Exxon settlement legal fees to reach nearly $50 million

File Photo According to an article by the Associated Press, the proposed settlemen between ExxonMobile and the state for $225 million would come with nearly $50 million in legal fees and expenses for the law firm handling the case for New Jersey.
File Photo
According to an article by the Associated Press, the proposed settlemen between ExxonMobile and the state for $225 million would come with nearly $50 million in legal fees and expenses for the law firm handling the case for New Jersey.

UNION COUNTY, NJ — According to an Aug. 8 article by the Associated Press, legal fees for the proposed $225 million settlement between the state and ExxonMobil will total close to $50 million, more than one fifth of the total settlement.

The lawsuit has been ongoing for more than a decade, with much fanfare and contention rising in the past year. Originally, the state was suing in the neighborhood of $9 billion, and news of a proposed settlement dropping down to $225 million raised loud opposition from critics.

The lawsuit covers two polluted petroleum sites in northern New Jersey, including one in Linden at the Bayway Refinery now owned by Phillips 66, 16 additional facilities across the state, and roughly 1,700 gas station.

Sen. Raymond Lesniak has been leading the pack in opposition, most notably filing a motion to intervene that was denied and holding a rally last winter near a site of pollution in Linden.

When asked by the Associated Press about the legal fees, Lesniak did not see a problem with legal counsel, saying they did a “great job” but continued to attack the proposed settlement, adding it “is just another example of the state selling out the public.”

Should the suit be settled for $225 million, the state would lose nearly $50 million of it to the law firm representing them, Kanney & Whiteley. After those fees, only an additional $50 million is required to go into a fund for natural resource restoration. The rest of the money, $125 million, could be used by Gov. Chris Christie to balance the regular budget if desired.

This is one of the most often attacked components of the settlement by critics who are convinced the funds would go into the general fund, and not toward environmental restoration. Assemblyman John McKeon said in April that using the money to fix a short-term budget hole would be adding “insult to injury.”

McKeon, along with a handful of Democrats, sponsored legislation to change the law so that all the funds would go into the restoration fund, but the measure was vetoed by Christie.

The real insult to injury, however, may come in the form of tax breaks. According to state law, environmental damages can be written off as a cost of doing business, or a tax write off, reducing the final tally for ExxonMobil to around $150 million in expenses.

Despite this criticism, and other stipulations of contention, the Christie administration has maintained that this settlement is the largest of its kind in state history, and notes that cleanup and restoration costs are not included and will be covered by ExxonMobil with no cap on the costs.

The state continues to pursue the settlement’s approval. According to the Associated Press article from Aug. 9, the legal costs came to light during a meeting last month at which the Department of Environmental Protection, the Attorney General’s Office and ExxonMobil attempted to convince the judge to approve the settlement even as environmental groups continue fighting a separate legal struggle to intervene in the case.

Critics, too, have been harsh of Christie’s touting the scale of the settlement, and some have even noted that the governor has not been telling the whole truth.

In an April article in LocalSource, details emerged showing that ExxonMobil may be practically off the hook when it comes to Morses Creek in Linden, which feeds the Arthur Kill. The settlement makes it clear the creek will likely not be cleaned up anytime soon.

ExxonMobil does not have to clean the creek until Phillips 66, which now owns the refinery, closes the Linden Bayway Refinery. Critics and legislators pointed out that the state gave the oil giant a pass in this area, and experts have said the creek is so contaminated it may not ever be able to be restored to ecological health. And the refinery shows no signs of closing.

Phillips 66, which took over the refinery in 2012, is a growing company. They recently acquired two new refineries, including one in Linden and another in Washington state, and Phillip 66 and their partners announced a planned $340 million in spending on upgrades over the next five years to both facilities and to develop a new pipeline system to ship oil, according to the company’s website.

One online forum that covers the energy industry, Breaking Energy, noted that Phillips could easily see 20 percent growth in distribution in 2015. As of last April, the refinery was producing 238,000 barrels of crude oil a day. All of this leaves Morses Creek as it stands for a very long time, despite the settlement.

In addition, critics have also noted that the proposed settlement does not require ExxonMobil to clean up the entire Bayway Refinery site.

Under the deal, Exxon only has to remediate, not restore, more than 1,700 acres of contaminated wetlands. Again, the costs the settlement mandates against Exxon are big, but many critics argue they are not big enough.

If the settlement is approved, Kanney & Whiteley will receive $5.6 million for reimbursements and $44.5 million in legal fees, according to the Associated Press. The article also notes that these legal fees would be paid separately from the $50 million earmarked for restoration.