Government Agencies Face Unprecedented Task Assessing Damages to Gulf Ecosystem by Janice Valverde

BNA, INC.

DAILY ! ENVIRONMENT REPORT Reproduced with permission from Daily Environment Report, 152 DEN 8-10-10-4027.2, 08/10/2010. Copyright 姝 2010 by The Bureau of National Affairs, Inc. (800-372-1033) http://www.bna.com

Oil Spills

ouisiana Gov. Bobby Jindal (R) struck a tone of urgency the day he announced a plan to restore the state’s already fragile coastal wetlands, which bore the brunt of the crude oil that gushed for 87 days into the Gulf of Mexico. Flanked by local officials from surrounding parishes, Jindal told a news conference in New Orleans July 14 that the state will use its legal authority ‘‘to ensure that every drop of oil is removed and wildlife habitats are restored’’ in the wake of the largest accidental oil spill ever. The Louisiana governor has a long-term vision for restoring coastal land that has eroded over decades, but it is clear that addressing even the most immediate damage from the Gulf spill will not be easy—or happen quickly. Given the large quantity of crude oil released in deep water, the size of the area affected, the complex ecosystems involved, and the unprecedented amounts of chemicals used to disperse the oil, analysts say federal and state trustees charged with assessing the natural resource damages and drawing up restoration plans face an unprecedented challenge. The Oil Pollution Act designates federal and state agencies to be ‘‘natural resource trustees.’’ On behalf of the public, they are entrusted as stewards of natural resources, with authority and responsibility to carry out the process of assessing damages and ultimately restoring the resources.

director of Tulane’s Institute on Water Resources Law and Policy. ‘‘We are in uncharted waters . . . and it will be fascinating to watch,’’ Davis told BNA. The consensus among environmental attorneys and advocates, government officials, and others is that with the magnitude of the Gulf spill, the process will take many years, maybe decades, and will cost many billions of dollars. Few analysts were willing to speculate on possible outcomes at this early stage, but there is agreement on a few points: the Oil Pollution Act of 1990 provides a good legal and regulatory framework for determining damage and liability; much scientific research remains to be done; and pre-existing damage to Gulf ecosystems will complicate the process of determining liability and arriving at a restoration plan. The federal government now estimates that 4.9 million barrels leaked from BP Plc’s Macondo well 40 miles south of New Orleans and that BP was able to capture about 800,000 barrels before it reached the Gulf. As of Aug. 5, about 650 miles of Gulf Coast shoreline had been oiled—373 miles in Louisiana—and nearly 2 million gallons of chemical dispersants had been used. A little over 1 million gallons were applied to surface waters and another 771,000 gallons at the wellhead 5,000 feet below the surface. The National Oceanic and Atmospheric Administration and the Coast Guard now estimate that about three-quarters of the oil has dissipated, either through evaporation, skimming, or natural dispersal. But even if that is correct, it still leaves an estimated 1.27 million barrels that has washed up on marshes, remains as a sheen on the surface, or is still in the deep water column—about five times the amount from the Exxon Valdez spill (148 DEN A-13, 8/4/10).

‘We’re in Uncharted Waters.’ ‘‘Sorting out what to do now that the well is capped, once the natural resource damage assessment really begins, is going to be something of the sort we have never seen before,’’ said Mark Davis, a professor at Tulane University Law School and

A Balancing Act. As the assessment process unfolds, officials face the task of balancing the desire to fully understand the impact on wildlife and the marine ecosystem with the need to move as quickly as possible to estimate damage and design a restoration plan.

Government Agencies Face Unprecedented Task Assessing Damages to Gulf Ecosystem

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2 One thing people need to keep in mind about the natural resource damage assessment process is that ‘‘time matters,’’ said Tom Brosnan, a communications and external affairs branch chief for NOAA. ‘‘There is a drumbeat in the regulations toward trying to get to restoration as soon as reasonably possible,’’ he said. ‘‘You want to do enough assessment to understand what was damaged or lost,’’ but there has to be a tradeoff between research studies and getting restoration projects going, Brosnan said. Restoration projects can also prevent further damage, so the Oil Pollution Act calls for them to begin quickly, he said, acknowledging that ‘‘ ‘quickly’ is certainly a relative term.’’ NOAA is the lead federal trustee for the Gulf, entrusted with the marine environment, including the deep waters and ocean floor. The U.S. Fish and Wildlife Service, the National Park Service and the Bureau of Land Management also are federal trustees of natural resources in the Gulf region. State agencies from Alabama, Florida, Louisiana, Mississippi and Texas serve as state trustees, and four tribal nations are also trustees of natural resources within Louisiana.

Rigorous Science Needed. Cynthia Dohner, director for the southeast region of the Fish and Wildlife Service, told the Senate Environment and Public Works Committee July 27 that assessments are under way to quantify impacts to numerous species, some of them threatened or endangered. Still, determining the magnitude of that injury will ‘‘require a rigorous scientific process that can take several years to complete,’’ she said (143 DEN A-15, 7/28/10). Robert Spies, president of Applied Marine Sciences and chief scientist for the Exxon Valdez Oil Spill Trustee Council from 1990 to 2001, told the same Senate panel that it is important ‘‘not to end a damage assessment too soon.’’ Subtle and indirect effects may not emerge for a while, he said, ‘‘and we must understand the entirety of the damage to know when the ecosystem has been made whole.’’ Detailed laboratory experiments conducted on pink salmon years after the Alaska spill showed that damage could be done to developing embryos and expressed later in poor adult survival rates as a result of oil exposure in the parts per billion range, Spies said. ‘‘It is a long, long process’’ and one lesson Alaska has learned is that some environmental impacts are not evident for a long time, Mark Swanson, executive director of the Prince William Sound Regional Citizens’ Advisory Council, told BNA. Swanson said small pockets of oil still turn up on Alaska’s coast 21 years after the spill. It took several years to definitively determine that a certain pod of whales had disappeared from the area due to the loss of herring in the sound, which the whales fed on. The herring has never come back, he added. ‘‘Anyone who might try to trivialize the NRDA process and say it can or should be done quickly is delusional,’’ Swanson said. The process for conducting a natural resource damage assessment for the Gulf spill is laid out in the Oil Spill Pollution Act of 1990, which was enacted within months of the 1989 Exxon Valdez spill that released 262,000 barrels of crude oil into Alaska’s pristine Prince William Sound. 8-10-10

Three-Phase Process. The goal of the law is to make the environment and the public whole by restoring, remediating, rehabilitating, or acquiring an equivalent replacement for damaged natural resources. There are three phases prescribed in the law for accomplishing that goal: pre-assessment, restoration planning, and restoration implementation, with specific procedures spelled out in regulations at 15 C.F.R. Part 990.10-66. According to NOAA, trustees are required to demonstrate causality between the release, or substantial threat of a release, of oil and injured resources, lost services, or lost human use of those resources and services. Determining the amount of injury and appropriate restoration requires an understanding of the baseline condition—the condition of those resources and the uses, had the spill not occurred. Restoration could include enhancing beach shoreline, creating oyster reefs and other shellfish habitat, and conducting species recovery and monitoring programs. Prior to the Oil Pollution Act, oil spill natural resource damage assessment was conducted under Comprehensive Environmental Response, Compensation and Liability Act regulations. After a transition period ending in 1996, Oil Pollution Act regulations specific to oil spills superseded CERCLA rules. Adequate Legal Framework. Sarah Chasis, senior attorney for the Natural Resources Defense Council, and other attorneys agreed that the law provides a legal and regulatory framework that is adequate, even in the unique case of the Gulf oil spill, for assessing damage; developing a restoration plan with public input; negotiating or litigating a liability and compensation agreement between the natural resource trustees and responsible parties; and ultimately implementing a restoration plan. The law has provisions for satisfying claims from foreign trustees, which Chasis said may be invoked for the first time if the oil reaches Mexico or any Caribbean nations. Technical Working Groups Organized. In her testimony July 27, Dohner of the Fish and Wildlife Service, said the trustees have organized into 13 working groups, each focusing on one category of natural resources. There are technical working groups on fish, birds, coral, cultural resources, marine mammals and sea turtles, terrestrial and freshwater habitats, and others. The Water Column Technical Working Group will examine the ‘‘complex exposure regime for biological resources such as plankton, fish, invertebrates, turtles, mammals and birds in the water column,’’ Dohner said. It is tasked with developing studies on dispersants’ effects, ‘‘both on the surface and by subsurface injection,’’ she added. With so much yet to be done, it is too soon to know when the process will move from pre-assessment to the restoration planning phase. Assessing the damage in the Gulf will be in the preassessment phase ‘‘for quite some time,’’ NOAA spokesman Ben Sherman said. According to Brosnan, moving on to the restoration planning phase will be the trustees’ call, and once they have drafted a restoration plan, regulations obligate them to post a public notice of Intent to Conduct Restoration Planning, and solicit public comment on it.

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Oil Spill Law Goes Beyond CERCLA. While CERCLA allows money recovered from natural resource damage claims to be used only to restore or replace injured natural resources, or to acquire equivalent resources, the Oil Pollution Act goes further. The oil spill law allows trustees to recover funds used to conduct damage assessments and to develop restoration plans. Even further, it requires responsible parties to pay for the public’s loss of the use of the natural resources from the time of the oil spill until full restoration, a concept attorneys have dubbed ‘‘use of ecosystem services,’’ according to Zygmunt J.B. Plater, a professor at Boston College Law School. Plater told BNA that ‘‘an increase in sophistication’’ in carrying out the natural resource damage assessment process has resulted in more claims in recent years for lost use of ecosystem services. Assessing Ecosystem Services. ‘‘If I were the attorney general, I would say that the Gulf trustees have the authority to assess the ecosystem services’’ and make claims for the public’s lost use of those services, he said. Plater chaired the State of Alaska Oil Spill Commission’s Legal Task Force, whose final report Congress drew upon in drafting the Oil Pollution Act. ‘‘If the administrative and political will is there, [the Oil Pollution Act] ’90 presents the opportunity,’’ Plater said, adding that accounting for interim loss of ecosystem services ought to be done and can be done in the Gulf, although ‘‘the calculations will be hellacious.’’ Chasis said these claims might include the lost opportunity for using a beach for swimming or recreational fishing, as opposed to claims outside the scope of the natural resource damage assessment process, such as economic losses related to commercial fishing or beachbased businesses. According to NOAA’s Damage Assessment Remediation and Restoration Program’s website, natural resource economists are currently gathering data on lost ecosystem services in the Gulf. They are compiling data on use of boat ramps, numbers of swimmers on beaches, recreational fishing and boating, and other activities, and comparing it with prior years’ data. Modeling Spill’s Effects. The assessment process relies, at least in part, on computer models to estimate the impact of an oil spill. Deborah French-McCay, director of impact assessment services at Applied Science Associates in North Kingston, R.I., discussed her model, the Spill Impact Model Application Package, before the Senate Committee on Commerce, Science and Transportation a month after the well blowout in the Gulf. ‘‘With sufficient field and experimental-based data,’’ French-McCay said, ‘‘assessments can be calculated, and restoration plans are feasible that can produce resources and services of the same type and quality and/or of comparable value to those that were lost.’’ Nicole Mulanaphy, an environmental engineer at Applied Science Associates, told BNA that French-McCay has been refining her model for 20 years, and its use in over 100 oil spill natural resource damage assessments has enabled French-McCay to continually enhance the model’s capabilities. Mulanaphy said Applied Science Associates has had a long-standing contract with NOAA for modeling physical, chemical and toxicological effects of oil spills on human and environmental health. DAILY ENVIRONMENT REPORT

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French-McCay went to the Gulf to assist with data collection as soon as the spill began, according to Mulanaphy. She said Applied Science Associates has never before needed to model effects of oil originating from the ocean floor, nor the use of dispersants near the ocean floor, but the model is capable of doing so. Introducing dispersants, especially at the oil’s release point deep in the Gulf, has generated considerable concern and criticism of BP and the U.S. government. Marianne Engelman Lado, staff attorney at Earthjustice, criticized the Environmental Protection Agency for not having done any long-term research on possible chronic effects of dispersants in deep water. ‘‘EPA has still not begun any long-term research studies’’ on the dispersants, yet the agency approved their use in unprecedented quantities, she said. Lado said a 2005 National Research Council report set out a research agenda for EPA to follow on the subject, but it was never followed up (90 DEN A-5, 5/12/10). ‘‘The research should have been in place . . . it’s pretty troubling that the NRDA is underway without this necessary information,’’ Lado told BNA.

Studies Needed Urgently. Alaska’s Swanson agreed that it is urgent for Gulf trustees to get studies under way on concentrations and toxicity of dispersants on the ocean floor sediment deep and in the water column. Plater said oil and dispersants in deeper water ‘‘literally kill billions of fish larvae’’ that move through the water column. Summer is spawning season, and as soon as the oil hits fish larvae, they are killed, he said. Pressured from various sources, EPA conducted short-term acute toxicity tests on eight approved dispersants in combination with the Louisiana sweet crude oil. Crude oil is referred to as ‘‘sweet’’ if it contains less than 0.5 percent sulfur; crude oil with higher levels of sulfur is sometimes called ‘‘sour.’’ Administrator Lisa Jackson said July 15 at a hearing before the Senate Appropriations Subcommittee on Commerce, Justice, and Science that initial tests on mysid shrimp and silverside fish revealed that ‘‘none of the eight dispersants, including COREXIT 9500 A, displayed biologically significant endocrine disruption activity’’ (135 DEN A-14, 7/16/10). EPA released results Aug. 2 of the second phase of tests on the same two species, concluding that all eight dispersants were less toxic than the dispersant-oil mixture. ‘One Big Science Experiment.’ Ken Cook, co-founder and president of the Environmental Working Group, also testified July 15, calling it inexcusable that without baseline data or sufficient study results, the Gulf was ‘‘turned into one big science experiment.’’ Cook cited a 2003 National Research Council report that said the mixture of oil and dispersants was more harmful to coral than oil alone, raising the question of how coral reefs might be affected by the spill and how any damage to them might be accounted for in the assessment. Sherman told BNA July 23 that a NOAA vessel was ‘‘out looking at the deep coral.’’ He said there are coral species in the Gulf that have never been exposed to oil. Given the well-documented ‘‘commodified services’’ that coral reefs provide—tourism from snorkeling and diving—and the fact that no one wants to explore a dead reef, it may be easier to put a price tag on potenBNA

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4 tial damage to coral than many other natural resources, Jamison Colburn, a professor of environmental and natural resource law at Penn State’s Dickinson School of Law, told BNA. NRDC attorney Chasis said any damage assessment must begin with ‘‘critical baseline data,’’ but she said if BP or NOAA has reliable baseline data on the ocean floor environment, they have been reluctant to make it public. Asked about availability of baseline data on ocean floor species and habitats, NOAA spokesman Sherman said, ‘‘If it is out there, we will get it.’’ NOAA’s Brosnan told BNA that his agency is gathering information on ocean floor ecosystems and habitats and the deep water column, but he said he was unsure whether the data NOAA is collecting ‘‘would be adequate.’’

Shark Status Warrants Study. Colburn said whale sharks, filter feeders that swim with wide-open mouths to gather small fish and plankton, might be more likely to suffer from the volume of toxic chemicals in the water than some other species since they consume so much. On the other hand, their average weight is about 20.5 tons, so their size may make them more resilient, which points to the need for research, according to Colburn. He said a review of the whale shark’s status under the Endangered Species Act might be warranted to determine whether it should be ‘‘up-listed’’ from threatened to endangered. Gulf trustees will need to ‘‘reach out to universities for some ongoing studies’’ on a number of issues where there are information gaps, said Katherine VerrueSlater, staff counsel in the California Department of Fish and Game Office of Spill Prevention and Response. Verrue-Slater said that studies addressing damage to current or future generations of endangered species and attempts to restore those populations can become a very costly part of the natural resource damage assessment process. According to spokesmen for NOAA and the Fish and Wildlife Service, no species appear to have become endangered or extinct because of the spill in the Gulf. Jeff Fleming, assistant director for external affairs in Region 4 of the Fish and Wildlife Service, said it is too soon to know if the brown pelican will go back on the endangered list. It was removed from the list in November 2009, he said. Gulf sea turtles, especially the Kemp’s ridley, are the species most threatened by the oil spill, according to the National Wildlife Federation. Since late June, the Fish and Wildlife Service has relocated more than 135 sea turtle nests of various species from beaches in the oil spill’s path, moving them to an Atlantic coast facility in Florida, and the agency reported Aug. 2 that it released 45 hatchlings of threatened or endangered sea turtle species on a remote beach on Florida’s Atlantic coast. To date, it has collected about 3,100 oiled sea birds, a little over half of which were found alive and treated, the agency said. Contracts With Scientists Questioned. BP has acknowledged it is a responsible party and is participating in the assessment process, as allowed under Oil Pollution Act rules. 8-10-10

As BP begins preparing its defense for the inevitable claims to be brought against it, concerns have surfaced over possible restrictive provisions in contracts with independent scientists BP has hired to help. In a July 29 letter to BP, Reps. Henry Waxman (DCalif.) and Ed Markey (D-Mass.) wrote, ‘‘Mitigating the long-term impact of the oil spill will require an open exchange of scientific data and analysis.’’ ‘‘Any effort to muzzle scientists or shield their findings under doctrines of legal privileges could seriously impede the recovery,’’ they wrote. Waxman chairs the House Energy and Commerce Committee, and Markey chairs its Subcommittee on Energy and Environment. They asked BP for copies, by Aug. 6, of all contracts executed with consultants, scientists, or academics relating to assessing the environmental and health impacts of the oil spill or restoring the Gulf’s natural resources. Jeff Sharp, spokesman for the House committee, said Aug. 6 that BP had not yet responded.

$20 Billion Down Payment? Much is at stake for BP. In the second quarter of 2010, the company reported a $32.2 billion charge in anticipation of spill-related costs. It has already agreed to establish a $20 billion escrow account to cover certain claims against it. BP Plc made an initial payment Aug. 9 of $3 billion into the trust fund it has established to pay damages from the oil spill. ‘‘Establishing this trust and making the initial deposit ahead of schedule further demonstrates our commitment to making it right in the Gulf Coast,’’ Bob Dudley, chief executive officer of BP’s Gulf Coast Restoration Organization, said in a statement Aug. 9. One analyst said $20 billion is ‘‘just a down payment’’ on BP’s eventual liability. The escrow account is not dedicated to any one type of claim, but will cover natural resource damagesrelated costs, final judgments in litigation and settlements, and state or local response costs, along with claims for lost wages and business income, some of which are already being paid from the fund through the Gulf Coast Claims Facility. How long BP’s $20 billion stands up against existing and future claims is one of the questions that looms largest. The question has gotten the attention of Jindal, the Louisiana governor, and President Obama. The Agenda For Revitalizing Coastal Louisiana that Jindal released in mid-July updated a report and plan presented to him in December 2007 when he was a candidate for governor. It was developed by a coalition of environment groups including the Sierra Club, the National Wildlife Federation, the National Audubon Society, and the Coalition to Restore Coastal Louisiana. 2,100 Square Miles of Coastline Lost. Prior to the oil spill, Louisiana had lost nearly 2,100 square miles of coastline over the last 70 years, 217 square miles due to hurricanes Katrina and Rita in 2005, the report said. It predicted the loss of another 1,000 square miles in the next 50 years ‘‘if we do not take aggressive action now.’’ At his news conference, Jindal said officials ‘‘are looking ahead at our priorities to help our state not only recover from this environmental catastrophe, but to restore our ecosystem so it is even stronger and more resilient than before.’’

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5 The first step, according to Jindal, would be to implement $9 billion in coastal projects authorized by Congress, but for which funds have not been appropriated. In his June 15 speech on the Gulf spill from the Oval Office, Obama not only promised to ‘‘make BP pay for the damage their company caused,’’ but said that it ‘‘is also clear we need a long-term plan to restore the unique beauty and bounty of this region.’’ The BP spill represents ‘‘just the latest blow to a place that’s already suffered multiple economic disasters and decades of environmental degradation,’’ the president said, adding that the region still has not fully recovered from Katrina and Rita. ‘‘That’s why we must make a commitment to the Gulf Coast that goes beyond responding to the crisis of the moment,’’ he said. Obama delegated Secretary of the Navy Ray Mabus, a former Mississippi governor, to oversee development a long-term Gulf Coast Restoration Plan as soon as possible with input from states, local communities, tribes, fishermen, businesses, conservationists, and other Gulf residents. The plan is expected within a few weeks, according to a spokeswoman for Mabus.

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Transformational Moment for Gulf. Tulane’s Davis said he views the Gulf oil spill restoration plan as ‘‘a transformational moment for the Gulf . . . an opportunity to integrate other conservation and restoration projects’’ into what is mandated by the Oil Pollution Act. Davis, former director of the Coalition to Restore Coastal Louisiana, said that plans ‘‘have been cobbled together for many years to restore the Mississippi delta, all of them centered on bringing the river back.’’ ‘‘Why put [the Louisiana coast] back where it was when it was already so depressed?’’ he asked. BY JANICE VALVERDE Oil Pollution Act of 1990 regulations are available at http://law.justia.com/us/cfr/title15/15-3.1.2.5.20.html. Information on NOAA’s Damage Assessment, Remediation, and Restoration Program (DARRP) is available at http://www.darrp.noaa.gov/about/nrda.html. The Environmental Protection Agency’s webpage on dispersants, with links to its preliminary toxicity study results, is at http://www.epa.gov/bpspill/ dispersants.html. The final report of the Alaska Exxon Valdez Oil Spill Commission is available at http://www.arlis.org/ docs/vol1/B/33339870.pdf.

BNA

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