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U.S. District Court Issues Opinion on Natural Resource Damages Case: U.S. V. ARCO


Steven M. Jawetz
Beveridge & Diamond, P.C., May 13, 2003

The attached natural resource damages opinion is of principal interest to those entities with sites or facilities where hazardous substance releases to particular areas stopped by December 1980. (Mining sites often fall into this category, but other types of sites or facilities also may fall into this category.) To review the opinion, click here.

On May 13, the federal district court for the District of Montana dismissed the claim of the State of Montana under CERCLA for natural resource damages (measured by resource restoration costs) relating to three upland areas affected by historical smelter emissions. The smelters in question did not operate after July 1980. Under CERCLA, natural resource damages are not recoverable "where such damages and the release of a hazardous substance from which such damages resulted have occurred wholly before December 11, 1980 [the date of CERCLA's enactment]." The court found that the State did not present any evidence that natural resources in the upland areas suffered new or additional injuries, destruction or loss as a result of smelter emissions or re-releases of hazardous substances after December 11, 1980. The court also found that ARCO presented evidence that when the Anaconda Smelter stopped operations in July 1980, the condition of the natural resources in the upland areas stabilized and improved.

The court's opinion was very straightforward -- if there is no evidence of post-enactment damages, the action is barred as involving releases and damages that are "wholly before" enactment. The State appears to have blown its NRD case by failing to present evidence regarding the current status and impacts of the contamination remaining in the soil in the upland areas.

Two interesting aspects of the opinion:

1. The court drew on common law principles to find that "damages accrue or occur, including restoration costs, when the underlying injury occurs." Therefore, there must be proof of ongoing environmental harm after December 11, 1980 -- the mere presence of hazardous substances in the soil (or, for that matter, any other environmental medium) from a pre-1980 release is not enough, regardless of the concentrations of the substances. I note that, although the NRD assessment regulation define "injury" to include concentrations of hazardous substances in a medium sufficient to cause harm to biota, the court's opinion indicates that such an "injury" occurs when the initial release to the environment occurs, and stops when the release stops. The court declined to treat the continued presence of such concentrations after 1980 (without exacerbation) as a post-enactment injury or damage.

2. The court rejected the State's argument that, in the context of restoration costs, "damages" aren't suffered until the trustee incurs costs to restore the resource or restoration costs are quantified by the Court. The court properly noted that this interpretation would render the "wholly before" limitation meaningless.

For more information, contact Steven M. Jawetz at (202) 789-6045 or sjawetz@bdlaw.com.