$13mm NRD Settlement in 2003 Oil Spill Illustrates Long Tail on OPA Natural Resource Damage Claims

On October 17, 2017, the U.S. and the States of Rhode Island and Massachusetts lodged what was acknowledged as a “unique” settlement with a tug boat owner and operator for natural resource damages resulting from a 2003 marine oil spill. In U.S. v. Bouchard Transportation Company, the defendants had earlier settled other federal, state and private claims regarding the spill in 2010, including NRD claims for one marine bird species, but claims for natural resource damages and assessment costs and damages to other natural resources had been reserved.

Natural resource damage assessment can be complex, lengthy and expensive. This is particularly true where, as in many cases, there is limited baseline data on the condition of the resources that can be used to assess pre and post spill conditions. The result can be a long assessment process that delays the filing of a claim until long after one would have thought the matter had been resolved. In this instance, where the spill oiled 100 miles of shoreline, the natural resource trustees settled their claim for the piping plover in 2010, but then commenced a broader damage assessment which led to the 2017 settlement.

The long tail issue is not unique to the OPA. Under the OPA, the statute of limitations for natural resource damage claims is three years from discovery of the loss and its connection to the spill, or three years from the date of completion of a natural resource damage assessment commenced under the statute. The statute of limitations for natural resource claims under CERCLA at Superfund sites is three years from the completion of the remedy, not including operation and maintenance. At major sites that time period could easily be decades.

Certainty in cleanup matters is always sought and always difficult to obtain. That uncertainty regarding the extent of natural resource damage can make resource trustees unwilling to settle until their assessment activities are well along, as the Bouchard 2010 settlement illustrates. That in turn can explain why a party is often willing to pay large premiums to resolve those matters without going through a full assessment process.

The take home here is don’t kick the file under your desk or send it to archives after the initial cleanup actions are complete and cleanup cost claims are resolved. There could be an even messier and more expensive liability still hanging around for years, unless you have obtained a complete covenant not to sue.