# Natural Resource Damage Assessments > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/fr%3A94-10636 ## Record - **Collection:** Federal Register - **Document type:** Uncategorized Document - **Published:** May 4, 1994 ## Text SUMMARY: This notice solicits comment on proposed revisions of the regulations for assessing natural resource damages resulting from a discharge of oil into navigable waters under the Clean Water Act or a release of a hazardous substance under the Comprehensive Environmental Response, Compensation, and Liability Act. The Department of the Interior has previously developed two types of natural resource damage assessment regulations: Standard procedures for simplified assessments requiring minimal field observation (the type A rule); and site- specific procedures for detailed assessments in individual cases (the type B rule). The Department is proposing, as part of its compliance with a court remand, to revise the type B rule to address the use of the economic methodology known as contingent valuation to assess lost values of injured natural resources. In general, the Department is considering and soliciting comment on a proposed natural resource damage assessment rule regarding contingent valuation recently published by the National Oceanic and Atmospheric Administration pursuant to the Oil Pollution Act of 1990. This notice constitutes the Department's proposed rulemaking document and solicits comment on rule language under consideration for a final rule. Upon consideration of the comments received in response to this notice, the Department intends to issue a final rule. The Department recently published a final rule to revise the type B rule to comply with all other aspects of the court order. DATES: Comments must be received by July 7, 1994. ADDRESSES: Comments should be sent in triplicate to the Office of Environmental Policy and Compliance, ATTN: NRDA Rule, Mail Stop 2340, Department of the Interior, 1849 C Street, NW., Washington, DC 20240. FOR FURTHER INFORMATION CONTACT: Mary C. Morton or David Rosenberger at (202) 208-3301. SUPPLEMENTARY INFORMATION: This notice is organized as follows: I. Background A. Statutory Provisions B. Regulatory History C. Judicial Review D. Implementation of the Court Order E. Other Rulemakings II. Calculation of Damages Under the Type B Rule A. Costs of Restoration, Rehabilitation, Replacement, and/or Acquisition of Equivalent Resources B. Compensable Value III. Contingent Valuation: Discussion and Rule Language under Consideration A. Survey Instrument Design and Development B. Survey Administration C. Nature of Results D. Calibration E. Reporting F. Additional Requests for Comment IV. Technical Information Document V. Response to Comments I. Background A. Statutory Provisions The Clean Water Act, as amended (33 U.S.C. 1251 et seq.) (CWA) and the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (42 U.S.C. 9601 et seq.) (CERCLA) authorize natural resource trustees to recover compensatory damages for injury to, destruction of, or loss of natural resources resulting from a discharge of oil into navigable waters or a release of a hazardous substance. CWA sec. 311(f); CERCLA sec. 107. Federal and State officials may be designated to serve as natural resource trustees under CERCLA and CWA. CERCLA also recognizes the authority of Indian tribes to commence actions as natural resource trustees. Damages may be recovered for those natural resource injuries and losses that are not fully remedied by response actions. All sums recovered in compensation for natural resource injuries must be used to restore, rehabilitate, replace, or acquire the equivalent of the injured natural resources. Trustee officials may also recover the reasonable costs of assessing natural resource damages and any prejudgment interest. CERCLA requires the promulgation of two types of regulations for the assessment of natural resource damages resulting either from a discharge of oil under CWA or from a release of a hazardous substance under CERCLA. CERCLA sec. 301(c). The type A regulations constitute standard procedures for simplified assessments requiring minimal field observation. The type B regulations constitute site-specific procedures for detailed assessments. Both regulations identify the best available procedures for determining natural resource damages. Assessments performed by Federal and State natural resource trustee officials in accordance with these regulations receive a rebuttable presumption in court. CERCLA sec. 107(f)(2)(C). The promulgation of these regulations was delegated to the Department of the Interior (the Department). E.O. 12316, as amended by E.O. 12580. The Oil Pollution Act (33 U.S.C. 2701 et seq.) (OPA) was signed into law on August 18, 1990. Among other things, OPA amended the natural resource damage provisions of CWA. OPA authorized the National Oceanic and Atmospheric Administration (NOAA) to develop new natural resource damage assessment regulations for discharges of oil into navigable waters. The Department is coordinating its rulemakings with NOAA to ensure, to the maximum extent appropriate, that consistent processes are established for assessing natural resource damages under CERCLA and OPA. OPA provides that until NOAA develops final regulations, the Department's regulations may be used to assess natural resource damages under OPA. OPA sec. 6001(b). B. Regulatory History The Department has issued various final rules for the assessment of natural resource damages: 51 FR 27674 (Aug. 1, 1986); 52 FR 9042 (March 20, 1987); 53 FR 5166 (Feb. 22, 1988); and 53 FR 9769 (March 25, 1988). These rulemakings are all codified at 43 CFR part 11. The Department also recently published a final rule that has not yet been codified in the Code of Federal Regulations. 59 FR 14261 (March 25, 1994). The natural resource damage assessment regulations provide an administrative process for conducting assessments as well as technical methods for the actual identification of injuries and calculation of damages. Under the regulations, both type A and type B, assessments consist of four major phases. The first phase of an assessment conducted under the regulations involves the activities that precede the actual assessment. For example, upon detecting or receiving notification of a discharge or release, trustee officials perform a preassessment screen to ascertain whether further assessment actions are warranted. The second phase involves the preparation of an Assessment Plan. The Assessment Plan, which is subject to public review and comment, assists the involvement of other interested trustee officials, potentially responsible parties (PRPs), and the general public. The Assessment Plan also ensures that assessments are performed at a reasonable cost. In the third phase, trustee officials conduct the work described in the Assessment Plan. The work involves three steps: Injury Determination; Quantification; and Damage Determination. In Injury Determination, trustee officials determine whether any natural resources have been injured. If trustee officials determine that resources have been injured, they proceed to Quantification, in which they quantify the resulting reduction in services provided by the resources. Finally, in Damage Determination, trustee officials calculate the monetary compensation to be sought as damages for the natural resource injuries. In a type A assessment, trustee officials perform Injury Determination, Quantification, and Damage Determination through the use of standardized procedures involving minimal field work. The Department has adopted a phased approach to developing type A procedures for different environments. Only one type A procedure has been developed to date. The existing type A procedure provides for the use of a computer model to assess damages from small releases or discharges in coastal or marine environments. For other releases or discharges, trustee officials conduct a type B assessment, in which Injury Determination, Quantification, and Damage Determination are performed through the use of a range of alternative scientific and economic valuation methodologies. This notice addresses the use of a particular valuation methodology during the Assessment Phase. The fourth phase of every natural resource damage assessment, whether the type A or type B rule is followed, consists of post- assessment activities such as: Preparation of a Report of Assessment; establishment of an account for damage assessment awards; and development of a Restoration Plan for use of the awards. C. Judicial Review A party may petition the Court of Appeals for the District of Columbia Circuit to review any regulation issued under CERCLA. CERCLA sec. 113(a). A number of parties filed such petitions for review of the natural resource damage assessment regulations. The type B rule was challenged in State of Ohio v. United States Department of the Interior, 880 F.2d 432 (DC Cir. 1989) (Ohio v. Interior). The court in Ohio v. Interior upheld various challenged aspects of the type B rule but did remand three issues. The court ordered the Department to revise the rule to reflect the statutory preference for using restoration costs as the measure of natural resource damages. The court used the term ``restoration costs'' to encompass the cost of restoring, rehabilitating, replacing, and/or acquiring the equivalent of the injured natural resources. 880 F.2d at 441. The court also ordered the Department to allow for the assessment of all reliably calculated lost values of injured natural resources, including both lost use values and lost nonuse values. Use values are derived through activities such as hiking or fishing. Nonuse values are not dependent on use of the resource. Nonuse values include existence value, which is the value of knowing that a resource exists, and bequest value, which is the value of knowing that a resource will be available for future generations. Finally, the court asked the Department to clarify whether the natural resource damage assessment regulations apply to natural resources that are not actually owned by the government. The type A rule was challenged in State of Colorado v. United States Department of the Interior, 880 F.2d 481 (DC Cir. 1989) (Colorado v. Interior). The court held that, based on the reasoning in the Ohio v. Interior decision, the type A procedure for coastal and marine environments should be revised to allow for the calculation of restoration costs. D. Implementation of the Court Order The Department published an advance notice of proposed rulemaking on September 22, 1989, to announce its intent to revise the type B rule to comply with Ohio v. Interior. 54 FR 39016. The Department issued a proposed rule on April 29, 1991, with comments requested by June 28, 1991. 56 FR 19752. On July 2, 1991, the Department extended the comment period to July 16, 1991. 56 FR 30367. On July 22, 1993, the Department reopened the comment period to allow consideration of additional comments, including newly developed information on the contingent valuation methodology (CV), the only method currently available for the express purpose of estimating nonuse values. 58 FR 39328. The comment period was originally reopened until September 7, 1993, and then extended until September 22, 1993. 58 FR 45877 (Aug. 31, 1993). After reviewing the comments received in response to the July 22, 1993, Federal Register notice, the Department proposes to revise the type B rule to include appropriate standards to improve the reliability of CV when used to estimate lost nonuse values. The Department is issuing this notice to ensure that interested parties have an adequate opportunity for review and comment. On March 25, 1994, the Department published a final rule to revise the type B rule to comply with all aspects of the Ohio v. Interior remand other than the assessment of lost nonuse values. 59 FR 14281. Pending completion of this rulemaking, the Department is temporarily leaving unchanged the language of the original type B rule concerning the assessment of lost nonuse values. E. Other Rulemakings CERCLA mandates biennial review and revision, as appropriate, of the natural resource damage assessment regulations. The Department plans to begin the biennial update of the type B rule in July 1994. All aspects of the administrative process and the type B rule will be subject to review during that update. During the biennial review, the Department will consider ways of ensuring the greatest consistency appropriate between its damage assessment regulations and the damage assessment regulations being developed by NOAA. Further, later this year the Department plans to issue a proposed rule to revise the type A rule for coastal and marine environments in compliance with Colorado v. Interior. The Department is also developing an additional type A rule for assessing damages in the Great Lakes. Like the type A rule for coastal and marine environments, the type A rule for the Great Lakes will incorporate a computer model. II. Calculation of Damages Under the Type B Rule A. Costs of Restoration, Rehabilitation, Replacement, and/or Acquisition of Equivalent Resources The type B rule as originally published on August 1, 1986, provided that damages consisted of the lesser of the cost of restoring the injured resources (plus the lost interim use value) or the diminution in the value of the injured resources without restoration. In Ohio v. Interior, the court ordered the Department to revise the rule to reflect the statutory preference for using restoration costs as the measure of natural resource damages. CERCLA provides that sums recovered in natural resource damage actions may be used to restore, rehabilitate, replace, or acquire the equivalent of the injured natural resources. The court used the simple term ``restoration'' costs as shorthand for the cost of performing any of these actions. 880 F.2d at 441. On March 25, 1994, the Department published a final rule that revised the type B rule to allow trustee officials to recover the costs of restoration, rehabilitation, replacement, and/or acquisition of equivalent resources in all cases. 59 FR 14281. The March 25, 1994, final rule provides guidance on projecting the costs of restoring, rehabilitating, replacing, and/or acquiring the equivalent of the injured resources. Under that final rule, trustee officials first identify and consider a reasonable number of possible alternatives for restoring, rehabilitating, replacing, and/or acquiring the equivalent of the injured resources. Trustee officials also estimate those services that are likely to be lost to the public pending completion of each alternative under consideration. Trustee officials then select one of the possible alternatives based on several factors. The trustee officials document their decisions in a Restoration and Compensation Determination Plan, which is subject to public review and comment. Once the trustee officials select a restoration, rehabilitation, replacement, and/or acquisition alternative, they choose the methods they intend to use to estimate the costs of implementing that alternative. To do this, trustee officials select among specified cost estimating methodologies. Trustee officials include the rationale for their selection in the Restoration and Compensation Determination Plan. B. Compensable Value Under the March 25, 1994, final rule, the costs of restoring, rehabilitating, replacing, and/or acquiring the equivalent of the injured resources are the basic measure of damages; however, these costs are only one component of the damages that trustee officials may assess. Trustee officials also have the discretion to assess the value of the resource services that the public lost from the date of the release or discharge until completion of restoration, rehabilitation, replacement, and/or acquisition of equivalent resources. 59 FR 14283. The term ``compensable value'' is used to encompass all of the lost public economic values, including both lost use values and lost nonuse values. The Restoration and Compensation Determination Plan includes a description of the methodologies trustee officials intend to use when estimating compensable value during Damage Determination. The original type B rule provided a ranked list of methodologies that could be used to calculate lost use values. If the market for the injured resource was ``reasonably competitive,'' then the diminution of the market price attributable to the discharge or release was used to estimate damages. If a market price methodology was not applicable, then the trustee officials were required to use appraisal methodologies. Only when neither market-price nor appraisal methodologies were appropriate for the resources being assessed did the original version of the rule allow trustee officials to use non-market- based methodologies. Further, Secs. 11.83(b)(2) and 11.83(d)(5)(ii) of the original version of the type B rule provided that lost nonuse values could only be assessed if trustee officials could not determine any lost use values. In the August 1, 1986, preamble to the original type B rule, the Department provided the following explanation for this restriction: Ordinarily, option and existence values would be added to use values. However, section 301(c) of CERCLA mentions only use values. Therefore, the primary emphasis in this section is on the estimation of use values * * * Another related reason for this limitation is that more is known about the determination of use values than option and existence values. Option and existence values are less well- defined and more uncertainty surrounds their measurement. 51 FR 27719. Ohio v. Interior held that the type B rule incorrectly established a strong presumption in favor of the use of market price and appraisal methodologies to estimate lost use values. The court also held that the Department had ``erroneously construed the statute'' with regard to the assessment of lost nonuse values. The court stated: (S)ection 301(c)(2) requires Interior to ``take into consideration factors including, but not limited to * * * use value.'' 42 U.S.C. 9651(c)(2) (emphasis added). The statute's command is expressly not limited to use value; if anything, the language implies that DOI is to include in its regulations other factors in addition to use value. 880 F.2d at 464. The court went on to say that the Department is entitled to rank methodologies according to its view of their reliability, but it cannot base its complete exclusion of option and existence values on an incorrect reading of the statute. Id. The court instructed the Department to consider a rule that would permit trustee officials to include all reliably calculated lost values in their damage assessments. Id. CV is currently the only method available for the express purpose of estimating nonuse values. Under the original type B rule, CV was listed as a non-market-based methodology for calculating either lost use or lost nonuse values. Ohio v. Interior upheld the Department's inclusion of CV as a ``best available procedure.'' Id. at 478. However, the court did not require the Department to allow unlimited use of CV. Moreover, the court did not address the difference between use of CV to calculate lost use values and use of CV to calculate lost nonuse values. The March 25, 1994, final rule leaves trustee officials free to choose among the listed valuation methodologies, including CV, when estimating lost use values. 59 FR 14285-86. The final rule provides a number of criteria to guide the selection of valuation methodologies, including a requirement that the chosen methodologies are reliable for the particular incident and type of damage being measured. The final rule renumbers Secs. 11.83(b)(2) and 11.83(d)(5)(ii) of the original rule, which restrict the assessment of lost nonuse values to cases where lost use values cannot be determined, as new Secs. 11.83(c)(1)(iii) and 11.83(c)(2)(vii)(B), respectively. Pending completion of this rulemaking to address the final issue affected by the Ohio v. Interior remand, the Department is temporarily leaving unchanged the language of these renumbered sections. III. Contingent Valuation: Discussion and Rule Language Under Consideration CV is a survey-based approach to the valuation of nonmarket goods and services that relies on a questionnaire for the direct elicitation of information about the value of the good or service in question. The value obtained for the good or service is said to be contingent upon the nature of the constructed (hypothetical or simulated) market and the good or service described in the survey scenario. In the natural resource damage assessment context, CV studies generally derive values through elicitation of respondents' willingness to pay (WTP) to prevent injuries to natural resources or to restore injured natural resources. The first published CV study, valuing outdoor recreation, appeared in 1963. There are now over 1,400 documented papers, reports, and books on CV. In recent years, CV has become one of the most widely used methods of nonmarket valuation. Four basic elements common to CV questionnaires are: (1) An explanation of the structure and rules of the market in which the good or service being valued is either bought or sold; (2) a description of the good or service and how it is to be provided; (3) the value elicitation question; and (4) validation questions to verify comprehension and acceptance of the scenario and to elicit socioeconomic and attitudinal characteristics to interpret the variation in responses to the valuation question across respondents. There are no universal rules on how each of these elements of a CV questionnaire should be designed, since the appropriate formulation of each depends on the good or service being valued and its context and, consequently, will vary across applications. CV surveys generally measure total value of a good or service, which includes both use values and nonuse values. However, nonuse values, unlike use values, are not linked to observable behavior and, thus, are more difficult to validate externally than use values. Therefore, criticisms of CV pertain primarily to its use in valuing the nonuse component of total value and the difficulty of external validation of that component of total value. Among the most commonly cited criticisms of CV studies of nonuse values are: The stated intentions of WTP in CV surveys may exceed ``true'' WTP; CV may produce results that appear inconsistent with the tenets of rational choice; respondents to CV surveys on nonuse may be unfamiliar with the good or service being valued and therefore may not have an adequate basis for articulating their true value; CV respondents may be expressing a value for the satisfaction (warm glow) of giving rather than the value of the good or service in question; and respondents may fail to take CV questions seriously because the financial implications of their responses are not binding. Most proponents of CV acknowledge that poorly designed and administered CV studies can produce results that reflect the potential problems identified above. However, proponents also assert that these problems are not inherent to the method and that well-designed and well-executed CV studies can eliminate them or render them inconsequential. Proponents further assert that survey design, development, and administration standards will improve quality control for CV surveys. The Department received many, often conflicting, comments on the use of CV to calculate nonuse values. As the Department noted in the July 22, 1993, Federal Register notice, NOAA convened a panel of economic and survey experts (the NOAA panel), pursuant to its rulemaking authority under OPA, to evaluate the reliability of CV to measure nonuse values. The NOAA panel issued a report in January, 1993. 58 FR 4601 (Jan. 15, 1993). Based upon consideration of all comments received and the NOAA panel report, the Department is proposing to revise the type B rule to include standards for the use of CV to estimate lost nonuse values. The Department believes that standards to improve the reliability of CV surveys of lost nonuse values are needed in the Department's type B rule, because assessments performed in accordance with the rule will be given a rebuttable presumption in litigation over the specific amount of money a particular party must pay as compensation for liability. However, this same level of precision for CV surveys may not necessarily be required for other applications of CV, such as use of CV in regulatory cost-benefit analyses. On January 7, 1994, NOAA published a proposed natural resource damage assessment rule under OPA. 59 FR 1062. Section 990.78(b)(5) of NOAA's proposed rule includes standards for the use of CV. 59 FR 1182- 83; see also 59 FR 1142-48. In the interest of consistency and after consultation with other Federal agencies, the Department is soliciting comment on whether the Department's type B rule should be revised to include standards for the use of CV substantially similar to those proposed by NOAA. Upon consideration of the comments received in response to this notice, the Department intends to issue a final rule. NOAA's proposed standards for use of CV cover five areas: (1) Survey instrument design and development; (2) survey administration; (3) the nature of the results; (4) calibration; and (5) reporting. NOAA's proposed standards are intended to provide flexibility to trustee officials so that they can take advantage of new developments that may occur in CV methodology. Further, any standards included in the Department's type B rule may be subject to amendment during the statutorily required biennial review of the regulations to reflect the results of new research. A. Survey Instrument Design and Development The reliability of a CV study begins with the design and development of the survey instrument. NOAA has proposed several survey instrument design and development standards. The Department solicits comment on whether the same standards should be included in the Department's type B rule. NOAA's proposed rule language, which the Department is considering for its type B rule, is as follows: Survey instrument design and development--(A) Willingness to pay for Prevention or Restoration. (1) The survey instrument shall elicit from respondents their willingness-to-pay (WTP) either to prevent described injuries to natural resources or to restore injured resources as described to their baseline or comparable condition. (2) The trustee(s) shall document the rationale for selecting a prevention program or restoration program as the commodity to be valued. (B) Commodity definition. (1) During development of the survey, the trustee(s) shall determine whether respondents understood and found credible the description of the injuries (including whether they are permanent or interim losses) and the program (including the timing of the process) for preventing injuries or restoring the natural resources. (2) Prior to the value elicitation, the trustee(s) shall identify the natural resource context of the injured resources, if related resources exist, including commodities that might serve as substitutes. (C) Budget constraints. Prior to the value elicitation, respondents shall be reminded of their budget constraints and their alternative expenditures. Respondents shall be reminded that their WTP for the environmental program in question would reduce their expenditures on other goods. This reminder should be more than perfunctory, but less than overwhelming. The goal is to induce respondents to keep in mind other likely expenditures, including those on other environmental goods, when evaluating the main scenario. After the value elicitation, respondents shall be reminded again of their alternative expenditure possibilities. Respondents shall be given an opportunity to reconsider and change their votes (bid) after this second reminder of alternative expenditure possibilities. (D) Comparability with real transactions. (1) The survey instrument shall use a credible choice mechanism and payment vehicle. (2) The trustee(s) shall select a choice mechanism that is incentive compatible and shall document the rationale for the selected choice mechanism. (3) The trustee(s) shall ask follow-up questions to determine whether the respondents accepted the choice mechanism and payment vehicle as credible. (4) (Note: Calibration requirement discussed in Section III.D of this notice)* * * (E) Pretesting. (1) Survey development shall include adequate field testing to ensure that the above design criteria are met. 59 FR 1182-83. One important aspect of survey instrument design and development is the selection of a choice mechanism. Past CV studies have used different methods to elicit values, including open-ended WTP questions; bidding cards; and voting formats typically termed ``referenda.'' The Department believes that selection of a choice mechanism should be left to the discretion of trustee officials, as provided in NOAA's proposed rule. Nonetheless, the Department believes that the current state of the art shows many advantages for using a voting format as the choice mechanism for CV surveys in natural resource damage assessments. Therefore, if trustee officials select a choice mechanism other than a voting format, they should document the factors that led them to reject a voting format. Nevertheless, the Department solicits comments regarding the incentive compatibility of alternative choice mechanisms and whether the final regulation or its preamble should state a preference for the voting format. The Department also solicits comments regarding the administrative and analytical costs associated with alternative choice mechanisms. The Department believes that the method of elicitation should be one with which people are familiar and one which provides a realistic context in which respondents can choose to increase levels of public goods. Local jurisdictions and State governments often ask voters to increase taxes on themselves so that public goods may be increased (e.g., school bond issues; special assessments for public infrastructure). Second, in our society, most goods are offered using posted prices. Asking an individual to reveal his or her maximum WTP for a good is both unfamiliar and unrealistic. Third, it is important that respondents believe that they will receive the program offered in the CV survey. To CV respondents, the cost of the program naturally determines the price they must pay. If no set price is offered, the respondents may perceive uncertainty regarding the program's costs and, therefore, uncertainty regarding the provision of the program. Finally, the voting format is incentive compatible. Respondents must reveal their preference and vote for the program if they desire the program at the stated price. Voting against or refusing to vote will only lower the probability of obtaining the program. B. Survey Administration The most carefully designed CV survey can produce unreliable results if the survey administration is faulty. NOAA has proposed several standards for survey administration. The Department solicits comment on whether the same standards should be included in the Department's type B rule. NOAA's proposed rule language, which the Department is considering for its type B rule, is as follows: Survey administration--(A) Sampling procedures. (1) The trustee(s) shall determine the relevant population(s) to be sampled and document the rationale for that determination. (2) The trustee(s) shall draw a probability sample(s) from the target population for the administration of the final survey. Less rigorous sampling is suitable for pretesting and pilot surveys so long as the heterogeneity of the target population is considered. (3) The sample size(s) shall be sufficient to draw statistically significant population inferences and to estimate WTP valuation functions or to test relevant statistical hypotheses. (4) The trustee(s) shall minimize nonresponse bias to the extent practicable by striving for as high a response rate in the final survey as possible, consistent with the requirements of reasonable cost. In no case shall the response rate be less than seventy percent. (5) The trustee(s) shall document the rationale for the selected response rate. (B) Mode of administration. (1) The trustee(s) shall document the rationale for the selected mode of survey administration. (2) If interviewers are used, the survey administration shall be conducted by trained interviewers who are supervised by experienced interviewer field managers. (3) Regardless of the mode of administration, the trustee(s) shall use an experienced survey research organization to administer the survey. (C) Confidentiality. The trustee(s) should ensure respondent confidentiality. 59 FR 1183. One important aspect of survey administration is the determination of an appropriate response rate. The Department believes that trustee officials should obtain as high a response rate as possible, consistent with the requirements of reasonable cost, in order to ensure reliable inferences to the general population. Low response rates pose a risk of compromising the statistical validity of the survey when nonrespondents have systematically different values than respondents. Another risk associated with low response rates is that estimates of response variance may be significantly affected such that the indicated confidence of survey results is questioned. Since the likelihood of these risks cannot be determined unless nonrespondents have been surveyed, trustee officials should minimize nonresponse in the final survey to the extent practicable. For example, trustee officials could design the survey instrument so that individuals must decide whether to respond before the exact nature of the environmental insult is revealed. NOAA has proposed that response rates shall not fall below 70 percent. The Department solicits comments on whether there should be a specified minimum response rate and, if so, whether 70 percent is a reasonable floor. Further, the Department solicits comments regarding the administrative costs associated with alternative response rates. Another important aspect of survey administration is selection of the mode of administration. The three generally used CV survey administration modes are in-person, mail, and telephone. There are advantages and disadvantages of each method, and often the selection of the appropriate method is dependent on a number of factors such as cost, turn-around time, desired response rate, type of information to be conveyed, use of visual aids, required population coverage, and the ultimate use of the survey results. For example, telephone surveys can approximate simple random sampling of households through random digit dialing; can produce fast results; are relatively easy to administer; and are less expensive than in-person interviews. On the other hand, visual aids cannot be used; interviews need to be relatively short; interviewer bias may be involved; and individuals without telephones are necessarily omitted from the sample. Self-administered mail surveys are the least costly of the three methods. However, probability sampling is difficult; respondents can review the survey before deciding to participate (imparting self-selection bias); there can be no random selection within the household and no control of question sequencing; and a higher number of incomplete responses are likely to result because there is no interviewer to motivate the respondent. Finally, in-person interviews permit random selection of the respondent within the household; maintain control of question ordering; allow the use of visual materials; and generate high response rates. In-person interviews, though, are the most costly method to administer; require complex field operations; involve the use of many documents and forms (e.g., calling cards, interviewer evaluation forms, verification forms); and may involve interviewer bias. For a more in-depth discussion of each method, see EPA, ``Survey Management Handbook,'' vol. II, pp. 24-35, 230/12-84-002, December, 1984. The Department believes that selection of a mode of administration should be left to the discretion of trustee officials, as provided in NOAA's proposed rule. Nonetheless, the Department believes that in- person interviews provide certain advantages in the natural resource damage assessment context. Therefore, if trustee officials select a mode of administration other than in-person interviews, they should document the factors that led them to reject in-person interviews. The Department solicits comments on whether the final regulation or its preamble should state a preference for in-person interviews. While recognizing that mail surveys can provide invaluable information for many academic studies and regulatory purposes (e.g., the U.S. decennial census), the Department believes that mail surveys at this time lack certain features that are desirable for use in the natural resource damage assessment context. Telephone surveys also have limitations. A CV survey designed for natural resource damage assessment purposes is likely to impart a large amount of information to respondents causing interviews to be lengthy and often complex. In- person interviews offer the opportunity to motivate the respondents and to hold their interest by providing important information in a graphic and pictorial format and asking interactive questions regarding the respondents' understanding and acceptance of key features of the survey instrument. In-person interviews also permit interviewers to record verbatim responses to important open-ended questions. Such information may be critical in demonstrating that a trustee official has adhered to regulatory standards for the design and administration of the CV study. The Department also believes that trustee officials should consider the use of modes of administration other than in-person interviews during the survey instrument development stage. For example, a telephone survey may be an appropriate and cost-effective method to test a design feature such as question ordering or the understanding of technical terms. Further, the Department is interested in comparative empirical testing of other administration modes, such as random digit dialing for initial contacts, followed by mailed descriptive information and visual materials, culminating with a telephone survey. If such testing demonstrates that other modes can produce the type of information and results comparable to in-person interviews, the Department would consider encouraging trustee officials to use those methods for the final survey. Regardless of the mode of administration, the Department believes that all surveys should be administered by a survey research organization, as provided in NOAA's proposed rule. The Department believes that use of a survey research organization is necessary because the preparation and administration of a general population survey require practical survey expertise and substantial logistical support. The Department also believes that trustee officials should select a survey research organization that has implemented procedures to meet the standards outlined in either the Council of American Survey Research Organizations' Code of Standards for Survey Research or the American Association for Public Opinion Research's Code of Professional Ethics and Practices. Use of such an organization would help to maintain reliability and confidentiality. Further, such organizations are likely to have proven track records and the staff necessary to conduct a survey in accordance with any regulatory standards. Nevertheless, the Department solicits comments regarding the requirement that surveys be administered by an experienced survey research organization. Further, comments regarding alternative codes of standards for survey administration are solicited. C. Nature of Results A commonly expressed concern about CV is that it can produce results that are not sensitive to all relevant characteristics of the described natural resource injuries and methods of preventing or restoring the injured resources. NOAA has proposed a test to address this concern. The Department solicits comment on whether the same test should be included in the Department's type B rule. NOAA's proposed rule language, which the Department is considering for its type B rule, is as follows: Nature of results. (A) Scope test. Controlling for attitudinal, demographic, perceptual, and other differences across respondents, the trustee(s) shall demonstrate statistically that the aggregate WTP across all respondents for the prevention or restoration program increases (decreases) as the scope of the environmental insult is expanded (contracted). The scope of the environmental insult is characterized by the severity of the natural resource injuries and the level of effectiveness and timing of the restoration or prevention program. The demonstration shall be conducted through the use of split samples. (B) Number of scenarios. The trustee(s) shall administer to split samples different survey instruments containing three variations of the scope of the environmental insult that respondents perceive as different unless the trustee(s) can provide a reasonable showing that the three-scenario test is infeasible due to considerations of cost or lack of plausibility of scenarios. Where three scenarios are feasible, the statistical test shall involve pairwise comparisons. In either case, the scenarios may vary along any of the margins of intensity, geography, and duration of damage and, for prevention scenarios, the probability of an event occurring. The trustee(s) shall document the rationale for the selected variations of the scope of the environmental insult. In determining the descriptions to be used with the split samples, the trustee(s) shall use realistic injury scenarios and prevention or restoration programs that the respondents accept as credible. (C) Maximum amount of difference between scenarios. The trustee(s) shall develop scenarios for the total value test. Prior to the performance of the test, the trustee(s) shall demonstrate that not more than ninety-five percent of respondents in a pre-test or in focus groups indicate that there are meaningful value differences between the scenarios to be tested in any pairwise comparison. The demonstration shall be based on a minimum of sixty valid responses. The trustee(s) shall exclude from this demonstration any individuals who indicate in screening questions that they are not willing to pay anything for any size environmental cleanup or who would be willing to pay unrealistically large and invariant amounts for any size environmental cleanup. 59 FR 1183. If this test were included in the Department's type B rule, one important aspect would be the determination of the relevant dimensions of the scope of the environmental insult. The scope of an environmental insult such as a discharge of oil or release of a hazardous substance is multi-dimensional, where the dimensions are influenced by biological and social attributes. A discharge or release can affect all or part of an ecosystem. Its effects can be short- or long-lived, lethal or sublethal, geographically contained or widely dispersed. From the human perspective, the effects of a discharge or release may be directly visible and disturbing, or out of sight and perceived only indirectly once there is knowledge about the loss of natural resources. In the first phase of NOAA's proposed test, the relevant dimensions of the scope of the discharge or release under investigation would need to be identified. Once the trustee official had defined the relevant dimensions of scope, the trustee official would employ a split sampling technique where some respondents were provided with an alternative survey instrument. The trustee official would begin the analysis with the primary survey instrument that would be used to estimate the values lost due to the discharge or release in question. This instrument would be designated the base instrument. Trustee officials would pre-test and perform pilot tests on the instrument to ensure that the instrument met any design and development standards. Analyses performed using incompletely developed or tested preliminary instruments would not be considered evaluations of scope sensitivity because in these situations it would not be possible to distinguish the effects of variations in survey instrument design from the effects of changes in the scope of the injury or proposed prevention or restoration program. In designing a CV survey instrument, trustee officials would determine the dimensions of scope that were relevant to the discharge or release under investigation and decide whether there existed a subset of dimensions that were important to the values being measured or whether all of the dimensions were linked and therefore equally important. In cases where a subset were deemed important, trustee officials would choose whether to scale these dimensions up or down in relation to the levels described in the base instrument and by how much to scale the dimensions. If all relevant dimensions were to be scaled, trustee officials would still decide in which direction and magnitude to scale each dimension. After the trustee officials had decided on the dimensions to be scaled, in what direction and by how much, they would produce second and third instruments that differed from the base instrument only with respect to the scope dimensions. Trustee officials could choose to scale dimensions regarding the injury description, dimensions concerning the prevention or restoration programs offered to respondents, or both. Regardless, trustee officials must take care to ensure that the expected ordinal change in WTP remains unambiguous when simultaneously scaling different dimensions. The scope test would be designed to determine ordinal changes in the aggregate WTP estimates. The Department is considering a hierarchy of preferred scope tests. The first priority in this hierarchy would be to demonstrate the transitivity of aggregate WTP estimates with respect to the scope of the environmental insult. The second priority would be to demonstrate the sensitivity of aggregate WTP estimates to both an expansion and a contraction of the environmental insult. The most preferred test would involve two alternative instruments: One reflecting an expansion of the environmental insult from that described by the base instrument and the other reflecting a contraction of the environmental insult from that described by the base instrument. Joint pairwise comparisons would determine whether the three aggregate WTP estimates were transitive (i.e., A