Making Sure Pollution Settlements Go to Restoring Natural Resources

Proposed constitutional amendment would prevent damages from environmental lawsuits from being diverted to the general fund

State Sen. Bob Smith (D-Middlesex)
The Legislature yesterday began a slow and probably difficult effort to ensure money from pollution cases is used to restore natural resources harmed by spills and other events.

The Senate Environment and Energy Committee voted out a proposed constitutional amendment that aims to prevent environmental-lawsuit damages from being diverted to other uses, such as plugging holes in the state budget.

That has happened twice in the past few years, when hundreds of millions of dollars from natural-resources damage suits has been used to help fund other programs in the annual budget deliberations.

“I don’t think anybody is happy with how it ended up,’’ said Sen. Bob Smith (D-Middlesex), the chairman of the committee and sponsor of the bill (SCR-39), referring to the diversion of settlements involving dioxin contamination of the Passaic River and ExxonMobil’s pollution of hundreds of acres at two refineries.

The diversion of environmental funds to help balance the budget has been a running dispute between some lawmakers and the Christie administration, although in the end, the Legislature has usually acquiesced to the shift in spending priorities. During Gov. Chris Christie’s to two terms, more than $1 billion has been diverted from the Clean Energy Program, which is funded by utility customers.

If approved by voters, the proposed constitutional amendment would prevent such diversions, but getting the measure on the ballot is no easy lift. It would have to be approved by three-fifths majorities in both houses. Failing that, a simple majority vote in both houses in two consecutive years could also accomplish the task.

That is the course Smith is aiming for, hoping the bill released yesterday could be approved by both houses by the end of the year, and then again early next year in time to get it on the ballot in the fall.

The problem is the bill needs further fine-tuning as even Smith concedes. He wants to make sure the language in the proposed amendment ensures money from relevant settlements goes to restoring natural areas damaged by pollution, while putting aside enough to pay outside firms the state hires to litigate the cases.

In the Exxon case, for example, the state settled damages claims for $225 million, but approximately $40 million is expected to go to an outside law firm that handled the case. None of that money has yet been spent because environmental groups and others contested the settlement, arguing it is contrary to other pollution laws. The case is pending in the appellate division.

Environmental groups urged passage of the amendment, saying it is imperative to ensure the money goes to restoring natural resources damaged by polluters.

“For those communities impacted, this is a one-shot deal for them,’’ argued Ed Potosnak, director of the League of Conservation Voters. “It is their one opportunity to get these resources restored.’’

Jeff Tittel, director of the New Jersey Sierra Club, said there are as many as 100 major polluted sites that may merit from the filing of natural-resources damage lawsuits, which could lead to billions of dollars in potential settlements.