# Natural Resource Damage Assessments; Final Rule DEPARTMENT OF THE INTERIOR

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URL: https://www.frixlaw.com/law-library/documents/fr%3A94-6749

## Record

- **Collection:** Federal Register
- **Document type:** Uncategorized Document
- **Published:** March 25, 1994

## Text

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 othe

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A94-6749. Public record. Not legal advice.