N.J. Dep't of Envtl. Prot. v. Exxon Mobil Corp.

Decision Date25 August 2015
Docket NumberL–1650–05,DOCKET NOS. L–3026–04
Citation453 N.J.Super. 588,183 A.3d 289
Parties NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION, Plaintiff, v. EXXON MOBIL CORPORATION, Defendant.
CourtNew Jersey Superior Court

Richard F. Engel, Deputy Attorney General, for plaintiff (John J. Hoffman, Acting Attorney General, attorney). Allan Kanner, of the Louisiana bar, admitted pro hac vice, and Elizabeth B. Petersen, of the Louisiana bar, admitted pro hac vice, for plaintiff (Kanner & Whiteley, LLC, attorney).

Marc A. Rollo, Haddonfield, for defendant (Archer & Greiner PC, attorney). Theodore V. Wells, Jr., of the New York bar, admitted pro hac vice, for defendant (Paul, Weiss, Rifkind, Wharton & Garrison LLP, attorney).

HOGAN, P.J. Ch., J.S.C. (retired and temporarily assigned on recall)

I. Introduction, Statement of Facts, and Procedural History

"Nearly any consent decree can be viewed simultaneously as ‘a crackdown or a sellout.’ " United States v. Telluride Co., 849 F.Supp. 1400, 1402 (D. Colo. 1994) (quoting William A. Rodger, Jr., 2 Environmental Law: Air and Water, § 4.40 at 584 (1986) ). This quote rings especially true for the settlement that this court has been tasked with reviewing. After eleven years of litigation, including a sixty-six day trial before this court, the New Jersey Department of Environmental Protection ("DEP," "State," or "Department") and ExxonMobil Corporation ("Exxon") have agreed to a consent judgment ("Proposed Consent Judgment" or "Consent Judgment") that resolves the State's claims for natural resource damages in New Jersey Department of Environmental Protection v. Exxon Mobil Corp., No. UNN–L–3026–04, consolidated with No. UNN–L–1650–05 ("Bayway/Bayonne Litigation"). The Consent Judgment also resolves (1) the State's pending claims in New Jersey Department of Environmental Protection v. Exxon Mobil Corp. f/k/a GATX Terminals Corp., No. L–1063–07, consolidated with No. L–0563–03; and (2) certain potential claims the DEP may have against Exxon at fifteen other facilities and 1768 retail gas stations.

After giving considerable time and thought to its task, for the reasons stated in this opinion, the court finds that the proposed consent judgment is fair, reasonable, in the public interest, and consistent with the goals of the Spill Compensation and Control Act ("Spill Act"), N.J.S.A. 58:10–23.11 to –23.24. It therefore approves the Consent Judgment. The facts and procedural history have been set out in a number of previously issued opinions.1 However, because an understanding of this case's facts and history is integral to understanding the court's approval of the Proposed Consent Judgment, the court provides its own Statement of Facts and Procedural History.

I.A. Statement of Facts

During the mid–1800s, the Constable Hook peninsula, which is located in the Upper New York Bay, was composed of salt marshes and intertidal wetlands. Farming was the main local occupation at this time, but by the 1870s, industry began to spring up.2 One such operation was the Prentice Oil Company, which was established in 1875 and produced kerosene. It is this company that John D. Rockefeller, through his Standard Oil Company,3 first set his sights on in establishing what would become the Bayonne Facility ("Bayonne") at issue in this case.4

Although Prentice had only twenty employees when Standard Oil acquired it in 1877, Standard soon began to extensively modify the land, expand its holdings, and develop infrastructure for an oil refinery. For example, to eliminate the cost of shipping oil to the coast, in 1887 Standard finished constructing an oil pipeline that transported 10,000 barrels of crude oil from the fields of Pennsylvania directly to Bayonne for processing. Outward expansion continued until the refinery hit its peak in 1936, at which time it employed 5000 workers and consisted of 650 acres. After this time, Standard began selling off tracts of land. Even though all refining and manufacturing had ceased by 1971, the site continued to function as a petroleum storage facility and wholesale distribution center. In 1993, Exxon sold approximately 210 acres of the site to International Matex Tank Terminals ("IMTT"), while still retaining ownership of a few acres.5

At the turn of the twentieth century, the land that would eventually become the Linden Bayway Refinery ("Bayway") was similarly composed of marshes and wetlands.6 Although farming used to be the main occupation, by the time Standard Oil began acquiring land in 1907, the area was beginning to industrially develop. For instance, the Pennsylvania and Short Line Railroads of Monopoly fame cut across the area. After Standard first acquired land at Bayway, it began constructing refinery infrastructure and did not begin producing petroleum products until 1909. Over the course of the 1900s, Exxon continued to expand operations, refine crude oil, and manufacture chemicals until December 1992, when it sold the site to the Bayway Refining Company, a wholly-owned subsidiary of the Tosco Corporation. Tosco ultimately sold the site to Conoco, which in turn sold it to Phillips 66. Currently, Bayway is owned by both Phillips 66 and Infineum, although several other companies have easements and leaseholds.

During the course of Exxon's ownership and operation of the two sites, large amounts of hazardous substances,7 including petroleum products, were discharged into the lands and waters at and near the sites. To address the cleanup of this chronic contamination, the State and Exxon voluntarily entered into two Administrative Consent Orders ("ACOs") on December 19, 1991. Although Exxon denied any statutory or regulatory violation, they agreed to pay a civil penalty of $1,500,000 for Bayway and $1,350,000 for Bayonne. In order to "determine the nature and extent of the problems presented by the discharges of hazardous substances and pollutants at the Site[s]," Exxon and the Department agreed on the necessity to conduct a remedial investigation and feasibility study of remedial action alternatives. They also agreed "to develop and implement a plan for remedial action to remove or remediate the hazardous substances and pollutants from the Site[s]." Through December 31, 2014, Exxon has spent $136,101,470 in remediation-related costs for Bayway and $121,616,000 in remediation-related costs for Bayonne. Importantly, both ACOs contained a "Reservation of Rights" section that stated, "This Administrative Consent Order shall not be construed to affect or waive the claims of federal or State natural resources trustees against any party for damages for injury to, destruction of, or loss of natural resources."

I.B. Procedural History

On August 19, 2004, the DEP elected to exercise this reserved right and filed two complaints against Exxon for alleged injuries to natural resources at Bayway and Bayonne.8 The complaints brought statutory Spill Act claims, as well as common law public nuisance and trespass claims, for alleged injuries to groundwater, surface water, and ecological resources. On October 7, 2004, Exxon attempted to remove the case to the United States District Court for the District of New Jersey. This attempt was unsuccessful, and the matter was remanded back to the Superior Court by a March 24, 2005, order. Pursuant to a January 11, 2006, case management order, Judge Ross Anzaldi, the motion judge at the time, bifurcated the case between the State's Property Claims and Surface Water Claims.9

On the same date, the DEP moved for partial summary judgment, seeking a determination that Exxon was strictly liable as a matter of law for all cleanup and removal costs under the Spill Act, including the restoration of natural resources. Exxon cross-moved for summary judgment on the ground that the Spill Act does not provide liability for "loss of use" of natural resources. On May 26, 2006, Judge Anzaldi granted both motions in part, holding that Exxon was strictly liable under the Spill Act for natural resource damages ("NRD"), including restoration, but dismissing the DEP's Spill Act claims for loss of use damages. N.J. Dep't of Envtl. Prot. v. Exxon Mobil Corp., 393 N.J. Super. 388, 397–98, 923 A.2d 345 (App. Div. 2007) (hereinafter " Exxon I"). Although Exxon elected not to appeal the strict liability ruling, the DEP sought an interlocutory appeal on the loss of use issue. Id. at 398, 923 A.2d 345. After examining the Spill Act's language, intent, and recent amendments, the Appellate Division reversed and held that loss of use damages "are a component of costs of mitigating damage to public natural resources." Id. at 402, 923 A.2d 345.

While this appeal was pending, on November 3, 2006, the State's natural resource damage assessment ("NRDA") expert, Stratus Consulting, issued its damages report. At Bayway, the report identified 1252 acres of intertidal wetland, palustrine meadow/forest ("palustrine meadow"), and upland forest/meadow ("upland meadow") habitats that were contaminated. At Bayonne, the report identified 475.7 acres of contaminated habitats. Stratus quantified these damages at $8.9 billion, $2.5 billion for on-site "primary restoration" and $6.4 billion for off-site "compensatory restoration."10

After the Appellate Division decided Exxon I in the State's favor, the DEP moved to amend its complaints to include common law strict liability counts. N.J. Dep't of Envtl. Prot. v. Exxon Mobil Corp., 420 N.J. Super. 395, 398, 22 A.3d 1 (App. Div. 2011) (hereinafter " Exxon II"). Exxon then moved for partial summary judgment, seeking to dismiss the strict liability counts on the theory that the statute of limitations had run and that the extension statute, N.J.S.A. 58:10B–17.1, did not apply.11 Ibid. On July 23, 2009, Judge Anzaldi ruled in Exxon's favor and dismissed the DEP's common law strict liability counts. Id. at 401, 22 A.3d 1. On May 31, 2011, the Appellate Division reversed and held that the statute of limitations did not bar the...

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