Natural Resource Damage Assessments; Final Rule DEPARTMENT OF THE INTERIOR

SUMMARY: This final rule amends the regulations for assessing natural

resource damages resulting from a discharge of oil into navigable

waters under the Clean Water Act or a release of a hazardous substance

under the Comprehensive Environmental Response, Compensation, and

Liability Act. The Department of the Interior has previously developed

two types of natural resource damage assessment regulations: standard

procedures for simplified assessments requiring minimal field

observation (the type A rule); and site-specific procedures for

detailed assessments in individual cases (the type B rule).

This final rule revises the type B rule to comply with all but one

aspect of a court order. This rule establishes a procedure for

calculating natural resource damages based on the costs of restoring,

rehabilitating, replacing, and/or acquiring the equivalent of injured

resources. This rule also allows for the assessment of all use values

of injured resources that are lost to the public pending completion of

restoration, rehabilitation, replacement, and/or acquisition of

equivalent resources. The Department will soon issue a new proposed

rule to address assessment of lost nonuse values of injured resources.

EFFECTIVE DATE: The effective date of the final rule is April 25, 1994.

FOR FURTHER INFORMATION CONTACT: Mary C. Morton, Cecil Hoffmann, or

David Rosenberger at (202) 208-3301.

SUPPLEMENTARY INFORMATION: This preamble is organized as follows:

I. Background

A. Statutory Provisions

B. Regulatory History

C. Judicial Review

D. Implementation of the Court Order

E. Other Rulemakings

II. Overview of this Final Rule

A. Measure of Damages

B. Restoration and Compensation Determination Plan

C. Resources Covered by the Natural Resource Damage Assessment

Regulations

D. Other Significant Issues

III. Response to Comments

A. General Comments Concerning this Rulemaking

B. Overall Damage Assessment Process

C. Resources Covered by the Natural Resource Damage Assessment

Regulations

D. Trustee Coordination

E. Preliminary Estimate of Damages

F. Reasonable Cost of an Assessment

G. Calculation of Baseline

H. Measure of Damages

I. Restoration, Rehabilitation, Replacement, and/or Acquisition

of Equivalent Services Versus Resources

J. Selection of a Restoration, Rehabilitation, Replacement, and/

or Acquisition Alternative

K. Costs of Restoration, Rehabilitation, Replacement, and/or

Acquisition of Equivalent Resources

L. Compensable Value

M. Date of Promulgation of the Natural Resource Damage

Assessment Regulations

N. Judicial Review of an Assessment

O. Use of Collected Damages

P. Miscellaneous Comments

I. Background

A. Statutory Provisions

The Clean Water Act, as amended (33 U.S.C. 1251 et seq.) (CWA) and

the Comprehensive Environmental Response, Compensation, and Liability

Act of 1980, as amended (42 U.S.C. 9601 et seq.) (CERCLA) authorize

natural resource trustees to recover compensatory damages for injury

to, destruction of, or loss of natural resources resulting from a

discharge of oil into navigable waters or a release of a hazardous

substance. CWA sec. 311(f); CERCLA sec. 107. Federal and State

officials may be designated to serve as natural resource trustees under

CERCLA and CWA. CERCLA also recognizes the authority of Indian tribes

to commence actions as natural resource trustees.

Damages may be recovered for those natural resource injuries and

losses that are not fully remedied by response actions. All sums

recovered in compensation for natural resource injuries must be used to

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

injured natural resources. Trustee officials may also recover the

reasonable costs of assessing natural resource damages and any

prejudgment interest.

CERCLA requires the promulgation of two types of regulations for

the assessment of natural resource damages resulting either from a

discharge of oil under CWA or from a release of a hazardous substance

under CERCLA. CERCLA sec. 301(c). The type A regulations provide

standard procedures for simplified assessments requiring minimal field

observation. The type B regulations provide site-specific procedures

for detailed assessments. Both regulations identify the best available

procedures for determining natural resource damages. Assessments

performed by Federal and State trustee officials in accordance with

these regulations receive a rebuttable presumption in court. CERCLA

sec. 107(f)(2)(C). The promulgation of these regulations was delegated

to the Department of the Interior (the Department). E.O. 12316, as

amended by E.O. 12580.

The Oil Pollution Act (33 U.S.C. 2701 et seq.) (OPA) was signed

into law on August 18, 1990. Among other things, OPA amended the

natural resource damage provisions of CWA. OPA authorized the National

Oceanic and Atmospheric Administration (NOAA) to develop new natural

resource damage assessment regulations for discharges of oil into

navigable waters. The Department is coordinating its rulemakings with

NOAA to ensure, to the maximum extent possible, that consistent

processes are established for assessing natural resource damages under

CERCLA and OPA. OPA provides that until NOAA develops its regulations,

the Department's regulations may be used to assess natural resource

damages under OPA. OPA sec. 6001(b). NOAA published a proposed natural

resource damage assessment rule on January 7, 1994. 59 FR 1062.

B. Regulatory History

The Department has issued various final rules for the assessment of

natural resource damages: 51 FR 27674 (Aug. 1, 1986); 52 FR 9042 (March

20, 1987); 53 FR 5166 (Feb. 22, 1988); and 53 FR 9769 (March 25, 1988).

These rulemakings are all codified at 43 CFR part 11.

The natural resource damage assessment regulations provide an

administrative process for conducting assessments as well as technical

methods for the actual identification of injuries and calculation of

damages. Under the regulations, both type A and type B, assessments

consist of four major phases.

The first phase of an assessment conducted under the regulations

involves the activities that precede the actual assessment. For

example, upon detecting or receiving notification of a discharge or

release, trustee officials perform a preassessment screen to ascertain

whether further assessment actions are warranted.

The second phase involves the preparation of an Assessment Plan.

The Assessment Plan, which is subject to public review and comment,

assists the involvement of potentially responsible parties (PRPs),

other trustee officials, the general public, and any other interested

parties. The Assessment Plan also ensures that assessments are

performed at a reasonable cost.

In the third phase, trustee officials conduct the work described in

the Assessment Plan. The work involves three steps: Injury

Determination; Quantification; and Damage Determination. In Injury

Determination, trustee officials determine whether any natural

resources have been injured. If trustee officials determine that

resources have been injured, they proceed to Quantification, in which

they quantify the resulting reduction in services provided by the

resources. Finally, in Damage Determination, trustee officials

calculate the monetary compensation to be sought as damages for the

natural resource injuries.

In a type A assessment, trustee officials perform Injury

Determination, Quantification, and Damage Determination through the use

of standardized procedures involving minimal field work. The Department

has adopted a phased approach to developing type A procedures for

different environments. Only one type A rule has been developed to

date. The existing type A rule provides for the use of a computer model

to assess damages from small releases or discharges in coastal or

marine environments. For other releases or discharges, trustee

officials conduct a type B assessment, in which Injury Determination,

Quantification, and Damage Determination are performed through the use

of a range of alternative scientific and economic methodologies.

The fourth phase of every natural resource damage assessment,

whether the type A or type B rule is followed, consists of post-

assessment activities such as: Preparation of a Report of Assessment;

establishment of an account for damage assessment awards; and

development of a Restoration Plan for use of the awards.

C. Judicial Review

A party may petition the Court of Appeals for the District of

Columbia Circuit to review any regulation issued under CERCLA. CERCLA

sec. 113(a). A number of parties filed such petitions for review of the

natural resource damage assessment regulations. The type A rule was

challenged in State of Colorado v. United States Department of the

Interior, 880 F.2d 481 (D.C. Cir. 1989) (Colorado v. Interior). The

type B rule was challenged in State of Ohio v. United States Department

of the Interior, 880 F.2d 432 (D.C. Cir. 1989) (Ohio v. Interior).

The court in Ohio v. Interior upheld various challenged aspects of

the type B rule but did remand three issues. The court ordered the

Department to revise the rule to reflect the statutory preference for

using restoration costs as the measure of natural resource damages. The

court used the term ``restoration costs'' to encompass the cost of

restoring, rehabilitating, replacing, and/or acquiring the equivalent

of the injured natural resources. The court also ordered the Department

to revise the rule to allow for the recovery of all reliably calculated

lost values of injured natural resources, including both lost use

values and lost nonuse values, with no specific hierarchy of

methodologies required of trustee officials in estimating those values.

Use values are derived through activities such as hiking or fishing.

Nonuse values are not dependent on use of the resource. Nonuse values

include existence value, which is the value of knowing that a resource

exists, and bequest value, which is the value of knowing that a

resource will be available for future generations. Finally, the court

asked the Department to clarify whether the natural resource damage

assessment regulations apply to natural resources that are not actually

owned by the government.

D. Implementation of the Court Order

The Department published an advance notice of proposed rulemaking

on September 22, 1989, to announce its intent to revise the type B rule

to comply with Ohio v. Interior. 54 FR 39016. The Department issued a

proposed rule on April 29, 1991, with comments requested by June 28,

1991. 56 FR 19752. On July 2, 1991, the Department extended the comment

period to July 16, 1991. 56 FR 30367. On July 22, 1993, the Department

reopened the comment period to allow consideration of additional

comments, including newly developed information on the contingent

valuation methodology (CV), the only method currently available for the

express purpose of estimating nonuse values. 58 FR 39328. The comment

period was originally reopened until September 7, 1993, and then

extended until September 22, 1993. 58 FR 45877 (Aug. 31, 1993).

After reviewing the comments received in response to the July 22,

1993, Federal Register notice, the Department has decided to issue a

final rule addressing all aspects of the Ohio v. Interior remand other

than the assessment of lost nonuse values. The Department is

considering revising the type B rule to include certain standards to

improve the reliability of CV when used to calculate lost nonuse

values. In order to ensure that interested parties have an adequate

opportunity for review and comment, the Department will soon publish

the standards in a notice of proposed rulemaking. Pending completion of

that rulemaking, the Department is temporarily leaving unchanged the

remanded language of the original type B rule concerning assessment of

lost nonuse values.

E. Other Rulemakings

CERCLA mandates biennial review and revision, as appropriate, of

the natural resource damage assessment regulations. The Department

plans to publish an advance notice of proposed rulemaking to begin the

biennial update of the type B rule in July 1994. All aspects of the

administrative process and the type B rule will be subject to review

during that update. During the biennial review, the Department will

consider ways of ensuring the greatest possible consistency between its

damage assessment regulations and the damage assessment regulations

being developed by NOAA.

Further, the Department plans to publish a proposed rule to revise

the type A procedure for coastal and marine environments in compliance

with Colorado v. Interior in November 1994. The Department is also

developing an additional type A procedure for assessing damages in the

Great Lakes. Like the type A procedure for coastal and marine

environments, the type A procedure for the Great Lakes will incorporate

a computer model. The Department expects to publish a proposed rule for

the type A procedure for the Great Lakes in August 1994.

II. Overview of This Final Rule

A. Measure of Damages

The type B rule as originally published on August 1, 1986, provided

that damages consisted of the lesser of the cost of restoring the

injured resources or the diminution in the value of the injured

resources without restoration. In Ohio v. Interior, the court ordered

the Department to revise the rule to reflect the statutory preference

for using restoration costs as the measure of natural resource damages.

CERCLA provides that sums recovered in natural resource damage actions

may be used to restore, rehabilitate, replace, or acquire the

equivalent of the injured natural resources. The court used the simple

term ``restoration'' costs as shorthand for the cost of performing any

of these actions. 880 F.2d at 441. In many cases, trustee officials

will likely use damage awards to fund some combination of these

actions, rather than only one. Therefore, the final rule allows trustee

officials to recover the costs of restoration, rehabilitation,

replacement, and/or acquisition of equivalent resources in all cases.

The court recognized the Department's authority to establish

* * * some class of cases where other considerations--i.e.

infeasibility of restoration or grossly disproportionate cost to use

value--warrant a [measure of damages other than the costs of

restoration, rehabilitation, replacement, and/or acquisition of

equivalent resources]. Id. at 459.

However, the Department believes that trustee officials will always

perform some, albeit occasionally minor, form of restoration,

rehabilitation, replacement, and/or acquisition of equivalent

resources. Even in situations where natural recovery is the preferred

action, trustee officials will nonetheless incur some costs, such as

the expense of restricting public access or taking other actions to

ensure that natural recovery is not impeded. Therefore, the final rule

does not include any exceptions to the basic measure of damages.

Moreover, the rule also provides trustee officials with the discretion

to add to the basic measure of damages the value of the resource

services lost to the public from the date of the discharge or release

until restoration, rehabilitation, replacement, and/or acquisition of

equivalent resources has been completed.

B. Restoration and Compensation Determination Plan

To assist trustee officials in developing claims under the new

measure of damages, the rule provides for the development of a

Restoration and Compensation Determination Plan. The Restoration and

Compensation Determination Plan replaces the Restoration Methodology

Plan discussed in the original version of the rule. The Restoration and

Compensation Determination Plan is designed to focus the scope of

Damage Determination. The Restoration and Compensation Determination

Plan is part of the overall Assessment Plan and, thus, subject to

public review and comment.

1. Selection of a Restoration, Rehabilitation, Replacement, and/or

Acquisition Alternative

Since damages are based on the costs of restoring, rehabilitating,

replacing, and/or acquiring the equivalent of the injured resources,

trustee officials need a mechanism for projecting these costs. The rule

includes a procedure for selecting a restoration, rehabilitation,

replacement, and/or acquisition alternative that can be used in this

projection.

Under the rule, trustee officials first identify and consider a

reasonable number of possible alternatives for restoring,

rehabilitating, replacing, and/or acquiring the equivalent of the

injured resources. Trustee officials also estimate those services that

are likely to be lost to the public pending completion of each

alternative under consideration. Trustee officials then select one of

the possible alternatives. The rule lists factors that trustee

officials must consider during the selection. The relative weight of

these factors is left to the discretion of the trustee officials.

Trustee officials document their decisions in the Restoration and

Compensation Determination Plan.

2. Calculation of the Costs of Restoration, Rehabilitation,

Replacement, and/or Acquisition of Equivalent Resources

Once the trustee officials select a restoration, rehabilitation,

replacement, and/or acquisition alternative, they must choose the

methods they intend to use to estimate the costs of implementing that

alternative. To do this, trustee officials select among the specific

cost estimating methodologies provided in the rule. The rule provides a

number of criteria to guide the selection of cost estimating

methodologies, including a requirement that the chosen methodologies

are reliable for the particular incident and type of damage being

measured. Trustee officials include the rationale for their selection

in the Restoration and Compensation Determination Plan.

3. Calculation of Compensable Value

Under this rule, the costs of restoring, rehabilitating, replacing,

and/or acquiring the equivalent of the injured resources are the basic

measure of damages; however, these costs are only one component of the

damages that trustee officials may assess. Trustee officials also have

the discretion to assess the value of the services that the public lost

from the date of the release or discharge until completion of

restoration, rehabilitation, replacement, and/or acquisition of

equivalent resources. The final rule uses the term ``compensable

value'' to encompass all of the lost public economic values, including

lost use values and lost nonuse values such as existence and bequest

values. The Restoration and Compensation Determination Plan includes a

description of the valuation methodologies trustee officials intend to

use when estimating compensable value during Damage Determination.

a. Use values. The original type B rule provided a ranked list of

valuation methodologies that could be used to calculate lost use

values. If the market for the injured resource was ``reasonably

competitive,'' then the diminution of the market price attributable to

the discharge or release was used to estimate damages. If a market-

price methodology was not available, then the trustee officials were

required to use appraisal methodologies. Only when neither market-price

nor appraisal methodologies were appropriate for the resources being

assessed did the original version of the rule allow trustee officials

to use non-market-based methodologies.

The court ruled that the hierarchy of valuation methodologies

incorrectly established a strong presumption in favor of market-price

and appraisal methodologies. The proposed rule continued to rank

valuation methodologies according to reliability but allowed trustee

officials to use any of the methodologies whenever they wanted,

notwithstanding the ranking. In light of potential confusion over the

practical effect of the ranking in the absence of any restrictions on

trustee officials' selections, the Department has eliminated the

ranking from the final rule. The final rule leaves trustee officials

free to choose any of the specified valuation methodologies. The rule

provides a number of criteria to guide the selection of valuation

methodologies, including a requirement that the chosen methodologies

are reliable for the particular incident and type of damage being

measured. Trustee officials include the rationale for their selection

in the Restoration and Compensation Determination Plan.

b. Nonuse values. Sections 11.83(b)(2) and 11.83(d)(5)(ii) of the

original version of the type B rule provided that lost nonuse values

could only be assessed if trustee officials could not determine any

lost use values. In the August 1, 1986, preamble to the original type B

rule, the Department provided the following explanation for this

restriction:

Ordinarily, option and existence values would be added to use

values. However, section 301(c) of CERCLA mentions only use values.

Therefore, the primary emphasis in this section is on the estimation

of use values. 51 FR 27719.

Ohio v. Interior held that the Department had ``erroneously

construed the statute,'' stating:

[S]ection 301(c)(2) requires Interior to ``take into

consideration factors including, but not limited to * * * use

value.'' 42 U.S.C. Sec. 9651(c)(2) (emphasis added). The statute's

command is expressly not limited to use value; if anything, the

language implies that DOI is to include in its regulations other

factors in addition to use value. 880 F.2d at 464.

The court went on to say that the Department--

* * * is entitled to rank methodologies according to its view of

their reliability, but it cannot base its complete exclusion of

option and existence values on an incorrect reading of the statute.

Id.

The court instructed the Department to consider a rule that would

permit trustee officials to include all reliably calculated lost values

in their damage assessments. Id.

CV is currently the only method available for the express purpose

of estimating nonuse values. CV can also be used to calculate use

values. Under the original type B rule, CV was listed as a non-market-

based methodology for calculating either lost use values or lost nonuse

values. Ohio v. Interior held that the Department's decision to include

CV as a best available procedure was not improper. Id. at 478. However,

the court did not require the Department to allow unlimited use of CV.

Moreover, the court did not address the difference between use of CV to

calculate lost use values and use of CV to calculate lost nonuse

values.

The Department received numerous comments on the use of CV. These

comments focused on use of CV to estimate lost nonuse values rather

than lost use values. In the April 29, 1991, notice of proposed

rulemaking, the Department stated that ``[w]hen CVM is used to quantify

use values alone, it is judged to be just as reliable as the other

nonmarket valuation methodologies.'' 56 FR 19762. Commenters did not

dispute this assertion and have not provided any information to the

contrary, even though the Department specifically solicited ``reviews

of CVM that address its reliability for measuring use values'' in the

July 22, 1993, Federal Register notice. 58 FR 39329. Thus, this final

rule allows trustee officials to use CV to assess lost use values

subject only to the restrictions applicable to any of the listed

methodologies for assessing lost use values. However, during the

upcoming biennial review of the type B rule, the Department will

reconsider whether additional standards for the use of CV to estimate

lost use values are appropriate.

Nonuse values, unlike use values, are not linked to behavior and,

thus, are more difficult to validate externally than use values.

Therefore, the Department will soon be issuing a proposed set of

standards to improve the reliability of CV when used to estimate lost

nonuse values. This final rule renumbers Secs. 11.83(b)(2) and

11.83(d)(5)(ii) of the original rule, which restrict the assessment of

lost nonuse values to cases where lost use values cannot be determined,

as new Secs. 11.83(c)(1)(iii) and 11.83(c)(2)(vii)(B), respectively.

However, pending completion of the rulemaking concerning assessment of

lost nonuse values, the Department is temporarily leaving unchanged the

language of renumbered Secs. 11.83(b)(2) and 11.83(d)(5)(ii), which was

remanded by Ohio v. Interior.

C. Resources Covered by the Natural Resource Damage Assessment

Regulations

The final issue remanded by Ohio v. Interior concerns the scope of

the resources covered by the rule. The rule as originally published

incorporated the statutory definition of ``natural resources.'' This

definition encompasses any resource--

Belonging to, managed by, held in trust by, appertaining to, or

otherwise controlled by the United States * * *, any State or local

government, any foreign government, or any Indian tribe, or, if such

resources are subject to a trust restriction on alienation, any

member of an Indian tribe. CERCLA sec. 101(16).

The court in Ohio v. Interior noted that, although CERCLA does not

authorize recovery of damages for injuries to purely private resources,

the statutory definition of ``natural resources'' is clearly not

limited to resources literally owned by a government. 880 F.2d at 460.

Similarly, in its oral argument in Ohio v. Interior, the Department

recognized that applicability of CERCLA's natural resource damage

provisions does not hinge solely on ownership. Id. at 461. However, the

August 1, 1986, preamble to the final type B rule stated that ``section

101(16) of CERCLA clearly indicates that privately owned natural

resources are not to be included in natural resource damage

assessments.'' 54 FR 27696. Therefore, the court asked the Department

to clarify whether the natural resource damage assessment regulations

may be used to assess damages for injuries to any resources that are

not owned by the government.

The Department never intended to suggest that the applicability of

the regulations hinges solely on ownership of a resource by a

government entity. The rule is available for assessments of all natural

resources covered by CERCLA, which under the plain language of the

statute includes more than just resources owned by the government.

Section 11.14(z), which was not affected by this rulemaking,

incorporates the statutory definition of ``natural resource.'' The rule

does not interpret this statutory definition. This final rule does,

however, add a requirement that trustee officials prepare statements

explaining the bases for their assertions of trusteeship. This

statement must be included both in the Notice of Intent to Perform an

Assessment, which is sent to PRPs, and in the Assessment Plan, which is

subject to public review and comment.

D. Other Significant Issues

This final rule addresses two additional issues related to the

court order:

(1) Development of a preliminary estimate of damages; and

(2) The date of promulgation of the natural resource damage

assessment regulations.

1. Preliminary Estimate of Damages

Under Sec. 11.35 of the rule as originally published, the

determination of the appropriate measure of damages was made in the

Economic Methodology Determination. In the Economic Methodology

Determination, trustee officials were required to estimate both the

costs of restoring the injured resources and the diminution in the

value of the injured resources without restoration. The smaller value

served as the measure of damages. The Economic Methodology

Determination was then used to help trustee officials develop an

Assessment Plan.

Under this final rule, damages always include the costs of

restoration, rehabilitation, replacement, and/or acquisition of

equivalent resources. Therefore, the Department has eliminated the

Economic Methodology Determination. However, the Economic Methodology

Determination served a function that is still relevant under the

revised rule. CERCLA provides that trustee officials may recover the

costs of performing an assessment, but only if those costs are

reasonable. Under the definition of ``reasonable cost'' in

Sec. 11.14(ee), which was not affected by this rulemaking, the

anticipated cost of the assessment must be expected to be less than the

anticipated damage amount. Under the original rule, the damage

estimates developed during the Economic Methodology Determination

helped trustee officials design their Assessment Plans so that this

standard was met. In order to continue assisting trustee officials in

performing assessments at reasonable costs in the absence of the

Economic Methodology Determination, this final rule requires trustee

officials to prepare a preliminary estimate of damages before they

begin the development of an Assessment Plan.

2. Date of Promulgation of the Natural Resource Damage Assessment

Regulations

CERCLA provides that natural resource damage claims other than

those involving Federal facilities or sites on the National Priorities

List must be commenced by Federal and State trustee officials:

* * * within 3 years after the later of the following:

(A) The date of the discovery of the loss and its connection

with the release in question.

(B) The date on which regulations are promulgated under section

301(c). CERCLA sec. 113(g)(1).

Neither the language nor the legislative history of CERCLA defines the

date of promulgation of the natural resource damage assessment

regulations under section 301(c).

There has been considerable confusion over this statutory provision

in the aftermath of Ohio v. Interior and Colorado v. Interior. The

natural resource damage assessment regulations are designed to

calculate a monetary damage figure for injuries to natural resources.

Ohio v. Interior and Colorado v. Interior remanded a fundamental issue,

namely the measure of damages. Until the court orders are fully

implemented, trustee officials are left without a complete procedure

for calculating damages consistent with the provisions of CERCLA.

Therefore, the Department has amended the rule to clarify that for the

purposes of section 113(g)(1) of CERCLA, the ``date on which

regulations are promulgated'' is the date on which final rules revising

both the type A rule and the type B rule in compliance with Ohio v.

Interior and Colorado v. Interior are published.

III. Response to Comments

The Department received numerous comments on the July 22, 1993,

Federal Register notice. The Department appreciates the time and effort

expended by the commenters. This notice does not address any of the

comments received concerning the use of CV to calculate lost nonuse

values. Those comments will be addressed in the Department's upcoming

notice of proposed rulemaking to revise the original language of the

type B rule concerning the assessment of nonuse values.

With respect to comments outside the confines of the Ohio v.

Interior remand, the Department has for now simply reproduced guidance

provided in prior Federal Register notices and indicated that further

clarification is beyond the scope of this rulemaking. During the

upcoming biennial review, the Department will carefully consider all of

the comments submitted during this rulemaking that were beyond the

scope of the court remand. Commenters need not resubmit these comments

during the biennial review.

A. General Comments Concerning this Rulemaking

1. Scope of This Rulemaking

Comment: Some commenters objected to the Department's decision to

defer consideration of certain issues until the next biennial review.

These commenters stated that all matters relating to the measure of

damages should be addressed in this rulemaking.

Response: As was explained in the April 29, 1991, notice of

proposed rulemaking, the Department decided to limit this rulemaking to

the court order in light of the potentially wide-ranging issues that

will be considered during the biennial review. The Department believes

that it has considered all issues within the scope of the Ohio v.

Interior remand.

2. Timing of This Rulemaking

Comment: Several commenters expressed concern that the Department

was proceeding too slowly on implementation of Ohio v. Interior and

Colorado v. Interior and commencement of the biennial review.

Response: Implementation of Ohio v. Interior and Colorado v.

Interior and commencement of the biennial review have involved

considerable, time-consuming analysis and coordination. The Department

has been proceeding, and will continue to proceed, as expeditiously as

possible.

3. Goal of This Rulemaking

Comment: One commenter stated that the Department had failed to

articulate clear goals for this rulemaking. This commenter offered

suggestions on possible goals, including promotion of timely, cost-

effective restoration. Another commenter requested that the Department

attempt to eliminate ambiguity and vagueness from the rule in order to

reduce transaction costs.

Response: Section 11.11, which was not affected by this rulemaking,

states that the purpose of the regulations is to provide standardized

and cost-effective procedures for assessing natural resource damages.

The Department has indicated that the primary goal of this particular

rulemaking is to revise the type B rule to comply with Ohio v.

Interior. The Department believes that promotion of timely, cost-

effective restoration and elimination of ambiguity and vagueness are

worthy objectives and has attempted to further those objectives to the

extent possible within the context of addressing the court order. The

Department will consider whether additional revisions are necessary

during the upcoming biennial review.

4. Regulatory Impact Analysis

Comment: A few commenters disagreed with the Department's statement

that this rulemaking is not ``major'' under Executive Order 12291 and,

thus, does not require preparation of a Regulatory Impact Analysis.

These commenters challenged a number of aspects of the Determination of

Effects prepared for the proposed rule.

Response: Executive Order 12291 has been rescinded since the

Department prepared the Determination of Effects for the proposed rule.

This final rule has been reviewed under Executive Order 12866 and has

been determined to constitute a significant regulatory action. However,

because of the difficulty of evaluating the effects of alternatives to

this rule, the Office of Information and Regulatory Affairs within the

Office of Management and Budget has waived preparation of the

assessments described in sections 6(a)(3)(B) and 6(a)(3)(C) of

Executive Order 12866 for the final rule.

5. Status of Prior Unpublished Notice of Final Rulemaking

Comment: A number of commenters objected to the publication of the

July 22, 1993, Federal Register notice on the ground that the

Department had already sent a notice of final rulemaking to the Office

of the Federal Register in January, 1993, that was never published.

Response: The Department acknowledges that its former Assistant

Secretary-Policy, Management and Budget sent a notice of final

rulemaking to the Office of the Federal Register in January, 1993. The

Department retrieved the notice from the Office of the Federal Register

before it was filed out of concern that proper procedures had not been

followed in connection with its preparation. Most notably, the notice

improperly referred to and relied upon information received outside the

comment period and had not received proper Departmental clearance. The

Department, therefore, believes it was appropriate to retrieve the

notice and publish the July 22, 1993, Federal Register notice to reopen

the comment period.

B. Overall Damage Assessment Process

1. Trustee Discretion

Comment: A number of commenters addressed the level of discretion

that the proposed rule would afford trustee officials. Many commenters

thought that trustee officials are in the best position to determine

how to proceed at a specific site and praised the flexibility of the

proposed rule. On the other hand, several commenters thought that the

rule would delegate too much authority to trustee officials. These

commenters stated that the language and legislative history of section

301(c) of CERCLA, through reference to ``protocols,'' ``best available

procedures,'' and ``most accurate and efficient procedures,'' require

that the Department develop substantive objective standards. According

to these commenters, the proposed rule relies upon subjective standards

that will lead to arbitrary and capricious results. These commenters

expressed concern that the Department was placing too much reliance on

public review and comment to curb potential abuses of discretion by

trustee officials.

Response: The Department believes the rule appropriately balances

the need for objective procedures against the need for flexibility. In

order to comply with the statutory requirement to identify best

available procedures for assessing natural resource damages, the

Department has developed a detailed, standardized process that

incorporates a specific range of acceptable alternative methodologies.

However, the type B rule was also intended to have broad application.

Natural resource damage cases range from situations involving discrete

injury of one resource caused by a small, incidental release of a

single substance to incidents involving extensive injury of multiple

resources caused by large, long-term releases of mixtures of

substances. In light of the myriad of possible natural resource damage

scenarios, a type B rule that mandates a particular course of action at

each stage of every assessment would generally be unusable or result in

unreasonable assessment costs. Therefore, in certain areas the rule

allows trustee officials to use their best judgment.

Although trustee officials do have some discretion, the rule

imposes a number of checks on that discretion. The rule requires

trustee officials to document the rationale for their decisions. The

rule also provides an opportunity for public comment and review of

trustee officials' actions, which the Department believes will ensure a

significant level of accountability for trustee officials. Also, the

Department notes that all decisions made by trustee officials will

ultimately be reviewable in court. Therefore, the rule includes

criteria by which courts can evaluate trustee decisions.

2. Public and PRP Involvement

Comment: Several commenters voiced opinions about the opportunity

for PRP and public participation in the assessment process. Some

commenters stated that the proposed rule would provide an appropriate

level of public and PRP participation. Other commenters thought that

the Department should encourage earlier involvement of PRPs to

encourage settlement and avoid duplication of effort. A few commenters

suggested that the rule be revised to clarify that trustee officials

are authorized to allow PRPs to conduct assessment work.

Response: This final rule does not affect the level or timing of

PRP or public participation in the natural resource damage assessment

process. The Department agrees that early participation of PRPs in the

assessment process promotes amicable settlement of natural resource

damage claims but does not think that any revisions of the rule are

necessary in this regard.

Section 11.32(d) already provides trustee officials with the

discretion to allow PRPs to conduct assessment work. However, as was

stated in the August 1, 1986, preamble:

The Department's intention has always been that the decision to

allow or not to allow potentially responsible parties to participate

in the implementation of the Assessment Plan should rest solely with

the authorized official, or the lead authorized official, when

appropriate.

Furthermore, a decision to allow such participation should only

be made when the authorized official believes that a fair and

accurate damage assessment will result from the potentially

responsible party's participation and will be ensured through

adequate direction, guidance, and monitoring by the authorized

official * * *. The Department emphasizes that any and all actions

taken by potentially responsible parties to implement an Assessment

Plan occur under the ultimate approval and authority of the

authorized official acting as trustee. The potentially responsible

party functions in a strictly ministerial role. The final choice of

methodologies rests solely with the authorized official. 51 FR

27704.

Further clarification is beyond the scope of this rulemaking.

3. Separate Assessments for Each Injury

Comment: Some commenters stated that the rule should encourage

trustee officials to perform separate assessments for each injury in

order to facilitate settlement.

Response: Natural resources are generally highly interdependent.

The selection of methods to address one injured resource will often

affect the selection of methods to address other resources. Therefore,

the rule leaves it to the discretion of the trustee officials whether

separate assessments should be conducted for each injury. Further

clarification is beyond the scope of this rulemaking.

4. Focus of Assessments

Comment: Some commenters stated that the Department should take

precautions to ensure that trustee officials do not undertake

unnecessary basic research when performing damage assessments. These

commenters suggested that the Department provide a list of sources of

existing scientific data and prohibit trustee officials from performing

new research unless there are no existing data regarding the effect of

the particular substance on the particular natural resources involved.

Response: As was noted in the August 1, 1986, preamble to the

original type B rule:

General research studies are not compensable under a damage

assessment performed pursuant to this rule, since it is

inappropriate that experimental research studies to advance general

scientific understanding be included as a part of a specific natural

resource damage claim. 51 FR 27710.

Further clarification is beyond the scope of this rulemaking.

C. Resources Covered by the Natural Resource Damage Assessment

Regulations

Comment: There were numerous comments on the issue of the resources

covered by the natural resource damage assessment regulations. Several

commenters supported the Department's proposal not to define which

privately owned resources are covered by the regulations. These

commenters stated that the question of whether a particular resource is

covered by the regulations is governed by a wide variety of Federal,

State, local, and tribal laws that are constantly evolving. These

commenters further stated that trustee officials are the most familiar

with these laws and, therefore, are in the best position to determine

whether a particular resource is covered by the regulations.

On the other hand, several commenters thought that the regulations

should include some limits on the assessment of damages for injuries of

privately owned resources in order to avoid overly broad claims and

unnecessary litigation. Some of these commenters stated that the

Department had misinterpreted Ohio v. Interior and that the court did

ask the Department to clarify which privately owned resources are

covered by the regulations.

Response: The Department believes that the Ohio v. Interior court

did not require or even request the Department to define precisely

which privately owned resources are covered by the natural resource

damage assessment regulations. The court merely asked for clarification

of whether the Department intended the regulations to cover any non-

government-owned resources.

The scope of resources covered by the natural resource damage

assessment regulations is determined by section 101(16) of CERCLA,

which defines ``natural resources'' as:

[L]and, fish, wildlife, biota, air, water, ground water,

drinking water supplies, and other such resources belonging to,

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

controlled by the United States * * *, any State or local

government, any foreign government, any Indian tribe, or, if such

resources are subject to a trust restriction on alienation, any

member of an Indian tribe.

As the court noted, this definition, which is incorporated into

Sec. 11.14(z) of the rule, extends beyond resources that are actually

owned by the government.

Use of the natural resource damage assessment regulations is not

restricted to government-owned resources. Trustee officials can use the

regulations to assess damages for all natural resources covered by

CERCLA. The Department believes that no additional action is needed to

comply with the court order.

Not only is development of a definition of the privately owned

resources covered by the regulations not required by Ohio v. Interior,

it is also impractical. The question of whether a trustee official can

assess damages for a particular natural resource is governed by CERCLA.

However, CERCLA provides that trustee officials can only recover

damages for injuries to those resources that are related to them

through ownership, management, trust, or control. These relationships

are created by other Federal, State, local, and tribal laws. In light

of the diversity of these other laws, the Department believes that the

determination of whether a particular privately owned resource

constitutes a natural resource under CERCLA is best addressed on a

case-by-case basis.

The Department disagrees that lack of a definition of the privately

owned resources covered by the regulations will result in overly broad

claims and unnecessary litigation. This final rule requires a trustee

official to prepare a statement explaining the basis for his or her

assertion of trusteeship. This statement must be included both in the

Notice of Intent to Perform an Assessment, which is sent to PRPs, and

in the Assessment Plan, which is subject to public review and comment.

These opportunities for early input from PRPs and the public provide

both a check on the trustee officials' discretion and a means of

resolving disputes prior to litigation. Other provisions of the

regulations, such as the requirement that only committed public uses of

resources be included in compensable value, provide additional

protection against improper assertions of authority over private

property.

Comment: There were also many comments on the Department's proposal

to clarify that a trustee official's statement of his or her basis of

authority is not entitled to a rebuttable presumption. Several

commenters supported this proposal. These commenters noted that a

trustee official's basis of authority is an issue of legal standing to

sue rather than an issue of assessment of damages. These commenters

also stated that it was particularly appropriate not to grant a

rebuttable presumption to a trustee official's statement since the rule

contained no standards for determining which privately owned resources

are covered by this rule.

On the other hand, a number of commenters thought that the

rebuttable presumption should apply to a trustee official's statement

of his or her basis of authority. These commenters stated that one of

the first steps that a trustee official takes in an assessment is the

determination of whether the affected resources fall under his or her

trusteeship. These commenters noted that nothing in CERCLA indicates

that this rule should restrict the rebuttable presumption to certain

aspects of an assessment.

Response: In light of the fact that the Department has decided not

to provide guidance on the scope of resources covered by the

regulations, the Department does not believe that a trustee official's

statement of authority should be given a rebuttable presumption.

Section 11.31(a)(2) has been revised to clarify this point.

Comment: One commenter noted that in the July 22, 1993, Federal

Register notice, the Department referred to the ``Federal, State,

local, and tribal laws'' that give rise to trusteeship. The commenter

sought clarification of whether local governments could bring natural

resource damage claims and whether States could bring natural resource

damage claims on behalf of local governments.

Response: The Department refers to local laws that may give rise to

trusteeship because the statutory definition of ``natural resource''

mentions resources belonging to, managed by, held in trust by,

appertaining to, or otherwise controlled by any local government. This

rule does not address local governments' standing to sue for natural

resource damages. However, at least one court has held that a local

government could not bring a natural resource damage claim, relying in

part on State law. Werlein v. United States, 746 F. Supp. 887, 910 (D.

Minn. 1990). Ohio v. Interior states that CERCLA allows State trustee

officials to recover damages for injured resources owned by, managed

by, appertaining to, or otherwise controlled by a local government. 880

F.2d at 460 n. 43.

Comment: Some commenters requested that the rule be revised to

require trustee officials to provide detailed statements of authority.

Response: The Department believes that a trustee official's

statement of authority, like all statements required under the

regulations, should be detailed enough to provide PRPs, other trustee

officials, the general public, any other interested parties, and

ultimately the courts with an adequate opportunity to evaluate the

statement. The level of detail may vary depending on the resources

involved. The Department does not believe that any revision of the rule

is necessary.

Comment: A few commenters had questions about the application of

the rule to specific resources. One commenter asked the Department to

clarify that a tribal trustee official has authority to assert claims

for natural resource damages no matter where the natural resources are

located so long as the trustee official can establish trusteeship.

Response: Nothing in these regulations prevents a Federal, State,

or tribal trustee official from assessing damages for injuries to any

natural resources, regardless of their location, so long as the trustee

official can establish trusteeship over the resource.

Comment: Other commenters raised questions about the Department's

discussion of cultural and archaeological resources. Some commenters

disagreed with the Department's statement that cultural and

archaeological resources do not constitute natural resources under

CERCLA. Other commenters agreed that such resources are not natural

resources. However, these commenters disagreed with the Department's

statement that trustee officials are allowed to factor the loss of

archaeological and cultural attributes of a natural resource into a

natural resource damage assessment through consideration of the loss of

services provided by that natural resource. These commenters stated

that consideration of archaeological and cultural services provided by

a natural resource was tantamount to treating archaeological and

cultural resources as natural resources in violation of the statute.

One commenter requested that the Department clarify that an injury to

an archaeological or cultural resource in and of itself is not a basis

for a natural resource damage claim.

Response: As was explained in the July 22, 1993, Federal Register

notice, the Department acknowledges the confusion that has arisen as a

result of multiple uses and meanings of the term ``resource'' under

different statutes. ``Archaeological'' and other ``cultural'' resources

are not ``land, fish, wildlife, biota, air, water, ground water,

drinking water supplies, [or] other such resources.'' Therefore,

``archaeological'' and ``cultural'' resources do not constitute

``natural'' resources under CERCLA.

Nevertheless, although archaeological and cultural resources, as

defined in other statutes, are not treated as ``natural'' resources

under CERCLA, the rule does allow trustee officials to include the loss

of archaeological and other cultural services provided by a natural

resource in a natural resource damage assessment. For example, if land

constituting a CERCLA-defined natural resource contains archaeological

artifacts, then that land might provide the service of supporting

archaeological research. If an injury to the land causes a reduction in

the level of service (archaeological research) that could be performed,

trustee officials could recover damages for the lost service. Further

clarification is beyond the scope of this rulemaking.

D. Trustee Coordination

Comment: There were several comments concerning trustee

coordination. A number of commenters wrote in support of the trustee

coordination provisions in the rule. A few commenters thought that the

rule should place greater emphasis on trustee coordination and provide

additional guidance on how trustee officials can coordinate most

effectively.

Response: Trustee coordination is discussed in Sec. 11.32(a)(1),

which was not affected by this rulemaking. Further clarification is

beyond the scope of this rulemaking.

Comment: Several commenters raised questions about designation of a

lead authorized official. Some commenters asked the Department to

revise Sec. 11.32(a)(1)(ii)(A) to prohibit an official from an agency

that is both a trustee and a PRP from being designated as the lead

authorized official. Another commenter stated that the lead authorized

official should be selected on a case-by-case basis according to which

agency has the greatest interests at stake.

Response: Revision of the procedures for appointing a lead

authorized official contained in Sec. 11.32(a)(1)(ii)(A) is beyond the

scope of this rulemaking.

Comment: One commenter questioned why the Department had raised the

issue of collateral estoppel in the July 22, 1993, Federal Register

notice.

Response: The Department referred to collateral estoppel in

response to a comment. The commenter thought that requiring Federal

trustee officials to use the natural resource damage assessment

regulations would eliminate collateral estoppel problems. The

Department responded that revising the optional nature of the

regulations was beyond the scope of this rulemaking and, moreover,

would not necessarily resolve potential collateral estoppel problems.

E. Preliminary Estimate of Damages

Comment: The commenters who addressed the issue of the preliminary

estimate of damages agreed that an estimate of damages is needed to

determine the proper scope of an assessment and to ensure the

reasonableness of assessment costs. Several commenters thought that

trustee officials should be required to disclose the preliminary

estimate as soon as possible to ensure that the public and the PRPs

have an opportunity to comment on the reasonableness of projected

assessment costs. One commenter stated that trustee officials should be

required to consult with the PRPs when developing the preliminary

estimate.

Response: The Department believes that premature disclosure of the

preliminary estimate might adversely affect the ability of trustee

officials to settle or litigate a natural resource damage case.

Therefore, the Department has revised the language of proposed

Sec. 11.35(d)(3) to clarify that trustee officials need not disclose

the preliminary estimate until the assessment has been completed.

Even though the preliminary estimate is not disclosed until the end

of the assessment, PRPs and the general public will still have a

meaningful opportunity to comment on the reasonableness of assessment

costs. Under Sec. 11.14(ee), which was not affected by this rulemaking,

the relationship between anticipated damages and anticipated assessment

costs is only one factor of reasonable costs. Another factor is whether

all aspects of the assessment directly contribute to the calculation of

a monetary damage figure. The public and the PRPs need not know the

preliminary estimate of damages to comment on whether an assessment

satisfies this factor of reasonableness. Moreover, after the assessment

has been completed, trustee officials are required to include the

preliminary estimate in the Report of Assessment, which will allow PRPs

and courts to evaluate whether anticipated damages exceeded anticipated

assessment costs.

Nothing in the rule prevents trustee officials from consulting with

PRPs during the development of the preliminary estimate. However, the

Department believes that requiring trustee officials to do so could

adversely affect their ability to settle or litigate their claims.

Comment: Some commenters thought that the preliminary estimate

should always be completed before publication of the Assessment Plan.

Other commenters thought that the Department should provide additional

guidance on when delay of preparation of a preliminary estimate would

be warranted.

Response: The Department acknowledges the importance of the

preliminary estimate in ensuring that the Assessment Plan is

appropriately focused. However, the Department believes that trustee

officials should have discretion to delay completion of the preliminary

estimate until the end of Injury Determination if insufficient data

exist upon which to base an estimate. The Department realizes that in

some cases the injuries might be so complex or the existing data might

be so sparse that any preliminary estimate of damages would be

meaningless until Injury Determination is complete. The Department does

not believe that additional guidance on this topic is needed.

Comment: A few commenters suggested that trustee officials be

allowed to develop a range of preliminary estimates rather than one

specific estimate. These commenters expressed concern that if required

to develop a specific number, trustee officials would be likely to

develop a high preliminary estimate, which would then encourage them to

find damages at least as high as the preliminary estimate, regardless

of the actual damages.

Response: The Department does not think that a range of preliminary

estimates would provide an adequate standard for evaluating whether

assessment costs are reasonable. Also, the Department does not believe

that development of a specific preliminary estimate will encourage

trustee officials to develop exaggerated damage claims, particularly

since the preliminary estimate of damages may be revised as new

information becomes available.

F. Reasonable Cost of an Assessment

Comment: A number of commenters expressed support for the existing

definition of ``reasonable cost.'' However, other commenters thought

that the definition should be revised so that the reasonableness of

assessment costs is determined by comparing the cost of each component

of the assessment to the anticipated damages to be determined by that

component.

Response: The definition of ``reasonable cost'' contained in

Sec. 11.14(ee) was upheld in Ohio v. Interior after thorough review.

Revision of the definition is beyond the scope of this rulemaking.

Comment: A few commenters suggested that the Department add a list

of specific practices that would render assessment costs unreasonable.

Response: Section 11.15(a)(3) of the rule specifies different types

of expenses that constitute reasonable costs of an assessment. The only

revision to Sec. 11.15(a)(3) that is being made in this rulemaking is a

substitution of the phrase ``restoration'' with the phrase

``restoration, rehabilitation, replacement, and/or acquisition of

equivalent resources.'' Additional changes to Sec. 11.15(a)(3) are

beyond the scope of this rulemaking.

Comment: One commenter expressed concern that trustee officials

might sacrifice scientific accuracy in order to meet the standards of

reasonable cost.

Response: The Department believes that the rule adequately ensures

scientific accuracy. Also, as discussed above, the definition of

``reasonable cost'' contained in Sec. 11.14(ee) was upheld in Ohio v.

Interior after thorough review.

Comment: Some commenters stated that reasonable assessment costs

should include attorneys' fees. A few commenters thought that if

attorneys' fees were included as recoverable assessment costs, then the

Department should clarify that trustee officials may recover only those

attorneys' fees necessary for the assessment not those related to

preparation and litigation of a natural resource damage claim. One

commenter expressed confusion about what the Department meant when it

stated in the July 22, 1993, Federal Register notice that trustee

officials may recover only those costs that are associated with the

actual assessment.

Response: As noted in the August 1, 1986, and the July 22, 1993,

Federal Register notices, the Department believes that trustee

officials will generally need the assistance of an interdisciplinary

team of experts when performing natural resource damage assessments.

The rule does not restrict recoverable assessment costs to the expenses

of particular types of professionals. Section 11.60(d)(2), which was

not affected by this rulemaking, provides that recoverable assessment

costs are ``limited to those costs incurred or anticipated by the

authorized official for, and specifically allocable to, site specific

efforts taken in the assessment of damages.'' Therefore, if attorneys

are involved in work specifically allocable to an assessment, the

resulting attorneys' fees are recoverable as assessment costs under the

rule. The rule does not address the recovery of attorneys' fees

incurred in litigation over the results of the damage assessment, as

opposed to those incurred during the assessment itself.

G. Calculation of Baseline

Comment: There were a variety of comments about the calculation of

baseline. A number of commenters supported the Department's proposal to

revise Sec. 11.82(b)(1)(i) to clarify that baseline represents the

conditions that would have existed had the release or discharge not

occurred rather than the conditions that existed prior to the discharge

or release.

Response: As noted in the July 22, 1993, Federal Register notice,

the definition of baseline, which was not affected by this rulemaking,

is set forth at Sec. 11.14(e):

Baseline means the condition or conditions that would have

existed at the assessment area had the discharge of oil or the

release of the hazardous substance under investigation not occurred.

Section 11.82(b)(1)(i) of the proposed rule inadvertently described

restoration and rehabilitation actions as actions taken to return a

resource to baseline as measured by ``the services previously

provided.'' Section 11.82(b)(1)(i) of the final rule has been revised

to conform with the definition in Sec. 11.14(e).

Comment: A number of commenters sought additional guidance on how

to determine baseline in industrial areas, particularly how to

distinguish the effects of the release or discharge in question from

the effects of other conditions.

Response: Sections 11.72(c) through (k), which were not affected by

this rulemaking, provide considerable guidance on the calculation of

baseline. Additional clarification is beyond the scope of this

rulemaking.

Comment: There were a few comments about the discussion in the July

22, 1993, Federal Register notice concerning the appropriate baseline

for a river that in addition to being injured by a hazardous substance

release also regularly receives sewer overflows that do not constitute

hazardous substance releases under CERCLA. Some commenters noted that

the Department stated that the effects of the sewer overflows did not

render restoration, rehabilitation, replacement, and/or acquisition of

equivalent resources pointless but did affect the baseline condition

that must be reestablished. These commenters sought additional

clarification that PRPs could not be held liable for the cost of

restoring, rehabilitating, replacing, and/or acquiring fish if the

sewer overflows would kill any stocked fish.

Response: Baseline conditions are those that would have existed had

the release or discharge in question not occurred. In the hypothetical

case offered by the commenters, PRPs' liability for stocking fish

depends on whether fish would have existed in the river but for the

release in question. If fish would not survive in the river regardless

of whether the release had occurred, then PRPs would not be liable for

the cost of stocking fish.

H. Measure of Damages

Comment: There were a number of comments on the proposed measure of

damages. Several commenters supported the proposal to allow trustee

officials to recover compensable value in addition to restoration,

rehabilitation, replacement, and/or acquisition costs. However, many

others thought that allowing recovery of compensable value in addition

to restoration, rehabilitation, replacement, and/or acquisition costs

violated the Ohio v. Interior holding that restoration costs are the

preferred measure of damages. These commenters stated that compensable

value should only be recovered when restoration, rehabilitation,

replacement, and/or acquisition of equivalent resources is infeasible

or poses grossly disproportionate costs.

Response: The Department believes that providing trustee officials

with the discretion to assess compensable value is consistent with the

holding in Ohio v. Interior because it will help ensure that the public

is more fully compensated for injuries to natural resources. Ohio v.

Interior did hold that restoration costs are the preferred measure of

damages. However, nothing in the decision prohibits the Department from

allowing trustee officials to assess compensable values in addition to

restoration, rehabilitation, replacement, and/or acquisition costs. In

fact, the court explicitly stated that ``Congress intended the damage

assessment regulations to capture fully all aspects of loss.'' 880 F.2d

at 463. Further, even under Sec. 11.81(b) of the original rule, claims

based on restoration costs could include damages for diminution of use

values during the recovery period.

Comment: Some commenters stated that even if the Department decides

to allow assessment of compensable value for CERCLA claims, it should

not allow assessment of compensable value for CWA claims. These

commenters stated that unlike section 107(a)(C) of CERCLA, which

imposes liability for ``damages for injury to, destruction of, or loss

of natural resources,'' section 311(f)(4) of CWA merely refers to the

``costs of removal,'' which include ``any costs incurred by the Federal

government or any State government in the restoration or replacement of

natural resources.'' Furthermore, these commenters stated that nothing

in the legislative history of CWA suggests that lost use values were

intended to be recoverable.

Response: Although the specific issue raised by these commenters

was not remanded by Ohio v. Interior and is not within the scope of

this rulemaking, the Department believes that compensable values are

recoverable under CWA. CWA provides that damages ``shall include any

costs or expenses incurred by the Federal government or any State

government in the restoration or replacement of natural resources

damaged or destroyed.'' CWA sec. 311(f)(4). Similarly, CERCLA provides

that damages ``shall not be limited by the sums which can be used to

restore or replace such resources.'' CERCLA sec. 107(f)(1). The court

in Ohio v. Interior compared these two provisions and concluded:

These directives are in harmony: restoration is the basic

measure of damages, but damages can exceed restoration cost in some

cases. 880 F.2d at 450.

Comment: Several commenters stated that CERCLA, Ohio v. Interior,

and Commonwealth of Puerto Rico v. SS Zoe Colocotroni, 628 F.2d 652

(1st Cir. 1980), cert. denied, 450 U.S. 912 (1981) (Puerto Rico v. SS

Zoe Colocotroni), require inclusion of an exception from the basic

measure of damages when restoration, rehabilitation, replacement, and/

or acquisition costs are grossly disproportionate to the lost value of

the resource. A number of these commenters disagreed with the

Department's statements in the July 22, 1993, Federal Register notice

that no exceptions were needed because some form of restoration,

rehabilitation, replacement, and/or acquisition of equivalent resources

will always be performed.

One commenter questioned the Department's statement in the July 22,

1993, Federal Register notice that consideration of the factors set

forth in proposed Sec. 11.83(a)(3) would ensure that trustee officials

do not select inappropriate restoration, rehabilitation, replacement,

and/or acquisition alternatives. This commenter observed that proposed

Sec. 11.83(a)(3) addresses selection of cost estimating and valuation

methodologies rather than selection of a restoration, rehabilitation,

replacement, and/or acquisition alternative.

A number of other commenters opposed the creation of an exception

for grossly disproportionate restoration, rehabilitation, replacement,

and/or acquisition costs. Some of these commenters urged the Department

to use caution if such an exception were adopted. One commenter

requested that the Department bear in mind the special spiritual and

cultural significance of natural resources to Indian tribes when

developing any such exception. Other commenters urged the Department to

base any such exception on a comparison of restoration, rehabilitation,

replacement, and/or acquisition costs to the total value of the

resources in question rather than the values of the resources lost as a

result of the injuries.

Response: The Department believes it is not necessary to create an

exclusion from the basic measure of damages when restoration,

rehabilitation, replacement, and/or acquisition costs are grossly

disproportionate to the lost value of the injured resources. The

Department agrees that when trustee officials evaluate a particular

restoration, rehabilitation, replacement, and/or acquisition

alternative, they should consider the relationship between the costs of

implementing that alternative and the lost value of the resource.

However, if the costs of implementing a particular alternative do

greatly exceed the lost value of the resource, trustee officials need

not eliminate restoration, rehabilitation, replacement, and/or

acquisition of equivalent resources as a basis for damages but should

instead select a less costly method of restoration, rehabilitation,

replacement, and/or acquisition of equivalent resources. Therefore,

Sec. 11.83(a)(3) provides a number of factors for trustee officials to

consider when selecting a restoration, rehabilitation, replacement,

and/or acquisition alternative. These factors, when considered

together, protect against the selection of an alternative that poses

grossly disproportionate costs.

As noted in the July 22, 1993, Federal Register notice, the

Department does not agree that CERCLA, Ohio v. Interior, or Puerto Rico

v. SS Zoe Colocotroni mandate an exclusion from the basic measure of

damages when restoration, rehabilitation, replacement, and/or

acquisition costs are grossly disproportionate to the lost value of the

injured resources. CERCLA and Ohio v. Interior grant the Department the

discretion to develop exceptions to the basic measure of damages but do

not require such exceptions. Puerto Rico v. SS Zoe Colocotroni arose

under a Puerto Rican statute, and although the case does contain dicta

concerning CWA, it did not establish any standards for damages under

either CWA or CERCLA.

Furthermore, Puerto Rico v. SS Zoe Colocotroni focused on whether

damages should be based on the costs of implementing a plan to dig up

and replant an oiled mangrove forest instead of relying upon natural

recovery. The court rejected the plan as ``impractical, inordinately

expensive, and unjustifiably dangerous to the healthy mangroves and

marine animals still present in the area to be restored.'' 628 F.2d at

676.

This rule neither requires nor authorizes trustee officials to

pursue intensive activities to restore or rehabilitate an injured

resource if such activities would be impractical, inordinately

expensive, and unjustifiably dangerous. Under the rule, trustee

officials evaluate a range of alternatives, including an alternative

based on natural recovery, under a set of factors, including technical

feasibility, cost-benefit considerations, cost-effectiveness, and

potential for additional injury. The rule allows trustee officials to

rely upon natural recovery when appropriate. If trustee officials

decide to rely on natural recovery, they will still incur restoration,

rehabilitation, replacement, and/or acquisition costs because they will

take some sort of action, such as restricting public access or

monitoring, to ensure that natural recovery is not impeded.

In the July 22, 1993, Federal Register notice, the Department

inadvertently stated that consideration of the factors set forth in

proposed Sec. 11.83(a)(3) would ensure that trustee officials do not

select a restoration, rehabilitation, replacement, and/or acquisition

alternative that poses grossly disproportionate costs. Section

11.83(a)(3) of the rule addresses selection of cost estimating and

valuation methodologies rather than selection of a restoration,

rehabilitation, replacement, and/or acquisition alternative. The

Department meant to reference the factors set forth in Sec. 11.82(d).

Comment: Some commenters agreed with the Department's proposal to

allow trustee officials to base damages solely on restoration,

rehabilitation, replacement, and/or acquisition costs when there is no

acceptable methodology for calculating compensable value at a

reasonable cost. One commenter, however, urged the Department to

clarify that when trustee officials choose to base damages solely on

restoration, rehabilitation, replacement, and/or acquisition costs,

PRPs should not be allowed to challenge these costs based on their

unilateral calculation of compensable values.

Response: The Department has decided that a trustee official should

have the discretion to base damages solely on the cost of restoration,

rehabilitation, replacement, and/or acquisition of equivalent resources

not only when compensable value cannot be calculated at a reasonable

cost but whenever the trustee official deems it appropriate. The

Department has revised the language of Sec. 11.80(b) accordingly. The

rule provides that it is within the trustee official's discretion

whether to base damages solely on restoration, rehabilitation,

replacement, and/or acquisition costs; therefore, PRPs will not be able

to use a unilateral calculation of compensable value to challenge a

damage claim based solely on restoration, rehabilitation, replacement,

and/or acquisition costs.

I. Restoration, Rehabilitation, Replacement, and/or Acquisition of

Equivalent Services Versus Resources

Comment: Despite the Department's attempts to clarify the issue in

the July 22, 1993, Federal Register notice, commenters expressed

continued confusion over whether the Department intended restoration,

rehabilitation, replacement, and/or acquisition of the equivalent to

focus on the resource itself, the services provided by a resource, or

both. Several commenters continued to think that the rule dealt

inconsistently with this issue.

Some commenters thought that the Department should specify that

damages are based on the cost of restoring, rehabilitating, replacing,

and/or acquiring the equivalent of both the services provided by a

resource and the resource itself. These commenters objected to the

Department's statements that service levels provide a means of

measuring restoration, rehabilitation, replacement, and/or acquisition

of equivalent resources. These commenters expressed concern that using

services alone as a measurement would result in less than complete

restoration, rehabilitation, replacement, and/or acquisition of

equivalent resources because the loss of potential services might be

left unaddressed.

A few commenters offered an example of a groundwater drinking

supply that previously contained hazardous substances at concentrations

significantly better than required by drinking water standards. The

commenters noted that if service levels are used to measure

restoration, rehabilitation, replacement, and/or acquisition of

equivalent resources, then treating the groundwater to the point at

which it meets drinking water standards might be deemed full

restoration, rehabilitation, replacement, and/or acquisition but would

fail to make the public whole. These commenters further stated that

failure to account for potential services when measuring restoration,

rehabilitation, replacement, and/or acquisition of equivalent resources

would violate Ohio v. Interior, which stated that ``a trustee is not

prohibited from recovering costs of restoring or replacing a natural

resource even when that resource has no documented `committed use.'''

880 F.2d at 462.

Other commenters stated that service levels should not be viewed

simply as a yardstick for, but rather as the very focus of,

restoration, rehabilitation, replacement, and/or acquisition. These

commenters thought that unless reestablishment of baseline service

levels were used as the standard for restoration, rehabilitation,

replacement, and/or acquisition, PRPs would be required to pay to

replicate the exact natural resources that were injured, contrary to

congressional intent. These commenters requested that the Department

state explicitly that the actual injury need not be corrected if

services can be restored through other means. Some commenters offered

an example of contaminated sediment that destroys vegetation. These

commenters stated that dredging should not be required if the

vegetation can be restored through reseeding or fertilization.

A number of commenters also objected to the Department's statement

that Congress did not intend to allow trustee officials to simply

restore the abstract services provided by a resource through an

artificial mechanism. Some commenters asked the Department to clarify

that its concern lies with creation of an artificial resource rather

than use of a manufactured device to restore the injured resource.

Response: As noted in the July 22, 1993, Federal Register notice,

the Department did not intend to change the focus of restoration,

rehabilitation, replacement, and/or acquisition of equivalent resources

in this rulemaking. The Department has always intended restoration,

rehabilitation, replacement, and/or acquisition of equivalent resources

to involve actions taken to return a resource to baseline. Apparent

inconsistencies in the rule arise because trustee officials need a

means of measuring injury in order to determine when restoration,

rehabilitation, replacement, and/or acquisition of equivalent resources

is complete, and the concept of services provides that means. As was

stated in the August 1, 1986, preamble to the original type B rule:

Traditionally humans have valued natural resources in monetary

terms on the basis of services provided by the resources. This

method logically may be extended to valuing damages to an injured

resource on the basis of changes in services. This rule establishes

the link between measured adverse changes in the condition of the

resource, the injury, and the damages through the measurement of

changes in the services provided by the injured resource. 51 FR

27686.

In other words, although it is the natural resource that trustee

officials are restoring, rehabilitating, replacing, and/or acquiring

the equivalent of, such actions cause an increase in services, and that

increase in services is used to measure the level of restoration,

rehabilitation, replacement, and/or acquisition of equivalent

resources.

As evidenced by the statutory provision allowing trustee officials

to acquire equivalent natural resources, Congress did not envision that

trustee officials would, could, or should always replicate the exact

same injured resources. Therefore, the rule gives trustee officials the

discretion to decide, based on consideration of designated factors, how

best to provide the public with natural resources that offer the same

baseline level of services. Further, trustee officials have the

discretion to decide which services to consider when determining the

necessary level of restoration, rehabilitation, replacement, and/or

acquisition of equivalent resources.

The Department does not believe that using baseline service levels

to measure restoration, rehabilitation, replacement, and/or acquisition

of equivalent resources fails to make the public whole. In the

groundwater example offered by the commenters, the resource may well

provide a service other than that of being a drinking water supply. For

example, in the August 1, 1986, preamble to the original type B rule,

the Department noted that one service provided by resources with low

baseline concentrations of hazardous substances or oil is the service

of ``being able to absorb low levels of that material without exceeding

standards or without other effects.'' 51 FR 27716. Trustee officials

have the discretion to consider this and other services when

determining the necessary level of restoration, rehabilitation,

replacement, and/or acquisition of equivalent resources.

Also, the Department does not think that using baseline services to

measure restoration, rehabilitation, replacement, and/or acquisition of

equivalent resources violates the Ohio v. Interior holding concerning

committed uses. The term ``committed use,'' which applies only to

calculation of compensable values, refers to human uses of resources.

The definition of ``services,'' which was not affected by this

rulemaking, includes more than just functions provided by the injured

resource for humans. When determining the necessary level of

restoration, rehabilitation, replacement, and/or acquisition of

equivalent resources, trustee officials have the discretion to consider

services provided by the injured resource for another resource,

regardless of whether there is a committed human use of those services.

Finally, the Department did not intend to suggest in the July 22,

1993, Federal Register notice that trustee officials may not use

manufactured devices to assist the restoration of injured resources.

The Department simply meant that trustee officials should not replace

injured natural resources with artificial resources.

Comment: There were a number of comments about whether restoration,

rehabilitation, replacement, and/or acquisition of equivalent resources

should include reestablishing baseline services provided by the injured

resource to other resources (e.g., provision of a food source for fish

or wildlife). Some commenters supported consideration of inter-resource

services in order to ensure complete restoration, rehabilitation,

replacement, and/or acquisition of equivalent resources. Other

commenters thought that trustee officials generally should not consider

inter-resource services. These commenters stated that requiring

restoration, rehabilitation, replacement, and/or acquisition of

equivalent inter-resource services would amount to requiring

replication of the exact natural resource that was injured. These

commenters expressed concern that there is currently no way of

accurately quantifying inter-resource service levels. Some of these

commenters suggested that inter-resource services be considered only

when they have value to humans.

Response: Section 11.71(e), which was not affected by this

rulemaking, allows trustee officials to consider inter-resource

services when quantifying an injury. Since restoration, rehabilitation,

replacement, and/or acquisition of equivalent resources is designed to

correct an injury, trustee officials have the discretion to consider

inter-resource services when determining the necessary level of

restoration, rehabilitation, replacement, and/or acquisition of

equivalent resources. As was noted in the August 1, 1986, preamble to

the original type B rule:

* * * The non-human services may be more important [than

services used by humans] in measuring changes in how well a wildlife

habitat or marsh is supporting wildlife, controlling floods,

assimilating wastes, and providing any other services that may be

important. 51 FR 27687.

Moreover, as discussed above, prohibiting trustee officials from

considering inter-resource services could violate the Ohio v. Interior

holding concerning committed use. J. Selection of a Restoration,

Rehabilitation, Replacement, and/or Acquisition Alternative

Comment: There were numerous comments on the factors for

consideration during selection of a restoration, rehabilitation,

replacement, and/or acquisition alternative. Several commenters thought

that the proposed rule would afford trustee officials the appropriate

degree of discretion by providing factors for consideration but leaving

the question of how to weigh those factors up to the trustee officials.

A number of other commenters thought that the proposed rule would

provide trustee officials with too much discretion over selection of a

restoration, rehabilitation, replacement, and/or acquisition

alternative. These commenters supported the Department's proposal to

require trustee officials to consider all of the listed factors.

However, these commenters stated that simply requiring consideration of

the factors was inadequate. These commenters stated that the Department

should provide guidance on how trustee officials should consider and

weigh the factors in order to prevent abuses of discretion. A few

commenters objected to the Department's statement that development of a

post-award Restoration Plan would curb potential abuses of discretion

by a trustee official in selecting a pre-award restoration,

rehabilitation, replacement, and/or acquisition alternative to serve as

the basis of the trustee official's claim.

Response: Section 11.82(d) lists factors for trustee officials to

consider when choosing a restoration, rehabilitation, replacement, and/

or acquisition alternative. The language of the proposed rule has been

revised to require trustee officials to consider all of the listed

factors. However, in light of the wide range of possible natural

resource damage cases, the Department believes that trustee officials

must have flexibility when selecting a restoration, rehabilitation,

replacement, and/or acquisition alternative. Therefore, the rule does

not mandate how trustee officials should weigh the listed factors.

The rule provides a number of protections against potential abuses

of discretion by trustee officials. Trustee officials are required to

document their rationale for selecting a particular alternative. This

documentation is included both in the Restoration and Compensation

Determination Plan, which is subject to public review and comment, and

in the Report of Assessment, which is reviewable in court. Finally, the

rule provides that the Restoration Plan, which describes how the

damages that are actually collected will be spent, is to be based on

the alternatives selected in the Restoration and Compensation

Determination Plan. Although the Restoration Plan is developed after

damages have been recovered, the Restoration Plan is subject to public

review and comment. Therefore, trustee officials who propose

restoration, rehabilitation, replacement, and/or acquisition

alternatives that differ from those used as a basis for damages will

have to explain the reasons for the difference.

Comment: Some commenters thought that trustee officials should be

required to choose restoration, rehabilitation, replacement, and/or

acquisition alternatives that are technically feasible.

Response: The rule lists technical feasibility as one of the

factors that trustee officials must consider when selecting a

restoration, rehabilitation, replacement, and/or acquisition

alternative. Under Sec. 11.14(qq) of the rule, an alternative is

``technically feasible'' if it involves well-known technology and has a

reasonable chance of successful completion in an acceptable period of

time. Different alternatives may possess varying degrees of

feasibility. The technical feasibility factor is designed to require an

evaluation of these varying degrees of technical feasibility rather

than to establish a strict standard of feasibility for acceptable

alternatives. Nevertheless, trustee officials should not select

alternatives that are infeasible.

Comment: A number of commenters suggested that trustee officials

should be required to choose the restoration, rehabilitation,

replacement, and/or acquisition alternative that maximized net benefits

or was most cost effective.

Response: Ohio v. Interior recognized that cost considerations,

although relevant, are not paramount under CERCLA. Therefore, the rule

does not require trustee officials to select the alternative that is

most cost effective or that minimizes costs. However, the rule does

require trustee officials to consider both cost effectiveness and the

relationship between costs and benefits when selecting a restoration,

rehabilitation, replacement, and/or acquisition alternative.

When considering the relationship between costs and benefits,

trustee officials should consider how each restoration, rehabilitation,

replacement, and/or acquisition alternative would affect not only the

injured resources but also lost interim use of those resources. Total

damages will depend on the sum of compensable value and restoration,

rehabilitation, replacement, and/or acquisition costs. Often there will

be tradeoffs between compensable value and restoration, rehabilitation,

replacement, and/or acquisition costs. For example, a fast-paced

restoration, rehabilitation, replacement, and/or acquisition

alternative may result in a lower level of interim lost use, and thus

reduce associated compensable values. However, implementation of such

an alternative may result in significantly higher restoration,

rehabilitation, replacement, and/or acquisition costs. In some cases,

there may be sufficient data to demonstrate that some restoration,

rehabilitation, replacement, and/or acquisition alternatives result in

substantially lower total damages than others.

In its January 7, 1994 notice of proposed rulemaking, NOAA

solicited comment on whether its damage assessment regulations under

OPA should require trustee officials to explain their rationale if they

select a restoration, rehabilitation, replacement, and/or acquisition

alternative that does not minimize total damages. 59 FR 1134. If NOAA

does include such a requirement in its final damage assessment

regulations, the Department will consider whether a similar requirement

should be added to the Department's type B rule during the upcoming

biennial review.

Comment: A few commenters thought that the Department should

require trustee officials to select a restoration, rehabilitation,

replacement, and/or acquisition alternative that is consistent with the

response actions taken at the site. These commenters expressed concern

that without such a requirement, State trustee officials could

circumvent section 121(f) of CERCLA, which requires States to bear the

cost of obtaining cleanup levels beyond those selected by the United

States Environmental Protection Agency (EPA).

Response: Section 11.23(f) of the rule, which was not affected by

this rulemaking, requires trustee officials to coordinate their

activities with the lead response agency. Also, Sec. 11.82(d)(4) of

this final rule requires trustee officials to consider the effects of

any actual or planned response actions when selecting a restoration,

rehabilitation, replacement, and/or acquisition alternative. The

Department encourages trustee officials to work closely with EPA, the

United States Coast Guard, and State response agencies. However, the

Department recognizes that the purpose of a response action may differ

from that of an action to restore, rehabilitate, replace, and/or

acquire the equivalent of injured resources. Therefore, the Department

does not believe that consistency with response actions should govern

the selection of a restoration, rehabilitation, replacement, and/or

acquisition alternative.

The Department does not believe that section 121(f) of CERCLA is

applicable in this context. Section 121(f) addresses whether the cost

of attaining a certain cleanup level should be borne by the Federal

Hazardous Substance Superfund or by the State; it does not address PRP

liability for natural resource damages.

Comment: Some commenters requested that trustee officials be

required to provide a detailed analysis of the factors listed in

Sec. 11.82(d).

Response: The Department believes that a trustee official's

analysis of the factors listed in Sec. 11.82(d), like all statements

required under the regulations, should be detailed enough to provide

PRPs, other trustee officials, the general public, any other interested

parties, and ultimately the courts with an adequate opportunity to

evaluate the analysis. The level of detail may vary depending on the

alternatives involved. The Department does not believe that any

revision of the rule is necessary.

Comment: One commenter requested that proposed Sec. 11.82(d)(10),

which addressed consideration of consistency with applicable Federal

and State laws and policies, be amended to include reference to tribal

laws and policies.

Response: The Department agrees with the commenter and has revised

the rule accordingly. As noted in the July 22, 1993, Federal Register

notice, the Department has also decided that consideration of

compliance with applicable Federal, State, and tribal laws should be

distinguished from consideration of consistency with relevant Federal,

State, and tribal policies. Therefore, the Department has revised the

language of proposed Sec. 11.82(d)(10) to list these two factors

separately.

Comment: A few commenters suggested that the Department prohibit

trustee officials from considering factors other than those listed.

These commenters expressed concern that in the absence of such a

prohibition, trustee officials might base their decisions on

inappropriate considerations.

Response: The Department believes that in some situations there may

be appropriate considerations in addition to the factors listed in

Sec. 11.82(d). Section 11.82(d) already provides that all factors

considered must be relevant. The Department does not believe that any

revision of the rule is necessary.

Comment: Some commenters stated that the rule should clearly

authorize trustee officials to choose a natural recovery alternative

when selecting a restoration, rehabilitation, replacement, and/or

acquisition alternative. Some commenters thought that the Department

should provide guidance on how trustee officials could maximize the

opportunities for natural recovery.

Response: The Department believes that the rule does clearly

authorize trustee officials to select a natural recovery alternative

when appropriate. In fact, Sec. 11.82(c)(2) explicitly requires trustee

officials to consider a ``No Action-Natural Recovery'' alternative.

Development of additional guidance is beyond the scope of this

rulemaking.

Comment: Some commenters thought that the rule should not

discriminate among the four components of restoration, rehabilitation,

replacement, and acquisition of equivalent resources. Other commenters

thought that the rule should not grant acquisition of land the same

status as restoration, rehabilitation, or replacement. These commenters

stated that CERCLA and Ohio v. Interior establish a clear preference

for using restoration or replacement costs, as opposed to acquisition

costs, as the measure of damages. The commenters noted that section

107(f)(1) of CERCLA does list restoration, replacement, and acquisition

of equivalent resources as legitimate uses of collected damages but

then provides that the measure of damages shall not be limited by

restoration and replacement costs. According to the commenters, these

statutory provisions indicate, and the court in Ohio v. Interior

recognized, that amounts recovered must be spent first on feasible

restoration or replacement actions and then any excess funds are to be

spent on acquisition of equivalent resources. These commenters also

stated that land acquisition does nothing to improve the condition of

the injured natural resources.

Response: In light of the wide range of possible cases, the

Department believes that the rule should provide flexibility in the

selection of a method to return an injured resource to baseline. The

term ``restoration, rehabilitation, replacement, and/or acquisition of

equivalent resources'' was introduced to emphasize that trustee

officials may select among a wide range of methods. The Department does

not believe that the rule should establish a preference for restoration

as opposed to acquisition of equivalent resources. CERCLA explicitly

mentions use of recovered funds for restoration, rehabilitation,

replacement or acquisition of equivalent resources. The ``shall not be

limited by'' language quoted by the commenters simply provides that

trustee officials may obtain damages in excess of restoration costs.

The statutory language does not require that damages be based on

acquisition costs only if restoration is infeasible. Further, the court

in Ohio v. Interior did not establish any preference for restoration as

opposed to acquisition of equivalent resources. In fact, the court

specifically stated that its use of the term ``restoration'' was

intended as shorthand for restoration, rehabilitation, replacement, or

acquisition of the equivalent of the injured resources. 880 F.2d at

441.

Comment: Some commenters supported the Department's clarification

that the restriction on land acquisition set forth in proposed

Sec. 11.82(d)(8) would apply only to Federal trustee officials, not

State or tribal trustee officials. Other commenters thought that the

restriction should be eliminated altogether.

Response: As was noted in the August 1, 1986, preamble to the

original type B rule, the restriction on land acquisition by Federal

trustee officials was included:

* * * After extensive consultation with other Federal agencies.

The purpose of this limitation is to limit the acquisition of

private lands for Federal management under CERCLA, by eliminating

the possibility of expanding the Federal estate without

Congressional approval. 51 FR 27719.

To avoid any confusion, the Department has removed the restriction

from the list of factors that all trustee officials must consider when

selecting a restoration, rehabilitation, replacement, and/or

acquisition alternative and designated it as a separate provision.

Further revision is beyond the scope of this rulemaking.

Comment: Some commenters requested that trustee officials be

prohibited from selecting a restoration, rehabilitation, replacement,

and/or acquisition alternative that involves the purchase of

contaminated land.

Response: The Department anticipates that there may be situations

in which it is difficult to identify available land in the appropriate

geographical region that provides services identical to those provided

by the injured resources. Therefore, the Department believes it would

be inappropriate to further restrict trustee officials by requiring

them to acquire only land that is free from all contamination.

Comment: Some commenters thought that if trustee officials based

their damage claim on acquisition costs, they should be required to

demonstrate a clear link between the services lost and the services

provided by the acquired resource.

Response: The rule provides that trustee officials are to select a

restoration, rehabilitation, replacement, and/or acquisition

alternative that reestablishes baseline services. Therefore, any

alternative based on acquisition of resources would have to involve

acquiring resources that provide services equivalent to those lost as a

result of the injury.

Comment: One commenter expressed concern that proposed

Sec. 11.82(b)(1) could be read to require trustee officials to examine

restoration, rehabilitation, replacement, and/or acquisition

alternatives on a resource-by-resource basis.

Response: The Department did not intend to require trustee

officials to examine restoration, rehabilitation, replacement, and/or

acquisition alternatives on a resource-by-resource basis. To avoid any

confusion, the Department has revised the language of the proposed rule

to refer to ``resources'' rather than ``resource.''

K. Costs of Restoration, Rehabilitation, Replacement, and/or

Acquisition of Equivalent Resources

Comment: A number of commenters objected to the inclusion of

indirect costs as recoverable restoration, rehabilitation, replacement,

and/or acquisition costs. These commenters stated that indirect costs

are not recoverable in natural resource damage cases as a matter of

law. The commenters acknowledged that courts have awarded indirect

costs in response actions; however, the commenters stated that those

courts relied on the broad language of section 107(a)(4)(A) of CERCLA,

which authorizes recovery of ``all costs of removal or remedial

action.''

Some commenters cited case law for the proposition that indirect

costs are generally not recoverable. United States v. Rohm and Haas

Company, 2 F.3d 1265 (3d Cir. 1993) (U.S. v. Rohm and Haas). A few

commenters stated that recoverable indirect costs should be limited to

those actually caused by the release and objected to the reference in

proposed Sec. 11.83(b)(1)(ii) to recovery of costs of activities that

``support'' the selected restoration, rehabilitation, replacement, and/

or acquisition alternative. These commenters also stated that the

Department should clarify that the cost of policy formulation is not

recoverable.

Response: The Department believes that inclusion of indirect costs

in an assessment is consistent with both Ohio v. Interior and the

language and legislative history of CERCLA, which emphasize development

of a damage figure that will make the public whole. 880 F.2d at 445.

Section 107(f)(1) of CERCLA contains the broad language that ``[t]he

measure of damages shall not be limited by the sums which can be used

to restore or replace'' the injured resources.

The Department agrees that PRPs are only liable for those indirect

costs that are connected to a specific release or discharge. However,

the Department does not believe that revisions to the language of the

proposed rule are necessary. Furthermore, although the Department does

not think that the cost of policy formulation would generally be

recoverable, there may be some cases in which certain policy

formulation activities would not take place but for the occurrence of a

specific release or discharge. In those cases, and only in those cases,

the costs of policy formulation could be recoverable.

The Department does not believe that U.S. v. Rohm and Haas is

relevant. The court in that case held that EPA oversight of cleanup

activities conducted by PRPs did not constitute a ``removal'' action

under CERCLA, and therefore the cost of the oversight was not

recoverable. The court did not address the recoverability of indirect

costs associated with government action. In fact, the court

specifically stated that ``this case does not involve the issue of

whether indirect, overhead costs associated with government removal or

remedial activity at a particular facility are recoverable * * *.'' 2

F.3d at 1273. The indirect costs recoverable under this rule are not

oversight costs but rather costs that trustee officials will incur as

they undertake restoration, rehabilitation, replacement, and/or

acquisition.

Comment: A few commenters sought clarification of the meaning of

the following language in proposed Sec. 11.83(b)(1)(iii):

When an indirect cost rate is used * * * [s]uch amounts

determined in lieu of indirect costs shall be treated as an offset

to the total indirect costs of the selected alternative before

allocation to the remaining activities. The base upon which such

remaining costs are allocated should be adjusted accordingly.

Response: The Department acknowledges the confusion generated by

these last two sentences of proposed Sec. 11.83(b)(1)(iii) and has

deleted them.

Comment: Some commenters objected to the language of proposed

Sec. 11.83(b)(3) limiting trustee officials to cost estimating

methodologies based on accounting practices. These commenters stated

that accounting practices are generally developed to deal with past

events and that methodologies developed in other disciplines are better

suited for estimating future expenses. The commenters suggested that

trustee officials be allowed to use methodologies based on ``standard

and accepted professional practices'' or simply ``standard and accepted

estimating practices,'' including engineering practices and public

budgeting practices.

Response: The Department did not intend to limit trustee officials

to using only accounting practices. The Department has revised the

language of proposed Sec. 11.83(b)(3) to allow for the use of any

standard and accepted cost estimating practices provided that the

trustee officials can document that those practices satisfy the

criteria set forth in Sec. 11.83(a)(3).

Comment: One commenter stated that the rule should explicitly

recognize the authority of trustee officials to use combinations of

different cost estimating methodologies.

Response: The Department agrees that trustee officials should be

allowed to use combinations of different cost estimating methodologies,

so long as the different methodologies either do not double count

damages or allow any double counting to be estimated and eliminated in

the final damage calculation. The Department has revised the language

of proposed Sec. 11.83(b)(2) to make this point clear.

Comment: A few commenters thought that the proposed rule provided

inadequate guidance on selection and use of cost estimating

methodologies.

Response: The Department believes that development of additional

guidance is beyond the scope of this rulemaking.

L. Compensable Value

Comment: A few commenters thought that the proposed rule provided

inadequate guidance on selection and use of valuation methodologies.

Response: The ``Type B Technical Information Document: Techniques

to Measure Damages to Natural Resources,'' which was developed in 1987,

is available through the National Technical Information Service, 5285

Port Royal Road, Springfield, Virginia 22161, (703) 487-4650. The

Department is considering updating the document; however, such revision

is beyond the scope of this rulemaking.

Comment: Some commenters requested that proposed Sec. 11.84(h)(3)

be revised to allow State trustee officials to assess and recover

compensable value for all individuals, not just those within the State.

Response: The ``scope of analysis'' provisions contained in

Sec. 11.84(h)(3) have not been substantively changed by this

rulemaking. Virtually identical provisions were incorporated in

Sec. 11.84(i) during the August 1, 1986, rulemaking. This final rule

merely substitutes the term ``compensable value'' for the term ``use

value.'' Further clarification is beyond the scope of this rulemaking.

Comment: A few commenters questioned what was meant by the term

``secondary economic impacts,'' which would be excluded from the

definition of ``compensable value'' under proposed Sec. 11.83(c)(1).

Response: The Department believes that introducing the term

``secondary economic impacts'' into the regulations would create

unnecessary confusion. Therefore, the Department has revised the

proposed rule to eliminate the term. Nevertheless, the Department notes

that all recoverable values must be traceable to a direct loss of

services provided to the public.

M. Date of Promulgation of the Natural Resource Damage Assessment

Regulations

Comment: There were numerous comments on proposed Sec. 11.91(e)

clarifying the date of promulgation of the natural resource damage

assessment regulations for statute of limitations purposes. Several

commenters supported proposed Sec. 11.91(e). These commenters stated

that clarification of the date of promulgation was necessary and within

the Department's statutory authority and technical expertise. Other

commenters thought that clarification of a term in the statute of

limitations was a judicial matter beyond the Department's authority and

expertise.

Response: The Department believes that it has full authority to

issue Sec. 11.91(e). Section 301(c) of CERCLA authorizes the Department

to ``promulgate regulations for the assessment of damages for injury to

* * * natural resources.'' Section 113(g)(1) of CERCLA creates a

statute of limitations based on the date that those regulations are

``promulgated.'' Since Ohio v. Interior and Colorado v. Interior were

issued, there has been considerable confusion over the statute of

limitations. Nothing in the language or legislative history of CERCLA

explicitly defines ``promulgation.'' As the agency given authority to

develop procedures for assessing natural resource damages, the

Department believes it is in the best position to evaluate when

regulations establishing full procedures have been promulgated.

Issuance of Sec. 11.91(e) is designed merely to clarify an unclear

statutory term and is well within the scope of the Department's

expertise and statutory grant of authority.

Comment: Some commenters stated that the proposed clarification was

consistent with Congressional intent. These commenters noted

legislative history indicating that section 113(g)(1) was added to

CERCLA out of concern that the absence of final natural resource damage

assessment regulations had impaired the ability of trustee officials to

pursue claims. According to these commenters, trustee officials are

just as handicapped after Ohio v. Interior and Colorado v. Interior as

they were when section 113(g)(1) was passed because those cases

invalidated a crucial aspect of the regulations, namely the measure of

damages.

Other commenters stated that the proposed clarification could not

be consistent with Congressional intent because it would allow the

statute of limitations to be tolled indefinitely. These commenters

disagreed with the Department's statement in the July 22, 1993, Federal

Register notice that Ohio v. Interior and Colorado v. Interior left

trustee officials without a measure of damages. These commenters stated

that Ohio v. Interior established restoration costs as the measure of

damages.

Response: The Department believes that proposed Sec. 11.91(e) is

completely consistent with Congressional intent. Ohio v. Interior did

not overturn the regulations in their entirety; however, it did remand

an extremely critical component of the regulations, namely the measure

of damages. Although Ohio v. Interior held that restoration costs are

the preferred measure of damages, the court also acknowledged that the

Department has considerable authority and discretion to shape the

specific scope of the measure of damages. Thus, until the Department

revises the regulations, no valid measure of damages exists.

Section 11.91(e) does not allow the statute of limitations to be

tolled indefinitely, it merely ensures that trustee officials are not

barred from bringing suit before they have the benefit of complete

procedures for assessing natural resource damages. The legislative

history of the Superfund Amendments and Reauthorization Act (SARA)

indicates that section 113(g)(1) was added to CERCLA because Congress

believed that so long as trustee officials lacked procedures for

assessing natural resource damages they were handicapped in their

ability to bring suit. In the absence of a valid damage formula, the

very goal of the natural resource damage assessment regulations, namely

the derivation of a monetary damage figure, cannot be fully realized.

Comment: Some commenters stated that the proposed clarification of

the date of promulgation was incorrect as a matter of law and common

sense. The commenters cited dictionaries and case law for the

proposition that the date of promulgation is the date on which a signed

rule is first made public or is published, not when it has cleared

judicial hurdles. United States v. City of Seattle, No. C90-395WD, slip

op. (W.D. Wash. Jan. 28, 1991) (U.S. v. Seattle); American Petroleum

Institute v. Costle, 609 F.2d 20, 23-24 (D.C. Cir. 1979) (API v.

Costle); United Technologies Corp. v. Occupational Safety and Health

Administration, 836 F.2d 52, 54 (2d Cir. 1987) (UTC v. OSHA).

Response: The Department believes that the cases cited by

commenters for the proposition that ``promulgation'' occurs when a

regulation is first made public are inapposite. API v. Costle involved

the interpretation of a provision of the Clean Air Act that prohibited

the inclusion of documents in a rulemaking docket after the date of

promulgation. 609 F.2d at 22. Noting that the statutory provision was

designed to ensure adequate opportunity for public review and to

prevent post hoc rationalizations, the court held that the date of

promulgation was the date the final rule was first released to the

public as opposed to the date of publication in the Federal Register.

Id. at 23-24.

UTC v. OSHA involved the statute of limitations period for filing a

challenge to an OSHA standard. 836 F.2d at 53. The statute provided

that any challenges to a standard issued by OSHA had to be brought

within 60 days after the standard was promulgated. Id. OSHA regulations

defined ``the date of issuance'' as the time of filing in the Office of

the Federal Register but did not define ``promulgation.'' Nevertheless,

OSHA argued that the date of promulgation should also be the date of

filing with the Office of the Federal Register. The court noted that

Congress, by using two different terms, must have intended the date of

issuance to differ from the date of promulgation. Id. Therefore, the

court held that the date of promulgation was the date of publication in

the Federal Register. Id. at 54.

Neither API v. Costle nor UTC v. OSHA purport to define

``promulgation'' for all purposes. In fact, the cases reveal that the

definition of ``promulgation'' can vary, depending on Congressional

intent. The cases also do not address the specific question of the

effect of a judicial remand on the date of promulgation for statute of

limitation purposes. Further, the court in UTC v. OSHA recognized an

agency's authority to determine when its regulations had been

promulgated, stating that ``[t]he agency is certainly entitled to adopt

a definition of `promulgated', and it may well have the power to equate

`promulgated' with `issued', if it chooses to.'' Id. at 53. The problem

in that case was that the agency had not issued a regulation defining

``promulgation.''

U.S. v. Seattle involved a motion to dismiss a natural resource

damage case on statute of limitations grounds. The defendant had argued

that the statute of limitations began to run on August 1, 1986, the

date the original type B rule was published. In an unpublished opinion,

the court denied the motion to dismiss and held that the statute of

limitations did not begin to run until both type A and type B rules had

been promulgated. Slip op. at 1. Because the case had been filed within

three years of March 20, 1987, the date the original type A rule was

published, the court did not need to reach, and did not address, the

issue of the effect of Ohio v. Interior and Colorado v. Interior on the

date of promulgation.

However, in light of existing case law, the Department has decided

that it would be more appropriate to base the date of promulgation on

the date of publication of final rules complying with Ohio v. Interior

and Colorado v. Interior rather than the date of effectiveness of those

final rules. The Department has revised the rule accordingly.

Comment: A few commenters noted that section 113(a) of CERCLA

provides that any challenge to regulations issued under the statute

must be brought within 90 days of promulgation. These commenters stated

that if the natural resource damage assessment regulations had not been

promulgated, the court in Ohio v. Interior would not have had

jurisdiction.

Response: The Department does not dispute that the court in Ohio v.

Interior had jurisdiction under section 113(a) of CERCLA. However, the

Department does not believe that determination of the date of

promulgation for purposes of section 113(a) is necessarily dispositive

of the issue of the date of promulgation for purposes of section

113(g)(1).

Comment: A few commenters expressed concern that the Department has

a conflict of interest because issuance of the proposed clarification

of the date of promulgation would preserve the Department's ability to

pursue its own natural resource damage claims.

Response: The Department does not believe that it has allowed its

duties as a Federal trustee agency to prejudice the development of the

natural resource damage assessment regulations. The Department has

striven to develop regulations that are fair to not only trustee

officials and the general public but also PRPs. Moreover, the

Department notes that it is not only a trustee agency but frequently a

PRP in natural resource damage cases.

N. Judicial Review of an Assessment

Comment: There were a number of comments concerning judicial review

of assessments performed in accordance with the rule. Some commenters

supported the Department's statement in the July 22, 1993, Federal

Register notice that the rebuttable presumption attaches only to those

assessments that are performed in accordance with the entire rule.

Other commenters disagreed, stating that the different components

of the rule are not inextricably intertwined and that trustee officials

need the flexibility to decide which aspects of the rule are

appropriate for a particular assessment. These commenters stated that

the language of section 107(f) of CERCLA, which grants a rebuttable

presumption to assessments performed ``in accordance'' with the rule,

allows trustee officials to obtain a rebuttable presumption for any

portion of an assessment that is in accordance with the rule. These

commenters thought that if trustee officials assessed one component of

damages following the rule and another component without following the

rule they should still be able to obtain a rebuttable presumption for

the component that was assessed in accordance with the rule.

Response: The Department's statement that the rebuttable

presumption attaches only to those assessments performed in accordance

with the entire rule was not intended to suggest that trustee officials

would lose the rebuttable presumption if they supplemented the damage

claim assessed under the rule with additional claims assessed without

following the rule. The rule provides both an overall administrative

process for development and review of documentation as well as a range

of alternative methodologies for the actual determination and

quantification of injury and damages. In order to obtain a rebuttable

presumption, a trustee official must follow the entire administrative

process set forth in the rule. If the trustee official has followed the

administrative process, the rebuttable presumption attaches to those

components of the damage claim that were calculated through the use of

the methodologies described in the rule. However, trustee officials are

not required to use all of the listed methodologies in order to obtain

a rebuttable presumption.

For example, if trustee officials decide not to use the rule to

assess damages for injury to a particular resource, they need not

follow those portions of the rule that describe the methodologies for

determining injury to such a resource. In that case, the trustee

officials could still obtain a rebuttable presumption for damages for

injury to other resources that were calculated using methodologies

described in the rule. Similarly, if trustee officials decide not to

use the rule to assess damages for a particular element of lost use of

an injured resource, they need not follow those portions of the rule

that describe methodologies for calculating compensable value for such

an element. In that case, the trustee officials could still obtain a

rebuttable presumption for damages for other elements of lost use that

were calculated using methodologies described in the rule.

Comment: One commenter disagreed with the Department's statement

that CERCLA does not grant a rebuttable presumption to assessments

performed by tribal trustee officials. This commenter stated that when

SARA was passed, Congress intended to grant tribes the same authority

as States in the area of natural resource trustee activities. The

commenter further stated that under established case law concerning the

Federal government's fiduciary responsibility to tribes, any ambiguity

in the statute concerning tribes' right to the rebuttable presumption

must be construed in favor of the tribes.

On the other hand, a few commenters agreed with the Department's

statement that CERCLA does not grant a rebuttable presumption to tribal

assessments. However, these commenters expressed concern that the

Department's statement in the July 22, 1993, Federal Register notice

that assessments performed jointly by Federal and tribal trustee

officials or by State and tribal trustee officials would qualify for a

rebuttable presumption. These commenters thought that such an

interpretation would circumvent the language of the statute.

Response: Section 11.91(c) of the rule was revised in 1988 to

reflect the SARA amendment to CERCLA granting a rebuttable presumption

to natural resource damage assessments performed by State trustee

officials. In the preamble to that rule, the Department stated that

SARA did not extend the rebuttable presumption to assessments performed

by tribal trustee officials. 53 FR 5167. The Department went on to

state that ``Federal trustees and Indian tribes can work closely

together in assessments, and such assessments would qualify for a

rebuttable presumption.'' Id. at 5168. Further clarification of this

issue is beyond the scope of this rulemaking.

Comment: There were several comments about the applicability of the

rebuttable presumption to assessment costs. Some commenters stated that

CERCLA provides a rebuttable presumption only for the actual damage

assessment performed in accordance with this rule not for the costs of

performing the assessment. Other commenters thought that trustee

officials who comply with this rule, including the standards for

reasonable costs, should be granted a rebuttable presumption that their

damage assessment costs are recoverable.

Response: Section 11.91(c), which was not affected by this

rulemaking, provides that when trustee officials perform an assessment

in accordance with this rulemaking, the assessment receives a

rebuttable presumption. The Department believes that the determination

of whether it is reasonable to incur a particular assessment cost is an

integral component of a damage assessment. The rule contains specific

provisions to guide trustee officials in determining whether to incur a

particular assessment cost, including a definition of reasonable

assessment costs that was specifically upheld in Ohio v. Interior.

Therefore, the Department believes that trustee officials that comply

with this rule, including the standards for determining reasonable

assessment costs, should be granted a rebuttable presumption that their

assessment costs are reasonable and, thus, recoverable.

Comment: Some commenters thought that the Department should clarify

that judicial review of an assessment is limited to the data in the

administrative record. These commenters stated that, in the absence of

such a clarification, PRPs would refuse to disclose any of their data

until formal judicial discovery begins but would demand that trustee

officials make all of their data available for public review and

comment as early in the assessment process as possible. These

commenters expressed concern that such a result would put trustee

officials at a significant disadvantage in natural resource damage

litigation.

Response: Clarification of the data that will be admitted in a

natural resource damage case is beyond the scope of this rulemaking.

O. Use of Collected Damages

Comment: Some commenters stated that trustee officials should be

required to spend all collected damages on implementation of the same

restoration, rehabilitation, replacement, and/or acquisition

alternative that was selected in the Restoration and Compensation

Determination Plan as the basis for the damage claim. These commenters

thought that without such a requirement, trustee officials would have

little incentive to perform accurate assessments. There were

suggestions that trustee officials be required to notify or obtain

permission from the court or the PRPs before implementing a final

Restoration Plan that differs significantly from the Restoration and

Compensation Determination Plan.

Response: The Department does not believe that the rule should

explicitly require collected damages to be spent on implementation of

the same restoration, rehabilitation, replacement, and/or acquisition

alternative selected in the Restoration and Compensation Determination

Plan. Section 11.93(a) provides that upon award of natural resource

damages, trustee officials must prepare a Restoration Plan describing

how the awarded funds will be used. Section 11.93(a) states that the

Restoration Plan shall be based on the Restoration and Compensation

Determination Plan. The Restoration Plan is intended to be a detailed

description of the implementation of the alternative selected in the

Restoration and Compensation Determination Plan. However, the

Department recognizes that there may be unforeseen changes in the

condition of the natural resources between the time the Restoration and

Compensation Determination Plan is prepared and the time trustee

officials actually collect damages. Also, the amount of damages

ultimately collected may differ from the amount of damages claimed.

Finally, the actual cost of restoring, rehabilitating, replacing, and/

or acquiring the equivalent of the injured resources may differ from

the estimated cost. Therefore, trustee officials may need to revise the

alternative selected in the Restoration and Compensation Determination

Plan.

The Department does not believe that absence of a requirement that

trustee officials implement the same exact alternative selected in the

Restoration and Compensation Determination Plan will eliminate trustee

officials' incentive to conduct accurate assessments. The Restoration

Plan is subject to public review and comment, and trustee officials who

propose restoration, rehabilitation, replacement, and/or acquisition

alternatives that differ from those used as a basis for damages will

have to explain the reasons for the difference. The Department believes

that making the draft Restoration Plan available for public review and

comment should provide interested parties with adequate notice of

proposed changes from the Restoration and Compensation Determination

Plan.

Comment: A few commenters requested guidance on determining when

restoration, rehabilitation, replacement, and/or acquisition of

equivalent resources is complete. Some commenters suggested that

trustee officials provide PRPs with a certification when restoration,

rehabilitation, replacement, and/or acquisition of equivalent resources

is essentially completed so that PRPs will not remain liable

indefinitely.

Response: Section 11.73(a) provides that the recovery period is the

time until baseline services have been reestablished. The Department

does not believe it is necessary to require trustee officials to

provide PRPs with a certification when restoration, rehabilitation,

replacement, and/or acquisition of equivalent resources is essentially

completed. The extent of a PRP's continuing liability after damages

have been collected depends on the terms of the judgment or settlement

agreement. Additional clarification is beyond the scope of this

rulemaking.

Comment: Some commenters stated that any portion of collected

damages that is not spent to restore, rehabilitate, replace, and/or

acquire the equivalent of the injured resources or to supply lost uses

should be returned to the PRPs. These commenters disagreed with the

Department's statement in the July 22, 1993, Federal Register notice

that such a requirement was unnecessary because there should never be

excess funds after completion of restoration, rehabilitation,

replacement, and/or acquisition of equivalent resources. These

commenters noted that because damages are based on estimated costs of

restoration, rehabilitation, replacement, and/or acquisition of

equivalent resources and estimated compensable values, there will be

excess funds whenever trustee officials overestimate costs or

compensable values.

Response: The Department believes that revision of the regulations

to address the disposition of any excess damage recoveries is beyond

the scope of this rulemaking.

Comment: One commenter asked the Department to recognize the right

of co-trustees to spend collected damages on implementation of

different Restoration Plans.

Response: Nothing in the rule prohibits co-trustees from

implementing different Restoration Plans. Additional clarification of

this issue is beyond the scope of this rulemaking.

P. Miscellaneous Comments

1. Funding of Tribal Assessments

Comment: One commenter asked the Department to acknowledge that its

fiduciary responsibility to tribes extends to natural resource damage

assessments involving tribal resources. This commenter requested that

the Department develop funding mechanisms for natural resource damage

assessments involving tribal resources.

Response: Discussion of this issue is beyond the scope of this

rulemaking.

2. Quality Assurance Plans

Comment: Several commenters stated that the rule should be revised

to eliminate the requirement that trustee officials adopt quality

assurance plans that conform with EPA guidance. These commenters

thought that EPA guidance on quality assurance is poorly suited for

natural resource damage assessment work. One commenter noted that the

Department had incorrectly stated that proposed Sec. 11.31(c)(4)

contained a reference to EPA quality assurance guidance when in fact

that reference is contained in Sec. 11.31(c)(3) of the existing rule.

Response: In the July 22, 1993, Federal Register notice, the

Department inadvertently suggested that proposed Sec. 11.31(c)(4) would

require trustee officials to include in their Assessment Plans quality

assurance plans that complied with EPA guidance. Section 11.31(c)(4)

contains no reference to quality assurance plans. Section 11.31(c)(3),

which was renumbered but not substantively affected by this rulemaking,

does require that trustee officials develop a quality assurance plan

that satisfies the requirements listed in EPA guidance, but only if

that guidance is applicable. Further clarification is beyond the scope

of this rulemaking.

3. Threat of a Release or Discharge

Comment: Some commenters disagreed with the Department's statement

in the July 22, 1993, Federal Register notice that the regulations may

not be used to assess damages caused by a threat of a release or

discharge. These commenters noted that section 107(a) of CERCLA

specifically establishes liability for damages from a release or a

threat of a release. Further, these commenters noted that natural

resource damages include compensation for loss of use of a natural

resource. Therefore, these commenters thought that if a threat of a

release results in the loss of use of a natural resource, then trustee

officials should be able to assess and bring a claim for natural

resource damages.

Response: Section 11.10, which was not affected by this rulemaking,

provides that these regulations are only available for the assessment

of damages resulting from a discharge of oil or a release of a

hazardous substance. Although section 107(a) of CERCLA does refer to a

release or a threat of a release, section 107(a)(4)(C) refers to

damages for injury to, destruction of, or loss of natural resources

``resulting from such a release.'' Also, section 301(c) of CERCLA

authorizes the Department to develop regulations for assessment of

``damages for injury to, destruction of, or loss of natural resources

resulting from a release of oil or a hazardous substance.'' Therefore,

the rule may only be used when there has been an actual release or

discharge, as opposed to a threat of a release or discharge, and actual

injury to, destruction of, or loss of a natural resource, as opposed to

simply a reduction in use of a resource. Further clarification is

beyond the scope of this rulemaking.

4. Coordination With Response Activities

Comment: Some commenters thought that the rule should provide

additional guidance on coordination of natural resource damage

assessment activities with response activities. A few commenters stated

that trustee officials should be required to participate in the

remedial planning process. One commenter supported coordination of

natural resource damage assessment activities and response activities

but urged trustee officials to bear in mind the paramount need for

rapid and effective cleanup. One commenter suggested that the On-Scene

Coordinator be allowed to contact just one Federal trustee agency and

one State trustee agency and that the contacted trustee agencies be

required to notify all other trustee agencies.

Response: The August 1, 1986, preamble to the original type B rule

contains considerable discussion of the relationship between response

actions and natural resource damage assessments. 51 FR 27681, 27692-93.

Further clarification of the issue is beyond the scope of this

rulemaking.

5. Injuries Caused by Response Activities

Comment: One commenter asked the Department to clarify that State

trustee officials are not allowed to recover damages for injuries

caused or aggravated by State-ordered cleanup activities if those

injuries were reasonably avoidable. Another commenter interpreted the

rule to prohibit recovery of damages for any injuries that trustee

officials could have reasonably avoided.

Response: Section 11.15(a)(1)(ii), which was not affected by this

rulemaking, provides that PRPs are liable for any increase in injuries

that is reasonably unavoidable as a result of response actions taken or

anticipated. As was stated in the August 1, 1986, preamble to the

original type B rule,

* * * The Department believes that any response actions

undertaken by government agencies should strive to avoid additional

injury to natural resources whenever possible. Damages from such

``reasonably unavoidable'' increases in injury resulting from

response actions by governmental agencies are not excluded from

damage actions, because they are indirectly due to the discharge or

release and thus included under section 301(c) of CERCLA. 51 FR

27698.

Therefore, if government response activities cause an increase in

injuries, trustee officials can only recover damages for the increase

if it was reasonably unavoidable. Section 11.15(a)(1)(ii) deals solely

with liability for increases in injuries caused by response actions.

Section 11.14(jj), which was not affected by this rulemaking, defines

``response'' as removal or remedial actions as defined in sections

101(23) and 101(24) of CERCLA.

6. Limitations on Liability

Comment: A few commenters believed that the rule should clarify the

application of various statutory limitations on liability, including

the ceilings set forth in section 107(c) of CERCLA and the provision in

section 107(f)(1) that excludes natural resource damages if those

damages and the release that caused those damages occurred wholly

before the enactment of CERCLA.

Response: The Department notes that Secs. 11.15(b) and 11.24(b)(1),

which were not affected by this rulemaking, already incorporate the

ceilings on damages set forth in section 107(c) of CERCLA and the

limitation on damages set forth in section 107(f)(1) of CERCLA. Any

further clarification of these provisions is beyond the scope of this

rulemaking.

7. Timing of the Restoration and Compensation Determination Plan

Comment: Some commenters thought that the information needed to

determine the required level of restoration, rehabilitation,

replacement, and/or acquisition of equivalent resources would not be

available at the time that the Assessment Plan is made available for

public comment and review; therefore, the Restoration and Compensation

Determination Plan should not be prepared until after Injury

Determination and Quantification have been completed. Other commenters

expressed concern that allowing preparation of the Restoration and

Compensation Determination Plan to be delayed would lead trustee

officials to perform unnecessary and unfocused assessment work during

Injury Determination and Quantification. Therefore, the commenters

suggested that trustee officials be required to use their best efforts

to prepare the Restoration and Compensation Determination Plan at the

same time as the rest of the Assessment Plan.

Response: The Department believes that early preparation of the

Restoration and Compensation Determination Plan is advisable to ensure

that the costs of assessments are reasonable. The definition of

``reasonable cost,'' which was not affected by this rulemaking,

includes a requirement that Injury Determination, Quantification, and

Damage Determination bear a well defined relationship to each other.

The Assessment Plan, which includes the Restoration and Compensation

Determination Plan, is designed to coordinate Injury Determination,

Quantification, and Damage Determination. Therefore, the Restoration

and Compensation Determination Plan should be prepared as early as

possible. In most cases, trustee officials should be able to develop an

initial Restoration and Compensation Determination Plan based on

estimates of the extent and nature of the injuries and then make

revisions as needed. Section 11.32(e)(1) of the rule, which was not

affected by this rulemaking, authorizes trustee officials to modify any

part of the Assessment Plan at any stage of the assessment as new

information becomes available.

However, the Department recognizes that selection of a restoration,

rehabilitation, replacement, and/or acquisition alternative depends in

part upon the extent and nature of the injuries, which will not be

fully known at the outset of an assessment. Therefore, there may be

cases where even a preliminary attempt to evaluate restoration,

rehabilitation, replacement, and/or acquisition alternatives would be

meaningless unless Injury Determination or Quantification had begun. In

these cases, premature preparation of the Restoration and Compensation

Determination Plan could temporarily misdirect Injury Determination and

Quantification. Therefore, the rule provides that in those cases where

existing data are insufficient to develop a Restoration and

Compensation Determination Plan at the time that the rest of the

Assessment Plan is prepared, the Restoration and Compensation

Determination Plan may be developed later. Nevertheless, the

Restoration and Compensation Determination Plan must always be

developed before completion of Quantification in order to ensure that

Quantification is correlated with Damage Determination.

The Department believes that it is unnecessary to add a requirement

that trustee officials use their ``best efforts'' to prepare the

Restoration and Compensation Determination Plan along with the rest of

the Assessment Plan. Nevertheless, the Department emphasizes that

trustee officials should only delay development of the Restoration and

Compensation Determination Plan when existing data are insufficient to

develop even a rough estimate of the extent of the injuries. Further,

if trustee officials do delay development of the Restoration and

Compensation Determination Plan, they should complete the Plan as soon

as they obtain sufficient information.

National Environmental Policy Act, Regulatory Flexibility Act,

Paperwork Reduction Act, and Executive Orders 12866, 12630, 12778, and

12612

The Department has determined that this rule does not constitute a

major Federal action significantly affecting the quality of the human

environment. Therefore, no further analysis pursuant to section

102(2)(C) of the National Environmental Policy Act (43 U.S.C.

4332(2)(C)) has been prepared.

The Department certifies that this rule will not have a significant

economic effect on a substantial number of small entities under the

Regulatory Flexibility Act (5 U.S.C. 601 et seq.). The rule provides

technical procedural guidance for the assessment of damages to natural

resources. It does not directly impose any additional cost. As the rule

applies to natural resource trustees, it is not expected to have an

effect on a substantial number of small entities.

It has been determined that this rule does not contain information

collection requirements that require approval by the Office of

Management and Budget under the Paperwork Reduction Act (44 U.S.C. 3501

et seq.).

This final rule has been reviewed under Executive Order 12866 and

has been determined to constitute a significant regulatory action.

However, because of the difficulty of evaluating the effects of

alternatives to this rule, the Office of Information and Regulatory

Affairs within the Office of Management and Budget has waived

preparation of the assessments described in sections 6(a)(3)(B) and

6(a)(3)(C) of Executive Order 12866 for the final rule.

It has been determined that this rule does not have takings

implications under Executive Order 12630. The Department has certified

to the Office of Management and Budget that this rule meets the

applicable standards provided in sections 2(a) and 2(b)(2) of Executive

Order 12778. It has been determined that this rule does not have

federalism implications under Executive Order 12612.

List of Subjects in 43 CFR Part 11

Continental shelf, Environmental protection, Fish, Forests and

forest products, Grazing land, Indian lands, Hazardous substances,

Mineral resources, National forests, National parks, Natural resources,

Oil pollution, Public lands, Wildlife, Wildlife refuges.

For the reasons set out in the preamble, title 43, subtitle A of

the Code of Federal Regulations is amended as follows:

PART 11--NATURAL RESOURCE DAMAGE ASSESSMENTS

1. The authority citation for part 11 continues to read as follows:

Authority: 42 U.S.C. 9651(c), as amended.

Subpart A--Introduction

2. Section 11.13 is amended by revising paragraph (e)(3) to read as

follows:

Sec. 11.13 Overview.

* * * * *

(e) * * *

(3) Damage Determination phase. The purpose of this phase is to

establish the appropriate compensation expressed as a dollar amount for

the injuries established in the Injury Determination phase and measured

in the Quantification phase. The sections of subpart E of this part

comprising the Damage Determination phase include guidance on

acceptable cost estimating and valuation methodologies for determining

compensation based on the costs of restoration, rehabilitation,

replacement, and/or acquisition of equivalent resources, plus, at the

discretion of the authorized official, compensable value, as defined in

Sec. 11.83(c) of this part.

* * * * *

3. Section 11.14 is amended by revising paragraph (qq) to read as

follows:

Sec. 11.14 Definitions.

* * * * *

(qq) Technical feasibility or technically feasible means that the

technology and management skills necessary to implement an Assessment

Plan or Restoration and Compensation Determination Plan are well known

and that each element of the plan has a reasonable chance of successful

completion in an acceptable period of time.

* * * * *

4. Section 11.15 is amended by revising paragraph (a)(3)(ii) to

read as follows:

Sec. 11.15 Actions against the responsible party for damages.

(a) * * *

(3) * * *

(ii) Administrative costs and expenses necessary for, and

incidental to, the assessment, assessment planning, and restoration,

rehabilitation, replacement, and/or acquisition of equivalent resources

planning, and any restoration, rehabilitation, replacement, and/or

acquisition of equivalent resources undertaken; and

* * * * *

Subpart C--Assessment Plan Phase

5. Section 11.30 is amended by revising paragraph (c)(1)(v) to read

as follows:

Sec. 11.30 Assessment Plan--general.

* * * * *

(c) * * *

(1) * * *

(v) Preliminary estimate of damages costs; and

* * * * *

6. Section 11.31 is amended by revising paragraph (a)(2), removing

paragraph (c)(2), removing the word ``and'' at the end of paragraph

(c)(3), replacing the period at the end of paragraph (c)(4) with the

words ``; and'', redesignating paragraphs (c)(3) and (c)(4) as

paragraphs (c)(2) and (c)(3) respectively, and adding a new paragraph

(c)(4) to read as follows:

Sec. 11.31 Assessment Plan--content.

(a) * * *

(2) The Assessment Plan shall be of sufficient detail to serve as a

means of evaluating whether the approach used for assessing the damage

is likely to be cost-effective and meets the definition of reasonable

cost, as those terms are used in this part. The Assessment Plan shall

include descriptions of the natural resources and the geographical

areas involved. The Assessment Plan shall also include a statement of

the authority for asserting trusteeship, or co-trusteeship, for those

natural resources considered within the Assessment Plan. The authorized

official's statement of the authority for asserting trusteeship shall

not have the force and effect of a rebuttable presumption under

Sec. 11.91(c) of this part. In addition, for type B assessments, the

Assessment Plan shall include the sampling locations within those

geographical areas, sample and survey design, numbers and types of

samples to be collected, analyses to be performed, preliminary

determination of the recovery period, and other such information

required to perform the selected methodologies.

* * * * *

(c) * * *

(4) The Restoration and Compensation Determination Plan developed

in accordance with the guidance in Sec. 11.81 of this part. If existing

data are not sufficient to develop the Restoration and Compensation

Determination Plan as part of the Assessment Plan, the Restoration and

Compensation Determination Plan may be developed later, at any time

before the completion of the Injury Determination or Quantification

phases. If the Restoration and Compensation Determination Plan is

published separately, the public review and comment will be conducted

pursuant to Sec. 11.81(d) of this part.

7. Section 11.32 is amended by revising paragraphs (a)(2)(iii)(A)

and (f)(2), and by removing paragraph (f)(3) to read as follows:

Sec. 11.32 Assessment Plan--development.

(a) Pre-development requirements. * * *

(2) * * *

(iii)(A) The authorized official shall send a Notice of Intent to

Perform an Assessment to all identified potentially responsible

parties. The Notice shall invite the participation of the potentially

responsible party, or, if several parties are involved and if agreed to

by the lead authorized official, a representative or representatives

designated by the parties, in the development of the type and scope of

the assessment and in the performance of the assessment. The Notice

shall briefly describe, to the extent known, the site, vessel, or

facility involved, the discharge of oil or release of hazardous

substance of concern to the authorized official, and the resources

potentially at risk. The Notice shall also contain a statement of

authority for asserting trusteeship, or co-trusteeship, over those

natural resources identified as potentially at risk.

* * * * *

(f) Plan review. * * *

(2) The purpose of this review is to ensure that the selection of

methodologies for the Quantification and Damage Determination phases is

consistent with the results of the Injury Determination phase, and that

the use of such methodologies remains consistent with the requirements

of reasonable cost, as that term is used in this part.

8. Section 11.35 is revised to read as follows:

Sec. 11.35 Assessment Plan--preliminary estimate of damages.

(a) Requirement. When performing a type B assessment pursuant to

the requirements of subpart E of this part, the authorized official

shall develop a preliminary estimate of: the anticipated costs of

restoration, rehabilitation, replacement, and/or acquisition of

equivalent resources for the injured natural resources; and the

compensable value, as defined in Sec. 11.83(c) of this part, of the

injured natural resources, if the authorized official intends to

include compensable value in the damage claim. This preliminary

estimate is referred to as the preliminary estimate of damages. The

authorized official shall use the guidance provided in this section, to

the extent possible, to develop the preliminary estimate of damages.

(b) Purpose. The purpose of the preliminary estimate of damages is

for reference in the scoping of the Assessment Plan to ensure that the

choice of the scientific, cost estimating, and valuation methodologies

expected to be used in the damage assessment fulfills the requirements

of reasonable cost, as that term is used in this part. The authorized

official will also use the preliminary estimate of damages in the

review of the Assessment Plan, as required in Sec. 11.32(f) of this

part, to ensure the requirements of reasonable cost are still met.

(c) Steps. The preliminary estimate of damages should include

consideration of the ability of the resources to recover naturally and,

if relevant, the compensable value through the recovery period with and

without possible alternative actions. The authorized official shall

consider the following factors, to the extent possible, in making the

preliminary estimate of damages:

(1) The preliminary estimate of costs of restoration,

rehabilitation, replacement, and/or acquisition of equivalent resources

should include consideration of a range of possible alternative actions

that would accomplish the restoration, rehabilitation, replacement,

and/or acquisition of the equivalent of the injured natural resources.

(i) The preliminary estimate of costs should take into account the

effects, or anticipated effects, of any response actions.

(ii) The preliminary estimate of costs should represent the

expected present value of anticipated costs, expressed in constant

dollars, and should include direct and indirect costs, and include the

timing of those costs. The provisions detailed in Secs. 11.80-11.84 of

this part are the basis for the development of the estimate.

(iii) The discount rate to be used in developing the preliminary

estimate of costs shall be that determined in accordance with the

guidance in Sec. 11.84(e) of this part.

(2) The preliminary estimate of compensable value should be

consistent with the range of possible alternatives for restoration,

rehabilitation, replacement, and/or acquisition of equivalent resources

being considered.

(i) The preliminary estimate of compensable value should represent

the expected present value of the anticipated compensable value,

expressed in constant dollars, accrued through the period for the

restoration, rehabilitation, replacement, and/or acquisition of

equivalent resources to baseline conditions, i.e., between the

occurrence of the discharge or release and the completion of the

restoration, rehabilitation, replacement, and/or acquisition of the

equivalent of the injured resources and their services. The estimate

should use the same base year as the preliminary estimate of costs of

restoration, rehabilitation, replacement, and/or acquisition of

equivalent resources. The provisions detailed in Secs. 11.80-11.84 of

this part are the basis for the development of this estimate.

(ii) The preliminary estimate of compensable value should take into

account the effects, or anticipated effects, of any response actions.

(iii) The discount rate to be used in developing the preliminary

estimate of compensable value shall be that determined in accordance

with the guidance in Sec. 11.84(e) of this part.

(d) Content and timing. (1) In making the preliminary estimate of

damages, the authorized official should rely upon existing data and

studies. The authorized official should not undertake significant new

data collection or perform significant modeling efforts at this stage

of the assessment planning phase.

(2) Where possible, the authorized official should make the

preliminary estimate of damages before the completion of the Assessment

Plan as provided for in Sec. 11.31 of this part. If there is not

sufficient existing data to make the preliminary estimate of damages at

the same time as the assessment planning phase, this analysis may be

completed later, at the end of the Injury Determination phase of the

assessment, at the time of the Assessment Plan review.

(3) The authorized official is not required to disclose the

preliminary estimate before the conclusion of the assessment. At the

conclusion of the assessment, the preliminary estimate of damages,

along with its assumptions and methodology, shall be included in the

Report of the Assessment as provided for in Sec. 11.91 of this part.

(e) Review. The authorized official shall review, and revise as

appropriate, the preliminary estimate of damages at the end of the

Injury Determination and Quantification phases. If there is any

significant modification of the preliminary estimate of damages, the

authorized official shall document it in the Report of the Assessment.

Subpart E--Type B Assessments

9. Section 11.60 is amended by revising paragraphs (d)(1) (iii) and

(iv) to read as follows:

Sec. 11.60 Type B assessments--general.

* * * * *

(d) Type B assessment costs. (1) * * *

(iii) Restoration and Compensation Determination Plan development

costs including:

(A) Development of alternatives;

(B) Evaluation of alternatives;

(C) Potentially responsible party, agency, and public reviews;

(D) Other such costs for activities authorized by Sec. 11.81 of

this part;

(iv) Cost estimating and valuation methodology calculation costs;

and

* * * * *

10. Section 11.71 is amended by revising paragraphs (a)(2) and

(l)(4)(ii) to read as follows:

Sec. 11.71 Quantification phase--service reduction quantification.

(a) * * *

(2) This determination of the reduction in services will be used in

the Damage Determination phase of the assessment.

* * * * *

(l) Biological resources. * * *

(4) * * *

(ii) Provide data that will be useful in planning efforts for

restoration, rehabilitation, replacement, and/or acquisition of

equivalent resources, and in later measuring the success of those

efforts, and, where relevant, will allow calculation of compensable

value; and

* * * * *

11. Section 11.72 is amended by revising paragraph (b)(4) to read

as follows:

Sec. 11.72 Quantification phase--baseline services determination.

* * * * *

(b) * * *

(4) Baseline data collection shall be restricted to those data

necessary for conducting the assessment at a reasonable cost. In

particular, data collected should focus on parameters that are directly

related to the injuries quantified in Sec. 11.71 of this part and to

data appropriate and necessary for the Damage Determination phase.

* * * * *

12. Section 11.73 is amended by revising paragraph (a) to read as

follows:

Sec. 11.73 Quantification phase--resource recoverability analysis.

(a) Requirement. The time needed for the injured resources to

recover to the state that the authorized official determines services

are restored, rehabilitated, replaced, and/or the equivalent have been

acquired to baseline levels shall be estimated. The time estimated for

recovery or any lesser period of time as determined in the Assessment

Plan shall be used as the recovery period for purposes of Sec. 11.35

and the Damage Determination phase, Secs. 11.80 through 11.84, of this

part.

(1) In all cases, the amount of time needed for recovery if no

restoration, rehabilitation, replacement, and/or acquisition of

equivalent resources efforts are undertaken beyond response actions

performed or anticipated shall be estimated. This time period shall be

used as the ``No Action-Natural Recovery'' period for purposes of

Sec. 11.82 and Sec. 11.84(g)(2)(ii) of this part.

(2) The estimated time for recovery shall be included in possible

alternatives for restoration, rehabilitation, replacement, and/or

acquisition of equivalent resources, as developed in Sec. 11.82 of this

part, and the data and process by which these recovery times were

estimated shall be documented.

* * * * *

13. Section 11.80 is revised to read as follows:

Sec. 11.80 Damage Determination phase--general.

(a) Requirement. (1) The authorized official shall make his damage

determination by estimating the monetary damages resulting from the

discharge of oil or release of a hazardous substance based upon the

information provided in the Quantification phase and the guidance

provided in this Damage Determination phase.

(2) The Damage Determination phase consists of Sec. 11.80--general;

Sec. 11.81--Restoration and Compensation Determination Plan;

Sec. 11.82--alternatives for restoration, rehabilitation, replacement,

and/or acquisition of equivalent resources; Sec. 11.83--cost estimating

and valuation methodologies; and Sec. 11.84--implementation guidance,

of this part.

(b) Purpose. The purpose of the Damage Determination phase is to

establish the amount of money to be sought in compensation for injuries

to natural resources resulting from a discharge of oil or release of a

hazardous substance. The measure of damages is the cost of restoration,

rehabilitation, replacement, and/or acquisition of the equivalent of

the injured natural resources and the services those resources provide.

Damages may also include, at the discretion of the authorized official,

the compensable value of all or a portion of the services lost to the

public for the time period from the discharge or release until the

attainment of the restoration, rehabilitation, replacement, and/or

acquisition of equivalent of the resources and their services to

baseline.

(c) Steps in the Damage Determination phase. The authorized

official shall develop a Restoration and Compensation Determination

Plan, described in Sec. 11.81 of this part. To prepare this Restoration

and Compensation Determination Plan, the authorized official shall

develop a reasonable number of possible alternatives for restoration,

rehabilitation, replacement, and/or acquisition of equivalent resources

and select, pursuant to the guidance of Sec. 11.82 of this part, the

most appropriate of those alternatives; and

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