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National Ass'n of Mfrs. v. Department of the Interior

Citation: 28 ELR 20509
No. 96-1268, 134 F.3d 1095/(D.C. Cir., 01/16/1998)

The court holds that a U.S. Department of the Interior (DOI) rule concerning natural resource damage (NRD) assessments under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) does not violate the Administrative Procedure Act or CERCLA. The rule, challenged by a manufacturing association, revises the simplified type A assessment procedures for the NRDs in coastal and marine environments and establishes a new type A procedure for the Great Lakes. The court first holds that the association's claim that the new type A rule's use of predictive computer submodels improperly relieves the natural resources trustee of its burden to demonstrate that a particular release in fact caused injury to a specific natural resource is not time barred. Although the rule is simply a revision of an earlier rule, DOI's substantial revisions to the type A procedures significantly altered the stakes of judicial review, and thereby constructively reopened to challenge the predictive nature of the computer submodels. However, the court then holds that the DOI's reliance on predictive computer submodels to establish causation and injury is both reasonable and consistent with the commands of CERCLA. There is nothing in the relevant provisions of CERCLA that requires greater proof of causation and injury than is provided by the DOI's predictive computer submodels. Predictive submodels that represent rational scientific judgments about the probability that a particular release will cause a specific type and amount of injury are consistent with Congress' intent to develop a standardized damage assessment system that is efficient as to both time and cost. Moreover, the DOI developed the type A procedures so that the public would be compensated for the NRDs resulting from minor spills that are illsuited for the expensive and resource-intensive type B procedures.

The court next holds that the type A rule satisfies CERCLA § 301(c)(2)'s requirement that it take replacement value into consideration, and that the rule need not consider acquisition of equivalent resources. The rule's consideration of replacement value is merely less ambitious than it could be, which is not a basis for reversal. Further, CERCLA §§ 301(c)(2) and 107(f)(1) do not require the regulations to consider acquisition values. The court then rejects the association's claim that the DOI's type A submodels are arbitrary and capricious because they do not evaluate restoration alternatives in terms of the effect such action may or may not have on natural resource services. The association failed to raise this argument in the rulemaking proceedings below, and the court finds no reason to excuse the association's failure to exhaust its administrative remedies. The fact that, buried in hundreds of pages of technical comments the association submitted, some mention is made of the resource services concept and its relation to compensable values, rather than restoration alternative, is insufficient to preserve the issue on appeal.

The court then holds that the DOI's inclusion of calculations for lost assimilative capacity do not contravene CERCLA. CERCLA § 301(c)(2) requires the regulations to take into consideration the ability of the ecosystem or resource to recover. Consideration of lost assimilative capacity meets that command by assessing the cumulative effects a release may have on a resource's ability to recover and by preventing erosion of baseline conditions. Therefore, the DOI's interpretation of § 301(c)(2) to permit assessment of lost assimilative capacity damages is reasonable and consistent with Congress' intent to recover for the full damages resulting from a release. The court further finds that the DOI's decision to calculate the monetary loss resulting from a diminution in assimilative capacity by extrapolating from the costs of dredging contaminated sediment in a nearby area is not arbitrary or capricious.

The court next holds that economic rent for commercial fishing and hunting losses is a public interest that can be included in the type A rule. The fact that commercial hunting and fishing operations are not presently paying something for the privilege to exploit public fish and game stocks does not mean that they have converted the stocks into private property. Rather, the public custodians of the resources have determined that the public interest is served by refraining from charging the commercial enterprises for harvesting the public fish and game stocks. In addition, the likelihood of double recovery is minimal, because, if a commercial harvester recovers lost profits, the regulations bar the public trustee from including such losses in its NRD calculation. Likewise, if a state or other public trustee recovers such damages, a private party will be barred by res judicata from seeking recovery for the same public losses.

The court also holds that the DOI's use of various studies to satisfy CERCLA's best available procedures requirement was reasonable. The DOI used a number of screening criteria that studies had to meet before they became part of its submodels' database. Also, the DOI's decisions to average studies, to use studies from other regions in the absence of suitable studies of the Great Lakes region, and to use older studies rather than guessing values or excluding them completely from the database are permissible interpretations of CERCLA.

The court then rejects the association's claim that the type A rule is invalid because it permits trustees to use both type A and type B procedures to calculate the NRDs for the same release. By using type A procedures and selectively supplementing them with certain low-cost and expeditious type B procedures, the DOI is able to arrive at a more complete assessment of damages at less cost and in less time than a type B assessment would likely require. And while type A submodels predict losses based on certain averaged values, that does not mean that supplementing the determinations with type B calculations for values that are not included in the type A submodels will result in overestimation or underestimation of damages. Without the use of type B procedures, a trustee could recover less than the full measure of damages sustained, because certain values are not covered in the type A submodels. In addition, an injury determination and quantification is not required for supplemental type B procedures when the procedures are used to calculate compensable value losses not included in the type A submodels.

Last, the court holds that the association does not have standing to claim that the DOI erred by retaining modeling subroutines for oil and petroleum discharges, which are now under the jurisdiction of the National Oceanic and Atmospheric Administration (NOAA) and governed by regulations implementing the Oil Pollution Act (OPA). The association failed to show an injury-in-fact. The regulations plainly acknowledge that the retained subroutines are without binding effect. Thus, the association cannot have been injured by the DOI's decision to publish the nonbinding materials. Furthermore, the association failed to show that any injury suffered is fairly traceable to the DOI's publication of the nonbinding materials. The association's problem with NOAA's incorporation of the procedures into its OPA regulations without developing assessment submodels and databases anew and without subjecting such procedures to additional notice and comment is a problem with NOAA, not the DOI.

Counsel for Petitioner
James R. Bieke
Shea & Gardner
1800 Massachusetts Ave. NW, Washington DC 20036
(202) 828-2000

Counsel for Respondent
Greer S. Goldman
Environment and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 514-2000

Before Ginsburg and Tatel, JJ.