The advanced notice of proposed rulemaking signals DOI’s interest in developing faster and more cost-effective methods to quantify natural resource damage claims.
By Kegan A. Brown, Gary P. Gengel, G. Jack Mathews, and Thomas C. Pearce
On January 18, 2023, the US Department of the Interior (DOI) Office of Restoration and Damage Assessment issued an Advance Notice of Proposed Rulemaking (the Notice) requesting feedback on possible amendments to the “simplified” natural resource damage assessment (NRDA) regulations for discharges of oil or hazardous substances (known as “Type A” NRDA regulations). DOI proposes to “modernize the Type A process and develop a more flexible and enduring rule” by, among other things, broadening the universe of natural resource damage (NRD) claims that may be subject to Type A procedures. DOI has requested public comments on possible revisions to the Type A NRDA regulations by March 20, 2023.
Current Type A Rule
The Type A NRDA regulations currently only apply if the alleged NRD is either a “coastal and marine environment” or a “Great Lakes environment.” In addition, the calculated NRD must fall below $100,000 and be allegedly attributable to a single release or incident. If the NRD does not meet these conditions, natural resource trustees may use the “Type B” regulatory procedures, which assess and quantify NRD at complex sites.
As DOI acknowledges in the Notice, the Type A NRDA regulations have “rarely been utilized” because of the narrow circumstances in which they apply. Therefore, DOI has deemed the current Type A NRDA procedures “inefficient and inflexible” and “not currently useful as a means to resolve [NRD] claims and promote natural resource restoration.”
Proposed Revisions to Type A Rule
DOI intends to reformulate the Type A regulations as “a procedural structure for negotiated settlements.” It proposes to do so by codifying the use of and broadening the applicability of methodologies which have evolved since the Type A regulations took effect. DOI aims to “reduce transaction costs and expedite restoration in a broader range of less complex and contentious cases.” DOI has therefore requested comments and feedback from the public on the following issues and potential changes:
- New Assessment Methodologies: DOI would expand the Type A regulations’ scope by replacing the current two NRD quantification formulas with “widely used and accepted” assessment methods, such as habitat equivalency analysis (HEA) and resource equivalency analysis (REA). DOI considers these quantification methodologies “adaptable and functional enough to support negotiated resolution of a wide range” of NRD claims. DOI seeks feedback on which quantification methodologies it should add to the Type A NRDA regulations.
- Non-Monetary Limits: DOI seeks public comment on non-monetary limitations for using Type A regulations. Questions include whether:
- the simplified Type A procedures are appropriate at a site with multiple potentially responsible parties (PRPs);
- participating PRPs must agree to pay for the reasonable costs of the NRDA; and
- the cap applicable to any Type A regulations should include assessment costs.
- Updated Presumption of Correctness: DOI proposes to increase the amount of damages eligible for the rebuttable presumption of correctness beyond the current Type A ceiling of $100,000. This amount was set in 1997 and has not been changed for inflation or otherwise since. DOI believes engaging in a cost-effective and cooperative process for NRD claims below $100,000 is challenging for parties.
- Time Limits: DOI seeks public input on what, if any, time limits should apply to NRD proceedings using the Type A regulations, including whether a tolling agreement with PRPs for statutes of limitation may be appropriate.
Implications for Companies
DOI’s Notice recognizes that the current Type A NRDA regulations are not being efficiently used. As a result, nearly all NRD claims that follow DOI regulations rely on the more complex and time-consuming Type B NRDA regulations. DOI’s request for public comment on ways to “modernize” the Type A regulations indicates its aim to resolve — and logically, pursue — more NRD claims.
If new, streamlined procedures for simplified assessment of NRDs ultimately take effect, trustees’ transaction costs to assert such claims will likely decrease and result in more NRD claims. Additionally, depending on the new cap for presumptively correct damages, many NRDAs conducted under revised Type A regulations may be subject to a presumption of correctness under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA).
Companies facing NRD liability (i.e., any company with potential cleanup liability under CERCLA or state analogs) may want to comment on the Notice to provide practical considerations to DOI as it considers how to revise the Type A regulations. DOI is accepting comments until March 20, 2023.
This blog post was prepared with the assistance of Chuanyi Qi in the New York office of Latham & Watkins.
 Id. at 3373-74.
 88 Fed. Reg. 3373; see 43 C.F.R. 11.40(a).
 All $ references are in US dollar.
 Id. at 3373.
 Id. at 3374.
 Id. at 3373.
 Id. at 3374.