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Housatonic River Preliminary Natural Resource Damage Assessment." Multiple Copies Are Included, As Appropriate

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294 INDUSTRIAL ECONOMICS INCORPORATED 2067 Massachusetts Avenue Cambridge. Massachusetts 02140 ' l 7/354-0463 MEMORANDUM January 28, 1997 TO: Housatonic River NRD Agency Contacts FROM: John Weiss SUBJECT: Preliminary Natural Resource Damage Assessment Report Enclosed please find lEc's final report entitled "Housatonic River Preliminary Natural Resource Damage Assessment." Multiple copies are included, as appropriate. Please call if you have any questions. Confidential Attorney Work Product HOUSATON1C RIVER PRELIMINARY NATURAL RESOURCE DAMAGE ASSESSMENT r i Prepared for: Mark Barash Anton P. Giedt Department of the Interior National Oceanic and Atmospheric Administration Northeast Region Solicitor's Office Office of General Counsel Matt Brock John Looney Massachusetts Office of the Connecticut Office of the Attorney General Attorney General Prepared by: Robert E. Unsworth, John C. Weiss, Maria A. Markowski Industrial Economics, Incorporated 2067 Massachusetts Avenue Cambridge, MA 02140 001927 Confidential Attorney Work Product TABLE OF CONTENTS WTRODUCTION........................................................^^ ASSESSMENT OF INJURIES TO NATURAL RESOURCES..................................... CHAPTER 2 PRELIMINARY ESTIMATE OF DAMAGES........................................................... CHAPTER 3 PRELIMINARY EVALUATION OF RESTORATION OPTIONS........................... CHAPTER 4 APPROACH FOR AN ASSESSMENT OF DAMAGES RESULTING FROM INJURY TO GROUNDWATER RESOURCES..................... CHAPTER 5 APPROACH FOR AN ASSESSMENT OF DAMAGES BASED ON THE ADDED COST OF DEVELOPMENT RESULTING FROM INJURY TO NATURAL RESOURCES..................................................1................ CHAPTER 6 CALCULATION OF LOST OR DIMINISHED RECREATIONAL FISHING TRIPS IN MASSACHUSETTS................................................................ APPENDIX A VALUATION OF LOST OR DIMINISHED RECREATIONAL FISHING TRIPS IN MASSACHUSETTS AND CONNECTICUT ........................ APPENDIX B VALUATION OF LOST OR DIMINISHED RECREATIONAL FISHING TRIPS IN MASSACHUSETTS AND CONNECTICUT......................... APPENDIX C CALCULATION AND VALUATION OF LOST BOATING TRIPS IN MASSACHUSETTS AND CONNECTICUT..................................................... APPENDDC D 001923 Confidential Attorney Work Product INTRODUCTION CHAPTER 1 Under contract to the U.S. Fish and Wildlife Service (FWS) and the Massachusetts Department of Environmental Protection (MADEP) (as a subcontractor to TRC Environmental Corporation), Industrial Economics, Incorporated (lEc) was asked to conduct a preliminary assessment of damages associated with injuries to natural resources caused by the release of hazardous materials by the General Electric Company (GE) to the Housatonic River. In general, this assessment was to include descriptions of: • Injuries that have resulted from the release of hazardous materials to the river, • Recreational and passive use losses resulting from these injuries; • The type and scale of restoration actions necessary to restore the injured resources (i.e., primary restoration); and • The type and scale of additional restoration actions that would compensate the public for interim losses (i.e., compensatory restoration). lEc described the scope of the tasks required to achieve the project's objectives in the Proposed Technical Approach prepared under FWS Contract Number 14-48-0009-95-005, Delivery Order 1-001. This Technical Approach combined the requirements of the Statements of Work issued by each of the funding agencies.1 The objective of this preliminary damage assessment is to (1) assist the trustees in the development of an appropriate strategy for presenting a damage claim, (2) provide information that will be of value in Grafting a settlement position, should the trustees enter into negotiations The Commonwealth of Massachusetts, U.S. Department of the Interior, the National Oceanic and Atmospheric Administration, and the U.S. Environmental Protection Agency provided funding to support this effort Confidential Attorney Work Product with the responsible party, and (3) serve as a first step in planning more detailed injury and damage assessment activities that could lead to the litigation of a natural resource damage claim. An assessment such as this includes elements of both the "preassessment screen" and the "preliminary estimate of damages," which are described in the Department of the Interior (DOI) regulations for damage assessments (43 CFR §§ 11.23-11.25 and 43 CFR §11.35, respectively). In completing this assessment, we have worked within DOI's regulatory framework, which identifies four primary damage assessment components: documenting a release of hazardous substances to the environment; documenting injuries resulting from this release; calculating the economic damages associated with the injury, and determining appropriate restoration activities that will return the injured resources to their pre-release, or baseline. Trustees may elect to identify additional restoration activities that will compensate the public for the economic losses incurred during the period between release and restoration. SUMMARY OF FINDINGS The following summarizes the results of our efforts to assess potential injuries, to calculate estimates of compensable damages associated with recreational and passive use losses, and to begin to evaluate the appropriate type and scale of restoration actions. • Resources with characteristics that satisfy the definitions of injury provided in the DOI regulations include surface water and certain biological resources (including fish, frogs and turtles). • Extensive data suggest, but do not confirm, that contamination of the sediment portion of the surface water resource may be the source of injuries to a variety of biological resources, including invertebrates, fish, reptiles and amphibians, birds and mammals. • Injury may also be occurring as a result of the exposure of biological resources to contaminated floodplain soils. • Additional injury assessment studies would be needed to further document injuries associated with sediment and soil contamination. • The release of PCBs to the Housatonic River has resulted in the posting of fish consumption advisories and changes in fishery management practices in both Massachusetts and Connecticut These factors have resulted in a reduction in the utilization of the Housatonic River fishery (i.e., fewer trips are taken) and have diminished the value of the remaining trips. • On the basis of available data, our best estimate of damages associated with lost or diminished recreational fishing and boating trips is $11 million - $32 million. 1-2 Confidential Attorney Work Product The release of hazardous substances to the Housatonic River has also resulted in a reduction in the passive use value of the resource. Based on household willingness-to-pay data from existing contingent valuation studies and an estimate of the probable "market" for this resource, we estimate that passive use damages are in the range of $25 million - S250 million. A wide variety of options are available to compensate the public for interim losses of natural resources (i.e., the loss between the initial release of hazardous substances and the restoration of the resources to their baseline condition). Based on extensive interviews with representatives of national and local conservation organizations, state and federal agencies, and local recreational groups, we have identified options in the following general categories: enhancement of water quality, enhancement of recreational fisheries, enhancement of other recreational uses, general land/wetland conservation, and other. LIMITATIONS The nature of existing, readily available data and information limited our ability to complete all of the objectives described in the Statements of Work. In particular, our injury assessment does not identify and quantify all of the natural resource injuries likely to be present in the Housatonic River environment Consequently, we have not recommended specific restoration alternatives that are explicitly linked to documented injuries. The following discussion provides additional detail regarding these and other areas that may require further data collection and analysis. • Contaminants of concern: Polychlorinated biphenyls (PCBs) are the primary contaminants of concern at this stage of the damage assessment. Though there are other hazardous substances present in the Housatonic River that may contribute to natural resource injuries, we have not addressed potential injuries resulting from exposure to substances other than PCBs. • Geographic Scope: Our preliminary assessment has focused on the Housatonic River and floodplain downstream of the GE facility in Pittsfield, MA. We have not assessed potential injuries and damages associated with Silver Lake and Unkamet Brook. Both may require additional scrutiny. In addition, we have not addressed specific injuries and damages that might be associated with the former oxbows located in Pittsfield, though we do recognize the potential importance of these areas to a final determination of restoration and compensation requirements. Furthermore, we recognize that these areas may be sources of continuing contamination to the Housatonic River. 1-3 001932 Confidential Attorney Work Product • Injury Assessment: Existing data are available to characterize the nature .and extent of contamination in the Housatonic River environment but do not in all cases provide sufficient information to document natural resource
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