NJ Appellate Division Upholds $225 Million NJDEP Settlement with Exxon Mobil for Natural Resource Damages, Grants Environmental Groups Right to Appeal
In February 2018, New Jersey’s Appellate Division upheld a consent judgment that settled the New Jersey Department of Environmental Protection (NJDEP)’s claims against Exxon Mobil Corporation (Exxon) under the New Jersey Spill Compensation and Control Act to recover natural resource damages (NRD) for the Bayway refinery in Linden and another facility in Bayonne. The Exxon NRD decision, which is approved for publication, clarifies the law with respect to third-party intervention, standing, and citizen group appeals from settlements.
The consent judgment, entered after a lengthy bench trial, effectively settled NJDEP’s claims at the Bayway and Bayonne sites, sixteen other Exxon locations, and more than a thousand retail gas stations in this State in exchange for a record $225 million payment. Nonetheless, a state senator and several environmental organizations sought to intervene in the underlying litigation and subsequently appealed the trial court’s entry of the consent judgment. The Appellate Division found no reason to “second guess” the trial judge’s decision, given the extensive factual record that informed his decision, and further, having found “no authority prohibiting the transfer of the settlement proceeds or limiting their use, nor any authority that permits this court to wade into the budgetary waters,” declined to weigh in on the dedication or application of the settlement funds for environmental purposes.*
The Exxon NRD case is perhaps most notable for the Appellate Division’s decision to permit environmental organizations to appeal the trial court’s entry of the consent judgment. Although the court ultimately ruled against the environmental groups, finding that the trial court properly approved the settlement, this newly granted right of appeal is likely to have significance under the Murphy administration, which has indicated a desire to pursue NRD more aggressively. Environmental groups may now request a role in future settlement discussions regarding NRD claims, since they can rely on the Exxon NRD decision as a basis for appealing such a settlement.
*Note: In 2017 New Jerseyans voted in favor of a constitutional amendment allocating State revenue from legal settlements related to NRD toward restoring and protecting natural resources and paying the costs of pursuing such settlements.