Contact: Matthew Stout             FOR IMMEDIATE RELEASE                         
                                   11/26/97

The U.S. Court of Appeals upheld the goals of the Oil Pollution Act, changing the way environmental liability is determined following an incident involving an oil spill. This new rule provides an effective framework for quick and efficient restoration of natural resources and services.

"Last year, NOAA broke new ground when it issued its final damage assessment regulation. This ruling reaffirms NOAA's efforts to promote a cooperative, restoration-focused approach to damage assessment that fully compensates the American public for injury to their natural resources," said Terry Garcia, Assistant Secretary for Oceans and Atmosphere at the Department of Commerce. "NOAA thoughtfully balanced the concerns of industry and the public in developing these regulations, and the court has placed its stamp of approval on this approach to restoring natural resources harmed by oil spills."

On November 18, 1997, the U.S. Court of Appeals for the D.C. Circuit largely upheld the National Oceanic and Atmospheric Administration's regulations for natural resource damage assessments under the Oil Pollution Act of 1990. Of greatest significance is the court's conclusion that a natural resource trustee can select its assessment methods on a case by case basis. Particular assessment methodologies need not be prescribed in advance, but can be selected based on incident-specific facts. In addition, the Court rejected industry claims that contingent valuation, a method of determining the market and non-market value of natural resources, was so inherently unreliable that NOAA should have explicitly prohibited its use.

Given the Oil Pollution Act's mandate to NOAA and other trustees to restore injured resources, the court found that the costs of monitoring to evaluate the success of restoration are necessary, and thus are a recoverable, component of damage assessment claims. The Court also ruled that simplified procedures, including the Department of the Interior's type A model, may be used for assessment given the rule's requirement that trustees must develop incident-specific or regional restoration plans. Further, the Court verified that Congress clearly authorized trustees to recover passive use values for the loss of benefits associated with natural resources, independent of any direct use. NOAA's final damage assessment regulations, which were issued in January 1996, set out general guidelines for trustees to follow in developing damage claims based upon what is needed to effect restoration of injured natural resources such as occurred as a result of the Exxon Valdez oil spill. Petitioners from several industry and insurance concerns subsequently challenged these regulations. The major issues were industry's assertion that the rules contain no standards or guidance for carrying out damage assessments, and challenges to specific methodologies. Briefs were filed by both the government and petitioners earlier in 1997 and oral arguments were held on September 11.

The Court remanded two issues to NOAA for further rulemaking: first, the agency must more fully address the circumstances under which trustees may use restoration authorities to remove oil remaining after a response operation has been completed; and second, NOAA must define precisely what activities by attorneys should be included in recovery of assessment costs.

Copies of the decision can be obtained by contacting the U.S. Court of Appeals for the D.C. Circuit or through the internet at http://mercury.ll.georgetown.edu/Fed-Ct/cadc.html . For additional information, contact Linda Burlington.

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