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Natural Resource Damages From Oil Spills: A Comparison of the Ohio Decision and the Oil Pollution Act

April 1992

Citation: 22 ELR 10263

Issue: 4

Author: Richard W. Dunford

Editors' Summary: The subject of natural resource damages continues to become ever more prominent. Congress' 1990 enactment of the Oil Pollution Act with a strong provision on causes of action for natural resource damages, combined with the 1991 settlement for damages from the Exxon Valdez oil spill worth hundreds of millions of dollars, promises to create even more attention in the future.

In this Article, the author, an economist, focuses on an issue not yet widely analyzed: the different results that occur from using different formulations to measure natural resource damages. In 1989, the D.C. Circuit ruled in
Ohio v. United States Department of the Interior, 19 ELR 21099, that the cost of restoring damaged resources is the starting point in calculating the damage award. Congress took a similar approach in the Oil Pollution Act. Yet, on close examination the two standards are not the same, and in some cases the results can be dramatically different depending on which formulation is used.

The author illustrates the differences with four hypothetical scenarios, and draws conclusions about which scenarios are most likely to occur in practice.

Richard W. Dunford, Ph.D., is the Assistant Director of the Natural Resource Damage Assessment Program at the Research Triangle Institute in North Carolina. Dr. Dunford and his colleagues have worked on seven major oil spills in U.S. waters, including the Exxon Valdez oil spill in Alaska.

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