As Promised, NJDEP Continues Pursuit of NRD Claims

Environmental Law Alert

 

In August 2018, following a decade-long hiatus from pursuing Natural Resource Damage (“NRD”) claims, the State filed three NRD lawsuits (Port Reading Refinery (Hess), Pohatcong Valley Superfund Site, and Deull Fuel Company). Attorney General Gurbir S. Grewal announced that the Attorney General’s Office and the New Jersey Department of Environmental Protection (“NJDEP”) were “back in the environmental enforcement business” and promised to “aggressively bring even more Natural Resource Damage cases throughout the State.” The State appears to be following through on that promise, filing a fourth NRD complaint in December 2018 (Puchack Well Field), and the fifth just last week, on March 7, 2019, against ExxonMobil.

NRDs are intended to compensate the public for injury to, destruction of, loss of, or loss of value of, natural resources, including surface water, groundwater, sediments, wetlands, and biota (non-human living resources, e.g., animal life). As the trustee for the natural resources within its jurisdiction, the State is authorized to bring NRD claims against alleged polluters. In each of its NRD Complaints, the State has asserted claims under New Jersey’s Spill Compensation and Control Act and Water Pollution Control Act as well as common law claims for trespass, public nuisance, and strict liability.

In the Pohatcong Valley and Puchack Well Field cases, the State is alleging injuries to groundwater. In the Duell Fuel case, the NJDEP alleges that sediments are the affected natural resource. In the Port Reading complaint and the recently-filed ExxonMobil complaint, the NJDEP is alleging injury to all categories of natural resources.

The Port Reading complaint involves a former petroleum refinery located in Woodbridge Township that operated along the banks of the Arthur Kill. The NJDEP alleges that there were numerous spills and leaks at the refinery, which caused injuries to the nearby natural resources, including the surface waters of the Arthur Kill.

In the case of ExxonMobil, the complaint alleges that in the late 1950s, Mobil Corporation used the Lail Property in Gloucester County for the dumping of drums containing petroleum products and other hazardous substances, including PCBs. While the NJDEP acknowledges the remedial actions taken by ExxonMobil since the 1990s at the property, it contends that extensive PCB contamination remains in the surface water, groundwater, soils, sediments, wetlands, and biota, including surface waters of the Delaware Estuary, Mantua Creek, and the Delaware River.

The Hess and ExxonMobil complaints are the only two recent NRD Complaints for which the State has brought in outside counsel to prosecute the case. In addition, these complaints allege injuries within navigable waterways, which overlaps with the trusteeship of the National Oceanic Atmospheric Administration (“NOAA”), and to fish and wildlife, which overlaps with the trusteeship of the United States Department of Interior’s Division of Fish and Wildlife. As these cases progress, and new NRD cases are filed, it will be important to monitor whether and how the federal trustees get involved in seeking damages for injuries to resources that fall within their common trusteeship.

In addition, while the State has recently been aggressive in its filing of NRD complaints, it still faces some of the same legal and technical challenges that it encountered in its earlier NRD initiatives (most recently in the early to mid-2000s). For example, the State’s formula for calculating injury to groundwater was rejected by the court in a case against ExxonMobil in 2007. Moreover, no regulations currently exist setting forth criteria to value NRDs. While the NJDEP has publicly announced that it is working to finalize an objective formula for calculating NRDs, the valuation of NRDs likely will be a hotly contested issue in these cases.

The State also recently lost on a motion to dismiss filed by Hess and Buckeye Partners in the Port Reading case. The Court granted the defendants’ motion to dismiss the common law claims, holding that (1) only a party having “exclusive possession” of property may bring a trespass action, (2) the State could not recover monetary relief on its public nuisance claim because the only available remedy is abatement, and (3) the State’s strict liability claim failed because it presented no authority to support the proposition that the storage and processing of petroleum products constitutes an abnormally dangerous activity. Notwithstanding this ruling, the State asserted these same common law claims in the ExxonMobil complaint as well as a new cause of action, tortious interference, alleging that ExxonMobil’s contamination of the State’s natural resources constitutes a physical invasion of the public trust and thereby an unreasonable and substantial interference with the same.

Despite the challenges confronting the NJDEP and the Attorney General’s Office, they have made clear that the unofficial moratorium on NRD claims is over, and that they intend to continue this environmental enforcement initiative in earnest. As a result, the regulated community should carefully assess their potential NRD exposure and consider strategies for mitigating same going forward.

For more information, please contact the author, Katie Gannon, at kgannon@bressler.com, or any attorney in Bressler’s Environmental Practice Group.