[Federal Register Volume 67, Number 190 (Tuesday, October 1, 2002)]
[Rules and Regulations]
[Pages 61483-61493]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-24918]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF COMMERCE

National Oceanic and Atmospheric Administration

15 CFR Part 990

[Docket No. 990608154-2213-02]
RIN 0648-AM80


Natural Resource Damage Assessments

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

ACTION: Final rule.

-----------------------------------------------------------------------

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 (OPA). The final regulations were challenged, 
pursuant to section 1017(a) of OPA. On November 18, 1997, the United 
States 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)). On July 31, 2001, NOAA 
published proposed amendments to the final regulations to address the 
remanded issues and to propose some clarifying and technical amendments 
in other parts of the regulation. This final rule addresses the 
remanded issues and comments received.

EFFECTIVE DATE: October 31, 2002.

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 (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. 
Congress directed the National Oceanic and Atmospheric Administration 
(NOAA) to promulgate regulations for the assessment of natural

[[Page 61484]]

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, plus assessment costs. These final 
regulations were challenged pursuant to section 1017(a) of OPA. On 
November 18, 1997, the United States 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 also proposed 
clarifying and technical amendments in other parts of the regulations.

Discussion

I. Court's Mandate to Clarify Removal Language

A. Discussion

    In General Electric Co., 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 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 regulations. NOAA did not intend to 
propose shared ``removal authority,'' as defined by OPA. Removal 
authority is exclusively provided to the U.S. Environmental Protection 
Agency (EPA) and the U.S. Coast Guard (Coast Guard) under the Clean 
Water Act, 33 U.S.C. 1321 (CWA), Executive Order 12777 (56 FR 54757, 
Oct. 22, 1991), and the 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 that the regulations authorize 
trustees to eliminate or reduce exposure of natural resources to oil 
resulting from an incident, but only if such action is selected in 
accordance with standards and procedures for restoration 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 response and trustee agencies. Further, 
recognition of the trustees' authority to address residual oil through 
selection of a restoration action would not be granting trustees the 
authority to second guess response agencies because selection of 
restoration actions is based upon different information and criteria 
than are used by the response agencies 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 prevent, 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), see also OPA section 1001(30) (33 U.S.C. 
2701(30)), the NCP, 40 CFR Part 300 at 300.5.
    While ``removal'' involves taking whatever actions are needed to 
prevent or reduce damage caused by a threat of or actual spill, natural 
resource damage assessment and restoration involve an investigation and 
planning process that is aimed at returning the environment to baseline 
conditions, i.e., the state it would have been in had the incident not 
occurred, by implementing restoration approaches as provided under OPA. 
Although not defined under OPA, restoration is defined in the Final 
Regulation 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 factors provided in the Final Regulation 
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 of natural resources to oil.
    Another area causing potential confusion with removal actions is 
the Final Regulation provisions on emergency restoration in Sec.  
990.26. Section 990.26 of the Final Regulation 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 proposed amendments to 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

[[Page 61485]]

or similar need for emergency action,'' and to mitigate the ultimate 
natural resource damages resulting from the incident that would result 
from delaying the emergency restoration action. This provision was 
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, NOAA proposed to amend Sec.  990.26(a) to 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.
    NOAA also proposed to amend Sec.  990.26(b) to provide that, if 
response actions are still underway, trustees must coordinate with the 
OSC before implementing any emergency restoration action. The 
amendments provided that trustees may take such action only if that 
action will not interfere with or duplicate the ongoing response 
action. Finally, the amendments also provided 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 specified in the NCP.
    Given the fact that the parenthetical language of Sec.  
990.53(b)(3) of the Final Regulation caused confusion on this issue, 
NOAA proposed that subsection be amended to delete the parenthetical 
language, ``e.g., residual sources of contamination.'' For the same 
reason, NOAA replaced the term ``remove'' with the term ``address'' in 
Sec.  990.53(b)(3).

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

    In its opinion in General Electric Co., et al., v. Commerce, the 
Court posed a number of specific questions for NOAA to address. The 
preamble to the proposed amendments published on July 31, 2001, at 66 
FR 39466-39467, answered these questions upon consultation with the 
Coast Guard and EPA. Although the questions were addressed in the 
preamble, NOAA believes that the language bears repeating. Therefore, 
the questions from the Court and their answers are given here to 
clarify the relationship 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 CWA, OPA, and the NCP 
addresses actions taken by the lead response agency necessary to 
``prevent, minimize or mitigate'' damage to the public health or 
welfare, including the environment. 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 may be 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 prevent, minimize or mitigate harm 
versus action to restore injured natural resources and services to 
baseline conditions.
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 the reduction or elimination of 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 but human intervention occurs, such as off-site acquisition or 
enhancement of substitute habitat, to address the injured resources.

[[Page 61486]]

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 the CWA may 
include actual removal or containment of oil, or other actions 
``necessary to prevent, 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. 1321(a)(8),(c),(e). As discussed above, the lead response 
agency's goals include preventing or reducing harm to the public health 
or welfare, including 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 prevent, minimize or mitigate 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 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 the 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 
amending 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. 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 
OSC before taking any 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 conditions 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. Response to Comments

    1. 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. Twelve 
separate parties responded to the request for comments. Comments were 
received from five industry representatives, four from state trustee 
representatives, one from EPA, and two from individual members of the 
public. Comments received are summarized and addressed below.
    Comment: One commenter, a private cleanup contractor, described a 
``unique design'' of skimmer used by his 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.
    Response: NOAA takes note of the cleanup approach suggested by the 
first commenter. NOAA does not agree with the second commenter that 
addressing residual oil is needless work. NOAA also points out that one 
of the

[[Page 61487]]

considerations trustees must address in selecting a restoration project 
is whether that project will inflict additional harm upon the 
environment.
    Comment: 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 the agency 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 
the agency would have the authority to request responsible parties to 
conduct this type of residual removal as part of a restoration plan. A 
second trustee representative commented on a specific case example 
involving residual oil in which trustees were heavily involved in the 
response planning and decisionmaking. 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. 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.
    Response: NOAA takes note of these comments.
    Comment: Another trustee representative stated its agreement with 
NOAA's proposed amendments that trustees have legal authority to remove 
residual oil as part of a restoration plan. 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 an 
example where oil unaccounted for by response efforts was discovered 
later in sediments of a protected natural area. Finally, this commenter 
urged NOAA to respond in the amended Final Regulation to all of the 
D.C. Circuit's questions posed in remanding this issue.
    Response: NOAA agrees with the commenter that addressing residual 
oil is sometimes necessary and unavoidable as a restoration action. 
NOAA also points to the responses to the Court's questions above in 
section I.B. of this preamble.
    Comment: EPA commented that it agrees 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. EPA suggested that incidents supporting 
the need for removal of residual oil should be few if the coordination 
and consultation process works.
    Response: NOAA takes note of this comment and agrees with EPA on 
this issue.
    Comment: 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 stated that NOAA 
should 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. 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 response agency.
    Response: NOAA notes that trustees acting pursuant to the Final 
Regulation will not attempt to usurp the role of the lead response 
agency. NOAA also refers the commenter to the response to the Court's 
questions given above in section I.B. of this preamble.
    Comment: 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 response agency pursuant to 
section 1011 of OPA. These commenters suggested that the OPA, CWA, and 
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 
on the removal of residual oil, which 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.
    Response: NOAA agrees with the commenter that the response agencies 
have exclusive authority to determine when removal is complete. 
However, NOAA does not agree that the trustees' interests are limited 
to consultation with the lead response agency. NOAA notes that, in 
consultation with the Coast Guard and EPA, it has responded to the 
Court's questions above in Section I.B. of this preamble. NOAA points 
out that Sec.  990.53(b)(3)(i) does not and should not address which 
trustees may use these provisions nor does it undermine Congressional 
intent.
    Comment: 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. 
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.
    Response: NOAA notes and appreciates the offer of support from 
these commenters. In response to the comment on cost-effectiveness, for 
emergency restoration actions, Sec.  990.26(a)(5) specifically requires 
that the costs of the action not be unreasonable. For non-emergency 
restoration conducted pursuant to a publicly-reviewed restoration plan, 
Sec.  990.54(a) provides standards for evaluating a range of 
restoration alternatives and Sec.  990.54(b) includes a cost-
effectiveness requirement.
    Comment: A fourth commenter representing an industry association 
also stated that the Final 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. 
However, this commenter also

[[Page 61488]]

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.
    Response: Again, NOAA notes that it is not attempting to create 
removal authority for trustees. NOAA does agree that trustees should 
work where possible through the consultation process with the lead 
response agency to address removal of oil that might impede 
restoration. However, NOAA points out that Sec.  990.53(b)(3)(i) is 
necessary to allow restoration to succeed where residual oil not 
subject to the removal process will impede restoration.
    Comment: The fifth 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 amendments to restore lost ecological functions 
or services. These commenters urged that NOAA revise the Final 
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.
    Response: NOAA notes and appreciates the support of these 
commenters. In response to the comment on cost-effectiveness, as noted 
earlier, for emergency restoration actions, Sec.  990.26(a)(5) 
specifically requires that the costs of the action not be unreasonable. 
For non-emergency restoration conducted pursuant to a publicly-reviewed 
restoration plan, Sec.  990.54(a) provides standards for evaluating a 
range of restoration alternatives and Sec.  990.54(b) includes a cost-
effectiveness requirement. NOAA does not believe that the physical 
removal of residual oil by trustees constitutes a type of restoration 
that must be evaluated any differently from the other types of 
restoration actions, except for the safeguards that the Final 
Regulation puts in place for emergency restoration actions that address 
residual oil. Nor did the commenters provide a basis for treating this 
type of restoration action differently from all others and subjecting 
it to a special and determinative cost-effectiveness criteria. However, 
NOAA would not attempt to limit or restrict trustee actions by only 
addressing threats to restoration success in situations involving 
``loss of services'' to the public, since the Final Regulation 
currently provides the flexibility to the trustees in making 
restoration decisions. NOAA agrees that trustees should coordinate 
closely with the lead response agency to try to address the removal of 
all oil deemed necessary.
    2. On July 31, 2001, NOAA published proposed amendments to the 
Final Regulation to address the remanded issues, including the issue of 
residual oil. 66 FR 39464. Only four comments were received on the 
proposed amendments regarding the issue of addressing residual oil: 
three comments from industry representatives and one comment from a 
coalition of State officials. The comments from industry 
representatives are similar and are therefore summarized and addressed 
as one set of comments.
    Comment: One major area of concern from industry representatives is 
that trustees do not have the authority to ``remove'' residual oil. The 
commenters maintain that the removal authority under OPA and the NCP, 
in particular, is clear and sufficiently broad to address any 
impediments to restoration resulting from residual oil. In support of 
preserving the statutory status quo, the commenters cite to 
Congressional and statutory language that unambiguously distinguish 
removal and restorations authority in terms of goals, scope, and 
provisions regarding liability and claims. (See, definition of 
``removal'' authority at OPA section 1001(30), CWA sections 311(c) & 
(d), and NCP Sec.  300.5.; on Congressional intent at H. Conf. Rep. No. 
653, 101st Cong., 2d Sess. (1990), at 146; on liability provision at 
OPA sections 1002(b)(1) & (b)(2)(A); on claims at OPA sections 
1017(f)(1)(b) & (f)(2) and the Oil Spill Liability Trust Fund claims 
procedures.) The commenters further cite the distinct roles and 
responsibilities between the response agencies and trustees as evidence 
of statutory intent to maintain removal of residual oil under the 
direction of the OSC, not the trustees. (See the President's 
responsibility at CWA section 311(c)(1), as amended by OPA section 
4201; President's has delegated responsibilities to EPA at Executive 
Order 12777, 56 FR 54757 (Oct. 22,1991); and duties of lead response 
agencies at 40 CFR Part 300.) One commenter suggested that cleanup 
resources may be unavailable to the OSC if trustees are using these 
resources for removal of ``residual oil.''
    The commenters state that NOAA's proposed amendments to the Final 
Regulation are an attempt to provide removal authority to trustees 
under the guise of restoration. The commenters claim that NOAA does not 
have the authority to grant itself such authority, that the granting of 
residual oil removal authority to trustees would be inconsistent with 
the statutory language under OPA and the NCP. The commenters further 
argue that NOAA has not adequately explained the standards and 
protections for its ``new-found'' removal authority, and how this 
claimed authority would relate to the authority granted to the OSC 
under the statute. The commenters also noted that there is no 
requirement that the additional removal of oil by trustees be cost-
effective or demonstrate a net environmental benefit.
    A second substantive issue of the commenters is that, if trustees 
are granted residual oil removal authority, the regulations will 
disrupt the decisionmaking process and operational scheme defined under 
the NCP to remove residual oil (NCP Subparts B-D). Under NOAA's 
proposed amendments, the commenters indicate that trustees might be 
able to take removal actions contrary to OSC decisions and prior 
trustee positions respecting removal actions while the OSC would have 
no say in trustee residual oil removal actions. The commenters note 
that the principal difference in NOAA's proposed amendments is the 
identity of the decisionmaker, not the decision. The commenters 
indicate that the current procedural safeguards under the NCP work. 
Changing the NCP would compromise removal decisions and serve as a 
disincentive to industry to cooperate and coordinate with response 
agencies. The commenters also stated that there should be no time line 
imposed upon the OSC's decision regarding oil removal. The commenters

[[Page 61489]]

cited the Tampa Bay case as one example of the trustees second-guessing 
the OSC. One commenter stated that allowing trustees to conduct 
additional oil removal may increase the liability of the responsible 
party. If this additional oil removal is not part of the established 
response process, then these costs may not be reimbursable to the 
responsible party if the liability limit is exceeded.
    The commenters argue that the U.S. Court of Appeals for the 
District of Columbia Circuit should dismiss NOAA's arguments that 
trustees have the right to conduct removal of residual oil under the 
``guise of restoration.'' The commenters argument is based upon their 
belief that NOAA did not adequately respond to the Court's questions, 
that NOAA failed to address the commenters' concerns in a prior Federal 
Register notice, and that NOAA is unclear regarding the position of the 
Federal lead response agencies (the Coast Guard and EPA) regarding 
NOAA's proposed amendments. The commenters recommend that the proposed 
amendments to NOAA's Final Regulation be revised in such a way that 
would not allow trustees to have the authority to address residual oil 
during emergency restoration or other resource restoration activities.
    Response: The proposed amendments did not grant authority to 
trustees to conduct removal under the ``guise of restoration.'' NOAA 
has clearly stated in the proposed amendments that it does not intend, 
nor was it intended in the Final Regulation, to grant ``removal 
authority'' to trustees as provided to the response agencies under OPA 
and the NCP (66 FR 39465 and 39471, thus, for instance, the change in 
terminology from ``removal'' to ``address'' Sec.  990.53(b)(3)(i)). 
However, NOAA firmly believes that Congress did not intend to limit the 
ability for trustees to conduct restoration in an efficient or 
effective manner. As a result, the regulations authorize trustees to 
address residual oil if such action clears the way to cost-effective 
restoration. As mentioned earlier, Sec.  990.54(b) includes a cost-
effectiveness requirement.
    Limiting the ability of trustees to initiate restoration as 
suggested by the commenters, could result either in more and costlier 
restoration, or in the inability of trustees to exercise any options to 
address residual oil that may serve as an impediment to restoration. 
NOAA believes that such alternative actions do not serve any member of 
the public and that trustees should have authority to evaluate a broad 
range of restoration alternatives.
    The proposed amendments maintained the opportunity for trustees 
``to eliminate or reduce exposure to oil resulting from an incident'' 
(66 FR at 39464, col. 3), if such action represents a preferred 
restoration alternative under the provisions of the regulations. 
Trustees have the authority to take limited ``emergency'' restoration 
actions consistent with that granted under OPA section 1012(j) and tort 
law. (66 FR at 39465, col 2.) While the commenters may perceive such 
restoration actions as ``removal'' actions that may be taken 
arbitrarily or in conflict with OSC decisions, they are not, nor would 
the trustee actions monopolize response resources. NOAA stated in its 
proposed amendments that restoration actions, including emergency 
actions as defined by OPA section 1012(j), must be consistent with the 
standards and procedures set forth under OPA (OPA section 1006), the 
Final Regulation (e.g., 15 CFR 990.54(a)), and the proposed amendments 
to the Final Regulation. Emergency restoration actions must also abide 
by the consultative requirements of the NCP and the determination of 
the OSC to reconsider or re-open a removal action or otherwise defer 
such action for restoration under trustee rules. (NCP Subpart D.) The 
trustee authorities described in the regulations are limited to 
restoration decisions made using restoration criteria, not the 
distinctly different decision framework used by the OSC to prevent, 
minimize or mitigate damage to human health, welfare, and the 
environment. Contrary to the arguments of the commenters, the decision 
truly is different, not just a function of the decision maker.
    As to the argument that the costs of addressing residual oil will 
not be recoverable if the responsible party exceeds liability limits, 
NOAA points out that such costs would be recoverable to the responsible 
party as restoration costs.
    The commenters cite the Tampa Bay example as a case where the 
trustees are alleged to have second-guessed the OSC. The commenters 
assertions misrepresent the facts of this case. In the Tampa Bay case, 
emergency restoration actions were taken only after extensive 
consultation with the OSC and the potentially responsible parties. 
Emergency restoration actions were determined necessary by the trustees 
upon the discovery of conditions that would have potentially resulted 
in the need for more and costlier restoration if no action were taken. 
This discovery was made possible through monitoring after the 
completion of removal actions. Given the circumstances at hand, the OSC 
determined it was best to defer further action to the trustees. (See, 
in particular, Sections 4.7 and Appendix D of the Tampa Bay Damage 
Assessment and Restoration Plan/Environmental Assessment for the August 
10, 1993, Tampa Bay oil spill, Volume 1--Ecological Injuries, Final, 
June 1997 in the Tampa Bay Administrative Record; and the paper on 
Tampa Bay in the NRDA Lessons Learned Workshop, May 11-12, 2000, New 
Orleans, LA. Both documents are available at http://www.darp.noaa.gov/publica.htm.)
    Under the safeguards highlighted in the proposed amendments and as 
demonstrated in the Tampa Bay example, NOAA does not envision that the 
decisionmaking framework and procedural guidelines in the NCP will be 
undermined. Like EPA, NOAA believes that circumstances where trustees 
will wish to address residual oil will be few in number (see EPA Letter 
to NOAA, March 30, 1998, re: Reconsideration of Final Rule--Assessment 
of Natural Resource Damages (15 CFR Part 990); Request for Comments (63 
FR 6846-6847, Feb. 11, 1998)), and that adequate controls are in place 
to ensure trustee coordination with the OSC.
    NOAA believes it has answered the Court's concerns. Further, NOAA 
believes it has provided ample opportunity for all commenters to 
provide input on the Court's questions. Finally, NOAA believes it has 
adequately addressed the commenters' concerns.
    On the issue of whether the lead Federal response agencies (the 
Coast Guard and EPA) concurred with NOAA's position in the proposed 
amendments, the Court asked that such concurrence be obtained in the 
event that NOAA was claiming ``removal residual authority'' per se (see 
discussion on Removal Authority in the United States Court of Appeals 
for the District of Columbia Circuit, November 18, 1997). Since NOAA is 
not claiming such authority, it could be argued that no such 
concurrence is necessary. However, NOAA agrees that ``emergency'' 
restoration actions do require close coordination with the response 
agencies.
    In sum, NOAA believes that the language provided in the proposed 
amendments is adequate. NOAA believes that the proposed language on 
restoration under Sec. Sec.  990.26 and 990.53(b)(3)(i) affords the 
scope and protections needed to conduct actions consistent with removal 
and restoration authorities.
    Comment: The one set of comments representing trustee interests 
found the proposed amendments constructive and sound, and recommended 
that these amendments be retained in the in the

[[Page 61490]]

Final Regulation. The commenters note that the proposed amendments 
adequately and accurately address the Court's questions. The commenters 
support NOAA's position that effective restoration may require the 
trustees to eliminate or reduce exposure to oil.
    The commenters specifically support NOAA's proposed amendments at 
Sec.  990.26(a) and (b) regarding emergency restoration. However, the 
commenters felt that NOAA should address the ``timeliness'' in the 
implementation of emergency restoration actions in the proposed 
amendments. (NOAA asked for input on adding an explicit element, ``at 
this time,'' to Sec.  990.26(b)(2) regarding the OSC's determination 
that residual oil does not merit further response, 66 FR 39465.) The 
commenters indicate that the OSC may be distracted on other more 
critical response issues (e.g., human health and safety) to make timely 
conclusions respecting the completion of a removal action. Such delays 
may require additional, costlier restoration. Thus, the commenters 
support the inclusion of the phrase ``at that time'' in NOAA's 
amendments as a reasonable solution.
    Response: NOAA concurs with the commenters' observation that the 
proposed amendments to Sec.  990.26(a) and (b) will facilitate the 
coordination of emergency restoration and removal actions. However, 
adding the phrase ``at that time'' to Sec.  990.26(b)(2) might appear 
to undermine the OSC's authority. Modifying the NCP language respecting 
the OSC's responsibilities for removal actions is left to EPA (in 
consultation with other members of the National Response Team) as 
provided under section 1 of Executive Order 12777, 58 FR 54757. Removal 
of discharges is delegated to EPA and the Coast Guard under section 3 
of the same Executive Order. Therefore, NOAA is declining to add such a 
time element relative to removal actions.

D. Conclusion

    NOAA believes that the amendments sufficiently address the issue of 
residual oil remanded from the Court. This language was carefully 
crafted through extensive consultation with the Coast Guard and EPA. 
Therefore, NOAA is not persuaded that changes are needed. The 
amendments are incorporated in the Final Regulation.

II. Trustee Legal Costs

A. Discussion

    The Court's decision on recovery of attorneys' costs as assessment 
costs discussed three issues. First, the Court noted that NOAA agreed 
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 proposed to amend to the definition of 
``Reasonable assessment costs'' in Sec.  990.30 by removing the word 
``enforcement'' from the definition. (General Electric Co., 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 line between recoverable and 
non-recoverable legal costs.'' (Id.) In response to this direction from 
the Court, NOAA proposed amendments to Sec.  990.30 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 amendments of July 31, 2001, focused 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 development of a restoration 
plan, that could only be performed by attorneys, constitute reasonable 
assessment costs, the proposed amendment provided that trustees must 
consider the following criteria:
    [sbull] Whether the action comprised all or part of an action 
specified either in this part or in OPA section 1006(c);
    [sbull] 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
    [sbull] 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 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.
    The preamble to the amendments proposed on July 31, 2001, provided 
examples of common or routine assessment actions that may be most 
appropriately performed by trustee attorneys including, but not limited 
to:
    [sbull] Providing written and oral advice on the requirements of 
OPA, these regulations, and other applicable laws;
    [sbull] 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;
    [sbull] Developing and managing administrative records;
    [sbull] Preparing binding agreements with potentially responsible 
parties in the context of the assessment, including study agreements, 
funding agreements, and restoration agreements;
    [sbull] Preparing co-trustee cooperative agreements;
    [sbull] Preparing formal trustee determinations required under the 
regulation;
    [sbull] Determining requirements for compliance with other 
applicable laws; and
    [sbull] Procuring title searches, title insurance, and/or 
conservation easements when property agreements are part of restoration 
packages.
Response to Comments
    On July 31, 2001, NOAA published proposed amendments to the Final 
Regulation to address the remanded issues, including the issue of 
trustee legal costs. 66 FR 39464. Only four comments were received on 
the proposed amendments: one comment from a coalition of State 
officials and three comments from industry representatives. These 
comments are summarized and addressed below. No comments were received 
on the issue of trustee legal costs in response to the February 11, 
1998, request for public comments since that notice only dealt with the 
issue of residual oil (63 FR 6846).
    Comment: The State officials and one industry commenter suggested 
that NOAA clarify the examples of trustee attorney actions given in the 
amendments proposed on July 31, 2001, and include these examples in the 
text of the Final Regulation.
    Response: NOAA has provided more clarity to the examples and has 
included that language in the Final Regulation. Readers should note, 
however, that

[[Page 61491]]

these examples are included simply as some of the various activities 
trustee agency attorneys might perform during the assessment and should 
not be taken as an exhaustive list of those activities that are 
authorized.
    Comment: One industry commenter stated that the criteria in the 
proposed amendments are insufficiently detailed to exclude the recovery 
of attorney costs that would not appropriately be considered assessment 
costs. The commenter noted that NOAA did not draw a sufficiently bright 
line to exclude litigation nor other attorney costs that are incurred 
for essentially legal functions rather than damage assessment 
functions. The commenter also suggested that actions such as preparing 
binding agreements with potentially responsible parties or other 
agencies, such as study or funding agreements, are not essential to the 
performance of an assessment and are therefore not recoverable. The 
commenter stated that such agreements are substitutes for litigation 
and should be excluded from the definition of recoverable legal costs.
    Response: NOAA believes that the criteria in the proposed 
amendments do provide clear guidance to define which attorney actions 
may be included as assessment activities. NOAA points out that such 
actions as preparing study and funding agreements are, in fact, 
essential to successful assessment work, particularly in the case of 
cooperative assessments where the parties want clear guidance on the 
bounds of the assessment. Instead of seeing such work as a substitute 
for litigation, NOAA believes such activities are essential to a 
successful assessment.
    Comment: This same commenter noted that an attorney may review 
assessment documents solely for the purpose of preparing the documents 
to be used in litigation. The commenter stated that this review cannot 
be performed adequately by a non-attorney and is directly related to 
litigation preparation. The commenter requested that NOAA should add a 
criterion to exclude all litigation preparation costs.
    Response: Review of an assessment document by an attorney during 
the course of an assessment may not be conducted for the sole purpose 
of preparing for litigation. If the assessment does not result in 
litigation at some future date it would likely be impossible to 
determine the ``motives'' of reviewers of documents. In addition, if 
litigation is avoided, the commenters' concern disappears. NOAA 
believes the current regulatory language gives clear guidance on how to 
define attorney actions performed for the purpose of assessment or 
development of a restoration plan so that a determination can be made 
as to which legal costs may be recoverable as reasonable assessment 
costs.
    Comment: This same commenter also suggested that NOAA add the word 
``costs'' after the word ``legal'' in the definition of ``reasonable 
assessment costs'' in Sec.  990.30 of the final regulation.
    Response: NOAA has added the word ``costs'' after both the word 
``administrative'' and ``legal'' in Sec.  990.30.
    Comment: Finally, some commenters pointed out that a trustee 
potentially could recover attorney costs that fail the criteria, so 
long as the trustee explains why the attorney work ``was not performed 
for the primary purpose of litigation.'' The commenters stated that 
this language would allow recovery of costs if the secondary purpose of 
the action were to further litigation. These commenters suggested that 
NOAA should clarify the definition of ``legal costs'' to provide that 
any costs of attorney work that are intended in any manner to prepare 
for or assist in litigation or similar activities are not recoverable. 
One commenter suggested that NOAA should clarify that attorney costs, 
to be recoverable, must be for actions specified under section 1006(c) 
of OPA. Another commenter suggested that the language of Sec.  990.30 
definition of legal costs be revised by replacing subparagraph (2) with 
language requiring that costs must meet the criteria in subparagraph 
(1), thereby not allowing any costs that do not meet the three 
criteria.
    Response: NOAA does not believe it is necessary to revise the final 
regulation to provide more clarity. The language allowing legal costs 
for actions ``not performed for the primary purpose of litigation'' was 
the phrase used by the Court and is included in the final regulation to 
avoid rigid adherence to the criteria in situations where assessment 
actions might not fit clearly within the three criteria listed, yet 
would still qualify as reasonable assessment costs. Responsible parties 
will still have the opportunity to challenge any costs they believe are 
not appropriate legal costs to include in reasonable assessment costs. 
NOAA points out that Sec.  990.30 definition of ``legal costs,'' in 
subparagraph (1)(i), already requires that actions be conducted 
pursuant to section 1006(c) of OPA.
Conclusion
    After considering the comments received on the July 31, 2001, 
proposed rule, NOAA has made the following changes to the regulatory 
language on attorneys' costs:
    (1) Section 990.30 definition of legal costs has been revised in 
this final rule by adding a new subparagraph (3), which includes a non-
exhaustive list of examples of attorney actions performed for the 
purpose of assessment or developing a restoration plan, in accordance 
with this rule.
    (2) Section 990.30 definition of ``reasonable assessment costs'' 
has been revised in this final rule to insert the word ``costs'' after 
the words ``administrative'' and ``legal.''

III. Other Technical Clarifications

    The amendments proposed on July 31, 2001, included technical and 
clarifying amendments to the Final Regulation. NOAA stated that it was 
not opening up the entirety of 15 CFR 990, but only those specific 
sections or subsections proposed. No comments were received on the 
technical and clarifying amendments. Therefore, the final regulation 
incorporates the following revisions:

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 (Trust Fund). On September 25, 1997, the Office of Legal Counsel 
for the U.S. Department of Justice (DOJ) determined that OPA does not 
require trustees to seek appropriations for uncompensated claims for 
damages. Instead, the U.S. DOJ found that damage claims could be 
presented to and paid by the Trust Fund without further appropriations. 
Thus, NOAA is amending the Final Regulation to reflect this legal 
determination. Therefore, under the final regulation, 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 U.S. Department of the 
Interior's (DOI) regulations for natural resource damage assessments 
under the Comprehensive Environmental Response, Compensation, and 
Liability Act (CERCLA) that authorize recovery of indirect costs 
associated with

[[Page 61492]]

restoration plans. Kennecott Utah Copper Corp. v. U.S. Dept. of the 
Interior, 88 F.3d 1191 (D.C. Cir. 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 an 
indirect cost rate to situations where the costs of estimating indirect 
costs outweigh the benefits, and where the assumptions used in 
calculating the indirect cost rate have been documented.
    The preamble to NOAA's Final Regulation indicated that indirect 
costs were recoverable assessment costs, but the Final Regulation did 
not include specific guidelines for determining indirect costs for 
either assessment or restoration costs. Based upon the ruling in 
Kennecott, NOAA is making technical clarifications to the Final 
Regulation to define the scope of indirect costs that are recoverable 
as ``reasonable assessment costs'' and as ``restoration costs.'' The 
Final Regulation 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 Final Regulation contains similar procedural 
safeguards that apply to selecting a methodology to determine indirect 
costs as those in the DOI regulation. Section 990.27 of the Final 
Regulation 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 that are demonstrated to be 
reliable, valid, and cost-effective. Also, Sec.  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 Final 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 is adding a new 
subsection (f) to Sec.  990.62 of the Final 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 Final 
Regulation.

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

    NOAA is also providing 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. Therefore, NOAA is adding a new subsection (g) to 
Sec.  990.62 of the Final Regulation to require that, when estimating 
costs to implement a restoration plan, trustees must use methods 
consistent with generally accepted cost estimating principles and with 
the requirements of Sec.  990.27 of the Final Regulation.

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

    The National Oceanic and Atmospheric Administration has determined 
that the amendments to the Final Regulation do 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 the amendments to the Final Regulation 
will not have a significant economic effect on a substantial number of 
small entities. The amendments to the Final Regulation are 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 amendments to the Final 
Regulation are 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 amendments, 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 not significant under 
Executive Order 12866. The amendments to the Final Regulation provide 
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, Restoration, Water pollution control, Waterways.

    Dated: September 9, 2002.
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, subchapter E, is 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;

[[Page 61493]]

    (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 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.
    (3) Examples of common or routine assessment actions that may be 
most appropriately performed by trustee attorneys, in accordance with 
this part, include, but are not limited to:
    (i) Providing written and oral advice on the requirements of OPA, 
this part, and other applicable laws;
    (ii) 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;
    (iii) Developing and managing administrative records;
    (iv) Preparing binding agreements with potentially responsible 
parties in the context of the assessment, including study agreements, 
funding agreements, and restoration agreements;
    (v) Preparing co-trustee cooperative agreements;
    (vi) Preparing formal trustee determinations required under this 
part; and
    (vii) Procuring title searches, title insurance, and/or 
conservation easements when property agreements are part of restoration 
packages.
* * * * *
    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 costs, legal costs, 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. 02-24918 Filed 9-27-02; 12:15 pm]
BILLING CODE 3510-JE-P