Superfund: Outlook for and Experience With Natural Resource Damage Settlements
Published: 1996-04-16T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Pursuant to a congressional request, GAO reviewed natural resource damage provisions of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), focusing on: (1) the prospect for future claims by the federal government against polluters for natural resources damage; (2) the amount and use of settlements that federal agencies have already collected from polluters; and (3) the guidelines used by federal agencies to determine an appropriate amount of compensation for natural resources damage.
section_title: What GAO Found
paragraphs: GAO found that: (1) the Department of the Interior and the National Oceanic and Atmospheric Administration estimate that 60 sites may eventually have claims for damages to natural resources that will equal or exceed $5 million and that up to 20 of these sites may have claims exceeding $50 million; (2) of the $83.8 million owed to the federal government for the five largest natural resource damage settlements, only about 40 percent has been collected, and 11 percent of these funds has been spent; (3) the collected money has been used to reimburse trustees for completed damage assessments and to pay for natural resource restoration plans; (4) while CERCLA did not require standards or methods to determine damages, it directed Interior to develop consistent procedures that trustees should consider when assessing damages to natural resources; (5) trustees rarely use either of the procedures, since one is limited in scope and the other is costly and time-consuming; and (6) the 95 settlements reached as of April 1995 used abbreviated procedures that use readily available site-specific information and scientific literature to quantify damages.

section_title: Letter
paragraphs: Under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), a party responsible for a hazardous substance release is liable for injury to natural resources, such as wildlife and groundwater, resulting from the release. The regulations implementing the act designate certain federal agencies, state governments, and tribal authorities as natural resource trustees and authorize them to make claims against responsible parties for natural resource damages. As of April 1995, relatively few claims had been settled and their amount was small compared with the cost of cleaning up sites, but some recent claims have been quite sizeable. These large claims have heightened concern over the potential for future claims.
Because of your interest in the act’s natural resource damage provisions, you asked us to (1) obtain information on the potential for future federal natural resource damage claims, (2) determine what funds federal agencies have collected from natural resource damage settlements and how these funds have been used, and (3) describe the procedures that federal agencies use to determine the amount of damage claims. In responding to your second question, we limited our analysis, as agreed with your offices, to the five largest natural resource damage settlements that represent nearly four-fifths of the total dollars settled through April 1995.
subsections: section_title: Background
paragraphs: Under CERCLA, the parties responsible for releasing hazardous substances into the environment are liable for their cleanup. The cleanup of hazardous waste sites is administered by the Environmental Protection Agency (EPA) under its Superfund program, which is financed mainly by taxes on corporate income, crude oil, and certain chemicals. EPA places the most dangerous sites on the Superfund National Priorities List (NPL) for cleanup actions. As of September 1995, there were 1,290 sites on the NPL.
In addition to imposing cleanup obligations, CERCLA makes responsible parties liable for the costs of restoring injuries to natural resources resulting from a hazardous substance release. These resources are defined broadly under the law to include land, fish, wildlife, groundwater, and other resources belonging to, managed by, or otherwise controlled by federal or other governmental entities. Only natural resource trustees can file suits under CERCLA against parties responsible for injuring natural resources.
The law and its implementing regulations designate federal, state, and tribal authorities as trustees for natural resources. The Department of the Interior (Interior) and the National Oceanic and Atmospheric Administration (NOAA) are the two principal federal trustees for natural resources. Other federal agencies, such as the departments of Agriculture, Defense, and Energy, are the trustees for natural resources on the lands that they manage. States have traditionally acted as trustees for groundwater; the lands they own (e.g., state parks and forests); and fish, game, and other wildlife.
Under CERCLA and implementing regulations, Indian tribes have certain responsibilities as natural resource trustees. Although trustees’ responsibilities for natural resources are not always exclusive and can overlap, damages cannot be recovered by more than one trustee for injuries to the same resource by the same release. Thus, federal, state, and tribal trustees often coordinate their natural resource damage claims. Superfund money may not be used to restore injuries to natural resources or to conduct natural resource damage assessments. Instead, the trustees may recover monetary compensation (damages) from responsible parties to restore natural resources and to pay for the reasonable costs of assessing any damage to natural resources.
Several factors limit recoveries for natural resource injuries, according to Interior officials. First, injuries must be traced to particular releases of hazardous substances; second, a viable and solvent responsible party must be found; third, the claim must be filed within the statute of limitations;and fourth, a federal agency must have the financial resources available to assess the damage and develop the information necessary to support a claim. Furthermore, Department of Justice (Justice) officials state that the level of appropriations to fund federal natural resource damage programs is the single most important factor in determining how many sites can be assessed for damages.
For a site being cleaned up under CERCLA, the trustees can seek damages only for injuries that remain after the cleanup has been completed, according to Justice officials. Residual injuries occur when (1) a cleanup leaves significant contamination in the environment or (2) animal populations have been reduced or wildlife habitat has been destroyed and cannot recover quickly without human intervention. The federal trustees estimate that as of May 1995, the total compensation for residual natural resource injuries at all Superfund sites on the National Priorities List has been less than 1 percent of the total cost to clean up the sites.
A natural resource damage claim has three basic components: the necessary and reasonable costs of performing the damage assessment; the costs of restoring the resource to the condition that would have existed at the time of the injury (restoration costs), taking into consideration the effects over time of natural and human activities unrelated to the release of contamination; and the costs associated with the loss of resources or of the benefits/services derived from such resources (e.g., a wetland’s provision of habitat for animals and birds or a body of water’s provision of commercial or recreational fishing opportunities) from the date of the injury until the full restoration of the resources and/or services (referred to as interim lost values).
According to Interior and NOAA officials, the majority of natural resource damage cases involving federal trustees are settled as part of the cleanup agreement negotiated by EPA. Almost half of the settlements require the responsible party to make no separate payment for natural resource damages either because the negotiated cleanup will correct the injury to the natural resource or because no such injuries were found. Justice reports that through the end of April 1995, federal trustees had settled 98 natural resource damage cases for a total of $106 million. Of these settlements, 48 required no payment and the remaining 50 involved monetary recoveries ranging from about $4,000 to $24 million.
section_title: Outlook for Natural Resource Damage Claims
paragraphs: At our request, Interior and NOAA officials developed preliminary estimates of the number of sites where natural resource damage claims involving federal trustees may ultimately reach $5 million or more. The agencies estimate that 60 sites may eventually have claims for damages to natural resources that will equal or exceed $5 million and that up to 20 of these sites may have claims exceeding $50 million. Sixty sites represents less than 5 percent of the current number of Superfund sites.
Interior and NOAA officials cautioned that their projections are very preliminary and could change for a variety of reasons. Most importantly, as table 1 shows, detailed studies to assess the injuries to natural resources have not even begun at more than half (31) of the 60 sites estimated to have claims of $5 million or more. Furthermore, most of the sites have not been evaluated to determine whether natural resource losses can be traced to specific releases of hazardous substances and whether the parties responsible for these releases are capable of paying damages—prerequisites to pursuing natural resource damage claims. Another factor affecting agencies’ ability to make projections is that many sites will be cleaned up under the Superfund program, so that until EPA determines the scope of its cleanup efforts, the agencies do not know what, if any, residual resource damage will remain to be addressed through a claim. Finally, the value of these claims may ultimately differ from the initial estimates because the claims may be settled through negotiations with responsible parties. To date, almost all natural resource damage claims have been settled without litigation.
section_title: Restoration Still in the Planning Phase for the Five Largest Sites
paragraphs: Together, the five largest natural resource damage settlements—Elliott Bay in Seattle, Washington; Commencement Bay in Tacoma, Washington; New Bedford Harbor on the Achushnet River in Massachusetts; Montrose located offshore Los Angeles County, California; and the Cantara Loop Train Derailment outside of Dunsmuir, California—totaled $83.8 million, about four-fifths of the total dollar value of all 98 settlements reached as of April 1995. Through July 1995, about 40 percent of the moneys for the five settlements had been collected from the responsible parties. Of these collections, about 11 percent had been disbursed either to reimburse trustees for completed damage assessments or to pay for planning natural resource restorations. However, no other restoration actions had been taken with the moneys collected.
Collections and disbursements are governed by settlement agreements. Although some of the funds collected from responsible parties are paid directly to the trustees to reimburse them for the costs they incurred in performing damage assessments, most of the funds usually reside in court-administered registry accounts until the trustees are ready to use them. Frequently, settlements are structured so that payments may take place over a period of years. Additionally, CERCLA requires that all participating parties agree to a restoration plan requiring extensive public review before the restoration can begin.
For each of the five cases, restoration planning was taking place at the time of our review. Settlement dates ranged from December 1991 to March 1994. The reasons that restoration had not yet begun included the need at all sites to develop and obtain public comments on a restoration plan; unexpected cleanup problems at New Bedford, which hampered the planning process; and intervening lawsuits at Cantara Loop, which postponed the disbursement of collected funds.
Table 2 summarizes the amounts collected and disbursed for the five largest settlements as of July 1995. The settlements are arranged by age, from the oldest to the most recent. (App. I describes the status of restoration activities for each settlement.)
section_title: Procedures in Regulations to Assess Natural Resource Damages Seldom Fully Implemented
paragraphs: CERCLA does not require the trustees to use a particular standard or method for assessing natural resource damages. It did, however, direct Interior to develop standardized procedures for all trustees to consider in assessing and valuing injuries to natural resources. Accordingly, the regulations include two procedures for valuing natural resource injuries, but the trustees are not required to use these procedures. Because one procedure is limited in scope and the other procedure can be costly and time-consuming to implement, the trustees seldom fully implement either one. Instead, according to Interior and NOAA officials, the trustees most often use an abbreviated procedure that employs readily available site-specific information and scientific literature to quantify damages.
subsections: section_title: CERCLA’s Requirements
paragraphs: CERCLA directs that the assessment process identify the best available procedures to determine damages, including both direct and indirect injuries, and takes into consideration the ability of the ecosystem to recover on its own. CERCLA further states that the measure of injuries need not be limited by the sums required to restore or replace such resources. For example, the value of a particular service or benefit that was lost to the public while the resource was injured may also be calculated and collected.
section_title: Procedures Developed in Response to CERCLA’s Requirements
paragraphs: In response to CERCLA’s requirements, Interior developed two valuation procedures: a simplified assessment process that requires the use of minimal data (“type A”) and a detailed process that requires extensive site-specific data (“type B”). The use of these damage assessment procedures is optional. If the trustees elect to implement these procedures fully, they are granted a legal presumption of correctness in a court of law that shifts the burden to the defendants to prove otherwise. NOAA officials said that this rebuttable presumption is of limited value, since the trustees still must prove their case. Furthermore, since all but a few cases had been settled without litigation as of December 1995, the trustees have not had to take the time and incur the expense needed to implement these procedures fully. According to NOAA, Interior, and Justice officials, full implementation of the type B procedure is most often not necessary because settlements can be reached without it or it is impractical because of the cost and time involved. According to Interior officials, the trustees use elements of the procedures to the extent necessary to reach a settlement in a cost-effective manner. The type A procedure provides standard methods for conducting simplified natural resource damage assessments through computer modeling. As of December 1995, only one computer model had been developed for the type A procedure. This model can be used only for small incidents of limited duration (e.g., one-time spills) that occur in coastal and marine environments. The model consists of programs to perform mathematical computations and databases containing chemical, biological, and economic information. Although the model requires minimal use of actual field data because it is based on general assumptions, it can be used to assess the injuries to natural resources, quantify these injuries (e.g., the number of fish killed or acres of wetlands contaminated), and determine the damages from many types of discharges or releases. Interior has proposed adding a model for the Great Lakes region to the type A regulations. This model will also be appropriate only for small, one-time incidents.
Federal trustees said they rarely use the type A approach for CERCLA claims because it applies to few CERCLA damage cases. It has greater application for oil spills, which are addressed under a separate law—the Oil Pollution Act. As of July 1995, NOAA, the primary federal trustee for resources in coastal waters, had used this model to quantify damages at only one site. For a detailed description of this case, see appendix II.
The type B procedure provides a set of detailed guidelines for conducting extensive site-specific studies to assess the extent of the injury and to value the damages. This procedure can involve the use of various evaluation methods and techniques. For example, the regulations specify various methods for quantifying interim values for lost use. One such technique is the travel cost analysis, which estimates the costs of the travel and extra time required to go to an alternative site rather than the injured site for a purpose such as fishing. Trustees can also use a technique referred to as the contingent valuation method. This method, which is not often used by federal trustees, employs public opinion surveys to establish a dollar value for natural resources that do not have an established market value. For example, if contamination from past mining had contributed to reducing or destroying the salmon population in a stream, members of the public would be asked what price they would be willing to pay to have that stream restored to a condition that would allow the return of salmon.
Interior and NOAA officials said they seldom use the type B procedure fully because of the expense and time—usually several years—required to perform such studies. Federal officials said that they did not believe that a full type B assessment had ever been performed, but they identified five sites where the procedure had been most fully pursued. An illustration of the type B procedure appears in appendix III.
section_title: Abbreviated Procedure Most Often Used
paragraphs: Federal trustees most often use an abbreviated type B procedure to quantify damages. Under this process, they follow the basic steps of the type B procedure—determining the injuries, quantifying their value, and determining the damages. However, instead of employing the time-consuming and costly site-specific surveys and analyses required by the type B procedure, they use readily available off-the-shelf literature and other information to value damages using various evaluation techniques.
The abbreviated approach is commonly used when, during a negotiation with EPA, a private party wants to settle its liability for both cleanup costs and natural resource damages at the same time. In such situations, EPA or Justice notifies the trustees of the party’s request. The trustees then typically have about 2 to 3 months to assess any injury to natural resources at the site, quantify the government’s claim, and, if possible, obtain a mutually satisfactory settlement agreement with the responsible party. To meet this time frame, the trustees use an abbreviated approach that draws on readily available site-specific and other information to quantify the damages.
A 1991 settlement illustrates the use of the abbreviated process in the context of settling a party’s liability for natural resource damages as part of the cleanup settlement. In this case, a solvent recovery firm was a responsible party at two different sites, both of which are included on the NPL. The natural resource damage settlement came about after the responsible party asked to resolve its liability for natural resource damages at the same time as it settled its liability for cleanup costs. After being notified of the responsible party’s request, a Fish and Wildlife Service field biologist began to review available information about the potential injuries to resources at the sites. The field biologist identified data that had been gathered from the sites as part of the investigation to identify the appropriate cleanup remedies. These data were sufficient to show that injuries had occurred to federal and state trust resources. The biologist combined the data with other readily available information to quantify the damage using a relatively new technique, the habitat equivalency analysis. This analysis calculates the acreage needed to replace the services that were lost when the habitat was injured rather than calculating the dollar value of the loss, as is usually done. Using this method, the field biologist calculated that 17.5 acres of rare dune and swale lands and 31 acres of wetlands were needed to replace the injured resources.
section_title: Agency Comments and Our Evaluation
paragraphs: We transmitted copies of a draft of this report to the Secretary of the Interior, the Secretary of Commerce, and the Attorney General for their review and comment. Although the agencies did not disagree with the facts presented in the draft report, they wanted to emphasize information associated with three issues. Their general comments appear in appendixes V through VII. In addition, the three agencies provided technical and editorial comments, which we incorporated into the report as appropriate. We did not reproduce these comments in the appendixes.
The first issue involves the potential for future natural resource damage claims. Interior stressed in its comments that the projected number of sites having natural resource damage claims in excess of $5 million represents a maximum number and that the actual number would likely be smaller. We have qualified our description of the estimate to indicate that it represents an upper bound.
The second issue involves the use of the funds collected from natural resource damage settlements. All three agencies said that there are site-specific and legal reasons, beyond the control of the trustees, why restoration has not started at the five largest settlement sites. The agencies pointed out that a small experimental restoration project had begun at Commencement Bay. Interior stated that “restoration planning” is an essential part of the restoration process and, as such, should be reported as a restoration action. We believe it is useful, when describing the status of the program, to distinguish between restoration planning and restoration action. Interior also stated that it is misleading to compare the total collections for the five largest settlements with these settlements’ total value because most of the collections resulted from one settlement. We believe that it is appropriate to present summary figures to indicate the overall status of the five cases, and we have also shown the collections and value for each settlement so that the summary figures can be properly interpreted.
The third issue involves the procedures used by the trustees to develop natural resource damage claims. Both Interior and NOAA said that the settlement process is based on selecting appropriate elements of the assessment procedures provided in the regulations. Evaluating whether the agencies were making “appropriate” selections from the regulations was beyond the scope of our review. Interior said that for relatively minor cases, the type B procedure is not necessarily costly and time-consuming. We have added this qualification to our discussion of the type B procedure.
We conducted our review from July 1995 through February 1996 in accordance with generally accepted government auditing standards. See appendix IV for further discussion of our scope and methodology.
As arranged with your offices, unless you publicly announce its contents earlier, we plan no further distribution of this report until 30 days after the date of this letter. At that time, we will send copies to the Secretary of the Interior, the Secretary of Commerce, and the Attorney General. We will make copies available to others upon request.
Please call me at (202) 512-6112 if you or your staff have any questions. Major contributors to this report are listed in appendix VIII.
section_title: Restoration Status for Five Largest Settlements
subsections: section_title: Elliott Bay/Seattle, Washington
paragraphs: Elliott Bay is a 21-square-kilometer area in central Puget Sound encompassing the commercial waterfront district of Seattle. (See fig. I.1.) Over the past 150 years, Elliott Bay and the adjoining Duwamish Waterway estuary have been contaminated by many hazardous substances, including chromium, cadmium, copper, lead, zinc, and several toxic and/or carcinogenic organic compounds, such as polychlorinated biphenyls (PCB). These pollutants have extensively contaminated nearshore sediments, reducing the value of the area as a habitat for fish and wildlife. In 1991, the natural resource trustees—including the Department of Commerce’s National Oceanic and Atmospheric Administration (NOAA), the Department of the Interior (Interior), the state of Washington, and area Indian tribes—reached a $24.3 million legal settlement with the city of Seattle and the municipality of Metropolitan Seattle, both of which had contributed to the contamination. The settlement allocated $12 million for remediating sediments, $10 million for developing habitat, $2 million for controlling pollution sources, and $250,000 for reimbursing NOAA for damage assessment costs. As of July 1995, $3 million of the $24.3 million settlement had been collected. Of this amount, $0.7 million had been disbursed.
The Panel of Managers—which, in this case, included both the trustees and the responsible parties—developed a restoration plan that was completed in June 1994. This plan requires cleaning up the bay’s contaminated sediments and also studying sediment recontamination patterns to ensure the success of planned habitat development projects. In July 1995, the Elliott Bay Waterfront Recontamination Study was completed. This study will form the basis of an effort to remediate the contaminated sediments. In addition, the panel had screened all possible habitat restoration sites and was acquiring the properties. As of December 1995, the panel was investigating sites for sediment remediation efforts.
section_title: “Montrose” Offshore Los Angeles County, California
paragraphs: Approximately 2,000 metric tons of DDT and PCBs were discharged into the southern California marine environment by various industrial companies through the local county sewer system. (See fig. I.2.) The state of California issued a health advisory against the consumption of fish from the area because of dangerous concentrations of DDT and PCBs, and a commercial fishery was closed. In June 1990, the Department of Justice (Justice) filed a claim, collectively referred to as “Montrose,” on behalf of NOAA and Interior against the 10 responsible parties, for injuries to natural resources caused by discharges of DDT and PCBs into the marine environment. In May 1992, the federal and state trustees settled one case with some responsible parties for $12 million.
San Miguel Is.
Santa Cruz Is.
Anacapa Is.
Santa Rosa Is.
Santa Barbara Is.
San Nicolas Is.
Santa Catalina Is.
San Clemente Is.
In March 1995, a federal court of appeals overturned a second $42.2 million settlement between the trustees and the Los Angeles County sanitation district and municipalities and sent the settlement back to the federal district court for reconsideration. As of December 1995, this decision was still under litigation.
In the meantime, according to Interior officials, the trustees are proceeding with the preliminary restoration plan. They anticipate modifying the plan as remediation actions are completed or more settlements are obtained. According to Justice officials, these future settlements may be substantial.
For the case that has been settled for $12 million, $8.1 million has been collected, $1.4 million of which has been disbursed. The money was used to reimburse some of the trustees’ past damage assessment costs.
section_title: New Bedford Harbor, Massachusetts
paragraphs: The New Bedford Harbor case was one of the first natural resource damage cases filed under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). Located on the Achushnet River, near Buzzards Bay, Massachusetts, the harbor has long been used by the fishing, shipping, and manufacturing industries. (See fig. I.3.) After studies during the 1970s found high levels of PCBs and heavy metals in the harbor’s fish and shellfish, several fishing areas were closed. By the end of 1992, the federal and state trustees had reached a $20.2 million settlement with five companies to cover the costs of the natural resource damage assessment and restoration. The companies had also agreed to an $88 million Superfund cleanup settlement with the Environmental Protection Agency (EPA) and the state. The nature of the natural resource restoration work is contingent upon the scope of the cleanup remedy that EPA selects for the outer harbor. Restoration projects under consideration by the trustees include, but are not limited to, improving anadromous fish runs, reestablishing seagrass beds, creating wetlands, and constructing artificial reefs.
As of July 1995, all of the $20.2 million settlement had been collected and $0.5 million had been disbursed for restoration planning. According to NOAA officials, restoration planning has been delayed because of the uncertainty over EPA’s cleanup plans. EPA’s record of decision for the cleanup and disposal of the most contaminated sediments had to be renegotiated when the community opposed the incineration of contaminated sediments. The community’s challenge led to a delay in planning and cleaning the remaining contaminated sediments. Nevertheless, the trustees are going forward with the restoration plan, which they say can be modified if EPA’s actions interfere with the trustees’ restoration activities. As of December 1995, the trustees had asked the public to suggest ideas for restoration. These ideas are expected to be rank-ordered and included as alternatives in the restoration plan, which the trustees expect to release for public comment by the summer of 1996.
section_title: Commencement Bay/Tacoma, Washington
paragraphs: Commencement Bay is an estuarine bay located in the southern part of Puget Sound in Tacoma, Washington. (See fig. I.4.) Industrialization and urban development have severely degraded natural habitats in the bay by introducing a variety of hazardous substances into the surface water and groundwater and the sediments of the bay area. Much of the bay’s nearshore area is a federal Superfund site. Federal, state, and tribal trustees negotiated a natural resource damage settlement with the Port of Tacoma (Oct. 1993) and the Simpson Tacoma Kraft Company (Dec. 1991)—both of which contributed to natural resource losses—for a total of about $13 million. Moneys from the settlement will be used to restore, replace, or acquire equivalent components of the historical ecosystem, including vegetated shallows, mudflats, tidal marshes and creeks, off-channel sloughs and lagoons, naturalized stream channels, and adjacent upland buffer areas.
Of the $13.3 million settlement, $2.6 million had been collected and about $1.0 million had been disbursed as of July 1995. The disbursements have been primarily to the trustees to reimburse their expenditures for past damage assessment activities and to develop the baywide restoration plan. In addition, as part of the settlement, one of the responsible parties agreed to conduct a pilot restoration project to convert upland industrial property into wildlife habitat. The results of the pilot project will be used to develop the baywide restoration plan. Although this project was only 1.5 months old at the time of our visit in July 1995, local Interior officials had already noted a 10-percent increase in wildlife populations.
The Commencement Bay trustees are attempting to assess the natural resource damage and plan the restoration while EPA is still cleaning the site. In addition, not all parties have settled. For example, according to a NOAA official, one of the largest potential sources of pollution is a smelting plant that is currently negotiating its responsibility for Superfund cleanup activities with EPA. The cleanup may not be completed for another 5 years. The trustees are continuing to discuss settlements with other responsible parties and reported in December 1995 that they were actively negotiating settlements with three different sets of parties. Justice officials believe that future settlements may be substantial.
Because other natural resource damage settlements are not expected for several more years, the trustees are developing a baywide restoration plan that can be implemented as sediments are remediated and/or funds become available. As of December 1995, this plan was in draft, and the trustees expected to circulate it for public comment in the spring of 1996.
section_title: Cantara Loop Train Derailment, Dunsmuir, California
paragraphs: In July 1991, a train derailed on a stretch of track known as the “Cantara Loop” near Dunsmuir, California. (See fig. I.5.) The derailment spilled approximately 19,000 gallons of the herbicide metam sodium into the upper Sacramento River. The spill destroyed all aquatic life along a 42-mile stretch of the river and caused extensive injuries to a native trout fishery as well as to the river’s ecosystem. A claim for natural resource damages was filed by the state of California and Justice.
The responsible parties settled with California and Justice—on behalf of Interior, the U.S. Department of Agriculture, and EPA—for $38 million in 1994, using CERCLA and other federal and state laws. According to a senior attorney at Justice overseeing the settlement, the $38 million included $14 million under CERCLA’s natural resource damage provisions, $5 million under CERCLA’s emergency restoration provisions, and $19 million under the Clean Water Act, other parts of CERCLA, and various California state laws. The settlement created the Cantara Trustee Council consisting of five voting members—four from California state agencies and one from the Fish and Wildlife Service representing Interior.
According to Justice officials, as of July 1995, none of the $14 million recovered under CERCLA’s natural resource damage provisions had been deposited into the trustee account, and therefore none had been disbursed. Although, according to the official in charge of the restoration in California’s Department of Fish and Game, $16 million of the total $38 million Cantara Loop settlement had been collected by July 1995, these funds were frozen by the court pending the resolution of an additional lawsuit filed by environmental organizations seeking a greater role in the restoration. In November 1995, the plaintiffs in the suit settled their complaints, and the funds will be made available to the trustees early in 1996.
The Cantara Trustee Council met for the first time in November 1995. According to the Cantara program supervisor with the California Department of Fish and Game, as of December 1995, most elements of the Sacramento River ecosystem are recovering without any further special restoration efforts. In November 1995, the Council announced that it would use the $14 million to fund grants for restoration projects rather than develop an in-house restoration program. According to terms agreed upon by the Council, projects that directly affect the upper Sacramento River ecosystem will receive a higher weighted score. However, the trustees may use the money to develop natural resource restoration projects in other areas of the state. The Council plans to choose the project(s) in March 1996 and begin implementation in April 1996.
section_title: An Application of the Type A Procedure
paragraphs: As of July 1995, NOAA, the primary federal trustee for natural resources in coastal waters, had used the type A procedure once in settling a natural resource damage claim under CERCLA. This case involved a ship’s loss of 21 shipping containers, four of which held 25-gallon drums of arsenic trioxide, a highly poisonous metal oxide that is used as an insecticide, herbicide, and wood preservative. A single dose, the size of an aspirin, is lethal to humans.
The incident occurred in January 1992 off the coast of New Jersey in an area that is used for commercial and recreational fishing. Although sampling ultimately showed only background levels of arsenic in the water and sediment, a 16-square-mile area was closed to all fishing activities for 180 days because of the potential for seafood contamination. NOAA, as the federal trustee, concluded that the evidence of injury to its trust resources was not sufficient to warrant a claim for biological injuries. However, the agency determined that it did have a claim for the fishery’s closure. To value this claim, NOAA entered data into the type A model about the extent and duration of the fishery’s closure. The result was a claim of approximately $280,000 for the lost harvest of fish and shellfish from this area. NOAA and the responsible party settled the case for $205,000, which included reimbursement of the assessment’s cost.
section_title: An Application of the Type B Procedure
paragraphs: The complexity of the type B damage assessment procedure is illustrated by the state of Idaho’s actions in 1983 at the inactive Blackbird Mine site, located on national forest lands within the state. The federal claims were filed by Justice in 1993 on behalf of NOAA, the Forest Service, and EPA. Copper, cobalt, and other heavy metals from mining activities at this site have extensively contaminated groundwater and surface water, including 26 miles of the Panther Creek, a tributary of the Salmon River. To perform the assessment, the trustees conducted a series of technical and economic studies to determine the extent of the injury to natural resources, quantify the damages, and develop a plan to restore the injured resources. For example, NOAA commissioned an expert study to identify the effects of the mine’s contamination on the sediments and small animals in the streambeds of the Panther Creek watershed. Part of this study involved taking samples at 16 sites to show the conditions both upstream and downstream of the contamination. The agency also paid consultants to study injuries to fish. These studies found toxic responses (including death) when salmon were exposed to water quality conditions similar to those found at the site. The trustees settled the case in September 1995. Although this settlement is valued at more than $60 million dollars, the only cash payment required from the potentially responsible party (PRP) is approximately $8 million for restoration and reimbursement of past damage assessment costs. The remainder of the settlement is the value of the PRP’s in-kind cleanup and restoration work. The largest portion of the in-kind work is the agreement that the PRP will restore the water quality to support all life stages of the salmon by the year 2002—valued at about $57 million by the trustees.
section_title: Objectives, Scope, and Methodology
paragraphs: To determine the number of future federal natural resource damage claims, we interviewed officials at Interior and NOAA. After we discovered that this information was not readily available, Interior offered to survey the agency’s regional offices in order to estimate this number. From the survey, Interior developed a list of sites that it believes may have claims ranging from $5 million to $50 million and over $50 million. NOAA and Justice then reviewed this list for possible overlaps and/or omissions. In addition, we interviewed the Chief of the Mining Section in EPA’s Office of Solid Waste and representatives of the Western Governors Association, the National Association of Attorneys General, and the Mineral Policy Center.
To obtain information on how settlement dollars are being collected and spent, we focused on the top five CERCLA settlements involving federal agencies, since they accounted for nearly 80 percent of the settlement dollars that Justice had identified as of April 1995. This approach emphasizes larger and possibly more complicated and time-consuming restorations. However, since the information on the smaller settlements resides predominantly with Interior, whose operations are decentralized over numerous field offices, we decided to concentrate our efforts more cost-efficiently on the largest settlements. NOAA, as the lead trustee for four of the five settlements, provided the financial backup records, disbursement request forms, consent decrees, and memorandums of agreement for these settlements. For the fifth settlement, Cantara Loop, which was led by the state of California, the California Department of Fish and Game and the California Attorney General’s Office provided information on the status of the settlement and restoration activities. We interviewed both headquarters and field office trustees for the five sites. We visited Elliott Bay in Seattle, and Commencement Bay in Tacoma, Washington. To obtain the most up-to-date information, we contacted the lead trustees in the field at the five sites as late in the data collection phase of this study as possible. Therefore, all restoration activities are reported as of December 1995.
In identifying the approaches the trustees used to develop their natural resource damage claims, we reviewed the regulations for implementing CERCLA as well as other documents for developing damage claims. Interior and NOAA briefed us on their methods and explained how they had developed the claims for four sites. We also reviewed the documents related to these cases.
section_title: Comments From the Department of the Interior
section_title: Comments From the Department of Commerce
section_title: Comments From the Department of Justice
section_title: Major Contributors to This Report
subsections: section_title: Resources, Community, and Economic Development Division, Washington, D.C.
section_title: Chicago Field Office
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