Exxon settlement details revealed

Residents have until June 4 to share their opinions of the proposed $225 million settlement

UNION COUNTY, NJ — On Monday the state officially posted details of the proposed $225 million liability settlement with ExxonMobil for contaminating the Bayway refinery area in Linden and another in Bayonne. The public now has 60 days to share comments with the judge who will eventually approve the deal or throw it out.

The settlement, touted as “historic” by the DEP, requires ExxonMobil to pay the state $225 million, ending any liability they have for natural resource damages caused by contamination from refinery operations in Linden and Bayonne.

For more than a decade the DEP waged a legal battle against the world-wide oil company, claiming the liability alone was worth $8.9 billion. The fact the state settled for $225 million was disconcerting to democrat legislators, who immediately launched efforts to stop the deal.

However, both the DEP and attorney general said it was the best deal they could negotiate, considering how this was the second largest payout for an environmental settlement, with the exception of the Exxon-Valdez case.

“We have vigorously litigated this case for the good of the environment and for the people of New Jersey,” said DEP Commissioner Bob Martin.

“On top of the historic payout for this natural resources damages settlement, there is no cap on what ExxonMobil must spend to complete the remediation work,” he said, adding that the company “is also obligated to remediate all of the other, though far less contaminated, sites included in the proposed agreement.”

“This proposed settlement meets the goals we set for this case, which were to recover an amount that fairly and reasonably compensated the state for natural resource damages and reinforce ExxonMobil’s requirement to cleanup the Bayway and Bayonne sites,” said acting attorney general John Hoffman.

Democrat State Sen. Ray Lesniak, who is launching a campaign to reject the settlement, did not hesitate to say how he felt about the details of the settlement being released Monday.

“The more we learn about this deal the worse it smells. In fact, this has to be the biggest corporate giveaway in history and its being done for the most profitable oil company in the world,” said Lesniak, noting that ExxonMobil “put the health and safety of residents at risk.”

“I grew up near the giant Exxon sign in the Bayway section of Elizabeth so I have firsthand knowledge of the damage done to the wetlands, waterways and the land. It smelled back then but this deal smells worse,” said the senator.

“I will continue to work with other legislators, local officials, community residents and environmental groups to see the administration’s proposed settlement is not approved. We will work to have the Department of Environmental Protection reject it,” he said, pointing out that, if necessary, he and Senate President Steve Sweeney “will go to court to stop it.”

While the state is claiming the settlement is historic, according to sources, ExxonMobil paid less than half of its $1.1 billion agreement with the federal government for the Exxon-Valdez oil spill in 1989. Further, ExxonMobil could get a huge tax break if none of the $225 million is assessed as a fine or penalty, which would reduce the amount they pay to slightly less than $150 million.

The state first filed its lawsuit against ExxonMobil in 2004 and by 2008 the court ruled the oil company was liable for polluting the waterways, wetlands and marshes on and near the refinery site in Linden and Bayonne. What was not known until now was the extent of legal wrangling that took place between the state and ExxonMobil over the years.

According to information obtained by LocalSource, which was not contained in the report issued Monday, the state was initially seeking $9 billion from the oil company because a previous lawsuit determined ExxonMobil was responsible for the contamination.

At that time the state said it would take $9 billion to restore 550 acres located at the Bayway refinery and another 25 at the Bayonne site. A study at the time, according to reports submitted to the court early on in the lawsuit, showed it would take close to $3 billion just to restore these areas to their former state.

The state was also seeking $6.3 billion to compensate the public for loss of these natural resources, but there was nothing noted that would indicate there would be money set aside for Linden residents whose health was affected by the contamination that seeped into their groundwater since 1909.

In order to stress how wide the contamination was at the Linden site, the DEP noted in one of the post-trial documents that the scope of the environmental damage was “as obvious as it is staggering and unprecedented in New Jersey.” The state also pointed out that ExxonMobil had used the wetlands as “waste receptacles.”

Neither Martin nor Hoffman mentioned in the statement released Monday that the state was hampered in their negotiations back in 2008 by Jon Corzine’s administration and their efforts to settle the case. At the time, sources said, Corzine’s representatives offered a $550 million settlement to ExxonMobil, which then set the bar in the millions, not billions.

In 2012 Gov. Chris Christie’s administration decided a settlement between $250 and $450 million would be fair, eventually presenting a $325 million offer to ExxonMobil that was rejected.

According to sources privy to the negotiations over the last decade, the state’s case against ExxonMobil was further hampered by two other environmental lawsuits involving Union Carbide and Essex Chemical that took place in 2011 and 2012. The state was seeking $31 million from Union Carbide and $8 million from Essex Chemical, but in the end both cases were dismissed and the state received nothing.

According to the details of the ExxonMobil settlement released by the state Monday, in addition to the $225 million payout, the deal preserves the state’s natural resources damage claim against ExxonMobil with respect to the Arthur Kill, Newark Bay and any other surfaces impacted by the company’s operations. It also requires ExxonMobil to cleanup Morses Creek at the Linden refinery site once operations there conclude, but there is no indication that the refinery at the Morses Creek site will close any time soon.

The settlement agreement pointed out that plans for remediation are already underway at the Linden Bayway refinery, with the first phase of the company’s feasibility study work plan submitted Jan. 28.

In the meantime, the DEP said in the statement released Monday, refinery operations have already undergone “containment and remediation actions.”

The DEP said the Linden refinery, now owned by ConocoPhillips, “is operating in full compliance with all DEP standards and regulations, including all water discharge and air permits.”

However, they did not mince words about who was responsible for the oil and chemical contamination that now goes as deep as 17-feet below the surface in some places.

“Morses Creek is a natural water body that flows through the Linden site. The area between the creek’s two dams was used for decades by ExxonMobil as a location for oil and water to separate,” the state said, adding that under the state’s supervision, interim remedial measures have been taken at the site by ExxonMobil to prevent further groundwater contamination.

Steel sheeting also has been installed along the banks of the creek, along with “hydrologic controls and product recovery wells.”
Announcement of the $225 million settlement in mid-March became a political lightning rod for democrats, who swiftly rallied against the move.

When it came out that the settlement was made at the 11th hour, just days before a Superior Court judge was due to rule on the matter and the state could legally take the majority of these settlement funds to offset the state budget, that only added fuel to the fire burning in among democrat legislators.

In response, Democrat Assembly members Annette Quijano and John McKeon, among others, introduced several pieces of legislation, including one that would extend the 30-day public comment period to 60-days, which the assembly overwhelmingly approved last week.

The second bill would amend the law so the bulk of money received from environmental lawsuits is reserved for damage restoration. However, while the democrat-controlled legislature has sent this bill to the governor for approval, there is concern Christie wants to use the bulk of the money to offset the budget. The governor has until May to decide if he will give it his stamp of approval or veto the measure.

Monday McKeon admitted he was pleased that the DEP and Attorney General’s office “heeded the assembly’s recommendation,” by extending the public comment period on the settlement to 60 days, rather than the 30 days typically prescribed by law.

“This is a great victory for the public,” McKeon said in a statement, adding “the voices of those affected most by this persistent and pervasive pollution deserve to be heard.

“As we said all along, 30 days was far too little time for the public to absorb the extensive facts surrounding this settlement and respond in a proper manner,” said the assemblyman who represents portions of Essex and Morris counties.

“There are far too many concerns surrounding the ExxonMobil settlement to rush the approval process,” the assemblyman said, adding that given the size of the settlement and extent of the damage, which includes 16 other sites in 11 legislative districts throughout the state, a 30-day public notice period “would have been far too inadequate.”

McKeon said with legislators on both sides of the aisle almost unanimously approving the extension of the public comment period, “it’s clear that this was the right thing to do.”

Once the 60-day public comment and response period concludes, both the state and ExxonMobil are expected to submit a finalized agreement to Superior Court Judge Michael Hogan, who presided over the 66-day trial the state brought against the oil mogul in 2014.

Hogan then has to determine that the agreement between the state and DEP is “fair, reasonable and in the best interests of the state.