The U.S. Commerce Department has taken a conservative and flexible approach to how much polluters should pay for damages to natural resources caused by oil spills.
The long awaited proposed rules are separate from the issue of cleanup costs.
They determine what compensation the government should receive for the injury to public owned natural resources and for the loss of use of resources during cleanup operations.
PROPOSED RULE
Commerce's National Oceanic and Atmospheric Administration issued the proposed rule in the Jan. 7 Federal Register under the authority of the 1990 Oil Pollution Act.
NOAA said the government will use compensation formulas to be used for most oil spills in the sea and inland waters.
It said 99% of coastal discharges of oil from 1973 90 were less than 10,000 gal. Compensation formulas could be used for most of them, particularly for those that occur in areas where it would be difficult to ascertain precise environmental effects.
The formulas would allow an estimate of damages per gallon, taking into account average restoration costs, plus average lost direct use values pending restoration.
The formulas would consider the amount and type of oil discharged and region and habitat type in which the discharge occurs.
The estuarine and marine compensation formula is based on 55 representative province/habitat combinations ranging from Maine to Alaska to Hawaii. The inland waters formula is based on 100 combinations representing the Great Lakes and other inland waters by type.
NOAA said the formulas would apply to a wide range of the most commonly discharged oil products, allowing a national consistency and a regional specificity.
When government trustees determine circumstances of an oil spill are far out of the bounds of compensation formulas, they could use another assessment procedure.
ENVIRONMENTALIST SETBACK
In a setback for environmentalists, the proposed rule restricts use of the "contingent valuation" method of setting damages.
That method would use opinion surveys to determine the value the public places on preserving special resources and seek compensation on that value rather than any loss incurred.
Oil companies and others complained that extensive use of contingent valuation method could generate excessive estimates of damages that would be punitive and could bankrupt many companies.
NOAA decided if trustees use a contingent valuation method, they should follow a conservative approach and choose the design that would understate rather than overstate the natural resource damage.
The Natural Resources Defense Council complained that by limiting the contingent valuation method, NOAA's rule fails to provide a strong incentive to prevent pollution.
Copyright 1994 Oil & Gas Journal. All Rights Reserved.
