Missing The Key Point on Christie DEP Deal With Exxon Mobil for Bayway Refinery

DEP Lacks Regulations To Quantify Natural Resource Damages (NRD)

Lack of NRD Regulations Opens The Door To Abuse

Open Space Advocates OPPOSED Constitutionally Dedicating NRD Funds

There’s been quite a lot of press coverage and expressions of outrage over the Christie DEP’s sweetheart deal with Exxon Mobil regarding decades of pollution from the Bayway refinery that caused  “Natural Resource Damages” (NRD).

The settlement was apparently leaked to the NY Times, who ran a huge story on Friday. I assume it was leaked by some one from DEP or the AG’s Office who was outraged by the sellout.

The media coverage correctly has stressed major abuses – as I did in my initial post –  including:

• the $250 million recovery is less that 3 cents on the dollar of an $8.9 billion claim
• those funds are likely to be used to close budget deficit and pay for Christie’s corporate tax cuts
• the sellout is linked to Gov. Christie’s political fundraising – implied corrupt quid pro quo

I expect the mainstream press to not understand complex issues of environmental law and to play up the politics. So I am not surprised that they missed key points.

But I expect more of the environmental community and of NJ Spotlight, who are not bound by the soundbite and 24 hour news cycle and instead are – or should be – focused on policy.

So, I was disappointed by today’s Spotlight story:

• ADMINISTRATION REPORTEDLY SETTLES $8.9B EXXON LAWSUIT IN A HURRY — FOR ONLY $250M

To claim that Superior Court Judge Hogan found Exxon liable for NRD and use that finding to imply with confidence that he would render an opinion that hit Exxon with almost $9 BILLLION in damages is absurd and misleading  (especially given Hogan’s prior role as chief counsel to the pro-business and anti-regulatory Whitman DEP Commissioner).

Worse, to claim that DEP has a “complex formula” for calculating Natural Resource Damages (NRD) is simply false and obscures the critical point.

Bureaucracies shield themselves from this kind of abuse of enforcement discretion via regulations – with numeric standards and methodologies.

If DEP had regulations and standards in place for quantifying NRD damages, the dirty Exxon deal could not have been done.

DEP does not have such NRD damage determination rules in place and we’ve criticized that fact for YEARS now. (DEP has methods for groundwater injury and ecological injury, but these are not enforceable regulations)

[* further clarification: the DEP’s groundwater injury method provides a formal for calculating economic damages for lost use, but it has not been promulgated as a regulation and is not enforceable.

In contrast, the Ecological injury method relies on the Site Remediation program’s Baseline Ecological Evaluation (BEE), which HAS BEEN adopted as a regulation. However, a BEE merely documents the ecological or natural resource injury: it does NOT quantify NRD injury in economic terms.

Both conditions must be met – i.e. DEP has to have both: a promulgated rule that provides a method to quantify economic damages.]

In a 2004 settlement agreement of the case New Jersey Society of Environmental & Economic Development v. Campbell (N.J. Super. Law Div., Mercer County), DEP legally committed to propose formal natural resource damage regulations.

For 10 years, DEP has failed to honor that settlement and has not adopted NRD regulations that provide standards and methods for calculating NRD damages.

NJ Courts have rejected DEP NRD claims based on DEP’s failure to promulgate regulations, see:

N.J. Dept. of Envtl. Prot. v. Exxon Mobil Corp., Docket No. MER-L-2933-02 (N.J. Super. Ct. Law Div. Aug. 24, 2007).

We discussed that case here:

• NEW JERSEY FORFEITS HUNDREDS OF MILLIONS IN POLLUTION DAMAGES – Court Ruling Faults DEP for Failure to Enact Rules to Compensate Public

Trenton — In a stunning legal setback, the State of New Jersey cannot recover damages from polluters in what may be thousands of contaminated groundwater cases, according to Public Employees for Environmental Responsibility (PEER). The problem stems from the state’s failure to adopt regulations governing how to calculate “natural resources damages” (NRD) for polluted drinking water. As a result, polluters can avoid compensating the public for treatment of tainted groundwater, replacement water supply lines, drilling new wells and associated damages — leaving taxpayers with uncalculated costs.

On August 24, 2007, a state Superior Court dismissed with prejudice an attempt by the New Jersey Department of Environmental Protection (DEP) to recover a natural resource damage claim involving benzene and toluene contamination of private wells in the Hillwood Lakes area of Ewing Township. (N.J. Dept. of Envtl. Prot. v. Exxon Mobil Corp., Docket No. MER-L-2933-02 (N.J. Super. Ct. Law Div. Aug. 24, 2007)). The Court found that DEP did not follow the rule making process to establish, by regulation, a reliable formula for calculating natural resources damages. In the absence of regulations, the Court also found DEP lacked adequate scientific support to proceed on a case-by-case basis.

More recently, after the Appellate Division struck down a DEP NRD claim, we petitioned the NJ Comptroller to intervene and require that DEP adopt regulations EXACTLY to AVOID this kind of political abuse, see:

• NEW JERSEY FUMBLING AWAY POLLUTION DAMAGES – Court Ruling Underlines State Futility in Assessing “Natural Resources Damages”

Trenton — The State of New Jersey is forfeiting hundreds of millions of dollars in damages from polluters in contaminated groundwater cases, according to Public Employees for Environmental Responsibility (PEER), which has asked for a review of the program by the state Comptroller.   The state’s failure to adopt regulations governing how to calculate “natural resources damages” (NRD) for polluted drinking water has contributed to its inability sustain assessments against polluters. […]

“This mess was wholly preventable but even now the state is not taking the measures everyone agrees are needed,” Wolfe added. “It appears that we have utterly lost the capacity for enlightened environmental leadership in New Jersey.”

PEER is asking the Comptroller to review the performance of the NRD, determine the extent to which taxpayers are not attaining full NRD recoveries and make recommendations for putting the program back on track in a more transparent and accountable fashion.

The Corzine DEP under Lisa Jackson failed to adopt regulations, as did the anti-regulatory Christie administration.

Those failures to adopt rules are what allowed this most recent Christie Bayway abuse to occur – a predictable and predicted abuse.

Finally, to whine that the revenue from the settlement will go to the State budget and not to natural resource restoration and public compensation for lost use of natural resources is disgraceful.

As I’ve written, the introduced version of the Open Space Resolution SCR84  (see lines 31 – 33 on page 3) would have Constitutionally dedicated NRD settlement funds to the Open Space fund, but environmentalists OPPOSED Constitutionally dedicating this funds.

I repeat: that is one of the biggest blunders of all time, as both the Passaic and now the Exxon settlement prove.

Environmentalists need to spend more time working on what DEP actually does that in the media.