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January 5, 2024

New DOI NRDA Rule Issued Today

Advisory

Today, the U.S. Department of the Interior (DOI) Office of Restoration and Damage Assessment issued a notice of proposed rulemaking to revise its existing natural resource damage assessment (NRDA) regulations to provide simplified NRDA procedures at certain contaminated sites. While DOI’s existing NRDA regulations do provide simplified NRDA procedures (called the Type A Rule), these are currently available in extremely limited circumstances and have, as a matter of practice, rarely been used. The new Type A Rule would greatly expand the circumstances in which simplified procedures are available to include significantly more contaminated sites. In addition, the new Type A Rule modernizes the approach to simplified assessment to adopt procedures advocated by industry that regulators have found to result in fair and efficient resolution of natural resource damage (NRD) cases.

To which contaminated sites will the new procedures apply?

First, it is important to note that the DOI rules apply only to NRD claims proceeding under the Comprehensive Environmental Liability and Compensation Act (CERCLA) and the Clean Water Act. NRD claims arising under the Oil Pollution Act are governed by separate regulation promulgated by the National Oceanic and Atmospheric Association and are not impacted by the proposed change. Pursuant to the proposed rule, Type A procedures will be available at CERCLA contaminated sites where either:

  • The NRD claim value is expected to be less than US$3 million (excluding reasonable assessment costs).
  • The NRD claim relates to a relatively discrete event like a spill (contrasted from historic contamination released over long periods of time), there are a small number of potentially responsible parties, and the NRD claim value is expected to be less than US$5 million.

The rule also requires that at least one potentially responsible party (PRP) at the site voluntarily agree to use the Type A procedures and that the U.S. obtain from the PRPs an agreement to toll all NRD claims for at least one year.

What do the new procedures entail?

The new procedures provide significant flexibility to allow Trustees and PRPs to rely upon models that are already widely used in NRD assessments (for example, habitat equivalency analysis or “HEA” and recreational equivalency analysis or “REA” models) to achieve faster settlement with responsible parties. The proposed rule provides specificity as to what types of documentation must be included in the administrative record to support conclusions in a “Type A Report,” and issuance of the “Type A Report” will trigger public notice and comment procedures, but the technical approaches to applying NRDA models are largely left to the discretion of the Trustees.

While this approach could be viewed as increasing agency discretion to assess NRD values, it also imposes important controls, including that a PRP must consent to the use of Type A procedures. Thus, the technical flexibility provided by the rule is aimed more at providing Trustees and PRPs with an efficient path to settlement that will ensure access to all available legal protection (if legally challenged, a NRDA that complies with regulation — Type A or the much more arduous Type B — is entitled to a rebuttable presumption of accuracy in its assessment of damages).

Will the new rule improve the likelihood of efficiently resolving NRD matters?

The idea of revising the Type A procedures to facilitate faster and more efficient NRDA settlements was first proposed in an article we published in 2018 (Standardizing NRD assessments, ABA Trends, Vol. 49 No. 6). In that article, we argued that DOI should, “modify the Type A NRD regulations to include equivalency models and PRP cooperation.” We further argued that, “if the Trustees include both elements, they will enjoy the statutory rebuttable presumption, the PRPs will resolve their liabilities faster, transaction costs will be nearly eliminated, and environmental restoration will occur years, or decades, sooner.” Today’s proposed rule revision largely tracks these recommendations. We are continuing to evaluate the details of DOI’s proposed rule and anticipate filing a comment letter. Comments are due Tuesday, March 5.

© Arnold & Porter Kaye Scholer LLP 2024 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.