Public Claims and Damages Arising from Environmental Harms to Our - - PowerPoint PPT Presentation

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

DEF EFINE TH THE E 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 UING THE P PUBLIC IC C CLAIM IMS S

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

Baseline Condition Release of Hazardous Substance Causes Injury Response Actions Begin Response Actions End Remedial Actions Begin Remedial Actions End Recovery to 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

• f 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

Oi Oil Pollution A n Act o

• f 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 “BP IS FOU OUND G ND GROS OSSLY NE NEGLIGENT IN DE DEEPW PWATER H HOR ORIZON ZON DISAST STER” ”

“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
• f 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 “NEW JERSEY SEY’S B S BIGGEST EST C CRIM IME E SCENE ENE” U.S. Sen. Cory Booker on the Passaic River

DIV IVIS ISIBIL ILITY IN IN A RIV IVER C CASE: A AS S LIK LIKEL ELY AS S TIM IME T TRAVEL?

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

TH THE S E STA TATE TE D DECI ECIDES TO TO ACT CT

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

TH THE REME E 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 ++

REST STORATION OF OF T THE HE PASSA 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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