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The Latest Evolution of NRD

Natural resource damages (NRD) has been part of the environmental liability reality for nearly 30 yrs. NRD has evolved slowly over the years, but those changes have been significant. At the forefront of these changes has been the National Oceanic and Atmospheric Administration (NOAA) as a federal trustee under the Department of Commerce (DOC). Back in the mid-1990s NOAA introduced a fundamental change in NRD assessment process shifting away from the traditional economic-based valuation of NRD claims (developed by the Department of the Interior in the mid-80s) to a resource-based valuation process (using a Habitat Equivalency Analysis). NOAA is now making a shift in the timing and the funding of the NRD process relative to site investigation and cleanup. This shift could significantly impact where the money comes from to pay NRD assessments. 

Historically in the CERCLA arena, NRD claims have been brought by the Trustees upon the completion of the Record of Decision (ROD) once the remedial objectives and endpoints had been established. Whether the Trustee employed an economic or a resource-based valuation approach, the NRD claim would include costs for habitat restoration, loss of habitat service, and NRD assessment. The Trustees would fund the assessment, the claim would be brought by the Trustees to the potentially responsible parties (PRPs), and typically a settlement would be reached between the PRPs and Trustees which included the assessment costs. 

Recently at the Portland Harbor Superfund site, a NOAA-lead group of Federal, State and Tribal Trustees has requested the PRPs fund, up front, the NRD assessment prior to any official NRD claim. The PRPs are currently working on investigation and feasibility study activities and have conducted some interim remedial measures but have yet to choose a final remedy for the site. So, in this instance the costs for the NRD assessment are being expended by the PRPs during the investigation process. This may change the categorization of these costs from settlement costs, to investigation-level costs. It will be interesting to see if this becomes standard operating practice for Trustees across the country and, if so, will there be any challenges to this practice. We will be keeping an eye on this issue.

For more information, please contact Michael Marsden at (925) 403-6200.