General Elec. Co. v. U.S. Dept. of Commerce

• Decision Date: 18 November 1997
• Docket Number: 96-1101,Nos. 96-1096,96-1102,96-1104 and 96-1105,96-1103,s. 96-1096
• Parties: , 327 U.S.App.D.C. 33, 28 Envtl. L. Rep. 20,263 GENERAL ELECTRIC COMPANY, Petitioner, v. UNITED STATES DEPARTMENT OF COMMERCE, National Oceanic and Atmospheric Administration, Respondent, American Forest and Paper Association Inc., et al., Intervenors.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 767

128 F.3d 767

45 ERC 1609, 327 U.S.App.D.C. 33, 28

Envtl. L. Rep. 20,263

GENERAL ELECTRIC COMPANY, Petitioner, v. UNITED STATES DEPARTMENT OF COMMERCE, National Oceanic and Atmospheric Administration, Respondent American Forest and Paper Association Inc., et al., Intervenors.

Nos. 96-1096, 96-1101, 96-1102, 96-1103, 96-1104 and 96-1105.

United States Court of Appeals District of Columbia Circuit.

Argued Sept. 11, 1997.

Decided Nov. 18, 1997.

On Petitions for Review of Orders of the United States Department of Commerce.

E. Edward Bruce, Washington, DC, argued the cause for the non-insurance petitioners. With him on the briefs were James R. Bieke, G. William Frick, Philip A. Cooney, Dean A. Calland, Thomas B. Smith, Harold E. Mesirow, James L. Connaughton, David F. Zoll, Ronald A. Shipley, Christina Franz, L. Charles Landraf, Linda K. Breggin, and Cynthia H. Evans.

Marilyn L. Lytle, New York City, argued the cause and filed the briefs for petitioners American Institute of Marine Underwriters and Water Quality Insurance Syndicate.

Monica P. Medina, General Counsel, U.S. Department of Commerce and Naikang Tsao, Attorney, U.S. Department of Justice, Washington, DC, argued the cause for respondent. On the brief were Lois J. Schiffer, Assistant Attorney General, and Eileen T. McDonough, Attorney.

Peter H. Lehner, New York City, argued the cause for intervenor Natural Resources Defense Council, Inc. With him on the brief was Sarah Chasis.

Thomas S. Udall, Attorney General, State of New Mexico, Charles de Saillan, Assistant Attorney General, Santa Fe, NM, and Charles E. Magraw, Assistant Attorney General, State of Montana, Helena, MT, were on the brief for amici curiae State of New Mexico, et al.

Before: SILBERMAN, ROGERS and TATEL, Circuit Judges.

Opinion for the Court filed by Circuit Judge TATEL.

TATEL, Circuit Judge:

Seventeen months after the oil tanker Exxon Valdez ran aground in Prince William Sound, spilling almost eleven million gallons of North Slope crude, Congress enacted the Oil Pollution Act of 1990 to make parties responsible for oil spills liable for damage to natural resources. In this case, we consider both procedural and substantive challenges to the final rule that the National Oceanic and Atmospheric Administration issued pursuant to the Act. Concluding that the final rule's authorization for removal of residual oil suffers from a lack of reasoned decisionmaking, we vacate this portion of the rule and remand to the agency for further consideration. With the agency's consent, we also vacate and remand the final rule's authorization for recovery of legal fees. In all other respects, we sustain the final rule.

I

Prior to the Oil Pollution Act of 1990, Pub.L. No. 101-380, 104 Stat. 486 (codified at 33 U.S.C. §§ 2701-20, 2731-37, 2751-53, 2761 (1994)) ("OPA"), natural resource damages resulting from oil spills were assessed pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, Pub.L. No. 96-510, 94 Stat. 2767 (codified as amended in scattered sections of the U.S.C.), amended by the Superfund Amendments and Reauthorization Act of 1986, Pub.L. No. 99-499, 100 Stat. 1613 (1986) ("CERCLA"), which authorizes "trustees" (e.g., federal, state, or local officials) to assess and collect damages from all types of environmental polluters. In Kennecott Utah Copper Corp. v. United States Dep't of the Interior, 88 F.3d 1191 (D.C.Cir.1996), and Ohio v. United States Dep't of the Interior, 880 F.2d 432 (D.C.Cir.1989), we reviewed and largely sustained the natural resource damage assessment regulations that the Interior Department issued pursuant to CERCLA.

OPA focuses specifically on oil discharges in the nation's waterways and along its coastlines. Amending the Clean Water Act, section 4201(a) of OPA directs the President, who has since delegated his authority to the Environmental Protection Agency and the Coast Guard, to remove spilled oil. 33 U.S.C. § 1321(c)(1). Section 1002, the primary focus of this litigation, makes responsible parties liable for "[d]amages for injury to, destruction of, loss of, or loss of use of, natural resources, including the reasonable costs of assessing the damage." Id. § 2702(b)(2)(A). Only a "trustee" appointed by either the President, a governor, the governing body of an Indian tribe, or the head of a foreign government may recover such damages. Id. § 2706(a)-(b). The Act limits responsible party liability, e.g., id. § 2704(a)(3) (limiting liability of any offshore facility except a deepwater port to removal costs plus $75 million per incident), but if trustees need additional funds for restoration, they can draw upon the Oil Spill Liability Trust Fund, id. § 2712(a)(2), a fund financed primarily by a five cent per barrel tax on imported and domestic oil, 26 U.S.C. § 4611(c)(2)(B) (1994).

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." 33 U.S.C. § 2706(e)(1). Natural resource 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" under OPA. Id. § 2706(e)(2).

Engaging in a six-year rulemaking process, which produced proposed rules in 1994, 59 Fed.Reg. 1062 (1994), and in 1995, 60 Fed.Reg. 39,804 (1995), NOAA promulgated its "final rule" governing trustee assessment of natural resource damages in 1996. Natural Resource Damage Assessments, 61 Fed.Reg. 440-510 (1996) (adding 15 C.F.R. §§ 990.10-990.66). The final rule reflects NOAA's determination to accomplish OPA's goals through a restoration-based approach, focusing not merely on assessing environmental damages--the approach taken by CERCLA--but also on developing and implementing plans for restoring and rehabilitating damaged resources or services.

The final rule lays out a three-stage procedure for assessing injuries resulting from oil spills and for developing and implementing plans to restore damaged resources. Termed the "Preassessment Phase," the first stage requires trustees to determine whether they have jurisdiction under OPA to pursue restoration activities and whether actions taken by other agencies have adequately addressed the injuries. This first stage also requires the trustee to collect and analyze pertinent data, prepare a notice of intent to conduct restoration planning activities, and open a publicly available administrative record. 15 C.F.R. §§ 990.41-990.45 (1997).

The second stage, the "Restoration Planning Phase," has two substages. The "injury assessment" substage requires the trustee to determine whether an injury has occurred, whether a "pathway" can be established between the discharged oil and the injury, and whether the injury resulted from the discharge. Id. § 990.51(a)-(b). If the trustee determines that the oil discharge caused an injury, the trustee must quantify its degree and spatial and temporal extent, including the amount of services destroyed. Id. § 990.52(a)-(b). If that analysis leads the trustee to conclude that the injury requires restoration, the trustee proceeds to the "restoration selection" substage, where the trustee identifies a "reasonable range" of restoration alternatives, evaluating them against several factors, including cost, potential success, risk of collateral injury, and public health and safety. Id. §§ 990.53-990.54. Once the trustee chooses the restoration plan that best restores the value destroyed by the oil discharge, the trustee 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. Id. § 990.55(b). After giving the public an opportunity to review and comment on the Draft Plan, id. § 990.55(a), the trustee ends this stage by developing a Final Restoration Plan, id. § 990.55(d).

In the third and final stage of the process, the "Restoration Implementation Phase," the trustee presents a written demand for payment to the owner of the tanker or other party or parties responsible for the oil discharge. Id. § 990.62(a). If the responsible party refuses to satisfy the demand within ninety days, or if the trustee and the responsible party cannot agree on an alternative figure, the trustee may sue the responsible party or seek an appropriation from the Oil Spill Liability Trust Fund. Id. § 990.64(a). In any suit filed by the trustee, its damage assessment is entitled to a rebuttable presumption, id. § 990.13, if the trustee can demonstrate that its assessment procedures are "capable of providing assessment information of use in determining the type and scale of restoration appropriate for a particular injury," id. § 990.27(a)(1), that any additional cost of a "more complex procedure" reasonably relates to the expected increase in the quantity or quality of information, id. § 990.27(a)(2), and, most important, that its assessment procedures are "reliable and valid for the particular incident," id. § 990.27(a)(3).

Pursuant to section 1017(a) of OPA, which allows interested persons to petition this court to review any OPA regulation within ninety days of its promulgation, 33 U.S.C. § 2717(a), two groups of petitioners filed separate challenges to the final rule. The first group, the "industry petitioners," consists of General Electric, American Petroleum Institute, Beazer East, Chemical Manufacturers Association, Rhone-Poulenc, Zeneca Holdings, Stauffer Management, and Atkemix Thirty-Seven, Inc. These petitioners argue that NOAA acted arbitrarily and capriciously by authorizing trustees to employ an assessment technique known as contingent valuation. They also argue that...