Natural Resources Damage Assessment under OPA: Time to Account
Carmen L. Conaway Mediavilla, B.A., J.D., L.L.M. & Wuyi Ogunyika, J.D., L.L.B., B.L., L.L.M.
“The Legislature recognizes the difficulty historically encountered in calculating the value of damaged natural resources. The value of certain qualities have an intrinsic value to the residents of the state, and any damage to natural resources and their qualities should not be dismissed as non-recoverable merely because of the difficulty in quantifying their value…”
This paper will briefly present a general overview of OPA 1990 (OPA) as a comprehensive statutory regime regulating oil spill damages. It will identify the major actor in the damage assessment scenario and articulate the role of government agencies in oil-spill related environmental damage assessments. Furthermore, the paper will enunciate fundamental concepts in OPA forming the basis of the interaction between various players in the oil spill damage assessment setting.
The paper will discuss the natural resources damage assessment regulations issued under OPA and other environmental laws focusing on various assessment methodologies, particularly, the contingent valuation methodology, and the evolving environmental jurisprudence based on the judicial review of the administrative rules.
The paper will finally present case studies on the real life application of natural resources damage assessment regulations, to highlight the underlying dynamics and the complex interplay between the legislative ambition, judicial policy and agency implementation of the statutory chart provided to navigate the slippery natural resources damage valuation terrain resulting from oil soaked environmental catastrophes.
THE OIL POLLUTION ACT
On January 5, 1990, Congress passed the Oil Pollution Act (“OPA”), which to date is the most comprehensive statutory regime dealing with environmental protection against oil spill damages, liability and compensation. But it took the Exxon Valdés disaster, 11 million gallons of oil release, and a deafening public outcry to get this congressional response and attention.
Under OPA, a vessel or facility discharging oil or even threatening to discharge of oil into navigable waters or adjoining shoreline is liable for damages. OPA also regulates liability for direct and indirect damages caused by oil spills and cost of cleaning up the spill. The legislation imposes liability based on causation and confers powers on the President of the United States to designate the person liable, described as the Responsible Party and defined in the Act.
OPA’s scope is contained in section 2702(a), which provides: “Notwithstanding any other provision or rule of law, and subject to the provisions of this chapter, each responsible party for a vessel or a facility from which oil is discharged, or which poses the substantial threat of a discharge of oil, into or upon the navigable waters of adjoining shorelines or the exclusive economic zone is liable for the removal costs and damages specified in subsection (b) that result from such incident.”
Geographic Coverage: The Act covers discharges of oil into or upon the navigable waters of the United States (including the territorial seas), the adjoining shorelines and the exclusive economic zone. It also applies to discharges of oil in or onto the territorial sea, internal waters or adjacent shoreline of a foreign country, but only if the discharge is from:
a. a facility on the outer continental shelf or a deep water port;
b. a vessel in the navigable waters of the United States;
c. a vessel carrying oil as a cargo between the places in the United States; or
d. a tanker that has received oil at the terminal of the pipeline constructed under tanker of Alaska Pipeline Authorization Act for transportation to a place in the United States and the discharge occurs prior to delivery of the oil to that place.
Activities covered: The Act applies to discharges of oil from a “vessel” or “facility” as defined in the Act. Discharge under OPA means “any emission (other than natural seepage), intentional or unintentional, and includes, but is not limited to, spilling, leaking, pumping, pouring, emitting, emptying, or dumping.”Vessel is defined as “every description of watercraft or other artificial contrivance used, or capable of being used, as a means of transportation on water, other than a public vessel.”Pubic vessel is a vessel not engaged in commerce and owned, bareboat chartered, or operated by the United States, or a State, or a political subdivision thereof, or by a foreign nation. Facility excludes vessels and means any structure, group of structures, equipment, or devices used for exploring, drilling, producing, storing, handling, transferring, processing or transporting oil. It also includes any motor vehicles, rolling stocks or pipelines used for one or more of the listed purposes.
Liability. Under OPA, the persons liable include the Responsible Parties, Guarantors and Third Parties. But the Act imposes liability on an owner or operator of a vessel, and or facility, and not on the owner of the cargo.
Furthermore, OPA features a strict liability concept, and as a result, subject to few exceptions, liability is dependent on the fact of the discharge regardless of fault.
Damages. A remarkable innovation of OPA is the opening of new vista for the recovery of damages by the government, its agencies, private entities and persons.
Governmental entities may recover damages for injury, destruction of, or loss of use of natural resources including reasonable cost of assessing the damage recoverable by the appointed trustees. Natural resources under the Act include land, fish, wildlife, biota, air, water, groundwater, drinking water supplies, and other such resources belonging to, managed by, held in trust by, appertaining to, or otherwise controlled by the United States (including the resources of the exclusive economic zone), any state or local government or Indian Tribe, or any Foreign government.
The Act further provides that the measure of the damages is the cost of restoring, rehabilitating, replacing, or acquiring the equivalent of the damaged natural resources; the diminution in value of those natural resources pending restoration; plus the reasonable cost of assessing those damages.
To facilitate the damages assessment task the President, acting through and under the Secretary of Commerce for Oceans and Atmosphere and in consultation with the Administrator of the Environmental Protection Agency, the Director of the United States Fish and Wildlife Service is mandated to promulgate regulations for the assessment of the Natural Resource damages resulting from a discharge of oil.
Statutory Bodies under OPA. OPA established several statutory entities and authorities to carry out specific functions which are outside the scope of this paper. However, for the purposes of this paper, the following agency and offices are pertinent: National Oceanic and Atmospheric Administration. “The oceans and atmosphere are interacting parts of the total environmental systems upon which we are dependent, not only for the quality of our lives, but for life itself. We face an immediate… [and] compelling need for exploration and development leading to the intelligent use of our marine resources. We must understand the nature of these resources and assure their development without either contaminating the marine environment or upsetting its balance. Establishment of the National Oceanic and Atmospheric Administration, NOAA, within the Department of Commerce, would enable us to approach these tasks in a coordinated way.”
These words, published in July 1970, ushered the creation of a new agency, the National Oceanic and Atmospheric Administration.
Pointedly, NOAA is a science-oriented entity established to predict changes in oceanic and atmospheric environment, to coordinate the use of living marine resources, and to make available reliable scientific information and related data.
NOAA’s Political Background. Although a decidedly scientific agency, the strategy and placement of NOAA obviously attracted political maneuverings and was eventually created, within the Department of Commerce, out of the following component organizations:
1. The Environmental Science Services Administration (ESSA) of the Department of Commerce;
2. Most of the Bureau of Commercial Fisheries and the Marine Sport Fishing Program of its Bureau of Sport Fisheries and Wildlife;
3. Office of Sea Grant Programs from the National Science Foundation;
4. The mapping, charting, and research functions of the United States Army Lake Survey;
5. The United States Navy’s National Oceanographic Data Center;
6. The Marine Mineral Technology Center of Interior’s Bureau of Mines;
7. The Navy’s National Oceanographic Instrumentation Center and;
8. The National Data Buoy Project from the Department of Transportation.
NOAA’s policies, history and heritage reflect the collective characteristics of its component entities. Armed with an impressive blend of maritime and administrative credentials, the agency seems superbly qualified for the Congressional and Presidential task of promulgating regulations for the assessment of the oil related natural resource damages in its area of expertise. However, administrative bodies are usually plagued with changing shades of political opinion and the following extract may be instructive.
“In mid-January 1993, shortly before President Clinton’s inauguration, Interior’s Assistant Secretary for Policy, Management and Budget approved a set of Type B regulations, which differed from those proposed in April 1991; and directed a subordinate to send the document to the Office of the Federal Register for publication as Final Regulations. The OFR received an original and two (2) copies of these signed regulations…which we shall call the «1993 Document»… sent after 2:00pm on January 19, 1993, the final day of the Bush Administration. On January 21, just two days after the OFR received the «1993 Document», and before the OFR filed the document for public inspection, an Interior employee at the Direction of the new active Assistant Secretary for Policy, Management and Budget telephoned the OFR to withdraw the document. The employee confirmed the request in writing later the same day. In accordance with its regulations and internal guidelines, the OFR stopped processing the 1993 Document and returned all three copies to Interior, recording the action in the “Kill Book” a handwritten ledger of the OFR maintained to keep track of the documents withdrawn by agencies. Several months later, in July 1993, Interior reopened the public comment period on the regulation it had proposed in April 1991, while also suggesting further revisions to those proposed rules… Interior issued final regulations in March 1994. These regulations are the subject of the challenges that before lay us today.”
States’ Authority. The State’s authority to make additional requirements or imposing time or penalty pertaining to oil spill damages was preserved under OPA. However, it may be in-structive to examine the judicial delimitation to this legislative permission given to the state. A case on point is Intertanko, in which the State of Washington promulgated the Oil Pollution legislation requiring tanker operators to have the oil spill prevention plans compliant with the state’s Best Achievable Protection Regulations as a pre-condition to transporting oil in the State waters. The International Association of Independent Tanker Owners (Intertanko) challenged sixteen (16) of the regulations on the constitutional grounds. The Ninth Circuit upheld the regulations, reasoning that OPA permitted the state’s legislative supplement. Upon further appeal ,the Supreme Court reversed the Ninth Circuit and held that while OPA reserved to the states the right to impose additional liability and financial responsibility requirements relative to oil spills, its savings clause did not permit state regulation of matters covered and preempted by other federal regulations, in this case, the Ports and Waterways Safety Act of 1972 (PWSA), which preempted state initiative in vessel operation, design or manning matters.
However, the Court recognized and upheld the right of the state to regulate its ports and waterways, so long as such a regulation is based on the peculiarities of the local waters that call for special precautionary measures, including local circumstances and problems such as water depth and narrowness idiosyncratic to a particular port or waterway.
Notwithstanding the merit of allowing states liberty either under OPA savings clause or the judicially recognized exception to fill the cracks in addressing their peculiarities, potential well founded defendants face possible exposure of multiple claims, overlapping regulations and increased financial obligations.
Potential claimants under OPA. OPA not only increased the items on the damages list in an oil spill case, it also expanded the category of persons withstanding to claim such damages. The list includes the following:
Private parties. Before OPA, there was no Federal Legislation providing for private action against the oil pollution damages. Such action was founded on general torts law. OPA, however, ushered in a new era for private victims of the oil pollution damages.
Before OPA, the Federal environmental legislations allowed citizens to sue the oil spiller only if the government failed to enforce the law and such citizen suits under the federal law generally result in enforcement of the Federal Law, not in an award of damages to plaintiff. This changed under OPA, which allows citizen suits to ensure compliance and enforcement of the federal law as well, but also allows private parties to recover for damages resulting from an oil spill.
The OPA largesse was also extended to include subsistence users, persons suffering economic loss due to damage to real or personal property, persons suffering pure economic loss, loss of profit or impairment of earning capacity without property or proprietary interest. The last category of claimant would have been barred from recovery but, for legislative abrogation of the Robins Dry Dock judicial obstacle, which barred persons without property or proprietary interest from making claims against a tort feasor for pure economic loss.
Furthermore, OPA modified the traditional maritime law principle under which the ship owner’s liability is capped by the value of the vessel and its pending freight. In oil spill related claims under OPA, ship-owner’s liability is regulated by a different limitation regime.
The Statutory Trustees. Consistent with the age long principle that the state is vested with the authority to act on behalf of the general public in matters pertaining natural resources, OPA created the following statutory trustees; Federal Trustees, State Trustee, the Indian Tribe Trustees, and the Foreign Trustee.
The Federal Trustee: Apart from the designation of the President as the Federal Trustee, OPA if the Trustees shall present claims for assessing natural resource damages, and recover for damages to the natural resources.
The State Trustee: As stated earlier, OPA expressly preserved the right of the States and their political subdivisions to impose additional liability requirements56 with respect to: (a) Discharge of oil or other pollution by oil within such states, or (b) Any removal activities in connection with such a discharge.
OPA also preserved the obligations or liability of any person under state law, and the authority of any state “to establish or to continue in effect a Fund… to pay for costs or damages
arising out of, or directly resulting from oil pollution, substantial threat of oil pollution” or “to require any personal to contribute to such a fund.”
Like the Federal Trustees, OPA designated the State Trustees who have the duty to develop and implement plans for restoration, rehabilitation, replacement, or acquisition of the equivalent of the natural resources under their trusteeship as well as presenting a claim to recover damages for the harm done to natural resources.
Foreign claimants. OPA acknowledges the right of foreign claimants by allowing the head of the foreign government to designate Foreign Trustees who shall act on behalf of that gov-ernment as trustees for the natural resources under OPA. The functions of the so-called Foreign Trustees are similar to those set out for the Federal and State Trustees.
However, a Foreign claimant is required to “demonstrate that he (the claimant) has not been otherwise compensated for the removal costs or damages and that recovery is authorized by a treaty or executive agreement between the United States and the claimant’s country or the Secretary of State, in consultation with the Attorney General and other appropriate officials that have certified that the claimant’s country provides a comparable remedy for the United States claimants.”
Additionally, OPA prescribes the specific claims that could be brought by a foreign claimant. Finally, OPA defined foreign claimant as a person residing in a foreign country, the government of a foreign country and an agency or political subdivision of a foreign country.
The Foreign Sovereign Factor. Since Foreign claimants include a sovereign state, a claim by a Foreign Sovereign claimant, may constitute a waiver of immunity regarding matters that the foreign state would otherwise be able to plead sovereign immunity including ministerial actions pertaining to settlement of victims, clean up operations, allocation of resources, etc. It is important to bear in mind the relevant provisions of the Foreign Sovereign Immunities Act, which expressly allows for counter claim against a claim brought by a Foreign State, provided that such counterclaim arises “out of a transaction or occurrence that is the subject matter of the claim of the foreign state” or “to the extent that the counterclaim does not seek relief exceeding in amount, or different in kind, from that sought by the foreign state.”
Recovery by Responsible Party. The responsible party of a vessel or facility is entitled to a liability defense or “to a limitation of liability” and may assert a claim under OPA. However, in the latter case, a responsible party may assert a claim only to the extent of the removal cost and damages incurred that exceeds the limitation of his liabilities under OPA.
Overlapping claims. The overlapping claims and double recovery are problems likely to emanate from the activities of multiple claimants. There are several permutations including claims between trustees regarding the natural resources under their respective trusteeships; another one is between public claims and private claims as well as between private claimants. The inapplicability of the Robins Dry Dock doctrine to OPA claims, also portends a landmine of duplicative claims. A private claim for damages resulting from subsistence use of natural resources would effectively duplicate a trustee’s claim to recover damages to natural resources, but both are permitted under OPA. In addition, presenting private claims founded on proprietary interest in property, concurrently with claims for damages to natural resources may pose a tricky problem. For instance, in a case where an oil spill results in loss of recreational use of a public park, or damages to the beaches of waterfront residents, the trustee would claim for the loss of use values on behalf of the public. Apart from the Trustee, some of the residents, as private claimants, could also recover for soiled rugs and floors and the loss of enjoyment of their property. While the private and public claims for clean up cost due to soiling rise no issue of double recovery, the lost enjoyment claims suggest the possibility of double counting.
OPA specifically provided that “there shall be no double recovery… for natural resources damages including, with respect to the costs of damage assessment or restoration, rehabilitation, replacement, or acquisition for the same incident and natural resources.”
Addressing the issue, NOAA’s Natural Resources Damage Assessment Regulation “encourages trustees with shared or overlapping trusteeship to coordinate their assessment activities to avoid duplicative claims for damages.” The regulation further mandated the designation of a Lead Administrative Trustee (LAT) when conducting joint assessment and such LAT to be selected by mutual agreement of the trustees. Provisions were also made for Co-LAT or segmental LAT for different stages of the process “depending upon circumstances of the incident.” Another solution suggested in the regulation was the use of agreements in form of Memoranda of Understanding.
However, the regulation acknowledges the possibility of the need for independent action by Trustee and permits, it provided and it does not result in double recovery.
Disallowing all public claims for economic rent has been suggested as a way to address potential overlap between the public and private claims. But sometimes, private parties may be unable or unwilling to fully recover all private losses thereby allowing the responsible party to escape liability and evade responsibility for compensating the public fully.
Echoing the wisdom of NOAA, coordination among private and public claimants may well be the most effective means to ensure the best available data as well as “a mutually consistent conceptual framework for calculating losses.”
NATURAL RESOURCES DAMAGES ASSESSMENT
Assessing natural environments poses both complex and controversial questions. Natural environment is treated as public goods leading some to argue they could not be subject to traditional market value methodology because it lacks the typical characteristic of ordinary commodities that could be the focus of exchange mechanisms including market and a common language of exchange, for example, price. Yet some hold the view that the natural environment should not be valued any differently than ordinary commodities, “on the ground that people are entitled only to natural environmental benefits their wealth world permit.”
OPA imposed on Trustees the duty to assess the natural resource damages and mandated the President acting through NOAA to promulgate the Natural Resource Damage Assessment (NRDA) Regulations. Before looking into the regulations, it may be helpful to examine the fundamentals of natural resources ownership, damages, the relevant value concepts and the assessment methodologies.
The Public Trust Doctrine: Common-Law Roots for Natural Resources Damage.
The public trust doctrine, which dates back to Roman times, is founded on the hypothesis that the government is the trustee of certain lands for the people. It gained judicial recognition when the Supreme Court in Illinois Central R. R. v. Illinois, declared that the state held the submerged lands of the harbor of Chicago “in trust for the people of the State” and not even the legislature could alienate such ownership interest.
The public trust doctrine was further discussed in Puerto Rico v. SS Zoe Colocotroni, where the Appellate Court for the First Circuit impliedly confirmed that the Commonwealth of
Puerto Rico had standing as “trustee of the public trust” to institute a suit for recovery of damages to such natural resources.
The initial focus of the doctrine was the protection of commercial rights such as the right to float saw logs, and gradually, the courts developed a broader view covering non-commercial interests such as recreational fishing, hunting, sailing, and scenic enjoyment. Including the “enjoyment of scenic beauty” as a protected value is arguably the beginning of a recognition of non-use values.
In addition, the environmental revolution of the 1960’s and 1970s, resulted in the protection of more non-use values of public lands. In Marks v. Whitney, the California Supreme Court stated that the old list of uses was not exhaustive because the public trust doctrine was “sufficiently flexible to encompass changing public needs,” and went on to state that one of the most important… uses … is the preservation of those lands in their natural state, so that they may serve as ecological units for scientific study, as open space, and as environments which provide food and habitat for birds and marine life, and which favorably affect the scenery and climate of the area.” Further recognition of non-use values was also underscored by the extension of a cause of action for damages to cover loss of such values as opposed to the initial judicial attitude when the only remedy was injunction.
Furthermore, when courts first recognized the right to recover damages, it was limited to market value, until courts began to appreciate the inadequacy of traditional market measures of value. Thus in Puerto Rico v. SS Zoe Colocotroni, in which Puerto Rico sued a tanker for damages to natural resources caused by an oil spill. In dismissing the defendant’s argument that the measure of damages should be the diminution in market value, the court pointed out that “many unspoiled natural areas of considerable ecological value have little or no commercial or market value. Indeed, to the extent such areas have a commercial value, it is logical to assume they will not long remain unspoiled…” And apparently focusing particularly on quasi-option values, the court further observed that “portions of the land and sea which at first glance seem useless …often contribute in subtle but critical ways to an environment capable of supporting …human life.” While acknowledging the complex issues involved in attaching a value to this species of property, the court concluded that the presumptive measure of damages is the cost of restoration, and that “in the light of this recent federal statutory activity… Puerto, obviously, meant to sanction the difficult but perhaps not impossible task of putting tag on resources, whose values cannot always be measured by the rules of the market place.”
Generally, cases since SS Zoe Colocotroni, have recognized that the proper measure of damages to natural resources is restoration, rejecting a pure market-based valuation of damages. These trends in the common law are carried over to “[t]he CWA, CERCLA, and OPA, which together provide the current basis for the recovery of natural resource damages by the government.” “Their language and legislative history indicate that Congress intended that damages be measured by restoration, at least as a starting point.”
Non-use values, restoration and contingent valuation. Non-use values are those excluding actual use of the resource. These include option value, existence value (or vicarious values), bequest value (or inter-temporal value), and quasi-option value. In addition, they constitute a major portion of natural resources damage assessment.
Option value expresses the utility in retaining the option of future use, while “existence value is the worth to people of knowing that a given natural environment is protected.” Bequest value, as the name suggests, has a testamentary connotation, i. e. a bequeathal quality worth preserving for future generations, and quasi-option value protects the yet unknown potentials of the resource “such as possible medicinal values.”
The Endangered Species Act of 1973 (ESA) is a testimony to the importance of the non-use value concept. The Act protects species from “over utilization for commercial, recreational, scientific, or educational purposes,” all trademarks of use values of natural resources. Notwithstanding this congressional recognition that species are more than the sum of their use values, much debate has centered around whether non-use values are a proper source of monetary damage and, if so, how to measure those values.
One method of assessing non-use values is to use restoration as a measure of damages. Restoration largely cures injuries to non-use values such as existence or bequest value by replacement, and is “especially critical with regard to quasi-option values, which by definition cannot be quantified at the current time since they are based on unknown and unknowable future values of resources.” However, restoration is not panacea for environmental injuries. It is a curative method with limitations in dealing with non-use values; and is antithetical to the unique concept of natural resources since it can rarely recreate the exact resource that was lost. Moreover, it does not completely prevent the loss of non-use values, it takes time, and in the
interim, the public has to do without non-use values. However, the Congress, which mandated, specifically addresses the interim loss to the public as a measure of damages the “diminution in value of …natural resources pending restoration.” The legislative requirement makes the assessment of this loss, especially the non-use value, a critical issue.
One method for measuring damages to non-use values is the contingent valuation methodology (CVM), which uses direct questioning of individuals through surveys to estimate a figure for these damages. Contingent valuation, unlike restoration, which limits the extent of the loss of non-use values, places a numerical value on those losses. The method has been the subject of criticism and has attracted considerable judicial attention, especially as the effective method of monetizing non-use values. These will be examined in detail.
Contingent valuation: CERCLA Regulations and the Ohio Decision. The damage assessment regulations under CERCLA were applicable to oil spills induced natural resources damages before NOAA regulations, and before CERCLA regulations were reviewed in the Ohio case, an epochal judicial milestone in the recognition of non-use values as a component of natural resources, and endorsement of contingent valuation methodology as a means of evaluating such values.
Under CERCLA, the President had the initial responsibility of promulgating regulations for assessment of damages, natural resource injuries, and sub-delegated this responsibility to DOI. The regulations were to indicate “standard procedure for simplified assessment requiring minimal field observation” designated “Type A” rules and “alternative protocols for conducting assessments in individual cases” called “Type B” rules. Both Type A and Type B rules were to identify “the best available procedure for determining such damages.” Under CERCLA, a trustee seeking damages is not obliged to resort to either of the two procedures; however, any assessment performed in accordance with the prescribed procedure is entitled to a rebuttable presumption of accuracy in a proceeding to recover damages from a responsible party. DOI published its final rules in 1986, containing general natural resources damages assessment regulations and Type B rules, which were the subject of attacks by state governments, environmental groups, industrial corporations and an industry group. These regulations were implemented by both CERCLA and the CWA.
The regulations further sanctioned the use of contingent valuations to evaluate both option and existence values. However, the regulations set out a rigid hierarchy of permissible methods for determining “use values,” limiting recovery to the price commanded by the resource on the open market, unless the trustee finds that “the market for the resource is not reasonably
competitive.” Environmental petitioners in the suit maintained and the court agreed that Interior’s emphasis on market value is an unreasonable interpretation of the statute. The court observed that it is unreasonable to view market price as the exclusive factor, or even the predominant one because natural resources have values that are not fully captured by the market system.
The court also noted that DOI through many of the materials it relied on in developing its rules regarding contingent valuation, indicated it is aware of the market is process deficiency necessitating the need for contingent valuation techniques. The court held that while DOI is entitled to rank methodologies according to its view of their reliability, it cannot base its complete exclusion of option and existence values on an incorrect reading of the statute and that the hierarchy values allocating a low ranking to non-use values is not a reasonable interpretation of the statutes. Addressing Industry petitioner’s challenge against the inclusion of the contingent valuation methodology in the regulation, the court pointed out that the structures of the common law do not apply to CERCLA, it disagreed with the view that CVM is at odds with the common law principle barring recovery. The Industry petitioner’s further insisted that CVM is too imprecise, untested and ridden with built-in-bias and propensity to produce overestimation to qualify under “the best available procedure” requirement for damages assessment methodology under CERCLA. But the court responded that in choosing CVM, DOI made an intelligent and cautious decision recognizing the need for CVM to “be properly structured and professionally applied” as well as eliminating a feature of CVM that might have resulted in an overly high assessment. It therefore decided that DOI’s adoption of CVM was consistent with legislative intent and worthy of judicial deference. The Industry petitioner also pointed to the possibility of bias inherent in CVM and its inability, even with recommended guidelines, to meet the huge variations and fluctuations in a typical survey, rendering it unworthy of the best available procedure qualification. But the court drew attention to the length DOI went to evaluate the utility of the CVM and noted that neither the injury nor the variation of natural resources damages is shaped by CVM. It then held that the charge strikes at CERCLA and not CVM’s implementation, which is a subject exclusively for Congressional consideration. The next concern of the Industry Petitioners was that CVM does not rise to the status of a “best available procedure” because willingness-to-pay (WTP) –a factor prominent in CV methodology- carries with it in the risk that respondents do not actually pay money, and they will likely overstate their WTP. The court ruled that the simple and obvious safeguard against overstatement is more sophisticated questioning. Even then, “the risk of overestimation has not been shown to produce such egregious results as to justify judicial overruling of DOI’s careful estimate of the caliber and worth of CV methodology.”
Industry Petitioner’s also challenged the use of CV after an oil leak or a hazardous waste release had occurred, fearing that application of CV methodology in those circumstances would be soaked with a significant bias leading to overvaluation of the damaged resources. While conceding this possibility, the court also pointed out that it was impracticably expensive, if not physically impossible, to conduct valuations in a manner that would avoid this feared bias. Furthermore, the court opined that CERCLA’s preference for restoration rendered such efforts unnecessary. In addition, the court finally held that this concern was still insufficient to reduce CVM to less than “best available resource” and it has yet to see why it should not defer from DOI’s judgment that CVM, when properly applied could be structured to eliminate undue upward biases.
Industry Petitioners also challenged as arbitrary and capricious, the rebuttable presumption status conferred upon natural resources damage assessments including CVM. But the court held that since CV methodology was thoroughly investigated, comments were analyzed and dealt with, and changes were made to refine the use of CV. The record does not support the claim that DOI’s treatment of industry petitioners’ comments was arbitrary or capricious. Finally, the court identified the justification for the presumption; judicial economy through docket management and prevention prolonged battle of experts.
Contingent valuation and General Electric decision. To facilitate damage recovery, OPA directs the President, acting through NOAA, to “promulgate regulations for the assessment of natural resource damages… resulting from a discharge of oil.” Natural resources damage assessments made by a trustee in accordance with those regulations “shall have the force and effect of a rebuttable presumption on behalf of the trustee in any administrative or judicial proceeding.” In 1996, NOAA promulgated its “final rule” governing trustee assessment of natural resource damages which went beyond CERCLA’s mere damage assessment concept by reflecting a restoration-based approach, i.e. developing and implementing plans for restoring and rehabilitating damaged resources or services. The NOAA’s final rules were subject of attack in the General Electric v. U. S. Department of Commerce.
The NOAA’s final rule outlines a three-stage procedure for oil spills, induced damage assessment and restorative plans. The first stage, termed the Pre-assessment Phase, requires the trustees’ self-jurisdictional determination regarding competence to engage in restorative activities under OPA, and whether actions taken by other agencies have adequately addressed the injuries. This stage also requires collection and analysis of pertinent data, preparation of notice of intent to conduct restoration planning activities, and opening a publicly available administrative record. The second stage, the Restoration Planning Phase, has two sub stages.
The “injury assessment” and “restoration selection” sub stages. The former requires the trustee’s determination of injury occurrence and the causal link (“pathway”), the discharged oil and the damage. If the result is in the affirmative, the trustee must quantify its degree and its spatial and temporal extent, including the amount of services destroyed. If that analysis leads the trustee to conclude that the injury requires restoration, the trustee proceeds to the “restoration selection” sub stage, where he identifies a “reasonable range” of restoration alternatives, evaluating them against several factors, including cost, potential success and risk of collateral injury, public health and safety. The trustee thereafter chooses the best restorative plan and develops a Draft Restoration Plan, setting forth the injury assessment procedures employed, the nature and extent of injuries resulting from the discharge, the restoration goals, the range of restoration alternatives considered, how the alternatives were evaluated, and which alternatives were chosen. After the public comment and review period on the Draft Plan, the trustee terminates this stage by developing a Final Restoration Plan.
In the third and final stage of the process, the Restoration Implementation Phase, the trustee presents a written demand for payment to the responsible party under OPA. Refusal by the responsible party to satisfy the demand within ninety days, or failure by both the trustee and the responsible party to agree on an alternative figure, may lead to a suit by the trustee against the responsible party or claim against the Oil Spill Liability Trust Fund. Damage assessment in any suit by the trustee is entitled to a rebuttable presumption provided, it could be demonstrated that such assessment procedures are “capable of providing assessment information of use in determining the type and scale of restoration appropriate for a particular injury,” that any additional cost of a “more complex procedure” reasonably relates to the expected increase in the quantity or quality of information, and most important, that its assessment procedures are “reliable and valid for the particular incident.” The petitioners attacked the authorization of CVM by NOAA as arbitrary and capricious. Also, relying on the court’s holding in Chemical Mfrs. Ass’n v. Dept. of Transp., the petitioner further contended that rebuttable presumption are appropriate only when proof of one fact renders the existence of another fact so likely that assuming the existence of the inferred fact is both sensible and time efficient, and that the rebuttable presumption gives the trustee a “powerful advantage” whereas the agency is required to issue regulations that are sound and credible to deserve the presumptions The court held in Chemical Manufacturers, that the position applies only to rebuttable presumptions created by agencies and not where Congress created the presumption because legislative bodies, unlike administrative bodies, are “free to adopt presumptions for policy reasons.” Noting that the petitioners failed to cite authority for the alleged advantage arrogated to the trustee by the rebuttable presumption, the court doubted if the rebuttable presumption actually gave the alleged powerful advantage since it functioned as nothing more than a “burden shifting exercise.” The court however pointed out that in any event, before trustees can take advantage of the presumption, they must prove that their damage assessments are “reliable and valid for the particular incident.”
Regarding complaints against CVM, the courts observed and held as follows: “In valuing damage to natural resources caused by oil discharges, trustees may consider two types of losses: active and passive. “Active-use” losses refer to the loss of actual use of a natural resource… Under the final rule, the trustee develops a plan to restore the beach to its original condition and, while restoration takes place, to provide alternative fishing, swimming and other active-use opportunities. NOAA’s final rule also authorizes recovery of what are known as non-use or “passive” losses, the value individuals place upon the existence of natural resources, even if they never plan to make active use of them…[t]o assess this value, researchers employ a survey technique known as “contingent valuation,” in which they create a hypothetical market and ask people -survey respondents-how much they would pay to preserve or protect a given resource. Averaging the responses, researchers then determine the value the public places on the resources…”
The court further acknowledged the administrative efforts made to address the controversy surrounding CVM in the form of a NOAA-sponsored study carried out by a special panel including two Nobel laureates, which returned a favorable verdict for the CVM, provided it is properly conducted under strict guidelines.
It was also observed, that based on the panel’s report, NOAA’s first proposed rule explicitly authorized trustees to employ contingent valuation and provided detailed standards for using it but, in its next proposed final rule, NOAA omitted all references to contingent valuation and instead authorized the trustees to choose whichever assessment techniques they wished, subject to reliability and validity requirements, for a particular incident.
However, in appendix B to the final rule’s preamble, NOAA included contingent valuation on a list of techniques that trustees could choose to utilize for a given incident subject to the validity and reliability test. The court concluded that:
“…NOAA ignored neither the panel’s comments nor the criticisms of contingent valuation that the panel considered. It simply gave trustees discretion to use contingent valuation, so long as the technique produces valid and reliable results for the particular incident. Documenting its findings in the record, NOAA reasonably concluded not only that prescribing standards for using all possible assessment procedures in all possible situations would be infeasible, but also that general standards, such as those included in Section 990.27, can adequately ensure that trustees do not abuse their discretion. If a responsible party in a particular case believes that a trustee using contingent valuation has produced either unreasonable or invalid results for the specific incident, it can withhold payment, forcing the trustee to file suit under section 990.64 and to establish validity and reliability under Section 990.27 in order to gain the rebuttable presumption… We held in Ohio that the Interior Department had not acted arbitrarily or capriciously by authorizing CERCLA trustees to use contingent valuation… Not only does nothing in the panel report or any other portion of the administrative record cast doubt on Ohio, but the panel report itself found that if performed correctly, contingent valuation can produce both useful and reliable results…”
It should be noted that the assessment procedures recommended in the guidance documents are not part of the final rule, raising the issue whether the NRDA prepared under such guidance documents would be entitled to the rebuttable presumption benefit, due to an assessment prepared under the regulations. Apparently, avoiding the CVM controversy in its regulations, NOAA declared that it supports the “use of all the procedures discussed in Appendix B of the preamble (including CVM) as reliable and valid within the appropriate context and when performed in accordance with accepted professional practices.”
THE KUMHO TIRE DIMENSION TO NATURAL RESOURCE DAMAGE ASSESSMENTS
Apart from the unclear status of CVM under OPA, another wrinkle to its admissibility is the holding in Kumho Tire Co. v. Carmichael, in which the Supreme Court extended the Daubert expert witness evaluation factors to all expert witnesses. In Daubert v. Merrell Dow Pharmaceuticals, the Court held that admissibility of scientific evidence in the District Court under the Federal Rules of Evidence must not only be relevant but reliable. Daubert, then set out a four-factor reliability test for a District Court’s evidentiary gatekeeper function regarding a scientific theory or technique: testing, peer review, error rates, and acceptability in the relevant scientific community.
Kumho Tire has been applied to exclude expert medical testimony, and similar developments appear emergent in the state judicial terrain where for instance, the Texas Supreme Court beat the United States Supreme Court by some nine months in adopting Daubert’s rationale to reach the same Kumho conclusion. Furthermore, Kumho’s doctrine seems to dovetail into the NOAA’s “reliable and valid” prerequisite for OPA’s rebuttable presumption and responsible parties may seize the logic of these requirements speculative natural resource damages assessment based upon CVM. In spite of these procedural hurdles, it should be recalled that Federal Judges still have broad discretion in assessing the admissibility and reliability of scientific or non-scientific evidence and the exercise of this discretion is not easily overturned on appeal.
Analysis of NOAA’s approach to CVM. It has been posited that NOAA’s damage assessment theory reflects the Nock’s idea that: “Money does not pay for anything, never has, never will. It is an economic axiom as old as the hills that goods and services can be paid for only with goods and services.”
In other words, lost natural resources and services can only be paid for with other natural resources and services. Clearly, under OPA, the primary focus of remedial measure for environmental injury is restoration, the question has always been the best means to effectively and accurately compensate the public for its loss pending full restoration, especially the monetization of the non-use values portion of natural resources through CVM. It is generally agreed that “[u]ntil more extensive collaboration between the environmental and social sciences produces a better understanding of non-use values, contingent valuation will remain the only recognized method for assessing those intangibles.” Maybe due to the controversy over CVM, NOAA’s adopted assessment regime minimizes the role that contingent valuation has in an environmental damage appraisal by discouraging monetization of non-use values.
It should be recalled that the Ohio court rejected an assessment arrangement that excluded non-use values on the ground. These are essential components in the diminution of value factors that should feature in computing the total remedial package that would make the public whole. And to this end, the court endorsed the use of contingent valuation as a best available assessment procedure. It is therefore important to crosscheck NOAA’s action with Congressional intent as judicially discerned.
Addressing this inconsistency, attempts have been made to rationalize NOAA’s approach by positing that “in a scheme based on compensatory restoration and the service-to service ap-proaches, natural resource trustees may be able to achieve the congressional objectives without explicit measurement of non-use values” and that “[c]ompensatory or resource-based com-pensation is premised on the idea that, aside from the primary restoration action, trustees can compensate the public for interim diminution in value by providing or improving other natural resources of the same type and quantify as those lost… and replace the non-use values that are bound up in the human and ecological services without expressly measuring or monetizing them.”
Within the parameters of this resource, based compensation for interim diminution in non-use values, the role of CVM is accordingly modified. It was observed that CVM “will operate differently from the traditional and controversial view of that method. Instead of surveying individuals about the monetary value of the resource, the contingent valuation survey will seek to determine what level of replacement resources will equal the lost resources and thus make the public whole—the surveys will ask respondents to value their feelings for natural resources in terms of other natural resources. In fact, Final Rule avoids the monetization of non-use values and the inaccuracy associated with converting those uncertain values into dollars.”
However, this justification for NOAA’s perceived compensatory restoration approach to redressing interim diminution of non-use values is fundamentally flawed when viewed within the prism of an inherent character of Natural Resources: its uniqueness. This is well encapsulated by a commentator as follows: “Often a portion of the non-use value of a natural resource exists in the public’s appreciation of the uniqueness of that resource. To the extent that a resource’s non-use value derives from its uniqueness, replacement resources cannot compensate the public for that loss. Essential to the concept of a unique good is the complete lack of adequate substitutes. This absence of adequate substitutes means that the replacement of natural resources cannot make the public whole.”
Comparative justification for contingent valuation. Whatever the criticism against CVM, the consensus, including the judicial vote, appears to favor the view that a property-designed survey will elicit a reasonably accurate estimation of lost non-use damages. Besides, a small level of inexactness is not a fatal flaw.
Comparably, damages for personal injury consist of both pecuniary losses (use values) such as lost earnings and medical expenses, and non-pecuniary losses (non-use values), such as “mental and physical distress.” This imprecision in fixing value to the latter is an accepted part of the legal system, which acknowledges that lost wages and medical expenses alone could properly compensate a person for the loss of an arm or a leg. Assessment of these sort of damages is left entirely to the discretion of the jury, with only the judge’s limited ability to reduce the award in case of run away jury. It is the same legal system that entrusted the quantification of intangible injuries, resulting from bodily harm to twelve people drawn randomly from society, which sanctioned contingent valuation of non-use values, which works on the same basic assumption, refined and tested by some of the top economists in the country. Even if the critique of contingent valuation is correct, the potential inaccuracies do not pose an insurmountable barrier to the use of this method as a rough benchmark of damages for use by the judge and jury. There are judicial and legislative endorsements of the status of non-use values as a crucial component of natural resource damages, which cannot be ignored. Contingent valuation remains the best available method for assessing this non-use values despite their intangible character, and this methodology has been shown to be reasonably accurate. Additionally, Contingent valuation of non-use values performs other several functions; provision of a benchmark for measuring when restoration, the statutory remedial preference, is grossly disproportionate. It complements restoration by redressing the interim loss between injury and full restoration. In addition, when restoration is grossly disproportionate or technically infeasible, contingent valuation of non-use values ensures that the public will not be under-compensated for the damages done to public resources. Failure to make the responsible party account for this portion of natural resources means the resources are effectively sold to industries for less than their actual worth.
NOAA REGULATIONS IN ACTION: STATE CASES STUDIES
An examination of how NOAA’s regulations work in real life cases through typical restoration plans may be instructive on the impact of the agency’s natural resources damage assessment policies.
1. M/V Kuroshima Oil Spill, Summer Bay, Unalaska, Alaska
The Restoration Plan was jointly prepared by NOAA, U. S. Fish and Wildlife Service (United States Department of Interior), Alaska Department of Fish and Game, Alaska Department of Natural Resources and the Alaska Department of Law, in consultation with the Qawalangin Tribe of Unalaska.
M/V Kuroshima incident and site overview. On November 26, 1997, the M/V Kuroshima, a 368-foot frozen seafood freighter broke away from anchorage in Summer Bay on Unalaska island, near Dutch Harbor, Alaska.
While attempting to move to safer anchorage, winds reportedly in excess of 100 knots blew the freighter into Second Priest Rock, damaged several of the vessel’s fuel tanks, killed two -crewmen, and caused a spill of 39,000 gallons of heavy fuel oil resulting in huge environmental and other injuries.
Overview of the natural resource injuries. Five categories of natural resource injuries were identified. These included:
(1) Death or injury to birds including the bald eagle, the emperor goose and the Federally listed Steller’s eider among other numerous species of seabirds and waterfowl.
(2) Extensive oiling of shoreline vegetation, predominantly beach wildrye grass resulting from the spill, as well as exposure of wetlands, riparian and dune vegetation to oil. Response activities also caused extensive damage to vegetation.
(3) Shellfish and Intertidal Biota exposed to dissolved and dispersed petroleum hydrocarbons, smothering by gross oil accumulations, crushing and smothering of subtidal shellfish during dredging and salvage actions.
(4) Deposit of oil on the lake bottom, contamination of lake sediments, exposure of lake water to dissolved polycyclic aromatic hydrocarbons (PAHs), and exposure of fish to oil through ingestion, skin and gill contact with dissolved PAHs in the lake water column. Exposure of spawning and rearing habitats to oil contamination in the lake waters and sediments.
(5) Impairment of Recreational sites and activities on Unalaska Island, including beach combing, clamming, camping, swimming, picnicking day hiking, mountain biking, sport fishing, and wildlife watching.
Natural Resources Trustees and authorities. The plan indicated the designation of both state and federal trustees pursuant to OPA to assess and recover natural resources damages, to plan and implement restorative actions, in connection with which the plan was prepared.
The trustees designated NOAA as the Lead Administrative Trustee as suggested in NOAA’s regulations. It was further indicated in the plan that the state, in addition to its authority to recover natural resources damages under Federal law, may also recover natural resources damage pursuant to Alaska’s statutes.
Purpose and need for restoration. It was declared, that the plan was prepared as a proposal for restoration plans regarding environmental damages caused by the M/V Kuroshima oil spill. The objective of the proposal is to make the public whole for injuries related to natural resources and natural resources’ damage services resulting from the M/V Kuroshima oil spill by returning the injured natural resources and national resource services to their baseline conditions and compensating for interim losses to those resources and services.
Summary of natural resources damage assessment. With copious reference to OPA and NOAA regulations, the plan identified the statutory functions of the trustees as recovery of the cost of restoring, rehabilitating, replacing, or acquiring the equivalent of the injured natural resources (“primary restoration”), diminution in value of those injured natural resources pending restoration (“compensatory restoration”), and reasonable assessment cost.
Running the incident through OPA and NOAA regulations, the trustees determined the existence of legal jurisdiction to pursue restoration under OPA and that the grounding and oil spill constituted an “incident” pursuant to OPA. It was further determined that the “incident” was not an “excluded discharge” within the meaning of OPA, and finally, that the injured natural resources, as a result of the incident, are under the authority of the trustees. The “incident” underwent the various phases outlined in NOAA’s regulations.
Coordination and public participation. The trustees not only coordinated among each other, but also coordinated with the responsible parties, who are, in this case Kuroshima Shipping S. A. and Unique Trading Co., thereby reducing duplication of studies, increasing cost effectiveness, encouraging information sharing, and decreasing the likelihood of litigation. In addition to a systematic coordination, the statutory mandated public participation in the restoration planning through an open review of the process, which was achieved through public notice, availability of the Draft Plan for a thirty (30) day comment period, a scheduled public meeting at Unalaska town hall and additional opportunity for further public review if the Trustees decided to make significant changes to the plan based on the initial public comments.
Proposed compensatory restoration actions. The plan identified the overriding statutory mandate to make the public whole through primary restoration and compensation for interim losses. The Trustees expected the affected resources to recover over time, because of the prompt actions taken to clean up and minimize the spill and in most instances, natural recovery will be sufficient to return the resources to the baseline. However, this recovery may take years to occur. Therefore, most of the restorative alternatives evaluated in the plan are focused on compensating for the interim losses. After the detailed articulation of the assessment formula, the following restoration actions were proposed:
(i) Conducting predator removal and control measures to enhance nesting success for seabird populations affected by the spill;
(ii) Restoration of vegetation oiled by the spill and monitoring to evaluate the success and need for additional replanting;
(iii) Additional testing of intertidal shellfish contamination and education on seafood safety;
(iv) Sediment control, lakeshore revegetation, limnological survey work and enumeration of salmon smolt out migration and adult escapement;
(v) Funding beach cleanup activities to compensate for lost or diminished human use during the oil spill and subsequent cleanup operations;
(vi) Purchase of tents and other facilities to be publicly available for use year around as well as for a summer environmental education camp; and
(vii) A community-wide education program designed to reduce adverse impacts of recreation and other public uses that may impede recovery of natural resources or affect restoration efforts.
It is instructive to note that in setting outs its understanding of what compensatory restoration means and requires, the Trustees in the plan stated that:
“Compensatory restoration includes action taken to compensate for interim losses of natural resources and/or services pending recovery. The type and scale of compensatory restoration may depend on the nature of the primary restoration action and the level and rate of recovery of the injured natural resources and/or services, given the primary restoration action. When identifying the compensation restoration components, of the restorative alternatives, the trustees must first consider compensatory restoration actions that provide services of the same type and quality and of comparable value as those lost. If compensatory actions of the same type and quality and comparable value cannot provide a reasonable range of alternatives, Trustees then consider other compensatory restoration actions that will provide services of at least comparable type and quality as those lost.”
This is a reiteration of the view already addressed elsewhere in this paper. It is strange, that in face of the quantum of damage inflicted on the environment in this case study, and while the Draft plan detailed the enormous damages and acknowledged that “the public is entitled to compensation for interim lost use” of the natural resource, the plan did not address interim loss of non-use values including existence, option, and bequeathal values which have all received judicial recognition. Moreover the report did not mention CVM, which is the recognized method for evaluating this non-use values. The plan only assessed loss of recreational use, the analysis of which supports over $165,000 in interim loss of use of the area resulting from the spill.
2. Texaco Pipeline Inc. Crude oil discharge, Lake Barre, Louisiana
Damages assessment restoration plan. This restoration plan was jointly prepared under NOAA’s regulations as in the last case study.
Overview of the incident. 275.562 gallons of crude oil were released into Lake Barre, Louisiana on May 17, 1997, causing extensive environmental damage including injuries to the biota in the lake estuarine and marsh environments. The report reiterated most of the regulatory assessments and restoration concepts mentioned in the first case. Boat-based recreation, shrimping and fishing was affected. The selected restoration alternatives comprised of natural recovery for primary restoration and marsh enhancement for compensatory restoration. Again, the Trustees determined that the environment will recover naturally without human intervention, acknowledged that the public is entitled to interim lost use, and it did not account or consider the loss of non-use values. The report made no mention of non-use value as an item of loss under the compensatory restorative alternatives.
3. M/V Westchester crude oil discharge, Lower Mississippi River, Louisiana
Damages assessment / Restoration plan and Environmental assessment. On November 28, 2000, the M/V Westchester lost steerage due to crankcase explosion, grounding the vessel, holing the #1 starboard cargo tank, and subsequently leaked 550,000 gallons of Nigerian crude oil into the Mississippi River. The Trustee determined that the incident caused injuries to habitats, biota in the Mississippi River and shoreline environments including a variety of birds and wildlife. Again, the plan indicated that the natural resources damage will be restored to baseline with time and without human intervention, but the valuation of environmental loss did not feature compensation for loss of non-use value of the resources.
CONCLUSION: A CASE FOR BREACH OF TRUST
(a) Congressional direction to recover damages for non-use values. Congress specifically provided that the measure of damages to be recovered by the Trustees for injury to natural resources should in addition to restoration cost, include the diminution in value of those resources pending restoration. Judicial expatiation of the provisions has established the parameters of these values as encompassing use-values like hunting, swimming, recreational fishing, bird watching, etc., and non-use values including option, existence, and bequeathal values. These damages are to be ascertained by the appraisal formula contained in the natural resources damages assessment of regulations promulgated by NOAA. The absence of an appropriate assessment mechanism for this head of damages is an infraction of the legislative command. To be fair, the high cost, and imperfections of CVM are tempting disincentives for its adoption. However, the difficulty in creating a satisfactory assessment regime was never an accepted excuse for executive failure to carry out the task. Rather, courts have impliedly appreciated the colossal hurdles on the path to fashioning a suitable method for evaluating such esoteric concepts and accorded due deference to agency’s efforts even in the face of stiff criticism and oppositions. It is important to seize on, build on this judicial goodwill rather than squander, and fritter it away through administrative lethargy or timidity.
Florida is a good reference for making efforts at developing appropriate solutions to the assessment conundrum. Evoking memories of the wisdom behind Type A regulation e. e. “avoidance of unnecessary… expenditure of limited resources to determine… values, Florida legislature established a damage assessment regime for natural resources damages caused by discharge of less than 25 gallons of gasoline or diesel fuel as well as a compensation schedule for natural resources damages caused by discharge of 30,000 gallons of pollutant. Significantly, the Florida compensation schedule is based upon the cost of restoration and the loss of ecological, consumptive, intrinsic, recreational, scientific, economic, aesthetic, and educational values of such injured or destroyed resources. Under the schedule, compensation assessment is calculated by a combination of detailed and enumerated evaluation factors. For discharges greater than 30,000 gallons, responsible parties may elect between having the amount of their liability for compensation determined by the schedule or by a damage assessment performed by the department. The morale of the Florida initiative is that it projects and appropriate executive posture to fulfilling a delicate and intricate mandate, in the face of temptation to adopt a less offensive alternative.
(b) Executive waywardness. In contrast to the Florida standpoint, NOAA’s relegation of CVM from the status of a mandatory direction to a mere discretionary option in the appendix to the regulations and subject to the validity and reliability tests confirms the (tacit) rejection of the methodology and what it represents. Importantly, it halted the tedious but progressive march to develop a formula for establishing the appropriate methodology to ascertain and monetize the damages recoverable for injury to non-use qualities of natural resources. In addition, even more importantly, it connotes a flagrant breach of the statutory terms of reference on measure of damage.
In addressing the genuine concerns regarding the flaws and problems associated with CVM, NOAA may adopt a modified form of the Florida scheme, and limit the application of contingent valuation of big and extensive oil spills, and design a Type A compensation schedule CVM model for loss of non-use value caused by small discharges.
(c) Cause of action. Remarkably, Congress chose the trust device in defining duties and responsibilities for the management of natural resources. The traditional equitable principles of trusteeship therefore become applicable; fiduciary duties and account stated.
The three case studies highlight how the implementation of NOAA’s regulation could result in distortions of congressional intent and shortchanging the public. The regulations in high-sounding verbiage, declared a commitment to primary legislative mission including restoration of natural resources and recovery for diminution in their value pending restoration. Moreover, great judicial pains were taken to identify and articulate the components of these “value pending restoration” as clearly including non-use values.
Maybe it should be made clear that natural resources are not just national resources, they are public goods held under trusteeship and the State’s agencies as trustees have a primary duty to the public and not just to the environment. Clearly, when the trustee adopts and implements the restorative plan, it has fulfilled only a part of the mission, making the environment whole. But it is when further and additional compensation is recovered for diminution in use and non-use value pending restoration that the public is made whole. Consequently, failure to claim the vast amount of non-use value caused damages to environmental property, constitute a monumental abdication of responsibility and a fundamental breach of trust.
As a commentator rightly observed: “Americans have long had some sense that the environment is worth more than its market value, that it has some value beyond the commercial. The United States was the first country to establish a system of national parks. Instead of relying on entrance fees to support the parks as would seem to be dictated by the market, the government chose to subsidize the parks and keep entrance costs low. Part of the reason for this is a sense that these areas of natural beauty enhance our country regardless of whether any particular person ever sees them. This is an expression of our deep-rooted sense that natural resources have non-use values, values that go beyond an individual’s use of the resource, and that those non-use values must be protected.”
NOAA’s exclusion of these classes of value from the natural resources damages computation (thereby making only the environment whole) is an act of executive miscalculation, and a gross disservice to the public. Perhaps it is time to have the trustees render account.
Law and Regulations:
–The Oil Pollution Act (OPA) of 1990, 33 U. S. C. §2701-2752 (1990).
–Rules and Regulations of the Department of Commerce, National Oceanic and Atmospheric Administration, Natural Resources Damage Assessment, 61 F. R. 440 (1996) and 15 C. F. R. § 990 (2002). –Florida Statute Title XXVIII, Natural Resources; Conservation, Reclamation and Use; Chapter 376, Fl. St. §376.121 (2001).
– U. S. v. Locke, 529 U. S. 89 (2000)
– Kumho Tire Co., v. Ltd. V. Carmichael, 526 U. S. 137 (1999).
– Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U. S. 579 (1993).
– Illinois Cent. R. Co. v. State of Illinois, 146 U. S. 387 (1892).
– General Elec. Co. V. U. S. Dept. of Commerce, 128 F. 3d. 767 (U. S. App. D. C. Circ. 1997)
– Ohio v. U. S. Dept. of Interior, 880 F. 2d. 432 (U. S. App. D. C. Cir. 1989)
– Black v. Food Lion Inc., 171 F. 3d 308 (Fifth Circ. 1999)
– International Ass/n of Independent Tanker Owners (Intertanko) v. Locke, 148 F. 3d. 1053 (Ninth Circ. Wash. 1998)
– Gammill v. Jack Williams Chevrolet, Inc. 972 S.W. 2d. 713 (Tex.1998)
– Chemical Mfrs. Ass’n. v. Dept. Of Transp., 105 F. 3d. 702 (D.C. Cir.1997)
– Com. Of Puerto Rico v. SS Zoe olocotroni, 628 F. 2d. 652 (First Cir. 1980)
– Marks v. Whitney, 491 P. 2d 374 (Cal. 1971)
– Muench v. Public Service Commission, 52 N.W. 2d. 514 (Wis.1952)
–Robert Force, Marine Pollution, Vol. I and II (Spring 2002).
– Jones, Carol A., Theodore D. Tomasi and Stephani W. Fluke, Public and Private Claims in Natural Resource Damage Assessment, 20 HARV. ENVT. LAW 111 (1996)
– Kende, Christopher B., Development and presentation of the pollution victim’s claim, 5 U.S.F. Mar. L. J. 203 (1993)
– Letourneau, Keith B. and Wesley T. Welmaker, The Oil Pollution Act of 1990: Federal judicial intervention through the end of the millennium, 12 U.S.F. L. J. (2000)
– Robinson, Judith, The Role of non-use values in Natural Resources Damages: Past, present and future, 75 TEX. L. REV. 189 (1996)
– Seevers, James S. Jr., NOAA’s New Natural Resource Damage Assessment Scheme: It’s not about collecting money, 53 Wash. & LEE L. REV. 1513 (1996)
– Weighrauch, Bruce C., Oil Spill Litigation: Private Party Lawsuits a Limitation, 27 LAND AND WATER L. REV. 363 (1992)
– Williams, Douglas R., Valuing Natural Environment: Compensation, market harm and the idea of public good, 27 CONN. L. REV. 365 (1995)
– Shea, Eileen L., History of NOAA, 1987 quoting Richard Nixon, with statement to Congress accompanying the Reorganization Plan #4 of July 9, 1970, at: http://www.lib.noaa.gov/edocs/noaahistory.html
– National Oceanic Atmosphere Administration et. al., M/V Westchester Crude Oil Discharge Lower Mississippi River, Louisiana Damages Assessment / Restoration Plan and Environmental Assessment, (September 27, 2001), at: http://darp.noaa.gov/pdf/westdarp.pdf
– National Oceanic Atmosphere Administration et al., Draft Restoration Plan and Environmental Assessment for the M/V Kuroshima Oil Spill, Summer Bay, Unalaska, Alaska (1997)., at: http://www.darcnw.noaa.gov./kuro.htm
– National Oceanic Atmosphere Administration et al., Damages Assessment and Restoration Plan, Texaco Pipeline Inc. Crude Oil Discharge, Lake Barre, Louisiana, (May 16, 1997), at: http://www.darcnw.noaa.gov/lakebarreea.prd