How Do Cleanup Costs Relate to Damages to Natural Resources?

A person who contaminated soil or groundwater may be required to pay for the cost of cleaning up the contamination and may be required to pay for damages to natural resources.  How those two obligations relate to each other has been a source of much discussion, specifically, is it one or the other (and if you pay for cleaning it up, you don’t have to pay damages) or, can a person be required to pay both?  A recent decision by a federal court in Wisconsin suggests that it is more either/or than both.

In United States v NCR Corporation, 2018 WL 3420019 (E.D. Wisconsin, July 13, 2018), the government claimed sought more than $30 million in Comprehensive Environmental Response, Compensation & Liability Act (“CERCLA”) response costs from defendant P. H. Glatfelter.  Glatfelter argued that the government had already received more than that amount in settlements with other parties and CERCLA prohibits the government from receiving a double recovery.  The government argued that it had not been reimbursed for those response costs in its settlements with other responsible parties because it had allocated a significant amount of the settlement recoveries to Natural Resource Damages.

The court denied the government’s motion for summary judgement, reasoning that the government does not have separate claims against responsible parties for response costs and natural resource damages.  Instead, the government has a claim against responsible parties under section 107 of CERCLA for the harm caused by a release of hazardous substances and among the remedies for that claim are response costs and natural resource damages.  Thus, the court treated amounts paid for natural resource damages as an offset against response costs.

The court’s reasoning suggests that the government may recover either response costs or natural resource damages and not both for the same resource because the court allowed the offset.  By allowing the offset, the court implied that if a responsible party pays response costs for the cleanup of a resource, natural resource damages for damage to that resource may be prohibited as a double recovery, and if a responsible party pays for damages to a resource, then response costs for cleanup of that resource may also be double recovery.

At present, governments tend to view natural resource damages as a separate claim from response costs.  This decision suggests otherwise, and there is a logic to the decision – simply put, if you broke it you can be required to either fix it or pay for it, but not both.

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