International Marine Pollution Law
LWN 084
Semester 2, 2000
Unit Co-ordinator - Frances Hannah
COMPENSATION FOR NON-ECONOMIC
ECOLOGICAL DAMAGE UNDER THE
INTERNATIONAL OIL POLLUTION REGIME:
THE ENVIRONMENTAL BOTTOM LINE?
Robert Stevenson
Student No: N 00589896
This paper is submitted in partial fulfilment of the requirements for the
degree of Master of Laws (Environmental Resources Law) at Queensland
University of Technology.
Index
__________________________________________________________________________________
Introduction
3
The International and United States Regimes
The International Regime
3
3
3
4
5
5
5
Overview
Ecological damage
The United States Regime
Overview
Ecological damage
Practical issues
Arguments for ecological damages
The environmental bottom line
Completeness
Deterrence
Arguments against ecological damages
Arbitrary nature
Lack of certainty
No practical application
Bases for recovery of ecological damages
Anthropological view
Overview
The concept of the public trust
Criticism of the public trust doctrine
The Conventions and the OPA
Ecological view
Overview
Darwinian theory
Transcendence and immanence
An evolving environmental ethic
Matters for measurement
Existing possibilities
Market valuation
Restoration and replacement
Behavioural use valuation
Contingent valuation
A different way – damage schedules
8
8
8
8
9
9
9
9
10
10
10
10
11
11
11
12
12
12
13
13
14
14
14
14
15
15
16
Trustees
17
Conclusions
18
Bibliography
19
__________________________________________________________________________________
2
Introduction
A large oil tanker runs onto the Great Barrier Reef near Cairns in cyclonic conditions. It
breaks in two and its cargo of oil blankets the coastal reefs and the pristine beaches and
estuaries for hundreds of kilometres. The entire ecosystem of the area is damaged from the
loss of stretches of coral, fish, dugongs, seagrass beds, mangroves and fish breeding areas.
The public of Queensland, Australia and probably most of the rest of the world are
understandably outraged. Under the international regime to which Australia is a signatory,
the owners of the tanker will be responsible for clean up measures and measures to reinstate
the environment such as replanting mangroves and seagrass beds. They will also be
responsible for economic losses such as those incurred by operators of tours to the reef.
They will not be responsible for the loss of use of the reef incurred by the general public, nor
for the more indefinable sense of loss suffered by members of the public who have never
visited the reef but value its existence. They will most certainly not be responsible for the
damage to the area as an intrinsic part of the environment, quite separate from any human
values. This paper suggests that provision should be made in the international regime for
these “ecological” damages. 1 It might be said that these matters cannot be quantified, or are
merely speculative. This would be to ignore the “environmental bottom line” that we need
to do more to preserve the environment if we are to ensure our long term survival.
The current position under the international regime will be contrasted with the domestic
United States legislation which incorporates ecological damages, albeit from a purely human
viewpoint. Pragmatic and theoretical reasons for including provision for ecological damages
in the international regime for oil pollution will be explored. The first theoretical basis
recognises that humans value the environment and rely on it in more than a purely economic
sense. The second involves a readjustment of our role in the world to being one part of an
entire ecosystem. Alternatives for attaching economic value to ecological damage will be
explored. Finally, the use of trustees to recover these damages is considered.
The International and United States Regimes
The International Regime
Overview
The Convention on Civil Liability for Oil Pollution Damage and the Convention on the
Establishment of an International Fund for Compensation for Oil Pollution Damage were
adopted by the International Maritime Organisation in 1992 to replace earlier treaties of the
same names concluded in 1969 and 1971 respectively.2 These Conventions, known as the
1992 Civil Liability Convention and the 1992 Fund Convention (“Conventions”), entered into
force on 30 May 1996. They constitute an exclusive international regime in relation to
marine pollution caused by oil tankers.3 They incorporate a modern commercial, insurance
based system of compensation for damage which is not common in international
environmental law. Their existence can be traced to the aftermath of the Torrey Canyon
The term “ecological” rather than “natural resource” damage will be used throughout this paper
whenever possible.
2
P W Birnie and A E Boyle, Basic Documents on International Law and the Environment (Oxford
University Press, 1995) 91.
3
Although it should be noted the Conventions apply only to spills of persistent oil and they do not
preclude victims from claiming compensation outside the Conventions from persons other than the
owner, their servants or agents.
1
3
incident where the lack of a common legal regime resulted in long delays in obtaining
arguably inadequate compensation.4
The Conventions apply exclusively to pollution damage caused in the territory, including the
territorial sea, and the exclusive economic zone of a contracting state. 5 The main elements of
the Civil Liability Convention are:
1. a requirement for shipowners to carry compulsory liability insurance;6
2. the imposition of strict liability for damage on the shipowner;7
3. ceilings on liability;8 and
4. limitations periods for claims.9
The Fund Convention complements the Liability Convention by:
1. providing for supplementary compensation where protection offered by the Civil
Liability Convention is inadequate;10 and
2. establishing an intergovernmental organisation called the International Oil Pollution
Compensation Fund to administer the system of compensation (“Fund”).
Ecological damage
In their original form, the Conventions relevantly provided that:
““Pollution damage” means loss or damage caused outside the ship carrying oil by
contamination resulting from the escape or discharge of oil from the ship . . . .” 11
This definition was clearly capable of broad interpretation. A claim for compensation for
ecological damage was first made by the government of the USSR in the Antonio Gramsci
incident.12 The amount claimed for ecological damage had been calculated according to a
mathematical formula laid down in USSR regulation which involved a sum per cubic metre
of water affected.13 The Fund rejected payment of compensation calculated on this basis.
The same questions arose in the Patmos14 and the Haven.15 Both these claims were settled by
the Fund without a court pronouncing on the issue. The issue was also dealt with around the
same time by the American courts in the SS Zoe Colocotroni16. There, the Court held that the
M Jacobsson, ‘The International Conventions on Liability and Compensation for Oil Pollution
Damage and the activities of the International Oil Pollution Compensation Fund’ in C M De La Rue
(ed), Liability for damage to the marine environment (Lloyd’s of London Press, 1993) 40.
5
Article II Civil Liability Convention.
6
Article VII Civil Liability Convention.
7
Article III(1) Civil Liability Convention, subject to limited exceptions.
8
Article V Civil Liability Convention, except in the case where damage is caused intentionally or
recklessly and where foreseeable.
9
Under Article VIII of the Civil Liability Convention, there is a three year limitation on compensation
claims and six years for all other types of claims from the date when the damage occurred.
10
Article 2(1)(a) Fund Convention. This additional compensation is funded by industry, primarily the
cargo owners. The Fund Convention operates as a mutual insurer funded by oil-importing states or
contracting parties to the convention.
11
D J Wilkinson, ‘Moving the boundaries of compensable environmental damage caused by marine oil
spills: the effect of two new international protocols’ (1993) Journal of Environmental Law 71 at 83.
12
Jacobsson (n4), 52.
13
Wilkinson (n11), 83.
14
Patmos case (Messina Ct. App. 1989) referred to in F O Vicuna, ‘Responsibility and Liability for
Environmental Damage Under International Law: Issues and Trends’ (1998) 10 Geo. Int’l Envtl. L. Rev.
279 at 298.
15
Id.
16
Commonwealth of Puerto Rico v. The SS Zoe Colocotroni, 628 F.2d 652, 1981AMC2185 (1 st Cir
1980), cert. denied 450 U.S. 912 (1981) referred to in M Jacobsson and N Trotz, ‘The Definition of
4
4
appropriate standard for determining damages where a claim for ecological damage was made
was the cost to restore or rehabilitate the environment to its pre-existing condition, or as close
thereto as was feasible without grossly disproportionate expenditure.17
In view of these claims, the Fund Assembly unanimously adopted a resolution in 1980 stating
that “the assessment of compensation to be paid by the IOPC Fund is not to be made on the
basis of an abstract quantification of damage calculated in accordance with theoretical
models”.18 This interpretation of the definition was formalised in the Conventions by the
1984 Protocol and was carried over to the 1992 Conventions.19 The definition now
specifically limits compensation for impairment of the environment, other than loss of profit,
to “costs of reasonable measures of reinstatement actually undertaken or to be undertaken.”20
The definition makes it clear that compensation cannot be assessed on the basis of an abstract
quantification. The definition is far more limiting than provisions on compensable damage in
many national legal systems and in particular that under the United States regime.21
The United States Regime
Overview
The Oil Pollution Act 1990 (US)22 (“OPA”) is in many respects similar to the international model. 23 It
was enacted in the wake of the Exxon Valdez debacle, which exposed the lack of effective domestic
legislation. It is a more comprehensive system than that which exists under the Conventions. 24
Congress decided not to ratify the Conventions because the scope of damages allowed was considered
to be too limited and the damages ceilings too low.25 The goal of the OPA is to make the environment
and public whole for injuries to natural resources and services resulting from incidents involving a
discharge or substantial threat of a discharge of oil.26 It applies to a broader class of pollution incidents
than the Conventions and imposes strict liability on the operator and bareboat charterer of a vessel as
well as the owner. However, the most significant difference between the two regimes is OPA’s
provision for ecological (called “natural resource” in the OPA) damage claims arising out of oil spills.
Ecological damage
The OPA represents the latest refinement of the concept of compensation for ecological
damage in American law.27 Responsible parties are liable for removal costs and damages
specified by the OPA.28 Damages to the environment constitute a class of damages defined
as “damages for injury to, destruction of, loss of, or loss of use of, natural resources,
Pollution Damage in the 1984 Protocols to the 1969 Civil Liability Convention and the 1971 Fund
Convention’ (1986) 17 Journal of Maritime Law and Commerce 467 at 479.
17
Ibid at 480.
18
Jacobsson (n4), 52.
19
Jacobsson (n4), 54.
20
Article I, paragraph 6 Liability Convention.
21
Z Brodecki, ‘New Definition of Pollution Damage’ (1985) Lloyd’s Mar. & Comm. L.Q. 382 at 387.
22
33 U.S.C. 2701.
23
Although it is not exclusive in that it does not cover the field and state laws still apply.
24
Potential liability is not limited to the shipowner or cargo owner.
25
W F Dougherty, ‘Natural Resource Damages under the Oil Pollution Act of 1990’ Conference paper
presented to the Maritime Law Association Annual Conference, Leura, New South Wales, July 1994 2.
26
Oil Pollution Act 1990 (US) Regulations, 15 CFR 990.10.
27
It has been preceded by the Trans-Alaska Pipeline Authorisation Act of 1973, the Deepwater Port Act
of 1974, the Clean Water Act amendments of 1977 and , the Comprehensive Environmental Response,
Compensation and Liability Act 1990 (CERCLA). See P M Manus, ‘Natural Resource Damages from
Rachel Carson’s Perspective: A Rite of Spring in American Environmentalism’ (1996) 37 Wm and
Mary L. Rev. 381 at 424.
28
s.2702 Oil Pollution Act 1990 (US).
5
including the reasonable costs of assessing the damage, which shall be recoverable by a
United States trustee, a State trustee, an Indian tribe trustee, or a foreign trustee.” 29 Natural
resources are broadly defined.30
The natural resources for which damages are able to be recovered are those “belonging to,
managed by, controlled by, or appertaining to” those trustees. 31 In a practical sense, any
conceivable natural resource affected by an oil spill could be the subject of a natural resource
damage claim by some governmental or tribal agency.32 Awards of natural resource damages
under OPA can be used only to reimburse assessment costs and to restore, rehabilitate,
replace or acquire the equivalent of injured resources. 33 The measure of natural resource
damages is defined to be:
1. the cost of restoring, rehabilitating, replacing, or acquiring the equivalent of, the
damaged natural resources;
2. the diminution in value of those natural resources pending restoration; plus
3. the reasonable cost of assessing those damages.34
It is suggested that both human and ecological values are envisioned to be the subject of
compensation under the legislation. In defining the class of natural resource damage, broad
language is used which would encompass both sets of values. Whilst the measure of
damages specifically addresses restoration rather than compensation, it is suggested that any
diminution in value pending restoration would be reflected in ecological damages.
However, this is not the way the legislation has been implemented. Provision is made in the
OPA for regulations for the assessment of natural resource damages. 35 The U.S. Department
of Commerce, acting through the National Oceanic and Atmospheric Administration
(NOAA), has issued final regulations providing an approach that trustees may use when
conducting Natural Resource Damage Assessments (NRDA) under the OPA. 36 The
regulations clarify that the only form of ecological damage envisioned is that relating to
human values. The definition of “Value” in the regulations is:
“the maximum amount of goods, services, or money an individual is willing to give
up to obtain a specific good or service, or the minimum amount of goods, services, or
money an individual is willing to accept to forgo a specific good or service. The total
value of a natural resource or service includes the value individuals derive from
direct use of the natural resource, for example, swimming, boating, hunting, or bird
watching, as well as the value individuals derive from knowing a natural resource
will be available for future generations.”37
29
s.2702(b)(2)(A) Oil Pollution Act 1990 (US).
s.2701(20) Oil Pollution Act 1990 (US).
31
Id.
32
J L Nicoll, ‘Marine Pollution and Natural Resource Damages: The Multi-Million Dollar Damage
Award and Beyond’ (1993) 5 U.S.F. Mar. L.J. 323 at 329
33
s.2712(a)(2) Oil Pollution Act 1990 (US).
34
s.2706(d) Oil Pollution Act 1990 (US).
35
s.2706(e) Oil Pollution Act 1990 (US).
36
Oil Pollution Act 1990 (US) Regulations 15 CFR 990 which became effective on 5 February, 1996.
The regulations were promulgated in light of Ohio v. U.S. Department of the Interior 880 F. 2d 432
(D.C. Cir. 1989) in which the Court of Appeals for the District of Colombia held in respect of similar
regulations that the measure of damages should reflect restoration costs and that market value is only
one of many factors to be considered when assessing damages. See D M Stager, ‘From Kepone to
Exxon Valdez Oil and Beyond: An Overview of Natural Resource Damage Assessment’ (1995) 29 U.
Rich. L. Rev. 751 at 753.
37
Oil Pollution Act 1990 (US) Regulations 15 CFR 990.30.
30
6
The first part of the definition anticipates valuation by a contingent method. The second part
refers to direct and passive use human values. A direct use value would be the loss to people
who regularly use an area for recreational fishing. A passive use value would be the value
individuals place upon the existence of an area, even if they never plan to make active use of
it.38 This may or may not include the spiritual value of an area to indigenous people. Whilst
the definition does not purport to be exhaustive, it is suggested that ecological values would
not be within its compass.
The regulations reflect the NOAA’s determination to accomplish OPA’s goals through a
restoration-based approach, focusing not merely on assessing environmental damages, but
rather on developing and implementing plans for restoring and rehabilitating damaged
resources or services.39 Apart from the inference of contingent valuation referred to above,
the regulations do not provide specific procedures for quantifying injury, the rationale being
to permit trustees to select any procedure deemed appropriate for the circumstances of the
incident.40 The U.S. Court of Appeals for the D.C. Circuit rejected industry claims that
contingent valuation was so inherently unreliable that the NOAA should have explicitly
prohibited its use.41 The Court also verified that Congress clearly authorised trustees to
recover passive use values for the loss of benefits associated with natural resources,
independent of any direct use.42
The scope for ecological damages under OPA represents a significant expansion of common
law principles.43 At common law, damages to property were frequently limited to the lesser
of the diminution of the market value of the property or the cost of its restoration. This was
originally thought to promote economic efficiency by encouraging an optimal level of
restoration.44 In enacting the ecological damage provisions, Congress recognised that in
addition to the expense of restoring the environment, the public would lose the use and
enjoyment of the resources between the time of injury and time of recovery or restoration. 45
This is a wider view than has been taken at the international level. However, whilst the
wording of the OPA could be construed to include damages for ecological values, the
regulations make it clear that such damages are to be restricted to human values.
Practical issues
Arguments for ecological damages
The environmental bottom line
It is suggested that there are two practical reasons for the extension of the international
regime to include compensation for non-economic ecological damage. These are part of what
38
General Electric Company & Ors v. United States Department of Commerce, National Oceanic and
Atmospheric Administration (17/11/97) http://mercury.11.georgetown.edu/Fed-Ct/cadc.html 21/10/00.
39
General Electric Company & Ors v. United States Department of Commerce, National Oceanic and
Atmospheric Administration (17/11/97) http://mercury.11.georgetown.edu/Fed-Ct/cadc.html 21/10/00.
40
Oil Pollution Act 1990 (US) Regulations, 15 CFR 990.27 referred to in C B Anderson, ‘Damage to
Natural Resources and the Costs of Restoration’ (1997) 72 Tul. L. Rev. 417 at 474.
41
http://www.publicaffairs.noaa.gov/pr97/nov97/noaa97-75.html 21/10/00.
42
http://www.publicaffairs.noaa.gov/pr97/nov97/noaa97-75.html 21/10/00.
43
Nicoll (n32), 333.
44
Nicoll (n32), 333.
45
Nicoll (n32), 337.
7
has been termed the “environmental bottom line”. The environmental bottom line is that if
humans do not do more to understand and protect our environment, then we run the risk of
one day facing the collapse of the ecosystem we call Planet Earth. Marine oil pollution is one
part of that environmental bottom line.
Completeness
It is suggested that both the international regime, and to a lesser extent, the American regime
are not complete systems of compensation for marine oil pollution damage. A ready analogy
can be found in the law of torts. Let us suppose that instead of a physical injury occurring to
an ecosystem such as the reef, an injury occurred to a personal possession such as a motor
vehicle or to our person, for instance in a motor vehicle accident. In the case of the motor
vehicle, we would be able to claim a component for the loss of use of that vehicle as well as
for the repair costs. Admittedly, we would not be able to claim for the emotional injury we
might suffer and nor would there be any component for the value of the damage to the
intrinsic nature of the motor vehicle. This might be explained on the basis that full
restoration is normally available in a speedy manner.
In the case of damage to ourself however, we would be able to claim for the loss of active use
of our body as well as damage to its intrinsic value in the form of economic loss and pain and
suffering and loss of amenity.46 In the law of personal injury at least, the law has found ways
to address non-economic loss. Similarly, in the law of nervous shock, the law has found a
way to compensate us for the shock we suffer when an injury occurs to someone else to
whom we have an attachment.
However, because the environment we are speaking of is not the property of any one person
and nor is it part of our person, it is not eligible for damage compensation. The environment
is often said to be “priceless”. However, it is paradoxically “worthless” when an injury
occurs to it.47 The reason usually put forward is that damage to the environment cannot be
quantified. However, the result is that we are literally abandoning the environment to its
fate.48 It is suggested that non-economic ecological damage to human and ecological values
deserves to be compensated because it is right and offers complete compensation in principle.
However, in the context of the environmental bottom line, the need is more imperative. It
offers a way of financing further study of the effects of marine oil pollution both in respect of
specific incidents and more broadly.
Deterrence
The “polluter pays” principle has become an accepted way of internalising the cost of
pollution incidents to the entity responsible for the pollution rather than externalising the cost
to the general population. The Conventions stop short of using liability to penalise damage to
the environment which cannot be reinstated, or quantified in terms of property loss or loss of
profits. To this extent the true environmental costs of marine oil pollution continue to be
borne by the community as a whole, and not by the polluter.49
See discussion in ‘CMI Colloquium on Environmental Damage Assessment: Discussion Paper’ in C
M De La Rue (ed), Liability for damage to the marine environment (Lloyd’s of London Press, 1993)
259.
47
M Remond-Gouilloud, ‘The Future of the Compensation System as established by International
Convention’ in C M De La Rue (ed), Liability for damage to the marine environment (Lloyd’s of
London Press, 1993) 92-93.
48
Id.
49
P W Birnie and A E Boyle, International Law and the Environment (Oxford University Press, 1992)
296.
46
8
Deterrence might be thought of as the flipside of completeness of compensation. It is
suggested that deterrence theory will only work if a party knows that if an accident occurs,
they will have to shoulder all the responsibility for the damage and not just that which is
readily identifiable or quantifiable. It is suggested that the international regime currently
lacks this character.
Arguments against ecological damages
The drafters of the Conventions were clearly keen to ensure that ecological damage should
not be covered under the international regime. Three major reasons have been enunciated in
the literature. It is suggested that these arguments amount to procedural difficulties in the
implementation of a system of ecological damages, rather than substantive reasons in
principle. Practical difficulties, while an obstacle in the short term, usually are not
insurmountable in the longer term.
Arbitrary nature
The director of the Fund, Mans Jacobsson, has expressed the view that any assessment of
ecological damage to the marine environment in monetary terms would require sweeping
assumptions regarding relationships between different components of the environment and
economic values. 50 However, there is no expansion on what is meant by this statement. He
seems to be saying that it is difficult to put economic value on particular environmental
damage. Indeed, this is the case. However, on Jacobsson’s view, if reinstatement measures
were unsuccessful, then the environment would be left to its fate in a damaged state.
It is accepted that any calculation of ecological damage in monetary terms will by necessity
be arbitrary to some extent. However, it does not necessarily follow, as Jacobsson postulates,
that it is therefore inappropriate to admit claims for compensation following damage to
unexploited natural resources which have no owner.51 Analogy has already been drawn with
the law of torts. In the law of contract, liquidated damages clauses are often used where
damage will be difficult to quantify. Would it not be better to recognise the imperative for
improvement and start taking small steps towards a system that does address ecological
damage?
Lack of certainty
It is argued that advantages exist in knowing in advance exactly what obligations liable
parties may have, their limitations, the exemptions from which they may benefit, and the
exclusions of liability arising through legal channels.52 The benefit of the current
international system is that it offers finite liability. In a practical sense, this means that
insurance risks can be calculated with some certainty which results in affordable premiums.
If contingent valuation were the only means to be used to measure ecological damage, then
this argument may have some force. It is accepted that some measure of certainty is
necessary for a compensation regime to be effective. However, it is suggested that these
benefits can be retained under a system which allows claims for ecological damage. There is
no reason why finite limits to liability cannot be retained, even if at a higher level than
present. It would certainly enable companies and insurers to factor these items into their
50
Jacobsson (n4), 53.
Jacobsson (n4), 53.
52
Remond-Gouilloud (n47), 85.
51
9
operational costs. The desirable effect may be to increase insurance premiums for those
insureds with a poor track record in pollution.
No practical application
It is argued that any monetary damages recovered for this head of damage are unlikely to be
spent on actual clean up and restoration of the environment affected by a spill, or in
compensating claimants for any tangible loss, since these would be paid for in any event. 53
This argument presupposes that the only useful way of utilising ecological damage funds is to
clean up and restore the subject environment. It is suggested that such funds could be
employed in longer term studies of the effects of oil pollution on the environment both
generally and particularly in relation to the particular subject site. Such funds could also be
available for use in physical restoration work in the longer term, beyond the time frame of
normal clean up and reinstatement measures. Environmental damage caused by marine oil
pollution may linger for decades or even grow worse as time goes on. Years may pass before
scientists accurately assess the overall damage incurred. For instance, five years after the
Exxon Valdez incident, scientists were only beginning to study the spill’s long term effects.54
It is suggested that there are good pragmatic reasons for providing for the recovery of
ecological damages under the Conventions. Theoretical justification can be found from an
anthropological view and an ecological view.
Bases for recovery of ecological damages
Anthropological view
Overview
It is suggested that compensation for ecological damage is justified on the basis that it is a
non-economic loss to us all. It is a reflection of the value to us of a damaged area beyond the
mere cost of reinstatement. This approach reflects the basis for the inclusion of human direct
and passive use losses in the United States regime. It is a purely anthropological view.
Central to this approach is acceptance that the areas affected by oil pollution belong to all
people. This represents an extension of traditional property paradigms.
The concept of the public trust
In his statement of Roman law principles, Justinian declared that air, running water, the sea
and its shores were the common property of all with attendant communal rights. 55 The
doctrine was at least partially incorporated into the common law of England in a modified
form. The common law recognised that the sea and its shores belonged to the public at large.
However, traditionally legal action was only able to be taken by individuals whose property
rights were affected in some way. The doctrine has been used sparingly by the courts of the
‘CMI Colloquium on Environmental Damage Assessment: Discussion Paper’ in C M De La Rue (ed),
Liability for damage to the marine environment (Lloyd’s of London Press, 1993) 259.
54
D M Stager, ‘From Kepone to Exxon Valdez Oil and Beyond: An Overview of Natural Resource
Damage Assessment’ (1995) 29 U. Rich. L. Rev. 751 at 778.
55
R J Lazarus, ‘Changing Conceptions of Property and Sovereignty in Natural Resources: Questioning
the Public Trust Doctrine’ (1986) 71 Iowa L. Rev. 631 at 633-634.
53
10
United Kingdom.56 However, as evolved in the United States the doctrine represents a
fundamental principle for the governance of air, water and land.57
Natural suitability for common use together with scarcity may explain why courts view
natural resources, such as navigable bays, as public assets, and why the state is seen to have a
duty to acknowledge and protect public property rights that will permit community access to
these resources. 58 Certainly, navigable waters and foreshores have long been accepted in the
United States as being subject to the public trust doctrine. Rodgers goes further and argues
that it is plausible to read the public trust servitude as reaching all natural resources and
subjecting them to a strongly protective use regime.59 He suggests that the public trust
doctrine is perhaps the strongest contemporary expression of the idea that the legal rights of
nature and of future generations are enforceable against contemporary users. 60 This may be a
gloss on the historical role of the doctrine. However, it is suggested there is no reason why
suitability for common use and scarcity cannot form an ecological basis for the doctrine’s
application.
Criticism of the public trust doctrine
The doctrine is not without its critics. Professor Lazarus considers the doctrine to be a legal
fiction designed to combat the insufficiencies of the law in past times, which is no longer
useful. 61
He argues that the thrust of recent developments in environmental and natural
resources law has been to replace already eroding notions of private property rights in natural
resources and in effect create public property regimes in common resources. 62 This may be
so in a practical sense. However, it is suggested that even legislated regimes have their roots
in the concept that the state holds certain common resources on behalf of and in trust for the
people. It is suggested that premising natural resources law solely on continuing regulatory
authority is too narrow a view, and has the effect of placing too much decision making power
in the sovereign authority, however constituted.
The Conventions and the OPA
It is suggested that the international and United States systems are largely based on the
traditional private property paradigm. In both instances, the starting point is that
compensation is payable for the physical or economic damage to persons or their property.
However, the international regime goes further than this, if only in a limited way. It allows
recovery for the cost of “reasonable” measures to reinstate the environment actually
undertaken or to be undertaken. This second limb it is suggested implicitly recognises the
human interest in the broader environment beyond the restriction of the traditional property
paradigm.
Where the international and United States regimes part is the ability to seek compensation for
human use values. It is suggested that these rights of use reflect the public property nature of
the areas generally subject to marine oil pollution. One of the strongest foundations for this
public property regime is the doctrine of the public trust. This is certainly the case in respect
56
D E Fisher, Environmental Law: Text and Materials (Law Book Company Ltd, 1993) 198-199.
J Sax, ‘The Limits of Private Rights in Public Waters’ (1989) 19 Environmental Law 473 at 479.
58
H C Dunning, ‘The Public Trust: A Fundamental Doctrine of American Property Law’ (1989) 19
Environmental Law 515 at 523.
59
W H Rodgers, ‘Bringing People Back: Toward A Comprehensive Theory of Taking in Natural
Resources Law’ (1982) 10 Ecology Law Quarterly 205 at 239.
60
Ibid at 239-240.
61
Lazarus (n55), 657-658.
62
Lazarus (n55), 693.
57
11
of land territory, territorial sea and the seabed and subsoil of the territorial sea of each state. 63
It is suggested that this foundation would extend to exclusive economic zones in which a
state has certain rights of sovereignty, not equivalent to ownership.64
Ecological view
Overview
And God said, Let us make man in our own image, after our own likeness: and let him have
dominion over the fish of the sea . . . and over all the earth .. .65
The second approach represents a move away from the biblical concept that humans have
dominion over all things on this planet. Our anthropocentric ethics value the natural world as
a resource to be manipulated at will for human benefit only. Most environmental legislation
protects nature not for its own sake but in order to preserve its potential value for man. 66 This
alternative approach recognises that humans are part of an ecosystem upon which we rely for
our survival and which has an existence and importance in a deeper sense than human values
alone. It has as its root that all living things, all species, all ecosystems and possibly all
things in the entire universe have inherent value independent of their use by human beings.
Darwinian theory
In his seminal article, Professor Stone suggests giving rights to nature as a means of
addressing environmental degradation.67 On the one hand, Stone holds Darwin responsible
for our present state of affairs saying that it was Darwin’s views that gave moral approbation
to struggle, conquest and domination.68 However, he also uses Darwin to demonstrate that
“the history of man’s moral development has been a continual extension in the range of
objects receiving his social instincts and sympathies”. He argues that the next logical
extension of human sympathies is toward the animate and inanimate “objects” of the
environment. Whilst this might be thought to have anthropological overtones, it is suggested
that the implicit basis for Stone’s justification for giving the environment “rights” is the
ecological presumption of interdependence between all living and non-living things.69
Professor Emond takes a different tack. He argues that Darwin’s theory of natural selection
does not result in domination, control and mastery of the environment and those within it. 70
Rather, he suggests it has the purpose of adapting the structure of each individual for the
63
I Brownlie, Principles of Public International Law (4th edn, Oxford University Press, 1990) 107.
Such rights generally relate to exploration, exploitation, conservation and management of natural
resources. See Article 56, paragraph I of the Law of the Sea Convention 1982 referred to in Brownlie
(n63), 209-210.
65
Genesis 1-26 referred to in D W Abecassis and R L Jarashow, Oil Pollution from Ships:
International, United Kingdom and United States Law and Practice (2nd edn, Stevens & Sons, 1985)
(iv).
66
L H Tribe, ‘Ways Not To Think About Plastic Trees: New Foundations for Environmental Law’
(1974) 83 Yale L.J. 1315 at 1325.
67
C D Stone, ‘Should Trees Have Standing? – Toward Legal Rights For Natural Objects’ (1972) 45
Southern California Law Review 451.
68
Ibid at 494.
69
D B Hunter, ‘An Ecological Perspective on Property: A Call for Judicial Protection of the Public’s
Interest in Environmentally Critical Resources’ (1988) 12 Harv. Envtl. L. Rev. 311 at 313. Also see K
K Baker, ‘Consorting with Forests: Rethinking Our Relationship to Natural Resources and How we
should value their loss’ (1995) 22 Ecology L.Q. 677.
70
D P Emond, ‘Co-Operation in Nature: A New Foundation for Environmental Law’ (1984) 22
Osgoode Hall Law Journal 323 at 343-344.
64
12
benefit of the whole community and the whole community profits by the selected change.
Further, Darwin describes how struggle is replaced by co-operation which in turn results in
the development of intellectual and moral facilities which secure the best conditions for
survival. The starting point for Emond is also the recognition that people are no more and no
less than an integral part of the environment.71
Transcendence and immanence
Professor Tribe suggests that the basis for our current environmental crisis can be found in
the biblical concept of a dichotomy between humans and nature. 72 The idea that we have a
continuing existence outside the created world and stand apart from our environment is
rooted deep within the theological concept of transcendence. 73 However, at least theological
tradition inferred some obligation toward nature. With the fall of theology’s role in modern
society has come the rise of reason based on science alone, which Tribe characterises as
“calculation without content”.74 He suggests that we have lost the benefit of divine guidance
and moral constraint that originally constrained our actions.75 However, he does not see the
current movement toward valuing nature for its own sake as the answer. He characterises this
movement as one towards immanence, a recognition of the sacred nature of the natural. 76 He
suggests that at its extreme this would represent a return to the religious tradition that
preceded transcendence in the form of pagan animism.77
An evolving environmental ethic
Tribe instead harks back to Aristotle and Plato in offering a solution. He suggests that the
highest purpose of human reason is to evolve a comprehensive understanding of our place in
the universe.78 This involves recognition of an environmental ethic and synthesising the
concepts of transcendence and immanence through evolving processes of interaction and
change.79 He suggests that as a minimum, we must begin to extricate ourselves from the
conceptually oppressive sphere of human want satisfaction, by encouraging the elaboration of
perceived obligations to plant and animal life and to objects of beauty in terms that do not
falsify such perceptions from the very beginning by insistent reference to human interests. 80
Whilst not framed in Darwinian theory, this concept is certainly compatible with the ideas of
Stone and Emond. It offers a solid basis for recognition of pure ecological values in the
compensation regime for marine oil pollution.
Matters for measurement
Existing possibilities
How then to put a value on the invaluable? The fundamental problem is that of putting
economic values on non-economic human and intrinsic values. However, we must of
necessity assign some monetary value of significance to these values because that is the only
71
Id.
Tribe (n66), 1333 referring to L White, ‘The Historical Roots of Our Ecologic Crisis’ (1967) 155
Science 1203-1205.
73
Tribe (n66), 1332.
74
Tribe (n66), 1334.
75
Tribe (n66), 1334.
76
Tribe (n66), 1336.
77
Tribe (n66), 1337.
78
Tribe (n66), 1327-1328.
79
Tribe (n66), 1338.
80
Tribe (n66), 1341.
72
13
value which can be translated into economic terms and upon which systems of compensation
generally rely.81 Money can be used to utilise means to remedy environmental damage and
deter subsequent environmentally unsound behaviour.82 The four leading existing procedures
for valuing natural resource damages are considered.
Market valuation
Market valuation measures ecological damage based on the market price for the damaged
commodity.83 Lost profits, decreased property values, decreased rental values of land, lost
business opportunities and replacement values are all standard means of measuring damages
according to market valuation.84 Market valuation has a number of benefits. It is generally
quick and relatively easy to measure losses by this means which makes it a convenient tool. 85
It is also reliable because it uses measures reflecting the actual behaviour of buyers and
sellers in the marketplace. However, market valuation fails to reflect non economic human or
intrinsic values of natural resources. Valuations using this means are accordingly more likely
to understate ecological damages.86
Restoration and replacement
Strictly speaking, restoration and replacement are not means of valuing natural resources but
rather programs of action.87 The international regime provides for “reasonable” measures of
reinstatement. However, this does not allow for situations of total loss. It is conceded that
not all incidents will involve total loss of environment. However, restoration and
replacement do not measure the non-economic human and ecological values lost during
restoration, nor any residual loss. To use the tortious analogy, these mechanisms are similar
to the concept of special damages in that they are the cost of physical measures taken to
remedy or mitigate the damage caused. They do not provide compensation for the fact of the
damage.
Replacement is generally a feasible alternative to restoration where there is total loss or
where restoration is too expensive or ineffective.88 For example, if a national park was
damaged beyond repair, the government could purchase a comparable site and transform it
into a national park. However, this does not recognise that many ecological resources do not
have close substitutes. One such example would be the Great Barrier Reef. It also
downgrades the importance attached to destruction of natural resources as long as
comparable resources exist elsewhere.89 It is questionable whether replacement would
constitute a reasonable measure of reinstatement under the international regime.
Behavioural Use valuation
81
It is not suggested that restorative justice techniques, such as apologising to the environment, are
suitable in the context under discussion.
82
Stager (n54), 773.
83
M W Jones, ‘Natural Resource Damage Assessments for Oil Spills: Policy Considerations
Underlying the Evolution of the Department of the Interior’s Regulations’ (1990) Villanova
Environmental Law Journal 491 at 503.
84
Id.
85
Ibid at 514-516.
86
Ibid at 517.
87
F B Cross, ‘Natural Resource Damage Valuation’ (1989) 42 Vanderbilt Law Review 269 at 298.
88
Ibid at 301.
89
Ibid at 302.
14
This method takes direct human use values into account. Use values measure actual
behaviour, rather than attitudes, and therefore offer some certainty in ascertaining damages. 90
Its great advantage over the first two mechanisms is that it recognises that not all ecological
damage is reflected in the open market. For example, although some endangered species are
not valued in the economic marketplace, our society has determined that their continued
existence possesses a value of sufficient importance to warrant strong protective measures. 91
This method creates its own artificial market through use of techniques such as the travel cost
method, the hedonic price method and the unit day value method. These measures determine
“shadow prices” for non market resources which reflect amounts that users would spend to
use a particular resource. However, these methods do not take into account passive use and
ecological values.92
Contingent valuation
This method is currently the only method available for estimating passive use values. 93
These values may take the form of:
1. option values (retaining the option of future use);
2. vicarious values (recognition that something can be valued even if it is never visited);
and
3. intertemporal values (the ability to pass something on to future generations even if it
is not intended to use it presently).94
Contingent valuation measures the passive uses of the environment by using public opinion
polls in which people are asked how much they would pay to preserve or protect a particular
resource. The dollar amounts are then multiplied by the number of people potentially
affected by an oil spill. By assigning economic values to passive uses, the surveys determine
what value the public places on particular natural resources. Trustees can then use the
converted passive values in their damage calculations when seeking compensation from
responsible parties.95
It has been found to be roughly consistent with behavioural use methods as a damage
assessment measurement technique.96 It can assume major importance in valuing damage to
those areas not subject to active use values. Because the Alaskan wilderness affected by the
Exxon Valdez spill was largely recreational and non commercial, passive use values
comprised a large portion of the damages in that case.97 However, it has been the subject of
strident criticism by industry. Several issues exist which need to be taken into account when
considering this method of valuation:
1. the possibility of skewed responses to surveys. It is possible that attitudes
conveyed in response to a survey may not correlate with actual behaviour;98
2. survey results may be radically altered due to simple changes in question
phraseology;99
3. the extent of knowledge of the survey designers;100
90
Ibid at 282.
Jones (n83), 503.
92
Jones (n83), 518.
93
Jones (n83), 519.
94
Cross (n87), 285-286.
95
Stager (n54), 775.
96
Jones (n83), 519.
97
Stager (n54), 778.
98
Jones (n83), 519.
99
P M Manus, ‘Natural Resource Damages from Rachel Carson’s Perspective: A Rite of Spring in
American Environmentalism’ (1996) 37 Wm and Mary L. Rev. 381 at 449-450.
91
15
4. the phenomenon of “embedding”. Studies have found that individuals tend to
place nearly identical values on greatly differing quantities of ecological loss;
5. reliance on survey methodology renders doubtful the scientific validity of
contingent valuation.
However, the major issue that exists with contingent valuation is that of hypotheticality.101 It
seeks to measure something, the non use value of a natural resource, that cannot ever be
quantified in monetary terms, no matter how precise the measurement technique. 102
However, according to its supporters, contingent valuation “can produce estimates reliable
enough to be a starting point for a judicial process of damage assessment”.103 It might also be
suggested that any evidentiary flaws are a far lesser evil than the law’s continued ignorance
of non-use values.104 Certainly, contingent valuation perpetrates no greater upset in
evidentiary law than tort laws method for measuring pain and suffering damages.
A different way - damage schedules
It almost goes without saying that there is no method of valuing pure ecological loss in any
economically quantifiable way. The tools of analysis which currently exist are simply too
blunt to be of great use in this regard.105 Nature’s complex interrelationships are not fully
understood. Heyde suggests that in view of the inadequacies of contingent valuation, a better
alternative could be to base damage assessments on a pre-established fixed schedule of loss
values, called a damage schedule.106 Damage schedules would provide predictability and
enforceability by specifying in advance the payments that will be required in the event of a
loss, rather than waiting until the damage has taken place.107 It would also provide a greater
deterrence incentive for the actions of others.108
The concept is similar in character to liquidated damages clauses where it is difficult or
expensive to determine the actual value of the losses.109 Standardised damage assessments
for non-pecuniary losses are hardly new, nor are the issues unique to environmental
valuations.110 Workers compensation schedules exist which vary with the severity of the
injury. Other tortious areas such as motor vehicle personal injury are being capped through
statutory compensation schemes.
The benefit of such a method is that it gets away from trying to measure non-economic
ecological damage in purely economic terms. It involves the concept of comparability rather
than commensurability.111 Damage schedules can reflect people’s judgments of the relative
importance of different losses, without requiring them to assign monetary values directly to
the losses.112 The amounts in the damage schedule could vary over a limited number of
100
Stager (n54), 777. In this regard, a NOAA panel of experts has produced a set of guidelines for
designing an ideal survey.
101
F B Cross, ‘Restoring Restoration for Natural Resource Damages’ (1993) 24 U. Tol. L. Rev. 319 at
330.
102
J M Heyde, ‘Is Contingent Valuation Worth the Trouble?’ (1995) U. Chi. L. Rev. 331 at 350.
103
Stager (n54), 775.
104
Manus (n99), 449-450.
105
Tribe (n66), 1320.
106
Heyde (n54), 353.
107
Heyde (n54), 353.
108
Heyde (n54), 353.
109
M B Rutherford, J L Knetsch and T C Brown, ‘Assessing Environmental Losses: Judgments of
Importance and Damage Schedules’ (1998) 22 Harvard Environmental Law Review 51 at 53.
110
Ibid at 72.
111
Ibid at 71.
112
Ibid at 53.
16
damage scenarios. A combination of the existing methods of valuation could be used to
arrive at schedules. Given that it is proposed that damages for non-economic values be used
partly for research purposes, it is possible for the schedule to evolve in accordance with our
increased understanding of ecological damage. Eventually, it is to be hoped that our
understanding reaches a point where the schedule becomes unnecessary and ecological
damage can be measured with more certainty than is currently the case.
Trustees
It is suggested that the trustee model used by the OPA is also suitable for use at the
international level. The principle of states acting as trustees has common law precedent in
the public trust doctrine and that of parens patriae. We have already seen that the public trust
doctrine supports state recovery of ecological damage claims on the theory that the
government holds public resources in trust for its citizens. The doctrine of parens patriae is
an alternative model that provides the state with the right to sue where no individual state
citizen has standing to bring a cause of action.113
The appointment of multiple trustees is possible under the OPA which creates the potential
for overlapping jurisdiction by federal, state and tribal governments over the same resources.
Congress anticipated this situation and has said that in such instances, trustees should
exercise joint management or control of the shared resources.114 OPA also prohibits double
recovery by two trustees for the same damage.
The international regime operates on the basis that the state concerned carries out clean up
work. The Fund then considers a claim by the state for reimbursement. There is no reason
why states could not be appointed trustee in relation to incidents occurring within their
jurisdiction. From a human perspective, trustees sue on behalf of the public as trustee for
ecological resources that are held in trust by the sovereign for the benefit of the public.115
From an ecological perspective, they sue as guardian of the environment as a whole. It is
suggested this would be a relatively simple matter to implement in practical terms. There is
perhaps no reason why, in the future, trustee status could not be extended to significant
community groups, or even individuals.
Conclusions
The international regime for compensation for oil pollution is in many respects a model for
other aspects of the environment. However, it is suggested that it could be improved by the
inclusion of compensation for non-economic ecological damage, comprising both human
values and pure ecological values. The domestic regime of the United States follows the
same basic model as the Conventions but is more comprehensive in its coverage. The strict
provisions of the OPA are wide enough to cover recovery of compensation for damage to
both non-economic human and ecological values. However, the regulations implementing the
OPA concentrate on human direct and passive use values only.
To be truly effective, it is suggested that recovery must capture the full value of the harm
done to the environment. The arguments raised against recovery of ecological damages are,
it is suggested, of a procedural nature only and are capable of being resolved. The
anthropological basis for ecological damages is the public nature of the areas normally
subject to marine oil pollution. These areas are held for the public in trust by the state, which
113
Jones (n83), 496.
Nicoll (n32), 333.
115
Baker (n69), 683.
114
17
has a duty to protect these areas from harm. The ecological basis recognises that humans are
part of an ecosystem which has a broader significance beyond human existence.
Traditional methods of valuation are inapposite for placing value on non-economic ecological
values. Contingent valuation, the only method which attempts to measure human passive use
values, suffers from problems of hypotheticality which are unlikely to gain it widespread
acceptance for the foreseeable future. It is suggested that our tools of analysis are limited for
things which inherently do not have an easily calculable monetary value. This is likely to be
the case for some time to come. It is suggested that a damage schedule for non-economic
ecological damage offers an interim solution. Such a schedule will offer fixed sums of
compensation for non-economic ecological damage depending on broad categories of severity
of damage. A suite of measures can be used to arrive at these figures, which can be refined
with experience and the development of our knowledge of the full impacts of marine oil
pollution. Lastly, it is suggested that the appointment of trustees to act on behalf of the
public as a whole and as a guardian of the environment would be an appropriate method to
facilitate ecological damage claims.
The Conventions constitute a robust commercial regime for the compensation of marine oil
pollution damage. They already go some way to addressing environmental damage and
degradation caused by marine oil pollution. It is suggested that improvement can be made to
the effectiveness of the regime by implementing a system under the Conventions to facilitate
ecological damage claims. Such an improvement would be a significant step towards
achieving the “environmental bottom line”.
18
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23