Presenting a live 90-minute webinar with interactive Q&A. Today s faculty features:

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1 Presenting a live 90-minute webinar with interactive Q&A Natural Resource Damages Assessment: Valuing and Contesting NRD Injury and Damages Methods for Determining and Quantifying Injury and Damages, Evaluating Cooperative Assessment TUESDAY, OCTOBER 3, pm Eastern 12pm Central 11am Mountain 10am Pacific Today s faculty features: James H. (Jim) Colopy, Partner, Farella Braun + Martel, San Francisco Robert L. (Buzz) Hines, Partner, Farella Braun + Martel, San Francisco The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions ed to registrants for additional information. If you have any questions, please contact Customer Service at ext. 10.

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5 Natural Resource Damages Assessment: Valuing and Contesting NRD Injury and Damages Methods for Determining and Quantifying Injury and Damages, Evaluating Cooperative Assessment October 3, 2017 Strafford Publications Webinar Buzz Hines Jim Colopy Farella Braun + Martel LLP San Francisco, CA rhines@fbm.com jcolopy@fbm.com

6 Buzz Hines, a partner in Farella Braun + Martel's Environmental Law Department and Product Law Department, is a longtime environmental practitioner. He is the current chair of Farella s Air Quality and Climate Change group. Buzz represents clients in complex government and private litigation and enforcement actions, including state and federal cost recovery actions, NRD claims, air and water, and hazardous waste actions. A former trial attorney with the Department of Justice Environmental Enforcement Section, Buzz is recognized by Chambers USA 2017 and is listed in Best Lawyers and the International Who s Who of Environmental Lawyers. Jim Colopy, a partner in Farella Braun + Martel's Environmental Law Department and Product Law Department, and recent Chair of the Department for six years, has specialized in environmental law for his twenty-three year career. Jim has represented clients in environmental, natural resource damages, toxic tort, government enforcement, citizen suit, cost recovery and property damage litigation in federal and state courts across the country. Jim is listed in Best Lawyers and serves of the Board of Directors of the Environmental Law Institute. 6

7 Presentation Overview Regulations for Assessing Natural Resource Damages (NRD) Injury Determination Injury Quantification Damage Determination Cooperative Assessment Best Practices 7

8 NRD Assessment Scenarios 8

9 Natural resources Sound in the Nature of Biological Entities: Under CERCLA: land, fish, wildlife, biota, air, water, ground water, drinking water supplies, and other such resources belonging to, managed by, held in trust by, appertaining to, or otherwise controlled by the United States any State or local government [or] any Indian tribe. 42 USC 9601(16). Five Federal Statutes Provide for NRD Recovery : 1. CERCLA, 42 USC Clean Water Act, 33 USC 1321(f) 3. Oil Pollution Act of 1990, 33 USC 2702(a), (b)(2) 4. National Marine Sanctuaries Act, 16 USC 1443(a)(1) 5. Park System Resource Protection Act, 54 USC

10 In the case of injury to, destruction of, or loss of natural resources liability shall be to the United States Government and to any State for natural resources within the State or belonging to, managed by, controlled by, or appertaining to such State and to any Indian tribe for natural resources belonging to, managed by, controlled by, or appertaining to such tribe. CERCLA, 42 USC 9607(f)(1) 10

11 Essence of the NRD Claim [Natural resource damages] are calculated by adding (1) the cost of restoring, rehabilitating, replacing or acquiring the equivalent of, the damaged resources, (2) the diminution in value of those natural resources pending restoration, and (3) the reasonable cost of assessing those damages. [plus (4) non-use damages] United States v Viking Resources, Inc., 607 F Supp 2d 808, 830 (S.D. Tx. 2009) For the (2) element above it is more common to think of value of the interim lost use of the natural resource from the time of injury to the time of restoration. 11

12 Standing to Bring a NRD Claim Remember that natural resources are defined by CERCLA as land, fish, wildlife, biota, air, water, ground water, and other such resources belonging to, managed by, held in trust by, appertaining to, or otherwise controlled by the United States any State or local government, any foreign government, any Indian tribe, or, if such resources are subject to a trust restriction, any member of an Indian tribe. CERCLA 9601(16). Case law has accordingly defined trustees to include those mentioned in this definition plus Municipalities if authorized by Governor of State per CERCLA 9607(f)(2)(B). Trustees do not include private parties. Split of Authority Whether Co-Trusteeship is Divisible.. Coeur d Alene I (D. Idaho 2003) and Tyson Foods (N.D. Okla 2009) vs Coeur d Alene II (D. Idaho 2005) 12

13 An Overview of Natural Resource Damage Assessments ( NRDAs ) NRDAs are administrative processes differ under each statute NRDAs not required prior to suit May be cooperative or unilateral Advantages to trustees, including.. Coordination of multiple trustee claims Opportunity to improve quality of evidence Control of the timeline to settlement discussions Potentially obtaining the rebuttable presumption Advantages to responsible parties, including. Opportunity to improve quality of evidence Chance to demonstrate strength of defenses Lower chance for inflation of assessed damages Focus attention away from companion tort claims 13

14 NRDA Under CERCLA Using DOI Regulations CERCLA NRDA conducted under DOI Regs at 43 CFR Part 11 CERCLA NRDA has four phases Preliminary assessment screen 43 CFR to Assessment plan 43 CFR to Type A assessment 43 CFR to Type B assessment 43 CFR to Post assessment 43 CFR to Trustees advance funds for assessment But see Confederated Tribes of Yakama Nation v. United States, 616 F. Supp. 2d 1094 (ED Wash. 2007) The administrative record of the NRDA must be complete Includes information developed and received under statute Includes information considered as well as relied upon Dynamics of cooperative v. unilateral assessments Important safeguards built Into assessment process 14

15 Preliminary Assessment Screen ( PAS ) PAS is critical step in the NRDA PAS required under DOI regulations 43 CFR Objective is to determine whether there is a reasonable probability of making a successful claim 43 CFR Authorized official shall preliminarily determine that all of 5 criteria under 11.23(e) are met = honored in the breach Authorized official shall determine the extent to which there would be no liability for NRD in light of any or all of 11 stated defenses Irreversible and irretrievable commitment Wholly before December 11, 1980 Federally permitted release Application of pesticide product registered under FIFRA Recycled oil from service station Exceptions from liability under CERCLA 107(f)(i)(j) and 114(c) Exclusions in CWA 311(a)(2) or (b)(3) Authorized official must preliminarily assess baseline Authorized official must determine that NRDA is warranted 15

16 Assessment Plan- Type A and Type B Objective is to ensure assessment performed in systematic method under Type A and/or B procedures at reasonable cost Must identify and document use of all Type A and/or Type B procedures to be followed - 43 CFR Type B assessment plans must include, per 43 CFR Statement of authority for asserting trusteeship Detailed sampling plan Plan for coordination with remedial activity under NCP Procedure for sharing data with responsible parties Confirmation of exposure Restoration/compensation plan if data sufficient Participation by the responsible parties 43 CFR 11.32(a) Public participation 43 CFR 11.32(c) Preliminary Estimate of Damages 43 CFR Consideration of Defenses Importance of Baseline 16

17 Assessment Three-Subphase Process in Type B assessments Injury determination subphase 43 CFR et seq. Quantification subphase 43 CFR et seq. Consideration of baseline - 43 CFR 11.70(a) Consideration of defenses 43 CFR Damage determination subphase 43 CFR et seq. Stated v. revealed preference economics Disclosure of the Restoration and Compensation Plan 43 CFR Disclosure of the Preliminary Estimate of Damages 43 CFR

18 Post-Assessment The Report of Assessment 43 CFR Demand in writing /Notice of Intent to Sue 43 CFR Extension of the 60-day Period 43 CFR Deposits into the Restoration Account 43 CFR Settlement Options Settlement Strategies 18

19 Injury determination Covered natural resource? Injury to resource? Connection between incident/spill and injured natural resource 19

20 Injury quantification Baseline condition of resource Extent or scope of injury Baseline services Recoverability of resource Reduction in services attributable to release 20

21 Damage determination Value of injured resource vs. cost to restore/replace resource Value of services lost Compensable value/lost use value 21

22 Cooperative assessment Joint technical assessment of damages Transaction costs When does it make sense to proceed in a cooperative fashion? 22

23 Best practices Overview and Recap Injury determinations Optimizing your position through prudent use of the NRD assessment process Cooperative assessment considerations 23

24 Questions and Conclusion 24