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Measuring Loss of Use Damages in Natural Resource Damage Actions

32 Pages Posted: 30 Jun 2011  

Allan Kanner

Kanner & Whiteley, LLC

Tibor Nagy

Susman Godfrey, LLP

Date Written: 2005

Abstract

This article responds to the increasingly frequent suggestion by polluters and conservative academics that because nonmarket damages, and loss of use damages in particular, are difficult to measure, the public should be deprived of such damages altogether. While we discuss federal NRD cases and the Contingent Valuation Method ("CVM") for measuring nonmarket damages, our focus is on state cases by state trustees. We argue the following: (1) the difficulty of measuring loss of use damages should not be an impediment to full recovery; (2) the law of all fifty states has well-established means of measuring nonmarket damages, such as the extremely common need to measure damages for pain and suffering; and (3) CVM is not an essential component of proving loss of use damages, nor should it be the focus of the debate concerning damages in NRD cases. Part II sets out a taxonomy of damages in NRD cases. Part III surveys several categories of cases in which American tort law has, for over a century, dealt with the problem of measuring nonmarket damages, namely in damages for pain and suffering. Part IV provides a brief overview of the federal response to the need to measure nonmarket damages in NRD cases - the CERCLA and OPA damage assessment regulations. Part IV argues that the real problem with CVM is practical and not theoretical: CVM surveys are inordinately expensive, unduly time-consuming, and allow defendants to prolong the final resolution of cases by shifting the focus from "polluter pays" to the various and sundry complaints about CVM. Part V outlines how states and courts can respond to the need to measure nonmarket damages in NRD cases without the use of CVM. In essence, we propose that nonmarket damages in NRD cases be measured in precisely the same way state courts have measured them in all other tort cases: by allowing juries to consider all of the available relevant and admissible evidence, in particular evidence of the damages actually suffered by the natural resources, and to render a verdict that brings a timely resolution to the case. Part VI highlights certain issues of valuation that are unique to NRD cases involving Native American tribes. Finally, Part VII discusses the use of unjust enrichment and restitution as an alternative remedy for compensating states for loss of use damages.

Suggested Citation

Kanner, Allan and Nagy, Tibor, Measuring Loss of Use Damages in Natural Resource Damage Actions (2005). Columbia Journal of Environmental Law, Vol. 30, No. 2, 2005. Available at SSRN: https://ssrn.com/abstract=1874837

Allan Kanner (Contact Author)

Kanner & Whiteley, LLC ( email )

701 Camp Street
New Orleans, LA 70130
United States
504-524-5777 (Phone)
504-524-5763 (Fax)

Tibor Nagy

Susman Godfrey, LLP ( email )

New York, NY
United States

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