Potentially responsible parties (PRPs) are changing their approach to defending natural resource damages (NRD) claims brought by public entity trustees. In the face of enormous potential liability, PRPs appear to be taking a more proactive approach to restoration of natural resources and natural resource trustees, rather than engage in the more traditional course of lengthy litigation and years-long natural resource damage assessments.

Under this revised approach, parties have been seeking interim settlements and early restoration projects to minimize costs on the back end. For example, PRPs involved with the Fox River contamination 5 and the Deepwater Horizon spill have entered into interim settlements. These settlements do not provide a release of liability, but do provide that the PRPs will receive a credit against their yet-to-be-determined liability for early restoration projects that will be selected and implemented prior to the completion of a full natural resource damages assessment. By engaging in restoration early on, PRPs can potentially reduce the amount of NRDs by reducing the length of the damages and by saving sensitive and valuable resources that might be destroyed in the interim. Trustees gain the advantages of quicker restoration and a wider range of alternatives. In the Deepwater Horizon matter, for example, BP Exploration and Production has placed US$1 billion into a dedicated trust for the express purpose of funding early restoration projects. The trustees will select projects through interim restoration plans and public input. Prior to funding any project, all parties must stipulate to the exact NRD offset that BP will receive.

In contrast to the proactive approach utilized in Fox River and Deepwater Horizon, other sites employ a more traditional approach. For example, on June 13, 2011, US EPA, the Coeur d’Alene Tribe and Hecla Limited entered into a Consent Decree to resolve all of Hecla’s liabilities at the Bunker Hill Mining and Metallurgical Complex Superfund Site in Idaho. As part of the settlement, Hecla will pay US$65.85 million plus interest to the plaintiffs to resolve the 20-year old litigation and to settle NRD claims stemming from 100 years of mine waste tailings disposal at the site. Over the course of the 20-year litigation, the scope quickly expanded from a 21-square mile area to a basin-wide area, increasing the alleged NRDs along the way. The Bunker Hill Site represents one of the largest NRD recoveries in history and is typical of the average NRD case involving protracted litigation with no mitigating measures at the front to minimize the scope.

Interim settlements and early restoration alternatives are gaining momentum as methods for dealing with NRD claims. This approach requires that both the PRP and the trustee agree to move forward in the face of uncertainty surrounding the total amount of NRDs, the performance of restoration projects and the long-term restoration goals. The efficacy of this approach is also limited by the challenge of determining how to value and account for restoration projects. This approach may not be as effective in cases involving older contamination, such as the Bunker Hill Site, where the parties may have a reduced incentive to participate in such a program if they have strong arguments against liability or if the opportunity to prevent future harm is diminished (i.e., scope is already well defined). Over the next two years, as the Deepwater Horizon trustees select restoration projects and move forward, we will gain better perspectives on this approach to responding to NRD claims.