ExxonMobil Rebuffed in Claim to Reduce Damages in Natural Resource Suit

Charles Toutant

New Jersey Law Journal

A Superior Court judge has rejected an effort by ExxonMobil Corp. to limit its damages for harming natural resources at two refinery sites.

Judge Ross Anzaldi of Union County denied the company's motion to dismiss the state's claims that the public trust doctrine can be used for recovery of damages for pollution on private property, in this case uplands and tidal lands.

In February, Anzaldi held that the state could pursue ExxonMobil for natural-resource damages by the refineries in Linden and Bayonne, and in his July 24 ruling he reiterated that point.

"This court will continue to read the Public Trust Doctrine expansively. Therefore natural resource damages are recoverable under the Spill [and Compensation Control] Act and the Public Trust Doctrine does not bar such recovery," he wrote in New Jersey Department of Environmental Protection v. ExxonMobil Corp., UNN-L-3026-04.

The natural resources at the heart of the case are on or next to former ExxonMobil properties, the 1,300-acre Linden site and the 288-acre Bayonne site. The properties had been used by ExxonMobil and its predecessors since the early 1900s.

In 2007, the Appellate Division held, in 393 N.J. Super. 388, that the DEP had authority under the Spill Act to seek damages for the loss of use of natural resources adversely affected by the discharge of hazardous substances.

ExxonMobil claimed that the Spill Act defines "natural resources" as land owned, managed, held in trust or otherwise controlled by the state. The company also said no New Jersey court had ruled that the Public Trust Doctrine is applicable to private uplands other than those where there was a need for beach access.

The DEP contended that its police power affords it a control interest in natural resources, whether on public or private property.

"Though the Public Trust has not been applied to date to private uplands, the Spill Act clearly permits restoration and recovery of property no matter where located or created," Anzaldi wrote.

He also said that the Appellate Division read into the Spill Act broad implied powers, defining the term "cleanup and removal costs" to include natural resource damages and the loss of use of resources.

ExxonMobil also claimed that the state did not have any interest in former wetlands the state conveyed to the company through riparian grants. But Anzaldi rejected that claim, saying the conveyance did not include permission to pollute.

"The state's rights as a public trustee exist even if the property has been alienated," Anzaldi wrote.

The ruling also covers various categories of land in other natural resources suits filed by the state in all 21 counties, says Richard Engel, the deputy attorney general handling the case. Anzaldi's decision, he says, "is an important piece of the puzzle."

ExxonMobil attorney Theodore Wells Jr. of Paul Weiss Rifkind Wharton & Garrison in New York could not be reached.

A company spokeswoman, Kristin Hellmer, issued a statement that said it disagrees with Anzaldi's holding "that the state holds a 'public trust' interest in perpetuity in private property it does not own, manage or control. This decision was based on an unprecedented interpretation of the Public Trust Doctrine that departs from more than a century of settled New Jersey law. ExxonMobil believes this decision undermines private property rights within New Jersey and raises serious constitutional issues."