NOAA's Latest Attempt at Natural Resource Damages Regulation: Simpler . . . But Better?

Robert F. Copple

Editors' Summary: The debate about the most appropriate procedures and methodologies to conduct natural resource damage assessments (NRDAs) has continued throughout the last decade among agencies and stakeholders. In August 1995, NOAA proposed the most recent set of regulations to govern NRDAs under the Oil Pollution Act. This Article reviews the history of natural resource damages regulations and the 1995 NOAA proposed rule. It concludes that while NOAA has made a valiant effort to respond to stakeholders' concerns and to simplify the NRDA process, the agency has sidestepped the most controversial issues in the NRDA debate, such as the appropriate scientific methodologies and valuation techniques, and to what extent passive-use values should be compensable.

[25 ELR 10671]

In the latest attempt by a federal agency to formulate a method for abstracting the ether of natural resource damages and environmental goods into worldly quantifications, the National Oceanic and Atmospheric Administration (NOAA) has released yet another proposed natural resource damages assessment (NRDA) rule.¹ The 1995 NOAA proposed rule builds on previous rulemaking efforts by NOAA and by the U.S. Department of the Interior (DOI),² and is based on extensive NOAA studies and public input.³ As such, NOAA's new proposed rule represents a good-faith effort by the agency to respond to problems and to fill some of the conceptual voids created by previous NOAA and DOI rulemakings.

In an effort to "promote expeditious restoration of natural resources and services injured as a result of an incident,⁴ the 1995 proposed rule ostensibly focuses on the use of simplified procedures to achieve restoration of natural resources, as opposed to the compilation of damages. In addition, the newly proposed process attempts to achieve greater public participation and consensus, as well as the increased involvement of potentially responsible parties (PRPs) in NRDAs. While the proposed rule appears to address many of the concerns raised by the previous NOAA and DOI rulemaking efforts, a close reading of NOAA's latest attempt at NRDA rulemaking leaves one with the uneasy sense that the fundamental problems, which may be unavoidably inherent in any comprehensive attempt at NRDA regulation, remain. As such, the heralded changes in the 1995 proposed rule may be more semantic than substantive. For example, the proposed rule may still allow for the same types of excessive past and future use and nonuse value damages explicitly provided for in earlier rulemakings, but without the benefit of strict methodological protocols. Thus, while the 1995 proposed rule can be described as more "user friendly" to natural resource damage trustees, it may be just as dangerous to PRPs.

This Article briefly describes the history of NOAA and DOI NRDA rulemakings. The Article then provides an outline of the assessment procedures under the 1995 NOAA proposed rule. It concludes by identifying specific issues, questions, and potential ramifications raised by this latest NRDA effort.

A History of Natural Resource Damage regulatory Efforts

Fifteen years after passage of the Comprehensive Environmental Response, Compensation, and Liability Act. (CERCLA)⁵ and more than 10 years after the DOI's initiation of NRDA rulemakings, NRDA regulatory efforts continue to limp along with no definitive end in site. It is important to emphasize that NOAA and the DOI, the primary NRDA regulatory [25 ELR 10672] agencies,⁶ may not be to blame. Instead, the troubled evolution of the NRDA rulemaking process is really an example of the jurisprudential problems inherent in an area as broad, complex, and nebulous as natural resource damages and the valuation of environmental goods. Because of the multiple layers of interrelating laws and authorities, the relative newness of this uncharted area of public policy, the lack of established and proven scientific methods, and the apparently irreconcilable differences between the representative constituencies, such result was inevitable, at least in hindsight.

The NRDA rulemaking process has satisfied no one. On the one hand, public NRDA trustees instead of achieving their hopes for restored natural resources (and, perhaps, maximized damages) have been forced to suffer through interminable stays and the realistic fear that it might be impossible to satisfy the procedurally complex NRDA regulatory requirements. PRPs, on the other hand, instead of resolving disputes and going on with business have been left with unquantifiable potential liabilities on corporate filings and disclosures. While NOAA's latest rulemaking effort appears to seek resolution of at least some of these concerns and to move the rulemaking process along, it is mired in a legacy of confusion.

The New Territory: The DOI's First Attempt at NRDA

In 1986, pursuant to a presidential delegation under CERCLA § 301(c)(2),⁷ the DOI promulgated the first in a series of NRDA regulations.⁸ The 1986 DOI regulations set up a complex four-step process designed to lead to the formulation of a natural resource damage claim for injuries caused by the release of hazardous substances.⁹ The DOI NRDA process involves four phases: (1) a preassessment screen and development of an assessment plan; (2) injury determination; (3) injury quantification; and (4) damage determination, during which a dollar value would be attributed to the natural resource injury.¹⁰

In addition, the 1986 DOI regulations contain several conceptual provisions that were, and to a degree continue to be, a source of controversy in the development of both DOI and NOAA NRDA regulations. First, in establishing the appropriate measure of damages, the DOI adopted a version of the common-law "lesser of" rule, under which the public trustee was limited to selecting "the lesser of: restoration of replacement costs, or diminution of use values as the measure of damages."¹¹ Second, although limiting compensable natural resource damages to losses suffered by the public, as opposed to private-property owners or commercial users,¹² the DOI apparently determined that the scope of compensable injuries included injuries to the ecosystem as a whole, as opposed to only those portions of the ecosystem that provided a specific service to the general public.¹³ Third, in directing the quantification of diminished value attributable to natural resources injuries, the DOI acknowledged that damages for diminished value could include all value lost to the public.¹⁴ But the DOI limited the scope of such diminution of value damages by establishing a hierarchy that stated a preference for the calculation of diminished value based on lost use values, as opposed to lost nonuse values, and sanctioned damage estimates based on nonuse values only when used values could not be determined.¹⁵ Finally, consistent with the use/nonuse diminished value hierarchy, the DOI established a hierarchy of valuation methods that preferred the use of traditional market price valuation methods over more disfavored nonmarket methods, such as contingent valuation methodology (CVM).¹⁶

[25 ELR 10673]

Ohio v. U.S. Department of the Interior: The Court Expands the Scope of Natural Resource Damage Liability

The 1986 DOI regulations soon came under attack by both industry and environmental groups, leading to a significant alteration of the regulations pursuant to the U.S. District Court for the D.C. Circuit's decision in Ohio v. U.S. Department of the Interior.¹⁷ While the court left the general DOI NRDA process intact, it took a hard look at DOI's approach to valuation measures and methods. In particular, the Ohio court objected to the promulgation of the "lessor of" rule and, instead, ascertained a congressional intent favoring restoration costs plus diminished value as the proper measure of damage recovery in natural resource damages cases.¹⁸ Next, the court invalidated DOI's hierarchy of valuation measures on the basis that the market price attributable to a natural resource injury is not sufficient "to capture fully all aspects of loss"¹⁹ and that DOI's hierarchy was inconsistent with Congress' intent to fully compensate the public for natural resource injuries. Likewise, the court rejected DOI's hierarchy of use and nonuse values for valuation purposes, concluding that nonuse values are really a form of "passive use" that should be considered and included in NRDAs in order to make the public whole.²⁰ Finally, in expanding the scope of both allowable methods and measures, the court held that, at least in theory, CVM was an acceptable technique for quantifying lost passive-use values.²¹

Finding a Regulatory Fix

The court's scrutiny of the 1986 DOI regulations engendered a flurry of regulatory activity that was further enhanced by NOAA's entry into the natural resource damages rulemaking arena. First, in 1991, the DOI issued a notice of proposed rulemaking²² in which it offered an unembellished regulatory fix of the 1986 regulations that included: (1) abandonment of the "lessor of" rule to allow for recovery of both actual restoration costs and the compensable value of services (passive uses) lost to the public due to the natural resource injury'²³ (2) acceptance of the court's compensable passive-use value category of damages to allow for recovery of both use and nonuse values;²⁴ and (3) collapse of its valuation method hierarchy to allow for the use of nonmarket methodologies, such as CVM.²⁵

While the DOI focused on amending its NRDA regulations, NOAA launched its own NRDA rulemaking process for oil spills pursuant to its mandate under the Oil Pollution Act. (OPA).²⁶ As a first step, NOAA sponsored a panel study on CVM, which resulted in the issuance of a report that examined the methodological criticisms of CVM in the valuation of nonuse values and provided a set of procedures or guidelines to limit the effect of CVM's flaws and inaccuracies.²⁷ The next step occurred in 1994, when NOAA issued its first set of proposed NRDA rules.²⁸ The proposed rules were similar to the DOI NRDA regulations, both in terms of focus and complexity, and closely paralleled the DOI assessment process. For example, the 1994 NOAA proposed rules provided for: (1) a phased approach to NRDAs;²⁹ (2) the regulatory determination that assessments conducted under the regulations would be accorded a rebuttable presumption in litigation seeking natural resource damages;³⁰ (3) compensation principles that allowed for actions based on restoration costs and lost passive use,³¹ and (4) use of nonmarket valuation methodologies, such as CVM, to capture the full range of lost passive-use values.³² The predominant theme of the 1994 proposed rules was that CVM is an available and reliable technique for the valuation of natural resource damages if conducted within the context of NOAA's proposed CVM protocols. The NOAA protocols provided extensive guidance concerning survey instrument design and development, survey administration, and analysis of survey results.³³

After almost 10 years of development, the DOI and NOAA NRDA regulatory processes had evolved to the point of massive complexity and uncertainty regarding the scope, reliability, and implementability of the various sets of regulations. As a result, the NRDA process has presented continuing and lingering concerns for both natural resource trustees and PRPs. For example, from the trustee point of view, both DOI and NOAA NRDA processes appear to be so procedurally complex that there remains a serious question whether it is feasible, and maybe even possible, to conduct an NRDA to satisfy the regulations. Likewise, because of the expanded scope of actionable natural resource damages after Ohio, PRPs have become increasingly concerned about the scope of damage claims to which they might be subjected and whether it is possible to defend such claims. In addition, concerns remain regarding whether, as a matter of policy, lost nonuse value should be compensable [25 ELR 10674] and whether CVM is a legitimate technique on which to base a judicial claim for damages.

The 1995 NOAA Proposed Rule: NOAA Tries Again

In response to the ongoing liability and methodological issues raised in the course of DOI and NOAA NRDA rulemakings, NOAA has proposed a "fundamental restructuring of the rule to provide even greater emphasis upon restoration."³⁴ The result is a simplified NRDA process that preserves the general phased approach while allowing trustees substantially greater flexibility in conducting assessments.³⁵

In order to meet its goal to " make the public and environment whole" for natural resource damage injuries,³⁶ NOAA explains its new regulatory approach as follows:

This proposed rule emphasizes several processes to achieve the goal of restoring injured natural resources and services: (1) Identification and evaluation of injuries to natural resources and/or services; (2) employing assessments methods relevant to the circumstances of a particular incident; (3) identification and evaluation of restoration alternatives; and (4) involvement of the public in the process of selecting restoration actions appropriate for a given incident.³⁷

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Keeping with the general NOAA/DOI phased approach, the NOAA rule proposes that NRDAs be conducted in the following phases: (1) preassessment phase; (2) restoration planning phase; and (3) restoration implementation phase.

The preassessment phase's purpose is to "provide a process by which trustees determine if they have jurisdiction to pursue restoration under OPA and, if so, whether it is appropriate to do so."³⁸ After determining whether the OPA statutory prerequisites to a natural resource damage action have been satisfied,³⁹ trustees must then determine whether to go forward with restoration planning based on an evaluation of the following factors: "(1) Injuries likely have resulted or will result from the indicident; (2) Response actions may not adequately address the potential injuries; and (3) Feasible restoration actions exist to address the potential injuries."⁴⁰ If these conditions are met, trustees are required to issue a notice of intent to conduct restoration planning,⁴¹ which must be sent to known PRPs inviting their participation in restoration planning, and open a publicly available administrative record.⁴²

After satisfying the requirements of the preassessment phase, trustees proceed to the restoration planning phase, which encompasses the bulk of NOAA's new conceptual approach to NRDAs. While the restoration planning phase may be generically defined as an information gathering, restoration alternative development, and scoping process, the methods and standards employed in that phase are what ostensibly make the 1995 proposed rule different from its predecessors.

In order to understand the scope of the restoration planning phase, it is important to clarify the range of natural resource damages that may be actionable under the new rule. As discussed above, under previous DOI and NOAA formulations a trustee was allowed to seek damages that included the cost of restoration plus compensatory damages for lost passive use from the time of the injury until the completion of restoration.⁴³ While the 1995 proposed rule places much greater emphasis on restoration and its implementation, a close reading reveals that the general scope of compensable damages remains the same.

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Restoration under the Proposed Rule includes two components: (1) Primary restoration—actions taken to return the injured resources and services to baseline, including the natural recovery option, and (2) compensatory restoration—actions to make the environment and public whole for resource services lost from the date of the incident until the recovery of the injured resources.⁴⁴

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Thus, despite NOAA's proposal to collapse the restoration cost and compensable value quantification into a single process, past and future, compensable value still remains part of the process and the potential for large, lost passive-use value claims continues to exist.⁴⁵ Accordingly, throughout its proposed rule, NOAA uses the term "restoration" to refer to "any appropriate combination of primary and compensatory restoration actions designed to address natural resource and service injuries."⁴⁶

With this understanding of the scope of restoration damages under the proposed rule, the potential impact of restoration planning is clearer. The restoration planning phase is essentially broken down into the following analyses: (1) injury determination and assessment, (2) injury quantification, (3) restoration alternative development, and (4) restoration alternative selection, all of which are to be documented in draft and final restoration plans. In performing the injury determination and assessment portion of restoration planning, trustees must analyze whether an injury, as defined by NOAA's new formulation of "injury,"⁴⁷ "has [25 ELR 10675] occurred and, if so, identify the nature of the injury."⁴⁸ As part of the injury determination, trustees must also establish that the natural resources have been exposed, either directly or indirectly, to the discharged oil from the incident and that a pathway exists linking the incident to the injuries.⁴⁹

With completion of the injury determination process, trustees must turn to injury quantification. The proposed rule provides trustees with flexibility to perform the quantification under one or more of several different conceptual approaches, including:

(1) The degree and spatial/temporal extent of injury to a natural resource;

(2) The degree and spatial/temporal extent of injury to a natural resource relative to baseline with subsequent translation of that change to a reduction in services provided by the natural resource; or

(3) The amount of services lost as a result of the incident.⁵⁰

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Thus, these three approaches allow trustees to focus either on the actual natural resource losses themselves, i.e., lost fish, or on the human services foregone because of the natural resource injury, i.e., lost fishing days, when quanfitying injuries. Therefore, while "injury quantification requires comparison to a baseline condition,"⁵¹ the proposed rule allows trustees relative discretion to select the operative baseline calculation method, including "baseline data, historical data, reference data, or control data."⁵² And, as with all assessment and quantification methods under the proposed rule, the only explicit factors presented to guide the method selection are cost and basic reliability.⁵³

In performing the injury quantification, trustees must estimate the time for natural recovery without restoration, based on a variety of factors proposed by NOAA to direct that analysis.⁵⁴ Trustees have some flexibility in choosing between simplified or incident-specific assessment procedures. When trustees select the simplified assessment procedures, however, the PRPs may request that trustees instead use incident-specific procedures, if the PRPs identify the appropriate procedures to be used, advance the cost of using such procedures, and agree not to challenge the reasonableness of costs associated with the incident-specific procedures.⁵⁵

Under the proposed NOAA process, once the injury determination and quantification phases have been completed, trustees must identify a reasonable range of restoration alternatives for further consideration, including a no-action alternative.⁵⁶ As discussed above, each restoration alternative must include a primary restoration component, which would physically restore the injured resource, and may include a compensatory restoration component, which would compensate the public for past and future lost use and nonuse values.⁵⁷

In developing the compensatory restoration component of the restoration alternatives, NOAA proposes a three-part hierarchy of methods that makes up its scaling approach to compensation analysis. First, trustees must consider whether it is possible to employ a service-to-service approach in order to determine what would that provide the public with additional services essentially identical to those that were lost.⁵⁸ For example, if a trustee determines that an oil spill has resulted in a loss of 50 days of beach use, the compensatory portion of the restoration alternative should include a means to provide the public with an additional 50 days of beach time of equal quality.

Second, when the service-to-service scaling approach is not possible because the natural resource damage scenario does not allow for direct compensation with the identical type of commodity, NOAA provides that trustees must use the valuation approach. Under the valuation approach, trustees are required to essentially abstract the lost services into a unit of services or monetary valuation and provide services of equivalent value to the public as part of the restoration alternative.⁵⁹ It is at this level that environmental [25 ELR 10676] valuation techniques, such as CVM, might come into play in the NRDA period. In fact, CVM is one of the valuation methods specifically identified by NOAA asapplicable in such situations.⁶⁰ Unlike the 1994 proposed rule with its explicit protocols for CVM valuations, however, the only reliability limitations in the new proposed rule are encompassed in the general statement for all assessment methods that "the procedures used must be reliable and valid for the particular context."⁶¹

Finally, if the valuation scaling approach cannot be performed at a reasonable cost, "trustees may estimate the dollar value of the lost services and select the scale of the alternative that has a cost equivalent to the lost value."⁶² In such cases, however, the PRPs may request that trustees value the services using a more formal method, if the PRPs are willing to pay the costs of the study and to refrain from challenging the reasonableness of such costs.⁶³

After restoration alternatives have been identified, trustees must analyze the alternatives in a manner somewhat reminiscent of a CERCLA remedial investigation/feasibility study analysis. As such, trustees must evaluate the alternatives through application of a number of factors focusing on the scope, rate and certainty of recoverability, and cost.⁶⁴ Based on this evaluation, trustees must then select the preferred restoration alternative, basing the choice between comparable alternatives on cost effectiveness.⁶⁵ This choice and the analytical process leading to the choice must be set forth in a draft restoration plan, which, after public comment, is revised into a final plan to govern the restoration process.⁶⁶ On completion of the final restoration plan, the administrative record is closed and the trustee presents the PRPs with a written demand to either implement the plan or advance the costs of the trustee's implementation of the plan.⁶⁷

Several other points should be noted regarding NOAA's new proposed rule. First, NOAA emphasizes the need for trustees to coordinate with each other, response agencies, the PRPs, and the public, in order to provide all interested parties with adequate input and an opportunity for comment.⁶⁸ This emphasis on public participation has marked NOAA's rulemaking efforts and, accordingly, has been embodied in its proposed rule.

Second, as a result of the ongoing give-and-take between the DOI and NOAA in the NRDA rulemaking process, NOAA has been careful to demarcate the applicable scope of its new proposed rule. In particular, NOAA proposes that while the 1995 rule, after promulgation, should supersede DOI regulations for application to oil spills in navigable waters, DOI regulations will still be effective for NRDAs for oil discharges initiated before the effective date of the final NOAA rule and for injuries to natural resources by discharges or releases of a mixture of oil and hazardous substances.⁶⁹

Third, NOAA recognizes that trustees may use NRDA procedures promulgated by state, local, or tribal authorities in lieu of those in NOAA's proposed rule. In such instances, trustees may still obtain a rebuttable presumption if the alternative procedures require that all recovered damages be spent on restoration, determine compensation based on injury and/or restoration, are consistent with the proposed NOAA rule, and were developed through a public rulemaking process.⁷⁰

Fourth, the 1995 proposed rule suggests that trustees have significant authority to settle claims for natural resource damages "provided that the settlement is adequate in the judgment of the trustees to make the environment and public whole for the injury . . . with particular consideration of the adequacy of the compensation to provide for the restoration [25 ELR 10677] of such resources."⁷¹ As such, the rule leaves open questions concerning when a trustee settlement decision may be challenged as unreasonable or arbitrary and capricious by another PRP, a trustee, or a citizens group.

Finally, the 1995 proposed rule creates a procedural exception for emergency restorations that cannot wait for completion of the more lengthy phased approach.⁷²

Issues and Observations

There is no question that with its proposed NRDA rule, NOAA has made a valiant effort to refocus NRDAs in a manner that emphasizes restoration of injured resources. As explained by Linda Burlington, one of the chief architects of the 1995 proposed rule, the new approach is intended to shift emphasis away from the compilation of the value of what was lost and toward the cost to implement restoration.⁷³ Thus, the 1995 proposed rule answers one question that has plagued many who have watched the NRDA regulatory process: In a regulatory system that allows claims for damages based on both the cost of restoration and compensatory damages for lost passive-use values, what is to become of monies paid to satisfy the compensatory damage component of the equation? NOAA now makes it clear that the compensatory damage portion must be used to provide additional environmental services directly or indirectly comparable to those that were lost. Even so, it is unlikely that this new approach will create an uncontrollable urge on PRPs' part to settle early or often. Despite NOAA's efforts, the new approach suffers from many of the same inherent problems that have made the NRDA process so burdensome and contentious.

First, even though NOAA has attempted to combine restoration damages and compensatory damages, the proposed rule still allows trustees to seek virtually unlimited compensatory damages for past and future lost use and nonuse values. That the trustee is now required to provide a plan to compensate the public for such lost services does not relieve the PRPs of the monetary sting of passive-use damages, which can be a major, if not the major, component of an NRDA. And when such tremendous amounts of money are at stake, hard fought litigation is not only likely, but inevitable.

Second, by failing to provide real limits or science-based protocols for equivalency analyses or valuation methods, NOAA is providing trustees with incredible flexibility in establishing compensatory restoration claims. This lack of standards will, by itself greatly increase the likelihood that assessments will be vigorously contested at both administrative and judicial levels. Accordingly, it is likely that the next major oil spill litigation, like its infamous predecessor, will, from the expert perspective, become the functional equivalent of a national convention of environmental scientists and economists. This continuation or escalation of transactional costs is obviously not the result that NOAA intended.

Third, in the context of environmental economics, compensatory restoration includes lost use and nonuse values. The inclusion of nonuse values creates an issue whether, given the amorphous nature of such values, restoration through the service-to-service approach can or should attempt to compensate for such lost nonuse values. The concepts of replaceable services and unique aesthetic values somehow seem incongruent and deserve further attention by NOAA and by environmental economists.

Fourth, it is readily apparent that NOAA has made a good-faith effort to simplify its regulations and to meet criticisms that NRDAs are unworkably process heavy. While NOAA's condensation of its regulations has resulted in a proposed rule that is more trustee-friendly, it has done so at the expense of clarity. As a result, it is unlikely that the simplified rule will result in simplified disputes. To the contrary, the inherent vagueness of the proposed rule in this immensely complex area of law will likely result in trustee overreaching and PRP challenges.

Finally, given the historic interplay between the DOI and NOAA in the natural resource damage area, it is important to consider the effect the 1995 NOAA proposed rule will have on future DOI rulemakings. Despite the DOI's early entry into the field, it is apparent that NOAA has taken the initiative during the last several years. One can only speculate, but there appears to be a significant likelihood that the DOI will eventually adopt an NRDA rule very similar in form to NOAA's proposed rule. Such an action by the DOI will inevitably create its own problems of interpretation and application, given the different issues created by hazardous substance releases (such as those of historic origin) and oil discharges.

Conclusion

Until these fundamental issues are resolved, future efforts at NRDA regulation will be met with continuing questions of interpretation and proof. While NOAA's proposed rule attempts to simplify the NRDA process, it does little to resolve the underlying conflicts. Thus, the proposed rule is really no more than a retrogression that simply submerges the fundamental issues for resolution on another day.

Robert F. Copple is an environmental attorney at Parcel, Mauro, Hultin & Spaanstra, P.C. in Denver, Colorado. He has represented defendants in a number of natural resource damages actions and has written extensively on natural resource damages and environmental economics issues. He received a J.D. from the University of Nebraska and a Ph.D. from the University of North Carolina at Chapel Hill.

1. NOAA, Natural Resource Damage Assessments, Notice of Proposed Rulemaking, 60 Fed. Reg. 39804 (Aug. 3, 1995).

Because of the court-ordered deadline in Natural Resources Defense Council v. U.S. Coast Guard, NOAA asserts that it will promulgate a final NRDA rule by December 31, 1995. Id. at 398.04; see also Natural Resources Defense Council v. U.S. Coast Guard, No. CV-94-4892, Order for Partial Settlement (E.D.N.Y. June 26, 1995).

2. For a more comprehensive discussion of the litany of NOAA and DOI NRDA rulemaking efforts, see Brian R. Binger, Robert F. Copple, & Elizabeth Hoffman, The Use of Contingent Valuation Methodology in Natural Resource Damage Assessments: Legal Fact and Economic Fiction, 89 NW. U. L. REV. 1029 (1995); Robert F. Copple, The New Economic Efficiency in Natural Resource Damage Assessments. 66 U. COLO. L. REV. 676 (1995).

3. See 60 Fed. Reg. at 39804-05.

4. Id. at 39807.

5. 42 U.S.C. §§ 9601-9675, ELR STAT. CERCLA §§ 101-405.

6. By order of the President, the DOI has been charged with promulgating natural resource damage regulations applicable to CERCLA and the Federal Water Pollution Control Act (FWPCA). Exec. Order No. 12316, § 8(c)(3), 46 Fed. Reg. 42237 (Aug. 20, 1981). CERCLA § 107(a)(4)(C) creates a cause of action for "damages for injury to, destruction of, or loss of natural resources, including the reasonable costs of assessing such injury, destruction, or loss resulting from such a release [of hazardous substances] . . . ." 42 U.S.C. § 9607(a)(4)(C), ELR STAT. CERCLA § 107(a)(4)(C). Pursuant to congressional mandate, NOAA has been charged with independently developing NRDAs under the Oil Pollution Act (OPA) for oil spills in navigable waters. 33 U.S.C. § 2706(e), ELR STAT. OPA § 1006(e). Like CERCLA § 107(a)(4)(C), OPA § 1002(b)(2) creates a cause of action for natural resource damages resulting from a discharge of oil "into or upon the navigable waters or adjoining shorelines or the exclusive economic zone . . . ." Id. § 2702(a), ELR STAT. OPA § 1002(a). Even though NOAA has this independent authority, under a combined reading of OPA §§ 1002(a) and 1006(b) the DOI natural resource damages regulations govern OPA NRDA's until the NOAA rules have been promulgated. See DOI, Natural Resource Damage Assessments, Proposed Rule, Reopening of Comment Period, 58 Fed. Reg. 39327, 39328, 39332 (July 22, 1993).

7. 42 U.S.C. § 9651(c)(2), ELRSTAT. CERCLA § 301(c)(2).

8. DOI, Natural Resource Damage Assessments, Final Rule, 51 Fed. Reg. 27674 (Aug. 1, 1986).

9. 42 U.S.C. § 9607(a)(4)(C), ELR STAT. CERCLA § 107(a)(4)(C); see id. § 9601(16), ELR STAT. CERCLA § 101(16) (defining natural resources for purposes of CERCLA liability); id. § 9607(f)(2)(C), ELR STAT. CERCLA § 107(f)(2)(C) (providing a rebuttable presumption for assessments conducted in accordance with the NRDA rules).

10. See generally 43 C.F.R. §§ 11.20-11.84 (1994).

11. Id. § 11.35(b)(2). See generally Copple, supra note 2, passim.

12. 51 Fed. Reg. at 27680.

13. See Binger, Copple, & Hoffman, supra note 2, at n.70 and accompanying text.

14. 51 Fed. Reg. at 27690.

15. Id. at 27719; see 43 C.F.R. § 11.83(b)(2). Simply defined, for the purposes of contingent valuation methodology, a "use value" is the value that an actual user of a resource places on his or her use of that resource. For example, a person who hikes or fishes in a particular area uses that resource, and presumably, places a personal value on that use. "Nonuse values" include values an individual places on a resource unrelated to that individual's actual "use" of the resource, and therefore, encompass all other values that the individual may attribute to a resource. For example, "option value" is the nonuse value that an individual would place on having the continued option to use that resource, even though that person has not yet actually made use of the resource. Likewise, "existence value" is the value that a person who had never used the resource, nor ever intended to use the resource, places on its continued existence. For example, many people have never seen a whooping crane in the wild but still might place a value on the continued existence of the species. Similarly, "bequest value" is the value that a nonuser places on being able to pass a resource (such as whooping cranes) to future generations. See Binger, Copple, & Hoffman, supra note 2, at 1055-56.

16. 43 C.F.R. § 11.83(c); see 51 Fed. Reg. at 27691. CVM is a valuation method through which damage claims are quantified on the basis of survey evidence from individuals who are asked to state the personal monetary value they attribute to a particular environmental good. For example, the survey respondents might be asked how much they would be "willing to pay" to preserve a forest, protect a species, or clean up a hazardous waste site. The survey results are statistically manipulated to create a monetary figure for the loss of, or damage to, a natural resource that is attributable to all persons within the universe of persons from which the survey respondents are chosen, i.e., a geographic area. This final calculation may be used as the basis for a natural resource damage claim in litigation. See generally Binger, Copple, & Hoffman, supra note 2, 1031-36.

17. 880 F.2d 432, 19 ELR 21099 (D.C. Cir. 1989).

18. Id. at 459, 19 ELR at 21113.

19. Id. at 463, 19 ELR at 21116.

20. Id. at 464, 19 ELR at 21116.

21. Id. at 474-81, 19 ELR at 21122-26.

22. DOI, Natural Resource Damage Assessments, Notice of Proposed Rulemaking, 56 Fed. Reg. 19752 (Apr. 29, 1991).

23. Id. at 19769 (to be codified at 43 C.F.R. § 11.80(b)).

24. Id. at 19759-60.

25. Id. at 19759. Subsequently, the DOI reopened the comment period on the proposed rule and allowed additional discussion of NRDAs with particular emphasis on issues relating to the use of CVM. 58 Fed. Reg. at 39327 (to be codified at 43 C.F.R. pt. 11). Specific provisions of these proposed regulations were officially promulgated in 1994. DOI, Natural Resource Damage Assessments, Final Rule, 59 Fed. Reg. 14262 (Mar. 25, 1994) (codified at 43 C.F.R. pt. 11). Issues concerning CVM and the quantification of nonuse values are presently the subject of a separate DOI rulemaking. DOI, Natural Resource Damage Assessments, Notice of Proposed Rulemaking, 59 Fed. Reg. 23098 (May 4, 1994) (to be codified at 43 C.F.R. pt. 11).

26. 33 U.S.C. § 2706(e), ELR STAT. OPA § 1006(e).

27. NOAA, Contingent Valuation Methodology Report, 58 Fed. Reg. 4601 (Jan. 15, 1993).

28. NOAA, Natural Resource Damage Assessments, Notice of Proposed Rulemaking, 59 Fed. Reg. 1062 (Jan. 7, 1994) (to be codified at 15 C.F.R. pt. 990).

29. Id. at 1064, 1168.

30. Id. at 1168.

31. Id. at 1181.

32. Id. at 1181-82. In addition, the 1994 proposed rule provided for the use of established compensation formulas for small oil spills in a variety of situations. Id. at 1176-77.

33. 59 Fed. Reg. at 1182-84; see Binger, Copple, & Hoffman, supra note 2, at 1976-85. See generally Brian R. Binger, Robert F. Copple, & Elizabeth Hoffman, Contingent Valuation Methodology in the Natural Resource Damage Regulatory Process: Choice Theory and the Embedding Phenomenon, NAT. RESOURCES J. (forthcoming 1995).

34. 60 Fed. Reg. at 39804.

35. Since the release of its 1994 proposed rule, NOAA has diligently conducted a number of workshops across the country in order to provide interested parties with an opportunity to comment and to stimulate further discussion concerning the appropriate scope of NRDAs. Id. at 39804-05.

36. Id. at 39805.

37. Id.

38. Id. at 39830 (to be codified at 15 C.F.R. § 990.40).

39. Id. (to be codified at 15 C.F.R. § 990.41).

40. Id. (to be codified at 15 C.F.R. § 990.42).

41. Id. (to be codified at 15 C.F.R. § 990.43).

42. Id. (to be codified at 15 C.F.R. § 990.44).

43. See Copple, supra note 2, at 691-706.

44. See Copple, supra note 2, at 691-706.

45. NOAA's proposed definition of "value" is consistent with its analysis:

The amount of items an individual is willing to give up to obtain a good or is willing to accept to forego a good. Under this part, value may be measured either in terms of units of natural resource services or dollar amounts. The total value of a natural resource or service is equal to the sum of all individuals' values.

Id. at 39830 (to be codified at 15 C.F.R. § 990.30); see id. at 39811 (defining value to include nonuse values).

46. Id. at 39806.

47. NOAA has attempted to narrow the definition of injury to "an observable or measurable adverse change in a natural resource or impairment of a natural resource service. Injury may occur directly or indirectly to a natural resource and/or service. Injury incorporates 'destruction,' 'loss,' and 'loss of use' as provided in OPA." Id. at 39829 (to be codified at 15 C.F.R. § 990.30) (emphasis added).

48. Id. at 39831 (to be codified at 15 C.F.R. § 990.52(b)). Thus, it is not required that the injury actually be a lethal injury to, for example, biota. An actionable injury can also include loss of natural resource services when theresources themselves have not been injured, such as in the case of "lost use associated with a fisheries closure to prevent harvest of tainted fish, even though the fish themselves may not be injured." Id. at 39813.

49. Id. at 39831 (to be codified at 15 C.F.R. § 990.52(c)). The proposed rule also provides a list of criteria that should be considered by trustees in selecting the potential injuries to assess in the injury assessment process. Id. at 39831 (to be codified at 15 C.F.R. § 990.52(ee).

50. Id. at 39831 (to be codified at 15 C.F.R. § 990.53(b)).

51. Id. at 39809.

52. Id. "Trustees are encouraged to collect information from the filed, laboratory, literature, models, or any combination thereof." Id.

53. Id. at 39830 (to be codified at 15 C.F.R. § 990.51); see id. at 39806 (requiring that the scope of assessment procedures be evaluated on the basis of the procedure's cost, the level of precision, and the relative expected total damages).

54. The factors include:

(1) degree and spatial/temporal extent of injury;

(2) sensitivity of the injured natural resource and/or service;

(3) reproductive potential;

(4) stability and resilence of the effected environment;

(5) natural variability ; and

(6) physical/chemical processes of the affected environment.

Id. at 39831 (to be codified at 15 C.F.R. § 990.53(c)).

55. Id. at 39831 (to be codified at 15 C.F.R. § 990.54(c)); see id. at 39815. The proposed rule specifically reserves the promulgation of compensation formulas for further rulemaking. Id. at 39831 (to be codified at 15 C.F.R. § 990.54(d)(2)).

56. Id. at 39832 (to be codified at 15 C.F.R. § 990.55).

57. Id. (to be codified at 15 C.F.R. § 990.55(b), (c)).

58. Id. (to be codified at 15 C.F.R. § 990.55(c)(3)(ii)). As NOAA explains:

When determining the scale of a compensatory restoration alternative that provides services that are of the same type and quality, and are subject to comparable resource scarcity and demand conditions as those lost, trustees must use the service-to-service scaling approach. Under the service-to-service scaling approach, trustees determine the scale of the compensatory restoration alternative that will produce services equal in quantity to those lost.

Id.; see id. at 39816.

59. Id. at 39832 (to be codified at 15 C.F.R. § 990.55(c)(3)(iii)). As NOAA explains:

The valuation approach requires that trustees determine the amount of services that must be provided to produce the same value lost to the public. The approach relies on the idea that lost value can be determined using one of a variety of possible units of exchange, including units of resource services or dollars. The valuation approach requires that the value of lost services be measured explicitly and that the compensatory restoration alternative provide services of equivalent value to the public. To properly scale the compensatory restoration alternative, the trustee might have to measure the values of varying sizes of the compensatory restoration alternative to determine the size of a project that will replace the value of lost services.

Id. at 39816.

60. Id. at 39816.

61. Id. at 39830 (to be codified at 15 C.F.R. § 990.51(d)). But NOAA has not completely abandoned its CVM protocols:

Because the reformulated unified restoration approach envisions a fundamentally different rule for valuation methods from what was contained in the January 1994 proposed rule, NOAA has not included standards for utilization of such methods in today's proposed rule. However, NOAA is still considering, and seeks comment on, whether standards for the use of valuation methods, including contingent valuation, should be included in the final rule (or in the accompanying guidance documents), and, if so, what level of guidance would be appropriate.

Id. at 39816-17. It is important to note that in its comments regarding the 1994 NOAA proposed rule, the U.S. Environmental Protection Agency argued strenuously that the CVM protocols should not be promulgated as regulations but, instead, should be issued as guidance, which could be issued as more is learned about the CVM techniques. See EPA, Comments on Proposed NOAA/DOI Regulations on Natural Resource Damage Assessment (Oct. 7, 1994) (available from the ELR Document Service, ELR Order No. AD-304).

62. 60 Fed. Reg. at 39892 (to be codified at 15 C.F.R. § 990.55(c)(3)(iii)(b)).

63. Id.

64. The factors identified by NOAA include:

(1) Extent to which each alternative can return the injured natural resources and services to baseline and make the environment and the public whole for interim services losses; (2) Extent to which each alternative improves the rate of recover;

(3) Extent to which each alternative will avoid additional injury;

(4) Level of uncertainty in the success of each alternative;

(5) Extent to which each alternative benefits more than one natural resource and/or service;

(6) Cost of each alternative;

(7) Effects of each alternative on public health and safety, and the environment; and

(8) Whether any alternative violates any laws or regulations.

Id. at 39832 (to be codified at 15 C.F.R. § 990.56(a)).

NOAA explains the rule of restoration cost in the alternatives analysis:

Thus, trustees must evaluate possible restoration actions in light of their effectiveness in returning natural resources and services to baseline. The lowest cost restoration alternative may not always represent the preferred alternative. Instead, the costs of restoration alternatives should be evaluated by comparing the costs of alternative actions to the relative effectiveness of each in returning injured natural resources and services to baseline taking interim service losses into account.

Id. at 39806; see id. at 39817.

65. Id. at 39832 (to be codified at 15 C.F.R. § 990.56(b)).

66. Id. at 39833 (to be codified at 15 C.F.R. § 990.57). In the alternative, for simplified assessments, NOAA allows the use of "pre-packaged" regional restoration plans as a substitute for more incident-specific restoration alternative analyses. Id. (to be codified at 15 C.F.R. § 990.58).

67. Id. at 39833 (to be codified at 15 C.F.R. § 990.62).

68. Id. at 39828 (to be codified at 15 C.F.R. § 990.14); see id. at 39807-08.

69. Id. at 39828 (to be codified at 15 C.F.R. § 990.20).

70. Id. (to be codified at 15 C.F.R. § 990.20(b)).

71. Id. (to be codified at 15 C.F.R. § 990.24).

72. Id. (to be codified at 15 C.F.R. § 990.25).

73. Telephone conversation with Linda Burlington, Project Manager, Damage Assessment Regulations Team, National Oceanic and Atmospheric Administration (Sept. 15, 1995).