NJ Appeals Court Affirms Approval of Controversial Spills Act Settlement


On February 12, the Appellate Division of the Superior Court of New Jersey issued its ruling in the case of the New Jersey Department of Environmental Protection v. Exxon Mobil Corporation. The appeals court affirmed the August 2015 ruling of the trial court which approved a broad settlement the parties reached on the very eve of trial, to resolve, for the time being, New Jersey Department of Environmental Protection’s (NJDEP) natural resource damages (NRD) claims against Exxon regarding its operations at the Bayway Refinery and the Bayonne facility, as well as one thousand Exxon retail gas stations in New Jersey.

Exxon agreed to pay $225 million to the state treasurer, and certain NRD claims were released. This followed the resolution of remedial, non-NRD issues that were the subject of 1991 Administrative Consent Orders between the NJDEP and Exxon affecting these facilities, which had then excluded any recovery for NRD.

In 2004, NJDEP filed two complaints against Exxon seeking NRD as well as claims under the Spill Compensation and Control Act (Spills Act), and various common law theories of public nuisance and trespass. NJDEP provided public notice of the proposed settlement, which became controversial; thousands of comments were filed and most of them objected to the settlement.

However, the trial court, after considering the evidence and the risks of litigation described by the parties, approved the settlement, deeming it to be “fair, reasonable, [and] faithful to the Spill Act’s goals, and in the public interest.” The trial court also rejected the applications of environmental groups and a state political figure to intervene, and this appeal followed.

The appeals court upheld most of the rulings of the trial court, including the approval of the settlement. However, it held that the environmental groups had standing to appeal the trial court’s rulings, but also determined that the trial court did not abuse its discretion in approving the settlement, which is one of the largest NRD settlements to date.