Public Claims and Damages Arising from Environmental Harms to Our Rivers, Bays and Estuaries

Bill Jackson bjackson@jgdpc.com

Complexity of Rivers, Bays and Sediment Sites • Risk Based Cleanup: Human and Ecological

• Chemical Processes, Volumes, Mass Loading, & Fingerprinting of the COCs Driving Risk

• Fate & Transport of COCs into the River • Bathymetric Data and Dredging Issues •Hydrodynamics, Deposition, and Scour Zones • Secondary Risk Drivers & Remedy Cost Drivers •Modeling, Remediation, OU’s and SMUs •Orphan Shares, Sources and Liabilities

DEFINE THE HARM

“It isn't pollution that's harming the environment. It's the impurities in our air and water that are doing it." Dan Quayle (or MAD Magazine?)

PURSUING THE PUBLIC CLAIMS

Response Costs/Removal & Remedial Costs • Strict Liability for Remediation

• Environmental Claims most frequently arise under federal/state statutes: – Non-Oil: CERCLA, RCRA – Clean Water Act and State law equivalents – State Superfund and equivalents

• Strict Liability Applies • Joint & Several Liability Often Applies

– Impacts of BNSF – Divisibility vs. Allocation

• Polluter Pays (loosely speaking)

Natural Resource Damages: Different than Cleanup/Remedial Claims

• Cleanup/response is primary • Risk based •Human health & environment • Superfund and other State/federal schemes •More legal authority/case law •More accepted for cleanup

Return to Baseline

A B C

D

Time

BaselineCondition

Release ofHazardous Substance

Causes Injury

ResponseActionsBegin

ResponseActions

End

RemedialActionsBegin

RemedialActions

End

Recoveryto

Baseline

E

Natural Resource Damages

• Trustees may seek to recover damages for the injury to the resource caused by the effects of contamination and the effects of the remedial actions taken at the site

•Damages include – Cost of restoration and/or replacement (actions

taken with respect to the same resource or type of resource)

– Acquisition of an equivalent resource (actions taken to replace the equivalent of the services to humans/environment provided by those resources)

Natural Resource Damages

Include the costs of: – Assessing an area’s natural resource damages, – Restoring the natural resources, and – Compensating the public for the lost use of the

affected resources.

Only available to federal, State and triabal trustees.

Other Theories of Recovery

• Negligence • Gross Negligence and Per Se Violations • Trespass • Statutory Violations and Penalties • Purpresture & Obstruction of Navigation • Public Nuisance: Imminent Endangerment • Private Nuisance • Breach of Contract • Fraud and Negligent Misrepresentations

Damages & Relief Available

• Compensatory damages to reimburse costs • Injunctive order requiring remediation • Property Damages:

– Market value of property or loss of income – Remediation Costs

• Economic Damages • Restitutionary Measures of Damages • Exemplary damages and penalties •Attorneys fees and litigation costs

Oil Pollution Act of 1990 • Exxon Valdez • Significant Gaps in Remedies and Response

Capacity • Hit PWS Community and Economy • Congress Passes the Oil Pollution Act of 1990:

– Covers oil spills in navigable waters – Strict liability applies – “Responsible Parties” are liable for all

“Removal Costs” and “Damages” – Fund for cleanup and third party claims – Damages cap … sometimes

Costs & Damages Available Under OPA

• Response Costs •Natural Resources Damages

AND

• Property Damages • Lost Governmental Revenues • Costs of Additional Public Services • Lost Profits and Earning Capacity • Subsistence Use Damages

“BP IS FOUND GROSSLY NEGLIGENT IN DEEPWATER HORIZON DISASTER”

“Federal Court Decision Could Mean Fine of Up to $18 Billion” Wall Street Journal Headline: September 4, 2014

The Impact of Deepwater Horizon • Hard to Overstate the Potential Impacts • Economic Damages to Private Parties • Public Entities’ Lost Revenues and Increased Costs

of Public Services • Natural Resource Damages

– Damages to the Marshes – Injuries to fish, birds and food chain – Losses of Human Uses and Cultural Impacts

• Removal of Damage Caps • Long term impacts on drilling in the Gulf • Legal Ramifications

“Remote” Damages Available

• OPA broadened the availability of damages by allowing for the recovery of economic damages by those without a proprietary interest in damaged property (i.e., “Profits and Earning Capacity” damages).

• This is a significant departure from federal maritime law, which required that persons who do not have a proprietary interest in physically damaged property have no cause of action for their economic losses. (Robins Dry Dock)

Causation and the Scope of Damages • Traditional Property Damages

• Lost Profits Restaurants & Hospitality – where? • Lack of Physical Proximity: Seafood Industry • Governmental Losses of Revenues & Taxes

– Across Every Sector – Tourism, Seafood, O&G – Offset by Response Inflows?

• Increased Costs of Social Services? Others? • Moratorium and Economic Response Injuries? • Line Drawing is very hard but the breadth of

damages is staggering

“NEW JERSEY’S BIGGEST CRIME SCENE”

U.S. Sen. Cory Booker on the Passaic River

DIVISIBILITY IN A RIVER CASE: AS LIKELY AS TIME TRAVEL?

“If we can clean up our world, I'll bet you we can achieve warp drive.” William Shatner

THE STATE DECIDES TO ACT

Focusing on the Risk

State’s 2005 Directive & Litigation • Source Control Dredge Plan & Directive

• NJDEP filed Litigation against Diamond Entities and Parent Companies seeking: – Past Costs – Declaratory Relief for Future Costs – Economic Damages – Disgorgement and Punitive Damages – NRD Assessment Costs – Fraudulent Transfers & Alter Ego Findings – Attorneys Fees and Litigation Costs

Results to Date • Summary Judgments against Primary Defendants

– Primary Defendants held strictly jointly and severally responsible for all past and future costs

• Settlement with 300 Third-Party Defendants • Settlement with Repsol/YPF/Maxus Parties • Settlements entered in December 2013, recovered:

– $148 Million in Past Costs & Litigation Costs – $17 Million in NRD Restoration Projects – $400 Million in protection against State FFS Costs – Reopeners for all other future costs subject to MSJ

• Economic & NRD Damages Reserved v. OCC

THE REMEDY

April 10, 2014

Focused Feasibility Study

• On April 10, 2014, the EPA FFS Remedy Released • One of the largest Superfund remedies ever

proposed • Bank-to-bank dredging of the lower 8-miles • Depths determined by navigational uses • 4 Million cubic yards of contaminated sediments

to be dredged, pressed, dried and shipped out of State for disposal

• Accompanied by a 2-foot cap of the river bottom • Estimated to cost $1.7 Billion ++

RESTORATION OF THE PASSAIC

An Opportunity for Economic Revival

Bridge between Environment and the Economy • Direct link between the economy and the

environment in the river, bay and port cases • Beneficial impacts on local political bodies and the

local community reaction to the Passaic – Surveyed local governments and communities – Evaluated future uses of the Passaic River – Incorporated into Remedy and Restoration Plans

• The Federal NRDA Process • States Can Break Paradigm & Act to Encourage

Immediate Redevelopment and Investment

Economic Benefits of Early Restoration • Local & NRD Investment in Human Use Projects

• Induced Economic Activity and Jobs •Multipliers in the Economy and ROR • Can Yield Enormous Benefits to the Public • Credits for Increased Ecological/Human Services • For Responsible Parties:

– Mitigation of Damages – Credit Mechanisms – Allows Settlements with imperfect information

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