Legislature Urged To Conduct Oversight Of DEP NRD Payments to Private Parties
Appeal To EPA Forthcoming
I was deeply troubled by the inclusion in a recent DEP NRD Settlement Agreement of payment of $2.8 million to the NJ Conservation Foundation, a private group.
In my view, such a practice raises a host of legal, public policy, and ethical issues and reflects a clearly inappropriate entanglement of private sector interests in purely governmental environmental enforcement actions. Both the private party and the government have potential conflicts of interest and incentives that might be perverse, including self dealing and inverse forms of pay-to-play politics.
I would think that conservation groups would be concerned about their independence and the appearance of quid-pro-quo deals with friendly government officials. Similarly, I assume that the private sector and legal communities would be particularly troubled by the kind of abuses this invites.
While the DEP NRD Settlement was entered into by NJ State officials primarily under NJ State law, it did cite federal laws as the legal basis and the Wyeth site (formerly American Cyanamid) is a federal Superfund site subject to EPA oversight, so I assume that there is some federal legal hook that could warrant application of US DOJ settlement policies.
So, I did some quick research of what the US Department of Justice’s legal policies are on such a practice.
I learned that the US DOJ Policy “1-17-000 – Settlement Payments To Third Parties” expressly prohibits some forms and imposes strict conditions on payments to private third parties in civil Settlement Agreements. (hit above link or full text of the policy and see below letter for additional excerpts):
It is generally not appropriate to use a settlement agreement to require, as a condition of settlement, payment to non-governmental, third-party organizations who are not victims or parties to the lawsuit. Department attorneys shall not enter into any agreement on behalf of the United States in settlement of federal claims or charges, including agreements settling civil litigation, accepting plea agreements, or deferring or declining prosecution in a criminal matter, that directs or provides for a payment to any non-governmental person or entity that is not a party to the dispute.”
NJCF is not a party to the dispute in the DEP Settlement agreement.
The public comment period on the Settlement is closed.
The DEP never provided an opportunity for the public to comment on such a highly significant policy.
The DEP’s NRD program continues to be implemented in the absence of regulations, including science based standards for measuring or estimating NR injuries and making transparent the factual and technical basis upon which NRD economic damage estimates are calculated.
The public has had no opportunity to review and comment on this kind of Settlement policy and DEP has refused to confine their broad discretion in the NRD program via regulations, despite previously entering into a judicial settlement agreement which obligated the DEP to do so.
As the NJ Law Journal reported:
A March 23, 2003, letter from deputy attorney general Richard Engel to Picco said the DEP “has long planned to promulgate regulations to improve the current Natural Resource Damage program” and “is currently developing its regulatory proposals, and plans to file one or more rule proposals prior to Aug. 1, 2005.”
The “forthcoming rules clearly will afford the NJ SEED plaintiffs an administrative forum, subject to judicial review, in which to present policy and legal arguments presented in or related to the pending litigation,” Engel said in the letter
A few years ago, Senate Environment Committee Chairman Smith – in the wake of the Christie DEP’s Exxon NRD Settlement Fiasco – announced the formation of a legislative Task Force on NRD standards and economic valuation methods to be incorporated in NRD legislation.
That Task Force has not released any recommendations as far as I know, so I fired off the below letter to Smith requesting legislative oversight.
I’ll reach out to US EPA in the near future as well to encourage their oversight, as this involves a federal Superfund site.
Dear Chairman Smith:
I just learned, via news reports, of a DEP NRD Settlement Agreement with Wyeth for groundwater damages associated with the former American Cyanamid site. To review the Settlement, see:
https://www.nj.gov/dep/nrr/settlements/amcy-wyeth-draft-settlement-agreerment.pdf.
The Settlement incorporates, among other things: (paragraph #9)
“an agreement with the non-profit conservation intermediary organization, New Jersey Conservation Foundation (“NJCF”) pursuant to which, and subject to the execution of this settlement, Wyeth will provide funds to NJCF for the purposes of land acquisition, and preservation, which preservation shall include the placement of a conservation easement on the acquired land, as approved by the Department.”
I am deeply troubled by inclusion of payment of NRD settlement moneys to private parties. As you know, NRD settlements are designed to compensate the public for natural resource injuries. Inclusion of payments to private 3rd parties in a State legal settlement agreement raises a host of legal, policy, and ethical issues, a discussion of which is beyond the intent and scope of this letter.
However, as a matter of legal policy and because this settlement involved a federal Superfund site and is expressly based in part on federal law, I research the US Department of Justice policy on settlement agreements, and found that they prohibit and restrict inclusion of payments to private third parties.
The USDOJ settlement policy states: (emphases mine)
“The goals of a settlement agreement between the Department and a private party are to compensate victims, redress harm, and/or punish and deter unlawful conduct. It is generally not appropriate to use a settlement agreement to require, as a condition of settlement, payment to non-governmental, third-party organizations who are not victims or parties to the lawsuit. Department attorneys shall not enter into any agreement on behalf of the United States in settlement of federal claims or charges, including agreements settling civil litigation, accepting plea agreements, or deferring or declining prosecution in a criminal matter, that directs or provides for a payment to any non-governmental person or entity that is not a party to the dispute.”
NJCF is not a “victim” and not a “party to the lawsuit”.
Does NJ Attorney General’s Office have a State policy on these issues?
The USDOJ Policy sets strict limits of settlements that include payments to private third parties. The US DOJ policy 1-17.000 states: (emphases mine)
https://www.justice.gov/jm/jm/1-17000-settlement-payments-third-parties
“Department attorneys may only enter into such agreements in three specific situations:
1. When the otherwise lawful payment or loan provides restitution to a victim or otherwise directly remedies the harm that is sought to be redressed (for example, harm to the environment or from official corruption).
2. When payment is directed towards legal or other professional services rendered in connection with the case.
3. When payment is expressly authorized by statute, including restitution and forfeiture.
This policy applies to all civil and criminal cases litigated under the direction of the Attorney General and includes civil settlement agreements, cy pres agreements or provisions, plea agreements, non-prosecution agreements, and deferred prosecution agreements.”
NJCF does not meet any of these conditions: they are not a victim; the settlement money is not directed to professional services; and there is no restitution or forfeiture. I am unaware of any NJ laws that “expressly authorizes” such NRD payments to private third parties.
The DEP settlement appears o contradict federal US DOJ legal policy.
I urge your immediate attention to this matter.
Among other issues, I urge you to ask the Attorney General’s Office and DEP to identify the legislative authority for such a settlement (i.e. which provide payments to private 3rd parties as noted above).
When did DEP provide an opportunity for public comment on an NRD policy of such significance?
As you know, the DEP NRD program continues to operate in the absence of implementing regulations, which is another fact I find deeply troubling.
The draft settlement was public noticed back on may 4, 2020 (during the hight of COVID). Unfortunately, the 60 day public comment period is closed, so I am precluded from commenting and therefore must rely on your intervention.
Respectfully,
Bill Wolfe
