At the heart of the NJ Exxon/Mobile controversy is ‘Natural-Resource Damages’

In New Jersey, polluters can be held liable to clean up contaminated water and soil under various state and federal laws. In some cases, the state also goes after the companies to restore natural resources, such as wetlands, marshes, and other natural areas.

Filing of natural-resource damages was often used by past administrations to try and restore environmentally sensitive land damaged by pollution. Former Gov. Jim McGreevey filed more than 131 such cases; since Gov. Chris Christie took office, his administration has filed only one natural-resource damage claim.

The rationale behind the suits is not only to restore natural areas to how they were before being polluted, but also to compensate the public for the loss of those resources.

In a densely populated state with a long history of manufacturing operations and thousands of contaminated hazardous-waste sites, environmentalists view the issue as critical if the state is to restore natural areas damaged by pollution.

Why the issue is getting a lot of attention: After more than a decade of litigation, the Christie administration reached a tentative settlement with Exxon Mobil in an 11-year-old case dealing with natural-resource damages at refineries it once operated in Linden, Bayonne, and Paulsboro. The proposal also covers 16 other sites once operated by the company and hundreds of retail gas stations. The settlement still has to be approved by the judge overseeing the case, who found the company liable; the only remaining issue to be settled is how much it would pay in damages.

Why the tentative deal is controversial: Originally, the state sought $8.9 billion in natural-resource damages. The proposed settlement would have Exxon Mobil pay a fraction of that — $225 million, a chunk of which could be used to plug a hole in next year’s state budget, with at least $40 million going to an outside law firm that litigated the case for the state. Environmentalists say the remaining money is far too little to restore areas damaged by more than 100 years of refining and petrochemical operations in Bayonne and Linden.

What the Christie administration says about the settlement: It defends the proposal, calling it the largest single agreement for natural-resource damages reached by the state. It also has diverted money in the past — with the Legislature’s agreement — to use fund from such cases to help balance the state budget, most recently from a natural-resources claim involving dioxin contamination of the Passaic River. The administration also notes that the Exxon deal does not absolve the company from cleaning up contamination at the sites.

What has happened so far: In the current year’s state budget, the Democratic-controlled Legislature inserted language to cap how much money from natural-resource claims could go to the general fund, but it was line-item vetoed by Christie.

The governor also vetoed a bill passed by the Democrats that would ensure half of the money from natural-resource claims would be used for restoration.

What happens next: In the Senate, a resolution (SCR-163) came out of committee that would ask voters in November to approve a constitutional amendment that would ensure all money from such claims would be used for environmental purposes. If passed by both houses, it would automatically go on this fall’s ballot, but that happening is uncertain. To get on the ballot, it must be approved by early August. It has yet to win approval from either the Assembly or the Senate, which typically break for the summer after reaching agreement on next year’s state budget, which begins July 1. The Senate, however, is planning a session in July.

Why some oppose a constitutional amendment dedicating money for specific purposes: Critics say it ties the hands of future lawmakers and administrations by diverting funds when dealing with budgets, especially in a state that has wrestled with huge shortfalls and deficits in recent years. This past year voters approved a constitutional amendment dedicating a portion of corporate business taxes to buy open space.

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NJ Spotlight, an independent online news service on issues critical to New Jersey, makes its in-depth reporting available to NewsWorks.