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Policy Directive 2003-07 - Subject: Natural Resource Damages

Over the past eighteen months, the Assistant Commissioners for Natural and Historic Resources (NHR) and for the Site Remediation Program (SRP) have begun the process of addressing the more than 4,000 potential claims for natural resource damages (NRD). These claims arise from releases of hazardous substances that have resulted in injuries to natural resources (loss or impairment of ecological function) or the deprivation of natural resource services (e.g. water supply, recreation, ecological services) with respect to resources owned by, managed by, or otherwise within the trusteeship or co-trusteeship of the State of New Jersey. The limited staff of the Office of Natural Resource Restoration within NHR, case managers among the offices of SRP, and attorneys from the Division of Law deserve particular credit for initial work to resolve claims that had been systematically disregarded in the past.

The Department already has demonstrated substantial success in addressing these claims. During the first year of Governor McGreevey's Administration, NRD recoveries exceeded the total for the six prior years combined, and recoveries for New Jersey sites within New Jersey's exclusive trusteeship exceeded the total for the preceding eight years combined. Despite this progress, DEP has resolved only a small percentage of the universe of potential claims. An accelerated effort is needed to ensure that application of the current statute of limitations for NRD claims does not result in the loss of the public's right to compensation for natural resource injuries.

This directive presents the standards and process that will be used in developing and resolving NRD claims, and outlines the policy objectives and constraints that will inform the Department's consideration of voluntary restoration efforts and proposed NRD settlements.

Claim Identification

Screening. NHR and SRP shall coordinate a screening process for sites presenting potential NRD claims, which shall include a phased process for completion of the attached screening form. NHR shall identify the classes of cases for screening in sequence, allowing adequate time for file review. Potentially responsible parties (PRPs) may use the same form as a basis for initiating settlement discussions with the Department.

Excluded Claims. DEP recognizes that the cost of pursuing certain classes of claims is certain to exceed any potential benefit in terms of restoration or recovery, and so the following classes of sites shall be deemed inappropriate for developing an NRD claim:

  • Sites or claims for which the only responsible parties are residential homeowners residing at the site at which the claim arises.
  • Sites or claims for which the only responsible parties are small businesses with a limited ability to pay.
  • Sites that meet the qualifying criteria for DEP's "Cleanup Star" Program.

Parties responsible for these sites may request, and for these sites SRP or NHR may provide, written assurance that they are not subject to an NRD claim.

Settlement Policies

Preference for Restoration. For all claims, the Department's preference is for the performance of restoration work and resource protection in lieu of payment of money damages, provided that reasonable allowance is made for monitoring and oversight to ensure accountability.
Substitute Resources. In many cases, the provision of substitute resources or resource services may be a more cost-effective means to compensate the public for natural resource injuries. The Department encourages habitat equivalency analysis, consideration of both in-kind and out-of-kind substitute resources, and similar efforts to provide substantially equivalent resource services in designing compensatory restoration projects. With respect to injured groundwater resources, acquisition of aquifer recharge areas, water re-use or recycling projects, infrastructure improvements to control stormwater or improve recharge, reforestation efforts to improve infiltration and water retention, or any other measure that enhances the water resource base in the affected area will be considered. For lost recreational uses, enhancements to public access, creation of or improvements to state or local parks, or the provision of other alternate recreational opportunities will be considered.
Groundwater Valuation. For parties that initiate settlement discussions with DEP, the Department will use the settlement valuation formula developed and applied by the Office of Natural Resource Restoration in past years. In the application of the formula, which shall only be used as a settlement tool, on-site groundwater will not be excluded and the temporal scope of the valuation will be decided on a case-by-case basis.
Nexus to the Injury. Restoration projects, whether implemented by DEP or a responsible party, must bear a nexus to the injured resource and should be in the same watershed (or sub-watershed) to the extent practicable. Damage recoveries shall be devoted exclusively to restoration and the associated costs of assessment, claim development, and recovery.
No-further Action Letter Practice. In general, and subject to the brownfields policy below, an assessment of ecological injuries and resolution of potential natural resource injuries, if any, should precede SRP's issuance of no-further action letters (NFAs). This policy does not extend to any of the claims or sites identified as excluded claims above, or for soils-only NFAs.

Coordination with Brownfields Policies

Consistent with Policy Directive 2002-03, the policies of this directive shall be applied in a manner to encourage and support brownfields cleanup and redevelopment. Claims for damages or compensatory restoration shall not be asserted against brownfields developers meeting the innocent purchaser defense requirements under New Jersey law at sites at which there is a historical natural resource injury. This policy shall not diminish responsibility for restoration actions that are inherent in remedial activity.

If the DEP Office of Brownfields Reuse, or any SRP manager identifies any site or claim at which the assertion of an NRD claim is an impediment to cleanup or redevelopment, the Assistant Commissioner for SRP shall identify that site to the Commissioner and to the Assistant Commissioner for NHR and shall propose whatever policy exception, waiver, or other resolution is appropriate to eliminate the impediment. SRP shall ensure that the resolution, if any, is identified within ten (10) business days.

Coordination with Federal Natural Resource Trustees

The Department has entered a memorandum of understanding to coordinate its NRD claims on the Passaic River with those of federal agencies that may be trustees or co-trustees for natural resources injured by hazardous substance releases along the river. The Department should use this model to coordinate the Department's NRD claims with those of federal trustee agencies where resources within federal trusteeship or co-trusteeship have been injured.

Coordination with the Division of Law

The development and assertion of claims pursuant to this policy shall be coordinated with the Division of Law and with any special counsel selected and duly assigned to NRD matters by the Attorney General.

Transparency

This directive shall be posted and made available on DEP's web site, along with any prior or subsequent policies or directives that may be useful in identifying and resolving NRD claims.

This directive creates no enforceable rights, legal or equitable, for any person. Nothing in this directive limits the discretion of the Commissioner to make further policy changes in response to public comment and additional data and analysis.


Date: September 24, 2003 _________________
  Bradley M. Campbell
Commissioner

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Department of Environmental Protection
P. O. Box 402
Trenton, NJ 08625-0402

Last Updated: October 29, 2003