## Facts

- The U.S. Department of the Interior (DOI) issued regulations governing natural resource damage (NRD) assessments under CERCLA, including detailed “Type B” assessment procedures.
- The regulations limited recoverable NRDs to the “lesser of” (1) the cost to restore/replace/acquire the equivalent of injured resources, or (2) the resources’ lost-use value.
- The regulations also imposed a valuation hierarchy that relied on market price measures for lost-use value whenever market data existed, relegating nonmarket valuation methods.
- Multiple states and environmental organizations argued the rules would systematically undercompensate NRDs and conflict with CERCLA’s restoration-centered remedial scheme.
- Multiple industry petitioners challenged the rules from the opposite direction, arguing the regulations could yield excessive NRD awards.
- After statutory amendments, related challenges to amended regulations were consolidated for review in the D.C. Circuit.

## Issues

1. Whether CERCLA permits DOI to cap NRD recovery at the “lesser of” restoration/replacement cost or lost-use value.
2. Whether DOI reasonably interpreted CERCLA by requiring market-based valuation measures for lost-use value whenever market prices are available.
3. Whether other challenged provisions of the Type B NRD assessment regulations were within DOI’s discretion under CERCLA.

## Decision

- The court granted the petitions in part and denied them in part.
- The court invalidated the “lesser of” cap as contrary to CERCLA’s expressed restoration preference and remanded to DOI for revision.
- The court held the market-value–only valuation hierarchy for lost-use value was not a reasonable interpretation of CERCLA and remanded those provisions.
- The court upheld other portions of the Type B regulations not found inconsistent with CERCLA.

## Legal Principles

- Under Chevron review, an agency’s discretion is constrained by statutory text, structure, and clear congressional preferences reflected in the remedial scheme.
- CERCLA reflects a strong preference that NRD recoveries fund restoration, replacement, or acquisition of equivalent resources; regulations may not systematically prevent recovery of restoration-based amounts.
- A regulatory approach that treats lost-use value as an equally controlling cap on restoration recovery can conflict with CERCLA’s restoration-focused design and related provisions governing use of recovered funds and restoration mechanisms.
- Market prices may not capture significant components of natural resource value; an agency may not unreasonably exclude or downgrade nonmarket valuation methods where doing so undermines CERCLA’s NRD objectives.

## Conclusion

The D.C. Circuit held that DOI’s CERCLA NRD rules could not cap damages at the lesser of restoration cost or lost-use value and could not require market-only valuation when market data exist, because those approaches conflicted with CERCLA’s restoration-centered scheme; the court remanded the invalid provisions while sustaining other regulatory components.


Ohio v. U.S. Dep’t of the Interior, 880 F.2d 432 (D.C. Cir. 1989)