Natural Resource Damage Assessments

SUMMARY: Section 1006(e)(1) requires the President, acting through the

Under Secretary of Commerce for Oceans and Atmosphere, to promulgate

regulations for the assessments of natural resource damages resulting

from discharges of oil. By today's Notice, NOAA is seeking comments

concerning the proposed rule. The proposed rule is for the use of

authorized federal, state, and tribal officials referred to in the Oil

Pollution Act of 1990 (OPA) as ``trustees,'' for the assessment of

damages to natural resources and/or services from a discharge of oil.

Natural resource damage assessments are not identical to response or

remedial actions addressed by the larger statutory scheme of OPA.

Assessments are not intended to replace response actions, which have as

their primary purpose the protection of human health, but to supplement

them, by providing a process for determining proper compensation to the

public for injury to natural resources.

DATES: Written comments should be received no later than April 7, 1994.

ADDRESSES: Written comments are to be submitted to Linda Burlington,

Project Manager, or Eli Reinharz, Assistant Project Manager, Damage

Assessment Regulations Team (DART), c/o NOAA/DAC, 1305 East-West

Highway, SSMC #4, 10th Floor, Workstation #10218, Silver Spring, MD

20910.

FOR FURTHER INFORMATION CONTACT: Linda Burlington or Eli Reinharz,

Office of General Counsel, DART, telephone (202) 606-8000, FAX (202)

606-4900.

SUPPLEMENTARY INFORMATION: The Oil Pollution Act of 1990 (OPA), 33

U.S.C. 2701 et seq., provides for the prevention of, liability for,

removal of, and compensation for the discharge, or substantial threat

of discharge, of oil into or upon the navigable waters of the United

States, adjoining shorelines, or the Exclusive Economic Zone. Section

1006(e) requires the President, acting through the Under Secretary of

Commerce for Oceans and Atmosphere, to develop regulations establishing

procedures for natural resource trustees to use in the assessment of

damages for injury to, destruction of, loss of, or loss of use of

natural resources covered by OPA. Section 1006(b) provides for the

designation of federal, state, Indian tribal, and foreign natural

resource trustees to determine resource injuries, assess natural

resource damages (including the reasonable costs of assessing damages),

present a claim, recover damages, and develop and implement a plan for

the restoration, rehabilitation, replacement, or acquisition of the

equivalent of the injured natural resources under their trusteeship.

NOAA has published eight Federal Register Notices, 55 FR 53478

(December 28, 1990), 56 FR 8307 (February 28, 1991), 57 FR 8964 (March

13, 1992), 57 FR 14524 (April 21, 1992), 57 FR 23067 (June 1, 1992), 57

FR 44347 (September 25, 1992), 57 FR 56292 (November 27, 1992), and 58

FR 4601 (January 15, 1993), requesting information and comments on

approaches to developing damage assessment procedures. NOAA conducted a

public meeting on March 20, 1991, for additional public participation

into the process and held four regional workshops during 1991 in

Rockville, Maryland; Houston, Texas; San Francisco, California; and

Chicago, Illinois, to learn of regional concerns in coastal and inland

waters. One workshop held in Alexandria, Virginia, in November, 1991,

provided a forum for early discussions of various economic issues

likely to be raised during the damage assessment rulemaking process. In

addition, on August 12, 1992, NOAA held a public hearing on the issue

of whether constructed market methodologies, including Contingent

Valuation (CV), can be used to calculate reliably passive use values

for natural resources, and if so, under what circumstances and under

what guidance. On January 15, 1993, at 58 FR 4601, NOAA published in

full the report of the panel commissioned by NOAA to evaluate the

reliability of CV in calculating passive use values for natural

resources.

The proposed rule summarizes the written comments received by the

agency and issues raised during the public meetings and workshops,

responds to those comments, and contains proposed regulatory language

on the various issues raised. Many of the specific comments summarized

in the proposed rule refer to the status report published by NOAA in

the March 13, 1992, Federal Register notice.

This preamble is organized in the following manner: the

Introduction gives an overview of the proposed rule and is followed by

a discussion of each of the subparts of the proposed rule. Subpart A

deals with the optional prespill planning for a damage assessment and

other general topics, subpart B describes the Preassessment Phase, and

subparts C, D, E, F, and G contain the description of the Assessment

Phase and the range of assessment procedures. Subpart H describes the

Post-assessment Phase.

INTRODUCTION

Overview of Process

I. General

The proposed rule simplifies the task of the natural resource

trustee(s) by providing a flexible and logical process for assessing

natural resource damages resulting from a discharge of oil. To assist

the trustee(s) in conducting damage assessments, the proposed rule

defines a number of key statutory terms relevant to damage assessment

and identifies a number of damage assessment techniques that NOAA has

determined are the best available. In addition, the proposed rule is

intended to facilitate public and responsible party (RP) involvement in

the restoration of injured natural resources and/or services by

creating an open, administrative process for selection of restoration

measures. The proposed rule promotes a cooperative approach to

resolution of natural resource damage cases by providing greater

certainty regarding the measure of damages and the process by which

damages will be determined.

The proposed rule is intended to provide the trustee(s) with

maximum flexibility in conducting damage assessments. It is important

to bear in mind that the proposed rule is optional. The trustee(s) is

free to depart from the proposed rule, however, section 1006(e)(2) of

OPA provides that damage assessments conducted pursuant to this

proposed rule shall have a rebuttable presumption of accuracy in any

administrative or judicial proceedings under OPA. Also, this proposed

rule makes possible judicial review on the administrative record for

the Assessment/Restoration Planning process. The administrative record

is the repository of all the information and data considered by the

trustee(s) during the assessment. The trustee(s) may use damage

assessment techniques outside the scope of this proposed rule at the

cost of assuming the burden of proof with respect to those components

of the damage assessment.

The nature and scope of this proposed rule can best be understood

in the context of the overall statutory scheme for natural resource

damage cases. The elements of liability under sections 1002(a) and

(b)(2) of OPA are simple and straightforward: (1) A discharge (2) of

oil (3) from a vessel or facility (4) into or upon navigable waters,

adjoining shorelines or the Exclusive Economic Zone, (5) which results

in injury to natural resources and/or services. Thus, liability is

established when there is some injury to a natural resource and/or

service resulting from a discharge of oil. The damage assessment is

designed to determine and quantify injury, the appropriate restoration

approach, and the damages resulting from the injury.

The damage assessment process described in this proposed rule has

three major phases: (1) The Preassessment Phase; (2) the Assessment

Phase; and (3) the Post-Assessment Phase (See Figure 1).

BILLING CODE 3510-12-P

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BILLING CODE 3510-12-C

Prespill planning involves planning and coordination among trustees,

coordination with the Area Committees, potential RPs, and the public to

ensure a cost-effective and coordinated assessment once a discharge of

oil occurs. Thus, it is not part of an incident-specific assessment,

but an important part of preparation by the trustee(s) for fulfilling

their natural resource damage assessment responsibilities during spill

response. The Preassessment Phase involves two basic decisions: The

decision whether to proceed with the Preassessment Phase and the

decision as to the scope of the assessment to conduct, if any. The

Assessment Phase offers a choice involving four types of assessment

procedures: compensation formulas, computer models, expedited

procedures, and comprehensive procedures. The Post-Assessment Phase

gives guidance on using the recoveries effectively and efficiently to

bring about the recovery of injured natural resources and/or services.

NOAA is also developing detailed guidance on various aspects of

damage assessment. It is anticipated that guidance documents will soon

be available on: Preassessment, injury determination and

quantification, and restoration. NOAA will publish a Notice of

Availability when these documents are ready for the public. These

guidance documents are being prepared in conjunction with this

rulemaking to provide more specific technical information to those

performing assessments and restorations under OPA and other interested

members of the public. These documents will not constitute regulatory

guidance nor must they be followed to obtain the rebuttable

presumption. The documents, in their final form, will be made available

through a public information distribution service.

II. Prespill Planning

Prespill planning and coordination by various parties are likely to

be involved in damage assessments under OPA. Prespill activities are a

crucial component of trustee responsibilities. Immediately after an oil

discharge, it is extremely difficult to determine the availability of

baseline scientific data, plan additional data collection, and

coordinate the damage assessment approach of the trustee(s). Thus,

baseline data collection and planning are important to a successful

assessment.

The proposed rule strongly encourages natural resource trustees to

coordinate among themselves, the response agencies, the public, and any

potential RPs interested in developing contingency plans for a damage

assessment. These prespill plans can consist of products of previous

planning efforts, or can be management plans modified or supplemented

to cover damage assessment issues.

In prespill planning, the trustee(s) should anticipate what may be

required to document the damage assessment. The documentation

requirements in the proposed rule are drawn largely from the comparable

process set out in the National Contingency Plan (NCP) for selection of

remedies at hazardous waste sites. The trustee(s) should have the

procedures in place to begin the assessment and restoration planning

process when a discharge occurs.

III. Preassessment Phase

A. Introduction

A natural resource damage assessment begins with the Preassessment

Phase, which consists of two basic components: (1) Preassessment

Determination and (2) Damage Assessment Determination. The

Preassessment Determination requires a decision by the trustee(s)

whether to initiate the Preassessment Phase. During the Preassessment

Phase, the trustee(s) may conduct limited data collection and analysis

(data collection). At the end of the Preassessment Phase, the

trustee(s) decides whether to proceed with a damage assessment in the

Damage Assessment Determination.

The Preassessment Phase also identifies the conditions for

notification, coordination, estimation of assessment costs, reporting,

and emergency restoration. Guidance on conducting the Preassessment

Phase will be available in the Preassessment Phase Guidance Document.

B. Relationship of Preassessment Activities to Response Activities

It is very probable that the Preassessment Phase will be conducted

simultaneously with the On-Scene Coordinator (OSC)-coordinated response

activities. Any activities conducted in the discharge area should be

coordinated with the OSC or designee, especially with regards to damage

assessment trustee(s) requests for response operations resources. The

trustee(s) at the discharge site is likely to be participating as a

part of the OSC's response organization and member of the damage

assessment team. The response activities are under the jurisdiction of

the OSC, whereas the damage assessment activities are under the

jurisdiction of the trustee(s).

C. Preassessment Process

1. Preassessment Determination. After notification, the trustee(s)

should determine if conducting the Preassessment Phase is justified.

The Preassessment Determination is largely a ``desktop'' exercise based

upon readily available information on the discharge and environmental

setting.

Based on that information, the trustee(s) should determine if: (1)

The discharge of oil meets the exclusionary conditions as set forth in

section 1002(c) of OPA; (2) the trustee(s) has authority under OPA to

assert damage claims for natural resources and/or services that may be

adversely affected by the discharge of oil; and (3) there is a

reasonable probability that the trustee(s) can make a successful damage

claim based on the scientific, economic, and legal merits of the case,

i.e., potential for injury resulting from the discharge and successful

and meaningful restoration and/or compensation. If these conditions are

met, the trustee(s) may proceed with the Preassessment Phase.

2. Damage Assessment Determination. In the Damage Assessment

Determination, the trustee(s) decides which, if any, damage assessment

procedure to conduct. Further, damage assessment is appropriate for

those injured natural resources and/or services that can be restored or

for which damages can be estimated. As part of the Damage Assessment

Determination, the trustee(s) should make a preliminary determination

regarding the applicability of the damage assessment procedures. These

decisions should be documented in the Preassessment Phase Report.

The trustee(s) has a great deal of flexibility in selecting

appropriate damage assessment methods. If at any time during the

Preassessment Phase the trustee(s) determines sufficient information

was collected in order to select a damage assessment procedure, the

trustee(s) may complete the preassessment and move into the Assessment

Phase. The proposed rule provides factors for the trustee(s) to

consider in the selection of appropriate assessment procedures.

3. Preassessment Phase Report. At the conclusion of the

Preassessment Phase, the trustee(s) should document briefly:

preassessment actions, such as data collection and emergency

restoration; estimated costs directly related to those actions; and

decisions to proceed with preassessment and damage assessment. The

report should provide sufficient information for input in the damage

assessment/restoration process.

If no further damage assessment actions are taken, the

Preassessment Phase Report becomes the Report of Assessment. If damage

assessment actions are undertaken, the Preassessment Phase Report

becomes part of the Report of Assessment. If the trustee(s) decides to

proceed with an assessment, the trustee(s) should develop a Draft

Assessment/Restoration Plan (DARP) as a guide to how the damage

assessment will be conducted.

D. Data Collection and Analysis

The primary reason for data collection and analysis (data

collection) in the Preassessment Phase is to ensure that there is

sufficient information to evaluate the risk to natural resources and/or

services resulting from the exposure to oil. The scope of the

trustee's(s') data collection should be reasonable in light of the

characteristics of the discharge and natural resources and/or services

potentially affected by the discharge. However, the trustee(s) and

RP(s) may agree to undertake limited injury determination studies to

verify that no significant injury to natural resources and/or services

has resulted from the discharge, although costs for such undertakings

are not recoverable.

When reasonably practicable, the trustee(s) should collect the

following types of information during the Preassessment Phase: (1) Data

that are necessary to make a determination to proceed with the

Preassessment Phase; (2) ephemeral or perishable data that may be lost

if not collected immediately; and (3) necessary data that serves as the

basis for the selected damage assessment procedure, the absence for

which data would prevent the trustee(s) from proceeding with the damage

assessment determination of Sec. 990.23 (i.e., input into the

compensation formulas of Type A models, or the study design for the

Expedited Damage Assessment (EDA) or Comprehensive Damage Assessment

(CDA)).

E. Emergency Restoration

At any time after the discharge, the trustee(s), with the approval

of the OSC, may decide to conduct emergency restoration as long as it

does not interfere with response actions. These actions are designed to

protect natural resources and/or services where there is insufficient

time to await completion of the entire damage assessment/restoration

planning process.

Emergency restoration is not subject to required public review and

comment. Consequently, the proposed rule requires the trustee(s) to

document that any actions taken under this authority are necessary and,

to the extent reasonably practicable, cost-effective.

IV. Assessment Phase

A. General

Through this proposed rule, NOAA is providing the trustee(s) with a

variety of assessment procedures in recognition of the need for

flexibility in dealing with situations that, by their nature, are

incident-specific. The trustee(s) can choose among the various

procedures based upon the circumstances of the discharge or natural

resource and/or service involved.

In the selection process, the trustee(s) should first consider the

simplified procedures, either the compensation formula, the Type A

model, or Expedited Damage Assessment (EDA), before a Comprehensive

Damage Assessment (CDA). The RP(s) may request that the trustee(s) use

a more complex assessment procedure than that chosen by the trustee(s),

only if the RP(s) provides the money up front to fund such an effort,

and it is understood that the trustee(s) has the ultimate

responsibility for the design and management of that study. The

trustee(s) has the option to decline to conduct the more complex

assessment procedure, but must justify and document that decision in

the Report of Assessment.

B. Draft Assessment/Restoration Plan (DARP)

The proposed rule requires that the trustee(s) prepare a DARP for

all assessments. The DARP is the document that gives the trustee(s) the

opportunity to present for comment the chosen approach for restoration,

replacement, rehabilitation, or acquisition of the equivalent of the

injured resources and services. The DARP will also give enough

information about the injury determination and quantification to allow

for a meaningful review of the trustee's(s') determination of the

restoration approach. The DARP will also contain the estimated costs of

implementing the chosen approach. The DARP also may, at the trustee's

discretion, contain a list of the planned valuation studies.

After the DARP has been reviewed by the public, the trustee(s) will

then modify it as appropriate. The DARP then becomes the Report of

Assessment, which is the final description of the restoration approach

selected by the trustee(s) and the estimated costs of implementing that

approach.

Although each assessment will be incident-specific, many elements

of a DARP will be essentially the same. At a minimum, the DARP should

identify the following: (1) The objectives of the trustee(s); (2) how

the trustee(s) plans to accomplish the objectives; and (3) whether the

planned actions are conducted in a cost-effective manner to the extent

reasonably practicable. It is expected that the DARP will address

issues such as study design, data collection and analysis, quality

assurance (QA), data management, and guidelines for conducting the

overall assessment/restoration process and individual studies within

that process. The proposed rule addresses these common components as

they are addressed through the DARP. Not all of these elements will be

required in every DARP, particularly in a compensation formula or Type

A assessment.

As mentioned throughout this preamble and proposed rule, the

trustee(s) is strongly encouraged to develop prespill plans for

conducting an assessment. Those prespill plans could even identify the

type of assessment procedure conducted under certain discharge

scenarios. When the trustee(s) determines that the assessment will be

conducted pursuant to prespill plans, the DARP shall document that

decision and be consistent with the actions identified in the prespill

plan to the maximum extent practicable. If the circumstances of the

incident are such that the trustee(s) determines that the assessment

will be conducted on an incident-specific manner rather than pursuant

to any prespill plans, the DARP shall document that decision.

The trustee(s) will prepare a DARP following the determination to

proceed with further assessment activities. The DARP should be based

upon the findings of the Preassessment Phase, identify the assessment

procedures the trustee(s) is planning to use, describe proposed studies

relating to injury determination and quantification, if any, and

describe proposed actions relating to the determination of the type and

nature of restoration actions, if any, subject to the prespill plans.

Although the trustee(s) should view the development of the DARP as one

process, it may be reasonable to develop the restoration component

separately and at a later date than the assessment component.

The development of a DARP will assist the trustee(s) in conducting

an efficient assessment and, subject to prespill plans, be available

for public review. The scope of the public notice and review should be

comparable to the scope of the extent of the assessment area and

expected effects. The DARP (including comments and responses) is to be

included in the administrative record accompanying the assessment. The

DARP will also ultimately become the Report of Assessment. The

trustee(s) is not required under the proposed rule to provide a review

and comment period of any specific injury determination/quantification

studies, only general notification of the nature and type of assessment

being conducted.

The trustee(s) must review and respond to public comments during

preparation of the restoration component of the DARP. In addressing

comments received concerning the proposed restoration approach, it is

not necessary for the trustee(s) to respond to each comment received.

Comments may be summarized in like-subject areas and responded to only

once.

The proposed rule allows the trustee(s) to modify the restoration

component of the DARP, if necessary. Public review is required for

modifications deemed significant by the trustee(s). Large discharges or

discharges with extensive environmental effects may require the

trustee(s) to develop multi-year plans. Again, modifications of the

annual restoration plans that are significantly different from the

preceding year should be provided for public review.

C. Compensation Formulas

The estuarine/marine and inland waters compensation formulas

described in this proposed rule would be applicable to the vast

majority of oil discharges. An analysis of reported coastal discharges

of oil from 1973-1990 shows that 99.8% of the discharges were less than

50,000 gallons and 99% were less than 10,000 gallons. Compensation

formulas could be used for most of these relatively small discharges,

particularly for those that occur in areas where it would be difficult

to ascertain precise environmental effects, e.g., small discharges in

open water or in areas that are subject to frequent discharges.

These formulas allow an estimate of damages per gallon taking into

account average restoration costs, plus average lost direct use values

pending restoration. The formulas assume various levels of natural

resource effects likely to result from the discharge of oil. These

assumptions consider the amount and type of oil discharged and region

and habitat type in which the discharge occurs. The formulas are

applicable to a wide range of the most commonly discharged oil

products. This approach allows both a national consistency and regional

specificity.

D. Computer Models

NOAA is proposing that the natural resource trustee(s) may use the

Natural Resource Damage Assessment Model for Coastal and Marine

Environments, Version 1.2, known as the Type A model, developed by the

U.S. Department of the Interior (DOI), for damage assessments under

OPA. The Type A model is described at 43 CFR Part 11, subpart D. The

Type A model may be used when the conditions of the discharge are

sufficiently similar to the conditions at 43 CFR 11.33(b).

It is likely NOAA will also recommend the new set of computer

models being developed by DOI. The current computer model, for use in

coastal and marine environments, is being revised to comply with the

circuit court's decision in Colorado v. U.S. Department of the

Interior, 880 F.2d 481 (D.C. Cir. 1989) (Colorado v. DOI) and as part

of the statutorily-mandated review and update. The court in Colorado v.

DOI held that natural resource damage assessments should be based upon

costs to restore, replace, rehabilitate, or acquire the equivalent of

the injured natural resources, plus the diminution of all reliably

calculated values pending recovery. Until the revisions to the Type A

model are completed, the trustee(s) may use the current Type A model

for lost use values and supplement the resulting figure with estimates

of restoration costs and other applicable damages. DOI is also

developing a second computer model for use in the Great Lakes and their

connecting channels.

These new computer models are under development through DOI, but

are not yet available for public review. NOAA is working closely with

DOI in its development of these computer models. Based upon an initial

evaluation of these models, it is likely that NOAA will recommend that

there be available procedures that the trustee(s) may choose to use.

E. Expedited Damage Assessment (EDA)

Included in the proposed rule is a new type of assessment

procedure--Expedited Damage Assessment. EDA reflects a damage

assessment approach that is intermediate between the current Type A and

the CDA procedures. This approach recognizes that a Type A model may

not address all key natural resources and/or services injured or at

risk, particularly for inland discharges. The approach also recognizes

that the size, location, and timing of a given discharge may not

warrant the extensive procedures associated with a CDA. The EDA offers

an option that addresses a broader range of natural resources and/or

services than a Type A model but is less time consuming and less

expensive than a CDA.

The goal of an EDA is to initiate necessary restoration as quickly

as possible by truncating the injury determination and quantification

components. Accordingly, an EDA does not include comprehensive or long-

term injury determination and quantification studies nor does it

address injury for every natural resource and/or service that may be

injured.

An EDA is not necessarily a unitary approach to damage assessment.

It encompasses a range of techniques that permit the trustee(s) to

determine injury based on limited, focused observations. In some

circumstances, an EDA may entail supplementing the Type A model with

field studies. In other situations, an EDA may comprise an abbreviated

CDA approach. Accordingly, the EDA should be viewed as a dynamic,

flexible process rather than a rigid step-by-step approach.

Simply stated, the goals of an EDA are to: (1) Identify and

quantify injuries to selected natural resources and/or services

resulting from a discharge, (2) accomplish the above goal using focused

studies and/or preexisting information, and (3) provide the basis for

restoration and recovery of natural resources and/or services. The

trustee(s) may undertake injury determination and quantification only

for selected natural resources and/or services.

Ideally, data collection in an EDA should not exceed two field

seasons. During this period, the trustee(s) should quickly develop

appropriate injury determination and quantification studies, and a

draft restoration plan. The remaining time should be devoted to

completion of the restoration plan, and to public review of the consent

decree and/or restoration plan.

F. Comprehensive Damage Assessment (CDA)

1. General. Whereas the EDA described above is intended primarily

for situations involving cooperative efforts completed within a

relatively short time, the CDA should be used where it is anticipated

that the assessment will require prolonged (i.e., multi-year) studies.

The CDA is particularly appropriate where the trustee(s) expects

complex effects for which there is little documentation in the

literature. The CDA includes guidance on: injury determination, injury

quantification, restoration planning and costs, and economic valuation.

2. Injury determination. The purpose of the injury determination

component in CDA is to verify injury to natural resources and/or

services. Before beginning the CDA, the trustee(s) must assess the

feasibility of detecting injury based on a scientifically valid study

design.

If an injury cannot be determined or cannot be linked to the

discharge, further assessment efforts should be terminated and the

results of the injury determination component documented in the Report

of Assessment. If injury is determined, the approach for the next two

components (i.e., quantification and damages) must be selected

consistent with the findings of the injury determination.

3. Injury quantification. After establishing that a natural

resource and/or service is injured by the discharge of oil, the next

step calls for quantifying the effects on natural resources and/or

services. Close coordination is required between natural resource

specialists and economists in planning and implementing this phase of

the assessment to estimate values in the economic valuation phase.

Quantification should only be conducted for natural resources and/or

services that can be restored and for which damages will be sought.

The proposed rule allows the trustee(s) to quantify injuries in one

of two ways: (1) Measuring direct changes in the natural resource

itself (i.e., changes in the chemical, physical, or biological

parameters); or (2) measuring changes in the level of services provided

by the natural resource. In either case, injury quantification requires

before-after and reference/contol-impact comparisons. Such comparisons

will depend on the recovery period of both the affected natural

resources and/or services. Quantification will ultimately be essential

for the evaluation of restoration alternatives, and measuring the

compensable value of lost services.

4. Restoration Planning. The purposes of the restoration component

are to: (1) Determine the most appropriate restoration approach for the

recovery of natural resources and/or services injured by a discharge of

oil; and (2) estimate the costs of implementing that approach. The goal

of restoration is to return an injured natural resource and/or service

to as close to the baseline condition as possible. OPA provides the

trustee(s) the following options to remedy injury to natural resources

and/or services: restoration, rehabilitation, replacement, and

acquisition of the equivalent natural resources. Natural recovery is an

option that should always be considered. When acquisition of equivalent

natural resources is selected, the DARP shall define clearly the

relationship of acquired natural resources to the injured natural

resources and/or services.

5. Compensable Values Determination. Natural resources are public

assets. Like other assets they provide a flow of services. The basic

types of services associated with natural resources include, but are

not limited to: (1) Recreational, (2) commercial, (3) ecological, (4)

special significance, and (5) passive use. Lost services may result

from the loss of, or reduction in, the quality or quantity of services

provided by a natural resource as a result of a discharge of oil. The

final estimate of interim lost value will, therefore, depend on the

most likely restoration approach. If no restoration is being considered

for the injured natural resources and/or services, damages include the

value of the lost or impaired/diminshed services from the time of the

discharge through the completion of natural recovery.

The total diminution in the value of natural resources and/or

services, whether with restoration actions or natural recovery, is

referred to as ``compensable values.'' For the purposes of this

proposed rule, compensable values include all reliably calculated

values that comprise the total diminution in value of lost or

diminished services of trust resources as a result of a discharge, from

the onset of the event until recovery to baseline or comparable

conditions is deemed complete by the trustee(s), i.e., interim lost

values. ``Compensable values'' are defined broadly to encompass both

direct use and passive use values that can be reliably calculated in a

manner that is trustworthy or worthy of confidence.

Direct use values are defined as the value individuals derive from

direct use of a resource. Passive use values are defined as the values

individuals place on resources independent of direct use of a resource

by the individual. The term ``nonuse values'' has also been used to

refer to the same concept, but NOAA prefers the term ``passive use

values.''

Factors to consider in calculating compensable values include: (1)

The value of the services injured or lost, (2) the predicted level of

services if the discharge had never occurred, (3) the predicted level

of services given injury and natural recovery, and (4) the predicted

level of services given injury and a feasible restoration plan. For

some categories of economic damage, it will be possible to conduct

site-specific analyses. For example, the economic damages associated

with the loss of access to a marine transportation corridor due to

closure of a waterway can be estimated using existing site-specific

data in most instances. In other cases the trustee(s) may employ

benefits transfer procedures to apply valuation estimates or valuation

functions from existing valuation studies from other contexts to

estimate losses in the present incident.

Several methodologies exist to measure direct use and passive use

values. This proposed rule provides maximum flexibility to the

trustee(s) for selecting any methodology that can provide reliable and

valid resource values and that is appropriate for valuing the injuries

associated with a particular discharge. The trustee(s) will have broad

discretion in selecting among existing and potential new methodological

approaches that may be employed in damage assessment. The flexibility

to exercise professional judgment in selecting and applying specific

analytical techniques is necessary because of the ``site-specific''

nature of discharges of oil. Further, the trustee(s) may use different

methodologies to produce separate damage estimates for different

resource services, so long as there is no double recovery of losses.

The choice of methodological approaches in a particular context will

depend upon the types of injuries associated with a discharge.

Estimates of the value of lost services pending recovery of injured

natural resources and/or services will be submitted as part of the

total damage determination.

V. Post-Assessment Phase

At the conclusion of an assessment the trustee(s) shall prepare a

Report of Assessment. The Report of Assessment, which is the final

description of the restoration approach selected by the trustee(s) and

the estimated costs of implementing that approach serves as the basis

for the judicial review on the record of the assessment.

Once the Report of Assessment is compiled, the trustee(s) should

present to the RP(s) a demand in writing for the total damages. The

demand is the document that is presented as the summation of all

damages claimed by the trustee(s) resulting from the discharge. The

demand will consist of an identification of the discharge, the identity

of the trustee(s), the amount of damages, and the Report of Assessment

as an attachment.

The total damage figure may be divided into two components:

estimated restoration costs and other damages, including but not

limited to assessment costs and compensable values. Judicial review of

that portion of the demand representing costs shall be conducted on the

administrative record. Judicial review of that portion of the demand

representing compensable values shall be conducted with the trustee(s)

receiving the benefit of the rebuttable presumption.

There are several issues involving handling sums recovered. One

issue is management of the account into which sums recovered are

placed. The proposed rule allows trustees to establish a ``joint

trustee account.'' This trustee account should be managed by all

trustees through a mutually agreed upon trustee committee or council.

However, if for some reason, the trustees cannot establish a joint

account, the proposed rule allows the trustees to divide the recoveries

and deposit their respective amounts into separate accounts.

The second issue is the possible pooling of recoveries from more

than one discharge into one account for Regional Restoration Plans.

Whether the trustee(s) establishes joint or separate accounts, there

are two possibilities for handling sums recovered from discharges. The

trustee(s) may establish an incident-specific account into which sums

recovered from a single discharge may be placed. However, an

alternative allowed by the proposed rule would be for the trustee(s) to

establish a combined account into which sums recovered from several

discharges could be placed.

Finally, whether joint or separate, incident-specific or combined,

these various accounts may be established within the trustee agency's

own treasury, in an account under the registry of the applicable

federal court, or in a commercial account. The commercial account may

be an escrow account or any other type of account not prohibited by

law. Each of these various types of accounts should be interest

bearing. The trustee(s) should provide that money may only be withdrawn

from such accounts with trustee(s) approval. Also, because of the

multiple types of accounts, the trustee(s) must maintain appropriate

accounting and reporting methods to ensure the proper use of sums

recovered. The damages representing compensation for injuries to

natural resources and/or services are to be spent to develop and

implement a final restoration plan.

The proposed rule describes two types of post-assessment

restoration plans. First, the trustee(s) may develop an incident-

specific restoration plan to address the effects of the discharge of

concern. This plan shall be based upon the restoration component of the

DARP developed using guidance given in the CDA phase of the proposed

rule.

Second, the trustee(s) is allowed to pool recoveries to apply them

to a Regional Restoration Plan for a specific area. This Regional

Restoration Plan would have to be developed through a public review and

comment process consistent with the restoration planning process

described in the proposed rule. Where such a plan already exists,

whether developed pursuant to this proposed rule or under other

management efforts, that plan may be used subject to the requirements

for such a plan listed in the proposed rule. This Regional Restoration

Plan would allow the trustee(s) to apply several relatively small

recoveries to a specific area, such as a bay or estuary to achieve a

more comprehensive restoration than what may otherwise be achieved

through a smaller, more segmented approach.

Relationship to 43 CFR Part 11

The U.S. Department of the Interior (DOI) has promulgated natural

resource damage assessment regulations under the Comprehensive

Environmental Response, Compensation, and Liability Act of 1980, as

amended (CERCLA), 42 U.S.C. 9601 et seq. These regulations, which are

codified at 43 CFR part 11, establish an administrative process and

procedures for the assessment of damages for injuries to natural

resources affected by a release of a hazardous substance or a discharge

of oil. These regulations currently provide guidance for damage

assessments resulting from both oil and hazardous substances. After the

OPA regulations are promulgated, the 43 CFR part 11 procedures can

still be used to assess damages for natural resource injuries resulting

from a release of a hazardous substance or a discharge of oil not

covered under OPA.

The procedures identified in 43 CFR part 11 provided a base from

which to identify assessment procedures to be promulgated under OPA.

NOAA requested comments on the applicability to oil discharges of 43

CFR part 11, as modified by the court decisions of Ohio v. U.S.

Department of the Interior, 880 F.2d 432 (D.C. Cir. 1989), and Colorado

v. U.S. Department of the Interior, 880 F.2d 481 (D.C. Cir. 1989). In

addition, NOAA and DOI are coordinating their respective rulemakings to

ensure consistency, when practicable, for the trustee(s) and RP(s) in

conducting natural resource damage assessments due to either a

discharge of oil or release of a hazardous substance. Although similar,

these proposed procedures vary in several aspects from the DOI rule.

Procedural Comparison

Figure 2 shows a rough structural comparison between the two

processes. First, this proposed rule strongly encourages actions

conducted prior to a discharge for ``prespill planning.''

BILLING CODE 3510-12-P

TP07JA94.001

BILLING CODE 3510-12-C

NOAA wishes to emphasize with this designation that actions taken

before a discharge actually occurs are important to the conduct of an

assessment after the discharge has occurred.

Second, the Preassessment Phase described in this proposed rule has

been expanded to reflect more clearly those actions that must occur

before beginning an assessment. This phase includes the Preassessment

Determination, similar to the Preassessment Screen found in 43 CFR part

11. However, the decision as to what kind of assessment procedure is

appropriate for a given incident has been moved up to the Preassessment

Phase in this proposed rule in recognition that this decision must, by

necessity, precede the actual assessment.

Third, the Assessment Phase in this proposed rule lists a wider

range of assessment procedures available to the trustee(s). Section

301(c) of CERCLA, which requires the development of the 43 CFR part 11

process, calls for two types of assessment procedures. Section 1006(e)

of OPA, which requires the promulgation of this proposed rule, does not

specify the number of assessment procedures to be made available to the

trustee(s). Therefore, this proposed rule offers four types of

assessment procedures--two new procedures and two procedures based upon

43 CFR part 11. The two new procedures contained in this proposed rule

are the compensation formulas and the expedited damage assessment

procedures. The compensation formulas are the simplest procedure

available and are designed to address the vast majority of discharges,

those under 50,000 gallons. The expedited damage assessment procedure

recognizes the need for a procedure that falls somewhere on a scale

between the current Type A and Type B procedures found in 43 CFR part

11. Besides these two new procedures, NOAA recognizes the need for

assessment procedures like the Type A and Type B procedures. Therefore,

NOAA is proposing to adopt the use of the current Type A procedure of

43 CFR part 11, subpart D, for use in assessments conducted pursuant to

this proposed rule. Finally, NOAA has also used the current Type B

procedure as a base to develop the comprehensive damage assessment

procedure in this proposed rule. The current Type B process has been

modified to allow a streamlining of the process to recognize the

dynamic nature of a discharge of oil, even a discharge requiring a

multi-year assessment process.

Fourth, the Post-assessment Phase of this proposed rule is

structured in a similar way to 43 CFR part 11. NOAA recognizes that, at

the completion of a damage assessment, the same basic actions are

necessary.

Substantive Comparison

In reviewing this proposed rule, the reader will find numerous

substantive differences between this proposed rule and 43 CFR part 11.

Some of these differences are dictated by the differences between OPA

and CERCLA. Other differences are necessary either to reflect lessons

learned in damage assessments in the last several years or to

acknowledge the inherent differences between oils and hazardous

substances. One example of the substantive differences between the two

rules is in the components of the assessment procedures. In this

proposed rule, restoration planning and compensable value determination

are separated, as opposed to the ``Damage Determination'' step of 43

CFR part 11. This separation is necessary to allow a clear line for the

record review of the restoration component without trying to include

the compensable valuation component into that review. Other substantive

differences appear throughout the proposed rule.

Issues of Interest in Proposed Rule

Several specific issues within the rulemaking process have been the

focus of attention among interested parties. Some of the interest is in

response to the fact that damage assessment regulations were

promulgated under CERCLA. These current regulations, codified at 43 CFR

part 11, apply to both hazardous substances and oils. The OPA rule,

when it becomes effective, will supersede those parts of the CERCLA

rule that deal with oil. Therefore, NOAA is specifically seeking

comments on those aspects of this proposed rule that are different from

the CERCLA rule.

Although the entire proposed rule is open for comment, NOAA is also

particularly interested in receiving comments on several issues that

have drawn much interest from very different points of view. These

issues include: The appropriate standard of judicial review of damage

assessments; the proposed definition of assessment costs; causation as

it relates to injury; the use of a compensation formula and the nature

of its results; and whether the trustee(s) may pool recoveries from

various ``small'' discharges to conduct restoration efforts from a

regional or watershed approach. Specific economic issues include: the

recovery of passive use values for natural resources and the

measurement of these values using the contingent valuation method; and

the appropriate discount rate to use in converting damages to current

dollars. Each of these issues is discussed in the following pages.

Review on the Record

Section 1006(c) of OPA provides that the trustees shall ``develop

and implement a plan for the restoration, rehabilitation, replacement,

or acquisition of the equivalent, of the natural resources under their

trusteeship.'' Section 1006(c)(5) provides that ``plans shall be

developed and implemented under this section only after adequate public

notice, opportunity for a hearing and consideration of all public

comment.'' NOAA is proposing to implement these provisions by requiring

the trustee(s) to document development of restoration plans in an

administrative record through notice and comment procedures.

A majority of the commenters who have spoken to the issue of the

administrative record and judicial review ``on the record'' support the

concept. Several commenters pointed out that these assessments involve

highly technical, scientific findings in which courts have

traditionally treated the agency's determination with great deference.

Therefore, the commenters conclude that judicial review of the

assessment/restoration plan should be conducted on the administrative

record, applying an arbitrary and capricious standard.

Other commenters, however, contend that NOAA would exceed its

statutory authority in granting such a standard of review. Several

commenters stated that the responsible party has the legal right to a

jury trial in natural resource damage assessment disputes as guaranteed

by the United States Constitution. The commenters argued that every

CERCLA natural resource damage case that has addressed the issue has

required a jury trial for these actions at law, therefore, issues

related to the selection of assessment/restoration plans must be

decided by a trial court.

NOAA notes that the administrative record provisions in the

proposed rule are intended to implement several important policy

concerns expressed by Congress in OPA. NOAA has considered

administrative law principles and various comparable policies found in

CERCLA to be relevant to the natural resource damage assessment process

in several areas. The administrative record provisions of this proposed

rule are intended to create an open assessment/restoration process to

allow an objective evaluation of how to restore or replace resources

injured by discharges of oil. Whether these provisions would result in

``record review'' is ultimately the decision of the courts. However,

NOAA feels that record review is essential for the type of expeditious,

fair assessments called for by OPA, and specifically asks for comments

on this approach.

Assessment Costs

OPA allows recovery of damages for injury to natural resources as

well as the reasonable costs of assessing those damages. Under the

CERCLA rule, reasonable costs are defined in terms of the costs being

less than the anticipated damage amount. NOAA has received several

comments in support of adopting the CERCLA rule's definition of

``reasonable costs'' to avoid exorbitant assessment costs. However,

some commenters have argued that it is difficult at the onset of a

discharge to make a preliminary damage estimate that will then be used

to shape the subsequent assessment.

Within the proposed rule, NOAA is defining reasonable costs to mean

those costs associated with performing an assessment in accordance with

the proposed rule. The proposed rule, in turn, gives guidance for each

phase of the assessment as to the reasonableness of assessment

activities. The proposed rule requires that any studies or procedures

be directly related to the purpose of the assessment and are conducted

in a cost-effective manner. This approach does not require the

trustee(s) in the early stages of a discharge to devise a preliminary

estimate of total damages likely to result from that discharge.

However, the proposed rule does require that the assessment be

conducted in such a manner to avoid unnecessary and excessive costs.

Injury/Causation

Under section 1002 of OPA, liability is established when there is

any injury to a natural resource resulting from a discharge of oil.

Injury under OPA encompasses the phrases ``injury to,'' ``destruction

of,'' ``loss,'' and ``loss of use.'' The definition of ``injury''

proposed by NOAA is different from that contained in the CERCLA rule.

According to the CERCLA rule, injury is defined as ``a measurable

adverse change, either long- or short-term, in the chemical or physical

quality or the viability of a natural resource resulting either

directly or indirectly from exposure to a discharge of oil or release

of a hazardous substance, or exposure to a product of reactions

resulting from the discharge of oil or release of a hazardous

substance.'' The definition of injury under CERCLA incorporates the

concepts of injury and causality. Specific injury definitions and

causation for resources are detailed in the CERCLA rule.

Under the OPA proposed rule, NOAA has attempted to more clearly

delineate these terms. The definition of injury under the OPA proposed

rule is more relaxed because it does not require that there be a

``measurable'' adverse change. Consequently, any discharge is likely to

result in an injury. The OPA proposed rule defines injury as ``any

adverse change in a natural resource, or any impairment of a human or

ecological service provided by a resource.'' Injury causation (i.e.,

definition of ``injury resulting from a discharge'') has been

determined when the trustee(s) has demonstrated that: (1) With direct

exposure, (a) the natural resource was exposed; (b) there is a pathway

between the discharge and exposed natural resource; and (c) the

exposure of oil, its components, or by-products has been shown by

rigorous and appropriate scientific methodology to have an adverse

effect on the natural resource in laboratory experiments or the field;

or (2) in the absence of direct exposure, (a) the adverse effect on or

impaired/diminished use of a natural resource has been shown by

rigorous and appropriate scientific methodology; and (b) the adverse

effect on or impaired/diminished use of the natural resource would not

have occurred but for the fact of the discharge or threat of a

discharge. The rationale for this approach is to simplify the legal

determination of liability. Basically, liability is established by the

presence of oil in the water. The trustee(s), however, recovers damages

by establishing a causal link between the presence of oil and the

observed adverse change in the resource or impairment of a human or

ecological service. Conceptually, this approach does not change

substantially the definition of injury under the CERCLA rule.

Compensation Formulas

The proposed rule offers a new damage assessment procedure in the

form of compensation formulas for both estuarine/marine and inland

waters. The estuarine/marine and inland waters compensation formulas

described in this proposed rule are applicable to the vast majority of

oil discharges. An analysis of reported coastal discharges of oil from

1973-1990 shows that 99.8% of the discharges were less than 50,000

gallons and 99% were less than 10,000 gallons. Compensation formulas

would be used for most of these relatively small discharges. These

formulas would allow an estimate of damages per gallon taking into

account average restoration costs, plus average lost direct use values

pending restoration. For various reasons, passive use values are not

included in these formulas at this time. The formulas assume various

levels of natural resource effects likely to result from the discharge

of oil. These assumptions consider the amount and type of oil

discharged and region and habitat type in which the discharge occurs.

The formulas are applicable to a wide range of the most commonly

discharged oil products. This approach allows both a national

consistency and regional specificity.

Some commenters expressed concern that such formulas may under-

value resources in industrialized or biologically degraded areas.

Others noted several disadvantages in simplified assessments, including

the potential overlapping trustee interests in certain natural

resources, damages will not sufficiently reflect the extent of the

actual injury, and the risk that a compensatory assessment could be

transformed into a punitive exercise.

Since the compensation formula is based upon averages, it is

impossible to include all known coastal habitats and every combination

of discharges. As proposed, the Estuarine and Marine Environments

Compensation Formula is based upon 55 representative province/habitat

combinations, ranging from Northern Maine to the Alaskan coast, the

Hawaiian and Pacific Islands. The Inland (Freshwater) Waters

Compensation Formula is based upon 100 representative province/habitat

combinations representing the Great Lakes and other inland waters by

type, i.e., river, lake, fast flowing stream, etc. By comparing the

habitat of the actual discharge with the province and specific habitat

used to estimate the damages in the formula, the trustee(s) should, in

most cases, find the most applicable scenario. NOAA emphasizes that the

primary advantages of a compensation formula are for simplicity and

cost-effectiveness.

In cases where the circumstances of an actual discharge are

determined to be far out of the bounds of the compensation formula, the

trustee(s) should consider the use of another assessment procedure. The

compensation formulas generate damages based on average restoration

costs and average diminution of value of the affected natural resources

and are thus compensatory as authorized by OPA. Therefore, the

compensation formulas are not akin to punitive damages.

NOAA is also proposing that the damages generated by the

compensation formulas will be conclusive in nature. That is, once the

rule becomes final and survives any judicial review, parties may

challenge the information used in applying the formulas in a particular

assessment, but may not challenge within that assessment the underlying

data used in developing the formulas.

Regional Restoration Plans

Section 1006(f) of OPA requires that sums recovered as damages be

used to develop and implement a plan for the restoration,

rehabilitation, replacement, or acquisition of the injured natural

resources. The proposed rule describes two types of Restoration Plans.

First, the trustee(s) may develop an Incident-Specific Restoration Plan

to address the effects of the discharge of concern. This plan would be

based upon the restoration planning guidance given in the proposed

rule. This plan should serve to define the objectives and approach

based on a sound decisionmaking process for the particular discharge

site. However, under this proposed rule, the trustee(s) would also be

allowed to pool recoveries to apply them to a Regional Restoration

Plan. These plans could be developed on a geographical or habitat basis

to allow the recovery of the system covered by the plan. Where such a

plan already exists, whether developed through prespill planning

efforts or under regular management efforts, that plan may be used if

it has been developed through a public review and comment process that

considers the major factors contained in the restoration planning

guidance in the rule. The plan must also address the same or similar

resource injuries as those identified in the assessment procedure.

These requirements are completely consistent with the current CERCLA

rule, which also allows for pooling damages. This option will likely be

most useful in areas with long-term pollution effects where damages

from a single discharge would be too small to ``restore'' the ecosystem

or where the planning costs for the restoration after a single

discharge would be quite high compared to the damage figure. However,

where a Regional Restoration Plan has not been developed, an Incident-

Specific Restoration Plan must be developed for use of the damages

recovered.

Several commenters have strongly rejected the use of recoveries

from several discharges for an ecosystem, bay, or area approach. The

commenters argued that pooling and usage of funds is contrary to the

principles of compensatory damages and avoidance of double damages

enunciated by Congress in passing OPA. Further, this usage contradicts

section 1006(f) that ``there be a nexus between monies recovered

resulting from a particular spill and their use to restore or enhance

the specific resources `affected by a discharge.''' Other commenters,

however, have supported a pooling of funds in order to fund a

restoration plan for an entire region, provided a legally-approved

regional restoration plan exists.

NOAA does not believe that pooling recoveries for use in a Regional

Restoration Plan contradicts the requirement in OPA that recoveries be

used to restore the resources affected by a discharge. A relatively

small recovery, assessed by a compensation formula, is unlikely to be

sufficient to restore a bay or estuary affected by a discharge where

many forces are working to degrade that ecosystem. By pooling

recoveries, the trustee(s) has a chance to carry out meaningful actions

to help that system recover. The responsible party will be able to

defend against an attempted double recovery by showing how the damage

figure is to be applied within the regional plan.

Resource Values

The major focus on economic issues within the rulemaking has been

the question of what types of values should be included in a damage

assessment and what methods should be used to measure those values.

Section 1006(d) of OPA authorizes the trustee(s) to recover: The cost

of restoring, rehabilitating, replacing or acquiring the equivalent of

the injured or lost natural resources and/or services; the diminution

in value of the injured or lost natural resources pending restoration;

plus the reasonable cost of assessing those damages. In the proposed

rule, the total diminution in value of resources and/or services

affected by a discharge is referred to as compensable values, which

include all reliably calculated values that comprise the total

diminution in value of lost or diminished services of trust resources

as a result of a discharge, from the onset of the event until recovery

to baseline or comparable conditions is deemed complete by the

trustee(s). In accordance with the OPA Conference Report,``diminution

of value'' refers to the standard for measuring resource damages cited

in the D.C. Circuit Court decision on Ohio v. DOI. The Ohio opinion

defines ``use values'' broadly, to encompass both direct use and

passive use values that can be reliably calculated, i.e., calculated in

a manner that is trustworthy or worthy of confidence.

Direct use values are defined as the value individuals derive from

direct use of a natural resource. Direct uses of resources include both

consumptive uses, such as fishing and hunting in which resources are

harvested, and nonconsumptive uses, in which the activity does not

reduce the stock of resources available for others at another time,

such as bird watching and swimming. Passive use values are defined as

the values individuals place on natural resources independent of direct

use of a resource by the individual. The term ``nonuse values'' has

also been used to refer to the same concept, but NOAA prefers the term

``passive use values.'' Passive use values include, but are not limited

to: the value of knowing the resource is available for use by family,

friends, or the general public; and the value derived from protecting

the natural resource for its own sake; and the value of knowing that

future generations will be able to use the resource.

Some interested parties have asserted that passive use value

damages should only be assessed for permanent or long-lasting injuries

to unique natural resources--atypical conditions for discharges of oil.

They argued there is no need for compensation for lost passive use

values when the resource will fully recover and when compensation will

be paid for direct use losses pending restoration.

Others have argued that passive use values should be included in

damage assessment, because exclusion would understate the true cost of

exposing natural resources to environmentally risky activities. They

have also argued that exclusion of passive use values would induce

systematic reallocation of environmentally risky activities to those

environments that generate greater passive use values relative to

direct use values.

NOAA has found no empirical evidence to suggest that a natural

resource must be unique, non-reproducible and/or permanently injured in

order to have significant passive use values. NOAA recognizes that, in

cases involving temporary injury, individuals may not experience a

significant sense of loss because the existence of the resource is not

permanently threatened. NOAA has found ample evidence, from the OPA

Conference Report and the decision in Ohio v. DOI, to believe that

``diminution of value'' refers to the standard for measuring resource

damages cited in Ohio v. DOI. This opinion defines ``use values''

broadly, to encompass both direct use and passive use values that can

be reliably measured. NOAA believes that failure to include all

relevant categories of damages in a claim would understate the true

loss to the American public attributable to a discharge of oil. Under

OPA, and in accordance with the Ohio v. DOI decision, passive use

values are a component of compensable values that are necessary to

fully compensate the public for losses as a result of a discharge, and

to return the public, as nearly as possible, to the level of well-being

it enjoyed before the discharge.

Contingent Valuation Method

In the Ohio decision, the D.C. Circuit Court determined that the

interim lost value portion of the claim was to include total resource

value, encompassing both direct use (recreational, commercial,

cultural/historical) and passive use of resources. In the comments,

there has been substantial discussion about contingent valuation (CV),

the only known methodology for measuring the passive use component of

total resource value. 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.

Contingent valuation surveys generally measure total value of a

good or service, which includes both direct use value and passive use

values. Because passive uses of resources leave no behavioral trace,

they are difficult to validate externally. A number of criticisms of CV

pertain specifically to its use in valuing the passive use component of

total use value and the difficulty of external validation of that

component of total value. Proponents of CV 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.

Though no other methods are available to provide alternative

estimates of the passive use component of total value, it is possible

to develop a variety of tests to evaluate the validity of the

responses. Due to the substantial interest in the topic, NOAA convened

a panel of experts co-chaired by two Nobel laureates, to evaluate the

reliability of CV to measure passive use values. The report issued by

the panel is part of the administrative record of this rulemaking,

along with the comments received from economists, industry

representatives and other interested parties. Based upon information in

the panel's report and other comments, NOAA is recommending several

validity tests in guidance for designing and conducting CV studies

provided in the proposed rule.

NOAA is proposing that reliable estimates of lost passive use value

due to discharges of oil can be estimated using CV so long as the CV

study follows the guidance offered in this preamble and the proposed

regulations. This guidance basically states that the trustee(s) should

follow a conservative approach when designing a CV instrument, that is,

to choose the design that would understate the natural resource damage

rather than overstate the damage.

One commenter has noted that any damage assessment rule authorizing

CV to measure passive use damages could well cost the U.S. economy

hundreds of millions of dollars annually by generating excessively high

estimates of passive use damages and could result in the bankruptcy of

some responsible parties. The proposed rule has been designated as a

``major'' rule because of the significant issues involved in the

rulemaking. However, because of the difficulty of evaluating the

effects of alternatives to this proposal, a Regulatory Impact Analysis

under E.O. 12866 is not necessary and has been waived.

Discounting Damages

Calculation of natural resource damages will generally require the

use of discounting in the estimation of: (1) Estimated restoration

costs; (2) diminution in value of the injured or lost resources pending

restoration; and (3) damage assessment and restoration costs incurred

by the trustee(s). ``Discounting'' is a widely used economic procedure

that allows the trustee(s) to convert past and future damage sums to

current dollars. This conversion is necessary for the trustee(s) to be

able to present a claim for a ``sum certain.'' Currently, the CERCLA

rule requires that a 10% discount rate be used. NOAA is proposing that

the U.S. Treasury rate should be used for discounting a trustee damage

claim.

DISCUSSION

Subpart A

Scope, Applicability, Purpose

OPA provides for the prevention of, liability for, removal of, and

compensation for the discharge of oil into or upon the navigable waters

or adjoining shorelines of the United States, including the natural

resources of the Exclusive Economic Zone. OPA provides for the

designation of federal, state, Indian tribe, and/or foreign officials

to act on behalf of the public as trustee(s) for the nation's natural

resources. In the event that natural resources are injured, destroyed,

lost, or the loss of use of natural resources occurs as a result of a

discharge of oil covered by OPA, these officials are to assess natural

resource damages, present a claim to the RP(s), recover damages, and

develop and implement a plan for the restoration, rehabilitation,

replacement, or acquisition of the equivalent of natural resources and/

or services under their trusteeship.

This part applies to assessments of damages resulting from

discharges of oil where those discharges occurred after the effective

date of OPA (August 18, 1990). Discharges involving mixtures of oil and

hazardous substances would ordinarily be covered by CERCLA. However,

the U.S. Environmental Protection Agency (U.S. EPA) has issued guidance

on the petroleum exclusion under sections 101(14) and 104(a)(2) of

CERCLA. (U.S. EPA Memorandum on the Petroleum Exclusion under the

Comprehensive Environmental Response, Compensation, and Liability Act,

July 31, 1987; BNA Environment Reporter 41:3321, 2/12/88.) Under this

guidance oil covered by OPA would be: (1) Crude oil and fractions of

crude oil including the hazardous substances, such as benzene, toluene,

and xylene, which are indigenous to petroleum and its refined products;

and (2) hazardous substances that are normally mixed with or added to

crude oil or crude oil fractions during the refining process, including

hazardous substances that have increased in level as a result of the

refining process. However, hazardous substances added to petroleum that

increase in concentration through any process other than refining, or

added as a result of contamination of the petroleum during use

(including waste oil), would not be excluded from CERCLA. For example,

the presence of dioxin in oil used as a dust suppressant on highways

would bring a discharge of such a mixture under the jurisdiction of

CERCLA, not OPA.

This part applies to all natural resource damages caused by oil (as

defined by the Clean Water Act amended by OPA) discharged into

navigable waters of the United States. The ``oil'' definition includes

petroleum and non-petroleum (e.g., animal, vegetable, and wood

chemical). A natural resource damage assessment may be appropriate even

in discharges caused by carriers transporting quantities smaller than

the threshold limits that would require OPA response plans. The

determination of when natural resource damage assessment will be

conducted is a responsibility of the trustee(s) acting on behalf of the

public.

NOAA is using in the proposed rule, the OPA definition of natural

resources that provides for various degrees of government regulation,

management or other form of control over the natural resources to make

the OPA natural resource damage provisions applicable. The proposed

rule repeats the statutory language of ``belonging to, managed by, held

in trust by, appertaining to, or otherwise controlled by,'' and thus

covers a broad range of government interest in natural resources on

behalf of the public. Pursuant to that language, general sources of

authority for recovery under the rule could include, but not

necessarily be limited to, relevant treaty or other provision of

international law, constitution, statute, common law, regulation,

order, deed or other conveyance, permit, or agreement.

The statutory phrase ``belonging to'' connotes ownership and would

cover government-owned lands, as well as resources affixed, i.e.,

permanently attached, to such lands. However, the remaining terms,

``managed by, held in trust by, appertaining to, or otherwise

controlled by,'' ensure a wide range of legitimate government interest

in natural resources that may, in fact, be held in private ownership.

Therefore, the proposed rule directs the trustee(s), or co-

trustees, to state briefly the authority for asserting trusteeship, or

co-trusteeship in the Preassessment Report and in the Draft Assessment/

Restoration Plan. In describing the natural resources of concern to the

trustee(s), the trustee(s) will cite the relevant treaty or other

provision of international law, constitution, statute, common law,

regulation, order, deed or other conveyance, permit, or agreement

providing the basis for the trusteeship.

This part supplements the procedures established under the National

Oil and Hazardous Substances Pollution Contingency Plan (NCP), 40 CFR

part 300, for the identification, investigation, study, and response to

a discharge of oil, and provides procedures for a natural resource

trustee(s) to determine compensation for injuries to natural resources

and/or services that have not been nor are expected to be sufficiently

addressed by response actions conducted pursuant to the NCP.

This part provides for a process to develop a DARP to document the

most appropriate restoration approach for the administrative record,

with its estimated costs, for a particular discharge. Therefore, any

judicial review of the development of the restoration component of the

assessment would be based solely upon the administrative record. Once

the restoration approach is developed, the trustee(s) then can

determine the expected interim lost values. It is anticipated that the

calculation of those values would not be included in the administrative

record and would not, therefore, be reviewed on the basis of the

administrative record.

Response to Comments

Scope, Applicability, Purpose

Comment: Several commenters noted that the damage assessment

procedures outlined in this proposed rule apply only to discharges of

oil under OPA. These commenters pointed out that this rule replaces the

current DOI rule, at 43 CFR part 11, for natural resource damage

assessments in discharges of oil. One of these commenters noted that

the DOI rule cannot be incorporated since parts of that rule were

declared illegal and are not yet revised.

Response: NOAA agrees that the proposed rule only applies to

natural resource damage assessments performed for discharges of oil

under OPA. When this proposed rule is promulgated as a final rule, it

will supersede those parts of the current 43 CFR part 11 that deal with

discharges of oil covered by OPA. The status of 43 CFR part 11 is

immaterial to this ongoing rulemaking since only those sections upheld

by the Court in the Ohio decision were used as a starting point for the

OPA regulations.

Comment: One of these commenters specifically stated that, since

the decisions of Ohio v. U.S. Department of the Interior (Ohio) and

State of Colorado v. U.S. Department of the Interior (Colorado)

concerning 43 CFR part 11 were decided before OPA's passage, those two

decisions are not controlling over NOAA's rule. These commenters argue

that Congress was aware of the decisions but did not incorporate them

in the NOAA charge to promulgate this proposed rule.

Response: NOAA notes that the decisions in Ohio and Colorado cases

are not directly controlling on the OPA rules. However, the decisions

do represent the only existing case law on some of the issues involved

in this rulemaking. Also, Congress did specifically reference the Ohio

decision's definition of ``diminution of value'' in the Conference

Report on OPA.

Comment: Several commenters noted that the natural resource damage

assessment rule is a part of the regulatory scheme covered by OPA.

These commenters urged NOAA to keep this perspective in mind so that

NOAA's rule does not duplicate or overlap other OPA regulations;

therefore, NOAA's rule should not allow punitive damages, since

penalties are set up in other provisions of OPA, nor should this rule

allow scientific research beyond what is needed to determine the

natural resource damages.

Response: NOAA recognizes that this proposed rule is but a small

part of the larger scheme of regulations required by OPA. For example,

this proposed rule would supplement the overall activities surrounding

a response to oil discharges set out in the NCP, 40 CFR part 300. There

are also regulatory requirements for transport of oil, certification of

vessels, etc., called for by Title IV of OPA. These other rulemakings

are separate and apart from this proposed rule. NOAA has been

coordinating with other federal agencies, particularly those other

agencies that have regulatory and planning responsibilities under OPA

to ensure consistency and avoid overlapping requirements.

NOAA also notes that Title VII of OPA authorizes an ambitious

research and development program on oil pollution to cover the basic

research that is beyond a natural resource damage assessment. As noted

elsewhere in the preamble, this proposed rule disallows work beyond

that needed to determine, quantify, restore, rehabilitate, replace,

acquire the equivalent, and value injury to, destruction of, loss of,

or loss of use of natural resources and/or services resulting from a

discharge of oil.

NOAA further recognizes that penalties or other punitive measures

are provided for elsewhere in OPA. The natural resource damage

provisions of OPA are compensatory, not punitive. A discussion of

allowable damages is found in the discussion of Sec. 990.14--``Recovery

of Damages'' and elsewhere in this preamble.

Comment: One commenter recommended that NOAA consider clarifying

whether CERCLA or OPA would cover a particular discharge of oil.

Response: NOAA notes that the previous preamble discussion on the

scope of this proposed rule describes the types of oil that are covered

by OPA.

Comment: One commenter suggested that NOAA's rule should serve to

provide the basic framework from which different state and local

agencies can adopt and expand upon through implementation.

Response: NOAA notes that, while the use of the proposed rule is

optional, it is hoped that the guidance and procedures in this proposed

rule will prove useful to all trustee agencies.

Comment: A few commenters discussed the requirement that new

regulations result in greater benefits than costs to society, as

directed by E.O. 12291 [now E.O. 12866].

Response: NOAA notes that this proposed rule is explicitly designed

to allow for expeditious and fair compensation to the public for

effects of a discharge on the public's natural resources. Purely

speculative damages clearly are not allowed under this damage

assessment process.

Comment: One commenter suggested that the natural resource damage

assessment rule allow for consideration of the size of the business

enterprise responsible for the damages. Another commenter suggested

that damages should be allocated somehow proportionately across the

different stages of oil production, i.e., production, transport, use.

Response: NOAA points out that the RP's ability to pay based on its

financial ``size'' should not be a determining factor. The damage

assessment process required under section 1006(e) of OPA is to

determine the type and extent of adverse effects and define the best

approach for the recovery of the affected natural resources and/or

services. In fact, Congress explicitly removes this concern from the

assessment of damages by allowing uncompensated claims against the

Fund. Allocation across stages of production is not possible within

this proposed rule.

Comment: One commenter stated that loss of subsistence use of

resources should be covered in the natural resource damage assessment

process.

Response: NOAA points out that section 1002(b)(2)(C) of OPA

specifically provides for the recovery of damages for the loss of

subsistence use of natural resources. Such damages are recoverable by

anyone who uses natural resources for subsistence.

Comment: Although several commenters mentioned that section 1006(e)

of OPA provides a rebuttable presumption for assessments performed

pursuant to the natural resource damage assessment rule, one commenter

specifically raised the question of how one might define the phrase

``in accordance with.'' One commenter noted that, so long as the

trustee(s) follows the rule and the public is given the opportunity to

review and comment on the restoration plans called for by section

1006(c)(5), the trustee's(s') determination of damages is granted the

rebuttable presumption. Another commenter suggested that the rebuttable

presumption should only apply to issues and components of an assessment

that are specifically included in the proposed rule. A few commenters

questioned the relationship between the statutorily granted rebuttable

presumption and the NOAA suggestion of assessments being conducted ``on

the record'' to be reviewed under the ``arbitrary, capricious, or

otherwise not in accordance with law'' standard of review. Another

commenter pointed out that the trustee(s) is also entitled to the

rebuttable presumption when presenting a claim to the Fund.

Response: NOAA notes that the damage assessment and restoration

planning process developed through this rulemaking is a framework that

offers both guidance and a range of procedures for the trustee(s) to

design the assessment/restoration approach most appropriate for the

specific discharge. The philosophy of this proposed rule is to provide

flexibility to allow the most cost-effective assessment/restoration

approach for a particular incident while giving guidance on how this

assessment can be conducted using ``good science.''

The rebuttable presumption applies, in the statutory language, to

``any determination or assessment of damages to natural resources.''

This language indicates that the entire assessment, including the

dollar figure is granted the presumption. Given the need for

flexibility in an assessment, the presumption will apply to any part of

the assessment conducted pursuant to this proposed rule, even if some

part of the assessment activities are not specifically listed in the

rule. NOAA also notes that section 1006(e) applies both to actions

against an RP and claims against the Fund.

In response to the commenters' questioning the relationship between

the rebuttable presumption and a review on the record, NOAA notes that

the rebuttable presumption goes to the trustee(s) who conducts an

assessment ``in accordance with'' this proposed rule. This language is

comparable to the ``not inconsistent with the NCP'' language found in

section 107(a)(4)(A) of CERCLA, which allows recovery of response costs

that are not inconsistent with the NCP by the United States, a state,

or an Indian tribe. Therefore, one challenging such costs must show

that the claimant acted in a way that was inconsistent with the NCP. In

a natural resource damage assessment under OPA, the trustee(s) gets a

rebuttable presumption for the assessment conducted ``in accordance

with'' this proposed rule. Therefore, someone challenging the

assessment must affirmatively prove that the assessment was

inconsistent with the assessment process set forth in this proposed

rule.

Reviewing a damage assessment ``on the record'' refines the phrase

``in accordance with.'' The review is of the information, data, and

procedures used in the assessment/restoration planning process, to

determine the type and extent of effects and best approach for

ecosystem recovery. In this way, therefore, the rebuttable presumption

and record review complement each other. (A further discussion of

record review and this proposed rule is provided later in this

preamble.)

Comment: Several commenters noted that NOAA should develop guidance

and technical support documents, rather than rigid rules. One other

commenter, however, stated that the proposed rule should contain a

clear process to ensure the consistent application of the damage

assessment process and gain public trust in that process. This

commenter urged that NOAA not limit the rulemaking to developing

``guidance'' for damage assessment instead of providing clear

requirements. Other commenters recognized that national uniformity is a

desirable goal, but less formalized, i.e., flexible procedures are

preferable in dealing with a wide range of incidents.

Response: NOAA believes that flexibility is important in the

proposed rule. The trustee(s) must be allowed the ability to design an

assessment/restoration approach that is appropriate for the situation

at hand. No national scheme could possibly anticipate all possible

discharge situations. In response to the requests for guidance, NOAA is

providing guidance on the best approaches to an assessment, in addition

to certain required steps and criteria. NOAA is also developing

technical guidance documents on: Preassessment, Injury Determination

and Quantification, and Restoration (Guidance and Bibliography), as

part of this rulemaking.

II. Definitions

Response to Comments

``Acquisition''

Comment: One commenter disagreed with grouping ``replacement'' and

``acquisition'' together, as acquisition implies an off-site activity.

Another commenter indicated that the proposed definition describes

``replacement,'' but the definition of ``acquisition of the

equivalent'' should also incorporate the requirement of ``proximity to

the affected area,'' for the purpose of ``enhancing the recovery * * *

of the ecosystem affected by a discharge.'' In addition, the commenter

stated that the regulations should reflect Congress' preference for on-

site restoration and should limit the availability of acquiring

equivalent resources to those rare situations where the cost of site

specific restoration would be ``grossly disproportionate to the value

of the resources involved.''

Another commenter noted that acquisition must be accompanied by

some effort to restore the discharge-impaired habitat. Acquisition

involves only a transfer of property accompanied by a net loss of the

species affected by the discharge. However, the commenter also stated

that acquisition may be used to replace the loss of resources between

the time of initial loss and full recovery of the habitat affected by a

discharge. One commenter noted that acquisition of equivalent resources

is not the same as replacement because it does not occur in the area

affected by the discharge.

Response: NOAA agrees that the terms ``acquisition'' and

``replacement'' should be defined separately. NOAA recognizes that the

Conference Report accompanying OPA states that the alternative of

acquiring equivalent natural resources should be chosen only when the

other alternatives are not possible, or when the cost of those

alternatives would, in the judgment of the trustee(s), be grossly

disproportionate to the value of the natural resources involved. This

discussion, however, is more appropriate in other parts of the preamble

and proposed rule.

``Baseline''

Comment: One commenter requested a more clear definition of

``baseline.'' Another commenter recommended that the definition of

``baseline'' reflect that, in the absence of reliable data on natural

variability, the baseline condition will be the condition of the

resources that existed at the location and time of the discharge.

Further, the commenter suggested that the definition be replaced or

supplemented with the following definition: Baseline data are those

which have been collected for natural resources and environmental

variables of interest for an extended period of time (typically years)

on a regular basis (e.g., annually, quarterly) up to the time of the

discharge. This database should describe the temporal mean and

variation of the variable(s) of interest, so that statistically

significant departures from this mean could be measured. Baseline data,

therefore, should ``take into account the natural variability that

would have existed at the assessment area.'' The commenter suggested

that ideally, the last sampling period in a baseline would have

occurred immediately prior to the discharge and included specific

locations that are or will be affected by the discharge. The commenter

stated that the early sampling program cannot provide a baseline (as

defined above), and should be clearly distinguished from a baseline.

The early sampling program cannot document the temporal variability in

the natural environment, especially for resources that have life cycles

longer than a few days or environmental variables that have seasonal

components.

Response: NOAA agrees that the definition of baseline should be

clarified and has revised the definition accordingly. The definition of

early sampling has been deleted.

``Biological Resources''

Comment: One commenter recommended that habitats, such as the water

column or substrate, must be included as ``biological resources'' along

with the interrelationships between species that are necessary for a

normal healthy functioning ecosystem. The commenter argued that species

depend on these habitats for successful completion of their normal life

histories. If the discharge adversely affects these ecosystem

components, then it should be presumed that injury to biological

resources has occurred.

Response: NOAA has deleted the definition of ``biological

resources'' along with those for ``air,'' ``drinking water supply,''

and ``surface water.'' NOAA believes that these natural resources are

included in the statutory definition of natural resources, which

encompass ``other resources belonging to, managed by, held in trust by,

appertaining to, or otherwise controlled by,'' the trustee(s). NOAA

takes the position that this provision includes biological resources,

and therefore there is no need for a separate definition. Further, NOAA

interprets the statutory definition as sufficiently broad to include

the water column or substrate. Accordingly, a trustee(s) may seek

damages for injury to the water column or substrate.

``Compensation''

Comment: One commenter suggested ``compensation'' is the sum total

of payment for damages to natural resources. The commenter noted that

payment shall include costs for injury and assessment investigations,

restoration of affected resources in the assessment area, monitoring of

the restoration implementation, necessary mid-course adjustments to the

restoration plan based on monitoring results, and acquisition of

additional habitat for the same or comparable resources affected by the

discharge to offset resource injuries between the time of the discharge

incident and full recovery following implementation of the restoration

plan. The term ``compensation'' must either be incorporated as a part

of the definition for ``restoration or rehabilitation'' or contained in

a separate definition as proposed. This concept for compensation should

also be included within the scope of ``damages.''

Response: NOAA has not specifically defined ``compensation.''

However, Sec. 990.14 of this proposed rule addresses recoveries and

includes items that the commenter suggested should be compensable. The

trustee(s), therefore, may recover: (1) For injury to natural resources

and/or services through the recovery period, including monitoring

costs, (2) costs of emergency restoration, (3) the reasonable costs of

assessment including preassessment and methodologies provided for in

the various assessment procedures, (4) the cost of restoration,

rehabilitation, replacement, or acquiring equivalent resources, and (5)

interest on the amounts recoverable, as provided in section 1005 of

OPA.

``Control Area'' or ``Resource and Reference Area'' or ``Resource''

Comment: One commenter believed ``control area,'' ``control

resource,'' ``reference area,'' or ``reference resource'' need further

definition and clarification. The commenter stated that all have

identical definitions and are cross-referenced in the earlier notice.

The commenter recommended that the terms ``control area'' and ``control

resource'' be deleted or restricted in the regulation, and that the

terms ``reference area'' and ``reference resource'' be used instead.

The word ``control'' should only be used in relation to the laboratory

or some microcosm and mesocosm testing facilities. The commenter

believed that ``control area'' refers to completely controlled systems.

Natural environments, however, are affected by many variables (in time

and/or space). The commenter noted that ``reference area'' data and

information are collected following the discharge, but in areas

unaffected by the discharge. The reference areas should be as nearly

identical to the affected areas as practical, except that there will

not be oil from the incident in the reference area. The reference area

sampling program(s) should be identical to those in the affected areas

in order to conduct quantitative comparisons regarding effects,

recovery, natural variation, etc. Further, the commenter stated the

``reference area'' concept is based on the reality that there may be

frequent and often substantial change in physical, chemical, and

ultimately, biological variables in the natural resources of interest,

due to natural, not man-made, factors. These natural changes should be

monitored so that their influence on the affected, and recovering,

community can be evaluated. The commenter noted that the effect of

natural variation, as documented in reference areas, on affected areas

may be very important in the injury assessment and quantification

phases of the natural resource damage assessment, and thus in the

ultimate damages assessed against the RP.

Response: NOAA recognizes that the terms ``control'' and

``reference'' are distinct. NOAA has incorporated the commenter's

concerns both in the rule and preamble language. NOAA further has

addressed the importance of natural variation in the damage assessment

process.

``Destruction''

Comment: One commenter believed the definition of ``destruction''

is so narrow that almost nothing will be covered because ``total'' and

``irreversible loss'' are very difficult to achieve. Further, the

commenter suggested that this definition be omitted.

Response: NOAA agrees, in part, and has revised the definition by

deleting the phrase ``irreversible loss.''

``Drinking Water Supply''

Comment: One commenter suggested that a ``drinking water supply''

for less than ten people would not justify restoration so that an

alternate supply would be a better answer for the limited period an oil

discharge would affect such a water supply. Another commenter noted the

definition is too broad as it would cover any water supply that one

person might drink once. The commenter suggested that the definition be

amended to read ``drinking water supply'' means any raw or finished

water which is or may be used by a public water system, as defined in

the Safe Drinking Water Act, or as drinking water by one or more

individuals on a regular basis.

Response: NOAA has deleted the definition of ``drinking water

supply'' because it is included in the statutory definition of natural

resources.

``Early Sampling Data''

Comment: One commenter noted ``early sampling data'' are those

obtained in the early sampling of both affected and reference areas

immediately after the discharge occurs. The commenter stated that often

this program will be designed without benefit of baseline or historical

data (as defined earlier). The early sampling program provides data on

the natural resources and environmental variables at the time of the

discharge. It may be described as a ``time slice,'' a ``benchmark,'' or

a ``base point'' in time, compared to a baseline (i.e., a series of

``base points'').

Response: NOAA agrees with the commenter's description of early

sampling data. While NOAA has not included the phrase ``early sampling

data'' in the definitions section, the concepts outlined by the

commenter are included in the preamble and this proposed rule.

``Equivalent''

Comment: Two commenters stated ``equivalent'' resources under this

section are resources that the trustee(s) determines are comparable to

the injured resources. They noted ``equivalent'' resources should be

acquired to enhance the recovery, productivity, and survival of the

ecosystem affected by a discharge, preferably in proximity to the

affected area. Another commenter defined ``equivalent'' as, ``to have

equal power * * * equal in force, amount or value * * * corresponding

or virtually identical especially in effect or function * * *''

Webster's New Collegiate Dictionary (1981). The commenter noted that

NOAA does not define the term ``equivalent'' and recommends a

nationally consistent definition be developed.

Response: The OPA Conference Report, H.R. 101-653 at p. 109,

defines ``equivalent'' to mean natural resources that the trustee(s)

determines are comparable to the injured natural resources. NOAA adopts

a similar definition.

``Exposed to'' or ``Exposure of''

Comment: One commenter noted that the definition of ``exposed to''

properly implies that physical contact with the oil discharge must be

the proximate cause of any compensable natural resource damage.

Response: NOAA disagrees that the definition of ``exposed to''

implies that physical contact with oil discharge must be the proximate

cause of any compensable natural resource damage. NOAA defines

``exposed to'' to mean that all or part of a natural resource that may

be in contact with oil or with any medium containing oil. Further, NOAA

is not limiting recovery of damages to natural resources that have been

exposed to oil (see definition of ``resulting from'').

``Geologic Resources''

Comment: One commenter believed the definition of ``geologic

resources'' is redundant under the OPA regulations and should be

omitted.

Response: NOAA has adopted the statutory definition of natural

resources which implies that ``geologic resources'' are included.

Specifically, the definition includes ``other resources belonging to,

managed by, held in trust by, appertaining to, or otherwise controlled

by,'' the trustee(s). NOAA takes the position that this provision may

include geologic resources, and therefore, there is no need to include

a separate definition of geologic resources.

``Historical Data''

Comment: One commenter believed ``historical data'' are those that

have been collected prior to the incident, but may not have been

collected for several periods (e.g., months, quarters, years) prior to

the incident. This database may provide a description of the resources

in the past, but there may be a temporal discontinuity long enough that

there could have been a significant change in the variable during that

time. The temporal gap, therefore, may be sufficient so that: (a) It

exceeds a few generation times of the ``important'' resources, (b) a

major episodic recruitment event could have occurred, or (c) that a

major disturbance event (e.g., storm) could have occurred. Further,

``historical data'' from areas similar to the affected area, though the

areas may not be suitable as reference areas, may be appropriate.

``Historical data'' may provide a ``gestalt'' about the present

affected areas, in some cases, but may not be appropriate for

quantitative comparison.

Response: NOAA agrees with the commenter's discussion of historical

data and has revised the definition accordingly.

``Natural Resource Damage Assessment''

Comment: One commenter believed the definition of ``natural

resource damage assessment'' should include new scientifically

developed methodologies that may be devised for the unique resource

damage circumstance related to the discharge at hand. Such

methodologies may not necessarily exist in a prescribed state prior to

the discharge.

Response: NOAA agrees and has eliminated the restrictions in the

earlier notice.

``Natural Resources''

Comment: One commenter urged that areas that are privately owned

but that support public natural resources should be included. A

commenter agreed with NOAA's decision not to attempt to limit the broad

statutory definition of ``natural resources'' by providing specific

guidelines on the degree of governmental control necessary to allow

public recovery. The commenter stated that a natural resource located

on private property may have both public and private value, and it is

the trustee(s) who should determine whether the public has an interest

in the resource.

Response: NOAA recognizes that there are times when natural

resources located on private property may have public value. However,

the ``public'' nature of the resource would have to be decided on a

case-by-case basis. At the time of the Preassessment Phase, the

trustee(s) is required to determine if there are resources of concern

to the trustee(s) that might be affected by the discharge. It is at

that time that the determination could be made of the nature of the

public's interest in the resource.

Comment: One commenter stated that NOAA should attempt to ensure

inclusion of all potentially affected trustee resources, such as

archeological resources and park lands or other preserved natural areas

valued particularly for their pristine state, into the natural resource

damage assessment process.

Response: NOAA has included a new definition of ``resources of

special significance.'' This definition is designed to address the

concerns of the comments (see ``resources of special significance'').

``Nonuse (Passive use) Value''

Comment: Two commenters questioned whether a regulatory definition

for passive use value is necessary, except to refer to values that

cannot be reliably calculated. Another commenter urged the inclusion of

the phrase, ``such services encompass values associated with the

knowledge that such resources simply exist as well as associated with

the option to directly use or not use such resources in the future.''

Response: NOAA believes that a definition of nonuse values,

referred to as passive use values, is appropriate and therefore will

continue to include such definition. NOAA's definition of passive use

values is broad and therefore includes the notions included in the

second commenter's proposed definition.

``Oil''

Comment: One commenter contended that unless the material under

consideration is definitely a single hazardous compound derived from

processing oil, it should be classified as ``oil'' (e.g., diesel or

gasoline would be oil for this purpose). Another commenter believed the

definition seems practical and reasonable to focus on what has been

discharged and not on its degradation products. The commenter

recognized the potential for dual regulation (CERCLA and OPA) of one

discharge of oil due to the hazardous constituents contained in some

oils. The same commenter noted, however, that the proposed definition

is cumbersome.

Response: NOAA agrees that the definition of oil is cumbersome and

has revised it accordingly.

``Reasonable Cost''

Comment: One commenter urged NOAA to revise the definition of

``reasonable cost.'' Two commenters urged NOAA to adopt the

requirements in DOI's rule 43 CFR 11.14(ee). One of those commenters

requested adoption of DOI's rule provided it is modified to show that

the reasonable cost test applies to separable subparts of the

assessment, as well as the assessment as a whole. Another commenter

believed that this definition is circular and recommended the cost of a

natural resource damage assessment be reasonable in keeping with the

size of the discharge and type and amount of natural resource damages

to be determined. Another commenter believed the definition is

incomplete, stating that just because a cost can be recovered, does not

mean it is reasonable.

Response: NOAA agrees that the definition in the Advance Notice of

Proposed Rulemaking (ANPRM) is somewhat circular and has revised the

definition. The costs of the damage assessment are deemed reasonable if

the assessment is conducted in accordance with this proposed rule, or

if the costs are otherwise reasonable under the circumstances. NOAA

believes this definition is simpler than the DOI definition.

Comment: One commenter stated that making the definition of

reasonable costs contingent on a preliminary and probably inaccurate

estimate is unreasonable because scientists' present understanding of

the effects of oil pollution is limited. In addition, the full extent

of damages may not be apparent for several years following a discharge.

Response: NOAA's definition of reasonable cost avoids the problems

the commenter identified with respect to the difficulty of ascertaining

reasonable costs based on preliminary information.

``Responsible Party(ies)'' (RP(s))

Comment: One commenter noted that the proposed definition of

``responsible party(ies)'' is confined to ``person or persons.'' The

commenter noted the RP should include the company or corporate entity

that owns or is otherwise responsible for the vessel or facility that

contained the discharged material. The owner of the discharged material

perhaps should also be initially included until the investigation

ascertains responsibility.

Response: NOAA agrees and that definition has been modified in the

proposed rule.

``Restoration or Rehabilitation''

Comment: One commenter endorsed the existing DOI definition of

``restoration,'' as occurring once resources are capable of providing

baseline service levels. This definition is consistent with Ohio v. DOI

as well as OPA's legislative history, which revealed no Congressional

intent to alter that definition. Another commenter agreed that

restoration occurs when the resources are capable of providing the

``without spill'' service levels. One commenter urged NOAA to clarify

the definition as meaning ``measures to restore the services provided

by the affected resources.'' Another commenter agreed with the proposed

definition as encompassing all four management options set forth. The

same commenter, however, urged NOAA to state that these techniques

should be designed to achieve the best possible overall restoration of

resources. One commenter disagreed with grouping ``restoration'' or

``rehabilitation'' together. The commenter argued that ``restoration''

is commonly used as an inclusive term for restoration, rehabilitation

and replacement as all are in situ approaches. For example,

``replacement'' may mean reestablishing a population at the site.

One commenter noted the proposed definitions of ``restoration'' and

``rehabilitation'' appear to expand the measure of natural resource

damages to include restoration of both ``the injured resources'

physical, chemical or biological properties.'' Any attempt by NOAA to

expand the measure of damages to require restoration of the resources'

properties beyond what is necessary to restore their services would be

contrary to economic principles and inconsistent with the structure of

section 1006(d)(1) of OPA. The same commenter suggested the definitions

of ``restoration'' and ``rehabilitation'' should be refined to read

``measures adopted to return injured natural resources to the condition

where they provide the same or substantially similar services as they

would have provided if the spill of oil had not occurred.''

Response: NOAA agrees that the terms restoration and rehabilitation

should be defined separately. In the revised definition, NOAA

distinguishes restoration from rehabilitation. Restoration actions are

designed to return the injured natural resources and/or services to

baseline conditions. The baseline condition is measured in terms of the

physical, chemical, or biological properties of those resources and/or

services prior to the discharge. Rehabilitation refers to actions that

are designed to bring the injured natural resources and services to a

different state from baseline conditions, but still beneficial to both

the environment and public. NOAA agrees with the suggestion that

sometimes a combination of techniques would best serve the overall

goals of resource recovery. Under those circumstances, the trustee(s)

may consider a combination of restoration techniques.

``Restoration, Rehabilitation, Replacement and Acquisition''

Comment: One commenter noted the definitions of ``restoration,

rehabilitation, replacement, and acquisition of equivalent'' resources

that are set forth in the notice do not maintain the hierarchy of

choices and their interrelationship as contemplated by OPA.

Response: The OPA Conference Report specifies that acquisition of

the equivalent resources will be undertaken when the alternatives of

restoration, rehabilitation, and replacement of damaged natural

resources will be technically infeasible or grossly disproportionate to

the value of the resources involved. Discussion regarding the use of

any of these options is addressed elsewhere in the preamble and the

proposed rule.

``Technical Feasibility''

Comment: One commenter suggested the definition of ``technical

feasibility'' seems to preclude the implementation of new or innovative

strategies in restoration/rehabilitation efforts. The commenter

believed that nontraditional approaches should be explored where

appropriate. The commenter also recommended that these approaches

should be encouraged where there is mutual agreement among the

trustees. Another commenter believed the proposed definition of

``technically feasible'' is too stringent. Currently very few recovery

techniques are well known. The same commenter recommended the

definition be revised as, ``technical feasibility means those on-site

restoration actions that are deemed possible following appropriate

planning, implementation, monitoring, and necessary mid-course

corrections of a restoration project.'' The commenter also noted that

project costs shall not be a part of technical feasibility but may be

considered as part of the overall settlement for damages taking into

account technical feasibility of restoration, acquisition, or other

means to make the damaged resources whole over a reasonable period of

time.

Response: NOAA agrees that the definition of technical feasibility

is too stringent and has revised the definition accordingly.

``Trauma''

Comment: One commenter recommended the definition of ``trauma''

include all adverse, sublethal, chemical, physical and behavioral

changes to living fish and wildlife resources, including adverse change

in the presence and activity levels of enzymes and other vital

components of living systems, caused by a discharge of oil and

attendant necessary cleanup and response activities. Trauma may include

disruption of reproductive rate or reproductive cycles normally

associated with a species. As used within this context, the commenter

argued that trauma is an injury and should be included within the scope

of damages.

Response: NOAA does not agree that a separate category of injury

defined as trauma should be included in this proposed rule. The current

injury definition is broad enough to include much of what the commenter

is concerned about.

``Use Value or Values''

Comment: One commenter agreed with the definition for ``use value

or values'' under OPA in the March 13, 1992, Notice.

Response: The proposed rule no longer defines ``use value''

separately, but defines ``compensable values'' to incorporate all use

values, including direct and passive uses.

``Water''

Comment: One commenter recommended ``water'' in the definition be

revised to ``waters of the United States'' consistent with the

definition in the Clean Water Act.

Response: OPA defines ``navigable waters'' to mean the waters of

the United States, including the territorial sea. NOAA has adopted this

definition in the proposed rule.

``Wetlands''

Comment: One commenter recommended that ``wetlands'' be included in

the definition of ``natural resources.''

Response: NOAA has adopted the definition of natural resources from

OPA and believes that the definition encompasses wetlands. Therefore,

there is no need to revise the definition to specifically include

wetlands.

III. Recoveries

Section 990.14 identifies what is recoverable as damages. In

section 1006 of OPA, Congress clearly delineates the measure of damages

to include the costs (both direct and indirect) of restoring,

rehabilitating, replacing, or acquiring the equivalent of the injured

natural resources, the diminution in value of those natural resources

pending restoration, plus the reasonable costs of assessing those

damages. These damages are based upon injuries occurring from the onset

of a discharge of oil through the recovery period (including monitoring

costs), less any mitigation of those injuries by response actions taken

or anticipated, plus any increase in injuries that are a result of

response actions taken or anticipated. Damages may also include the

costs of emergency restoration actions and the reasonable costs of the

assessment, which includes the cost of performing the preassessment,

assessment, and post-assessment phases; administrative or legal or

other enforcement costs, including base and incremental costs, and

expenses necessary for and incidental to the preassessment, assessment,

restoration planning, and post-assessment (including salaries); any

restoration or replacement undertaken; restoration monitoring; mid-

course corrections, and interest on the amounts recoverable as set

forth in section 1005 of OPA. The period for which interest shall be

paid is the period beginning on the 30th day following the date on

which the claim is presented to the RP(s) or guarantor(s) and ending on

the date on which the claim is paid. Interest is to be calculated in

accordance with Section 1005 of OPA. The determination of the damage

amount shall consider any applicable limitations provided for in

section 1004 of OPA.

In accordance with section 1006(d)(3) of OPA, there shall be no

double recovery under this rule. Actions for damages and assessment

costs shall comply with the statute of limitations set forth in section

1017(f) of OPA.

Finally, this proposed rule clearly authorizes the trustee(s) to

settle claims without completing an assessment. The trustee(s) is

authorized to reach settlement with the RP(s) at any time following a

discharge; neither OPA nor this proposed rule requires that an

assessment procedure of any type be completed. However, the trustee(s)

should be mindful of the great public interest in many discharges of

oil and may provide the public an opportunity to review and comment

upon the settlement terms and/or the restoration component of the DARP

should the assessment not be completed.

Response to Comments

Recoveries

``Assessment Costs''

Comments: Several comments were received regarding the appropriate

definition of ``reasonable costs'' and to the extent that such costs

are recoverable. Many of these comments are addressed in the section

dealing with definitions within the rule. Others indicated that the

trustee(s) could capture many of the administrative costs by simple

bookkeeping, i.e., recording the number of man-hours, travel costs,

etc. Several commenters indicated that the individual study costs

conducted in the context of an assessment should only be recoverable if

the individual study costs are reasonable. Other commenters indicated

their preference for the overall approach, i.e., the total costs of the

assessment are anticipated to be less than the damages.

Response: NOAA agrees that the trustee(s) should document all

administrative costs. The costs of damage assessments are deemed

reasonable if the damage assessment is conducted in accordance with

this proposed rule or if the costs are otherwise reasonable under the

circumstances. However, the trustee(s) is required to conduct only

studies that will provide data directly relating to the purpose of the

assessment, to the extent practicable under the circumstances, and to

conduct those studies in a cost-effective manner. NOAA does not require

the trustee(s) to consider whether individual study costs are

reasonable so long as the trustee(s) meets the requirements specified

in the previous sentence. To determine reasonableness, the trustee(s)

should consider the overall costs of the assessment against the

expected recovery.

Comment: Some commenters requested that the costs of monitoring

during the Assessment Phase be recoverable.

Response: NOAA has specifically included monitoring costs in the

recoverable damages.

Comment: Several commenters suggested that recoverable costs should

include the costs of recovering damages.

Response: NOAA agrees that the costs of ``assessing damages''

includes the costs of recovering those damages.

Comment: Some commenters desired more clarification on recoverable

damages, specifically, whether the rule would allow recovery of funds

in excess of the costs of restoration plus the assessment cost.

Response: The proposed rule allows for the recovery of damages

required by OPA, namely: (1) The cost of restoring, rehabilitating,

replacing, or acquiring the equivalent of, the injured natural

resources and/or services pending restoration; (2) the diminution in

value of those natural resources and/or services pending restoration;

plus (3) the reasonable cost of assessing those damages. The recovery

of those three items is not excess recovery. The trustee(s) is to use

the money to restore, rehabilitate, replace, or acquire the equivalent

of the injured natural resources and/or services and to be reimbursed

for the reasonable costs of conducting the assessment. Any recoveries

that remain after implementing the restoration plan shall be deposited

in the Oil Spill Liability Trust Fund in accordance with section

1006(f) of OPA.

Comment: One commenter indicated that the costs of emergency

restoration are more properly classified as response costs and not

associated with restoration.

Response: NOAA agrees that the appropriate avenue of redress is

through the OSC's response structure, which may consist of simply

having the OSC approve the trustee actions and costs as removal actions

and costs. While these actions/costs are not strictly preassessment

activities, it is likely that such actions/costs will be taken while

the trustee(s) is conducting the preassessment and can be included in

the Preassessment Phase. In circumstances where the trustee(s) takes

emergency restoration to repair or replace habitat or resources, these

are technically restoration costs, but again can be claimed in the

costs of conducting an assessment. NOAA reminds the trustee(s) that

emergency restorations are the exception, not the usual course of

business. NOAA expects fully that close cooperation and coordination

with the response agency(ies) and the RP(s) will greatly alleviate the

need for emergency restoration.

Comment: One commenter noted several disadvantages in simplified

assessments, including the potential overlapping trustee interests in

certain natural resources, damages will not sufficiently reflect the

extent of the actual injury, and the risk that a compensatory

assessment could be transformed into a punitive exercise.

Response: NOAA notes that double recovery is prohibited to the

extent provided by section 1006(d)(3) of OPA. The simplified damage

assessment procedures produce calculations based on statistical

averages and will reasonably reflect the damages of the actual injury

in a timely and economical manner. Finally, NOAA disagrees with the

charge that simplified damage assessments are akin to punitive damages.

The computer models and compensation formulas generate damages based on

average restoration costs and average diminution of value of the

affected natural resources and are thus compensatory as authorized by

OPA.

``Coordination With Legal Counsel''

Comment: Commenters covered the possible range concerning the

appropriate involvement of legal counsel. Some indicated that attorneys

will slow down the assessment process while others indicated that

assessments are complicated legal processes that may involve a variety

of legal issues, including Freedom of Information Act requests and

coordination among federal and state laws, and that attorneys must be

involved in the process from the onset. Most commenters indicated that

a formal process for attorneys need not be identified in the rule. Some

commenters indicated that, since many assessments have been conducted

under the threat of litigation, attorneys have more say than the

scientists in the assessment process. One commenter suggested that

early involvement of attorneys leads to adoption of extreme positions

by both parties and encourages unnecessary and poorly designed studies

aimed at litigation, not restoration.

Response: NOAA has determined that there is no need to specifically

provide a role for either trustee agency counsel or attorneys

representing the RP(s) in the proposed rule. NOAA has attempted to

propose a rule that is scientifically driven, and not specifically

geared to the potential of litigation, even though that potential

certainly looms ever-present. As a practical matter, NOAA encourages

trustee agencies to keep their respective counsels informed of the

assessment and seek their advice in legal matters. It is expected that

the RP(s) will rely upon its attorney(s) for advice and counsel

throughout most assessments.

``Private Causes of Action''

Comment: Some commenters encouraged NOAA to specifically allow the

trustee(s) to recover for private causes of action under OPA. They

reasoned that often it is the government that is the most logical party

to recover for what are arguably ``private'' harms, i.e., increased

prices due to fishery closures, since the consumers would have no

mechanism to individually recover those damages. Another example cited

was recreational users, who would be unlikely to pursue individual

claims.

Response: Section 1002 of OPA provides specifically for damages

recoverable under OPA, including natural resources, real or personal

property, subsistence use, revenues, profits and earning capacity and

public services. However, although OPA states that a natural resource

trustee may seek recovery of damages for injuries to, or loss of use

of, natural resources, OPA gives the right of action for the other

types of damages to the actual users or owners of the property

affected.

``Punitive Damages''

Comment: Some commenters expressed the opinion that recoveries

under OPA should not include punitive damages.

Response: NOAA agrees fully. The proposed rule is designed to

assess compensatory damages for the injury to, and loss of use of

natural resources, their corresponding diminution in value pending

restoration, and the reasonable costs of conducting an assessment.

``Future Damages''

Comment: Some commenters suggested that the damage figure should

include an added amount to pay for cumulative unknown effects that

cannot be determined by the assessment, comparable to the Superfund

provision with respect to damages for unforseen future liability. One

of these commenters suggested that these damages could be used to carry

out additional research, monitoring, etc.

Response: NOAA does not believe that OPA requires damages for

unforeseen future natural resource injuries. Such recoveries may be

speculative in nature. However, for any particular discharge the

trustee(s) and RP(s) may agree, through negotiations, to establish an

escrow account to cover future effects, perhaps with unused sums

reverting back to the RP(s) after a specified amount of time.

``Limits of Liability''

Comment: One commenter stated that liability limits for oil and gas

extractive facilities should hold under OPA, except on cases of proven

gross negligence, willful misconduct, or violation of certain federal

stipulations.

Response: NOAA notes that the commenter is requesting a statutory

change, clearly outside the scope of this rulemaking.

IV. Assessment on the Record

Purpose

Section 1006(c) of OPA provides that the trustee(s) shall ``develop

and implement a plan for the restoration, rehabilitation, replacement,

or acquisition of the equivalent, of the natural resources under their

trusteeship.'' 33 U.S.C. section 2706(c)(1)(C), (c)(2)(B), (c)(3)(B)

and (c)(4)(B). Section 1006(c)(5), 33 U.S.C. section 2706(c)(5),

provides that ``plans shall be developed and implemented under this

section only after adequate public notice, opportunity for a hearing

and consideration of all public comment.'' Thus, Congress intended that

restoration plans be developed by the trustee(s) pursuant to an

administrative process that provides an adequate opportunity for public

participation in the selection of restoration measures. In accordance

with traditional principles of administrative law, NOAA is proposing to

implement these provisions by requiring the trustee(s) to document

development of draft assessment/restoration plans (DARP) in an

administrative record through notice and comment procedures.

The administrative record has four basic purposes. First, it

facilitates selection of restoration, rehabilitation, replacement, or

equivalent acquisition actions by providing a central repository for

scientific data. Second, it documents the relevant factors the

trustee(s) considered in selecting restoration actions. Third, it

facilitates public participation. Fourth, it provides the basis for

judicial review.

The DARP serves to document, for the administrative record, the

most appropriate restoration approach, with its estimated restoration,

rehabilitation, replacement, or equivalent acquisition costs for a

particular discharge. Therefore, the judicial review standard of

``arbitrary, capricious, or otherwise not inconsistent with law'' would

apply to determinations through the development of the restoration

approach. Once the restoration approach is developed, the trustee(s)

then can determine the expected interim lost resource values. It is

anticipated that the calculation of those values would not be included

in the administrative record. This approach is suggested in the

legislative history of OPA, which states:

Calculating the total measure of damages under this section will

ordinarily be dependent upon the development by the trustees of the

appropriate plans for mitigating the injury to those resources. This

is because the estimated cost of implementing the plans will be a

major component of the measure of damages. Therefore, the trustees

should, in sequence, conduct the necessary assessments, develop and

estimate the cost of implementing the appropriate plans, and

calculate the diminution in lost use and other values of the injured

resources pending restoration. At that point, the total liability of

a responsible party under this section can be calculated (Committee

of Conference Report No. 101-653; 101 Cong. 2d Sess. at 109 (Aug. 1,

1990)).

Content and Level of Detail

The administrative record must contain sufficient information to

support judicial review of the assessment. The administrative record

should contain all documents considered by the trustee(s) in selecting

assessment and restoration measures, including documents that support

options the trustee(s) ultimately rejected. Pertinent documents that

are timely submitted by the RP(s) or the public shall be included in

the administrative record.

The administrative record should be limited to final documents when

possible. For example, draft documents that are superseded by final

documents are not considered documents on which the trustee(s)

specifically relies and therefore are not included in the record. Where

no final document is available at the time of selection of assessment/

restoration measures, the draft may be included in the record if the

document contains information not found in other documents in the

record but which is considered by the trustee(s) in selecting a

restoration approach.

Pre-decisional, deliberative internal agency memoranda will

ordinarily not be included in the administrative record. Like draft

documents, however, portions of these documents may be included if they

contain information that is not included in other documents. Documents

relating exclusively to liability will ordinarily not be included in

the administrative record unless they are relied upon in selecting

restoration measures. The trustee(s) may maintain a confidential file

for materials in the administrative record that might be sensitive

(e.g., the U.S. EPA Superfund process allows for Confidential Business

Information to be maintained in a confidential appendix to the

administrative record for a Superfund remedial action). If the

restoration approach is challenged, the judge may review that

confidential information in camera, i.e., in the judge's chambers in a

confidential manner. Scientific data and other information concerning

damages to natural resources, however, may not be subject to a claim of

being Confidential Business Information. Scientific data that fail

appropriate quality assurance/quality control requirements should not

be included in the administrative record except where such data are

relied upon in some manner in selecting restoration measures.

Ordinarily, the record should include documents regarding the

nature of the discharge, preassessment determination, restoration

planning, the draft assessment/restoration plan, public comments,

response to public comments, transcripts of public hearings, if any,

relevant investigation reports, scientific studies, work plans, quality

assurance plans, engineering evaluations, decision documents, and an

index to the documents in the administrative record.

The volume of material compiled for the administrative record

should be consistent with the scope of the assessment/restoration.

Compilation of massive documentation for a minor discharge with limited

restoration measures would not be appropriate.

Certain types of information will be common to all assessments,

regardless of the type of procedure selected. Therefore, each

administrative record will contain: (1) Information considered in the

Preassessment Phase; (2) a copy of the DARP; (3) any comments received

in response to public review of the DARP, with the responses to those

comments; (4) a copy of the demand made to the RP(s), including the

Report of Assessment; and (5) the costs of conducting that assessment.

Other items included in the record will be specific to the particular

type of assessment procedure selected. For a Compensation Formula

assessment, in addition to the common items listed above, the

administrative record should include documentation of the information

requirements for use of the formula and identification of the formula

used. For a Type A assessment using one of the computer models

developed by DOI, the administrative record should include

documentation of the information requirements for the Type A model

listed in 43 CFR part 11, subpart D, and the computer printout of the

application of the Type A model. For an Expedited Damage Assessment

(EDA) or Comprehensive Damage Assessment (CDA) the administrative

record should include all documentation supporting the restoration

determinations required in the EDA or CDA. Determinations in EDA or CDA

may include, but are not limited to: the injury determination/

quantification component and the restoration component (specifically

including the test results of any and all methodologies performed in

these phases).

Post-decisional Documents

Occasionally, the administrative record may require supplementing

after finalization of the DARP. Supplements to the record may be

allowed if: the interested party(ies) did not receive actual or

constructive notice of the DARP and the opportunity to comment on the

plan; the information submitted does not duplicate information already

contained in the administrative record; and the information raises

sufficiently significant issues regarding the scope, effectiveness, or

cost of the plan as to warrant having the trustee(s) reconsider the

plan. If the trustee(s) supplements the administrative record with

documents submitted by the RP(s) or the public, the trustee(s) may also

add to the record other documents pertinent to the matters addressed by

the RP(s) or the public.

Post-decisional documents are generally not part of the

administrative record. However, where these documents result in

modification of the DARP, the administrative record should be

supplemented to include the post-decisional documents. Also, where the

DARP provides for the development of certain components at a later

date, the information or documents used to develop these components

should be added to the administrative record as they become available.

The trustee(s) has the discretion, of course, to modify the plan at

any time. However, the public will have the right to review and comment

upon modifications that are, in the opinion of the trustee(s),

significant.

Availability of the Record

To the extent practicable, the administrative record should be

compiled and made available for review as documents are generated or

received by the trustee(s). NOAA believes that public information is

critical to the credibility of assessments and restoration efforts.

However, the degree of public notice and involvement in the

administrative record will necessarily vary depending on the choice of

damage assessment procedures. NOAA is proposing that the administrative

record be open for public review and comment concurrently with the

DARP. The availability and review of the administrative record may also

be arranged in prespill planning conducted by the trustee(s).

Judicial Review

Under the Administrative Procedure Act, 5 U.S.C. 706(2)(A), review

of selection of restoration measures would be conducted on the

administrative record. Review on the record would address several major

concerns expressed by Congress in passing OPA. First, Congress mandated

public participation in restoration planning. Section 1006(c)(5) of OPA

requires the development and implementation of the restoration plan

``only after adequate public notice, opportunity for a [public]

hearing, and consideration of all public comment.'' A trial de novo

would circumvent public participation in the selection and

implementation of the restoration plan by allowing the litigants and

the court to make the decision as to the type of restoration approach.

In interpreting similar Congressional intent with respect to the

selection of remedial action under CERCLA, courts have held that a

trial de novo of selection of a response action is inconsistent with

meaningful public involvement in selection of remedies for hazardous

waste sites. A discussion of these cases was provided in Appendix III

of the ANPRM of March 13, 1992 (57 FR 8964, at 8987). Inherent in these

decisions is the recognition that the general public does not have the

resources or the procedural mechanisms to protect its interests in the

courtroom.

Further, a trial de novo of assessment/restoration measures creates

incentives for parties to withhold scientific data for use at trial.

One of the most significant criticisms of the EXXON VALDEZ case noted

by commenters was the unavailability of scientific data produced by the

parties to the litigation. By contrast, a public administrative process

should create the incentive to disclose scientific data. The government

will be required to publicly disclose its scientific data and

conclusions in the administrative record developed in connection with

the DARP. Other parties will be required to publicly disclose their

scientific data and conclusions in connection with the administrative

development of the DARP or risk waiving their objections to the plan

during judicial review.

Second, record review is necessary to carry out the Congressional

mandate that the trustee(s), as the resource manager(s) and expert(s),

select assessment/restoration measures. NOAA's interpretation of OPA

indicates that Congress intended the Restoration Plan be developed and

implemented by the trustee(s) pursuant to an administrative process,

not by a courtroom battle of experts. Adequate evaluation of the

complex scientific issues involved in assessment/restoration is more

likely to result from a public administrative process conducted by

agencies with specialized scientific expertise.

Finally, Congress emphasized that assessment of damages be

conducted at ``reasonable'' costs. By requiring the various parties

involved in an assessment to submit their findings to a central

repository, much duplicative study can be avoided. Limiting the review

of the assessment/restoration to the administrative record will greatly

reduce the transaction costs.

Administrative Record

Response to Comments

``General''

Comment: A majority of the commenters who spoke to the issue of the

administrative record and judicial review ``on the record'' supported

the concept. Several commenters noted that general administrative law

principles and case law prior to the Superfund reauthorization of 1986

supported record review of expert agency decisions on injury,

restoration, and economic assessments. One commenter explicitly stated

that the injury determination, restoration strategies, and economic

damage amount would receive both the rebuttable presumption and the

deferential standard of judicial review. Some commenters referred to

OPA's reference to the rebuttable presumption's use in ``any

administrative . . . proceeding,'' as well as OPA's provisions for

claims against the Fund in an administrative proceeding, as support for

NOAA's creation of an administrative process that would be granted

record review. Other commenters, however, objected to NOAA's attempt to

allow a standard of review that these commenters perceived to be

inconsistent with the rebuttable presumption. Finally, some commenters

stated that assessment studies and restoration planning within the

context of an assessment should not be made public unless record review

were granted.

Response: NOAA notes that the administrative record provisions in

the proposed rule are intended to implement several important policy

concerns expressed by Congress in OPA. NOAA has considered

administrative law principles and various comparable policies found in

CERCLA to be relevant to natural resource damage assessment process in

several areas. In both CERCLA and OPA, Congress has reflected the

public's concern over expeditious recovery of resources injured by

pollution. Further, in OPA, Congress has explicitly provided that

restoration measures be selected by the natural resource trustee(s)

through notice and comment procedures. Therefore, NOAA feels that there

is statutory authority to establish review on the record. The

administrative record provisions of this proposed rule are intended to

create an open assessment/restoration process to allow an objective

evaluation of how to restore or replace resources injured by discharges

of oil. Whether these provisions would result in ``record review'' is

ultimately the decision of the courts. However, NOAA feels that record

review is essential for the type of expeditious, fair assessments

called for by OPA. As discussed earlier in this preamble, judicial

review on the record would apply to the entire assessment process with

the exception of the determination of the compensable value component

of damages. Finally, NOAA points out that the ``rebuttable

presumption'' is not a standard of review.

``Advantages''

Comment: Many of the commenters pointed out that an administrative

record would avoid the costs associated with a protracted trial de novo

and result in a more timely restoration of the affected resources. Many

of these commenters also noted that an administrative record of an

assessment would allow for the availability of scientific information

on the effects of oil and the efficacy of various cleanup strategies.

Others pointed out that this process would, in effect, allow for peer

review of assessments. Quite a few commenters noted that limiting

judicial review to the administrative record of the assessment would

facilitate the Congressional goal that the agency, as the organization

with the expertise, undertake the assessment as well as the

restoration. Some commenters noted that creating an administrative

record would ensure a more fair and objective process by encouraging

participation by the public and the RP(s). One of these commenters

pointed out that having such an open process would avoid the public

distrust that results from secrecy. Another commenter noted that an

``open record'' would foster a more cooperative process that could

avoid having litigators shield assessment studies and having scientists

conduct unnecessary research. Finally, a few commenters were pleased to

see an assessment/restoration process that is similar to the Remedial

Investigation/Feasibility Study process in Superfund with which so many

agencies are familiar.

Response: NOAA agrees with the advantages of an administrative

record process outlined by these commenters. In particular, creating an

open process that facilitates access to the science in the restoration

process is an important advantage. An open process will also allow

consideration of a wider range of views. Finally, NOAA relied upon,

with some modification, the NCP's administrative record provisions

since those provisions have already undergone extensive rulemaking

development and are somewhat familiar to most trustee agencies.

``Disadvantages''

Comment: Some commenters stated that an administrative record

requirement would result in a slower and more costly assessment process

and could seriously prejudice the ability of the trustee(s) to

negotiate a settlement. One of these commenters stated that the

requirement could overwhelm the ability of the trustee(s) to conduct an

effective assessment. Another commenter noted that such an open record

may allow parties to influence the results of the assessment and skew

the economic data gathered. Some commenters noted that outside

information submitted to the record is strictly advisory in nature, and

not controlling upon the trustee(s). Yet another commenter warned that

a court could decide to conduct a trial de novo anyway, which could

make the trustee(s) vulnerable. Finally, one of these commenters noted

that the RP(s) could totally disrupt the process.

Response: NOAA does not intend an administrative record requirement

that would add to the time and/or expense of a damage assessment. The

preamble discusses the requirement that the administrative record be

tailored to the scope of the assessment. The fact that materials

submitted ``for the record'' would be intended to influence the

assessment in a particular way is inherent in an open record. However,

the trustee(s) is given responsibility to manage and consider the

record in a manner that is consistent with the reasonable cost

requirement of the proposed rule, using best professional judgment.

With respect to the possibility that the courts might not uphold record

review for restoration, NOAA believes that this is unlikely, given the

statutory language. Because lack of record review would undercut a

number of the policies underlying the use of an administrative process

for selection of restoration measures, NOAA would review the process as

a whole if record review were not upheld by the courts.

Comment: Several commenters expressed concern regarding the

involvement of the RP(s) in the administrative record. One of these

commenters noted that, since the trustee(s) compiles the record, the

RP(s) has no incentive to disclose information that the trustee(s)

might decide to exclude from the record. Another commenter stated that

due process for the RP would require judicial review of the findings

and conclusions of the trustee(s), particularly in a tort type action.

Response: NOAA notes that under general principles of

administrative law, the RP(s) will be entitled to submit relevant

material to the administrative record if timely submitted. The

reviewing court will examine the documentation of the assessment/

restoration process for any significant omissions.

``Scope''

Comment: Several commenters spoke to the issue of the scope of the

administrative record of assessment. Some of these commenters stated

that the administrative record should include all data and information

gathered for the assessment. One commenter pointed out, however, that

confidential information gathered by the RP(s) for use in litigation

should not be included. Other commenters also noted that information

pertaining to liability, that may be litigated as a separate issue,

would not go into the record.

Response: NOAA notes that, with few exceptions, all data and

information considered by the trustee(s) in selecting restoration

measures would be contained in the record. Also, participants in an

assessment must recognize that any document that is put into the record

is in fact ``public.'' The RP(s) is free to decide whether to submit

information for the record, at the risk that, if he does not do so, the

information may not be considered when the court reviews the

assessment/restoration plan.

Comment: Other commenters noted specific questions regarding the

administrative record. One asked if (1) any documents could remain

confidential; (2) all data required by the trustee(s) must be given to

the RP(s) and the public; (3) chain of custody procedures would apply;

and (4) deliberative documents would be subject to FOIA. Another asked

that NOAA clearly identify the kinds of documents to be included in the

record, the requirements for public access and comment, and the type of

scientific basis for decisionmaking. Finally, one commenter suggested

that additions to the record after closure of the public comment period

should be carefully and narrowly defined.

Response: NOAA has noted the requests for specific information on

the types of documents to be included in an administrative record. The

general discussion in the preamble above lists examples of documents

that would be included or excluded in an administrative record.

Generally, those documents releasable under FOIA would be included in

the administrative record. Those documents not releasable under FOIA

would be excluded. The preamble and proposed rule provide guidance as

to what types of documents would be allowed into the record after the

public review period is closed.

``Components''

Comment: Some commenters stated that all documents relied upon by

the trustee(s) should be placed in the administrative record. One

commenter provided the following as examples of what should be included

in the administrative record: (1) Scientific data collected, generated,

and analyzed during the assessment; (2) the determination of scope of

injury; (3) comments and data provided by the public and the RP(s), and

the consideration of that information by the trustee(s); and (4)

relevant facts relied on in selecting the restoration plans and

calculating the damages.

Response: NOAA agrees that all documents and data forming the basis

for the selection of restoration measures, including these in each

phase of the assessment leading up to the development of a restoration

approach should be placed in administrative record. Additional data and

comments that are timely submitted by the RP(s) and the public should

also be included in an administrative record. Guidance for

documentation is provided in this preamble.

``Additional Components''

Comment: One commenter noted that its state open records law would

apply to the administrative record if maintained by a state trustee and

that the record requirements are broader than those suggested by NOAA.

The commenter noted that the state law requires that the following

types of documents be made available for public review: (1) Draft

documents; (2) pre-decisional, deliberative internal agency memoranda;

and (3) scientific data generated by the state or a contractor and in

the possession of the state regardless of whether it fails quality

assurance. The commenter noted, however, that documents relating

exclusively to liability, if prepared by or for an attorney under

client privilege, can be excluded from public view.

Response: NOAA recognizes that some state laws may require broader

availability of documents than what is described in this proposed rule

for the administrative record. If a state has additional requirements

for public availability of documents beyond those outlined in this

proposed rule, the state requirements may apply to state trustees.

NOAA's proposed rule describes the minimum requirements for public

review for the various types of assessment procedures. It should also

be noted that because record review of restoration measures selected by

federal trustees alone or jointly with state trustees is premised upon

the requirements of the federal Administrative Procedure Act, selection

of restoration measures by state trustees alone may be subject to

different principles of judicial review.

``Conditions''

Comment: Several commenters stated that their agreement with a

record review standard was conditional upon having the review available

for the assessment and restoration selection/cost decisions, but not

for the calculation of economic damages. These commenters stated that

the economics determination should then be entitled to the same

protection as other work product until trial. One commenter noted that

the legislative history of CERCLA (relevant to OPA) makes it clear that

Congress, by stressing the restitutionary nature of natural resource

damages, intended at least the selection of restoration plans to be

reviewed by the court on an administrative record.

Response: NOAA believes that the statutory language clearly

contemplates record review of selection of restoration measures. The

availability of record review for all aspects of the damage assessment

is less clear. The proposed rule provides for an administrative record

process only for those aspects of the assessment leading to selection

of restoration measures, including the estimate of the costs of such

measures. NOAA solicits comment on whether the administrative record

provisions should be extended in the final rule to other aspects of the

damage assessment.

Comment: Other commenters agreed with the open record so long as

the rule ensured that the RP would be given a joint and meaningful role

in the assessment. These commenters stated that the integration of the

open record with the later proposed ``jointly conducted, phased

assessments'' with responsible parties, would be essential.

Response: NOAA agrees that the RP(s) would play a major role in the

development of the administrative record for the assessment/restoration

process. As noted in the section of this preamble on cooperative

assessments, NOAA strongly encourages joint work with the RP(s). Also,

the administrative record process will work more smoothly where there

is a joint assessment in progress. However, there will undoubtedly be

instances where such joint efforts will not be possible. In those

cases, the administrative record is even more important, because it

gives both the RP(s) and the public the opportunity to provide material

for the administrative record, and it will require the trustee(s) to

address that material if relevant.

``Time of Review''

Comment: Another commenter stated that the record of assessment

actions should be final only after the trustee(s) has determined

damages and selected a restoration approach. Some commenters stated

that NOAA should consider the applicability of the concept of

``preenforcement review,'' which would allow selection, possibly

implementation, of the Restoration Plan without first having to prove

its validity in court.

Response: NOAA notes in its general discussion above that review on

the record would generally take place in an action to obtain damages.

Prior to this time, there would be no final agency action subject to

review.

``Levels of Documentation Required''

Comment: One commenter noted that, even where there is an expedited

damage assessment conducted, an administrative record should be

compiled to provide at least some information for public review.

Response: NOAA notes that, in the general discussion of detail of

an administrative record, documentation requirements would have to be

tailored to the scope of the case. In all cases other than emergency

restoration actions, however, final restoration measures would be

selected only after public review and comment.

``Support--Legal Arguments''

Comment: Several commenters noted that natural resource damages are

not measured by the traditional common law methods. These commenters

pointed out that these assessments involve highly technical, scientific

findings in which courts have traditionally treated the agency's

determination with great deference. A few of these commenters suggested

that the federal courts have neither the time nor the expertise to

decide these scientific issues. Therefore, the commenters conclude that

judicial review of the assessment/restoration plan should be conducted

on the administrative record, applying an arbitrary and capricious

standard.

Response: NOAA agrees that courts generally defer to agency

expertise in cases involving highly technical or scientific content.

For this reason, NOAA agrees that review of restoration measures, which

involve highly technical judgments, should be on the record.

Comment: Some commenters spoke to the issue of consistency with the

provisions for claiming natural resource damages against the Fund.

These commenters pointed out that, in presenting such a claim against

the Fund, the trustee is entitled to a rebuttable presumption of

correctness. The United States is then subrogated to the rights of the

trustee in pursuing the claim against the RPs. It follows that the

documented determination of injury, selection of restoration plans, and

calculation of the costs to assess, restore, and compensate for lost

use/nonuse value by the trustee is the only available evidentiary basis

on which the United States can proceed in court on behalf of the Fund,

to recover the damages paid out to the trustee(s) from that Fund. The

commenters then argue that the same standard should apply to

assessments reviewed by courts.

Response: NOAA agrees that consistency in the implementation of a

statute is a desirable goal. If there were two standards for

determining compensation for injuries to natural resources under OPA,

expensive and confusing assessments would result. Accordingly, the same

standard of review would apply to restoration in actions by the OPA

fund as to actions by the trustee(s).

Comment: Other commenters noted that, where the right to sue for

damages to private property existed at common law through a tort

action, the public's right to sue for restitutionary money to make an

injured environment whole did not exist. These commenters pointed out

that all components of natural resource ``damages'' (as defined under

OPA) are restitutionary in nature including quantification of lost use/

nonuse values. The commenters suggested that, when Congress creates a

public right by statute that did not exist at common law (such as the

ability to seek money to make whole an environment injured by an oil

discharge), it may entrust the determination of such public rights to

an administrative body. Therefore, the commenters argued that the right

to trial by jury for common law damages would not present an obstacle

to record review of a damage assessment.

Response: NOAA notes that Congress, in the legislative history of

CERCLA and OPA, pointed out problems with pre-CERCLA common law actions

for damages to public resources. This concern resulted in the set of

environmental statutes specifically allowing recovery by a public

government agency for damages as compensation for injuries to natural

resources. Because natural resource damage claims are essentially

restitutionary and because Congress has required that trustees (rather

than courts in the first instance) select a restoration approach and

compute damages to natural resources, NOAA agrees that the right to a

jury trial would not apply to damage actions under OPA. Further, most

OPA actions are likely to be brought in the courts' admiralty

jurisdiction, where there is no right to jury trial.

Comment: Several commenters noted that NOAA has the authority to

declare that judicial review of damage assessments would be on the

administrative record since there was no explicit statement as to the

standard of review in OPA. These commenters pointed out that, where the

legislative delegation to an agency on a particular question is

implicit rather than explicit, a court will generally defer to a

reasonable interpretation made by the agency.

Response: NOAA agrees that Congress' directions to NOAA were not

explicit as to the type of judicial review to be accorded to damage

assessments. However, the legislative history does note that this

proposed rule is to create a system of damage assessment that is

expeditious and fair. The report of the Committee of Conference states

that these regulations ``should be designed to simplify the trustees'

task of assessing and recovering the full measure of damages resulting

from an incident.'' See H. Con. Rept. No. 653, 101st. Cong., 2d Sess.

at 109 (1990). NOAA feels that providing for record review of damage

assessments is necessary to achieve this goal. Further, while the issue

of the standard of judicial review will ultimately be decided by the

courts, NOAA believes that, as the agency charged with implementing the

natural resource damage provisions of OPA, its views should be entitled

to some deference.

``Against--Legal Arguments''

Comment: Several commenters stated that the RP has the legal right

to a jury trial in natural resource damage assessment disputes as

guaranteed by the United States Constitution. The commenters pointed

out that a damage assessment is not a rulemaking under section 553 of

the Administrative Procedure Act, but is similar to an adversarial

administrative activity that will often result in litigation. The

commenters argued that every CERCLA natural resource damage case that

has addressed the issue has required a jury trial for these actions at

law. These commenters stated that issues related to the selection of

assessment/restoration plans must be decided by a trial court.

Response: As stated in the above discussion, the due process rights

of the RP(s) will not be sacrificed in the administrative record

process. While a few district courts have held that there is a right to

jury trial for the lost c

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