[Federal Register Volume 73, Number 41 (Friday, February 29, 2008)]
[Proposed Rules]
[Pages 11081-11087]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-3683]


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DEPARTMENT OF THE INTERIOR

43 CFR Part 11

RIN 1090-AA97


Natural Resource Damages for Hazardous Substances

AGENCY: Department of the Interior.

ACTION: Proposed rulemaking.

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SUMMARY: We are proposing to revise certain parts of the natural 
resource damage assessment regulations for

[[Page 11082]]

hazardous substances. The regulations provide procedures that natural 
resource trustees may use to evaluate the need for, and means of 
restoring, replacing, or acquiring the equivalent of public natural 
resources that are injured or destroyed as a result of releases of 
hazardous substances. This notice seeks comment on the proposed 
revisions to the regulations in response to the biennial statutory 
review requirement, two court decisions, and the recommendations of the 
Department of the Interior's Natural Resource Damage Assessment and 
Restoration Federal Advisory Committee.

DATES: We will accept comments through May 29, 2008.

ADDRESSES: You may submit comments, identified by the number [insert 
RIN], by any of the following methods:

--Federal rulemaking portal: http://www.regulations.gov. Follow the 
instruction for submitting comments.
--Mail: Department of the Interior, Natural Resource Damage Assessment 
and Restoration Program, Mail Stop 3548, 1849 C Street, NW., 
Washington, DC 20240.
--Hand delivery: Room 3548, 1849 C Street, NW., Washington, DC.

FOR FURTHER INFORMATION CONTACT: Frank DeLuise at (202) 208-4143.

SUPPLEMENTARY INFORMATION: This preamble is organized as follows:

I. What the Natural Resource Damage Regulations Are About
II. Why We Are Proposing To Revise Parts of the Regulations
III. Major Issues Addressed by the Proposed Revisions
    A. Further Emphasizing Restoration Over Economic Damages, as 
Recommended by the Natural Resource Damage Assessment and 
Restoration Federal Advisory Committee
    B. Complying With Ohio v. Interior and Responding to Kennecott 
v. Interior
    C. Technical Corrections To Provide Consistent Timing Guidelines 
for the Administrative Assessment Process Set Out in the Rule

I. What These Natural Resource Damage Regulations Are About

    The regulations describe how to conduct a natural resource damage 
assessment for hazardous substance releases under the Comprehensive 
Environmental Response, Compensation, and Liability Act (42 U.S.C. 
9601, 9607) (CERCLA) and the Federal Water Pollution Control Act (33 
U.S.C. 1251, 1321) (Clean Water Act). CERCLA required the President to 
promulgate these regulations. 42 U.S.C. 9651(c). The President 
delegated this rulemaking responsibility to the Department of the 
Interior (DOI). E.O. 12316, as amended by E.O. 12580. The regulations 
appear at 43 CFR part 11.
    A natural resource damage assessment is an evaluation of the need 
for, and the means of securing, restoration of public natural resources 
following the release of hazardous substances or oil into the 
environment. The regulations we are proposing to revise only cover 
natural resource damage assessments for releases of hazardous 
substances under CERCLA and the Clean Water Act. There are also natural 
resource damage assessment regulations at 15 CFR part 990 that cover 
oil spills under the Oil Pollution Act, 33 U.S.C. 2701 (the OPA 
regulations). The current hazardous substance natural resource damage 
assessment and restoration regulations, this preamble, and the proposed 
revisions to the regulations use ``restoration'' as an umbrella term 
for all types of actions that the natural resource damage provisions of 
CERCLA and the Clean Water Act authorize to address injured natural 
resources, including restoration, rehabilitation, replacement, or 
acquisition of equivalent resources.
    Natural resource damage assessments are conducted by government 
officials designated to act as ``trustees'' to bring claims on behalf 
of the public for the restoration of injured natural resources. 
Trustees are designated by the President, state governors, or tribes. 
If trustees determine, through an assessment, that hazardous substance 
releases have injured natural resources, they may pursue claims for 
damages against potentially responsible parties. ``Damages'' include 
funds needed to plan and implement restoration, compensation for public 
losses pending restoration, reasonable assessment costs, and any 
interest accruing after funds are due. See 43 CFR 11.15.
    The regulations establish an administrative process for conducting 
assessments that includes technical criteria for determining whether 
releases have caused injury, and if so, what actions and funds are 
needed to implement restoration. The regulations are for the optional 
use of trustees. Trustees can use the regulations to structure damage 
assessment work, frame negotiations, and inform restoration planning. 
If litigation is necessary to resolve the claim, courts will give 
additional deference--referred to as a ``rebuttable presumption'' in 
CERCLA--to assessments performed by federal and state trustees in 
accord with the regulations.
    The regulations provide guidance on two different types of 
assessment procedures identified in CERCLA: ``Type A'' and ``type B'' 
procedures. Type A procedures are simplified procedures for small 
cases. The current type A procedures are computer programs, available 
in a limited range of cases, that model the fate of a released 
substance in order to project the injuries caused by the release and 
calculate damages. Type B procedures outline an assessment process and 
assessment methods that trustees utilize on a case by case basis. We 
are proposing to revise certain parts of the type B procedures (case by 
case assessment provisions) in the regulations.

II. Why We Are Proposing To Revise the Regulations

    CERCLA provides that we review and revise the regulations as 
appropriate every two years. 42 U.S.C. 9651(c)(3). The regulations are 
due for such a review. To assist in this review, in May 2005, DOI 
convened a Natural Resource Damage Assessment and Restoration (NRDAR) 
Federal Advisory Committee (advisory committee) to provide 
recommendations regarding DOI's NRDAR activities, authorities and 
responsibilities. The advisory committee comprised 30 members, 
representing a diverse group of interested stakeholders--including 
state, tribal, and federal trustee agencies, industry groups and 
potentially responsible party representatives, scientists, economists, 
and national and local environmental and public interest organizations.
    A key recommendation of the advisory committee was that DOI should 
undertake, without delay, a targeted revision of the regulations to 
emphasize restoration over economic damages. This proposed revision 
implements that recommendation, and responds to two court decisions 
addressing the regulations: State of Ohio v. U.S. Department of the 
Interior, 880 F.2d 432 (D.C. Cir. 1989) (Ohio v. Interior); and 
Kennecott Utah Copper Corp. v. U.S. Department of the Interior, 88 F.3d 
1191 (D.C. Cir. 1996) (Kennecott v. Interior). Finally, we are 
proposing a technical revision to resolve an inconsistency on the 
appropriate timing for the administrative process set out in the rule.
    We have considered:
    (a) The NRDAR advisory committee report, which was released in May 
of 2007;
    (b) Comments (provided during prior rulemakings, and more 
informally during public meetings, symposiums, and discussion on 
natural resource damage assessment and restoration) from members of the 
private sector, representatives of federal, state, and tribal trustees, 
public interest groups,

[[Page 11083]]

and others who have experience with the existing regulations;
    (c) The Ohio v. Interior opinion;
    (d) The Kennecott v. Interior opinion; and
    (e) The OPA regulations.

III. Major Issues Addressed by the Proposed Revisions

    Our proposed revisions would largely leave the framework of the 
existing rule intact. We are not proposing substantive changes to legal 
standards for reliability of assessment data and methodologies. The 
NRDAR advisory committee made a number of recommendations to encourage 
faster, more efficient and more cost-effective resolution of claims. 
The committee endorsed a tiered approach to implementing its 
recommendations that would immediately address the option of 
emphasizing restoration over economic damages in the regulations, while 
leaving the implementation of a broader range of recommendations--
including providing technical guidance documents and streamlining of 
the restoration planning process--to the future. The rest of this 
section discusses the major issues addressed by the proposed revisions. 
The following section references the OPA regulations. These references 
are solely for the purpose of providing context and background. We are 
soliciting comments only on the proposed revisions to the CERCLA 
regulations. For guidance on conducting natural resource damage 
assessments under OPA, see 15 CFR Part 990.

A. Further Emphasizing Restoration Over Economic Damages

    Under the current regulations, trustees utilizing the Type B 
procedures must base their claim on the cost of implementing a publicly 
reviewed restoration plan designed to return injured resources to their 
baseline condition, which is defined as the condition that would have 
existed had the release not occurred (see 43 CFR 11.80-82). CERCLA and 
the Clean Water Act authorize trustees to recover damages not only for 
the cost of restoring injured or destroyed resources to their baseline 
condition, but also for public losses pending restoration to baseline. 
The regulations call these interim losses ``compensable values'' (see 
43 CFR 11.83(c)). The regulations define compensable value as the 
amount of money required to compensate the public for the loss in 
``services'' provided by the injured resources pending restoration (see 
43 CFR 11.83(c)(1)). Services are defined in the current regulations as 
the physical and biological functions performed by the resources, 
including the human use of those functions. The current regulations 
provide that compensable value should be measured by the economic value 
of public losses arising from the resource injury until restoration can 
be achieved, which arguably could be read as excluding restoration-
based approaches to determining compensable value.
    To comply with CERCLA and the Clean Water Act, trustees must spend 
any compensable value recoveries on restoration actions. Under the 
current regulations, however, trustees do not need to consider 
restoration actions to address interim losses until they have already 
determined and recovered damages. This can be inefficient and 
confusing. The NRDAR advisory committee recommended that DOI should 
amend its current regulation to explicitly authorize trustees to use 
the cost of restoration actions that address service losses to 
calculate all damages, including interim losses. Providing the option 
for a ``restoration-based'' approach to all damages better comports 
with CERCLA's overall restoration objectives. It also promotes an 
earlier focus on feasible restoration options, which can encourage 
settlements by providing opportunities for designing creative and cost-
effective actions to address losses. We are proposing to revise 43 CFR 
11.83(c) to provide trustees with the option of estimating compensable 
values for losses pending restoration utilizing the cost of 
implementing projects that restore those lost natural resource 
services.
    Methodologies that compare losses arising from resource injury to 
gains expected from restoration actions are frequently simpler and more 
transparent than methodologies used to measure the economic value of 
losses. Our proposed revisions include four examples of project-based 
assessment methodologies--conjoint analysis, habitat equivalency 
analysis, resource equivalency analysis, and random utility models--
which have been used successfully to resolve claims under both the 
CERCLA and the OPA regulations. We are proposing to add a brief 
description of these restoration-based methodologies to the non-
exclusive list of economic valuation methodologies in the current 
regulation. Our proposed revisions do not sanction or bar the use of 
any particular methodology, so long as it complies with the 
``acceptance criteria'' for relevance that appear in the rule.
    The list of proposed methodologies for assessing compensable values 
remains non-exclusive, allowing for the introduction of new and 
innovative techniques that may arise. In 43 CFR 11.83(a), the current 
regulations provide that when choosing among any cost estimation or 
valuation methodology, trustees should seek to ensure that the 
methodologies selected are feasible and reliable for a particular 
incident or type of damage to be measured. To assist trustees in 
evaluating such feasibility and reliability, we are proposing to 
provide a list of factors that set out general principles of 
feasibility and reliability for all methodologies. This includes the 
cost reasonableness, cost effectiveness, and avoidance of double 
counting criteria in the current regulations, along with other 
factors--such as the ability to provide useful restoration information, 
peer review, and methodological standards--for trustees to consider 
when evaluating the reliability of all damage assessment methodologies. 
Each of the listed factors we are proposing may not be applicable in 
every case, but trustees continue to be required to document their 
consideration of relevant factors in the Report of Assessment. We 
solicit comment on providing the option for the use of restoration-
based approaches and methodologies to resolve NRDAR claims.

B. Complying With Ohio v. Interior and Responding to Kennecott v. 
Interior

    Several provisions of the current regulations were invalidated by 
the D.C. Circuit Court of Appeals in Ohio v. Interior and Kennecott v. 
Interior. Some invalidated provisions from the 1986 rule were carried 
over in the 1994 revisions responding to the Ohio v. Interior decision. 
Additionally, the Kennecott v. Interior decision in 1996 invalidated 
certain provisions from the 1994 revisions which have not yet been 
corrected to comply with the decision. We are proposing technical 
corrections to the CFR in accord with these decisions.
    The Ohio v. Interior decision invalidated the limitation on 
estimating option and existence value in 43 CFR 11.83(c)(1)(iii). Our 
revisions will therefore delete this provision from the CFR. The 
restatement of this limitation in 43 CFR 11.83(c)(2)(vii)(B) will also 
be deleted from the CFR.
    Estimating option and existence value through the use of contingent 
valuation methodologies remains controversial. We note, however, that 
our proposed revision's focus on compensating for public losses pending 
restoration with restoration actions rather than monetary damages for 
the economic value of the losses would provide options for comparing 
functional losses from resource injuries to functional gains

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expected from restoration actions, which would reduce the need for 
trustees to seek to recover the monetary value of passive economic 
losses such as option and existence value.
    The Kennecott v. Interior decision invalidated DOI's attempt to 
define the date of promulgation of the 1994 revisions to the rule. This 
was relevant because it affected the three-year statutory limitations 
for filing a claim at some CERCLA sites. In 43 CFR 11.91(e), DOI 
defined the date of promulgation as the later of the date when either 
the Type A or Type B rule was finalized, pursuant to the Ohio v. 
Interior decision. The Court of Appeals found this interpretation 
unreasonable and invalidated the provision, which we will delete from 
the CFR. Since both the Type A and Type B revisions finalized pursuant 
to the Ohio v. Interior decision were finalized more than three years 
ago, this deletion is merely a technical correction which has no 
material effect.
    The 1994 revisions to the NRDAR rule stated that the measure of 
natural resource damages under CERCLA was the cost of restoration of 
``the injured natural resources and the services those resources 
provide'' (see 43 CFR 11.80(b)). In the Kennecott decision, the Court 
of Appeals invalidated this language because it was inconsistent with 
DOI's preamble explanation of the measure of damages, which endorsed 
the concept of quantifying resource injury and resulting public losses 
by utilizing a services metric. The court reasoned that creating an 
apparent dichotomy between restoration of resources and restoration of 
services implied an abandonment of the services approach that was 
unexplained. The court therefore invalidated the ``resources and 
services'' language and ``reinstated'' the services approach, pending 
further clarification.
    Under the current rule, natural resource damages include both the 
cost of restoring injured resources to their baseline level of services 
and, when appropriate, compensation for interim service losses pending 
restoration. Under the current rule, restoration to baseline focuses on 
the resource condition, while compensable value focuses on compensation 
for lost services pending the restoration of resources. ``Resources and 
services'' reflects the distinct emphases for different damage 
components, but it was not intended as a rejection of a services-based 
approach. As the proposed revisions make clear, the metric for 
evaluating natural resource conditions for baseline restoration is the 
baseline level of services, while the compensable value for losses 
pending restoration is either the value of the services lost pending 
restoration or the cost of projects that compensate for services lost 
pending restoration.
    The proposed revision to 43 CFR 11.80(b) clarifies that the measure 
of damages is the cost of restoring injured natural resources to their 
baseline level of services, and, at the discretion of the trustees, the 
compensable value of services lost pending restoration. This clear 
construct is carried over for conforming changes to 43 CFR 11.81(a)(1) 
and (2), 43 CFR 11.82(a), (b)(iii), and (c), and 43 CFR 11.83(a).

C. Technical Correction To Provide Consistent Timing Guidelines

    The current regulations provide that a Restoration and Compensation 
Determination Plan (RCDP) which evaluates and selects restoration 
alternatives may be developed after completion of the injury 
determination and quantification phases of the assessment (see 43 CFR 
11.81(d)(1)). However, an earlier provision of the current regulations 
provides that the RCDP can be developed ``at any time before'' 
completion of the injury determination or quantification phases. (See 
43 CFR 11.31(c)(4)). Since the evaluation and selection of restoration 
alternatives can benefit from more definitive injury determination and 
quantification data, we propose to resolve this inconsistency by 
correlating 43 CFR 11.31(c)(4) with 43 CFR 11.81(d)(1) to provide that 
the RCDP may be completed after the injury determination and 
quantification phases of the assessment.

IV. How We Have Complied With Rulemaking Requirements

    Regulatory Planning and Review under E.O. 12866--The Office of 
Management and Budget has reviewed the proposed revisions. The 
revisions are a significant regulatory action under E.O. 12866 because 
the rule will raise novel legal or policy issues. The revisions clarify 
that trustees have the option of calculating total damages using the 
cost of restoration actions that compensate for losses, rather than 
requiring a two-part process where natural resource damages are 
calculated using the cost of restoration actions, and public losses 
pending restoration are calculated using the economic value of the 
loss.
    These revisions do not fall under other criteria in E.O. 12866:
    a. This rule will not have an annual economic effect of $100 
million or adversely affect an economic sector, productivity, jobs, the 
environment, or other units of government. The regulations we are 
revising apply only to natural resource trustees by providing technical 
and procedural guidance for the assessment of natural resource damages 
under CERCLA and the Clean Water Act. The revisions are not intended to 
change the balance of legal benefits and responsibilities among any 
parties or groups, large or small. It does not directly impose any 
additional cost.
    In fact, the proposed revisions should assist in reducing natural 
resource damage assessment transaction costs by allowing trustees to 
utilize simpler and more transparent methodologies to assess damages 
when appropriate. The proposed revisions do not sanction or bar the use 
of any particular methodology, so long as it meets the acceptance 
criteria for relevance and cost effectiveness that are set out in the 
rule.
    We also believe that in many cases an early focus on feasible 
restoration and appropriate restoration actions, rather than on the 
economic value of public losses, can result in less contention and 
litigation, and faster, more cost-effective restoration. Meanwhile, 
existing criteria in the rule for evaluating restoration alternatives--
including cost effectiveness--remain intact (see 43 CFR 11.82(d)). The 
likely result will be the encouragement of settlements, less costly and 
more timely restoration, and reduced transaction costs. To the extent 
any are affected by the proposed revisions, it is anticipated that all 
parties will benefit by the increased focus on restoration in lieu of 
economic damages.
    b. The proposed revisions will not create inconsistencies with 
other agencies' action. The general approach to losses pending 
restoration set forth in this rule is consistent with the OPA 
regulations. Both allow for basing damages on the cost of restoration 
actions to address public losses associated with natural resource 
injuries.
    Regulatory Flexibility Act--We certify that this rule revision will 
not have a significant economic effect on a substantial number of small 
entities as defined under the Regulatory Flexibility Act (5 U.S.C. 601) 
(see section on E.O. 12866 above for discussion of potential economic 
effects.)
    Small Business Regulatory Enforcement Fairness Act--This rule 
revision is not a major rule under the Small Business Regulatory 
Enforcement Fairness Act (5 U.S.C. 804(2)). This rule revision:
    (a) Does not have an annual effect on the economy of $100 million 
or more (see section on E.O. 12866 above for

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discussion of potential economic effects.)
    (b) Will not cause a major increase in costs or prices for 
consumers, individual industries, Federal, State, or local government 
agencies, or geographic regions (see section on E.O. 12866 above for 
discussion of potential economic effects.)
    (c) Does not have significant adverse effect on competition, 
employment, investment, productivity, innovation, or the ability of 
U.S.-based enterprises to compete with foreign-based enterprises (see 
section on E.O. 12866 above for discussion of potential economic 
effects.)
    Unfunded Mandates Reform Act--This rule revision does not mandate 
any actions. The existing regulations do not require trustees to 
conduct assessment or pursue damage claims, and trustees who choose to 
conduct assessments and pursue damage claims are not required to do so 
in a manner described in the regulations. The proposed revisions do not 
change the optional nature of the existing regulations. The revisions 
themselves do not replace existing procedures; they merely clarify that 
trustees have the option of employing other procedures. Therefore, this 
rule revision will not produce a Federal mandate of $100 million or 
greater in any year.
    Takings Analysis under E.O. 12630--A takings implication assessment 
is not required by E.O. 12630 because no party can be compelled to pay 
damages for injury to natural resources until they have received ``due 
process'' through a legal action in federal court. This rule and the 
proposed revisions merely provide a framework for assessing injury and 
developing the claim.
    Federalism Analysis under E.O. 12612--E.O. 12612 requires federal 
agencies to consult with elected state officials before issuing 
proposed rules that have ``federalism implications'' and either impose 
unfunded mandates or preempt state law. A rule has federalism 
implications if it has ``substantial direct effects on the states, on 
the relationship between the national government and the states, or on 
the distribution of power and responsibilities among the various levels 
of government.'' This rule and the proposed revisions do not require 
state trustees to take any action; therefore it does not impose any 
unfunded mandates. The rule and the proposed revisions do not preempt 
state law. The rule and the proposed revisions have no significant 
effect on intergovernmental relations because they do not alter the 
rights and responsibilities of government entities. Therefore, a 
federalism summary impact statement is not required under section 6 of 
the Order.
    Civil Justice Reform under E.O. 12988--Our Office of the Solicitor 
has determined that the proposed revisions do not unduly burden the 
judicial system and meet the requirements of section 3(a) and 3(b)(2) 
of the Order. The proposed revisions are intended to provide the option 
for an early focus on restoration, utilization of simpler and more 
cost-effective assessment methodologies, and increased opportunities 
for cooperation among trustees and potentially responsible parties. 
This should minimize litigation.
    Paperwork Reduction Act--The proposed revisions do not pose 
``identical questions'' to, or impose ``identical reporting, record 
keeping, or disclosure requirements,'' on trustees. Therefore, the 
proposed revisions do not include an ``information collection'' 
governed by the Paperwork Reduction Act, 44 U.S.C. 3501 et seq.
    National Environmental Policy Act--We have analyzed the proposed 
revisions in accordance with the criteria of the National Environmental 
Policy Act, 43 U.S.C. 433 et seq. (NEPA). Restoration actions 
identified through the proposed revisions may sometimes involve major 
federal actions significantly affecting the quality of the human 
environment. In those cases, federal trustees will need to comply with 
NEPA. However, the proposed revisions do not require trustees to take 
restoration action. Further, if the trustees decide to pursue 
restoration, they are not required to follow the rule when selecting 
restoration actions. Finally, the rule and the proposed revisions do 
not determine the specific restoration actions that trustees can seek. 
Therefore, the rule and the proposed revisions do not significantly 
affect the quality of the human environment. Even if the rule revisions 
were considered to significantly affect the quality of the human 
environment, they would fall under DOI's categorical exclusion for 
regulations that are of a procedural nature or have environmental 
effects too broad or speculative for meaningful analysis and will be 
subject later to the NEPA process.

Public Availability of Comments

    Before including your address, phone number, e-mail address, or 
other personal identifying information in your comment, you should be 
aware that your entire comment--including your personal identifying 
information--may be made publicly available at any time. While you can 
ask us in your comment to withhold your personal identifying 
information from public review, we cannot guarantee that we will be 
able to do so.

List of Subjects in 34 CFR Part 11

    Natural resources, Environmental protection.

    Dated: January 10, 2008.
James E. Cason,
Associate Deputy Secretary.

    For the reasons given in the preamble, we propose to amend part 11 
of title 43 of the Code of Federal Regulations as follows:

PART 11--NATURAL RESOURCE DAMAGES FOR HAZARDOUS SUBSTANCES

    1. The authority citation for part 11 continues to read as follows:

    Authority: 42 U.S.C. 9651(c), as amended.

    2. In Sec.  11.31, revise paragraph (c)(4) to read as follows:


Sec.  11.31  What does the Assessment Plan include?

    (c) * * *
    (4) The Restoration and Compensation Determination Plan developed 
in accordance with the guidance in Sec.  11.81 of this part. If 
existing data are not sufficient to develop the Restoration and 
Compensation Determination Plan as part of the Assessment Plan, the 
Restoration and Compensation Determination Plan may be developed later, 
after the completion of the Injury Determination or Quantification 
phases. If the Restoration and Compensation Determination Plan is 
published separately, the public review and comment will be conducted 
pursuant to Sec.  11.81(d) of this part.
* * * * *
    3. In Sec.  11.38, revise paragraph (c)(2)(i) to read as follows:


Sec.  11.38  Assessment Plan--preliminary estimate of damages.

    (c) * * *
    (2) * * *
    (i) The preliminary estimate of compensable value should represent 
the expected present value of the anticipated compensable value, 
expressed in constant dollars, accrued through the period for the 
restoration, rehabilitation, replacement, and/or acquisition of 
equivalent resources to baseline conditions, i.e., between the 
occurrence of the discharge or release and the completion of the 
restoration, rehabilitation, replacement, and/or acquisition of the 
equivalent of the injured resources to their baseline level of 
services. The estimate should use the same base year as the preliminary

[[Page 11086]]

estimate of costs of restoration, rehabilitation, replacement, and/or 
acquisition of equivalent resources. The provisions detailed in 
Sec. Sec.  11.80 through 11.84 of this part are the basis for the 
development of this estimate.
* * * * *
    4. In Sec.  11.80, revise paragraph (b) to read as follows:


Sec.  11.80  Damage determination phase--general.

* * * * *
    (b) Purpose. The purpose of the Damage Determination phase is to 
establish the amount of money to be sought in compensation for injuries 
to natural resources resulting from a discharge of oil or release of a 
hazardous substance. The measure of damages is the cost of restoration, 
rehabilitation, replacement, and/or acquisition of the equivalent of 
the injured natural resources to their baseline level of services. 
Damages may also include, at the discretion of the authorized official, 
the compensable value of all or a portion of the services lost to the 
public for the time period from the discharge or release until the 
attainment of the restoration, rehabilitation, replacement, and/or 
acquisition of equivalent of baseline.
* * * * *
    5. In Sec.  11.81, revise paragraph (a) to read as follows:


Sec.  11.81  Damage determination phase--restoration and compensation 
determination plan.

    (a) Requirement. (1) The authorized official shall develop a 
Restoration and Compensation Determination Plan that will list a 
reasonable number of possible alternatives for restoration, 
rehabilitation, replacement, and/or acquisition of equivalent resources 
to their baseline level of services, and, where relevant, the 
compensable value; select one of the alternatives and the actions 
required to implement that alternative; give the rationale for 
selecting that alternative; and identify the methodologies that will be 
used to determine the costs of the selected alternative and, at the 
discretion of the authorized official, the compensable value of the 
services lost to the public associated with the selected alternative.
    (2) The Restoration and Compensation Determination Plan shall be of 
sufficient detail to evaluate the possible alternatives for the purpose 
of selecting the appropriate alternative to use in determining the cost 
of restoration, rehabilitation, replacement, and/or acquisition of 
equivalent resources to their baseline level of services, and, where 
relevant, the compensable value.
* * * * *
    6. In Sec.  11.82, revise paragraphs (a), (b)(1)(iii), and (c)(1) 
to read as follows:


Sec.  11.82  Damage determination phase--alternatives for restoration, 
rehabilitation, replacement, and/or acquisition of equivalent 
resources.

    (a) Requirement. The authorized official shall develop a reasonable 
number of possible alternatives for the restoration, rehabilitation, 
replacement, and/or acquisition of the equivalent of the injured 
natural resources to their baseline level of services. For each 
possible alternative developed, the authorized official will identify 
an action, or set of actions, to be taken singly or in combination by 
the trustee agency to achieve the restoration, rehabilitation, 
replacement, and/or acquisition of equivalent natural resources to 
their baseline level of services. The authorized official shall then 
select from among the possible alternatives the alternative that he 
determines to be the most appropriate based on the guidance provided in 
this section.
    (b) * * *
    (1) * * *
    (iii) Possible alternatives are limited to those actions that 
restore, rehabilitate, replace, and/or acquire the equivalent of the 
injured resources to their baseline, that is, the condition without a 
discharge or release as determined in Sec.  11.72 of this part.
* * * * *
    (c)(1) The possible alternatives considered by the authorized 
official that return the injured resources to their baseline level of 
services could range from: intensive action on the part of the 
authorized official to return the various resources and services 
provided by those resources to baseline conditions as quickly as 
possible; to natural recovery with minimal management actions. Possible 
alternatives within this range could reflect varying rates of recovery, 
combination of management actions, and needs for resource replacements 
or acquisitions.
* * * * *
    7. In Sec.  11.83, revise paragraphs (a)(1), (a)(3), and (c) to 
read as follows:


Sec.  11.83  Damage determination phase--cost estimating and valuation 
methodologies.

    (a) General. (1) This section contains guidance and methodologies 
for determining: the costs of the selected alternative for restoration, 
rehabilitation, replacement, and/or acquisition of equivalent resources 
to their baseline level of services; and the compensable value of the 
services lost to the public through the completion of the restoration, 
rehabilitation, replacement, and/or acquisition of the equivalent of 
the injured resources to baseline.
* * * * *
    (3) Only those methodologies that are feasible and reliable for a 
particular incident and type of damage to be measured shall be 
utilized. The authorized official should consider the following factors 
to evaluate feasibility and reliability of methodologies. Each factor, 
however, may not be applicable to every case. The authorized official 
shall document the consideration of relevant factors in the Report of 
Assessment:
    (i) Is the methodology capable of providing information of use in 
determining the restoration cost or compensable value appropriate for a 
particular natural resource injury?;
    (ii) Can the methodology be implemented at a reasonable cost, as 
that term is used in this part?;
    (iii) Does the methodology avoid double counting or allow any 
double counting to be estimated and eliminated in the final damage 
calculation?;
    (iv) Is the methodology cost-effective, as that term is used in 
this part?;
    (v) Does the methodology address the particular natural resource 
injury and associated service loss in light of the nature, degree, and 
spatial and temporal extent of the injury?;
    (vi) Has the methodology been subject to peer review, either 
through publication or otherwise?;
    (vii) Does the methodology enjoy general or widespread acceptance 
by experts in the field?;
    (viii) Is the methodology subject to standards governing its 
application?;
    (ix) Are methodological inputs and assumptions supported by a 
clearly articulated rationale?;
    (x) Are cutting edge methodologies tested or analyzed sufficiently 
so as to be reasonably reliable under the circumstances?
* * * * *
    (c) Compensable value. (1) Compensable value is the amount of money 
required to compensate the public for the loss in services provided by 
the injured resources between the time of the discharge or release and 
the time the resources are fully returned to their baseline conditions. 
The compensable value can include the economic value of lost services 
provided by the injured resources, including both public use and nonuse 
values such as existence and bequest

[[Page 11087]]

values. Economic value can be measured by changes in consumer surplus, 
economic rent, and any fees or other payments collectable by a Federal 
or State agency or an Indian tribe for a private party's use of the 
natural resources; and any economic rent accruing to a private party 
because the Federal or State agency or Indian tribe does not charge a 
fee or price for the use of the resources. Alternatively, compensable 
value can be determined utilizing a restoration cost approach, which 
measures the cost of implementing a project or projects that restore, 
replace, or acquire the equivalent of natural resource services lost 
pending restoration to baseline.
    (i) Use value is the economic value of the resources to the public 
attributable to the direct use of the services provided by the natural 
resources.
    (ii) Nonuse value is the economic value the public derives from 
natural resources that is independent of any direct use of the services 
provided.
    (iii) Restoration cost is the cost of a project or projects that 
restore, replace, or acquire the equivalent of natural resource 
services lost pending restoration to baseline.
    (2) Valuation methodologies. The authorized official may choose 
among the valuation methodologies listed in this section to estimate 
appropriate compensation for lost services or may choose other 
methodologies provided that the methodology can satisfy the acceptance 
criterion in paragraph (c)(3) of this section. Nothing in this section 
precludes the use of a combination of valuation methodologies so long 
as the authorized official does not double count or uses techniques 
that allow any double counting to be estimated and eliminated in the 
final damage calculation.

------------------------------------------------------------------------
     Type of methodology                      Description
------------------------------------------------------------------------
(i) Market price.............  The authorized official may determine the
                                compensable value of the injured
                                resources using the diminution in the
                                market price of the injured resources or
                                the lost services. May be used only if:
                                  (A) The natural resources are traded
                                   in the market; and
                                  (B) The authorized official determines
                                   that the market for the resources, or
                                   the services provided by the
                                   resources, is reasonably competitive.
(ii) Appraisal...............  The measure of compensable value is the
                                difference between the with- and without-
                                injury appraisal value determined by the
                                comparable sales approach as described
                                in the Uniform Appraisal Standards. Must
                                measure compensable value, to the extent
                                possible, in accordance with the
                                ``Uniform Appraisal Standards for
                                Federal Land Acquisition,'' Interagency
                                Land Acquisition Conference, Washington,
                                DC, 1973 (incorporated by reference, see
                                Sec.   11.18).
(iii) Factor income            May be used only if the injured resources
 (sometimes referred to as      are inputs to a production process,
 the ``reverse value added''    which has as an output a product with a
 methodology).                  well-defined market price. May be used
                                to determine:
                               (A) The economic rent associated with the
                                use of resources in the production
                                process; and
                               (B) The in-place value of the resources.
(iv) Travel cost.............  May be used to determine a value for the
                                use of a specific area. Uses an
                                individual's incremental travel costs to
                                an area to model the economic value of
                                the services of that area. Compensable
                                value of the area to the traveler is the
                                difference between the value of the area
                                with and without a discharge or release.
                                Regional travel cost models may be used,
                                if appropriate.
(v) Hedonic pricing..........  May be used to determine the value of
                                nonmarketed resources by an analysis of
                                private market choices. The demand for
                                nonmarketed natural resources is thereby
                                estimated indirectly by an analysis of
                                commodities that are traded in a market.
(vi) Unit value/benefits       Unit values are preassigned dollar values
 transfer.                      for various types of nonmarketed
                                recreational or other experiences by the
                                public. Where feasible, unit values in
                                the region of the affected resources and
                                unit values that closely resemble the
                                recreational or other experience lost
                                with the affected resources may be used.
(vii) Contingent valuation...  Includes all techniques that set up
                                hypothetical markets to directly elicit
                                an individual's economic valuation of a
                                natural resource. Can determine:
                                  (A) Use values and explicitly
                                   determine option and existence
                                   values; and
                                  (B) Lost use values of injured natural
                                   resources.
(viii) Conjoint Analysis.....  Like contingent valuation, conjoint
                                analysis is a stated preference method.
                                However, instead of seeking to value
                                natural resource service losses in
                                strictly economic terms, conjoint
                                analysis compares natural resource
                                service losses that arise from injury to
                                natural resource service gains produced
                                by restoration projects.
(ix) Habitat Equivalency       May be used to compare the natural
 Analysis.                      resource services produced by habitat or
                                resource-based restoration actions to
                                natural resource service losses.
(x) Resource Equivalency       Similar to habitat equivalency analysis.
 Analysis.                      This methodology may be used to compare
                                the effects of restoration actions on
                                specifically identified resources that
                                are injured or destroyed.
(xi) Random Utility Model....  Can be used to:
                                  (A) Compare restoration actions on the
                                   basis of equivalent resource services
                                   provided; and
                                  (B) Calculate the monetary value of
                                   lost recreational services to the
                                   public.
------------------------------------------------------------------------

    (3) Other valuation methodologies. Other methodologies that measure 
compensable value in accordance with the public's willingness to pay 
for the lost service, or with the cost of a project that restores, 
replaces, or acquires services equivalent to natural resource services 
lost pending restoration to baseline in a cost-effective manner, are 
acceptable methodologies to determine compensable value under this 
part.
* * * * *


Sec.  11.91  [Amended]

    8. In Sec.  11.91, remove paragraph (e).

 [FR Doc. E8-3683 Filed 2-28-08; 8:45 am]
BILLING CODE 4310-RG-P