The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10. Presenting a live 90-minute webinar with interactive Q&A NRD Recovery Under CERCLA and OPA: What to Expect in 2018 Today’s faculty features: 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific WEDNESDAY, DECEMBER 20, 2017 Brian D. Israel, Partner, Arnold & Porter Kaye Scholer, Washington, D.C. Amanda G. Halter, Esq., Pillsbury Winthrop Shaw Pittman, Houston, TX and Washington, D.C. Dr. Robert I. Haddad, Ph.D., Group Vice President & Principal Scientist, Exponent, Menlo Park, Calif.
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The Future of NRD
Brian D. Israel
Strafford Webinars
December 20, 2017
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Arnold & Porter Kaye Scholer LLP
All Rights Reserved.
The Future of NRD:
Ten Bold Predictions
Brian D. Israel
Strafford Webinars
December 20, 2017
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The Future of NRD:
Ten Bold Predictions
But NO Promises
Brian D. Israel
Strafford Webinars
December 20, 2017
1. Statutory or Regulatory Change
8
The Future of NRD: Ten Predictions
Brian D. Israel ~ December 20, 2017
1. Statutory or Regulatory Change A typical NRD assessment is lengthy,
expensive and cumbersome.
The current structure frequently results in unnecessary delay, internal agency disputes, unnecessary assessment work, increased costs for all parties, and delay in restoration.
There is currently an opportunity to reform the portions of the NRDA regulations.
Amanda will discuss details of reform options.
9
The Future of NRD: Ten Predictions
Brian D. Israel ~ December 20, 2017
1. Statutory or Regulatory Change
2. Restoration – Early and Often
10
The Future of NRD: Ten Predictions
Brian D. Israel ~ December 20, 2017
1. Statutory or Regulatory Change
2. Restoration – Early and Often
Early restoration refers to the implementation of restoration projects prior to the completion of the damages assessment.
Legal framework for early restoration pioneered in the Deepwater Horizon matter; nearly $1B spent on over 65 projects throughout the Gulf.
11
The Future of NRD: Ten Predictions
Brian D. Israel ~ December 20, 2017
Brian D. Israel ~ December 20, 2017 12
Early Restoration Framework Agreement
1. Statutory or Regulatory Change
2. Restoration – Early and Often
Framework from DWH can be scaled and applied to other sites.
Three fundamental criteria:
Parties agree on appropriate projects
Parties agree on NRD credit
NRD credit memorialized in writing, to be applied against ultimate injury
13
The Future of NRD: Ten Predictions
Brian D. Israel ~ December 20, 2017
1. Statutory or Regulatory Change
2. Restoration – Early and Often
3. NRDAs without Data Collection
14
The Future of NRD: Ten Predictions
Brian D. Israel ~ December 20, 2017
1. Statutory or Regulatory Change
2. Restoration – Early and Often
3. NRDAs without Data Collection Data collection is expensive and often not
helpful to resolution.
Increased efforts to minimize new data collection.
Better use of existing site data, including from cleanup/response, as well as numerous other independent data sources.
NRD and Big Data – it’s happening now.
15
The Future of NRD: Ten Predictions
Brian D. Israel ~ December 20, 2017
What is Big Data?
16
What is Big Data and How Will it Impact NRDAs?
Three defining principles:
– Volume: large amounts of data
– Variety: from various structured and unstructured sources
– Velocity: acquired and processed at high rates of speed
In NRDA context, possible “big data” sources include everything from decades of NOAA fisheries and oceanographic data to state park visitation receipts to remote sensing efforts.
The ability to access and analyze “Big Data” could help facilitate an expedited NRDA analysis without creating a whole new data collection project.
17
1. Statutory or Regulatory Change
2. Restoration – Early and Often
3. NRDAs without Data Collection
4. The End of Cooperation?
18
The Future of NRD: Ten Predictions
Brian D. Israel ~ December 20, 2017
4. The End of Cooperation? For years, NRD practitioners thought
cooperative NRD assessments would lead to better and faster results.
The evidence does not always support this assumption.
Cooperative NRDAs that are not truly collaborative can be worse than no cooperation at all.
Cooperation should be structured for success including clear rules for data sharing and expectations for collaboration.
19
The Future of NRD: Ten Predictions
Brian D. Israel ~ December 20, 2017
1. Statutory or Regulatory Change
2. Restoration – Early and Often
3. NRDAs without Data Collection
4. The End of Cooperation?
5. A Hybrid Approach: Independent but Cooperative
20
The Future of NRD: Ten Predictions
Brian D. Israel ~ December 20, 2017
5. Independent but Cooperative
New NRD assessment approach surfacing in cases where full cooperation not possible.
Parties undertake independent studies but share updates and results with the other parties.
Studies are funded separately.
Can create efficiencies and advance litigation preparation while still encouraging communication and settlement talks.
21
The Future of NRD: Ten Predictions
Brian D. Israel ~ December 20, 2017
1. Statutory or Regulatory Change
2. Restoration – Early and Often
3. NRDAs without Data Collection
4. The End of Cooperation?
5. Independent but Cooperative
6. Another Hybrid Approach: Shared Experts
22
The Future of NRD: Ten Predictions
Brian D. Israel ~ December 20, 2017
6. Shared Experts A shared expert is a scientist or economist
retained jointly by the trustees and the liable parties for purposes of conducting a particular study or assessment.
Studies are jointly directed and work product is shared simultaneously with all parties.
A shared expert can be a highly-regarded academic with specialized expertise.
Best if shared expert is unaffiliated with usual NRD consultant firms.
23
The Future of NRD: Ten Predictions
Brian D. Israel ~ December 20, 2017
6. Shared Experts: Mechanics Funding – likely funded by PRPs, though
funding can be indirect.
Contract – a three-way contract is preferable.
Reservation of Rights – parties may retain right to disagree with expert’s conclusions in litigation.
Admissibility – parties may agree up front to waive admissibility objections, at least for parts of the expert’s work (e.g. data).
Alternative – parties may agree that no part of the expert’s work may be used in litigation (similar to a mediation expert).
24
The Future of NRD: Ten Predictions
Brian D. Israel ~ December 20, 2017
1. Statutory or Regulatory Change
2. Restoration – Early and Often
3. NRDAs without Data Collection
4. The End of Cooperation?
5. Independent but Cooperative
6. Shared Experts
7. A Third Hybrid Approach: Increased Use of Stipulations
25
The Future of NRD: Ten Predictions
Brian D. Israel ~ December 20, 2017
7. Increased Use of Stipulations
Stipulations allow parties to reach early agreements on various aspects of the NRDA even while the overall assessment continues.
Stipulations can range in degree of complexity, from data admissibility to injury conclusions for particular resource categories.
Helps reduce transaction costs and narrow issues for trial.
Does not require formal cooperation.
26
The Future of NRD: Ten Predictions
Brian D. Israel ~ December 20, 2017
1. Statutory or Regulatory Change
2. Restoration – Early and Often
3. NRDAs without Data Collection
4. The End of Cooperation?
5. Independent but Cooperative
6. Shared Experts
7. Increased Use of Stipulations
8. Changing Mindset: Trustees
27
The Future of NRD: Ten Predictions
Brian D. Israel ~ December 20, 2017
8. Changing Mindset: Trustees
Increased focus by state and tribal trustees.
Growing expertise and experience (from DWH and other large cases).
Increasing recognition by many that NRD is not punitive: goal is restoration of the environment, not extraction of maximum dollars.
Increased recognition by some of burden of proof on causation and baseline issues, and need to avoid controversial methods.
28
The Future of NRD: Ten Predictions
Brian D. Israel ~ December 20, 2017
DWH Baseline Example –Natural Seeps
29 Brian D. Israel, ABA Fall Conference, 2016
1. Statutory or Regulatory Change
2. Restoration – Early and Often
3. NRDAs without Data Collection
4. The End of Cooperation?
5. Independent but Cooperative
6. Shared Experts
7. Increased Use of Stipulations
8. Changing Mindset: Trustees
9. Changing Mindset: Responsible Parties
30
The Future of NRD: Ten Predictions
Brian D. Israel ~ December 20, 2017
9. Changing Mindset: Responsible Parties
Increased interest in restoration, including early restoration, pilot projects, restoration banking and restoration-based settlements.
Growing sense of frustration with cooperative process; while a cooperative NRDA sounds reasonable, often times responsible parties feel the promise is not meeting the potential.
Increased sophistication and willingness to challenge speculative damages methodologies.
31
The Future of NRD: Ten Predictions
Brian D. Israel ~ December 20, 2017
1. Statutory or Regulatory Change
2. Restoration – Early and Often
3. NRDAs without Data Collection
4. The End of Cooperation?
5. Independent but Cooperative
6. Shared Experts
7. Increased Use of Stipulations
8. Changing Mindset: Trustees
9. Changing Mindset: Responsible Parties
10. Next Generation of NRD Practitioners
32
The Future of NRD: Ten Predictions
Brian D. Israel ~ December 20, 2017
10. Next Generation of NRD Practitioners
NRD is a growing area of environmental practice for the future.
Inherently more interesting than many areas.
Next generation of NRD practitioners will bring new ideas and new energy.
Important for all of us to provide opportunities for next generation of NRD lawyers, scientists and economists.
• Of the >100 cases with active assessment, many are waste sites/mines currently under CERCLA or CERCLA-like authority
• Many of the cases have been on the docket for years – General Electric Hudson River (NY) - Trustee
Council MOA signed in 1997 (20 yr ago)
– LCP Chemical (GA) - Trustee Council MOA signed 2002 (15 yr ago)
– Portland Harbor (OR) - Trustee Council MOA signed 2002 (15 yrs ago) – Record of Decision (ROD) signed 2017, but…
– Different case circumstances (all large and complex) – GE/Hudson - single RP, small Trustee Council
– LCP Chemical - single RP, small Trustee Council
– Portland Harbor - >50 PRPs, large complex Trustee Council
44
Goal of Cooperation
• Achieve cost-effective restoration
• Based upon sound science and transparent communication,
• While minimizing transaction costs.
45
NRD Uncertainty
• Across many NRDA cases, the scientific issues faced by the NRTs and the RPs have much in common and may have been faced in prior cases in slightly different guises.
• All too often, a concern is expressed that the uniqueness of my case requires additional studies to overcome uncertainties associated with the potential injury. – RP community wants to ensure injuries are appropriate and valued correctly
– The NRTs want greater support in bringing a specific type or magnitude of claim.
46
46
NRD Uncertainty
• These injury decisions are made with little formal or even informal consideration of the economic costs relative to the benefits of uncertainty reductions.
• And all too often, the science proposed and conducted – Yields few new insights (we are dealing with
natural systems)
– Fails to resolve disagreements as to the types and magnitude of natural resource injury, and
– Ends up creating its own little eddies of further discussion and debate with little forward movement.
47
47
Navigating NRD Uncertainty
• Can we integrate science and economics into evaluating the information base for making these uncertain decisions? – Focusing on the endgame
– Understanding that the process must be ultimately a public one.
48
• In other words, is there a better way to incorporate the concept of
restoration sufficiency into the decision-making progress, to avoid
getting caught in seemingly endless eddies of less-then-edifying
science?
48
HEA assumes that equivalent habitats will provide equivalent services, meaning that years of lost services can be compensated for by providing acres of additional habitat.
Primary
Restoration
Begins
Benefit of
Primary
Restoration
Restoration
Gain
Time
Services
Provided by
Habitat
Incident Full Recovery
With
Primary Restoration
Full
Natural
Recovery
Interim
Service Loss
Uncertainty - How Significant?
49
Reasonable Worst Case Scenarios
• Balances amount of information at hand with desire to move the process forward expeditiously
• Predicated on the use of scientifically valid assumptions
• Is often ‘tilted’ towards a more environmentally conservative perspective - as insurance for using assumptions
• May be influenced by additional data gathering
• Has been used by NOAA and DOI in many cases: – Alcoa-Lavaca Bay: 2001-2007
– Former Empire Oil Refinery Site: 2002-2006
– Chevron Questa Mine: 2004-2007 (agreement on injury and restoration)
50
50
Early Restoration
• Conduct injury determination and restoration planning in parallel
• Consistent with regulations (DOI and OPA)
– Assessment Phase (DOI)
– Restoration Planning Phase (OPA)
• Advantages:
– Goal of NRDA is to restore injured resources in order to make the public whole
– Early restoration starts the credit clock earlier!
– Coordination with remedial or response actions
– Facilitation of time-sensitive projects
51
51
HEA assumes that equivalent habitats will provide equivalent services, meaning that years of lost services can be compensated for by providing acres of additional habitat.
Primary
Restoration
Begins
Benefit of
Primary
Restoration
Restoration
Gain
Time
Services
Provided by
Habitat
Incident Full Recovery
With
Primary Restoration
Full
Natural
Recovery
Interim
Service Loss
Balancing/Bounding Uncertainty
52
Can we identify driver(s) for the Problem?
• Are cases really more difficult to move forward today, or is this a perception?
• Is there less willingness to accept natural uncertainty?
• Are attorneys and technical people focused on the right things?
• Are we losing sight of the end-game?
• Interaction between law, public, science and NGOs
• Are we initiating Trustee Councils too early (e.g., CERCLA 116g concern [42 U.S.C. § 9613(g)(1)(B)]
• Is it greed?
53
What’s Next • The idea of compensating the public for
injuries to their natural resources helps to keep the “Tragedy of the Commons” at bay, however…
• NRD Regulations should not be seen as being ‘written in stone.
• It is time for a comprehensive review of the NRD regulations under OPA and CERCLA - and perhaps time for a single set of updated NRD regulations designed to achieve the
54
54
Natural Resource Damages Goals
• Compensation for natural resource damages (NRD) under CERCLA/CWA and/or OPA is intended to
–Restore the natural environment to its prior
condition and
–To compensate the public for the interim lost use from the time of contamination until restoration
o Where U.S. was owner, shifting allocation in favor of operator
69
6. Evolving CERCLA jurisprudence
Tribal trusteeship:
• Confederated Tribes and Bands of the Yakama Nation v. Airgas USA LLC, et al. (D. Or. No. 17-CV-00164-SB)
• CERCLA definition of “natural resources” includes those “belonging to, managed by, held in trust by, appertaining to, or otherwise controlled by an Indian tribe.” 42 U.S.C. § 9601(16)
