NJ Legislature Moving to Dedicate Natural Resource Damages

NJ Legislature Moving to Dedicate Natural Resource Damages

The New Jersey Legislature is moving to dedicate more than $160 million received from two natural resource damage claims. Given the Murphy Administration’s renewed focus on bringing natural resource damage (NRD) lawsuits, there will likely be more settlement funds to follow.

Environmental Settlements Under NJ Constitution

Natural resource damages are intended to compensate the public for the injury to, destruction of, or loss of natural resources. In many cases, these environmental contamination lawsuits can generate large windfalls for the state, with settlements often totaling hundreds of millions of dollars. In the past, funds were used for non-environmental purposes, such as balancing the state budget, which drew the ire of environmental groups and the public.

In 2017, New Jersey voters approved an amendment to the New Jersey Constitution (Article VIII, Section II, paragraph 9) that mandates funds from environmental settlements must be reinvested into anti-pollution efforts. Specifically, all State moneys received from settlements and awards in cases of environmental contamination relating to natural resource damages must be used for certain environmental purposes, which include to repair, replace, or restore damaged natural resources or to preserve the State’s natural resources. The amendment further provides that moneys must be spent in an area as close as possible to the geographical area in which the damage occurred. 

Legislation Earmarks Funds for Natural Resource Restoration Projects

Senate Bill 3310 earmarks settlement monies from two lawsuits involving natural resource damages. The first is N.J. Dep’t of Env. Protection v. Exxon Mobil Corp., 453 21 N.J. Super. 588 (Law Div. 2015), which the Murphy administration maintains is not subject to the 2017 amendment. The bulk of the controversial $225 million settlement with Exxon Mobil was already diverted or used to pay legal fees.

Under the bill, $50 million would be deposited as natural resource damages into the Hazardous Discharge Site Cleanup Fund and appropriated to the DEP for: direct and indirect costs of remediation, restoration, and cleanup; costs for consulting, expert, and legal services incurred in pursuing claims for damages; grants and loans to local governments; and grants to nonprofit organizations.

Senate Bill 3310 also appropriates more than $110 million from funds recovered in connection with claims made by the State in N.J. Dep’t of Env. Protection v. Atlantic Richfield Co., et al., No. 37 08 CIV 00312 (S.D.N.Y.), which involved groundwater pollution caused by three oil companies. Those natural resource damages revenues would be deposited in the Natural Resources Damages – Constitutional Dedication account. The bill identifies several projects to receive funds, including Cape May Point Saltwater Intrusion Mitigation and Habitat Restoration ($30 million); Atlantic White Cedar Forest Watershed Restoration ($19 million); and Hudson-Raritan Estuary Water Quality Infrastructure/CSO Improvements ($10 million).

While environmental groups are happy that funds are finally going towards restoration efforts, they have raised concerns that the monies are not dedicated to areas damaged by the pollution. “The bill is too vague on where the money is going to go,’’ said Jeff Tittel, director of the New Jersey Sierra Club. “We want to make sure the funding for restoration projects is going directly to areas impacted by Exxon.’’

Increased Risk for NRD Suits

Additional NRD suits are likely on the horizon. In August, for the first time in a decade, New Jersey filed six new lawsuits seeking to recover natural resource damages. As detailed in greater depth in a prior post, Attorney General Gurbir S. Grewal and Department of Environmental Protection (DEP) Commissioner Catherine R. McCabe called it a “new day” for environmental enforcement in New Jersey.

“This is the largest single-day environmental enforcement action in New Jersey in at least a decade,” Attorney General  Gurbir Grewal said in a press statement. “Today is just the beginning. We are going to hold polluters accountable – no matter how big, no matter how powerful, no matter how long they’ve been getting away with it. And we’re sending a message to every company across the state: if you pollute our natural resources, we are going to make you pay.”

The uptick in NRD lawsuits strongly suggests that the Murphy Administration plans to aggressively pursue natural resource damages. Given that such damages can often outweigh the costs of remediation, businesses should closely monitor the state’s new NRD initiative and contact a knowledgeable New Jersey environmental law attorney to discuss any concerns.

If you have questions, please contact us

If you have any questions or if you would like to discuss the matter further, please contact me, Dan McKillop, at 201-806-3364.