Court approves ExxonMobil’s environmental settlement with New Jersey

A New Jersey Superior Court judge approved a $225-million environmental settlement between the state and ExxonMobil Corp. to resolve environmental damages over several decades from refineries in Linden and Bayonne and retail outlets and other facilities across the state.

Judge Michael J. Hogan said in his Aug. 25 settlement opinion that the settlement was fair, reasonable, in the public interest, and consistent with goals in the state’s Spill Compensation and Controls Act. “The record shows that the negotiations between two highly sophisticated parties with sharply conflicting interests were full of adversarial vigor,” he observed in his 82-page opinion.

The agreement is the single largest environmental settlement with a corporate defendant in state history, Acting New Jersey Atty. Gen. John J. Hoffman and Department of Environmental Protection (NJDEP) Commissioner Bob Martin jointly said. They indicated that it would end, following resolution of any appeals, more than a decade of aggressive and costly litigation and negotiations by the state spanning multiple administrations.

But a member of New Jersey’s congressional delegation strongly criticized the settlement of the state’s $8.9-billion environmental lawsuit against ExxonMobil.

“New Jerseyans deserved nothing less than to be fairly compensated for the degradation of our land and resources,” said US Rep. Frank Pallone Jr. (D), the House Energy and Commerce Committee’s ranking minority member. “However, the settlement and the ruling, along with ExxonMobil’s attempts—supported by the Christie Administration—to shirk responsibility, are an insult to New Jersey.”

Environmental organizations also felt the agreement was a mistake. Margaret Brown, an attorney with the Natural Resources Defense Council, which tried, with six similar groups, to block the settlement, called it a multibillion dollar gift to ExxonMobil from Gov. Chris Christie (R) and his administration. “After a decade-long court battle, this spring [it] abruptly and inexplicably gave the oil giant a more than 98% discount on the damages due for its destruction,” she said.

Additional payments

In their Aug. 25 announcement, Hoffman and Martin said the $225-million settlement also represents the second largest natural resources payout from a single company in US history. It is separate and in addition to the hundreds of millions of dollars ExxonMobil has spent and its obligation to further spend for complete remediation of the contaminated Bayonne and Linden refinery sites, pursuant to administrative consent orders previously entered into between the company and NJDEP, they emphasized.

While the settlement resolves ExxonMobil’s alleged liability for discharges from the Linden and Bayonne refineries, it preserves the state’s claims against the company with respect to natural resource damages to the Arthur Kill, Newark Bay, and any other surface waters affected by ExxonMobil’s operations, the announcement said.

It said the settlement also preserves New Jersey’s claims against ExxonMobil relating to the Lail facility, which requires further investigation as to the impact of ExxonMobil’s operations on natural resources. The settlement also addresses some pending and potential NRD claims involving a company refinery operation in Paulsboro, it added.

The two state officials said the agreement resolves relatively minor natural resources damage claims concerning 16 other facilities and ExxonMobil’s retail outlets, but preserves all of New Jersey’s NRD claims relating to the discharge of methyl tertiary butyl ether at those outlets. Refiners used MTBE as a replacement for lead as a gasoline octane enhancer in the 1980s before turning to ethanol. Martin said NJDEP will continue to vigorously litigate those claims.

In his opinion, Hogan also noted that New Jersey retains its right to refile surface water claims and pursue MTBE pollution which ExxonMobil allegedly caused. “Although far smaller than the estimated $8.9 billion in damages, Exxon’s payment represents a reasonable compromise given the substantial litigation risks [NJDEP] faced at trial and would face on appeal,” the judge said.

In response to OGJ’s request for a comment, an ExxonMobil spokesman said the company welcomes the settlement, which it believes has brought this case to a fair and reasonable conclusion. “Both parties will now have the benefit of the certainty and finality that comes from this settlement,” he said.

Contact Nick Snow at

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