Fee Shifting: An Institutional Change to Decrease the Benefits from Free Riding

Abstract

The private attorneys general mechanism in the Clean Air Act is an objective institutional change designed to increase the benefits appropriable by an individual for the protection of common property resources. Unlike traditional tort remedies, the private attorneys general mechanism entails no attempt to assess damages or compensate victims. Instead, it relies on fee shifting as a means of decreasing the benefits from free riding, that is, the costs foregone by inaction. Otherwise, the performance of the private attorneys general mechanism depends on such payoffs as the advertising of environmental issues by advocacy groups, quasi-legislative rule changes, and capital building by young attorneys. These kinds of benefits will be more difficult to obtain as the Act moves from implementation into the enforcement phase. The ad hoc nature of judicially developed fee shifting criteria has created the expectation of low benefits from undertaking such suits. Consequently, the visability of the private attorneys general mechanism is in question in the enforcement phase because the indirect benefits appropriable by private enforcers will be more limited in scope.

The views expressed in this paper are my own and are not necessarily those of the officers, trustees, or other staff members of the Brookings Institution.