Anyone who operates a chemical, petrochemical or bulk petroleum terminal facility has likely encountered a natural resource damages (NRD) claim. But since NRD claims have historically only been assessed after a catastrophic environmental contamination event, such as the 1989 Exxon Valdez disaster, many risk professionals may not have had any experience with them at all. This may be about to change, however, with many now referring to natural damages as a "sleeping giant" due to the potential lor vast recoveries under a host of federal and state laws. Before moving onto a more detailed discussion of this type of claim, first, it is is important to ensure we understand the necessary language.
Natural resource damages can be defined as compensation for injuries to natural resources sustained in the course of a spill or release of contamination or pollutants to the environment, with "injuries" referring to any measurable adverse change in the physical or chemical quality or viability of the resource.
Damages, (considered residual damages, i.e., they cannot be addressed by remedial or corrective action) may be assessed on the reduction in quantity or quality of natural resource services, with "resource services" referring to the physical and biological functions performed by natural resources, (food, habitat, drinking water and recreation), including the human use of those services.
Natural resources are also governed by a number of federal laws including the Superfund (the Comprehensive Environmental Response, Compensation and Liability Act or CERCLA ), the oil Pollution Act of 1990 (OPA) and the Clean Water Act. The protected elements include "land, fish wildlife, biota, air, water, drinking water supplies and other such sources" that are held in trust of the public or trust resources. The State of New York, for example, has designated the NYS Department of Environmental Conservation (DEC) as the natural resource trustee.
An NRD claim is defined as the injury to, destruction of, or loss of natural resources, including the costs for a natural resource damage assessment. Such assessments, which are typically directed by the natural resource trustee, consist of analyzing the injury and determining the appropriate restoration or service options during a damage settlement.
Superfund and OPA-through enforcement by the Environmental Protection Agency (EPA) as well as various state statutes-not only hold parties responsible for the remediation of hazardous waste sites, contaminated properties and oil spills not only liable for remediation, but also for the resulting NRD. Historically, NRDrelated fines have been assessed as a result of a catastrophic ecological disaster (Exxon's NRD settlement totaled $900 million after Valdez); however, states are now attempting to seek restoration and compensation for damages involving natural resources involving routine pollution.
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3 comments:
it is a good article and we all should be looking at NRDA issues as early as possible......
Liz. This article is a great find, and Bob is right. Even if the Supremes rule against the NJDEP ( probably on a technicality), NRDs have the feel of a major new liability concern for PRPs. At minimum, it will increase their insurance premiums. We'll be hearing about this for a long time to come, i believe.
Classic Bacsik raises some good points, epsecially about insurance which may or not be available to address NRD concrns - depending on your site and existing policies. It may be worth considering whether your existing policies include NRD coverage.
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