[Federal Register Volume 66, Number 147 (Tuesday, July 31, 2001)]
[Proposed Rules]
[Pages 39464-39471]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-18962]



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DEPARTMENT OF COMMERCE

National Oceanic and Atmospheric Administration

15 CFR Part 990

[Docket No: 990608154-9154-01]
RIN 0648-A036


Natural Resource Damage Assessments

AGENCY: National Oceanic and Atmospheric Administration (NOAA), 
Commerce.

ACTION: Proposed rule: Amendments.

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SUMMARY: On January 5, 1996, the National Oceanic and Atmospheric 
Administration (NOAA) promulgated final regulations for the assessment 
of natural resource damages pursuant to section 1006(e)(1) of the Oil 
Pollution Act of 1990. The final regulations were challenged, pursuant 
to section 1017(a) of OPA. On November 18, 1997, the U.S. Court of 
Appeals for the District of Columbia Circuit issued a ruling on the 
final regulations (General Electric Co., et al., v. Commerce, 128 F.3d 
767 (D.C. Cir. 1997)). This proposed rule addresses the issues remanded 
to NOAA by that ruling, and includes some clarifying and technical 
amendments in other parts of the regulation.

DATES: Written comments must be received no later than September 29, 
2001.

ADDRESSES: Written comments are to be submitted to: Eli Reinharz, c/o 
Office of General Counsel/Natural Resources, 1315 East-West Highway, 
Room #15132, Silver Spring, MD 20910.

FOR FURTHER INFORMATION CONTACT: Eli Reinharz, 301-713-3038, ext. 193; 
(FAX: 301-713-4387; e-mail: [email protected]) or Linda Burlington, 
301-713-1332 (FAX: 301-713-1229; e-mail: [email protected]).

SUPPLEMENTARY INFORMATION: In the event of a discharge or substantial 
threat of a discharge of oil (incident), the Oil Pollution Act of 1990 
(OPA), 33 U.S.C. 2701 et seq., provides that federal, state, Indian 
tribal, and/or foreign natural resource trustees assess natural 
resource damages and develop and implement a plan for the restoration, 
rehabilitation, replacement, or acquisition of the equivalent, of the 
injured natural resources and their services under their trusteeship. 
Congress directed the National Oceanic and Atmospheric Administration 
(NOAA) to promulgate regulations for the assessment of natural resource 
damages resulting from an incident (OPA section 1006(e)(1)). NOAA 
promulgated final regulations on January 5, 1996 (see 61 FR 440), 
codified at 15 CFR Part 990.
    Under these OPA regulations, trustees conduct natural resource 
damage assessments in the open, with responsible parties and the public 
involved in the planning process to achieve restoration more quickly, 
decrease transaction costs, and avoid litigation. These restoration 
plans form the basis of claims for natural resource damages. Under the 
natural resource damage assessment regulation, trustees then present a 
demand comprised of the final restoration plan to responsible parties 
for funding or implementation.
    General Electric and other industry groups challenged the final 
regulations pursuant to section 1017(a) of OPA. On November 18, 1997, 
the U.S. Court of Appeals for the District of Columbia Circuit issued a 
ruling on the final regulations (General Electric Co., et al., v. 
Commerce, 128 F.3d 767 (D.C. Cir. 1997)). The Court remanded to NOAA 
for further agency decisionmaking: (1) Authorization for the removal of 
residual oil; and (2) the scope of authorization for recovery of legal 
costs. NOAA is also proposing clarifying and technical amendments in 
other parts of the regulations. NOAA invites comments on the issues or 
comments in these proposed amendments.

Discussion

I. Court's Mandate to Clarify Removal Language

A. Discussion

    In General Electric, et al., v. Commerce, the Court asked NOAA to 
explain the change in language regarding the removal of residual oil 
between the Final Regulation and its preamble for natural resource 
damage assessments and the previous Proposed Rule. The Court also 
raised a series of questions on the relationship and coordination 
between response and restoration authorities.
    The Proposed Rule required trustees to identify and consider a 
reasonable range of restoration alternatives, including a primary 
restoration component in each alternative. 60 FR 39832. Concerning the 
types of primary restoration alternatives that could be considered, 
Sec. 990.55(b)(2)(i) of the Proposed Rule provided that: ``trustees 
must consider whether: (i) Conditions exist that would limit the 
effectiveness of primary restoration actions (e.g., residual sources of 
contamination); * * *'' Id. The corresponding section (990.53(b)(3)) of 
the Final Regulation provides that:

    (3) Active primary restoration actions. Trustees must consider 
an alternative comprised of actions to directly restore the natural 
resources and services to baseline on an accelerated time frame. 
When identifying such active primary restoration actions, trustees 
may consider actions that:
    (i) Remove conditions that would prevent or limit the 
effectiveness of any restoration action (e.g., residual sources of 
contamination) * * *

61 FR 507. The language in the preamble to the Final Regulation was 
nearly the same as that of the Proposed Rule.
    The Court ruled that the Proposed Rule did not authorize trustees 
to actually ``remove'' oil and that the provision in the Final 
Regulation, which did authorize such ``removal,'' could not be upheld 
because NOAA failed to explain this change in language.
    NOAA did not intend any substantive change by the edits in language 
between the proposed and final regulation. NOAA did not intend to 
propose shared ``removal authority,'' as defined by OPA. Removal 
authority is exclusively provided to EPA and CG under the Clean Water 
Act, 33 U.S.C. 1251 (CWA) and National Oil and Hazardous Substances 
Pollution Contingency Plan 40 CFR Part 300 (1994) (NCP). Removal of oil 
will be conducted under the authority of the On-Scene Coordinator 
(OSC). The OSC's authority will be carried out in accordance with the 
NCP.
    However, NOAA has always intended to authorize trustees to 
eliminate or reduce exposure to oil resulting from an incident, but 
only if such action is selected in accordance with standards and 
procedures set forth in the Final Regulation. NOAA acknowledges that 
the Proposed Rule may not have expressed this intent clearly. As a 
result, NOAA maintains that trustees must have the authority to 
eliminate or reduce the impediments to restoration, including residual 
oil, to bring about effective restoration, rather than be limited to 
merely considering such impediments, as erroneously suggested by the 
Proposed Rule (see, e.g., 61 FR 452).
    The court expressed concern that giving trustees the authority to 
remove residual oil would be inconsistent with OPA because it would 
allow trustees to second guess and encroach upon response agencies that 
have exclusive removal authority. NOAA did not intend to grant shared 
removal authority between trustee and response agencies. Further, 
recognizing the trustees' authority to address residual oil through 
selecting a restoration action would not be granting trustees the 
authority to second guess response decisions

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because selection of a restoration alternative is based upon different 
information and criteria than are used by the response agency in making 
removal decisions.
    ``Removal'' is a term of art under the applicable statutes and 
regulations. ``Removal'' is defined as:

* * * containment and removal of oil or a hazardous substance from 
water and shorelines or the taking of other actions as may be 
necessary to minimize or mitigate damage to the public health or 
welfare, including, but not limited to, fish, shellfish, wildlife, 
and public and private property, shorelines, and beaches;

    CWA, 33 U.S.C. 1321(a)(8), OPA section 1001(30) (33 U.S.C. 
2701(30), see also NCP, 40 CFR Part 300 at 300.5). The term does not 
encompass all possible actions to remove oil, only those actions 
necessary to ``minimize or mitigate'' additional harm.
    In contrast, natural resource damage assessment and restoration 
involve an investigation and planning process that is aimed at 
returning the environment to baseline, i.e., the state it would have 
been in had the incident not occurred, by implementing restoration 
approaches provided under OPA.
    Although not defined under OPA, the Final Regulation defines 
restoration to encompass ``any action that returns injured natural 
resources and services to baseline'' and ``any action taken to 
compensate for interim losses of natural resources and services that 
occur from the date of the incident until recovery.'' 15 CFR 990.30. 
Restoration actions may only be taken in accordance with the provisions 
in the Final Regulation governing their identification, evaluation, 
selection, and documentation. For example, trustees evaluate 
restoration alternatives using standards provided in the rule including 
the: cost to carry out the alternative; extent to which each 
alternative is expected to meet the trustees' goals and objectives in 
returning the injured natural resources and services to baseline and/or 
compensating for interim losses; likelihood of success of each 
alternative; extent to which each alternative will prevent future 
injury as a result of the incident, and avoid collateral injury as a 
result of implementing the alternative; extent to which each 
alternative benefits more than one natural resource and/or service; and 
effect of each alternative on public health and safety (15 CFR 
990.54(a)). Nothing in the statute or its legislative history suggests 
that trustees are prohibited from undertaking restoration actions that 
involve eliminating or reducing exposure to oil.
    Another area causing potential confusion with removal actions is 
the final rule provisions on emergency restoration in Sec. 990.26. 
Section 990.26 of the final rule currently states that trustees may 
conduct emergency restoration when: ``(1) The action is needed to 
minimize continuing or prevent additional injury; (2) the action is 
feasible and likely to minimize continuing or prevent additional 
injury; and (3) the costs of the action are not unreasonable.'' Since 
that language may tend to confuse restoration and removal, NOAA is 
proposing to amend Sec. 990.26 to clarify that the purpose is not to 
undertake any additional ``removal'' action, but that the intent of the 
emergency restoration provisions is to comport with the statutory 
language of section 1012(j) of OPA, which exempts emergency restoration 
from public notice and comment when it is needed ``to avoid 
irreversible loss of natural resources, or to prevent or reduce any 
continuing danger to natural resources or similar need for emergency 
action,'' and to mitigate the ultimate natural resource damages that 
would result from delaying the emergency restoration action resulting 
from the incident. This provision is consistent both with the language 
and purposes of OPA and with the tort law concept that persons who are 
seeking damages for an injury may take reasonable steps to mitigate 
damages, even before the claim has been asserted or adjudicated, by 
repairing some or all of the injury. Therefore, Sec. 990.26(a) would 
read:

    (a) Trustees may undertake emergency restoration before 
completing the process established in this part provided that:
    (1) The action is needed to avoid irreversible loss of natural 
resources, or to prevent or reduce any continuing danger to natural 
resources or similar need for emergency action;
    (2) The action will not be undertaken by the lead response 
agency;
    (3) The action is feasible and likely to succeed;
    (4) Delay of the action to complete the restoration planning 
process established in this part likely would result in increased 
natural resource damages; and
    (5) The costs of the action are not unreasonable.

    Section 990.26(b) is also modified to provide that, if response 
actions are still underway, trustees must coordinate with the OSC 
before implementing any emergency restoration action. The rule provides 
that trustees may take such action only if that action will not 
interfere with or duplicate the ongoing response action. Finally, the 
rule also provides that emergency restoration addressing residual oil 
can proceed only if the response action is complete or if the OSC has 
determined that the residual oil identified by the trustee as part of a 
proposed emergency restoration action does not merit further response. 
This coordination shall take place through the procedures laid out in 
the NCP.
    NOAA is specifically seeking comment on this proposed amendment. 
NOAA is also seeking comment on whether to modify the existing language 
with the proposed amendment. NOAA seeks comment on whether the proposed 
rule language adequately recognizes the distinct authorities of both 
the response agency and Trustees, while allowing sufficient flexibility 
on the part of the OSC and the Trustees to exercise their respective 
responsibilities in time-critical situations in a way that ensures 
coordination and consistency, and maximizes effective and efficient 
response and restoration. NOAA specifically seeks comment whether it 
would be appropriate to add an explicit time element to the OSC's 
determination that residual oil does not merit further response, i.e., 
to allow an OSC determination that no further response action with 
respect to the identified oil is merited ``at this time.'' Such 
language could provide OSCs with greater discretion and flexibility to 
clear proposed trustee emergency restoration actions addressing 
residual oil, without the OSC having to make a final determination that 
no further response actions will ever be merited with respect to that 
oil. NOAA solicits comment on whether such a modification to the 
proposed rule language would be appropriate. NOAA also solicits comment 
on whether there have been actual circumstances involving proposed 
emergency restoration actions under which the existing rule language 
has been problematic for OSCs, Trustees, or Responsible Parties, or 
under which the proposed rule language, with or without an explicit 
time element, would have been problematic.
    Given the fact that the parenthetical language of Sec. 990.53(b)(3) 
of the Final regulation caused confusion on this issue, NOAA is 
amending that subsection to delete the parenthetical language (``e.g., 
residual sources of contamination).'' For the same reason, the term 
``remove'' was replaced by the term ``address'' in Sec. 990.53(b)(3). 
NOAA also seeks comment on the language of the Final Regulation and on 
any procedural confusion that language might cause.

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B. The Court's Specific Questions on the Interrelationship of Response 
and Restoration Authority Concerning Removal of Oil

    Although NOAA is not attempting to confer shared ``removal 
authority'' with this rulemaking, answers to the questions posed by the 
court are provided to clarify the relationships between response and 
restoration.
1. What Is the Interrelationship Between Trustees' Residual Removal 
Authority and the Primary Removal Authority of EPA and the Coast Guard?
    As previously stated, NOAA did not intend to confer upon trustees 
shared ``residual removal authority'' by this rulemaking. Rather, NOAA 
and the lead federal response agencies maintain that trustees may 
implement an action to eliminate or reduce exposure to oil in the 
environment if that action comprises an appropriate part of a 
restoration plan developed in accordance with the Final Regulation. 
Thus, it is inappropriate to characterize the trustees' action as an 
exercise of ``residual removal authority.''
    OPA section 1006(c) directs trustees to assess natural resource 
damages, and to develop and implement a plan for restoration, 
rehabilitation, replacement, or acquisition of the equivalent of the 
natural resources under their trusteeship, after providing for public 
review and comment on such plans. 33 U.S.C. 2706(c)(1). OPA does not 
define ``restoration,'' but the Final Regulation describes this 
authority as encompassing ``any action * * * that returns injured 
natural resources and services to baseline'' and ``any action taken to 
compensate for interim losses of natural resources and services that 
occur from the date of the incident until recovery.'' 15 CFR 990.30, 61 
FR 505.
    In contrast, removal as defined under the Clean Water Act, OPA, and 
the NCP addresses actions taken by the lead response agency necessary 
to ``minimize or mitigate'' damage to the environment. Not all actions 
to reduce exposure to or recover oil are covered under the statutory 
term of ``remove.'' The Final Regulation acknowledges that removal 
actions may reduce or eliminate the need for subsequent natural 
resource damage assessment and restoration activities (see, e.g., 61 FR 
443, col. 2: Coordination among trustees and response agencies can 
result in reducing or eliminating natural resource or service injuries 
residual to the cleanup;'' 61 FR 444, col. 3: ``This rule provides 
procedures by which trustees may determine appropriate restoration of 
injured natural resources and services, where such injuries are not 
fully addressed by response actions;'' 61 FR 461, col. 2: ``NOAA agrees 
that restoration actions by trustees are intended to supplement the 
initial response and cleanup activities of response agencies.''). The 
Final Regulation also acknowledges that response actions are limited in 
scope and may not alleviate restoration concerns (61 FR 449, col. 1).
    Thus, NOAA and the federal response agencies interpret OPA as 
granting complementary authority to response agencies and trustees. 
Response and restoration authorities are respectively distinguished 
primarily by the need for action to minimize or mitigate harm versus 
action to restore injured natural resources and services to baseline.
2. Under What Circumstances Will Trustees Exercise Their Authority To 
Remove Oil?
    The trustees have no authority to undertake a ``removal'' action 
per se, but may select a restoration alternative that involves reducing 
or eliminating exposure to residual oil. The Final Regulation 
authorizes trustees to eliminate or reduce exposure to residual oil 
when such action has been selected in accordance with the restoration 
planning process in the OPA regulation. That is, the trustees could 
eliminate or reduce exposure to residual oil when they have developed a 
reasonable range of restoration alternatives that might include removal 
of residual oil, among other options, evaluate those restoration 
alternatives using the selection criteria in the OPA regulation, and 
select an alternative that includes removal of residual oil as the most 
appropriate restoration alternative for the injuries resulting from the 
incident. In cases where trustees do consider a restoration alternative 
involving reducing or eliminating exposure to residual oil, the 
reasonable range of alternatives should include not only a natural 
recovery alternative, but also an alternative in which the residual oil 
is left untouched yet there is other human intervention, such as off-
site acquisition or enhancement of substitute habitat, to address the 
injured resources.
3. How Does the Standard Governing the Lead Agency's Removal Authority 
Differ From the Standard Governing Trustee Removal of Oil?
    The lead response agency's removal authority under OPA may include 
actual removal or containment of oil, or other actions ``necessary to 
minimize or mitigate damage to the public health or welfare, including, 
but not limited to, fish, shellfish, wildlife, and public and private 
property, shorelines and beaches.'' 33 U.S.C. 2701(30). As discussed 
above, the lead response agency's goals include preventing or reducing 
harm to the environment that would result from exposure to oil. The 
objective of the lead response agency is to remove as much oil as is 
needed to minimize or mitigate additional harm. In contrast, the 
trustee's authority to eliminate or reduce exposure to residual oil is 
derived exclusively from restoration authority under OPA. As such, the 
trustee's authority is limited to those instances where residual oil 
would prevent or limit the effectiveness of restoration, as stated in 
Sec. 990.53(b)(3) of the Final Regulation.
4. What Precisely Is a Trustee's Role in Primary Removal, and What Is 
the Role of EPA and the Coast Guard, if any, With Respect to a 
Trustee's Residual Authority?
    The trustee's role in a removal action is defined in section 1011 
of OPA, which provides that: ``The President shall consult with the 
affected trustees designated under section 2706 of this title on the 
appropriate removal action to be taken in connection with any discharge 
of oil.'' 33 U.S.C. 2711. During this consultation, the trustee may 
advise the lead response agency on removal actions that could be taken 
to prevent, reduce, or eliminate impacts to natural resources. Removal 
decisions made by the lead response agency are intended to minimize or 
mitigate additional harm to the environment. Although these decisions 
may affect the nature and extent of trustee restoration actions, the 
decisions are not based upon the trustee goals of restoring the 
environment to baseline conditions and compensating for loss of natural 
resources.
    Generally, response agencies do not have a role in restoration 
actions by trustees. However, the Final Regulation does allow 
``emergency restoration,'' under Sec. 990.26. Under Sec. 990.26 (a), 
emergency restoration is allowed where: ``(1) The action is needed to 
minimize continuing or prevent additional injury; (2) The action is 
feasible and likely to minimize continuing or prevent additional 
injury; and (3) The costs of the action are not unreasonable.'' NOAA is 
proposing to amend the provisions of Sec. 990.26(a) to clarify that the 
purpose of trustees conducting emergency restoration is to reduce the 
ultimate damages resulting from the incident as discussed in section 
I.A. If emergency restoration is considered while response actions are 
still underway, Sec. 990.26(b) requires that the trustee coordinate 
with the lead response agency's On Scene Coordinator before taking any

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emergency restoration action and demonstrate that the emergency 
restoration action will not duplicate or interfere with any on-going 
response actions.
5. May Trustees Remove Residual Oil Even if EPA or the Coast Guard has 
Considered and Rejected a Trustee's Position During the Consultation 
Process? What Happens if a Trustee Originally Agrees With the Extent of 
Primary Removal, but Later Changes its Mind?
    NOAA believes that the lead response agency's rejection of a 
trustee's request for removing oil under the consultation provisions of 
section 1011 of OPA should neither bar nor precipitate such actions as 
part of a restoration plan developed in accordance with the Final 
Regulation. The response agency's refusal of a trustee's request in no 
way constitutes a conclusion regarding whether such an undertaking is 
appropriate as natural resource restoration. The response agency may 
make a determination, based upon available information, that removal is 
not necessary to prevent further impact to human health, welfare, or 
the environment. Subsequently the trustees, based upon information and 
analysis developed during the damage assessment process, may select a 
restoration alternative that involves elimination or reduction of 
residual oil. These determinations are not in conflict, and both are 
proper.
    The trustee's concurrence with the response agency's decision to 
leave oil in the environment during the response phase does not 
preclude the trustee's consideration of removal of residual oil if such 
action is deemed appropriate based upon information gained during the 
damage assessment process to reinstate baseline or compensate for lost 
services.
6. Do Coast Guard and EPA Agree That Trustees May Conduct Removal of 
Oil? Do the Lead Response Agencies Concur as to How They Will 
Coordinate Removal Activities on a Case-by-Case Basis?
    The Court indicated that such agreement is most likely needed by a 
reviewing court.
    The Federal response agencies agree that actions to eliminate or 
reduce exposure to oil need not occur solely under their response 
authorities, and can legitimately be conducted as a restoration action 
under OPA, consistent with the Final Regulation. The Federal response 
agencies also agree that coordination of removal activities in all 
cases will occur as specified within the NCP.

C. Summary of Comments Received

    On February 11, 1998, NOAA published a request for public comments 
concerning the authorization for the removal of residual oil by 
trustees as part of a natural resource restoration action. 63 FR 6846. 
Specifically, NOAA invited commenters to submit information on both 
case-specific and other consultation experiences with the Coast Guard, 
EPA, or state response agencies relating to removal actions taken 
either during or following the response phase of an incident. NOAA also 
requested reports of any standards, circumstances, and outcomes of 
incidents where trustees considered additional removal actions beyond 
those proposed by the lead response agency. Comments received are 
summarized below. The comments were taken into account in formulating 
the proposed rule amendments.
    Twelve separate parties responded to the call for comments. Five 
commenters submitted their comments on behalf of industry. Of the 
remaining seven comments, four were from state trustee representatives, 
one from U.S. EPA, and two from individual members of the public.
    One commenter, a private cleanup contractor, described a ``unique 
design'' of skimmer used by the company as an environmentally friendly 
approach to removal of residual oil.
    The second individual commenter advocated that trustees not be 
allowed to ask for more cleanup than that performed by the response 
agency, in order to avoid needless work and the potential to cause more 
environmental harm than that avoided by the additional work. The 
commenter also provided comments on various environmental problems 
caused by oil spills, the societal dependence on oil consumption, and 
agreement with the regulation's requirement for incident-specific plans 
in lieu of monetary damages calculated by models.
    One trustee representative relayed experiences from a unique 
situation involving residual oil, in which oily sand was piled up into 
``tar dunes'' in front of vegetated zones of beaches by response 
personnel. The decision was characterized as a joint decision among 
response and trustee personnel, based in part on the desire to minimize 
removal of sand from the beaches, and on uncertainty whether the dunes 
would cause any additional injury to natural resources. The trustee 
stated that in hindsight they would always recommend that oily sand be 
removed from beaches and replaced with clean sand from an appropriate 
source. In addition, this trustee was of the opinion that they would 
have the authority to request responsible parties to conduct this type 
of residual removal as part of a restoration plan.
    A second trustee commenter reported on a specific case example 
involving residual oil. In this instance, trustees were heavily 
involved in the response planning and decision-making from early on in 
the spill. The decision to leave residual oil in the environment in 
this instance was made with the agreement of the trustees, because 
additional removal would have killed individuals of an endangered 
species.
    A third trustee commenter stated its agreement with NOAA's original 
conclusion that trustees have legal authority to remove residual oil as 
part of a restoration plan. The commenter stated that OPA does not 
contain a bright-line distinction between removal and restoration 
actions, noting OPA's definition of removal actions as including 
actions to ``minimize or mitigate damage'' to natural resources such as 
fish, shellfish, and wildlife. The commenter suggested that Congress 
obviously intended a degree of overlap between removal and restoration. 
The commenter stated that removal of residual oil is often necessary 
and even unavoidable as a restoration action, citing to one case 
example where oil unaccounted for by response efforts was discovered 
later in sediments of a protected natural area. This commenter also 
noted that situations involving slow, continuous discharges of oil--
such as discharges from contaminated sediments--can be just as harmful 
to natural resources as catastrophic discharges, and that response 
agencies are far less likely to respond to the non-catastrophic 
circumstances. Finally, this commenter urged NOAA to respond in the 
revised final regulation to all of the D.C. Circuit's questions posed 
in remanding this issue.
    Another trustee commenter reported on an experience in which 
removal of residual oil long after an incident was paid for out of 
restoration funds paid by a responsible party and held by trustees in a 
trust account.
    U.S. EPA commented that they agree that trustees have authority to 
remove residual oil as part of implementation of a publicly-reviewed 
restoration plan. EPA also noted, however, that federal response 
agencies and trustees must consult and coordinate during an incident to 
ensure protection and restoration of potentially injured natural 
resources due to an oil spill. Although the final decision as to the 
scope and

[[Page 39468]]

completion of response activities is placed with the federal OSC, EPA 
stated that trustees may request that lead agencies conduct specific 
removal actions, including requesting that a removal action be re-
opened to address residual oil under certain circumstances. EPA 
suggested that incidents supporting the need for removal of residual 
oil should be few if the coordination and consultation process works.
    One group of industry representatives stated that trustees should 
not be authorized to undertake response actions, including removal of 
residual oil beyond that directed by the lead response agency in 
consultation with trustees. The commenters characterized NOAA's 
remanded regulation provision as a unilateral attempt to grant trustees 
additional power and authority, and stressed the need for NOAA to 
answer all of the D.C. Circuit's questions concerning the 
interrelationship of response and restoration authority. These 
commenters suggested drawing strong and clear distinctions between 
response and trustee authorities, roles and responsibilities. The 
commenters stated that tremendous problems arise respecting releases 
when trustees attempt to ``take over, circumvent, or reopen the 
analysis and selection of response action alternatives and cleanup 
criteria required under the [NCP],'' including inefficiency, confusion, 
delay, and increased costs, among other things. Citing to numerous 
sections of the NCP and EPA's July 31, 1997 OSWER Directive No. 9200.4-
22A, the commenters characterized the proper role of resource 
restoration as supplemental to, and consistent with, response actions 
and criteria selected by the lead agency.
    A second group of industry commenters also concluded that EPA and 
the Coast Guard have exclusive authority to determine when removal is 
complete, and that trustees' interests are protected by, and limited 
to, consultation with the lead agency pursuant to section 1011 of OPA. 
These commenters suggested that OPA, the CWA, and the NCP all draw 
clear lines between ``removal'' and ``restoration,'' citing as support 
the different liability provisions and different statutes of 
limitations for removal costs and for natural resource damages in OPA. 
These commenters also suggested that the remanded regulation provision, 
because it could be used solely by state or tribal trustees, undermines 
Congress' intent that removal under OPA always be conducted under the 
supervision of federal authorities. These commenters urged NOAA to 
remove Sec. 990.53(b)(3)(i) from the regulation.
    A third group of commenters representing industry concerns noted 
that oil spill cleanup is critically important, in part, because it may 
also achieve restoration and eliminate the need for further 
compensation to the public. These commenters stressed that ``too many 
cooks'' can hamper the effectiveness of response actions in achieving 
this and other goals, and suggested that this was one reason why 
Congress limited trustees' role during response to a consultative one. 
The commenters noted potential problems with recovering response costs 
from the Oil Spill Liability Trust Fund when these costs exceed the 
liability limits. The commenters also expressed concern about removal 
actions taken by trustees and consistency with the NCP. However, these 
commenters stated that they would support removal of residual oil by 
trustees in instances where it is necessary to assist natural recovery 
of injured resources, so long as such action is the most cost-effective 
restoration action, and that the claim for the costs of such action is 
developed in accordance with established damage assessment and 
restoration planning procedures.
    A fourth commenter representing an industry association also stated 
that the regulation should reflect the clear legal distinction drawn by 
Congress in OPA between removal of oil and restoration of natural 
resources. This commenter stated that NOAA should not attempt to 
authorize any removal authority for trustees. Reasons cited for this 
position included negative public policy, increasing transaction costs 
to rival the Superfund program, and open-ended removal liability. 
However, this commenter also recognized that removal of oil can 
comprise an effective restoration action, and that in reality there is 
no existence of a time certain at which removal stops and restoration 
begins. Citing the purpose of OPA's requirement that response agencies 
consult with trustees, this commenter advocated that natural resource 
damage assessment activities proceed apace with response in such a 
fashion that the removal completion decision can take into account the 
need to remove more oil in order to achieve effective restoration. This 
commenter also requested that NOAA resolve this remanded issue with 
formal rulemaking.
    The final group of industry commenters also stated that they would 
support trustee authority to remove residual oil if it is the most 
cost-effective restoration alternative, in certain circumstances. 
Specifically, these commenters urged NOAA to revise the regulation such 
that an injury to a natural resource for which trustees could seek 
restoration, including by removal of residual oil, be defined as a loss 
of a service that the resource provided to the public. Appropriate 
restoration would be limited to reinstatement of these services and 
could include elimination of oil from the environment if this action 
achieved reinstatement of services. The commenters argued that OPA's 
grant of authority to response agencies to abate threats to the 
environment overlaps with authorities NOAA granted to trustees under 
the regulation to restore lost ecological functions or services. The 
commenters suggested that trustee removal of residual oil, when it is 
not performed to reinstate a public service, represents second-guessing 
of the lead agency's determination that threats to the environment have 
been abated, even with oil remaining in the environment. These 
commenters urged that NOAA revise the regulation to eliminate the 
potential for any overlap between response and restoration authorities 
and actions. These commenters also urged that trustees work closely 
with removal agencies to identify in a timely manner whether additional 
removal is likely to be proposed as a restoration alternative, so that 
all removal can be carried out simultaneously.

II. Trustee Legal Costs

    The court's decision on recovery of attorneys' costs as assessment 
costs discussed three issues. First, the court noted that NOAA agrees 
that attorneys' costs incurred in pursuing litigation of a natural 
resource damages claim are not recoverable as assessment costs. In 
response to this point, NOAA proposes to amend the definition of 
``Reasonable assessment costs'' in Sec. 990.30 of the Final Regulation 
to remove the word ``enforcement'' from the definition. (General 
Electric et al. v. Commerce, at 776.)
    Second, the court noted that the parties in the case agreed that 
``trustees may recover assessment costs attributable to tasks that 
lawyers happen to perform but which others, such as engineers or 
private investigators, could have performed.'' (Id.) No amendment to 
the Final Regulation is necessary to address this point.
    Finally, the court declined to resolve the question of ``whether 
trustees may recover costs stemming from legal work not directly in 
furtherance of litigation (e.g., pre-litigation legal opinions, title 
searches) that only lawyers could have performed.'' (Id.) Instead, the 
court directed NOAA ``to draw the precise

[[Page 39469]]

line between recoverable and non-recoverable legal costs.'' (Id.) In 
response to this direction from the court, NOAA proposes to amend 
Sec. 990.30 of the Final Regulation to add a definition of ``legal 
costs'' that provides criteria for determining the scope of attorney 
activities that may be included in a trustee's claim for assessment 
costs.
    The proposed amendment focuses on the explicit actions that 
trustees are authorized to perform under the Final Regulation or under 
OPA. When determining whether the costs of actions, performed for the 
purpose of assessment or developing a restoration plan, that could only 
be performed by attorneys constitute reasonable assessment costs 
trustees must consider the following criteria:
     Whether the action comprised all or part of an action 
specified either in OPA section 1006(c);
     Whether the action was performed prior to, or in the 
absence of, the filing of litigation by or on behalf of the trustee in 
question to recover damages; and
     Whether the action was performed by an attorney who was 
working for or on behalf of the trustee agency, as opposed to a 
prosecutorial agency.
    The first criterion demonstrates that the action was directly in 
furtherance of natural resource damage assessment and restoration. The 
second and third criteria demonstrate that the action was not primarily 
in furtherance of litigation. If all of the above criteria are answered 
affirmatively, the costs associated with performance of the action by 
the attorney are assessment costs.
    If all of the above criteria are met, the costs associated with 
attorneys' actions are deemed assessment costs. If the criteria are not 
met, the trustee must explain why the action is an assessment action 
rather than an action performed for the primary purpose of furthering 
litigation. For example, if a responsible party declares bankruptcy at 
some point before a natural resource damage assessment is completed, a 
trustee may need to file a proof of claim in a bankruptcy court to 
preserve the natural resource damage claim. Although the cost of filing 
the proof of claim in the bankruptcy court may not be recoverable as an 
assessment cost, any attorneys costs in the continuing assessment 
itself would still be recoverable.
    The proposed amendment is consistent with OPA as there is nothing 
in the statute or its legislative history to suggest that trustees are 
required to assess injuries and develop restoration plans without any 
involvement of attorneys. There are numerous examples of common or 
routine assessment actions that may be most appropriately performed by 
trustee attorneys. Within NOAA's natural resource damage assessment and 
restoration program, and perhaps other trustee agencies, attorneys are 
responsible for such actions including, but not limited to:
     Providing written and oral advice on the requirements of 
OPA, these regulations, and other applicable laws;
     Preparing public notices, including the Notice of Intent 
to Conduct Restoration Planning issued to responsible parties and the 
Notice of Availability of Draft Restoration Plans;
     Developing and managing administrative records;
     Preparing binding agreements with potentially responsible 
parties in the context of the assessment, including study agreements, 
funding agreements, and restoration agreements;
     Preparing co-trustee cooperative agreements;
     Preparing formal trustee determinations required under the 
Regulation;
     Determining requirements for compliance with other 
applicable laws; and
     Procuring title searches, title insurance, and/or 
conservation easements when property agreements are part of restoration 
packages.
    NOAA is proposing to define the types of attorneys' costs that 
would be included in the recovery of assessment costs under the rule. 
The court noted that trustees may recover assessment costs attributable 
to tasks that lawyers happen to perform but which others, such as 
engineers or private investigators, could have performed. In addition, 
NOAA is clarifying in the proposal that costs of actions that could 
only be performed by attorneys also constitute assessment costs. NOAA 
is seeking comments on this approach.

III. Other Technical Clarifications

    NOAA is proposing a series of technical clarifications to 
incorporate developments in applicable law that occurred subsequent to 
publication of the Final Regulation, or to adjust language that may be 
inconsistent with OPA. NOAA is not opening up the entirety of 15 CFR 
part 990, but only these specific sections or subsections listed below.

A. Unsatisfied Demands for Damages, Sec. 990.64(a).

    Section 990.64(a) of the Final Regulation provides that where 
trustees' demands to implement or pay for restoration were denied by 
responsible parties, trustees could elect to file a judicial action for 
damages or seek an appropriation from the Oil Spill Liability Trust 
Fund. On September 25, 1997, the Office of Legal Counsel for the U.S. 
Department of Justice determined that OPA does not require trustees to 
seek appropriations for uncompensated claims for damages. Instead, the 
U.S. Department of Justice found that damage claims could be presented 
to and paid by the Trust Fund without further appropriations. Thus, 
NOAA is proposing an amendment to the Regulation to reflect this legal 
determination. Therefore, under the proposed rule, trustees have the 
option to seek recovery from the Trust Fund for uncompensated damages 
without further appropriations under section 1012(a)(4) of OPA, or seek 
an appropriation from the Trust Fund under section 1012(a)(2) of OPA.

B. Indirect Costs, Sec. 990.30

    Subsequent to publication of the Final Regulation, the D.C. Circuit 
Court of Appeals upheld provisions in the Department of the Interior's 
(DOI) regulations for natural resource damage assessments under CERCLA 
that authorize recovery of indirect costs associated with restoration 
plans. Kennecott Utah Copper Corp. v. U.S. Dept. of the Interior, 88 
F.3d 1191 (D.C. Dir. 1996). The Court found that DOI's provision met 
CERCLA's damages causation requirement because indirect costs were 
limited to those that were ``necessary'' to ``support'' implementation 
of a selected restoration option. Kennecott at 1224. The Court upheld 
recoverability of indirect costs of restoration in part due to the 
existence of procedural safeguards in DOI's regulation that help ensure 
the accuracy of such costs. These safeguards include describing 
selection of cost estimation methods in a publicly reviewable 
administrative record and restoration plan, and demonstrating that the 
method avoids double counting, and is feasible, reliable, cost-
effective, and can be conducted at a reasonable cost. Finally, the 
Court held that requirements provided in DOI's regulation for 
calculation and application of an indirect cost rate sufficiently 
restrained trustee discretion, in that the regulation limits use of a 
rate to situations where the costs of estimating indirect costs 
outweigh the benefits, and where the assumptions used in calculating 
the rate have been documented.
    The preamble to NOAA's Final Regulation indicated that indirect 
costs were recoverable assessment costs, but

[[Page 39470]]

the Regulation did not include specific guidelines for determining 
indirect costs for either assessment or restoration costs. Based upon 
the ruling in Kennecott, NOAA proposes technical clarifications to the 
Regulation to define the scope of indirect costs that are recoverable 
as ``reasonable assessment costs'' and as ``restoration costs.'' The 
Rule incorporates the definition of indirect costs provided by the 
Office of Management and Budget (see, ``Managerial Cost Accounting 
Concepts and Standards for the Federal Government,'' Statement of 
Federal Financial Accounting Standards No. 4 (SFFAS 4), Executive 
Office of the President, Office of Management and Budget, July 1, 
1995). The Rule contains similar procedural safeguards that apply to 
selecting a methodology to determine indirect costs as the CERCLA rule. 
Section 990.27 lists standards for all methods that might be used in an 
assessment, including methods that might be used to calculate indirect 
costs, i.e., cost calculation methods must be demonstrated to be 
reliable, valid, and cost-effective. Also, section 990.45 provides that 
relevant data on methods used should be included in the administrative 
record for the assessment. When using an indirect cost rate in lieu of 
calculating indirect costs on a case-specific bases, the basis of the 
indirect cost rate also should be documented in the administrative 
record.

C. Cost Accounting Procedures, Sec. 990.62(f)

    Although various sections of the Regulation require selection of 
reliable and valid methods and require trustees to avoid double 
counting, NOAA believes that these requirements should be explicitly 
stated for purposes of cost accounting, providing added assurances that 
costs are accurate and appropriate. Therefore, NOAA proposes to add a 
new subsection (f) to Sec. 990.62 of the Regulation to require that, 
when determining assessment and restoration costs incurred by trustees, 
trustees must use methods consistent with generally accepted accounting 
principles and with the requirements of Sec. 990.27 of the Regulation.

D. Cost Estimating Procedures, Sec. 990.62(g)

    NOAA is also proposing that trustees must use methods consistent 
with generally accepted cost estimating practices and the requirements 
of Sec. 990.27 of this part when estimating costs to implement a 
restoration plan.

National Environmental Policy Act, Executive Order 12866, 
Regulatory Flexibility Act, and Paperwork Reduction Act

    The National Oceanic and Atmospheric Administration has determined 
that this Rule does not constitute a major federal action significantly 
affecting the quality of the human environment. Therefore, no further 
analysis pursuant to section 102(2)(C) of the National Environmental 
Policy Act of 1969 (42 U.S.C. 4332(2)(C)) has been prepared. The 
Assistant General Counsel for Legislation and Regulation, in accordance 
with the Regulatory Flexibility Act, certifies to the Chief Counsel for 
Advocacy, Small Business Administration, that this proposed rule will 
not have a significant economic effect on a substantial number of small 
entities. The Rule is intended to make more specific, and easier to 
apply, the standards set out in OPA for assessing damages for injury to 
natural resources as a result of actual or threatened discharges of 
oil. The Rule is not intended to change the balance of legal benefits 
and responsibilities among any parties or groups, large or small. To 
the extent any are affected by the Rule, it is anticipated that all 
will benefit by increased ease of application of law in this area.
    It has been determined that this document is a significant rule 
under Executive Order 12866. The Rule provides optional procedures for 
the assessment of damages to natural resources. It does not directly 
impose any additional cost.
    It has been determined that this Rule does not contain information 
collection requirements that require approval by the Office of 
Management and Budget under 44 U.S.C. 3501 et seq.

List of Subjects in 15 CFR Part 990

    Coastal zone, Environmental protection, Natural resources, Oil 
pollution, Water pollution control, Waterways.

    Dated: July 20, 2001.
Jamison S. Hawkins,
Deputy Assistant Administrator for Ocean Services and Coastal Zone 
Management.
    Under the authority of the Oil Pollution Act of 1990, 33 U.S.C. 
2706(a), and for the reasons set out in this preamble, title 15 of the 
Code of Federal Regulations, chapter IX is proposed to be amended as 
set forth below.

SUBCHAPTER E--OIL POLLUTION ACT REGULATIONS

PART 990--NATURAL RESOURCE DAMAGE ASSESSMENTS

    1. The authority citation for part 990 continues to read as 
follows:

    Authority: 33 U.S.C. 2701 et seq.

    2. In Sec. 990.26, revise paragraphs (a) and (b) to read as 
follows:


Sec. 990.26  Emergency restoration.

    (a) Trustees may take emergency restoration action before 
completing the process established under this part, provided that:
    (1) The action is needed to avoid irreversible loss of natural 
resources, or to prevent or reduce any continuing danger to natural 
resources or similar need for emergency action;
    (2) The action will not be undertaken by the lead response agency;
    (3) The action is feasible and likely to succeed;
    (4) Delay of the action to complete the restoration planning 
process established in this part likely would result in increased 
natural resource damages; and
    (5) The costs of the action are not unreasonable.
    (b) If response actions are still underway, trustees must 
coordinate with the On-Scene Coordinator (OSC), consistent with the 
NCP, to ensure that emergency restoration actions will not interfere 
with or duplicate ongoing response actions. Emergency restoration may 
not address residual oil unless:
    (1) The OSC's response is complete; or
    (2) The OSC has determined that the residual oil identified by the 
trustee as part of a proposed emergency restoration action does not 
merit further response.
* * * * *
    3. In Sec. 990.30, add new definitions in alphabetical order and 
revise the definition of ``Reasonable assessment costs'' to read as 
follows:


Sec. 990.30  Definitions.

* * * * *
    Indirect costs means expenses that are jointly or commonly incurred 
to produce two or more products or services. In contrast to direct 
costs, indirect costs are not specifically identifiable with any of the 
products or services, but are necessary for the organization to 
function and produce the products or services. An indirect cost rate, 
developed in accordance with generally accepted accounting principles, 
may be used to allocate indirect costs to specific assessment and 
restoration activities. Both direct and

[[Page 39471]]

indirect costs contribute to the full cost of the assessment and 
restoration, as provided in this part.
* * * * *
    Legal costs means the costs of attorney actions performed for the 
purpose of assessment or developing a restoration plan, in accordance 
with this part.
    (1) When making a determination of the nature of attorneys' actions 
for purposes of this definition, trustees must consider whether:
    (i) The action comprised all or part of an action specified either 
in this part or in OPA section 1006(c);
    (ii) The action was performed prior to, or in the absence of, the 
filing of ligation by or on behalf of the trustee in question to 
recover damages; and
    (iii) The action was performed by an attorney who was working for 
or on behalf of the trustee agency, as opposed to a prosecutorial 
agency.
    (2) If all of the criteria in paragraph (1) of this definition are 
met, the costs associated with attorney's actions are deemed assessment 
costs. If the criteria are not met, the trustee must explain why the 
action was not performed for the primary purpose of furthering 
litigation in order to support a characterization of the action as an 
assessment action.
* * * * *
    Reasonable assessment costs means, for assessments conducted under 
this part, assessment costs that are incurred by trustees in accordance 
with this part. In cases where assessment costs are incurred but 
trustees do not pursue restoration, trustees may recover their 
reasonable assessment costs provided they have determined that 
assessment actions undertaken were premised on the likelihood of injury 
and need for restoration. Reasonable assessment costs also include: 
administrative, legal, and other costs necessary to carry out this 
part; monitoring and oversight costs; costs associated with public 
participation; and indirect costs that are necessary to carry out this 
part.
* * * * *
    4. In Sec. 990.53, revise paragraph (b)(3)(i) to read as follows:


Sec. 990.53  Restoration selection-developing restoration alternatives.

* * * * *
    (b) * * *
    (3) * * *
    (i) Address conditions that would prevent or limit the 
effectiveness of any restoration action;
* * * * *
    5. In Sec. 990.62, revise paragraph (b)(2) and add new paragraphs 
(f) and (g) to read as follows:


Sec. 990.62  Presenting a demand.

* * * * *
    (b) * * *
    (2) Advance to the trustees a specified sum representing all 
trustee direct and indirect costs of assessment and restoration, 
discounted as provided in Sec. 990.63(a) of this part.
* * * * *
    (f) Cost accounting procedures. Trustees must use methods 
consistent with generally accepted accounting principles and the 
requirements of Sec. 990.27 of this part in determining past assessment 
and restoration costs incurred by trustees. When cost accounting for 
these costs, trustees must compound these costs using the guidance in 
Sec. 990.63(b) of this part.
    (g) Cost estimating procedures. Trustees must use methods 
consistent with generally accepted cost estimating principles and meet 
the standards of Sec. 990.27 of this part in estimating future costs 
that will be incurred to implement a restoration plan. Trustees also 
must apply discounting methodologies in estimating costs using the 
guidance in Sec. 990.63(a) of this part.
    6. In Sec. 990.64, revise paragraph (a) to read as follows:


Sec. 990.64  Unsatisfied demands.

    (a) If the responsible parties do not agree to the demand within 
ninety (90) calendar days after trustees present the demand, the 
trustees may either file a judicial action for damages or present the 
uncompensated claim for damages to the Oil Spill Liability Trust Fund, 
as provided in section 1012(a)(4) of OPA (33 U.S.C. 2712(a)(4)) or seek 
an appropriation from the Oil Spill Liability Trust Fund as provided in 
section 1012(a)(2) of OPA (33 U.S.C. 2712(a)(2)).
* * * * *
[FR Doc. 01-18962 Filed 7-30-01; 8:45 am]
BILLING CODE 3510-JE-P