Legal fees in Exxon case could cost NJ about $50 million

Michael Catalini, Associate Press
More than one-fifth of a proposed $225 million settlement between Gov. Chris Christie's administration and oil & gas giant ExxonMobil will go toward legal fees if a Superior Court judge approves the deal.
Copyright, The Associated Press

TRENTON, N.J. (AP) — More than one-fifth of a proposed $225 million settlement between Gov. Chris Christie's administration and oil & gas giant ExxonMobil will go toward legal fees if a Superior Court judge approves the deal.

Under the current proposal, New Jersey would pay nearly $50 million in fees for outside legal counsel in the nearly 12-year-old lawsuit.

The legal costs re-emerged at a hearing last month as the Department of Environmental Protection, the Attorney General's office and the Houston-based oil company tried to persuade a judge to approve the settlement and as environmental groups fight a separate court battle to intervene in the case. Those groups argue the proposal is far too low, especially in light of the state's earlier argument that ExxonMobil should pay nearly $9 billion in damages.

The case involves two polluted petroleum sites in northern New Jersey, 16 additional facilities across the state and roughly 1,700 retail gasoline stations.

Here's a closer look at the legal fees:

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THE CALCULATION

For about a dozen years the state's private-sector counsel — principally Kanner & Whiteley, which also represents Louisiana in the Deepwater Horizon spill in the Gulf of Mexico — has worked without getting paid by the state. The firm agreed to be paid a percentage of any recovery in the case. Outside counsel will get about $5.6 million for reimbursements plus $44.5 million in legal fees, said Leland Moore, a spokesman for the Attorney General.

Opponents of the proposed settlement take no issue with the outside counsel's fees and instead criticize the state for failing to get a higher sum. State Sen. Raymond Lesniak said the state's outside counsel did a "great job," but the proposal itself "is just another example of the state selling out the public."

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THE REMAINDER

If Judge Michael Hogan approves the deal, the state would be left with about $175 million after the legal fees, but according to state law, another $50 million is required to go into a fund for natural resources restoration. The Christie administration has said the settlement is still among the largest of its kind and that pursuing the nearly $9 billion figure previously laid out in court could have resulted in lengthy appeals, further delaying payment to the state.

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THE RESTORATION

Some environmental groups question how the legal fees might be paid out. New Jersey Sierra Club director Jeff Tittel said he believes the state law requiring that $50 million be put toward natural resources restoration could instead be used to pay the legal fees, but the Attorney General's office says that's incorrect. The legal fees and $50 million for restoration are "separate and distinct," Moore said. The Christie administration has also said ExxonMobil remains on the hook for cleaning up the sites beyond the amount of the proposed settlement. It's unclear how much that cleanup will cost, however.

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HOW IT COMPARES

If the settlement is approved, the legal bills that go along with it would be less than the state shelled out for the Passaic River litigation, which involved three settlements involving more than 250 public entities as defendants for a total of $355.4 million. In that case, New Jersey paid nearly $69 million in fees, according to the Attorney General's office.

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