Appeals Court Upholds Outstanding $225M Fine Against ExxonMobil

Tom Johnson | February 13, 2018 | Energy & Environment
Plaintiffs argue amount too small but are relieved constitutional amendment ensures environmental fines go to restoring natural resources

PSEG Linden
A state appeals court yesterday upheld a controversial decision that allowed ExxonMobil to pay $225 million to settle longstanding pollution cases against the company at two refineries and other sites once operated by it.

In a 47-page decision, the court upheld a trial court’s ruling that a consent decree between the company and the state Department of Environmental Protection was a substantially fair and reasonable settlement of the decades-old case.

The plaintiffs, several environmental groups and former state Sen. Raymond Lesniak, a Democrat from Union, vowed to challenge the decision in court. They contended the settlement was only a fraction of the $8.9 billion originally sought by the state for natural-resources damages at the sites.

The case centered on massive contamination of approximately 1,500 acres of marshes, wetlands, and waterways, primarily at two refineries in Linden and Bayonne, although retail gas stations operated by the oil company also were brought into the matter.

Political victory

Despite the ruling, the groups argued they had achieved a political victory, even while suffering a legal setback, by delaying the outcome of the case long enough to prevent the money from being diverted from restoring environmental and natural resources.

“Even though we lost, we won,” argued Jeff Tittel, director of the New Jersey Sierra Club, one of the plaintiffs. “We didn’t get all the money we sought, but at least it is going to be spent in the right places.”

In appealing the settlement, the groups delayed a decision until after voters last fall approved a constitutional amendment preventing settlement money from suits like this being diverted to uses other than restoring habitat and other natural resources.

A bone of contention

The diversions had become a particular bone of contention between environmentalists and the Christie administration, which often used money from such lawsuits to help plug deficits in the state budget.

In the Exxon case, approximately $175 million of the settlement will be used for environmental purposes; the rest will go to legal fees associated with the case.

Lesniak, who as a lawmaker authored several of the state’s most important environmental statutes, vowed to contest the case, arguing the trial judge made errors in his decision, particularly delaying a cleanup of Morse’s Creek in Linden.

“He’s deferring the cleanup virtually forever,” Lesniak said of the settlement, which allows Exxon to hold off dealing with pollution there until the refinery is closed. “They should not be deferring a violation of the law.”

But the appeals court found Superior Court Judge Michael Hogan acted reasonably in approving the settlement. “Clearly, since Judge Hogan conducted the trial, heard the testimony, and observed the witnesses, we should defer to his fact-finding and review of the evidence,” the court found.

In any event, the case is likely to focus lawmakers on pushing the DEP to bring new cases against polluters for natural-resources damages suits. The Christie administration never brought a single lawsuit, a stance that is expected to change with the new Murphy administration.

Recommended by report

The new administration’s environmental transition report recommends the state reinstitute such lawsuits, according to Doug O’Malley, director of Environment New Jersey, another plaintiff in the Exxon case.

“Now, the state needs to come up with a game plan for holding polluters accountable,” O’Malley said. “The Murphy administration will take a much more pro-environment position than did Christie.”

In addition, the Legislature is likely to try and establish standards for restoring contaminated marshes, polluted drinking water, and other natural resources, a move that will make it easier to win compensation against firms that cause such damages. The lack of standards was a critical issue during the Exxon litigation, with the company arguing the state failed to prove $8.9 billion in damages.