Since its enactment in 1980, the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") has dramatically altered the legal landscape concerning hazardous substance liability and remediation. During this time, CERCLA's Superfund program has resulted in nearly 45,000 site assessments, 7,400 removal actions, 850 completed cleanups and the commitment of more than $20 billion from potentially responsible private parties for remediation costs.

While many parties have managed to resolve Superfund liability through costly and complex administrative and judicial proceedings and settlements, and remediation at many sites is completed or well underway, an even larger second round of potential liability looms on the horizon. Natural resource damages ("NRD") actions pose the threat to "reawaken" seemingly resolved hazardous substance liability by seeking damages for the value and restoration of site-related natural resources beyond the costs of removal or remediation.

Federal NRD claims are primarily based on three statutes: CERCLA, the Oil Pollution Act and the Clean Water Act. [1] CERCLA authorizes claims for "damages for injury to, destruction of, or loss of natural resources, including the reasonable costs of assessing such injury, destruction, or loss" resulting from the release of hazardous substances. Federal, state and tribal governments may, in certain circumstances, act on behalf of the public as "trustees" for injured natural resources and seek to recover the cost of restoring, replacing or acquiring the equivalent of the damaged resource. Thus, NRD claims pose a conundrum of potential double-liability: while CERCLA's Superfund program focuses on cleaning up hazardous substances, NRD claims seek recovery of the value of the natural resources injured by that contamination.

In the past, NRD claims tended to focus on adverse impacts to surface water, and associated wildlife, recreation and aesthetics, such as the 1989 Exxon Valdez oil spill that resulted in a $900 million NRD settlement. More recently, however, NRD litigation has targeted groundwater contamination, threatening to "re-open" a vast number of former and existing Superfund sites to duplicative liability – sites where a remedy is already in place and there are no impacts to wildlife, recreation or aesthetics.

Private corporations, public agencies and other entities must recognize the potential for NRD claims even at former and existing sites. Resolution of CERCLA Superfund liability does not automatically resolve future NRD liability unless separately negotiated with the relevant federal, state and tribal trustees. However, there are a number of potential defenses to NRD liability:

• Lack of Standing: Because CERCLA NRD actions may only be brought by designated trustees acting on behalf of the United States, States and Indian tribes, courts have held that private plaintiffs, citizens groups and municipalities do not have standing to recover damages for natural resources. 42 U.S.C. § 9607(f)(1).
• 
  
• Federal Preemption: A plaintiff's unjust enrichment, trespass, public or private nuisance, negligence or strict liability claims, often asserted to pursue punitive damages, are potentially preempted by federal law due to the inherent conflicts between common law claims and CERCLA's NRD provisions, including: (1) conflicts over the use of recovered damages, which may be used for any purpose under state law but are strictly limited to restoring natural resources under federal law; and (2) conflicts between state and federal law concerning settlors' contribution rights and protections.
• 
  
• Lack of Jurisdiction: Where a plaintiff seeks damages relating to contamination at a Superfund site that is subject to an existing CERCLA response action, the plaintiff's NRD claim may be barred by section 113(h) of CERCLA, which prohibits federal court jurisdiction until response activities are completed. 42 U.S.C. § 9613(h).
• 
  
• Retroactivity: Section 107(f)(1) of CERCLA prohibits retroactive NRD liability where damages are predicated on the release of a hazardous substance which occurred "wholly before" December 11, 1980.
• 
  
• Statutory Damages Limitation: CERCLA limits natural resource damages to $50 million "for each release of a hazardous substance or incident involving release of a hazardous substance." 42 U.S.C. § 9607(c)(1)(D).
• 
  
• Statute of Limitations: CERCLA provides a three-year statute of limitations for NRD claims, the commencement of which depends on the site designation on the National Priorities List. 42 U.S.C. § 9613(g)(1).
• 
  
• Standard CERCLA Statutory Defenses: CERCLA provides a number of "standard" statutory defenses that may apply to NRD claims depending upon the particular facts of the case. These defenses, outlined in section 107(b), include act of God, act of war and third-party act or omission. 42 U.S.C. § 9607(b).
• 
  
• Damages Not Available Under CERCLA: The damages available in an NRD action are limited to the costs of restoring, replacing or acquiring equivalent natural resources, including damages associated with the loss of use of the resource and reasonable assessment costs. 42 U.S.C. § 9607(a)(4)(C); 9607(f)(1).

These potential NRD defenses are illustrative and not intended to provide an exhaustive list of defenses that may apply in an individual case. Damage valuation is also typically the subject of considerable dispute and conflicting expert opinion in NRD cases, and provides an additional line of defense.

The Environmental Law Department of Farella Braun + Martel LLP is among the largest and most experienced in the nation, with attorneys specializing in environmental and natural resources compliance counseling, regulatory representation and litigation, including counseling and representation concerning NRD claims. Please contact the attorneys listed below, or any of our environmental law specialists, for more information.

James A. Bruen, 415.954.4430, jbruen@fbm.com
David J. Lazerwitz, 415.954.4980, dlazerwitz@fbm.com

[1] While the three statutory provisions generally pattern one another, because CERCLA provides the most extensive legal framework for NRD recoveries, we limit discussion here to CERCLA's NRD provisions.