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Standardizing Assessment of Natural Resource Damages: Massachusetts Is Taking the First Step

MassDEP is developing a standard methodology for assessing natural resource damages for small to medium oil spills to surface water that will be incorporated into forthcoming regulations, which will require persons responsible for these spills to pay the assessed natural resource damages, above and beyond cleaning up the spill.  MassDEP is expected to expand the standard assessment to include spills of hazardous materials and spills to groundwater.  MassDEP plans to pool these funds to improve watersheds that have been harmed by releases of oil or hazardous materials.

In the current program, the Commonwealth negotiates individually with responsible parties to assess natural resource damages for larger spills. These assessments, which are negotiated in tandem with federal trustees and tribal trustees when federal laws such as the Oil Pollution Act are implicated, involve significant administrative costs.  Undertaking case-by-case assessments is not feasible for every spill due to these costs.  By developing a standard methodology, MassDEP hopes to recover damages from smaller sites.  If implemented, the standard assessment would be used for oil spill volumes of greater than 10 gallons but less than 10,000 gallons.

MassDEP’s presentation materials explain the proposed standard methodology for small to medium oil spills to surface water.  Factors in the assessment method include the type of oil, the area of surface water or wetlands impacted by the spill, and the duration of the impact.  It also accounts for the value of the type of habitat harmed, the acreage of similar habitat that would need to be replicated in order to replace the value of the habitat lost, a factor to account for program costs, and inflation.  Notably, the amount of oil released is not part of the assessment.  Based on this methodology, and using data from spills between 2009 and 2017, MassDEP estimates that approximately 67% of small to medium oil spills would result in assessments less than $5,000.

If Massachusetts continues this initiative, it will join Washington and Florida as states with streamlined assessment tools for natural resource damages.  In Washington, unless an individualized assessment is done, compensation tables are used to determine the amount of damages per dollar of oil released to a water of the state based on the toxicity of the oil released, and the environmental sensitivity of the resource.  For spills less than 1,000 gallons, the damages range from $1 to $100 per gallon; for larger spills, the range is $3 to $300 per gallon spilled.  Florida by statute has created a compensation schedule which applies to releases of oil that cause harm to a natural resource, which is used in all cases unless a responsible party is not identified, the responsible party opts out and requests a case-by-case analysis, or a cooperative assessment is conducted with federal agencies.  The compensation schedule takes into account the volume of the release, the characteristics of the pollutant discharged, and the type and sensitivity of the resource harmed. 

If MassDEP develops and implements this standard methodology, it will close a gap in its current program by addressing the harm to natural resources caused by smaller releases of oil or hazardous material.  However, there remain significant questions about this new program, including who will pay the assessed natural resource damages for a site where the remediation is being conducted by an “eligible person” or another party without liability for the underlying release.  Further, it will increase the costs of resolving liability at these sites, which could deter redevelopment of Brownfields. 

Beveridge & Diamond, represents clients at complicated contaminated properties during all phases including cost recovery litigation, EPA enforcement defense, PRP group allocation, natural resource damage assessments, and brownfield redevelopment.  For more information on our contaminated properties practice, please contact Jeanine Grachuk in B&D’s Massachusetts office, Steve Jawetz in B&D’s Washington, D.C. office or Loren Dunn in B&D’s Seattle, Washington office.

In addition, the Wellesley office represents developers and owners of residential, commercial and industrial projects in land use and environmental permitting and litigation throughout Massachusetts. For more information about our Massachusetts practice, please contact Jeanine Grachuk or Dylan King.