Exxon Mobil’s $225 Million Spill Pact Backed by N.J. Judge

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Chris Christie, governor of New Jersey.

Photographer: Drew Angerer/Bloomberg

New Jersey Governor Chris Christie won a judge’s approval of a $225 million settlement with Exxon Mobil Corp. to end litigation over decades-old pollution, an accord Democratic lawmakers and environmental groups call inadequate.

The deal is a “reasonable compromise,” a state judge ruled Tuesday, even though New Jersey sought damages of $8.9 billion to resolve a 2004 case over the company’s refinery and petrochemical plants in Bayonne and Linden. The accord is earmarked to pay for Exxon’s damage to natural resources.

Exxon and the Department of Environmental Protection settled the case in February before the judge could issue a ruling following an eight-month trial last year. The settlement sparked an outcry from activists who said the state sold out to corporate interests for 3 cents on the dollar. The DEP got more than 16,000 public comments on the deal, and most were negative.

Michael Hogan, a retired Superior Court judge who heard the case, said the deal was fair, in the public interest and faithful to the state’s Spill Compensation and Control Act. New Jersey will retain the right to pursue litigation against Exxon. The New Jersey Sierra Club vowed Tuesday to appeal Hogan’s approval of the settlement.

“The DEP applied rational methods in order to estimate total damages and determine what a fair payment would be for those damages,” Hogan ruled. “Although far smaller than the estimated $8.9 billion in damages, Exxon’s payment represents a reasonable compromise given the substantial litigation risks the DEP faced at trial and would face on appeal.”

Polluted Sites

The settlement also covers dozens of other polluted sites around the state and 1,768 retail gas stations.

By law, the state must use $50 million for site remediation. The state will also pay $50 million to a law firm that litigated for the DEP, and the rest could go in the general fund.

Hogan said he had no power over whether Exxon uses the settlement to lower its tax bill.

“Courts do not wade into the tax strategies of multi-national corporations and determine how much, if any, of settlement payments they are going to deduct from their New Jersey state taxes,” the judge wrote.

1,600 Acres

Exxon agreed in 1991 to clean up almost 1,600 acres on the site near New York Harbor, and has paid almost $258 million since then to do so, Hogan wrote in his 81-page opinion.

The litigation, which spanned four governors, included settlement talks that began in 2007, but the two sides remained far apart, Hogan wrote. Exxon offered $20 million in 2012, an amount it boosted to $100 million in the trial last year.

“An aggressive trial strategy is the only way to bring reluctant parties to the table, and the state employed this tactic with success,” Hogan wrote. “The February 2015 agreement was not made on a whim, but was the end product of lengthy negotiations and zealous advocacy at trial.”

Acting New Jersey Attorney General John Hoffman said the deal would ensure Exxon would continue remediation work at polluted sites.

Jeff Tittel, director of the New Jersey Sierra Club, slammed the decision as a “sellout” and promised an appeal.

“Instead of protecting the environment and the taxpayers, the Christie Administration wants to protect Exxon,” Tittel said in a statement.

The case is New Jersey Department of Environmental Protection v. Exxon Mobil, L-3026-04, Superior Court of New Jersey, Union County (Elizabeth).

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