Ray Lesniak, a New Jersey state senator, is well known for his advocacy of sports-related gambling but is perhaps less known for his failed legal battle involving a previous settlement between the Christie Administration and Exxon Mobile. According to the settlement, which was reached in 2015, Exxon was to pay $225 million for its environmental negligence, having spilled chemicals in the New Jersey wetlands for nearly 100 years. That number is just a fraction of the $8.9 billion in damages sought in the original 2004 lawsuit against the fossil fuel conglomerate.
The low settlement amount is just the tip of the iceberg. According to recent reports, Governor Phil Murphy’s administration plans to siphon off $125 million of the total settlement, using it to fill in gaps in the state budget – in complete defiance of the agreement’s intent. Taking into account expenses and attorneys’ fees, the remaining amount is a mere $50 million to support cleanup efforts in Linden and Bayonne. This number is drastically insufficient, as a site in Gloucester County will require $80 million for clean-up, according to state experts.
As it turns out, the administration’s decision may also undermine a constitutional amendment that prevents the government from rerouting environmental clean-up funds to other departments. Seventy percent of New Jersey voted for the amendment, according to which: “[money given by polluters] would have to be used to repair, restore, replace, or preserve the State’s natural resources. The moneys may also be used to pay legal or other costs incurred by the state in pursuing its claims.”
Lesniak spoke about the necessity of the amendment around the time of its passing: “Money awarded for damage to natural resources needs to be used to restore the natural resources damaged, as in the ExxonMobil case, to restore wetlands and marshlands that protect against flooding from storm surges, and not siphoned off for other uses.”
Murphy’s decision to reroute funds echoes a move by the former Governor Chris Christie, who used his veto power to change budgetary restrictions requiring half the $225 million settlement with Exxon to go toward “remediation, restoration, and clean up.” Christie’s veto affected a number of other settlements as well, funneling much-needed clean-up money toward other state resources.
The Exxon settlement was approved by a state appeals court, which affirmed a Superior Court decision. The higher court’s decision came after environmentalist groups, together with Lesniak, attempted to block the $225 million settlement, which they deemed far too low. Appellate Division Judge Carmen Messano found no problems in the original judgement, which was offered by Superior Court Judge Michael Hogan. According to Messano, “Judge Hogan had the best opportunity to gauge the strength of the experts’ estimates regarding (natural resource damages), the relative strength of the parties’ litigation positions.”
Messano continued: “We find no mistaken exercise of the judge’s discretion in finding the consent judgment was fair, reasonable, consistent with the Spill Act’s goals, and in the public interest.”
The appellate court, however, disagreed with Hogan’s assertion that the environmental groups should not be able to appeal the settlement. But while they upheld the right of the groups to intervene, they still sided with Hogan’s opinion regarding the settlement.
State Supreme Court
More recently, the state Supreme Court doubled down on the appellate court’s decision, refusing the environmental coalition – which includes the Sierra Club, Clean Water Action and Environment New Jersey – any legal standing in the matter. Lesniak was not pleased: “It basically shuts out the public,” he said. “It basically gives the public no voice, and allows the state to basically violate the law. That’s what they did in this settlement; they violated the Spill Act.”
Why did the courts side with the state and Exxon? According to the appellate court’s decision, Exxon had already put $250 million toward the clean-up effort, and regardless of the outcome of the settlement, the company is still required to “spend whatever amount of money is necessary to fully remediate all of its contaminated sites in accordance with DEP’s regulatory standards.”
Imminent Legal Challenge
But the state’s decision to funnel that money toward other resources could be the source of another impending legal battle. As environmental attorney Edward Lloyd has pointed out: “That money wasn’t released to the state until last week, so it falls under the constitutional amendment.” He continued, “I don’t think the state can use it for anything else.”