Natural Resource Damages: The Economics Have Shifted After Ohio v. United States Department of the Interior

April 1990
Citation:
20
ELR 10127
Issue
4
Author
Raymond J. Kopp, Paul R. Portney, and V. Kerry Smith

Litigation under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA)1 is now a booming business. Most of the lawsuits seek to recover cleanup costs. But attention could soon shift to another class of cases: post-cleanup liability for residual injury to natural resources. These natural resource damage cases may eventually become as prevalent and as costly as cleanup cases.

In 1989, the District of Columbia Circuit Court of Appeals changed the rules of the game when it handed down its decision in Ohio v. United States Department of the Interior.2 From an economist's viewpoint, this decision has greatly widened the scope of admissible damages, changed the relative bargaining positions of plaintiffs and defendants in settlement proceedings, and altered defendants' optimal litigation strategies.

Raymond J. Kopp, Ph.D., is Senior Fellow and Director of the Quality of the Environment Division, Resources for the Future. Paul R. Portney, Ph.D., is Senior Fellow and Vice President of Resources for the Future. V. Kerry Smith, Ph.D., is University Distinguished Professor at North Carolina State University, and a University Fellow at Resources for the Future.

Article File