafted and made available for public review, trustees enter the Assessment Implementation phase, in which they perform the work described in the Assessment Plan. The regulations contain two general types of assessment procedures for determining injury and damages. "Type A" procedures are standardized procedures for simplified assessments requiring minimal field observation that are available to determine damages for minor spills in certain environments. "Type B" procedures are more detailed procedures for assessments in other cases. The regulations provide criteria for using a type A procedure, type B procedures, or both.

The Department is developing type A procedures in stages. Currently there are two type A procedures: one for minor spills in coastal or marine areas that incorporates the Natural Resource Damages Assessment Model for Coastal and Marine Environments (NRDAM/CME); and one for minor spills in the Great Lakes that incorporates the Natural Resource Damages Assessment Model for Great Lakes Environments (NRDAM/GLE). Users supply limited data, such as wind conditions and the amount and duration of the spill, and the NRDAM/CME and NRDAM/GLE determine the physical fate of the spilled substance, and estimate acute lethal effects. The models then estimate and sum the cost of restoring baseline and the value of certain lost interim public uses, such as hunting, fishing, birdwatching, and beach visitation. Because type A procedures are intended for minor spills, the regulations place a $100,000 cap on their use if trustees intend to obtain a rebuttable presumption.

When trustees use type B procedures, they determine injury and damages through scientific and economic studies. The regulations include both specific definitions of injury for each category of natural resource and provisions allowing trustees to establish additional injuries if certain criteria are met. The regulations provide guidance on the selection of testing and sampling methodologies to determine whether an injury has occurred and whether a pathway of exposure exists. If an injury has occurred and a pathway exists, trustees then quantify the injury by: (1) identifying the functions, or "services," such as habitat, recreation, erosion control, provided by the resource; (2) determining the baseline level of such services; and (3) quantifying the reduction in service levels as a result of the release or discharge.

After determining and quantifying injury, trustees identify a reasonable number of possible restoration alternatives, including natural recovery. Trustees select one of the alternatives based on several factors, including technical feasibility, relationship of costs to benefits, and consistency with response. Trustees then document their decisions in a Restoration and Compensation Determination Plan, which is subject to public review and comment. After the public comment period, trustees estimate the cost of implementing the selected restoration alternative. Trustees may also, but are not required to, determine the value of the associated public interim losses using methodologies authorized by the regulations.

Once the trustees have calculated damages, they enter the Post-Assessment phase. In this phase, the trustees prepare a Report of Assessment detailing the results of the Assessment Implementation phase. The trustees present the Report to the RPs, along with a demand for damages and reasonable assessment costs. Trustees have the authority to settle their damages claims at any time. However, if the RPs do not agree to pay within 60 days of receipt of the demand, then the trustees may file suit.

Once damages have been awarded or settlement has been reached, trustees officials establish an account for the recovered damages and prepare a post-assessment Restoration Plan. The trustees provide for public comment on the Plan and then implement the Plan using recovered natural resource damages.