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DEE-15: Natural Resource Damages Enforcement Policy

Commissioner Policy

The DEC Policy System
Department ID: DEE - 15
Program ID: N/A
Issuing Authority: Thomas C. Jorling, Commissioner
Originating Unit: Environmental Enforcement, Compliance Assurance Bureau
Signature: Thomas C. Jorling
Date: 17 May 1989
Issuance Date: 17 May 1989
Latest Review Date (Office Use):

Consistent with the Civil Penalty Policy; Order on Consent Enforcement Policy; Record of Compliance; Natural Resource Damages and Small Business Self-Disclosure Policy:

  1. The policies and procedures set out in this document are intended solely for the use and guidance of DEC personnel. They are not intended to create any substantive or procedural rights, enforceable by any party in administrative and judicial litigation with the State of New York. DEC reserves the right to act at variance with these policies and procedures.
  2. Any penalty calculations undertaken hereunder by DEC in anticipation of litigation are exempt from disclosure under the Freedom of Information Law.
  3. Pursuant to §4547 of the Civil Practice Law and Rules of the State of New York, all evidence or conduct of negotiations or settlement are inadmissible as evidence as proof of liability for or invalidity of the claim which is disputed as to either validity or amount of damages.
  4. The penalty amounts calculated with the aid of this document in adjudicated cases must, on the average and consistent with consideration of fairness, be significantly higher than the penalty amounts which DEC accepts in consent orders which are entered into voluntarily by respondents.

I. Introduction

This Enforcement Guidance Memorandum establishes an enforcement strategy for pursuing claims for natural resource damages.

On November 30, 1987, Governor Cuomo appointed the Commissioner of Environmental Conservation as trustee for natural resources under Section 107 of the Federal Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) and Section 311 of the Clean Water Act (CWA). As trustee, the Commissioner is charged to assess damages to natural resources resulting from releases of hazardous substances and to use recovered sums to restore, replace, or acquire the equivalent of the injured resource. Natural resources include land, fish, wildlife, biota, air, and ground and surface waters owned, managed, controlled by or appertaining to the State of New York. The Commissioner's new responsibilities under federal law complement long-standing requirements under Articles 1 and 3 of the Environmental Conservation Law to conserve, improve and protect new York's natural resources.

To carry out this mandate, the Department must develop fair and consistent policies to accomplish its goal of obtaining the fullest natural resources restoration or replacement practicable, and to refer significant cases of natural resources damages to the Department of Law for evaluation and timely preparation and filing of federal court complaints seeking recovery for such damages.

To meet these objectives, I appointed a Natural Resources Damages Task Force and charged the Task Force with responsibility to make recommendations concerning how the Department should pursue natural resources damages claims.

Based on the recommendations of the Task Force, I hereby adopt the following strategy for pursuing natural resources damages claims.

II. Initial Cases to be Referred to the Attorney General

Claims for damages to Nassau Lake, the St. Lawrence River and Onondaga Lake have been referred to the Attorney General. Due to the critical natural resources involved and the scope of damages to those resources as determined by Department staff, the Office of General Counsel, in cooperation with the program divisions of the Department, should prepare the following sites for referral to the Attorney General:

  1. Hoosick River
  2. Lower Oswego River
  3. Lake Ontario
  4. Niagara River

III. Criteria for Additional Sites

The Department should also pursue referral of additional sites based on the following criteria:

  1. significant and quantifiable natural resources injuries;
  2. a provable causal link between such injuries and the release of hazardous substances by a responsible party;
  3. financially viable responsible part(ies);
  4. qualification for one of the extensions of time as set out in CERCLA §113(g)(1) (i.e., National Priorities List Sites, federal facilities, or sites at which CERCLA remedial actions are "otherwise scheduled").
  5. the potentially responsible part(ies) have no ascertainable dispositive defenses including:
    1. the defense of a prior release from liability (consent order or judicial settlement);
    2. the defense that both the release of hazardous substances and the resulting injuries occurred wholly before December 11, 1980 (this defense does not include continuing releases or injuries) (CERCLA §107);
    3. the defense that "...the damages to natural resources complained of were specifically identified as an irreversible and irretrievable commitment of natural resources in an environmental impact statement, or other comparable environment (sic) analysis, and the decision to grant a permit or license authorizes such commitment of natural resources, and the facility or project was otherwise operating within the terms of its permit or license..." (CERCLA §107(f)(1)); and
    4. the defense that the release and resultant damages were caused solely by an act of God or of war, or by an act or omission of a third party (not an employee, or agent, or contractor of defendant, if defendant exercised due care with regard to the hazardous substances) (CERCLA §107(b)).

Suggestions for additional referrals should be provided to the Deputy Commissioner and General Counsel to the attention of the Director, Division of Environmental Enforcement, and the Deputy commissioner for Natural Resources by no later than May 15, 1989.

IV. Identification and Assessment of Injuries

Pursuant to CERCLA §301(c)(1)-(3), the United States Department of the Interior, on August 1, 1986, promulgated regulations concerning the assessment of damages for injuries to natural resources. (the regulations were amended on February 22, 1988, to conform to the Superfund Amendments and Reauthorization Act).

The use of the procedures and assessment methodologies in the regulations is optional for a State trustee. If a trustee follows the regulations, CERCLA provides that the trustee's determination or assessment of damages to natural resources is entitled to a "rebuttable presumption." Although the exact meaning and value of a "rebuttable presumption" under federal law is unclear, it appears that the trustee could present a prima facie case to the federal court which, if unchallenged, would be "presumed" to be accurate. Defendants would initially have the burden of "going forward" (i.e., presenting evidence to overcome the initial prescription) to demonstrate why the calculation of damages should not be accepted by the court.

It appears, however, that the limited value of the "rebuttable presumption" is outweighed by many disadvantages inherent in the structure of the regulations, especially the low dollar value the regulations would assign to natural resource damages. More comprehensively, there are inherent limitations in the assessment methodologies, both scientific and economic, and significant procedural constraints in the regulations.

In short, while the Department of Interior's regulations provide a useful starting point and helpful guidance for conducting natural resource damage assessments, strict adherence to them in order to gain the value of the "rebuttable presumption" is unwarranted.

V. Integration with Site Remediation Procedures

Natural resource damage claims provide a mechanism for recovery of the residual damages that remain after all site remediation efforts have been completed. In the future, to maximize and accelerate the pace of resource protection and recovery, it is preferable to address natural resource damages under the remedial program conducted by DEC. This will accelerate clean-up and restoration of the affected resource.

Therefore, in order to minimize the Department resources required for this effort, in the future we should integrate the effort to acquire data into the Department's existing remedial program.

To the extent appropriate under the circumstances, new Remedial Investigation/Feasibility Studies (RI/FS's) should define site impacts as broadly as possible, consistent with statutory requirements, to maximize the remediation of natural resource injuries in the remedial action phase. In such cases, this will minimize residual injuries subject to natural resources damages claims procedures. The Division of Hazardous Waste Remediation should therefore circulate proposed work plans to other program Divisions which regulate resources that may be affected by the release of hazardous substances, to ensure that appropriate data is collected to allow adequate assessment of all affected natural resources. In light of the inactive site program's ambitious timetable for investigating and remediating sites, any additional work required should be carefully incorporated into the RI/Fs process to ensure that the implementation of the remedial program is not delayed. If significant additional work will be required, alternative mechanisms should be explored, including initiating parallel investigations and incorporating natural resource damage assessments into Consent Orders.

VI. Economic Methodologies for Assessment of Damages

Damages to natural resources may include:

  1. direct losses, such as reduction in active recreational use (e.g., fishing and swimming), and impairing the structure and function of ecosystems;
  2. indirect losses, such as "passive" birdwatching, and similar benefits from visual amenities;
  3. the opportunity cost of potentially not being able to use a resource in the near term and longer term; and
  4. damages to well-being stemming from the knowledge that a resource exists, without "use" of the resource.

It is rare that market or quasi-market prices, such as the sale price of fish or shellfish, or the entry fee to a public park or the unit value of a mineral or water supply, capture the full value or benefit to the public of natural resources and the resultant loss in value due to damages from contamination. For example, the benefits to a recreational angler of fishing are far greater than the market value of his or her fish catch.

Because market value does not truly represent the value of natural resources, various well-defined economic methodologies have been developed over the past 40 years to measure the indirect benefit or value of natural resources.

"Replacement" or "restoration" costs should be used for all sites selected, in addition to damage losses, and claims should be submitted to cover both these elements.

Department staff should proceed to collect all available studies and information that value natural resources (and estimate benefits and/or loss of benefits) at the chosen sites. In addition to New York State-specific data, staff should utilize important nationwide studies for resources and uses as described in the table below:

Types of CERCLA Resources and Possible Uses (Loss of Use)
Types of CERCLA Resources Recreation Agriculture Commercial Aesthetic Extractive
Land (including vegetation) Hiking,
camping
Grazing,
farming
Unclear Scenic views,
vistas
Mining
underground,
surface,
surface water
Water (fresh) Swimming,
boating
Aquaculture,
irrigation
Fishing Scenic views Water supply
Surface water (marine) Swimming,
boating
Aquaculture Fishing Scenic views Water from
salt water
Fisheries Fishing Feed source
for poultry
Fishing - -
Wildlife Hunting,
viewing
Unclear Zoos Scenic views -
Wetlands Fishing,
viewing
Crops Development Scenic views Water supply
Groundwater None Irrigation Water supply Unclear Water supply
Air Unclear Unclear Unclear Scenic views Unclear

VII. Use of Funds Recovered for Natural Resources Damages

This section discusses the uses to which funds recovered in compensation for natural resources damages may be put, as well as available fiscal mechanisms for the placement and disbursement of such funds.

  1. Use of Damage Awards for Restoration or Replacement and for Reimbursement or Assessment Costs

    Both CERCLA and the Clean Water Act provide that any damage awards recovered for injuries to natural resources shall be "available for use to restore, replace or acquire the equivalent of such natural resources by the State." (CERCLA §107(f)(1)). In addition, the State can recover from the responsible party "the reasonable costs of assessing such injury." CERCLA §107(a)(4)(c).

    Negotiated settlements should be structured to reimburse the state for its expenses in doing the assessment at the site, separate from awards to restore or replace the damaged resources.

  2. Fiscal Mechanisms for Expenditure of Funds

    The Department can create a revolving account for damage claim and assessment cost monies (obtained from responsible parties) for Future use. The State needs to have legislative appropriations (i.e., approval) made to permit expenditures of such awards. For future years, the Department should factor into the Budget making process, its need for (a) "hard dollars," and (b)legislative appropriations to expend damage awards obtained from responsible parties pursuant to litigation for assessment, Restoration or replacement of the injured resources.

VIII. Interagency Protocols to Implement Enforcement Strategy to Recover Natural Resources Damages

  1. DEC/Attorney General

    The Commissioner hereby establishes the following procedures to govern the relationship between the Department and the Attorney general's Office concerning natural resources damages claims. These procedures will promote close coordination between the two agencies and thereby enhance the State's ability to bring cases involving natural resources damages that will prevail in court and produce maximum environmental benefits for the resources expended. The need for early and close coordination cannot be over stressed.

    The Department periodically receives requests from the Attorney General's Office for information concerning potential natural resources damages cases. The Department's natural resources damages strategy is designed to prioritize State natural resources damages claims. Hereinafter, both the Department's and the Attorney General's efforts in this area will target the specific cases to be pursued. Accordingly, ad hoc requests from the Attorney General's Office for information in these Areas should be referred to the Director of the Division of Environmental Enforcement for appropriate response. If he deems appropriate, the Director may convene a meeting of appropriate personnel to discuss whether priorities should be revised so that efforts can be made to investigate sites not previously considered to be of sufficiently high priority to warrant attention at that time. Referrals to the Attorney General should be made by the General Counsel.

  2. DEC/Federal Agencies (DOT-EPA-NOAA)

    Procedures to govern co-trustee relationships with federal agencies will be more complex. There are many significant as yet unanswered legal questions about the overlap of State and Federal natural resources - and thus trustees' respective jurisdictions - that need to be resolved with the DOI, EPA and NOAA (National Oceanographic and Atmospheric Administration of the Department of Commerce). Foremost among such issues is the State trustee's previously unquestioned sovereignty over its natural resources. The Department has already engaged in preliminary discussions with representatives of these agencies and it needs to follow up on these discussions.

  3. DEC/Other State Agencies

    In the course of pursuing its natural resources damages strategy, the Department may, from time to time, require the assistance and input from other state agencies (e.g., the Department of Health, Department of Agriculture and Markets, Office of Parks and Recreation, etc.). Efforts should be made at the earliest possible time in each case to identify these agencies and seek their cooperation.

IX. Conclusion

It is clear that natural resources throughout the State have Been injured by the release of hazardous substances and that the Commissioner, as trustee, has the authority, under the federal and state law, to recover from those responsible for such injuries. This memorandum outlines the Department's strategy for pursuing such claims.

Albany, New York
DATED: May 17, 1989

New York State Department of Environmental Conservation

Thomas C. Jorling
Commissioner

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