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TITLE 31NATURAL RESOURCES AND CONSERVATION
PART 1GENERAL LAND OFFICE
CHAPTER 20NATURAL RESOURCES DAMAGE ASSESSMENT
SUBCHAPTER CNATURAL RESOURCE DAMAGE ASSESSMENTS
RULE §20.32Assessment Procedures and Protocols for Determining, Quantifying and Valuing Natural Resource Injury and Loss of Services

(a) The state trustees may utilize any reliable incident-specific methods and procedures including, but not limited to, those listed in this section to determine and quantify injury to and loss of services of natural resources. In selecting the appropriate assessment procedures and protocols, the state trustees shall consider the unique characteristics and the location of the natural resources affected by the unauthorized discharge of oil, including adverse impacts caused by response activities, if any. The methods identified in this section shall be designed to ensure that the cost of any restoration, rehabilitation, replacement or acquisition project shall not be disproportionate to the value of the natural resource before the injury. Any assessment generated by the state trustees shall be reasonable and the costs of conducting the assessment shall have a rational connection to the value of the injured resources.

(b) The state trustees may find injury to a natural resource when:

  (1) the natural resource was exposed to oil from an unauthorized discharge; and

  (2) there was a pathway between the natural resource and the discharged oil; and

  (3) reliable methodologies indicate adverse effects on natural resources resulting from exposure to discharged oil; or

  (4) the natural resource was adversely impacted by response activities.

(c) The state trustees may find a loss of services when:

  (1) the ability of the natural resource to provide ecological services has been reduced as the result of an unauthorized discharge of oil; or

  (2) the ability of the natural resource to provide public uses has been reduced as the result of an unauthorized discharge of oil.

(d) The procedures and protocols to determine and quantify injury and loss of services of natural resources may include:

  (1) sampling of surface waters for temperature, pH, total suspended solids, salinity, dispersion and other parameters relevant to the fate and effects of oil and its degradation constituents;

  (2) sampling of sediments and shoreline materials for reference and for oil and its degradation constituents;

  (3) sampling of biota to determine bioaccumulation, acute toxicity, chronic toxicity, reproductive effects, community structure, and other relevant parameters;

  (4) analysis of the properties of the discharged oil;

  (5) an evaluation of the observable mortality and the potential for acute and chronic effects;

  (6) surveys of special protection or management areas, state and federal wildlife refuges, parks, habitats of threatened and endangered species, and other relevant natural areas;

  (7) photography, ground truthing, and other appropriate methods to delineate the assessment area;

  (8) reviews of relevant and reliable prior studies in scientific and economic literature and appropriate extrapolations therefrom;

  (9) studies to determine the actual and potential mortality, and biological and behavioral impacts of the unauthorized discharge of oil on biota;

  (10) collection of data and surveys to measure the loss of ecological and public uses;

  (11) toxicity testing of the discharged oil to measure impacts on biota actually located in the assessment area;

  (12) studies to determine the natural rate of recovery of injured resources considering seasonality, cumulative impacts and natural variations;

  (13) techniques to identify functions and values of injured natural resources and their public uses and ecological services;

  (14) reliable cost estimates of alternative restoration plans; and

  (15) any other reliable techniques to determine injury and damages to natural resources and appropriate assessment methods.

(e) The state trustees shall value the injury to natural resources and any loss of services as a result of an unauthorized discharge of oil utilizing the following valuation methods and criteria:

  (1) state trustees shall ensure that no double counting of damages for injuries or loss of services results from the valuation methodology or methodologies employed;

  (2) where more than one valuation method is used, the state trustees shall document each natural resource injury and loss of services that each valuation methodology measures;

  (3) valuation shall be conducted on an incident-specific basis for the unauthorized discharge of oil. The state trustees shall utilize methods that provide appropriate, valid and reliable resource values for the injuries associated with the unauthorized discharge of oil.

(f) The incident-specific valuation methods utilized by the state trustees may include, but are not limited to, the following:

  (1) Fish and wildlife. The Texas Parks and Wildlife Department's guidelines for measuring the monetary value of fish and wildlife resources (as defined in §§69.20-69.31 of this title (relating to Fish and Wildlife Values)) may be used to value the loss of fish and wildlife resources.

  (2) Recreational services. The travel cost method may be used to estimate the value of recreational services provided by natural resources affected by the unauthorized discharge of oil. The valuation shall be based on information on the number and costs of recreational visits to or near the site.

  (3) Factor income method. When a lost or injured resource and/or service is an input to a production process, the factor income methodology may be used. This methodology may be used to estimate the change in economic rent attributable to the injured natural resource or lost service as the result of the unauthorized discharge of oil. When the price of the good being produced is not affected by the injuries to natural resources or the loss of their services, then the change in economic rent is simply the sum of the changes in factor costs for each affected input.

  (4) Hedonic price method. The hedonic method relates the price of a marketed commodity, such as real property, to its attributes, such as the quality of the surrounding environment or access to environmental amenities. Where services provided by natural resources, such as water quality or air quality, function as attributes of real property or other market goods, the hedonic price method may be used to determine the value of the change in services for the public.

  (5) Market price.

    (A) For natural resources traded in markets, the state trustees may utilize the changes in market supply and demand for the natural resource. The measure of damages to consumers of the natural resource is the difference between the price of the marketed resource with and without the injury.

    (B) Where the supply of the natural resources is fixed, then the observed change in market price may be used as a proxy for damages per unit of affected natural resource. The measure of damages is the difference between the market with and without the injury.

    (C) Appraisal prices may be utilized when market price is not readily determinable. When this method is used, the damages should be measured, to the extent possible, by uniform generally acceptable appraisal standards, and any appropriate federal and state appraisal manuals.

  (6) Habitat or species replacement cost method. The habitat or species replacement cost method involves estimating the damages in terms of the cost of obtaining from alternative sources the equivalent of the injured resources. As appropriate, damages may be calculated as the cost of replacing entire habitats that support multiple species and provide a variety of resource services. The quality and the quantity of the resources replaced can be measured by the loss of services occasioned from the onset of the unauthorized discharge of oil through the full recovery of the injured resources and the restoration of the services. In applying this method, the state trustees should:

    (A) quantify a total discounted measure of the lost services over the full duration of the injury, taking into account the extent to which the resource and/or service will recover over time;

    (B) determine the total discounted measure of services provided by the restoration or replacement project over the full life of the relevant species or habitat;

    (C) calculate the appropriate scale of the restoration or replacement project, such that the total discounted services provided is equivalent to the total discounted value of interim lost services; and

    (D) estimate the cost of implementing the restoration or replacement project.

  (7) Benefit transfer method. The benefit transfer method involves the application of existing valuation point estimates or valuation function estimates and data that were developed in one context to value a similar resource and/or service affected by the unauthorized discharge of oil. When using benefits transfer, the state trustees should consider:

    (A) the comparability of the users and of the resource and/or services being valued in the initial studies and the changes resulting from the discharge of concern;

    (B) the comparability of the change in quality or quantity of resources and/or services in the initial studies and the ones affected by the unauthorized discharge of oil of concern; and

    (C) the quality of the studies being used for the transfer.

  (8) Contingent valuation method. The state trustees may use the contingent valuation method to estimate loss in passive use values that result from an unauthorized discharge of oil. The state trustees shall ensure that contingent valuation instruments are designed and administered in accordance with the recommendations and guidance provided in the Report of the National Oceanic and Atmospheric Administration (NOAA) Panel on Contingent Valuation, as published in the Federal Register (58 FR 4601), January 15, 1993.

(g) When discounting or compounding, the state trustees shall use the following methods:

  (1) For costs of assessment and restoration costs already incurred, the state trustees shall use the actual nominal United States Treasury rates for the past periods over which the costs were incurred to calculate the present value of these costs at the time the claim is presented to the responsible person.

  (2) For diminution in value of injured or lost resources or lost resource function, the state trustees shall use a discount rate equal to the real United States Treasury rate of comparable maturity to the duration of the natural resource injury. These rates are published in regular updates to Appendix C of the Office of Management and Budget Circular A-94. The trustees shall use the most recent update to this circular published prior to the date at which the claim is presented.

  (3) For estimated restoration costs, the state trustees shall use a discount rate equal to the United States Treasury rate of comparable maturity to the period over which the restoration will be carried out.

(h) The state trustees are entitled to pre-judgement interest and post-judgement interest on natural resource damage claims at a rate equal to the nominal dealer commercial paper rate, as published in the Wall Street Journal, on the date the claim is presented to the responsible person, compounded forward from 30 days from the date a damage claim is presented until the time of payment.


Source Note: The provisions of this §20.32 adopted to be effective October 19, 1994, 19 TexReg 7911.

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