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New Jersey Department of Environmental Protection v. Exxon Mobil Corp.

Superior Court of New Jersey, Law Division, Union

April 27, 2018


          Richard F. Engel, Deputy Attorney General, for plaintiff (John J. Hoffman, Acting Attorney General, attorney). Allan Kanner, of the Louisiana bar, admitted pro hac vice, and Elizabeth B. Petersen, of the Louisiana bar, admitted pro hac vice, for plaintiff (Kanner & Whiteley, LLC, attorney).

          Marc A. Rollo, for defendant (Archer & Greiner PC, attorney). Theodore V. Wells, Jr., of the New York bar, admitted pro hac vice, for defendant (Paul, Weiss, Rifkind, Wharton & Garrison LLP, attorney).

          HOGAN, P.J. Ch., J.S.C.

         I. Introduction, Statement of Facts, and Procedural History

         "Nearly any consent decree can be viewed simultaneously as 'a crackdown or a sellout.'" United States v. Telluride Co., 849 F.Supp. 1400, 1402 (D. Colo. 1994) (quoting William A. Rodger, Jr., 2 Environmental Law: Air and Water, § 4.40 at 584 (1986)). This quote rings especially true for the settlement that this court has been tasked with reviewing. After eleven years of litigation, including a sixty-six day trial before this court, the New Jersey Department of Environmental Protection ("DEP, " "State, " or "Department") and ExxonMobil Corporation ("Exxon") have agreed to a consent judgment ("Proposed Consent Judgment" or "Consent Judgment") that resolves the State's claims for natural resource damages in New Jersey Department of Environmental Protection v. Exxon Mobil Corp., No. UNN-L-3026-04, consolidated with No. UNN-L-1650-05 ("Bayway/Bayonne Litigation"). The Consent Judgment also resolves (1) the State's pending claims in New Jersey Department of Environmental Protection v. Exxon Mobil Corp. f/k/a GATX Terminals Corp., No. L-1063-07, consolidated with No. L-0563-03; and (2) certain potential claims the DEP may have against Exxon at fifteen other facilities and 1768 retail gas stations.

         After giving considerable time and thought to its task, for the reasons stated in this opinion, the court finds that the proposed consent judgment is fair, reasonable, in the public interest, and consistent with the goals of the Spill Compensation and Control Act ("Spill Act"), N.J.S.A. 58:10-23.11 to -23.24. It therefore approves the Consent Judgment. The facts and procedural history have been set out in a number of previously issued opinions.[1] However, because an understanding of this case's facts and history is integral to understanding the court's approval of the Proposed Consent Judgment, the court provides its own Statement of Facts and Procedural History.

         I.A. Statement of Facts

         During the mid-1800s, the Constable Hook peninsula, which is located in the Upper New York Bay, was composed of salt marshes and intertidal wetlands. Farming was the main local occupation at this time, but by the 1870s, industry began to spring up.[2] One such operation was the Prentice Oil Company, which was established in 1875 and produced kerosene. It is this company that John D. Rockefeller, through his Standard Oil Company, [3] first set his sights on in establishing what would become the Bayonne Facility ("Bayonne") at issue in this case.[4]Although Prentice had only twenty employees when Standard Oil acquired it in 1877, Standard soon began to extensively modify the land, expand its holdings, and develop infrastructure for an oil refinery. For example, to eliminate the cost of shipping oil to the coast, in 1887 Standard finished constructing an oil pipeline that transported 10, 000 barrels of crude oil from the fields of Pennsylvania directly to Bayonne for processing. Outward expansion continued until the refinery hit its peak in 1936, at which time it employed 5000 workers and consisted of 650 acres. After this time, Standard began selling off tracts of land. Even though all refining and manufacturing had ceased by 1971, the site continued to function as a petroleum storage facility and wholesale distribution center. In 1993, Exxon sold approximately 210 acres of the site to International Matex Tank Terminals ("IMTT"), while still retaining ownership of a few acres.[5]

         At the turn of the twentieth century, the land that would eventually become the Linden Bayway Refinery ("Bayway") was similarly composed of marshes and wetlands.[6] Although farming used to be the main occupation, by the time Standard Oil began acquiring land in 1907, the area was beginning to industrially develop. For instance, the Pennsylvania and Short Line Railroads of Monopoly fame cut across the area. After Standard first acquired land at Bayway, it began constructing refinery infrastructure and did not begin producing petroleum products until 1909. Over the course of the 1900s, Exxon continued to expand operations, refine crude oil, and manufacture chemicals until December 1992, when it sold the site to the Bayway Refining Company, a wholly-owned subsidiary of the Tosco Corporation. Tosco ultimately sold the site to Conoco, which in turn sold it to Phillips 66. Currently, Bayway is owned by both Phillips 66 and Infineum, although several other companies have easements and leaseholds.

         During the course of Exxon's ownership and operation of the two sites, large amounts of hazardous substances, [7] including petroleum products, were discharged into the lands and waters at and near the sites. To address the cleanup of this chronic contamination, the State and Exxon voluntarily entered into two Administrative Consent Orders ("ACOs") on December 19, 1991. Although Exxon denied any statutory or regulatory violation, they agreed to pay a civil penalty of $1, 500, 000 for Bayway and $1, 350, 000 for Bayonne. In order to "determine the nature and extent of the problems presented by the discharges of hazardous substances and pollutants at the Site[s], " Exxon and the Department agreed on the necessity to conduct a remedial investigation and feasibility study of remedial action alternatives. They also agreed "to develop and implement a plan for remedial action to remove or remediate the hazardous substances and pollutants from the Site[s]." Through December 31, 2014, Exxon has spent $136, 101, 470 in remediation-related costs for Bayway and $121, 616, 000 in remediation-related costs for Bayonne. Importantly, both ACOs contained a "Reservation of Rights" section that stated, "This Administrative Consent Order shall not be construed to affect or waive the claims of federal or State natural resources trustees against any party for damages for injury to, destruction of, or loss of natural resources. "

         I.B. Procedural History

         On August 19, 2004, the DEP elected to exercise this reserved right and filed two complaints against Exxon for alleged injuries to natural resources at Bayway and Bayonne.[8]The complaints brought statutory Spill Act claims, as well as common law public nuisance and trespass claims, for alleged injuries to groundwater, surface water, and ecological resources. On October 7, 2004, Exxon attempted to remove the case to the United States District Court for the District of New Jersey. This attempt was unsuccessful, and the matter was remanded back to the Superior Court by a March 24, 2005, order. Pursuant to a January 11, 2006, case management order, Judge Ross Anzaldi, the motion judge at the time, bifurcated the case between the State's Property Claims and Surface Water Claims.[9]

         On the same date, the DEP moved for partial summary judgment, seeking a determination that Exxon was strictly liable as a matter of law for all cleanup and removal costs under the Spill Act, including the restoration of natural resources. Exxon cross-moved for summary judgment on the ground that the Spill Act does not provide liability for "loss of use" of natural resources. On May 26, 2006, Judge Anzaldi granted both motions in part, holding that Exxon was strictly liable under the Spill Act for natural resource damages ("NRD"), including restoration, but dismissing the DEP's Spill Act claims for loss of use damages. N.J. Dep't of Envtl. Prot. v. Exxon Mobil Corp., 393 N.J.Super. 388');">393 N.J.Super. 388, 397-98 (App. Div. 2007) (hereinafter "Exxon I"). Although Exxon elected not to appeal the strict liability ruling, the DEP sought an interlocutory appeal on the loss of use issue. Id. at 398. After examining the Spill Act's language, intent, and recent amendments, the Appellate Division reversed and held that loss of use damages "are a component of costs of mitigating damage to public natural resources." Id. at 402.

         While this appeal was pending, on November 3, 2006, the State's natural resource damage assessment ("NRDA") expert, Stratus Consulting, issued its damages report. At Bayway, the report identified 1252 acres of intertidal wetland, palustrine meadow/forest ("palustrine meadow"), and upland forest/meadow ("upland meadow") habitats that were contaminated. At Bayonne, the report identified 475.7 acres of contaminated habitats. Stratus quantified these damages at $8.9 billion, $2.5 billion for on-site "primary restoration" and $6.4 billion for off-site "compensatory restoration."[10]

         After the Appellate Division decided Exxon I in the State's favor, the DEP moved to amend its complaints to include common law strict liability counts. N.J. Dep't of Envtl. Prot. v. Exxon Mobil Corp., 420 N.J.Super. 395, 398 (App. Piv. 2011) (hereinafter "Exxon II"). Exxon then moved for partial summary judgment, seeking to dismiss the strict liability counts on the theory that the statute of limitations had run and that the extension statute, N.J.S.A. 58:10B-17.1, did not apply.[11] Ibid. On July 23, 2009, Judge Anzaldi ruled in Exxon's favor and dismissed the DEP's common law strict liability counts. Id. at 401. On May 31, 2011, the Appellate Division reversed and held that the statute of limitations did not bar the common law strict liability counts because the common law could be considered part of the State's environmental laws, which have been legislatively granted an extension on their statute of limitations.[12] Id. at 411.

         During 2009, Judge Anzaldi also made three key rulings, none of which were appealed by the losing party. First, on January 22, 2009, he ruled that the Spill Act applies retroactively for natural resource damages that occurred before 1977, the year the Act came into effect. N.J. Dep't of Envtl. Prot. v. Exxon Mobil Corp., No. UNN-L-3026-04 (Law Piv. Jan. 22, 2009) (slip op. at 5) (hereinafter "Retroactivity Ruling"). Second, on June 5, 2009, he granted Exxon's "physical modification" motion. This ruling dismissed "the PEP's claims, under the Spill Act and the common law, for damages for injuries to natural resources of the State on the Bayway and Bayonne sites that are the result of physical modifications to the Bayway and Bayonne sites." N.J. Dep't of Envtl. Prot. v. Exxon Mobil Corp., No. UNN-L-3026-04 (Law Piv. June 5, 2009) (slip op. at 1) (hereinafter "Physical Modification Ruling"). Finally, in his July 24, 2009, Public Trust Ruling, he held that "[a]ny lands which are contaminated as a result of actions by Exxon or its predecessors could be subject to damages under the Spill Act." N.J. Dep't of Envtl. Prot. v. Exxon Mobil Corp., No. UNN-L-3026-04 (Law Piv. July 24, 2009) (slip op. at 4) (hereinafter "Public Trust Ruling"). With these rulings decided, and settlement negotiations unable to bear fruit, the parties prepared for trial, which was to begin January 2014.[13]

         I.C. The Parties' Experts and the Trial

         Each side assembled a host of expert witnesses for what was agreed to be the "battle of experts" that was to unfold over the coming months. The only thing matching the number of each side's expert witnesses was the number of "Rule 104 Motions"[14]that the opposing side filed in an attempt to exclude the opposing witnesses: the State retained eight experts, seven of which Exxon sought to exclude with Rule 104 Motions; Exxon sought to introduce six experts, and the State countered with six Rule 104 Motions. Such hearings are normally held before the expert testifies and outside the presence of the jury so that the jury will not hear inadmissible testimony if the judge ultimately excludes the expert. In the interest of judicial economy, because the present case was to be a bench trial expected to last many months, the court and the parties agreed to allow all experts to testify at trial. The parties agreed that post-trial, the court would then decide the pending Rule 104 Motions. Further, it was agreed that the court would not consider the testimony of excluded experts in forming its opinion.

         The court intended to release its Rule 104 decisions as part of its opinion. Due to the settlement of this case, that opinion, and thus the Rule 104 rulings that it contains, has not been released. However, a brief discussion of each side's experts is warranted in order to understand this court's approval of the Proposed Consent Judgment.

         The State proffered Dr. Joshua Lipton and Dr. Eldon Blancher II of the aforementioned Stratus Consulting, their central witnesses, as experts in the fields of (1) natural resource damage assessment; (2) environmental toxicology and chemistry; (3) ecology; and (4) environmental science. The State retained Lipton to determine the extent of natural resource injury to the Bayway and Bayonne sites and to quantify the value of any allegedly lost resources or services. Although Blancher did not testify at trial, he collaborated with Lipton to produce the combined expert report on injury and damages at the sites (the "Stratus Report"). As mentioned above, Lipton testified that this Report quantified primary restoration damages at $2.5 billion and compensatory restoration damages at $6.4 billion. To arrive at this $6.4 billion figure, Lipton employed a Habitat Equivalency Analysis ("HEA"), a complex, mathematical methodology. Lipton's HEA required a number of inputs, which Exxon contested, for the formula to reach its ultimate output: the $6.4 billion figure. Some of these inputs were allegedly within Lipton's area of expertise, such as (1) the number of injured acres of certain habitats; (2) the per-acre cost to restore allegedly injured intertidal, subtidal, and palustrine meadow habitats; (3) the alleged start dates for the accrual of damages; (4) how long it would take to implement restoration; (5) the end date for the benefits of restoration; (6) the base year by which to measure the value of a dollar; and (7) the proper discount rate. For two other key inputs, the State needed to retain other witnesses.

         The first of these was Dr. Emily Southgate, who opined on the condition of Bayonne and Bayway prior to Standard Oil's arrival. The State sought to have her qualified as an expert in the field of historical ecology. Her testimony was critical to the State's case for two reasons. First, her opinion on the sites' condition before Standard Oil's arrival was important because the Appellate Division has held that the Spill Act "requires the return of natural resources to their pre-discharge condition." Exxon I, 393 N.J. Super, at 405-06. Secondly, the sites' condition was important because one of the inputs to Lipton's HEA was the habitat condition prior to the accrual of damages, i.e. the first discharge.

         The second of these expert witnesses was Robert Williams, a proffered expert in the fields of forestry, forest reforestation, and forest restoration cost estimation. The State retained Williams to estimate the cost of restoring an uplands meadow as part of their overall restoration plan. Williams' estimate was key to determining the per-acre uplands meadow restoration cost input for the HEA.

         In support of its claim for on-site primary restoration at Bayway and Bayonne, the State retained Randy Horsak, head of the consulting firm 3TM, and sought to have him qualified in the fields of environmental engineering and engineering cost estimation. Horsak's charge was to give cost estimates of the State's proposed wetlands restoration project and overall cost for primary restoration at Bayway and Bayonne. The State also sought to introduce Ronald Ostermiller, a purported expert in the fields of engineering, project development, conceptual design, and cost estimation. He testified to support the State's assertion that its primary restoration plan was practicable, as required under the Spill Act. N.J.S.A. 58:10-23.11u(b)(4).

         The State's final two witnesses were John Sacco, current head of the Office of Natural Resources Restoration, and Dr. Robert Morrison, a chemist. The State offered Sacco as an expert in the fields of (1) environmental management, including restoration projects; (2) environmental science with emphasis on coastal ecosystems and restoration; (3) applied ecology; (4) natural resource damage assessment practice in New Jersey; and (5) New Jersey trust resources. Morrison was retained to review Exxon's soil sampling results from Bayway and Bayonne and develop a database of chemicals detected in the soils and sediments. Although Exxon did not seek to exclude Morrison's opinions on Rule 104 grounds, it retained its own chemist, who sought to undercut these opinions.[15]

         This expert was Dr. Paul Boehm, whom Exxon proffered in the fields of (1) environmental organic chemistry; (2) environmental forensics; (3) environmental assessment and chemistry; and (4) fate and transport of chemicals. Exxon retained Boehm (1) to review Lipton's and Morrison's reports, to understand the methodologies that they used, and to determine whether those were generally accepted methodologies; and (2) to analyze the chemical background information in the Bayonne and Bayway areas. In a further effort to undermine Lipton's and Morrison's testimony, Exxon retained Dr. Thomas Ginn, whom they proffered as an expert in the fields of (1) ecotoxicology; (2) ecology; (3) natural resource damage assessments; (4) habitat equivalency analysis; (5) environmental risk assessment; and (6) resource equivalency analysis. Exxon retained him to (1) review the State's expert reports and give opinions on them; (2) evaluate the ecological conditions at Bayway and Bayonne; and (3) provide his own opinions concerning the injuries to natural resources at the sites. As another critique of not only the Stratus Report, but also Horsak's 3TM Report, Exxon retained Dr. John Rodgers and proffered him as an expert in the fields of (1) wetlands; (2) construction and restoration of wetlands; (3) estimating costs of wetland construction and restoration; (4) ecotoxicology; and (5) environmental toxicology.

         These three proffered experts collaborated with Dr. William Desvousges, who was to be Exxon's counterpart to Lipton. Exxon offered him as an expert in the fields of economics and natural resource damage assessments and the subfield of natural resource economics. Exxon retained Desvousges to (1) provide an objective assessment of potential economic losses associated with Bayway and Bayonne; and (2) evaluate the expert reports of the State's witnesses. In addition to pointing out alleged flaws in Lipton's NRDA and HEA, Desvousges, along with Boehm, Ginn, and Rodgers, formulated his own HEA, which estimated damages as being between $1.4 million and $3 million.

         Exxon proffered Dr. Maury Klein as an expert in the field of history and retained him to discuss (1) the value of wetlands and how this value has changed over time; (2) the benefits New Jersey received from the Bayonne and Bayway refineries; and (3) the role these refineries played in World War II ("WWII"). By showing how the value of wetlands has changed over time, Exxon sought to discredit Lipton's HEA. They argued that for a HEA to reliably function, a key assumption was that the value of the natural resource must not change over time. As for the alleged refinery benefits and refineries' role during WWII, Exxon sought to argue that they deserved a credit for these benefits and that the State could not recover damages during the War years under the Spill Act's "Act of War" affirmative defense. N.J.S.A. 58:10-23.llg(d) (1) .

         Last was Dr. Tod Delaney, whom Exxon offered as an expert in the fields of engineering and site investigations. Exxon retained Delaney to examine the Bayway and Bayonne site development from the commencement of infrastructure construction until the late 1970s. With his testimony, Exxon sought to show that, pursuant to Judge Anzaldi's Physical Modification Ruling, all or most of the State's alleged natural resource damages were not due to the discharge of hazardous substances, but rather lawful industrial modifications. See N.J.S.A. 58:10-23.lib (defining "discharge" as "any intentional or unintentional action or omission resulting in the releasing, spilling, leaking, pumping, pouring, emitting, emptying or dumping of hazardous substances into the waters or onto the lands of the State, or into waters outside the jurisdiction of the State when damage may result to the lands, waters or natural resources within the jurisdiction of the State").

         From January to September 2014, this court heard sixty-six days of trial, which included expert opinion testimony, factual lay testimony, and two days for closing arguments. At the end of trial, the court set off to begin work on its written opinion, which it estimated would not be ready until Spring 2015. In November 2014, the parties submitted their extensive post-trial briefs, which maintained the same positions they asserted at trial. Then, in February 2015, a letter from the parties arrived notifying the court that they were on the cusp of reaching a settlement. On February 20, 2015, they notified the court that an agreement had been struck.

         II. The Proposed Consent Judgment

         Under the terms of the Proposed Consent Judgment, Exxon agrees to pay the state "$225 million by certified check made payable to 'Treasurer, State of New Jersey, ' or by wire transfer pursuant to instructions provided by the [State]." The State shall place that money into a segregated account within the Hazardous Discharge Site Cleanup Fund, where it will earn interest and shall not be used by the State for any purpose, until the Consent Judgment becomes final and non-appealable. In return, the State (1) releases with prejudice and covenants not to sue Exxon for all claims that it asserted or could have asserted in the Bayway/Bayonne Litigation; (2) dismisses the Surface Water Claims without prejudice and agrees that the Surface Water Claims can only be brought in the future in a multi-defendant action if a formal natural resource damage assessment is completed by the applicable trustee through a procedure that allows for Exxon's participation; (3) releases with prejudice and covenants not to sue Exxon for all NRD relating to Exxon Retail Stations (the "Retail Gas Stations") located within the state (this excludes any claims involving an Exxon Retail Station where methyl tertiary butyl ether ("MTBE") has been discharged); (4) releases and covenants not to sue Exxon for all NRD relating to sixteen facilities listed in Attachment C (the "Attachment C Facilities"), excluding any claims involving any facility listed on Attachment C where MTBE has been discharged (one of these facilities is the Former Paulsboro Terminal #3045 that has been the subject of ongoing litigation in Gloucester County, New Jersey Department of Environmental Protection v. Exxon Mobil Corp. f/k/a GATX Terminals Corp., No. L-1063-07 consolidated with No. L-0563-03 ("Paulsboro Litigation");[16] and (5) agrees to defer the final determination and remediation for Morses Creek until the cessation of refining operations at the [Bayway] site, which will be when operational conditions at [Bayway] no longer require the regular discharge into Morses Creek of 30 million gallons per day or more of once-through non-contact cooling water pursuant to NJPDES Permit No.NJ0001511 (or as renewed/reissued) .

         Further, the parties agree that (1) each party shall bear its own costs and expenses in the Bayway/Bayonne Litigation and Paulsboro Litigation; (2) the Proposed Consent Judgment will not alter, suspend, or otherwise impact Exxon's obligations under any ACOs, with the exception of the Morses Creek deferral;[17] (3) the State shall retain full authority and sole discretion to require Exxon to take any action to "address an immediate environmental concern, an imminent and substantial endangerment to public health, welfare or the environment, or an emergency response arising from or related to the Bayonne Facility, the Bayway Facility, any of the ExxonMobil Retail Stations, and any of the sites listed in Attachment C"; and (4) Exxon will not "sue or assert any claim or cause of action against the State concerning the Matters Addressed."

         The agreement also states that "[n]othing contained in this Consent Judgment shall be considered an admission by [Exxon] . . . of any wrongdoing or liability on [its] part, " and it grants Exxon contribution protection "to the fullest extent possible pursuant to Section 113(f)(2) of [the Comprehensive Environmental Response, Compensation, and Liability Act] CERCLA, 42 U.S.C. §§ 9613(f)(2), the Spill Act, N.J.S.A. 58:10- 23.11f(a)(2)(b) and any other statute, regulation, or common law principle that provides contribution rights against ExxonMobil . . . ." Finally, the agreement contains a non-severability clause that states:

All Sections, Paragraphs and provisions of the Consent Judgment (except headings and section titles) are integral to the Consent Judgment, and any Court Order that does not approve this Consent Judgment in its entirety or attempts to modify this Consent Judgment, except as to ministerial changes, shall cause this Consent Judgment to be void and of no effect, unless otherwise agreed in writing by the Parties.

         In accordance with N.J.S.A. 58:10-23.Ile2, the State published a copy of the Proposed Consent Judgment on the DEP's website, published notice in the New Jersey Register, and arranged for notice in twelve newspapers. Details of the settlement were made public April 6, 2015. The settlement immediately received extensive public backlash and has since been the topic of a number of media sources. Although the DEP usually gives the public thirty days to comment on any proposed settlement, due to the heightened public interest, it extended the time period prescribed in N.J.S.A. 58:10-23.Ile2 to sixty days. This Public Comment Period ended June 5, 2015, by which time the DEP had received 16, 013 public comments ("Public Comments" or "Public Commenters"), the vast majority of which were opposed to the settlement. The purpose of soliciting these comments is twofold. First, in any settlement under the Spill Act, the DEP reviews the comments before it decides to make a formal application for approval of a settlement. Second, the court ultimately charged with approving a settlement can review the comments for assistance in determining if the settlement is fair, reasonable, and in the public interest.[18]

         On June 9, 2015, the New York/New Jersey Baykeeper, New Jersey Sierra Club, Clean Water Action, Delaware Riverkeeper, Delaware Riverkeeper Network, Environment New Jersey, Natural Resources Defense Council, and New Jersey Audubon (the "Environmental Groups") collectively filed a motion to intervene as of right under Rule 4:33-1 or, alternatively, for permissive intervention under Rule 4:33-2. On June 19, 2015, New Jersey State Senator Raymond Lesniak, individually and as a member of the New Jersey State Senate for the 20th Legislative District (Union), filed motions seeking intervention under the same court rules. The Environmental Groups and Senator Lesniak opposed the Proposed Consent Judgment and sought to intervene so that they could (1) brief and orally argue against the Consent Judgment; and (2) have a right of appeal should the court approve it.

         On July 13, 2015, the court denied these motions without prejudice. N.J. Dep't of Envtl. Prot. v. Exxon Mobil Corp., No. UNN-L-3026-04 (Law Piv. July 13, 2015) (slip op. at 32) (hereinafter "Exxon III") .[19] The court invited the movants to apply for amicus status, something that both the State and Exxon had indicated they would not oppose. Although the court initially intended to hold oral argument on the Consent Judgment July 21, 2015, it delayed the hearing for nine days in order to give the Environmental Groups and Senator Lesniak (collectively "Amici") time to apply for amicus status and submit amicus briefs.

         Less than three days before this hearing was to occur, on July 27, 2015, the Environmental Groups, through counsel, notified the court that they were appealing Exxon III and filed a motion with the court requesting a stay. On July 30, 2015, after hearing oral argument on the stay request, the court denied the request. N.J. Dep't of Envtl. Prot. v. Exxon Mobil Corp., No. UNN-L-3026-04 (Law Piv. July 13, 2015) (slip op. at 12). That same day, the court heard oral argument on the Proposed Consent Judgment. Urging approval were Acting Attorney General John Hoffman, the State's special counsel, and counsel for Exxon. Amici urged the court to deny the Consent Judgment. At the time this court released this opinion, the Appellate Division had not yet ruled on the Environmental Groups' motion for leave to appeal.

         III. Standard of Review and Application of that Standard to the Proposed Consent Judgment

         In certain respects, this is a case of first impression for New Jersey state courts, which have never adopted a Spill Act consent judgment review standard. When reviewing Spill Act settlements, federal courts apply the same standard to these settlements that they apply to federal CERCLA settlements. See, e.g., N.J. Dep't of Envtl. Prot. v. Atl. Richfield Co. (In re Methyl Tertiary Butyl Ether "MTBE" Prods. Liab. Litig.), 33 F.Supp.3d 259, 264 (S.D.N.Y. 2014) (citing Reichhold, Inc. v. U.S. Metals Ref. Co., 655 F.Supp.2d 400, 444 (D.N.J. 2009); N.J. Dep't of Envtl. Prot. v. Gloucester Envtl. Mgmt. Servs., Inc., 821 F.Supp. 999, 1009 (D.N.J. 1993)). Under this standard, courts review consent decrees to ensure they are fair, reasonable, consistent with CERCLA's goals, and in the public interest.[20] Additionally, the DEP, Exxon, and Amici all agree that the court should apply this standard. Despite this general consensus, the Spill Act does not mandate a specific settlement review standard, [21] and this court is aware of no New Jersey state court that has adopted any specific standard. Indeed, neither the parties nor Amici have pointed to any such case. For the reasons stated below, however, the court will adopt this standard: Spill Act consent judgments, whether approved judicially or administratively, should be fair, reasonable, faithful to the objectives of the Spill Act, and in the public interest.

         This section proceeds by first discussing a court's role in reviewing a CERCLA settlement. It then explains why the federal standard is harmonious with New Jersey general settlement caselaw. This section will then conclude with a number of subsections that explain why the Proposed Consent Judgment is (1) procedurally fair; (2) substantively fair; (3) reasonable; and (4) consistent with the Spill Act's intent and goals. Section IV will then address specific objections to the Proposed Consent Judgment and explain why it is in the public interest.

         The policy of the law to encourage settlements has particular force where "a government actor committed to the protection of the public interest has pulled the laboring oar in constructing the proposed settlement." Cannons, 899 F.2d at 84 (citing F.T.C. v. Standard Fin. Mgmt. Corp., 830 F.2d 404, 408 (1st Cir. 1987)). Although judicial deference is warranted in these situations, "the true measure of the deference due depends on the persuasive power of the agency's proposal and rationale, given whatever practical considerations may impinge and the full panoply of the attendant circumstances." Ibid, (quoting Standard Fin., 830 F.2d at 408). "Respect for the agency's role is heightened in a situation where the cards have been dealt face up and a crew of sophisticated players, with sharply conflicting interests, sit at the table." Ibid.

         In such situations, "the district court must refrain from second-guessing the Executive Branch, " as the standard "is not whether the settlement is one which the court itself might have fashioned, or considers ideal, but whether the proposed decree is fair, reasonable, and faithful to the objectives of the governing statute." Ibid, (emphasis added) (citing Durrett v. Housing Auth., 896 F.2d 600, 604 (1st Cir. 1990)); see also United States v. Charles George Trucking, 34 F.3d 1081, 1085 (1stCir. 1994) ("[A] trial court, without abdicating its responsibility to exercise independent judgment, must defer heavily to the parties' agreement and the EPA's expertise."); Arizona ex rel. Woods v. Nucor Corp., 825 F.Supp. 1452, 1456 (D. Ariz. 1992) ("Thus, the court will not conduct a de novo review of the merits of the proposed settlement, but neither will it 'mechanistically rubberstamp' the Agreement." (quoting Cannons, 899 F.2d at 84)); In re Acushnet River & New Bedford Harbor, 712 F.Supp. 1019, 1032 (D. Mass. 1989) (stating that courts are "not required to ensure that the sovereigns have struck the best deal possible"). This is so due to "congressional intent concerning the role of agency expertise, " and because the "federal courts have neither the time nor the expertise to do so, and CERCLA has properly left the scientific decisions regarding toxic substance cleanup to the President's delegate, the EPA administrator and his staff." United States v. Akzo Coatings of Am., 949 F.2d 1409, 1424 (6th Cir. 1991) . While giving proper deference, courts are to "ensure that the agency has considered all the relevant evidence in the record and has acted within the public interest." Id. at 1426; see also Plaskett v. Esso Standard Oil S.A. (In re Tutu Water Wells CERCLA Litig.), 326 F.3d 201, 207 (3d Cir. 2003) ("Where the appropriate agency has reviewed the record and has made a reasonable determination of fault and damages, that determination is owed some deference."). "Protection of the public interest is the key consideration in assessing whether a decree is fair, reasonable and adequate." Akzo, 949 F.2d at 1435 (citing Acushnet River, 712 F.Supp. at 1028; United States v. Ketchikan Pulp Co., 430 F.Supp. 83, 86 (D. Ala. 1977)); see also United States v. Kramer, 19 F.Supp.2d 273, 280 (D.N.J. 1998) (stating that Congress intended federal courts to take "into account the interests of the public at large, the settling parties and the non-settlers alike").

         The fairness and reasonableness of a consent decree are "pragmatic concepts, and evaluating them requires common sense, practical wisdom, and a dispassionate assessment of the attendant circumstances." Charles George, 34 F.3d at 1085. This court finds that pragmatic evaluation does not require "mathematical exactitude" or "precise calculations." This is due to the reality that "[i]n settlement negotiations, particularly in the early phases of litigation, precise data relevant to determining the total extent of harm caused and the role of each PRP is often unavailable." Cannons, 899 F.2d at 88 (citing Superfund Settlements with De Minimis Waste Contributors: An Analysis of Key Issues by the Superfund Settlements Project, May 8, 1987, Vol. XIV Chem. Waste Lit. Rptr. 34, 46 (June 1987));[22] see also Charles George, 34 F.3d at 1088 ("[A] muddled record is the norm in most CERCLA litigation."). Courts do not "leave matters in limbo until more precise information is amassed" because to do so "would disserve a principal end of the statute -- achievement of prompt settlement and a concomitant head start on response activities . . . ." Cannons, 899 F.2d at 88. As long as the data "falls along the broad spectrum of plausible approximations, judicial intrusion is unwarranted . . . ." Ibid, (citing United States v. Rohm & Haas, 721 F.Supp. 666, 685-86 (D.N.J. 1989)). Courts must "compare the proportion of total projected costs to be paid by the settlors with the proportion of liability attributable to them, and then factor into the equation any reasonable discounts for litigation risks, time savings, and the like that may be justified." United States v. Montrose Chem. Corp., 50 F.3d 741, 747 (9th Cir. 1995) (citing Charles George, 34 F.3d at 1087), [23] A final consideration is that although it is "self-evident that generally defendants do not settle litigation for the full value of the asserted damages . . . . [I]n the general run of CERCLA cases . . . defendants will generally settle for substantially less -- indeed, often for far less given the inherent problems of proof in these cases -- than the asserted damages." Acushnet River, 712 F.Supp. at 1032 (emphasis added).

         Although the court's task is "quite limited, " Rohm & Haas, 721 F.Supp. at 685, the standard is not without teeth. Courts should deny proposed consent decrees if they do not have "at least an estimate of the projected total natural resource damages at issue in th[e] case." Montrose, 50 F.3d at 743 (rejecting a proposed consent decree because the government's preliminary damage estimate was known only to the Special Master and not the district court judge). This estimate is necessary so that courts have some benchmark with which to compare proposed consent decrees. Id. at 746. Once they have this information, courts must "actually engage with [it] and explain in a reasoned disposition why the evidence indicates that the consent decrees" meet CERCLA's standard. Arizona v. City of Tucson, 761 F.3d 1005, 1012 (9th Cir. 2014) (rejecting a proposed consent decree because, inter alia, the district court's "entire numerical analysis [was] found in a single footnote" and its "opinion even fail[ed] to mention the parties' individual and aggregate settlement amounts"). Importantly, courts must remember that deference "does not mean turning a blind eye to an empty record on a critical aspect of settlement evaluation." Montrose, 50 F.3d at 748.[24]

         Although this standard may seem amorphous, as this opinion will show, fairness and reasonableness "have more than a superficial meaning." Telluride, 849 F.Supp. at 1402. In many ways, fairness concerns the interactions among parties (settlers, non-settlers, and trustees) and the methods trustees use to (1) calculate total damages; (2) apportion liability; and (3) calculate the amount each settler pays. Public interest and consistency with the governing statute concern whether the settlement is an appropriate mechanism for accomplishing environmental cleanup. Reasonableness links fairness with these two concepts by comparing the total recovery with the total damages estimate. Under this prong, courts examine whether the settlement amount appropriately reflects litigation risks and is a large enough sum to further the statute's goals and the public interest.

         The court's review of the relevant New Jersey caselaw concerning settlements shows that New Jersey courts generally review settlements to ensure fairness, reasonableness, consistency with the governing statute, and public interest, the same assurances federal courts look for when reviewing CERCLA consent decrees. For instance, when reviewing DEP settlements under the Freshwater Wetlands Protection Act ("FWPA"), N.J.S.A. 13:9B-1 to -30, New Jersey courts ensure that settlements are not "unreasonable or inconsistent with the policies underlying the FWPA." Ocean Cty. Chapter Inc. of Izaak Walton League of Am. v. N.J. Dep't of Envtl. Prot., 303 N.J.Super. 1, 11 (App. Div. 1997). Under Ocean County, courts are also to establish that "the procedures which the DEP follow[s] in entering into the settlement . . . [are not] unfair, " id. at 12, and can approve a settlement with less than a full record, just as under CERCLA. Compare id. at 9 ("We also conclude that appellant failed to show . . . that there is a need for a remand to develop a complete record supporting the settlement."), with Cannons, 899 F.2d at 88 ("Yet, it would disserve a principal end of the statute -- achievement of prompt settlement and a concomitant head start on response activities -- to leave matters in limbo until more precise information is amassed.").

         Furthermore, when reviewing Mount Laurel settlements, [25] courts make sure they are "fair and reasonable" and "adequately protect[] the interests of the persons on whose behalf the action was brought." Morris Cty. Fair Hous. Council v. Boonton Twp., 197 N.J.Super. 359, 370 (App. Div. 1984) (citing Armstrong v. Milwaukee Bd. of Sch. Dirs., 616 F.2d 305, 314-15 (7th Cir. 1980); Cotton v. Hinton, 559 F.2d 1326, 1330 (5th Cir. 1977)), [26] This standard of review is appropriate because it allows for enough deference to balance New Jersey's strong public policy favoring settlements, Nolan v. Lee Ho, 120 N.J. 465, 472 (1990); Ocean Cty., 303 N.J. Super, at 10, with the need to protect settling parties and the public interest. Additionally, this standard recognizes that like the EPA, the DEP has been charged by the Legislature with the duty of "facilitat[ing] and coordinat[ing] activities and functions designed to clean up contaminated sites in the State." N.J.S.A. 58:10-23.11a; see also In re Stream Encroachment Permit, Permit No. 0200-04-0002.1 FHA, 402 N.J.Super. 587, 596 (App. Div. 2008) ("The NJDEP is authorized to 'formulate comprehensive policies for the conservation of the natural resources of the State, the promotion of environmental protection and the prevention of pollution of the environment of the State.'" (citing N.J.S.A. 13:1D-9)).

         Despite their general agreement that the court should apply the CERCLA standard, [27] at times, the DEP and Exxon have urged this court to apply even more deferential standards. For instance, the DEP has argued that:

The Spill Act was enacted before CERCLA, against a state law backdrop in which New Jersey courts long have been instructed to uphold governmental lawsuit settlements "absent clear and convincing evidence of fraud or other compelling circumstances." Ocean Cty. Chapter Inc. v. N.J. Dep't of Envtl. Prot., 303 N.J.Super. 1, 12 (App. Div. 1997). The Legislature never indicated, either upon enactment of, or any amendment to, the Spill Act, that a more probing review applies to Spill Act settlements.

         This is not an inaccurate assertion, but it comes from Ocean County, the same case that held that FWPA settlements must be fair, reasonable, and consistent with the policies underlying the FWPA. The court finds that the DEP's "fraud" argument is best understood as a component of a settlement's "fairness, " for if settlement negotiations are premised on fraud, they cannot be considered fair.

         Likewise, Exxon has argued that, "The Spill Act does not, however, expressly provide the standard for such judicial approval, and there is no New Jersey caselaw squarely on point. New Jersey law nonetheless sets forth a clear standard for the review of agency action pursuant to statutory mandate." Exxon asserts that "agency decisions 'will generally be upheld so long as they advance the agency's purpose and function, '" and that courts "may reverse an agency decision if it is arbitrary, capricious, or unreasonable." Further, they contend that agency decisions should only be disturbed if they are "patently corrupt, arbitrary or illegal."

         Again, these considerations have their place in the standard, but they are not the be-all and end-all for Spill Act settlements. Although Exxon is correct that DEP decisions will only be reversed if they are "arbitrary, capricious, or unreasonable, " In re Stream Encroachment Permit, 402 N.J. Super, at 597 (citations omitted), the DEP has "no superior ability to resolve purely legal questions, " such as whether the Proposed Consent Judgment is fair, reasonable, and in the public interest. Greenwood v. State Police Training Ctr., 127 N.J. 500, 513 (1992) (emphasis added) . When reviewing CERCLA settlements, federal courts, however, apply the arbitrary and capricious standard to a number of settlement components and trustee decisions made in order to formulate these components. Federal trustee decisions that are reviewed under the arbitrary and capricious standard include (1) estimation of total damages, In re MTBE, 33 F.Supp.3d at 265; (2) the chosen measure of comparative fault and apportionment of liability, Cannons, 899 F.2d at 87; and (3) the chosen method of determining the total projected costs to be paid by each settler. In re MTBE, 33 F.Supp.3d at 268-70. In other words, the inputs (trustees' calculations and methods) used to produce the final consent decree are reviewed under arbitrary and capricious, while the output (the consent decree itself) is reviewed for fairness, reasonableness, faithfulness to the objectives of the governing statute, and public interest.

         In conclusion, the court finds that CERCLA's settlement review standard is harmonious with general New Jersey settlement law. It therefore adopts this standard for Spill Act settlements. In the following subsections, the court will review the Proposed Consent Judgment for fairness, reasonableness, consistency with the Spill Act's objectives and intent, and public interest. During its review, when the court encounters technical decisions made by the DEP, it reviews them under the arbitrary and capricious standard.

         Ill. A. Fairness

         III. A. l Procedural Fairness

         "[F]airness in the CERCLA settlement context has both procedural and substantive components." Cannons, 899 F.2d at 86 (citing United States v. Cannons Eng'g Corp., 720 F. Supp. 1027, 1039-40 (D. Mass. 1989)). "To measure procedural fairness, a court should ordinarily look to the negotiation process and attempt to gauge its candor, openness, and bargaining balance." Ibid, (citing Cannons, 720 F.Supp. at 1040; Rohm & Haas, 721 F.Supp. at 680-81; Kelley v. Thomas Solvent Co., 717 F.Supp. 507, 517-18 (W.D. Mich. 1989); Acushnet River, 712 F.Supp. at 1031; City of New York v. Exxon Corp., 697 F.Supp. 677, 693 (S.D.N.Y. 1988); New York v. Town of Oyster Bay, 696 F.Supp. 841, 844-45 (E.D.N.Y. 1988); United States v. Hooker Chems. & Plastics Corp., 540 F.Supp. 1067, 1080 (W.D.N.Y. 1982)). Negotiations must be "conducted at arm's length, " Tutu Water Wells, 326 F.3d at 206, and the parties must act "forthrightly and in good faith." Cannons, 899 F.2d at 86.

         In determining whether the government entered into the decree in good faith, courts examine the "willingness of [the trustee] to thoroughly consider all oral and written comments made with regard to the proposed decree." Akzo, 949 F.2d at 1435. When governments supply the court and commenters with additional technical information, this is evidence of good faith and fairness. See Nucor Corp., 825 F.Supp. at 1459 (discussing substantive fairness). On the other hand, if the government's reaction to unfavorable comments is "to dismiss them as unfounded, " this evinces a lack of good faith. Telluride, 849 F.Supp. at 1406.

         The court finds that the Proposed Consent Judgment is procedurally fair. The record shows that the negotiations between two highly sophisticated parties with sharply conflicting interests were full of adversarial vigor. Cannons, 899 F.2d at 84, 87 n.4. Further, the parties were on equal footing, and the process was open and candid. Id. at 86. Finally, the DEP provided numerous substantive responses to the Public Comments and supplied the court and commenters with additional information after digesting them. Even though Amici do not seriously question the Consent Judgment's procedural fairness, a review of the negotiating process is helpful to understanding other aspects of its fairness and reasonableness.

         Amici contend that the State's decision to settle for $225 million, an amount they consider "suspiciously low, " was an abrupt change of course. This is not the case, as settlement negotiations began under the Corzine Administration, as far back as 2007. In 2008, during mediation conducted by retired Associate Justice Daniel O'Hern, [28] the State proposed a settlement whereby Exxon Mobil would pay $95 million to the State, $55 million in attorneys' fees and costs to the State's outside counsel, and perform off-site remedial projects which the State valued at approximately $400 million. Exxon immediately rebuffed this proposal, and Justice O'Hern concluded that further negotiations at that time would be useless. Although the total dollar figure on this proposal was $550 million, the Corzine Administration had performed an internal valuation of the package that, due to the effect of the pretrial special counsel retainer agreement, valued the whole package at $350 million. Negotiations did not resume until early 2012.

         Later that year, after the State made a settlement demand of $325 million, Exxon countered with an offer of only $20 million. The parties were still far apart. At this time, the State adopted a strategy under which they believed the only way to force Exxon "into a reasonable settlement posture" was to aggressively push their case at trial. This gambit bore fruit, as negotiations reopened late in the trial.

         For the first time, Exxon offered a substantial sum of money to settle the case: $100 million. This time, however, it was the State, emboldened by its effort at trial and believing that this sum was inadequate, that took a hardline approach and rejected the offer. Post-trial, negotiations continued in a "protracted and arduous" fashion until "the parties arrived at a figure that exceeded what the State had considered to be fair and reasonable:" $225 million, in addition to maintaining Exxon's duty to continue to clean up and remediate the sites under the ACOs.[29]

         The State proceeded under two different governors and numerous DEP commissioners to attempt to settle this case for a guaranteed sum of money, rather than leaving it to the uncertainties of trial. For seven years, Exxon repeatedly responded to the State's olive branches with only token offers. An aggressive trial strategy is often the only way to bring reluctant parties to the table, and the State employed this tactic with success. The February 2015 agreement was not made on a whim, but was the end product of lengthy negotiations and zealous advocacy at trial.

         Furthermore, Amici's contention that the State's inclusion of the Attachment C Facilities and Retail Gas Stations was done without consideration of the facts is also without merit. As General Hoffman made clear, during the 2012 negotiations, "the notion of a global settlement resolution was discussed." In that year, these additional sites were analyzed, and that analysis "was consistent with the de minimis value that is accorded those initial sites in the [Proposed Consent Judgment]." The State has known the limited value of these sites for years now, and, contrary to Amici's contention, the justifications and valuations of these sites laid out in the DEP Response to Public Comments were not post-hoc rationalizations.

         The court also finds that the DEP Response to Public Comments evinces the fact that the Consent Judgment was entered into in good faith. Released July 9, 2015, this document contains a nine-page introduction, twenty-two pages of substantive comments/responses, and a lengthy attachment listing all Exxon Retail Gas Stations located in New Jersey. The DEP provided numerous, substantive responses to the public's comments and concerns on the Consent Judgment's (1) Surface Water Claims provision; (2) Morses Creek deferral; (3) grant of contribution protection to Exxon; (4) denial of liability provision; (5) adequacy of recovery; (6) inclusion of the Attachment C Facilities and Retail Gas Stations; (7) reaffirmation of Exxon's ACO duties; (8) lack of a provision mandating that the entire $225 million be used for environmental purposes; (9) the amount of money the State will spend in attorneys' fees; and (10) tax issues.[30] In response to calls for more complete information, when the State formally notified the court that it was seeking approval of the Proposed Consent Judgment on July 9, 2015, it provided additional certifications on the negotiation process and inclusion of the additional facilities. Furthermore, the DEP opened its Attachment C Facility files to the public and did not oppose the Environmental Groups' and Senator Lesniak's amicus applications.

         The court gives no weight to two of Amici's final critiques of the Consent Judgment's procedural fairness. Senator Lesniak contends that because the Attorney General and DEP Commissioner issued press releases praising the Consent Judgment when it was first announced to the public, this shows "that they were firmly committed to the settlement" even before considering the Public Comments. The court is uncertain what the Senator expected the Attorney General and Commissioner to say in their press releases. Viewed against the backdrop of eight years of settlement negotiations where Exxon's initial position was $0, the State saw the settlement as a victory.

         In a similar vein, the Environmental Groups fault the DEP for maintaining in its post-trial brief that it proved $8.9 billion worth of damages and asserting that Exxon's defenses were weak. Again, the court is at a loss for what the Environmental Groups expected the DEP to argue in its post-trial briefs. Although the trial influenced settlement negotiations, the two events were traveling on parallel paths. The DEP was all too aware that over the past seven years, negotiations had repeatedly broken down. It makes perfect sense that the DEP would attempt to lock in a certain sum of money through settlement, while maintaining their trial arguments in the event negotiations collapsed.

         In conclusion, the court finds that the Proposed Consent Judgment is procedurally fair. It was the product of arm's length, adversarial negotiations between two highly motivated, sophisticated parties. Moreover, the DEP demonstrated good faith with their Responses to Public Comments and allowance of Amici to submit briefs and argue orally.

         III.A.2. Substantive Fairness

         While the procedural fairness inquiry examines the process, the substantive fairness inquiry examines the output of that process. "Substantive fairness introduces into the equation concepts of corrective justice and accountability: a party should bear the total cost of the harm for which it is legally responsible." Cannons, 899 F.2d at 87 (citing Developments in the Law - Toxic Waste Litigation, 99 Harv. L. Rev. 1458, 1477 (1986)). These concepts dictate that "settlement terms must be based upon, and roughly correlated with, some acceptable measure of comparative fault, apportioning liability among the settling parties according to rational (if necessarily imprecise) estimates of how much harm each PRP has done." Ibid, (citing Rohm & Haas, 721 F.Supp. at 68 5; Cannons, 720 F.Supp. at 1043; Kelley, 717 F.Supp. at 517; United States v. Conservation Chem. Co., 628 F.Supp. 391, 401 (W.D. Mo. 1985)). "As long as the measure of comparative fault on which the settlement terms ...

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