1. business and industrial
2. energy
3. oil
4. oil company

JOHN J. HOFFMAN
ACTING ATTORNEY GENERAL OF NEW JERSEY
By: Richard F. Engel, DAG (N.J. Bar No. 009401981)
Richard J. Hughes Justice Complex
25 Market Street; PO Box 093
Trenton, NJ 08625-0093
Tel: (609) 984-4863
KANNER & WHITELEY, L.L.C.
Special Counsel to the Attorney General
By: Allan Kanner (N.J. Bar No. 472828)
Elizabeth B. Petersen (Pro Hac Vice)
Douglas R. Kraus (Pro Hac Vice)
Allison M. Shipp (Pro Hac Vice)
701 Camp Street
New Orleans, LA 70130
Tel: (800) 331-1546, (504) 524-5777
Attorneys for Plaintiff
NEW JERSEY DEPARTMENT OF
ENVIRONMENTAL PROTECTION,
Plaintiff,
v.
EXXON MOBIL CORPORATION,
Defendant.
SUPERIOR COURT OF NEW JERSEY
LAW DIVISION - UNION COUNTY
DOCKET NO. L-3026-04
consolidated with
DOCKET NO. L-1650-05
PLAINTIFF’S POST-TRIAL BRIEF
VOLUME I OF II
Table of Contents
I.
Introduction.............................................. 1
A. Summary of In-Trial Rulings.............................. 10
B. What is Not in Dispute................................... 17
1.
The State’s public trust interest is not in dispute. . 17
2.
ExxonMobil is liable for primary restoration,
compensatory restoration and assessment costs. ....... 19
3.
The Bayway and Bayonne Sites are contaminated. ....... 21
4.
The validity of the underlying data sets and the
characterization of the Sites are not disputed. ...... 23
5.
Basic NRDA principles are undisputed. ................ 25
6.
Salt marshes are the most productive and valuable
ecological resources. ................................ 30
7.
ExxonMobil has not conducted natural resource
restoration at either of the Sites. .................. 30
8.
Habitat equivalency analysis is a generally accepted and
reliable methodology to calculate compensatory
restoration. ......................................... 31
9.
Permitted discharges need not be separated. .......... 32
II. The State Has Met Its Burden Regarding the Disputed Legal and
Factual Issues. ........................................... 32
A. Applicable Legal Standards............................... 32
1.
The State has met its burden regarding the amount of
damages caused by ExxonMobil’s discharges. ........... 33
2.
The State has met its burden of proof connecting
ExxonMobil to the claimed damage to the State’s natural
resources, making ExxonMobil strictly liable, jointly
and severally, for all cleanup and removal costs, and
ExxonMobil bears the burden of proof for any claims of
concurrent causation. ................................ 43
ii
3.
The State relied on the best available evidence to
determine the history of development and discharges at
the Bayway and Bayonne Sites. ........................ 47
B. The Department is Charged with the Management, Protection
and Restoration of the State’s Natural Resources......... 58
1.
ONRR is delegated with authority to represent the NR
Trustee. ............................................. 58
2.
Restoration and remediation are different. ........... 64
3.
ExxonMobil was aware of the Department’s policies and
goals with respect to NRD. ........................... 74
4.
ONRR is actively performing restoration throughout the
State. ............................................... 80
C. Pre-discharge Conditions at the Sites.................... 82
1.
Restoration is the return of natural resources to their
pre-discharge condition. ............................. 82
2.
The State has determined the pre-discharge habitats at
the Sites. ........................................... 83
3.
Early operators did not adversely impact the functioning
of the pre-discharge habitats ....................... 105
4.
ExxonMobil’s physical modification argument suffers from
legal and factual infirmities and should be rejected. 110
D. History of Development and Discharges at the Bayway and
Bayonne Sites........................................... 125
1.
Development of the Bayway Site. ..................... 128
a. The initial development at Bayway was primarily upland
areas of the Site. .................................. 128
b. Development of Refinery around Morses Creek. ........ 130
c. As ExxonMobil’s operations increased, spills and leaks
increased. .......................................... 132
d. ExxonMobil filled marshlands with waste for Refinery
expansion. .......................................... 134
iii
e. ExxonMobil used contaminated creek dredgings as fill
throughout the Site. ................................ 136
f. ExxonMobil disposed of its refinery waste in marshlands
and low-lying areas of the Site. .................... 139
g. Historic Fill ....................................... 157
2.
Development of the Bayonne Site ..................... 161
E. ExxonMobil’s Obligation to Fully Characterize and to
Restore the Sites....................................... 169
F. The State’s NRDA and Claim in This Case................. 177
1.
Underlying considerations for the State’s NRDA. ..... 178
a. Natural resource damage assessments are site specific
and are informed by the applicable legal and policy
framework. .......................................... 178
b. Federal regulations on NRDA. ........................ 179
c. Establishment of an appropriate background level,
baseline, or a reference site for NRDA should exclude a
responsible party’s discharges. ..................... 180
d. Injury assessment – historical reconstruction &
addressing uncertainties ............................ 183
2.
The State’s Primary restoration plan and cost estimates.
.................................................... 190
a. Primary restoration plan for Bayway and Bayonne ..... 190
b. The Department’s proposed primary restoration plan and
cost estimate. ...................................... 199
i. Areas to be restored............................... 199
ii. Pre-construction study and design.................. 203
iii. Clean-up and removal of contamination ............ 205
iv. Infrastructure removal and reconstruction.......... 210
v. Wetlands construction and restoration of tidal flow 216
vi. Wetlands maintenance and monitoring activities..... 217
iv
vii. Total estimated costs for primary restoration .... 222
viii. Escalation rate. ............................... 224
c. The Department’s proposed primary restoration plan is
practicable ......................................... 225
d. The Department’s primary restoration plan will provide
unique benefits to the citizens of New Jersey. ...... 240
3.
The State’s compensatory restoration plan. .......... 244
a. HEA ................................................. 247
i. Reliability and general acceptance of HEA.......... 251
ii. Dr. Hausman’s Rule 104 testimony regarding the Habitat
Equivalency formula does not contradict the evidence
in this case and is irrelevant..................... 263
iii. Discount rate .................................... 265
b. Inputs to the HEA. .................................. 270
i. Acreage of injured habitat......................... 273
ii. Start dates........................................ 276
iii. Compensatory restoration costs. .................. 278
iv. Per acre costs for palustrine and intertidal habitats.
................................................... 279
G. Summary of the State’s NRD Claim........................ 282
H. The State’s Common Law Claims........................... 289
III. ExxonMobil’s Proofs and Defenses........................ 293
A. Enumerated Defenses and Repackaged World War II Defense. 293
B. ExxonMobil’s Experts Have a Demonstrated Bias, Thus, They
Lack Credibility and Their Testimony Should be Given
Little, if Any, Weight.................................. 298
1.
ExxonMobil’s experts’ opinions were tainted by improper
instructions from counsel. .......................... 299
2.
ExxonMobil’s experts have a demonstrated bias. ...... 302
v
a. Dr. Desvousges’ opinion regarding the reliability of the
HEA methodology changed during the course of trial,
demonstrating a bias and lack of credibility. ....... 302
b. Dr. Boehm’s use of unsupported limitations and
restrictions to serve as a basis for his criticism of
the State’s experts results in biased opinions that lack
credibility. ........................................ 305
c. Dr. Rodgers’ testimony regarding the health of salt
marsh habitats at the Sites and concerns with onsite
restoration, including the threat of bird strikes, lacks
any reasonable basis. ............................... 308
d. Dr. Ginn’s testimony regarding his collaboration with
Dr. Desvousges and Dr. Rodgers on the HEA inputs lacks
credibility. ........................................ 311
e. Professor Klein ignored evidence contrary to his desired
conclusions, undermining the credibility of his
testimony. .......................................... 312
C. Additional Asserted Defenses and Arguments.............. 315
1.
Offset .............................................. 315
a. ExxonMobil is not entitled to any offset in damages for
its purported social benefits. ...................... 315
b. The extent of pollution at Bayonne and Bayway and the
necessity for restoration of the State’s natural
resources thoroughly contradict ExxonMobil’s argument
that a damages award would be a “windfall” for the
State. .............................................. 318
c. ExxonMobil lacks a legal and factual basis for
requesting an offset for costs it expended in its
limited site remediation efforts. ................... 321
2.
This Court should reject ExxonMobil’s last-ditch effort
to manufacture ambiguity in the ACOs, which
unambiguously reserve the State’s rights to bring NRD
claims. ............................................. 327
a. ExxonMobil’s argument runs contrary to the parol
evidence rule because it would “modify” or “curtail” the
plain terms of the ACO. ............................. 333
vi
b. Even if it were relevant, the evidence supports rather
than contradicts the plain meaning of the ACOs. ..... 339
3.
Policy and regulatory arguments ..................... 344
a. Failure to “speak with one voice.” .................. 344
b. ExxonMobil’s argument insisting that the Department must
promulgate regulations for every conceivable scenario is
refuted by sound principles of administrative law as
well as common sense. ............................... 348
c. In contending that the Department purportedly brings
this action prematurely or otherwise failed to adhere to
the technical regulations, ExxonMobil conflates
ecological risk assessment with natural resource damage
assessment, two importantly different processes. .... 351
4.
Prejudgment interest ................................ 352
5.
ExxonMobil’s due process arguments lack merit ....... 357
a. Ancient document rule ............................... 357
b. Due process and takings ............................. 360
i. Retroactive application of the Spill Act is not a due
process violation.................................. 362
ii. Retroactive application of the Spill Act is not a
takings violation.................................. 365
Conclusion................................................... 370
vii
Table of Authorities
Cases
Abtrax Pharm., Inc. v. Elkins-Sinn, Inc., 139 N.J. 499 (1995) 328
AEL Indus., Inc. v. Loral Fairchild Corp., 882 F. Supp. 1477
(E.D. Pa. 1995) ............................................ 329
Am. Sanitary Sales Co., Inc. v. State Dep’t. of Treasury, 178
N.J. Super. 429 (App. Div. 1981) ............................ 44
Atl. N. Airlines, Inc. v. Schwimmer, 12 N.J. 293
(1953)..... 336
Berwind Corp. v. Comm'r of Soc. Sec., 307 F.3d 222 (3d Cir.
2002) ...................................................... 369
Borough of Fort Lee v. Banque Nat’l de Paris, 311 N.J. Super.
280 (App. Div. 1998) ........................................ 37
Chubb Custom Ins. Co. v. Prudential Ins. Co. of Am., 195 N.J.
231 (2008) ................................................. 336
Columbus-Am. Discovery Group, Inc. v. Unidentified, Wrecked &
Abandoned Sailing Vessel, 742 F. Supp. 1327 (E.D. Va. 1990) 366
Conway v. 287 Corp’t Ctr. Assocs., 187 N.J. 259 (2006)....... 336
Czura v. Siegel, 296 N.J. Super. 187 (App. Div. 1997)........ 290
Dobson v. Twin City Fire Ins. Co., No. SACV 11-0192 DOC, 2012 WL
2708392 (C.D. Cal. July 5, 2012) ........................... 329
Dye v. United States, 360 F.3d 744 (7th Cir. 2004)........... 328
E. Cape May Assocs. v. N.J. Dep’t Envtl. Prot., 343 N.J. Super.
110 (App. Div. 2001) ....................................... 374
Eastern Enterprises v. Apfel, 524 U.S. 498 (1998)............ 367
Fisher v. United States, 425 U.S. 391 (1976)................. 365
Fosgate v. Corona, 66 N.J. 268 (1974)......................... 47
Fund for Animals, Inc. v. Rice, 85 F.3d 535 (11th Cir. 1996). 241
George v. Celotex Corp., 914 F.2d 26 (2d Cir. 1990).......... 366
Hackensack Meadowlands Dev. Comm’n v. Mun. Sanitary Landfill
Auth., 68 N.J. 451 (1975) .................................. 195
viii
Harker v. McKissock, 12 N.J. 310 (1953)...................... 344
Hatco Corp. v. W.R. Grace & Co. Conn., 849 F. Supp. 931 (D.N.J.
1994) ...................................................... 361
Hoppe v. Ranzini, 158 N.J. Super. 158 (App. Div. 1978)........ 38
Humenik ex rel. Humenik v. Gray, 350 N.J. Super. 5 (App. Div.
2002) ....................................................... 47
In re Adoption of N.J.A.C. 7:15-5.24(b), 420 N.J. Super. 552
(App. Div.), certif. denied, 208 N.J. 597 (2011) ............ 62
In re Commitment of G.G.N., 372 N.J. Super. 42 (App. Div. 2004)
........................................................... 364
In re Kimber Petrol. Corp., 110 N.J. 69 (1988)............... 325
In re Koretzky’s Estate, 8 N.J. 506 (1951).................... 61
In re Methyl Tertiary Butyl Ether (MTBE) Prods. Liab. Litig.,
No. 1:00-1898, 2014 WL 3778176, slip op. (S.D.N.Y. July 30,
2014) ...................................................... 324
In re New Jersey State Planning Comm’n Resolutions No.2003-03 &
No.2003-04, No. A-1629-03T3, 2005 WL 3822074 (N.J. Super. Ct.
App. Div. Mar. 3, 2006) .................................... 355
Interfaith Cmty. Org. v. Honeywell Int’l, Inc., 263 F. Supp.2d
796 (D.N.J. 2003) .......................................... 360
James v. Bessemer Processing Co., Inc., 155 N.J. 279 (1998)... 48
Johnson v. Exxon Co. U.S.A., No. 01-98-01220-CV, 1999 WL 417372
(Tex. App. June 24, 1999) .................................. 366
Kessler v. Tarrats, 191 N.J. Super. 273 (Ch. Div. 1983)....... 79
Kieffer v. Best Buy, 205 N.J. 213 (2011)..................... 334
Lane v. Oil Delivery, 216 N.J. Super. 413 (App. Div. 1987).... 37
Lasker v. Lasker, 91 N.J. Eq. 352 (Ch. 1920).................. 36
Levison v. Weintraub, 215 N.J. Super. 273 (App. Div. 1987)... 337
Lightning Lube Inc. v. Witco Corp., 4 F.3d 1153 (3rd Cir. 1993)
............................................................ 38
ix
Litton Indus., Inc. v. IMO Indus., Inc. et al., 200 N.J. 372
(2009) ..................................................... 358
Lucas v. S.C. Coastal Council, 505 U.S. 1003 (1992).......... 368
Marsh v. N.J. Dep’t of Envtl. Prot., 152 N.J. 137 (1997)...... 61
Matthews v. Bay Head Imp. Ass’n, 95 N.J. 306 (1984).......... 374
Meshinsky v. Nichols Yacht Sales, Inc., 110 N.J. 464 (1988).. 359
Metromedia, Inc. v. Dir., Div. of Taxation, 97 N.J. 313 (1984)
........................................................... 354
Milazzo v. Exxon Corp., 243 N.J. Super. 573 (Law Div. 1990).. 360
Montana v. Egelhoff, 518 U.S. 37 (1996)...................... 365
N.J. Dep’t of Envtl. Prot. v. Dimant, 212 N.J. 153 (2012)..... 34
N.J. Dep’t of Envtl. Prot. v. Essex Chem. Corp., No. MID-L-568507 (N.J. Super. Ct. Law Div. July 23, 2010) ................. 73
N.J. Dep’t of Envtl. Prot. v. Exxon Mobil Corp. 381 F.Supp.2d
398 (D.N.J. 2005) .......................................... 300
N.J. Dep’t of Envtl. Prot. v. Exxon Mobil Corp., 2011 WL 2304026
(N.J. App. Div. May 31, 2011) .............................. 286
N.J. Dep’t of Envtl. Prot. v. Exxon Mobil Corp., 393 N.J. Super.
388 (App. Div. 2007) ......................................... 9
N.J. Dep’t of Envtl. Prot. v. Exxon Mobil Corp., UNN-L-3026-04,
2008 WL 4177038 (Law Div. Aug. 29, 2008) ..................... 2
N.J. Dep’t of Envtl. Prot. v. Union Carbide, No. MID-L-5632-07
(N.J. Super. Ct. Law Div. Mar. 29, 2011) .................... 73
N.J. Dep't of Envtl. Prot. v. Occidental Chem. Corp., No. A0067-11T2, 2012 WL 1392597 (N.J. Super. Ct. App. Div. Apr. 24,
2012) ...................................................... 343
N.J. Dep't of Envtl. Prot. v. Ventron Corp., 94 N.J. 473 (1983) 1
N.J. Schs. Dev. Auth. v. Marcantuone, 428 N.J. Super. 546 (App.
Div. 2012) ................................................. 127
x
N.J. Site Remediation Indus. Network v. N.J. Dep’t of Envtl.
Prot., No. A-5272-97T3, 2003 WL 22053346 (N.J. Super. Ct. App.
Div. Apr. 17, 2000), cert. denied, 165 N.J. 528 (2000) ...... 69
Nat’l Bd. Labor Relations v. Noel Canning, 134 S. Ct. 2550
(2014) ..................................................... 365
Ohio v. U.S. Dep’t of the Interior, 880 F.2d 432 (D.C. Cir.
1989) ...................................................... 197
Pacifico v. Pacifico, 190 N.J. 258 (2007).................... 338
Paolicelli v. Wojciechowski, 132 N.J. Super. 274 (App. Div.),
certif. den., 68 N.J. 153 (1975) ............................ 36
Paragon Contractors, Inc. v. Peachtree Condo. Ass'n, 202 N.J.
415 (2010) .................................................. 79
Phillips Petrol. Co. v. Mississippi, 484 U.S. 469 (1988)..... 376
Raleigh Ave. Beach Ass’n v. Atlantis Beach Club, Inc., 370 N.J.
Super. 171 (App. Div.), aff’d, 185 N.J. 40 (2005) ........... 61
Reichart v. Vegholm, 366 N.J. Super. 209 (App. Div. 2004)..... 48
Schor v. FMS Fin. Corp., 357 N.J. Super. 185 (App. Div. 2002) 335
Sokaogon Chippewa Cmty. v. Exxon Corp., 805 F. Supp. 680 (E.D.
Wis. 1992) ................................................. 366
State v. Bunyan, 154 N.J. 261 (1998)......................... 365
State v. Jersey Cent. Power & Light, 125 N.J. Super. 97 (Law
Div. 1973) .................................................. 61
Stearns & Foster Bedding Co. v. Franklin Holding Corp., 947 F.
Supp. 790 (D.N.J. 1996) .................................... 298
Tanurb v. New Jersey Dep’t of Envtl. Prot., 363 N.J. Super. 492
(2003) ..................................................... 240
Tessmar v. Grosner, 23 N.J. 193 (1957)........................ 37
The Times of Trenton Pub. Corp. v. Lafayette Yard Cmty. Dev.
Corp., 368 N.J. Super. 425 (App. Div. 2004) ................. 62
Twp. of Howell v. Waste Disposal, Inc., 207 N.J. Super. 80 (App.
Div. 1986) .................................................. 65
xi
United States v. Great Lakes Dredge & Dock Co., No. 97-10075CIV, 1999 WL 1293469 (S.D. Fla. July 28, 1999) ............. 207
United States v. Shell Oil Co., 294 F.3d 1045 (9th Cir. 2002) 298
United States v. Winchester & Potomac R.R. Co., 163 U.S. 244
(1896) ..................................................... 299
V.A.L. Floors, Inc. v. Westminster Communities, Inc., 355 N.J.
Super. 416 (App. Div. 2002) ................................. 38
Statutes, Rules, and Regulations
15 C.F.R. § 990.............................................. 239
N.J.A.C. 7:26E................................................ 23
N.J.R.E. 1002................................................ 328
N.J.R.E. 1006................................................ 329
N.J.R.E. 401.................................................. 10
N.J.R.E. 803.................................................. 21
N.J.S.A. 13:1D-9.............................................. 62
N.J.S.A. 58:10-23.11, et seq................................... 1
N.J.S.A. 7.8B-1.............................................. 135
Other Sources
Charles T. McCormick, McCormick Handbook on Damages § 27 (1935)
............................................................ 54
Keith A. Findley, Judicial Gatekeeping of Suspect Evidence: Due
Process and Evidentiary Rules in the Age of Innocence, 47 Ga.
L. Rev. 723 (2013) ......................................... 364
Restatement (Second) of Torts §433A (1965).................... 47
Restatement (Second) of Trusts § 176 (1959)................... 62
Wright & Miller, 31 Fed. Prac. & Proc. Evid. § 7113 (1st ed.
1971) ...................................................... 365
xii
I.
Introduction
“Those who poison the land must pay for its cure.”
N.J.
Dep't of Envtl. Prot. v. Ventron Corp., 94 N.J. 473, 493 (1983).
Defendant
Exxon
Mobil
Corp.
(“ExxonMobil”)
must
pay
for
its
destruction of natural resources resulting from its decades of
discharges of hazardous substances at the Bayway and Bayonne
Sites (collectively “Sites”).
Plaintiff’s,
the
New
Jersey
Department
of
Environmental
Protection (“Department” or “State”), claim for natural resource
damages
(“NRD”)
at
the
Sites
includes
primary
compensatory restoration, and assessment costs.1
restoration,
ExxonMobil has
previously been found liable on each of the State’s claims, both
statutory
(violations
of
the
New
Jersey
Spill
Control
and
Compensation Act (“Spill Act”), N.J.S.A. 58:10-23.11, et seq.)
and common law (nuisance, trespass, and strict liability).2
In
addition, the trial court previously found that damages at these
Sites resulted from “both the active disposing and accidental
spilling of hazardous substances” and that the “resulting harm
was great.”
N.J. Dep’t of Envtl. Prot. v. Exxon Mobil Corp.,
1
The State’s claims were bifurcated into Surface Water Claims and Property
Claims, and this trial was only concerned with damages for the State’s
Property Claims. See 1/11/2006 Case Management Order.
2
In January of 2009, following briefing by the parties, the trial court
permitted the Department to amend its complaints to include theories of
strict liability and unjust enrichment. Amended Complaints, filed January 9,
2009.
The Department’s common law theories of unjust enrichment were
dismissed. 8/29/08 Letter Opinion (Anzaldi, J.).
1
UNN-L-3026-04, 2008 WL 4177038, at *6 (Law Div. Aug. 29, 2008)
(Anzaldi, J.).
“destructive
The trial court also found that ExxonMobil’s
conduct”
resulted
in
“significant
damage
to
the
natural environment” constituting abnormally dangerous activity
and
a
public
nuisance
as
a
matter
of
law.
Id.
at
*5,
9.
ExxonMobil admits to much of the contaminating activities that
led to the Court’s finding of liability.
ExxonMobil does not dispute that it discharged hazardous
substances that have adversely impacted natural resources.
The
millions of gallons of free product floating on groundwater and
the millions of cubic yards of hazardous waste sitting on top of
former wetlands are but two examples.
ExxonMobil has admitted
its refinery operations were necessarily leaking, spilling, and
discharging
both
environment,
discussed
practices.
oil
especially
infra,
ExxonMobil’s
crude
part
and
in
the
I(B)(3).
intentional
and
refined
products
past.
This
See
is
6/3/14
in
continuous
into
Order,
addition
waste
the
to
disposal
Further, ExxonMobil admitted that discharges were
proportional to throughput, which grew in size as the plant grew
over
time.
hazardous
Ibid.
waste,
Rather
ExxonMobil
than
properly
utilized
lying areas as waste receptacles.
disposing
wetlands
and
of
other
its
low-
See, e.g., Bayway Status and
Update Report of Brent Archibald, PEX0140, p. 2 (indicating that
marshlands at Bayway were filled with process wastes).
2
Indeed,
one of ExxonMobil’s experts, Dr. Tod Delaney, testified that
ExxonMobil
poured
kerosene
on
wetlands, to combat mosquitoes.
both
properties,
including
See Trial Tr. 6/2/14 (Delaney
Cross) 218:3-19.
This is consistent with another ExxonMobil
expert,
Maury
Professor
Klein,
who
described
“enemy” and something to be “conquered.”
nature
as
the
Trial Tr. 5/20/14
(Klein Cross) 122:2-124:10.
The scope of the environmental damage resulting from the
discharges is as obvious as it is staggering and unprecedented
in New Jersey: approximately 1,800 acres of wetlands, marshes,
meadows and waters have been adversely affected by or buried
under the discharge of hazardous substances, including over 600
chemicals
that
were
specifically
identified.
Although
ExxonMobil acknowledges its responsibilities for pollution at
these Sites, it denies any adverse impact on natural resources
other than some de minimus percentage of service loss at Bayway
that occurred after 1977.
After winning partial summary judgment on liability, the
State
offered
ExxonMobil
the
opportunity
to
conduct
a
joint
natural resource damage assessment (“NRDA”); Exxon refused.
response,
the
Administrator
State’s
for
the
team,
Office
directed
of
Natural
by
John
Resource
Sacco,
In
the
Restoration
(“ONRR”), conducted its NRDA to assess and quantify the State’s
injuries caused by ExxonMobil’s decades of destructive conduct
3
and
to
determine
an
appropriate
remedy.3
The
team
members’
various contributions and conclusions are summarized below.
The State started trial the same way it started its NRD
assessment: with the voluminous scientific data regarding the
Sites.
Mark
Walters,
the
former
Site
Remediation
Program
(“SRP”) Case Manager for the Sites from 1998-2011, described the
Sites, the history of pollution activity, and the resulting onsite
contamination.
Mr.
Walters
introduced
the
Court
to
scientific investigations by ExxonMobil’s technical consultants,
including
analyses
the
and
Site
site
History
Reports,
remediation
boring
documentation.
logs,
All
chemical
of
these
studies showed gross and pervasive contamination and substantial
ecological injuries.4
Dr. Emily Southgate, a historical ecologist, conducted a
historical review of the habitat types that were present at
these sites in the past and prior to ExxonMobil’s operations.
This
work
provided
a
valuable
context
for
assessing
injury
historically, as well as determining an appropriate restoration
end point.
Dr. Southgate’s opinion regarding the pre-discharge
habitats was undisputed, as was her conclusion that she could
3
The State addresses the Rule 104 issues related to both the State’s and
ExxonMobil’s experts in Volume II of this briefing.
4
ExxonMobil’s Brent Archibald and Richard Harley agreed with Mr. Walters’
characterization of the Sites and the documentation supporting his testimony.
Experts from both the State and ExxonMobil agreed that the site remediation
data was scientifically reliable.
4
find no evidence of material natural resource damages prior to
ExxonMobil’s arrival at the Sites.
Dr. Robert Morrison, an expert geologist, hydrogeologist
and
forensic
scientist
interpretation,
with
contaminant
expertise
transport
in
modeling,
aerial
as
photo
well
as
environmental forensics and chemistry, collected and prepared a
comprehensive
database
of
chemical
information
and
reviewed
extensive documentation of the environmental conditions prepared
by or on behalf of ExxonMobil and the Department.
Dr. Morrison
confirmed that the chemistry related to the Sites was consistent
with
the
refinery
ExxonMobil.
and
chemical
manufacturing
operations
of
He found the data to be reliable and that certain
data gaps were properly filled using typical mechanisms such as
interpretation of aerial photographs.
In essence, Dr. Morrison
established that the State and other experts were working from a
sound
scientific
basis.
Based
upon
the
totality
of
the
information regarding the nature and extent of contamination,
Dr. Morrison described the contamination at the two Sites to be
“pronounced.”
This is consistent with Mr. Walters’ description
of the Site contamination.
data
he
reviewed,
In Dr. Morrison’s opinion, given the
restoration
appropriate.
5
at
these
Sites
would
be
Dr. Joshua Lipton of Stratus Consulting Inc.5 (“Stratus”) is
an expert in natural resource damage assessment, environmental
toxicology and chemistry, ecology, and environmental science.
Dr. Lipton confirmed the pre-discharge habitats determined by
Dr. Southgate, described the ecological services associated with
these
habitats,
described
the
nature
and
extent
of
the
contamination at the Sites, described the contaminant transport
and migration throughout the Sites, and performed the habitat
equivalency analysis (“HEA”) for the Sites.
analysis
and
conclusions,
Dr.
Lipton
For purposes of his
conducted
an
extensive
review of the documentation characterizing the nature and extent
of contamination at the Sites (conducted in connection with the
Site
Remediation
Program),
including
the
Site
History
Remedial Investigation Reports and associated data.
and
He also
relied on conversations with Mark Walters and others at the
Department
familiar
with
the
Sites
to
better
understand
the
context of the data, as well as the chemical database compiled
by
Dr.
deemed
Morrison.
The
chemical
appropriate
for
inquiry
characterization
of
the
Sites.
database
by
included
ExxonMobil
More
than
contaminants were detected throughout the Sites.
5
chemicals
during
600
its
organic
Based upon his
A number of employees, with different areas of expertise, worked with Dr.
Lipton in processing and interpreting relevant information and development of
the NRD Assessment and restoration plan.
6
review
of
this
information,
Dr.
Lipton
concluded
that
the
pollution throughout the Sites was “ubiquitous.”
Mr. Robert Williams is a New Jersey forestry expert who
assisted
in
calculating
restoration projects.
costs
associated
with
upland
forest
Mr. Williams’ cost estimates were used in
the calculation of compensatory damages performed by Stratus.6
Mr. Randy Horsak is the principal engineer and scientist at
3TM Consulting.
expert
who
Mr. Horsak is the State’s cost engineering
prepared
a
pro
forma
cost
estimate
for
the
implementation of the State’s proposed primary restoration plans
for the Bayway and Bayonne Sites.
Mr. Horsak did exactly the
type of work the State commissions for all of its restoration
projects, except that Mr. Horsak’s work was more advanced than
what the State is typically presented with for other projects.
Mr.
Horsak’s
Monte
Carlo
analysis
is
one
example
of
this
increased sophistication.7
Mr. Ronald Ostermiller is the State’s expert engineer with
special expertise in the areas of refinery infrastructure and
design,
project
management,
and
cost
estimating.
He
was
retained to provide a cost estimate for the costs associated
6
ExxonMobil did not call a New Jersey forestry expert to challenge the
opinions of Mr. Williams.
7
ExxonMobil did not call an engineering cost estimator. ExxonMobil’s expert
Dr. John Rodgers did not estimate on-site work but did offer conclusions
based on decades of undocumented experience at unnamed sites.
7
with
modifications
infrastructure
restoration
into
the
that
plan
operations.
to
is
and
certain
necessary
allow
the
operational
to
complete
Bayway
Refinery
refinery
the
primary
to
continue
Mr. Ostermiller’s cost estimate was incorporated
overall
cost
estimate
for
the
restoration plan prepared by Mr. Horsak.8
State’s
primary
The combined work
performed by these individuals enabled the State to adequately
assess
and
calculate
the
natural
resource
damages
described
below.
The natural resource damages assessed and calculated by the
State include:
1. The
costs
of
primary
restoration.
The
State’s
analysis of injury and assessment of site conditions
calls
for
acres
at
the
Bayway
acres
at
the
Bayonne
outside
on-site
of
restoration
restoration
property
operating
plan,
of
and
property.
refinery
described
approximately
approximately
These
areas.
more
551
fully
areas
The
25
fall
primary
below,
is
estimated to cost approximately $2.6 billion in 2006
dollars.9 Much of the cost of primary restoration is
8
ExxonMobil did not call a refinery expert to dispute these costs or the
feasibility of doing this project next to an operating refinery.
9
Despite the Department’s stated preference for primary restoration and the
sound public policy rationale for the same, ExxonMobil offered no primary
restoration plan.
8
due
to
wastes
the
need
out
of
to
excavate
wetlands
ExxonMobil’s
hazardous
return
areas
and
the
to
intertidal elevations.
2. The cost of compensatory restoration.
Given the fact
that the on-site restoration is insufficient to make
the State whole for the loss it has suffered, the
State’s
experts
prepared
a
compensatory
restoration
claim that is based upon cost estimates for similar
projects
States.
in
New
The
Jersey
and
compensatory
the
Northeastern
restoration
United
costs
are
applied to the acres of habitat required to make the
public
whole
as
calculated
by
using
the
generally
accepted HEA formula.10 Compensatory restoration costs
amount to $6.3 billion in 2006 dollars.
3. NRD Assessment Costs. The costs incurred by the State
to perform the injury and damage assessment for the
Sites amount to $1.2 million.11
Mr.
Sacco
testified
that
the
instructions
the
Department
provided to its team of experts working to assess the injury at
10
As the Appellate Division acknowledged in this case, one of the benefits of
addressing loss of use damages is incentivizing responsible parties to
voluntarily resolve NRD claims in a timely fashion.
N.J. Dep’t of Envtl.
Prot. v. Exxon Mobil Corp., 393 N.J. Super. 388 (App. Div. 2007).
11
ExxonMobil paid three of its own experts about $2 million each, making the
State’s $1.2 million look eminently reasonable.
9
the Sites were consistent with New Jersey law and policy.12
Mr.
Sacco
the
also
confirmed
that
the
State’s
experts
followed
State’s instructions as to the governing law in their analysis
and
approach
restoration
to
the
damages.
calculation
Trial
Tr.
of
primary
4/29/14
and
(Sacco
compensatory
Direct)
91:25-
92:12.
A. Summary of In-Trial Rulings
During the course of trial, the Court entertained argument
and issued rulings on several motions brought by the parties.
One of the first such rulings related to post-2008 evidence.
The State moved to preclude such evidence in part due to the
fact that to the extent that it was produced at all, it was
produced
after
the
close
of
discovery
on
August
15,
2008.
ExxonMobil opposed the motion primarily based upon the argument
that such evidence was relevant pursuant to N.J.R.E. 401.
The
Court ultimately decided that upon timely objection it would
rule on the relevancy of post-2008 evidence on a case-by-case
basis as it relates to two categories of documents: to show that
the State's restoration plan is not practicable, and to rebut
the State's contention that ExxonMobil purposefully delayed the
remediation process.
2/10/14 Letter Opinion, pp. 4-5.
12
Dr. Lipton and Dr. Ginn both agreed that trustees regularly provide
instructions to experts in the course of a NRDA. Here, ExxonMobil’s experts
received instructions from counsel for ExxonMobil that were inconsistent with
New Jersey law and policy, and thus, never attempted to satisfy legitimate
State goals, for example, by submitting its own plan for primary restoration.
10
In addition, ExxonMobil sought, on the eve of trial to
repudiate
all
of
the
site
remediation
materials
it
or
its
consultants had prepared and submitted to the State pursuant to
the
Administrative
contending
that
Consent
they
were
Orders
(“ACOs”)
unreliable.
for
See
the
Letter
Sites,
Br.
of
ExxonMobil (1/12/14) and discussion infra., part III(C)(5)(a).
This position is contradicted by years of written discovery and
document production, as well as testimony from ExxonMobil and
its
representatives
reliable
and
environmental
the
that
best
conditions
this
information
evidence
and
was
comprehensive,
available
history
of
the
regarding
the
Sites.
See
discussion infra, part I(B)(4).
The Court also had the opportunity to hear and ultimately
deny ExxonMobil's motion to compel production of a map used as a
demonstrative
exhibit
during
the
State’s
opening
statement
relating to the areas of the Bayonne Site that are included in
the
State's
ultimately
claims
concluded
for
in
compensatory
denying
that
damages.
motion
that
The
Court
the
State
sufficiently identified the areas on the Bayonne property for
which it was seeking damages in its amended complaint and within
the Stratus report provided to the defendant during the course
of discovery several years prior.
60:2-64:17.
11
Trial Tr. 3/10/14 (Argument)
The Court granted in part, denied in part, and reserved in
part the State's Motion to Exclude the Opinions of Defendant’s
Expert Maury Klein.
As it related to the State's arguments
regarding Professor Klein's methodology, the Court reserved on
that part of the motion until the conclusion of trial.
commenting
opinions,
on
the
although
purported
the
relevancy
Court
noted
While
of
Professor
Klein's
that
Professor
Klein's
opinions appeared to be relevant on “the veneer," the Court
limited
his
testimony
and
prohibited
Professor
Klein
from
testifying as to several topics including: the monetary value of
the alleged benefits afforded by the refineries; limitation of
the State's public trustee duties, obligations, and power over
conveyed riparian lands; opinions based on his legal analysis or
opinions of a legal nature; and constitutional issues regarding
retroactivity of the Spill Act.
5/8/14 Letter Opinion, pp. 2-5.
On the same date that the Court addressed the above motion,
it granted the State’s request to take Judicial notice of the
existence of certain environmental statutes, but in its Letter
Opinion, the Court directed the parties to brief the relevancy
of the statutes at issue:
Under the N.J.R.E. 201, since there is
no dispute as to the existence of these
New Jersey statutes, the court will
take judicial notice of the 19 proposed
Statutes with this important caveat.
The State must ultimately demonstrate
through testimony, other evidence or in
12
its
closing
relevancy of
case
before
considered.
post
these
they
trial
brief
the
statutes to this
can
be
further
[Id. at 5-6.]
Each of the historical environmental statutes that are the
subject of the State’s Request for Judicial Notice is relevant
to rebut Professor Klein’s opinions and ExxonMobil’s continued
due process and notice arguments, in which ExxonMobil refuses to
acknowledge any environmental regulation or awareness of such
regulation prior to the Spill Act’s enactment in 1977.
Supreme
Court
statutes
found
in
demonstrate
Ventron,
New
supra,
Jersey’s
regulation dating back as early as 1866.
environmental
statutes
also
94
N.J.
historic
As our
473,
these
environmental
The existence of these
demonstrates
New
Jersey’s
longstanding prohibition of the discharge of pollution.
The
statutes also directly contradict the testimony of ExxonMobil’s
Professor Klein, who testified that in the late 1800’s and early
1900’s New Jersey’s concerns about environmental protection were
nonexistent or far less developed than they were in 1977, making
them relevant in that respect as well.
See, e.g., Trial Tr.
5/20/14 (Klein Cross) 168:17-172:9 (discussing the 1884 Sludge
Acid Law).
The State has demonstrated the relevance of these
statutes at trial, and the Court should consider these statutes
in its decision in this matter.
13
The Court later exercised its discretion and granted the
State's motion to add its forestry expert, Robert Williams, to
its witness list.
"there
[was]
State's
As the Court stated in its oral ruling,
nothing
motion
to
misleading
add
Mr.
or
surprising"
Williams
as
a
regarding
witness
and
the
that
ExxonMobil would suffer no prejudice by the Court granting of
the same.
It allowed the defendant the opportunity to depose
Mr. Williams, which subsequently occurred, and Mr. Williams was
able to testify regarding his upland forest restoration cost
estimate.
See Trial Tr. 3/19/14 (Argument) 120:3-122:17.
On the State's motion to bar the testimony of ExxonMobil's
environmental
engineering
expert
Dr.
Tod
Delaney,
denied the motion in part and granted it in part.
the
Court
The State had
sought to bar Dr. Delaney's testimony on the basis that he made
no analysis of the content of any fill material used at Bayway
or Bayonne, and specifically did not determine whether it was
contaminated with hazardous materials or not, while at the same
time
purporting
to
present
an
analysis
ExxonMobil's physical modification defense.
in
support
of
The Court commented
that Dr. Delaney's report would serve as the foundation for his
testimony, but the Court cautioned that Dr. Delaney was not to
supplement
or
provide
repetition
of
Dr.
Klein's
historical
opinions with his own non-expert historical perspective and was
not
to
testify
regarding
"state-of-the-art”
14
activities
or
practices, as the same would not be relevant to the methodology
and calculation of the State's natural resource damages. 5/20/14
Letter Opinion, pp. 3-6.
Next,
the
Court
granted
in
full
the
State's
Motion
to
Exclude the Deposition and Expert Report of Deceased Witness, F.
Douglas Mooney.
Mr. Mooney was an ExxonMobil engineering expert
who passed away in 2009.
ExxonMobil failed to inform the State
of Mr. Mooney's death until November 12, 2013, when ExxonMobil
listed Mr. Mooney's discovery deposition and expert report on
its exhibit list.
The Court noted that the discovery deposition
taken by the State was not a de bene esse, taken pursuant to R.
4:14-9
and
did
not
afford
the
State
with
the
appropriate
opportunity to cross examine the witness with information from
the discovery deposition.
The Court also noted that ExxonMobil
offered no justifiable reason for failing to inform the State of
Mr.
Mooney's
death
and
its
intent
to
use
his
discovery
deposition at trial, despite the fact that four years had passed
since the date of his death.
with
regard
to
Mr.
Mooney's
Lastly, the Court also noted that
report,
the
report
was
without an exception, and therefore, not admissible.
hearsay
6/10/14
Letter Opinion, pp. 3-5.
The
Court
also
granted
the
State's
Motion
to
Exclude
Evidence Regarding Unrelated Sites, that sought, in essence, to
preclude
evidence
regarding
settlements
15
and
the
Department
settlement policy at sites other than Bayway and Bayonne.
In
its ruling on that motion, the Court stated that comparing the
case before it to other matters that were settled or otherwise
resolved
was
Specifically,
not
the
a
determinative
Court
stated
issue
that
in
this
"[c]omparisons
case.
of
other
sites and settlements would be inapposite and ineffective."
The
Court
the
also
stated
that
the
focus
of
this
case
was
not
settlement policy or policies of the State as they relate to
other cases, and because there was a liability determination,
the strict focus of the litigation is the issue of damages to
the State's natural resources at Bayway and Bayonne.
The Court
did permit testimony regarding sites referred to in the State's
case-in-chief, that the State had brought up as examples of the
State's
extensive
projects.
experience
in
implementing
restoration
Id. at 5-6.
On July 25, 2014, the Court denied the State's motion to
quash
the
Campbell.
subpoena
While
served
noting
on
that
former
Judge
Commissioner
Grispin
did
not
Bradley
permit
Commissioner Campbell's discovery deposition, the Court stated
that that was not determinative on the issue before it.
The
Court warned that ExxonMobil's calling of Commissioner Campbell
was "risky because you don't know what the witness is going to
say . . . .”
stated
purpose
The Court went on to state that ExxonMobil's
for
Commissioner
16
Campbell's
testimony
was
to
testify
relative
to
the
NRD
policy
of
the
State
and
the
development of the NRD program during his tenure, and stating
“[w]ho better to discuss the NRD policy than the individual
responsible
for
setting
such
policies."
Trial
Tr.
7/25/14
(Decision) 42:6-45:17.13
B. What is Not in Dispute.
This matter has been litigated for over ten years and has
included seven motions and cross motions for partial summary
judgment, proceedings before a Special Discovery Master, as well
as
three
interlocutory
appeals.
In
the
course
of
these
proceedings, both pretrial and at trial, certain legal issues
were
resolved.
Additionally,
certain
factual
issues
were
resolved through admissions or stipulations of the parties.
As
discussed more fully throughout this brief, the following major
issues are not in dispute:
1.
The State’s public trust interest is not in dispute.
The State’s interest in the natural resources at and near
these Sites, including resources that have been destroyed by
ExxonMobil’s discharges, is not at issue.14
The trial court in
this matter previously found that “for the purposes of public
nuisance law, the right to an uncontaminated environment is one
13
The Court separately noted the inexactitude with which ExxonMobil had
referenced “policy” throughout the trial. Id. at 32:17-24.
14
N.J. Dep’t of Envtl. Prot. v. Exxon Mobil Corp., docket no. UNN-L-1650-05,
Letter Opinion (Law Div. July 24, 2009).
17
held
in
common
by
the
public.”
ExxonMobil,
supra,
2008
WL
4177038, at *5 (citing Restatement (Second) of Torts Sec. 821B
cmt. e) (1979).
The trial court further held that the “State’s
rights as public trustee exist even if the property has been
alienated.”
revisit
trust.
its
Ibid.
prior
ExxonMobil
ruling
and
asked
limit
the
that
the
scope
of
trial
the
The trial court again refused:
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.
The
Appellate
Division
in
this
case
repeatedly explained that "the legislature
intended
to
expand,
not
contract,
the
agency's abilities to recover compensatory
damages from polluters."
NJDEP v. Exxon,
393 N.J. Super. at 405. The Appellate
Division read into the Spill Act broad
implied
powers.
Specifically,
that
the
statute's use of "cleanup and removal costs"
was meant to include natural resources
damages and loss of use of resources. The
Appellate Division has clearly given DEP the
ability to obtain damages under the Spill
Act where a discharge has contaminated the
property. Any lands which are contaminated
as a result of actions by Exxon or its
predecessors could be subject to damages as
outlined by the Appellate Division under the
Spill Act. This court will continue to read
the
Public
Trust
Doctrine
expansively.
Therefore [n]atural resource damages are
recoverable under the Spill Act and the
Public Trust doctrine does not bar such
recovery.
[7/24/09 Letter Opinion, p. 4.]
This is the law of the case.
18
court
public
Nevertheless, ExxonMobil continued to press this issue at
trial.
ExxonMobil instructed its experts to take a limited view
of the public trust, contrary to the rulings in this case.
But,
as this Court held in connection with the State’s Motion in
Limine as to Professor Klein’s testimony:
[T]estimony
and
opinion
regarding
the
riparian issues will only be permitted so
long as it directly relates to the natural
resource damages allegedly associated with
areas that were owned by the State and
otherwise
conveyed
to
Exxon
or
its
predecessors. Testimony and opinions related
to the issue of a limitation of the public
trustees duties, obligations, and power over
conveyed riparian lands is not relevant as
the issue was determined. Judge Anzaldi
clearly ruled against Exxon on this issue.
ExxonMobil
Corp.,
No.
L-3026-04,
(N.J.
Super. Ct. Law Div. July 24, 2009).
[5/8/14 Letter Opinion, on Motion in Limine
regarding Professor Klein, p. 4 (emphasis
added).]
Thus, the State’s public trust interest is not in dispute, and
any testimony to the contrary need not be addressed.
2.
ExxonMobil
is
liable
for
primary
restoration,
compensatory restoration and assessment costs.
ExxonMobil
Sites.
was
previously
found
liable
for
NRD
As recognized by the Appellate Division:
Exxon Mobil does not dispute that it is
strictly liable under the Spill Act for the
costs of physical restoration of natural
resources
damaged
or
destroyed
by
its
discharge of hazardous substances what DEP
refers to as “primary restoration” costs as
part of the “cleanup and removal costs”
19
at
the
expressly stated in the Act. Indeed, the
motion judge, on summary judgment, held
defendant strictly liable as a matter of law
for “cleanup and removal” costs including
physical restoration of damaged or destroyed
natural resources, and that determination is
not before us on leave to appeal. Exxon
Mobil also acknowledges that “loss of use”
damages are available to the State under the
common law and other state statutes. The
only issue therefore is whether the Spill
Act affords the State the same relief.
[ExxonMobil, supra, 393 N.J. Super. at 398
(App. Div. 2007) (citations and footnotes
omitted) (emphasis added).]
As
a
result,
ExxonMobil
is
liable
for
that
under
all
cleanup
and
Spill
Act,
removal costs under the Spill Act.
The
“cleanup
Appellate
and
Division
removal
found
costs”
include:
the
primary
restoration,
compensatory restoration, and loss of use or value,15 as well as
the costs of performing the assessment.16
ExxonMobil’s expert
Dr. Thomas Ginn confirmed that these three components are part
of a typical NRD claim.
188:5.
In
addition,
Trial Tr. 7/22/14 (Ginn Cross) 187:23in
the
context
of
a
summary
judgment
motion, the trial court held that under principles of trust law,
15
ExxonMobil, supra, 393 N.J. Super. 388.
16
N.J. Dep’t of Envtl. Prot. v. Exxon Mobil Corp., 2011 WL 2304026 (N.J. App.
Div. May 31, 2011)
20
the State was entitled to attorney fees when incurred in the
pursuit of restoration.17
3.
The Bayway and Bayonne Sites are contaminated.
There is no dispute that contamination is present at the
Sites as a result of ExxonMobil’s acts and omissions at Bayway
and Bayonne.
Leading up to and during the trial of this case,
ExxonMobil took the position that statements and/or admissions
set forth in the site remediation materials prepared by or on
ExxonMobil’s
behalf
N.J.R.E. 803(b).18
were
not
binding
on
the
company
under
The State, by way of a motion, sought and
obtained a ruling that these statements were in fact admissions.
See 5/8/14 Letter Opinion, (addressing, in part, the State’s
Motion to treat statements as admissions).
The admissions are
set forth in this Court’s Order of June 3, 2014.
include
descriptions
the
of
areas
the
of
commencement
concern
IAOCs
activities
at
Bayway
and
operations
in
Bayonne.19
In addition, the admissions include descriptions of
17
and
of
The admissions
1/22/09 Letter Opinion, p. 10 (Anzaldi, J.).
This issue
addressed after the Court has ruled on damages in this case.
should
and
be
18
As this court noted in its ruling, “Exxon ask[ed] this court to ignore
their affirmative responses designated as ‘admitted’ to the State’s [prior]
motion[s] as if they were true enough to be admitted then but not true now.”
5/8/14 Letter Opinion, p. 8.
19
As described in more detail below, for investigative purposes in the Site
Remediation Program, the Bayway Site was broken into IAOCs (Investigative
Areas of Concern) and the Bayonne Site was broken into investigative units.
21
the environmental conditions at the two Sites.
These admissions
include but are not limited to the following statements:
As of 2006, 17 non aqueous phase liquid
(free oil) plumes were present in the
groundwater at Bayonne;
An operating refinery loses a certain
amount of both crude oil and refined
products through leaks, spills, and the
like;
The proportion of crude oil and refined
products lost through spills and leaks
cannot be exactly determined, but it was
almost certainly higher in the 1930’s and
1940’s than it is today;
For any given facility, the quantity
of hydrocarbons lost through leaks and
spills will normally be proportional to
throughput;
A refinery working beyond its normal
capacity,
or
where
normal
periodic
maintenance is foregone or deferred, will
tend to lose more hydrocarbons to leaks and
spills
than
a
refinery
where
periodic
maintenance can be performed on schedule;
Contamination exists beneath the Bayway
and
Bayonne
properties
from
these
discharges;
Over the more than 100 years of
refinery operations some of the soil on the
refinery properties was contaminated with
hydrocarbons from refinery operations, and
some groundwater beneath the refineries is
also contaminated; and
Oily wastes from petroleum refining
were disposed of at the Bayonne facility
from 1956 to 1965.
[6/3/14 Order.]
22
As ExxonMobil stated during trial, it is not disputing that the
Sites are contaminated.20
4.
The validity of the underlying data sets and the
characterization of the Sites are not disputed.
The
data
gathered
in
and
information
connection
relied
with
site
upon
by
the
remediation
conducted under the Department’s oversight.
State
was
activities
This material was
collected and developed pursuant to the New Jersey Technical
Requirements for Site Remediation (“Tech Regs.”).21
Mark Walters
described the remedial investigation as a mechanism to delineate
the contamination present at a site.
Trial Tr. 1/13/14 (Walters
Direct) 131:3-17.
All witnesses agreed that the Site History Reports, data
sets and other materials provided to the State in connection
with ExxonMobil’s site remediation obligations were reliable.
Trial Tr. (Walters Direct) 1/13/14 133:16-20 (testifying that
the State and ExxonMobil agreed that the Site History reports
were “valid [and] accurate” and that ExxonMobil itself relied
20
It is hard to reconcile these admissions with the instructions that
ExxonMobil provided to its experts, such as Dr. Delaney, to ignore all
evidence of contamination at the Sites in conducting their analysis.
See,
e.g., Trial Tr. 6/2/14 (Delaney Cross) 129:21-23 (“I was not charged with
looking for contamination.”).
21
Compliance with Tech Regs. is only a minimum. See New Jersey Technical
Requirements for Site Remediation, N.J.A.C. 7:26E-1.1(a) (“This chapter
constitutes the minimum technical requirements to investigate and remediate
contamination at any site.”); see also Trial Tr. 8/7/14 (Campbell Direct)
222:25 – 223:7.
23
upon these reports in furthering its investigation); id. 134:620
(expressing
no
doubts
about
the
reliability
of
the
Site
History Reports); see also ExxonMobil’s Interrogatory Answers,
PEX1613; Trial Tr. 1/13/14 (Walters Direct) 188:1-5; Trial Tr.
2/10/14 (Archibald Direct) 45:1-7; Trial Tr. 1/28/14 (Morrison
Direct) 171:2-172:15; Trial Tr. 3/10/14 (Lipton Direct) 85:1287:12, 100:9-20; Harley Depo. Designation (Joint Exh. 1)22 75:1721;
Trial
Tr.
6/26/14
(Boehm
Redirect)
186:24-187:4.
The
parties actually used the same underlying data in connection
with their analyses.
Trial Tr. 6/26/14 (Boehm Redirect) 186:24-
187:4 (confirming that the State and ExxonMobil had the same
data sets for these Sites).
ExxonMobil’s
experts
and
employees
testified
that
ExxonMobil’s contractors did a good job of collecting data to
characterize the nature and extent of contamination at these
Sites.
Trial
Tr.
6/26/14
2/10/14
(Archibald
Direct)
product
of
(Boehm
41:15-42:2
ExxonMobil’s
reliable”).
Mark
Cross)
consultants
Walters
explained
95:8-22;
(describing
as
Trial
Tr.
the
work
“scientifically
that
the
massive
contamination present at both Sites was the impetus for the
remedial investigation, noting that the investigation at Bayonne
was
delayed
due
to
the
amount
22
of
uncontrolled
free
product
Rick Harley worked with ExxonMobil’s Site Remediation Team, and, similar to
Brent Archibald, he was described by his peers as being very knowledgeable
regarding the environmental conditions at the Sites.
Trial Tr. 5/19/14
(Bruzzi Cross) 84:19-85:1; Trial Tr. 7/23/14 (Esch Cross) 211:13-20.
24
throughout the Site.
138:12, 139:3-10.
gross
He also noted that the joint recognition of
contamination
1/13/14
Trial Tr. 1/13/14 (Walters Direct) 137:15-
(Walters
argued
Direct)
for
limited
177:18-24.
sampling.
Mr.
Trial
Archibald
and
Tr.
Mr.
Harley confirmed this.
See Trial Tr. 2/10/14 (Archibald Direct)
44:4-15;
Designation
Harley
Depo.
(Joint
Exh.
1)
96:23-97:1,
98:24-99:4, 195:25-196:9.
5.
Basic NRDA principles are undisputed.
There
regarding
assumptions
are
the
and
a
number
State’s
of
disputes
between
mostly
centered
NRDA,
inferences
reaching their conclusions.
made
by
the
State’s
the
parties
around
experts
the
in
However, there are a number of
basic NRDA principles that are not in dispute.
The parties agree that NRDAs are conducted by Trustees.
Trial Tr. 6/5/14 (Desvousges Cross) 120:2-5 (confirming that the
trustee is responsible for doing the NRDA); Trial Tr. 7/22/14
(Ginn Cross) 3:18-21 (agreeing that NRDAs are the responsibility
of the trustee).
The parties also agree that NRDAs are site specific. Trial
Tr. 7/22/14 (Ginn Cross) 135:20-24 (confirming that each site is
unique and must be treated in a site-specific fashion); Trial
Tr. 6/9/14 (Desvousges Cross) 21:7-21 (testifying that analyses
are site specific).
Indeed, as Former Commissioner Campbell
testified, policies relating to interpreting a statute “would be
25
a
very
case-specific
interpretation.”
Trial
Tr.
8/7/14
(Campbell Direct) 37:23-38:2.
Both parties’ experts who have worked on NRDAs agreed that
NRDAs are performed within a legal and regulatory framework and
are not solely a scientific endeavor.
For example, Dr. Ginn
testified:
Q And what did you mean by
scientific aspects of the NRDA?
the
non-
A I'm referring to legal or regulatory
frameworks that I think are distinct from
the scientific issues.
[Trial Tr. 7/10/14 (Ginn Cross) 22:24-23:2.]
Dr. Lipton agreed. Trial Tr. 3/10/14 (Lipton Direct) 105:6-20,
143:6-144:18, 147:20-148:16.
The
parties’
experts
retrospective analysis.
124:12
(NRDAs
are
agree
that
NRDAs
require
a
Trial Tr. 7/10/14 (Ginn Cross) 123:24-
retrospective
in
that
they
require
an
investigation back to the commencement of the injury); see also
William Gala, et al., Ecological Risk Assessment and Natural
Resource Damage Assessment: Synthesis of Assessment Procedures,
5 Integrated Envt’l Assessment Mgmt. 515 (2009), DEX1563, p. 1
(noting
that
impacts
of
although
NRDAs
contamination,
consider
they
analysis).
26
also
current
and
include
a
prospective
retrospective
Additionally,
it
is
not
disputed
that
data
gaps
always
exist in a NRDA and reasonable inferences and estimates must be
made based on the exercise of professional judgment.
4/14/14
(Lipton
Redirect)
61:2-62:1;
Trial
Tr.
Trial Tr.
7/22/14
(Ginn
Cross) 45:17-46:4.
Finally,
sites
for
not
disputed
should
not
that
include
baseline
a
or
reference
responsible
party’s
Trial Tr. 6/24/14 (Boehm Cross) 213:23-214:2; Trial
7/8/14
important
is
NRDA
discharges.
Tr.
it
(Boehm
that
Recross)
reference
169:18-170:3
areas
are
(stating
not
that
influenced
it
by
is
the
activities on the Sites); Trial Tr. 7/10/14 (Ginn Cross) 94:3-6
(“[B]aseline
hazardous
factors
are
very
substances.”).
The
different
Tech
from
Regs.
effects
require
of
an
investigation into all contamination, even if it results from
the
responsible
party’s
operations.
N.J.A.C.
7:26E-1.8
(defining “historic fill material” as “non-indigenous material,
deposited to raise the topographic elevation of the site, which
was
contaminated
prior
to
emplacement,
and
is
in
no
way
connected with the operations at the location of emplacement and
which includes, without limitation, construction debris, dredge
spoils, incinerator residue, demolition debris, fly ash, or nonhazardous solid waste.
Historic fill material does not include
any material which is substantially chromate chemical production
waste
or
any
other
chemical
production
27
waste
or
waste
from
processing
of
tailings.”)
metal
This
is
or
mineral
similarly
ores,
reflected
residue,
in
slag
N.J.A.C.
or
7:26E-
3.10,23 Site Investigation - background investigation in soil:
(a)
If during the site investigation, a
suspected contaminant is found in any
area of concern in excess of the
applicable remediation standard, the
following approach may be used to
demonstrate to the Department that the
contaminant concentration is due to
natural background.
1. Demonstrate
that
a
previous
background investigation in the
region of the site, conducted
pursuant to (a)3 below, identified
contaminant concentrations in soil
in the region of the site at the
same concentration as the soil
found
on
the
site
under
investigation; [see below]
2. Demonstrate that the contaminant
concentrations at the site are due
to natural background conditions
as follows:
i. The contaminant of concern
was never used, stored, or
disposed
on
the
site
as
documented pursuant to NJAC
7:26E-3.1.
. . . .
3. Conduct
a
background
investigation as follows:
soil
. . . .
23
This section was in effect at the time this case was filed. Its number and
language has changed somewhat in more recent promulgations. For example, see
N.J.A.C. 7:26E-3.8 (from 2012 re-promulgation) (providing in part for "Site
investigation - natural background investigation of soil and ground water (a)
If during the site investigation, any contaminant that may be naturally
occurring is found in soil at any area of concern in excess of a soil
remediation standard, then the person responsible for conducting the
remediation may investigate the extent to which the concentration of the
contaminant in soil may be due to natural background . . .").
28
ii.
Background samples shall be
collected
at
locations
unaffected
by
current
and
historic site operations as
documented by the preliminary
assessment, including aerial
photographs.
Whenever
possible, background samples
shall
be
collected
from
locations
which
are
topographically
upgradient
and upwind of contaminated
sources.
iii. Background samples shall not
be
collected
from
the
following areas:
(1) Parking lots, roads, or
roadside areas;
(2) Areas
where
potential
contaminants were loaded,
handled or stored;
(3) Waste disposal areas;
(4) Areas
near
railroad
tracks;
(5) Areas of historic fill
material;
(6) Areas
receiving
runoff
from areas (a)3iii(1) to
(5) above or from adjacent
sites
(7) Storm drains or ditches
receiving runoff from the
site or adjacent sites; or
(8) Any other area of concern.
(b)
If during the site investigation a
contaminant concentration is found in
any area of concern in excess of the
applicable remediation standard, it may
be demonstrated to the Department that
the elevated contaminant concentration
is not due to an onsite discharge on a
case by case basis.
29
[Id. at 64-65 (emphasis added).24]
6.
Salt marshes are the most productive and valuable
ecological resources.
All
experts
with
ecological
backgrounds
agreed
that
intertidal wetlands are one of the most productive ecosystems on
the
planet,
and
their
restoration,
especially
in
the
highly
urbanized and developed region of northeastern New Jersey, is an
important goal.
Trial Tr. 4/29/14 (Sacco Direct) 19:24-20:2;
Trial Tr. 7/10/14 (Ginn Cross) 119:20-120:1; Trial Tr. 8/4/14
(Rodgers Direct) 40:14-41:20; Trial Tr. 3/12/14 (Lipton Direct)
101:21-104:18.
Mr.
Sacco
testified
that
the
services
the
destroyed habitats could have provided are of vital importance
to the ecosystems in the State of New Jersey.
Trial Tr. 4/30/14
(Sacco Direct) 36:22-40:12.
7.
ExxonMobil has not conducted natural resource
restoration at either of the Sites.
Witnesses for both ExxonMobil and the State testified that
restoration
remedial
Archibald
activities
process
or
confirmed
have
done
that
topic” for ExxonMobil.
not
been
in
any
way
NRD
was
a
incorporated
at
“high
the
into
Sites.
profile,
the
Brent
sensitive
Trial Tr. 2/10/14 (Archibald Direct)
24
Both Dr. Boehm and Dr. Ginn were questioned about this provision, and both
acknowledged that they did not follow the Tech Regs. definition of background
in their analysis. Trial Tr. 6/25/14 (Boehm Cross) 135:24-145:11; Trial Tr.
7/10/14 (Ginn Cross) 145:17-148:2.
30
106:25-107:4. Mr. Archibald’s testimony confirms that ExxonMobil
did
not
believe
that
its
obligations
and
liability
to
the
Department for natural resource damages had been resolved when
it signed the ACOs.
his
over
thirteen
Further, Mark Walters testified that during
years
as
the
Case
Manager
for
Bayway
and
Bayonne, ExxonMobil performed no natural resource restoration at
the Sites.
Trial Tr. 1/14/14 (Walters Direct) 150:8-12.
See
also infra, part II(E).
8.
Habitat equivalency analysis is a generally accepted
and reliable methodology to calculate compensatory
restoration.
The premise of a HEA is that the State’s natural resources
can be restored, and that the public can be compensated for past
and
expected
injured
future
natural
losses
resources
of
the
would
services
have
and
provided
values
through
that
the
provision of additional and equivalent services in the future.
Thus, a HEA is used to estimate natural resource damages and
provide
a
monetary
figure
equal
to
the
restoration
replacement costs necessary to make the public whole.
and
The HEA
methodology is well-established and has been accepted in courts
across
the
country.
ExxonMobil’s
witnesses
and
the
HEA
literature further support the State’s experts’ testimony about
the development and acceptance of HEA among NRDA practitioners.
Though the Department and ExxonMobil disagree on many of the
details, both agree that a HEA is the proper method of valuing
31
the
NRD
in
this
case.
See
infra,
parts
II(F)(3)
and
IV(B)(3)(b)(iv)(b).
9.
Permitted discharges need not be separated.
ExxonMobil
argued
that
the
State
was
required
to
distinguish between impacts caused by permitted and unpermitted
discharges and discharges under a federal or state permit.
the
context
of
this
Court’s
June
10,
2014,
opinion
on
In
the
State’s Motion in Limine to preclude evidence regarding this
issue, the Court held that: “[t]he permit defense is a defense
that goes to liability, not to damages.
The use of this defense
is therefore not available in the context of this trial.”
6/10/14 Letter Opinion, at 2-3 (Hogan, J.).
Court concluded that:
case
to
prove
either
See
In addition, the
“[T]he State is under no duty in this
way,
as
to
whether
predecessors operated with or without permits.”
Exxon
or
its
6/10/14 Order,
at 3.25
II.
The State Has Met Its Burden Regarding the Disputed Legal
and Factual Issues.
A. Applicable Legal Standards
As noted, ExxonMobil’s liability is undisputed and was not
at issue in this trial.
25
Additionally, much of the discharges at the Sites occurred prior to the
advent of permitting.
32
While there may be disputed issues of fact
concerning the extent of the damage that has
occurred, the facts that relate to the basis
of liability are not disputed. . . .DEP is
left to its proof as to damages.
[N.J. Dep’t of Envtl. Prot. v. Exxon Mobil
Corp., UNN-L-3026-04, 2008 WL 4177038 at *6
(Law Div. Aug. 29, 2008) (Anzaldi, J.)
(emphasis added).]
Likewise, the fact that ExxonMobil caused injury and damage
to natural resources of the State is not disputed and was not an
issue for trial.
quantum
of
This trial was solely about determining the
natural
resource
damages
for
which
ExxonMobil
is
liable.
1.
The State has met its burden regarding the amount of
damages caused by ExxonMobil’s discharges.
The State bears the burden of proof in establishing the
amount
of
natural
resource
damages
caused
by
ExxonMobil.
However, the parties disagree as to what is required of the
State
to
meet
this
burden.
ExxonMobil
seeks
to
apply
a
heightened burden of proof on the State, which by ExxonMobil’s
own admissions, is impossible to meet due to the nature of NRD
cases in general and due to the facts and circumstances of this
case specifically, including the extended length of time during
which pollution was released into the environment.
The specific
documentary evidence ExxonMobil demands of the State, such as
33
exact dates of each discharge26, exact volumes of each discharge,
specific identification of the source of each discharge, the
precise
condition
discharge,
of
and
the
Sites
documentation
immediately
specifically
prior
to
relating
each
each
discharge to a specific injury, is not available, obtainable, or
practicable in most chronic pollution injury cases, especially
where, as here, the responsible party did not keep appropriate
records.
Moreover, this amount of specificity is not part of
the State’s burden.
The Spill Act was drafted to remove impediments to recovery
by
the
public.
The
use
of
strict,
joint,
several
and
retroactive liability is an example of the legislative-driven
simplification
of
the
State’s
case.
The
use
of
a
“nexus”
requirement instead of a more difficult causation requirement
also simplifies the State’s case.
See N.J. Dep’t of Envtl.
Prot. v. Dimant, 212 N.J. 153 (2012).
ExxonMobil
State
to
that,
sub
provide
a
silentio,
snapshot
of
the
The idea advanced by
Legislature
site
conditions
required
the
the
instant
before each discharge is nonsensical.27
26
Discharges, which ExxonMobil concedes, occurred daily.
See 6/3/14 Order,
(stipulating, for example, that “[a]n operating refinery loses a certain
amount of both crude oil and refined products through leaks, spills, and the
like” and that the “quantity of hydrocarbons lost through spills and leaks
will normally be proportional to throughput.”).
27
As discussed herein, the State provided its chronic injury NRD case in a
reasonable and appropriate manner.
The liability finding in this case was
predicated on over a century of pollution at each Site. The State built its
case on, among other things, ExxonMobil’s admissions, site remediation
34
NRDAs are an inexact science relative to other scientific
enterprises.
However, NRDA practitioners have developed various
reasonable methods to assess and estimate damages in an NRD
case.
The
damages
in
wishes.
fact
a
remains
chronic
that
injury
there
NRD
is
case
no
in
way
the
to
way
determine
ExxonMobil
Even in the simplest NRD case, such as an acute oil
spill occurring only a few months or years ago, there will be
uncertainties in the amount of injury and damage caused by the
discharge and the need for professional judgment in resolving
these uncertainties.
Such is the nature of an NRD case.
This is not the simplest of NRD cases.
To the contrary,
this damages trial is extremely complex, involving large Sites,
numerous and voluminous discharges going back over 100 years,
discharges of hundreds of different contaminants, and lack of
documentation
and
inadequate
record-keeping.
Thus,
it
is
impossible for the State and its experts to provide all of the
unnecessary details insisted upon by ExxonMobil.28
discussed
herein,
available
professional
the
evidence,
judgment,
State
drew
and
and
its
experts
reasonable
provided
a
Instead, as
used
the
inferences
basis
for
best
using
estimating
investigations and analyses, internal ExxonMobil documents, soil borings and
chemistry. If this evidence is not adequate, then no chronic injury NRD case
could ever be brought, which is clearly inconsistent with Legislative intent.
28
Despite the fact that its own experts acknowledge that NRDAs are an inexact
science and there is no methodology that would precisely determine an amount
of natural resource damages, a majority of ExxonMobil’s argument is to demand
proof from the State with an exactitude that is not possible in NRD cases
generally or in this NRD case specifically.
35
damages with a reasonable degree of certainty.
is required under the law.
This is all that
Lasker v. Lasker, 91 N.J. Eq. 352,
353 (Ch. 1920) (“And the one general rule that runs through all
the doctrine of trial is this, that the best evidence the nature
of the case will admit shall always be required, if possible to
be had; but if not possible, then the best evidence that can be
had shall be allowed.”); Paolicelli v. Wojciechowski, 132 N.J.
Super. 274, 278-79 (App. Div.), certif. den., 68 N.J. 153 (1975)
(“Evidence affording a basis for estimating damages with some
reasonable degree of certainty is sufficient to support an award
of compensatory damages.”).
The historical data gathered by ExxonMobil pursuant to its
site remediation obligations, including the Site History Reports
and
deliverables
ExxonMobil’s
and
underlying
admissions
and
sampling
internal
data,
as
well
documents,
as
provide
sufficient information for the State to reasonably assess the
natural resource damages in this case.29
In New Jersey, once the
fact of damages has been established — as is the case here — a
plaintiff need not prove the amount of damages with exactitude.
A
plaintiff
need
“prove
damages
with
such
certainty
as
the
nature of the case may permit, laying a foundation which will
enable
the
trier
of
fact
to
29
make
a
fair
and
reasonable
The State’s reliance on the best available evidence is discussed, infra,
part II(A)(3).
36
estimate.”
Lane v. Oil Delivery, 216 N.J. Super. 413, 420 (App.
Div. 1987); see also Tessmar v. Grosner, 23 N.J. 193, 203 (1957)
(“The rule relating to the uncertainty of damages applies to the
uncertainty as to the fact of damage and not as to its amount,
and
where
it
is
certain
that
damage
has
resulted,
mere
uncertainty as to the amount will not preclude the right of
recovery.”); Borough of Fort Lee v. Banque Nat’l de Paris, 311
N.J. Super. 280, 291 (App. Div. 1998) (“Damages need not be
proved
with
precision
where
that
is
impractical
or
impossible.”); V.A.L. Floors, Inc. v. Westminster Communities,
Inc.,
355
Tessmar,
N.J.
supra,
Super.
that
416,
the
424
rule
(App.
Div.
regarding
2002)
the
(quoting
uncertainty
of
damages; that it applies to the uncertainty as to the fact of
damage and not as to its amount, noting that “[i]n fact, we do
permit
considerable
speculation
by
the
trier
of
fact
as
to
damages”); Hoppe v. Ranzini, 158 N.J. Super. 158, 169-70 (App.
Div.
1978)
(“Subject
to
appropriate
proofs
and
control
and
instructions by the court, the trier of facts often considers
factors in assessing damages that may be speculative in some
degree.”); Lightning Lube Inc. v. Witco Corp., 4 F.3d 1153, 1176
(3rd Cir. 1993) (citing Tessmar, supra,30 (“[I]t is well-settled
in New Jersey that . . . after the plaintiff has established an
30
See also infra, part IV(E)(3).
37
injury, it need prove the amount of damages only to a reasonable
degree of certainty.”)
While there were many disputes in this trial, there should
be no dispute that the amount of damage caused by ExxonMobil is
substantial.
“Exxon’s
destructive
conduct
occurred
over
a
number of years resulting in significant damage to the natural
environment.”
ExxonMobil, supra, 2008 WL 4177038, at *5.
“The
damage to the contaminated sites resulted from both the active
disposing and accidental spilling of hazardous substances.
resulting harm was great.”
Id. at *7.
The
“The pollutants that
escaped from the Bayway and Bayonne sites have impacted the
wildlife and contaminated wetlands and marshes.”
Id. at *4.
“Exxon points out that the contamination at the sites is the
result of spills dating back since the late 1800s” and “that
there
were
discharges’.”
Partial
‘numerous
reported
spills’
and
‘historic
1/22/09 Letter Opinion, on ExxonMobil’s Mtn for
Summary
Judgment
as
to
Issues
of
Spill
Act
Retroactivity, Statute of Limitations on Common Law Claims, and
Counsel Fees (Anzaldi, J.), p. 6.
“It is undisputed that during
the course of its ownership and operation of these two sites,
ExxonMobil discharged hazardous substances, including petroleum
products, into the natural resources of the State, and as a
result extensive contamination exists beneath these properties,
for which defendant acknowledges it is jointly and severally
38
liable under the Spill Act.”
ExxonMobil, supra, 393 N.J. Super.
at 392.31
As discussed herein, applying methodology commonly used in
NRDAs, the State analyzed the best available evidence and made
reasonable
inferences,
where
appropriate
and
necessary,
and
provided a reasonable, reliable estimate of damages resulting
from ExxonMobil’s discharges.
The State’s reliance on the best
available evidence is not an application of a lesser standard or
more lenient burden of proof, as ExxonMobil suggests.
Trial Tr.
9/3/14 (ExxonMobil Closing) 55:20-59:22.
Rather, it is both
consistent
a
with
sound
NRDA
practice
and
rejection
of
the
admittedly impossible burden of proof ExxonMobil seeks to create
and
have
this
Court
impose
on
the
State.
ExxonMobil
has
admitted the presence of widespread contamination at the Sites,
confirmed
the
sufficiency
of
the
documentation
of
the
contamination in the site remediation process, and acknowledged
the
date
likely
and
period.32
impossibility
source
of
each
of
identifying
discharge
with
over
the
specificity
the
100-year
time
In light of these concessions, ExxonMobil’s argument
that the State failed to meet its burden of proof because of the
31
As discussed herein, witnesses at trial, including the Department’s Mark
Walters and John Sacco, as well as ExxonMobil’s Brent Archibald and Richard
Harley, agreed that the Sites suffered extreme and pervasive contamination.
32
Trial Tr. 7/22/14 (Ginn Cross) 6:18-8:15 (agreeing that reconstruction in a
retrospective analysis “becomes more and more difficult with the length of
time” of the assessment and that NRDA practitioners attempt to “make the most
of available information.”)
39
imperfect data and data gaps that exist33 should be rejected in
favor of the recognition of long-standing New Jersey law that
“the
best
evidence
the
nature
of
the
case
will
admit
shall
always be required, if possible to be had; but if not possible,
then
the
best
evidence
that
can
be
had
shall
be
allowed.”
Lasker, supra, 91 N.J. Eq. at 353.34
The same is true with respect to ExxonMobil’s “causation”
argument.
The State need only demonstrate a “nexus” between the
discharge and damage to the State’s natural resources.
N.J.
Dep’t. of Envtl. Prot. v. Dimant, 212 N.J. 153, 182 (2012).
reasonable
nexus
or
connection
preponderance of the evidence.”
must
Ibid.
be
demonstrated
by
“A
a
To obtain damages under
the Spill Act, “there must be shown a reasonable link between
the discharge, the putative discharger, and the contamination at
the specifically damaged site.”
Ibid.
The State demonstrated
such a link at trial in this case.
33
The data gaps that exist, while not uncommon in NRD cases, are not
attributable in any way to actions or inactions of the State. As discussed,
infra, the same cannot be said of ExxonMobil.
34
ExxonMobil
repeatedly
complained
that
the
Department
is
seeking
“deference.”
Nothing discussed herein relates to deference; the State’s
burden of proof is set by New Jersey law that recognizes a lower threshold of
proof regarding the quantum of damages once the fact of injury is
established. Deference is only important regarding areas within its expertise
or public policy decisions made by the Department, which has a legislative
mandate to use its expertise to liberally construe the Spill Act to achieve
its goals.
Here, some deference is appropriate as to the Department’s
determination of an appropriate restoration remedy given the broad latitude
legislatively declared to the Department.
40
In Dimant, the Court found that the Department failed to
make the connection showing how PCE dripping from a pipe at the
defendant’s building reasonably could have made its way into the
groundwater, the contamination of which formed the basis of the
Department’s claim against a particular defendant.
Id. at 183.
The Court further provided examples of the type of proof that
could satisfy this nexus requirement:
The
court
noted
that
plaintiffs
could
satisfy their burden of production with
respect to causation under CERCLA by: (1)
identifying the hazardous substance at their
site; (2) identifying the same hazardous
substance at defendant’s site; and (3)
providing “evidence of a plausible migration
pathway by which the contaminant could have
traveled from the defendant’s facility to
the
plaintiff’s
site.”
Id.
at
1066
(footnote omitted). The “plausible migration
pathway” could be in the form of an
“undisputed release of thousands of gallons
of water from the contaminated site into the
[river],” or “underground migration,” or the
transportation of waste from one site to
another.
Ibid. n. 14 (citing various
examples from case law).
[Id. at 184 (citing Castaic Lake Water
Agency v. Whittaker Corp., 272 F.Supp.2d
1053 (C.D. Cal. 2003)).]
As discussed herein, the State has demonstrated the requisite
nexus,
i.e.,
discharges
ExxonMobil
made
their
grossly
way
into
polluted
each
area
the
of
Sites
the
and
its
Sites
and
destroyed the existing habitat, through the testimony of its
experts using the same types of proof cited by the Dimant court.
41
The heightened “causation” requirement ExxonMobil seeks to
impose on the State does not exist.
“[T]he Spill Act does not
require proof of the common law standard of proximate-causation
of specific environmental damage as a precondition to relief
under the Act.”
the
Id. at 160.
exactitude
sought
by
The Dimant court makes clear that
ExxonMobil
is
not
required,
as
it
speaks only of “proof of a reasonable, tenable basis” for how
the
hazardous
resources.
standard,
substance
Id.
and
at
resulted
185.
The
ExxonMobil’s
in
contamination
State
suggested
has
of
complied
heightened
natural
with
this
standard
is
improper.
The State relied on the historical data and documentation,
as well as the professional judgment of its experts who employed
accepted
methodology
to
make
inferences
reaching a reasonable damage assessment.
to
impose
a
heightened
burden
on
the
and
assumptions
in
ExxonMobil’s efforts
State’s
claim
would
effectively be a grant of immunity, as this is a burden that
could never be met.
its
contamination
Given ExxonMobil’s admissions concerning
and
precise
information,
notions
of
justice,
the
this
due
impossibility
heightened
process
of
burden
and
obtaining
is
more
contrary
fairness,
and
to
more
importantly, it is contrary to the law of the State of New
Jersey.
42
The ideal of a judicial system is perfect
justice. However, in a case where, as here,
absolute precision in fixing damages may not
be attainable, we should not hesitate to
seek essential justice.
It would be a
travesty to deny a plaintiff essential
justice because the absence of means for
precision precludes perfect justice.
[Am. Sanitary Sales Co., Inc. v. State
Dep’t. of Treasury, 178 N.J. Super. 429, 435
(App. Div. 1981).]
2.
The State has met its burden of proof connecting
ExxonMobil to the claimed damage to the State’s
natural resources, making ExxonMobil strictly liable,
jointly and severally, for all cleanup and removal
costs, and ExxonMobil bears the burden of proof for
any claims of concurrent causation.
The State does not have to establish that ExxonMobil was
the
sole
cause
of
the
injury
and
damage
nor
allocate
the
specific portion of the State’s damage caused by ExxonMobil’s
discharges.
Under the Spill Act, ExxonMobil is strictly liable,
jointly and severally, for all cleanup and removal costs.
See
N.J.S.A. 58:10-23.11g(c)(1) (imposing strict liability for all
cleanup and removal costs on “any person who has discharged a
hazardous
substance,
hazardous substance”);
or
is
in
any
way
responsible
for
any
see also Dimant, supra, 212 N.J. at 177
(“That nexus is what ties the discharger to the discharge that
is
alleged
to
be
the,
or
a,
culprit
in
the
environmental
contamination in issue.”) (emphasis added).
Here,
the
State
has
submitted
competent
and
reliable
testimony and evidence to tie ExxonMobil’s discharges to the
43
claimed damage to the State’s natural resources on these Sites,
rendering
ExxonMobil
liable,
jointly
and
severally,
for
the
primary and compensatory restoration set forth by the State’s
experts.
impact
Additionally, the evidence at trial showed that the
of
ExxonMobil’s
pollution
on
the
Bayway
and
Bayonne
wetlands was “comingled” with the physical modifications it made
to the Sites; the pollution and the physical modifications and
their respective impacts on natural resources are inextricably
intertwined such that it would be difficult, if not impossible,
to
separate
(Lipton
the
Cross)
damage
caused
by
123:21-124:21;
each.
Trial
Trial
Tr.
Tr.
4/15/14
3/13/14
(Lipton
Redirect) 17:2-18; Trial Tr. 7/10/14 (Ginn Cross) 83:21-84:9.
Dr. Delaney confirmed that the untangling of comingled materials
would be a “judgment call” even if the right information were
available.
Trial
Tr.
6/2/14
(Delaney
Cross)
200:19-201:8
(stating that in order to distinguish contaminated fill from
non-contaminated fill, ExxonMobil would have to have an analysis
of the fill so that they could be able to make that “judgment
call”).
This result is not surprising.
does
lawful
things
in
addition
44
to
Every responsible party
actions
that
result
in
discharge.
Yet, the Legislature did not create a defense or
place an affirmative burden on the Department.35
While ExxonMobil has suggested that some unknown portion of
the
State’s
damage
was
due
to
either
ExxonMobil’s
lawful
activities (i.e., physical modification) or to a third party,
ExxonMobil
has
failed
to
come
forward
with
any
evidence
to
substantiate this supposition and to rebut the State’s claim.
Once the State proves injury and nexus, as discussed above,
ExxonMobil bears the burden of proof with respect to concurrent
causes.
When there are alleged to be multiple causes of an
injury,
the burden of proof shifts to the culpable
defendant, who is held responsible for all
the damages, absent a showing by the
defendant that those damages for which the
defendant is responsible are capable of some
reasonable apportionment and what those
damages are. . . .
When it comes to
apportionment of injury, plaintiff need not
prove a negative. . . . [W]here a defendant
seeks a credit against a verdict for injury
which it claims is not causally related, the
burden of proof of that issue rests with the
defendants.
The defendant must not only
prove that the injury is capable of some
reasonable apportionment or severability,
but also the extent to which it is allocable
to causation.
35
Similarly, the Legislature understood that all polluting activities have
some economic benefit to the public but did not make that a defense or
offset. N.J. Dep’t of Envtl. Prot. v. ExxonMobil Corp., No. UNN-L-3026-04, 2008 WL
4177038, at *7 (N.J. Law Div. Aug. 29, 2008) (Anzaldi, J.) (“Just as with the
defendants in Ventron, Exxon is not saved by the fact that its activities produced
some benefit to society.”).
45
[Humenik ex rel. Humenik v. Gray, 350 N.J.
Super. 5, 18 (App. Div. 2002) (citing, among
other things, Fosgate v. Corona, 66 N.J.
268, 272-73 (1974)).]
See also Restatement (Second) of Torts §433A (1965) (“Damages
for harm are to be apportioned among two or more causes where
(a) there are distinct harms, or (b) there is a reasonable basis
for determining the contribution of each cause to a single harm.
Damages for any other harm cannot be apportioned among two or
more causes.”).36
The
Supreme
Court
first
enunciated
the
purpose
of
apportionment in Fosgate v. Corona, 66 N.J. 268, 272-73 (1974),
where the court noted the “practical difficulty in separating
that part of the harm” caused by a particular defendant from the
part of the harm not caused by that particular defendant.
Court
reasoned
that
an
“innocent
plaintiff
should
not
The
be
required to establish what expenses, pain, suffering, disability
or impairment are attributable solely” to the defendant, but
that the burden should be shifted to the culpable defendant “who
should
be
held
responsible
for
36
all
damages
unless
he
can
The Department disputes that a concurrent cause defense exists under the
Spill Act given the strict, joint and several liability regime. Indeed, the
Dimant Court rejected such apportionment arguments.
Further, to the extent
there were any basis legally or factually for apportionment, ExxonMobil, as
the culpable defendant, would have the burden to disprove the State’s
evidence showing that discharges caused destruction of natural resources.
However, despite its call for apportionment, ExxonMobil provided no evidence
that physical modifications were the sole cause of the destruction of any
natural resources at the Sites.
46
demonstrate that the damages for which he is responsible are
capable of some reasonable apportionment and what those damages
are.”
Ibid.
Moreover, it is appropriate to shift the burden to
the culpable defendants who have more expertise or are otherwise
better able to obtain or access relevant apportionment proofs,
for example, by virtue of their first–hand familiarity with the
facts at the time.
217
(App.
Div.
Reichart v. Vegholm, 366 N.J. Super. 209,
2004).
The
Legislature
preserved
joint
and
several liability in environmental tort actions and the Court
held
that
“in
such
cases
the
shifting
of
the
burden
of
apportionment to the defendants is consonant with New Jersey law
and with the Comparative Negligence Act.”
James v. Bessemer
Processing Co., Inc., 155 N.J. 279, 312 (1998).
3.
The State relied on the best available evidence to
determine the history of development and discharges at
the Bayway and Bayonne Sites.
The data upon which the State’s experts relied in gaining
an understanding of the Sites and making their damage assessment
is reasonable and reliable and is the best available evidence.
The State relied primarily upon data and information collected
by ExxonMobil (or on ExxonMobil’s behalf) during the over 15
years of investigative activities performed at the Bayway and
Bayonne
Sites
contributing
during
to
the
the
remediation
Department’s
process.
Information
understanding
of
the
development of the Sites includes the Site History Reports and
47
Site History Deliverables compiled by ExxonMobil pursuant to the
ACOs;
internal
ExxonMobil
documents
collected
throughout
the
history of the Refineries; aerial photographs of the Refineries
from as far back as the 1930s; boring logs dated as early as the
1940s;
sampling
data
collected
in
the
course
of
site
investigations; other information publicly available and within
published scientific literature; and statements from ExxonMobil
made in the course of this litigation, which confirm information
contained
in
85:12-87:12,
the
above.
100:9-20.
Trial
This
Tr.
is
3/10/14
(Lipton
typically
the
Direct)
type
of
information relied upon, where available, when completing a NRDA
or other investigations of contamination at a site.
Id. at
99:7-100:8.
Much of this data was collected by ExxonMobil and submitted
to the State in accordance with the ACOs governing these Sites.
The ACOs require all work to be conducted in accordance with
“prevailing professional standards.” E.g., Bayway ACO, PEX0001,
¶81;
see
also
Bayonne
ACO,
PEX0505,
¶81.
The
ACOs
make
ExxonMobil responsible for ensuring that its contractors perform
work in accordance therewith. Bayway ACO, PEX0001, ¶99; see also
Bayonne ACO, PEX0505, ¶99.
When ExxonMobil submitted these documents to the State, it
did so with a certification that the submitted information is
true, accurate and complete.
See, e.g., ExxonMobil submission
48
of the Bayway Refinery Clean Fill Area Supplemental Remedial
Investigation, PEX1617, p. 2.
these
certifications
submittal
to
the
were
Brent Archibald testified that
included
Department
with
(Trial
Tr.
each
2/10/14
ExxonMobil
(Archibald
Direct) 38:19-24), that he believed ExxonMobil had a requirement
to be truthful and honest in all submissions to the State (id.
at 39:20-22), that the work product generated by ExxonMobil’s
consultants was scientifically reliable (id. at 41:22-42:2), and
that ExxonMobil also relied on this work (id. at 42:9-43:17).
Additionally,
remediation
ExxonMobil
documents
has
and
acknowledged
data
are
the
that
best
its
source
site
of
information, “describ[ing] in detail the extent of environmental
contamination and the measures taken to remediate it.”
ExxonMobil’s
Resp.
to
Plaintiffs’
Initial
Def.
Interrogatories,
PEX1613, pp. 12-13, 26-27, 31-33, 35-40, 42-43.37
That the data
and information was collected during the remedial investigation
process overseen by the Department’s Site Remediation Program
37
In these responses, ExxonMobil identified site remediation materials as the
fullest and most complete account of the information responsive to the
State’s interrogatories:
As part of [the site investigation and remedial]
process,
ExxonMobil
and
its
consultants
have
generated
voluminous
Site
History
Reports,
remediation plans, and other documents . . . which
describe in detail operations at Bayway and Bayonne
as related to waste discharge and environmental
contamination.
Those documents are the fullest and
most complete account of the information responsive
to this interrogatory.
[Ibid.]
49
does not make it unreliable for purposes of a NRDA.
NRDA
programs
different
and
risk-based
programmatic
site
goals38,
remediation
sharing
data
Although
programs
regarding
have
the
characterization and location of contamination is an efficient
and reliable means to determine the extent of natural resource
damages at NRDA sites.
Trial Tr. 3/10/14 (Lipton Direct) 151:4-
152:13.
Pursuant to the ACOs, ExxonMobil’s contractor drafted the
Bayway and Bayonne Site History Reports following an extensive
review of the existing data about the Sites.
This was the best
information
of
available
regarding
the
onset
contamination
throughout the Sites (Trial Tr. 3/12/14 (Lipton Direct) 82:2-13;
Trial Tr. 1/13/14 (Walters Direct) 188:1-5), and witnesses from
both the Department and ExxonMobil found them to be reliable.
Trial Tr. 1/13/14 (Walters Direct) 133:16-134:20 (stating that
there was no dispute about the validity and accuracy of the site
history
reports
that
were
relied
upon
by
ExxonMobil
in
its
investigation); id. at 188:1-5 (stating that he considers the
Site History Reports to be the best available evidence for the
Department to understand the development of the Sites and the
historical
habitats);
41:15-42:2
(stating
38
Trial
that
the
Tr.
work
See infra, part II(B)(2).
50
2/10/14
(Archibald
generated
by
Direct)
ExxonMobil’s
consultants was scientifically reliable); id. at 45:1-7 (stating
that
he
believes
the
Site
History
Report
to
be
a
competent
document); Harley Depo. Designations (Joint Exh. 1) 75:17-21,
91:2-14 (stating that ExxonMobil did the best it could to find
out what was going on historically); Trial Tr. 3/12/14 (Lipton
Direct) 82:2-13 (stating that the data from Site History Reports
was the best available information).
ExxonMobil’s experts also
relied
for
Trial
on
these
Tr.
reviewed
documents
6/24/14
the
site
and
(Boehm
data
Direct)
history
their
75:1-22
information
and
own
analyses.
(stating
believes
that
he
it
is
generally accepted and appropriate methodology to do so); Trial
Tr. 6/3/14 (Delaney Cross) 4:10-5:13 (stating that he relied on
the Site History Reports and deliverables in this case and it is
typical in site investigation work to rely on these types of
material).39
The
Site
historical
History
operations
Reports
and
contain
activities
39
a
at
detailed
the
account
Sites,
of
including
During trial, ExxonMobil unsuccessfully attempted to prove the Site History
Reports to be inaccurate.
For example, during the direct examination of
Kenneth Siet, counsel for ExxonMobil focused on the Bayway Site History
Report’s notation of a 1970 vessel explosion involving heavy oil (or “H-Oil”)
that occurred in IAOC A01 near Powerformer 2.
See Trial Tr. 7/8/14 (Siet
Direct) 44:9-53:20; Bayway Site History Report, PEX0689A, p. 297.
In the
Phase 2 Remedial Investigation Report (PEX1199), Dan Raviv reported that no
benzene, toluene, ethyl benzene and xylenes (BTEX) were observed in the
sampling data.
Trial Tr. 7/8/14 (Siet Direct) 44:9-53:20.
This, however,
does not contradict the Site History Report’s entry regarding the 1970
explosion of H-Oil, because Dan Raviv only tested the sample for BTEX and not
all compounds.
Thus, Mr. Siet’s testimony that the sampling data did not
confirm that there was a historical release is misleading.
51
pollution and disposal activities.
inevitably incomplete.
However, the information is
As stated in the Bayway Site History
Report:
The current knowledge of historical spills,
releases and discharges is based on an
extensive review of Exxon records and NJDEPE
discharge reports. This extensive review is
historically
incomplete
because
record
keeping and reporting requirements have
varied over the years.
Due to the varied
operations, demolition and reconstruction
activities that have occurred at the Bayway
Refinery since 1909, it would be impossible
to identify the date(s) and source(s) of
each contamination incident.
[Bayway
19.]
Dr.
Delaney
Site
also
History
testified
Report,
that
it
PEX689A,
would
be
p.
impossible
to
identify the dates and sources of each contamination incident at
the Sites.
Though
Trial Tr. 6/3/14 (Delaney Cross) 9:19-10:4.
some
data
gaps
are
inevitable,
the
incomplete
historical record is also due in part to ExxonMobil’s careless
record
keeping
in
the
past,
destruction
of
environmental
records, and failure to talk with former employees in the course
of gathering information. ExxonMobil was in the best position to
obtain this data and chose not to do so.
See, e.g., ExxonMobil
Agenda for Technical Kickoff Meeting for Bayway Refinery Site
Assessment, PEX0610, p. 7 (encouraging employees not to talk to
former employees); Memo. From W.L Taetzsch to R. Macrae re:
Envtl.
Records
(Mar.
5,
1993),
52
PEX0261
(listing
historical
environmental files to be shredded); Bayway Site History Report,
Vol. I, PEX0689A, p. 19 (noting no records of spills prior to
1970s).
of
“Where the defendant’s wrong has caused the difficulty
proof
of
damages,
he
cannot
complain
of
the
resulting
uncertainty” and “[i]f the best evidence of the damage of which
the situation admits is furnished, this is sufficient.”
Charles
T. McCormick, McCormick Handbook on Damages § 27 at 101 (1935).
The State used the best available evidence for its NRDA in this
case.
The fact that perfect data does not exist does not mean
the State failed to meet its burden of proof.
Data gaps are typical in a NRDA,40 and professionals in the
field must often rely on their professional judgment to make
inferences and assumptions based on the available data in order
to
reach
reasonable
conclusions
injuries and damages.
data
gaps
requiring
commonplace in NRDAs.
as
to
the
natural
resources
Both Dr. Lipton and Dr. Ginn agree that
professional
judgment
and
inferences
are
Trial Tr. 4/14/14 (Lipton Redirect) 61:2-
62:1; Trial Tr. 7/22/14 (Ginn Cross) 45:17-46:4 (stating that
there are often data gaps in NRDAs, especially in cases over
long periods of time that require NRDA professionals to make
judgments and assumptions); Trial Tr. 7/10/14 (Ginn Cross) 9:2110:7
(stating
that
it
is
reasonable
to
rely
on
historical
materials generated in connection with site remediation programs
40
Trial Tr. 7/22/14 (Ginn Cross) 45:13-20.
53
for NRDAs).
Thus, it is reasonable for Dr. Lipton and the
State’s other experts to have relied on this historical data,
even
though
it
professional
may
be
judgment
incomplete,
to
draw
and
to
reasonable
have
used
their
assumptions
and
inferences to fill in those gaps.41
Especially
in
light
of
the
imperfect
record,
it
is
necessary to consider the available information in its totality.
This includes information that is helpful in putting chemical
and other data in context, including anecdotal documents from
ExxonMobil containing candid and straightforward statements from
current and former employees.
Looking at only the reported
spills at the Sites would provide an incomplete picture, as it
is well known that spills and explosions were not reported until
the 1970s.
It would be unreasonable to consider only one type
of information under the circumstances present here and to limit
conclusions to the explicit information found in ExxonMobil’s
reports.
Dr.
Morrison
incomplete
explained
information
that
relative
although
to
there
particular
was
often
coordinates
throughout the Sites, by looking at all available information
together
and
in
context,
generate
scientifically
the
State’s
reliable
resource damages at the Sites.
41
results
as
to
were
the
able
to
natural
Trial Tr. 1/28/14 (Morrison
See also discussion infra, part IV(B)(3)(b).
54
experts
Direct) 171:2-172:15.
For example, Dr. Morrison explained in
the context of the Pitch Area that:
[W]hen understanding the chemical database,
one needs to be cognizant that areas of
gross contamination, for example, an area of
free product or an area of let's say pitch,
which is below the ground water table, is a
known area of gross contamination but not
reflected in the soil samples that are
collected throughout the site. So in order
to look at the totality of the contamination
to refineries, one needs to keep, for
example, the free product or the pitch area
in this figure in context when looking at
the soil data.
[Trial Tr. 1/29/14 (Morrison Direct) 13:1914:5.]
Additionally, Dr. Lipton explained the importance of anecdotal
information in reaching reliable conclusions about the onset of
contamination at the Sites:
A The way I looked at that information is
that documentation started to be collected
and reported in about 1970. Site history
reports speak about earlier undocumented
spills. Beyond that, I think it's completely
unreasonable to think that there would not
have been spills or disposal of materials,
waste disposal prior to 1970. In fact,
there's
quite
a
record
that
suggests
otherwise going back in time for these sites
alone, without having to make inference to
other refineries. There are -- there's
documentation, all you have to do is look at
the newspaper, there's documentation of
explosions and leaks. There's documentation
of waste being filled into areas in the
1930s.
There's
documentation
of
acid
discharge.
I
don't
even
remember
what
exactly it was called, the Acid Sludge Act
of 1886 or something like that. There's
55
documentation in an ACO deliverable that
discusses the fact that in the 1940s, in the
first six months of the 1940s, there's some
number of millions of gallons of chemical
materials being lost into the atmosphere and
sewers from one of the chemical plants with
a somewhat amusing moniker of Stop Seeping
Tom. I don't think it's any sort of a
stretch to conclude that we know there have
been spills since 1970. And there's every
reason to believe, both on reporting and
reasonable inference, that there were spills
prior to that, that there was waste being
deposited into the sites long prior to that,
as well as there being literature on
historical losses of petroleum into the
environment from refineries.
[Trial Tr. 4/14/14 (Lipton Redirect) 49:1351:19.]
A
similar
practice
was
also
utilized
by
ExxonMobil
employees in the course of site remediation work to determine
the areas of the Sites that were contaminated.
Richard Harley
testified that ExxonMobil was “willing to connect the dots and
assume
that
between
two
contaminated
wells
there
was
contamination as well.” Harley Depo. Designations (Joint Exh. 1)
195:25-196:9.
Brent Archibald also testified that ExxonMobil
and its consultants would draw inferences from the scientific
data available.
Trial Tr. 2/10/14 (Archibald Direct) 42:9-23
(“I mean, a boring represents one point. If you have a group of
borings, then you have to make an engineering assessment of what
the environment is in and around those borings. Q A context, if
you will? A Yes.”); see also Trial Tr. 6/3/14 (Delaney Cross)
56
107:3-11 (testifying that experts extrapolate from boring logs
and make judgment calls about what is happening between the
boring logs).
The chemical sampling data relied upon by the Department’s
experts were reliable and sufficient to locate and delineate the
contamination at the Sites.
95:8-22.
Trial Tr. 6/26/14 (Boehm Cross)
The sampling data were collected pursuant to the ACOs,
which had the goal of identifying all of the waste that was
present at the Sites. Harley Depo. Designation (Joint Exh. 1)
81:24-82:13.
taken
at
Contrary to ExxonMobil’s contentions, samples were
all
areas
of
the
Sites
throughout
the
site
investigation process, not just higher-risk areas. Harley Depo.
Designation
(Joint
Exh.
1)
96:23-99:4
(“Q.
Well,
the
early
sampling, though, was in the higher-risk areas, like the slough,
or the areas of greater concern. Isn't that true? A. No. It was
all over.
Q. All over the property? A. Yes.”).
In fact, there
was no need to conduct extensive sampling in areas known to be
contaminated.
Trial
Tr.
1/13/14
(Walters
Direct)
177:18-24
(“[O]nce you know that it's contaminated, there's no need to put
a whole lot of samples in a contaminated area.").
ExxonMobil’s
experts relied on the same chemical data as the State’s experts,
further
attesting
to
their
reliability.
(Boehm Redirect) 186:24-187:4.
57
Trial
Tr.
6/26/14
ExxonMobil’s argument that the State failed to meet its
burden of proof because of the imperfect data and data gaps that
exist ignores applicable New Jersey law requiring only the best
available evidence and allowing inferences and assumptions to be
drawn therefrom.
Further, ExxonMobil’s argument that the State
and its experts should have done more than rely on the Site
History Reports and deliverables and related documentation in
order to meet its burden in this case asks the State to do the
impossible, as acknowledged by ExxonMobil itself.
This argument
ignores ExxonMobil’s own statements that “it would be impossible
to identify the date(s) and sources(s) of each contamination
incident” (Bayway Site History Report, PEX0689A, p. 19), and
that ExxonMobil felt the data it had gathered was sufficient and
additional sampling would not be productive (Trial Tr. 2/10/14
(Archibald Direct) 44:4-15, 71:12-15).42
B. The Department is Charged with the Management, Protection
and Restoration of the State’s Natural Resources.
1.
ONRR is delegated with authority to represent the NR
Trustee.
The Public Trust Doctrine originates from a body of common
law that provides: “public lands, waters and living resources
42
Further, if ExxonMobil’s argument was successful, it would be rewarded for
its poor record keeping in the past by gaining immunity for its past
discharges, and other responsible parties would be incentivized to destroy
records of their own historic discharges in order to escape potential
liability.
58
are held in trust by the government for the benefit of its
citizens.”
N.J.A.C. §7:36-2.1.43
The State’s efforts to restore
the public trust are part of its statutory responsibilities.
“The
State
has
not
only
the
right
but
also
the
affirmative
fiduciary obligation to ensure that the rights of the public to
a
viable
marine
environment
are
protected
and
compensation for any diminution in the trust corpus.”
to
seek
State v.
Jersey Cent. Power & Light, 125 N.J. Super. 97, 103 (Law Div.
1973), aff’d 133 N.J. Super. 375 (App. Div.), certif. granted 68
N.J. 161 (1975), rev’d on other grounds, 69 N.J. 102 (1976).
This fiduciary duty is a fundamental duty involving the utmost
loyalty and trust.
See In re Koretzky’s Estate, 8 N.J. 506, 528
(1951) (noting that trustee’s most fundamental duty is his duty
of loyalty to trust’s beneficiaries); Raleigh Ave. Beach Ass’n
v. Atlantis Beach Club, Inc., 370 N.J. Super. 171, 193 (App.
Div.), aff’d, 185 N.J. 40 (2005) (“The notion that lands are to
be held in public trust, protected and regulated for the common
use and benefit, is incompatible with the concept of profit.”);
Marsh v. N.J. Dep’t of Envtl. Prot., 152 N.J. 137, 145 (1997)
(“Although
the
DEP
has
continued
its
managerial
role
(under
which it must quickly deploy entrusted public funds to restore
43
The Appellate Division also previously held in this case that “the police
power of the State extends to the protection and conservation of natural
resources which are not the private property of any person or entity. . . .”
ExxonMobil, supra, 393 N.J. Super. at 392.
59
the
environment
and
abate
damages
from
the
discharge
of
hazardous substances), it has assumed a second role, a defensive
role,
as
fulfill
keeper
both
of
of
the
public
these
roles
purse.
in
DEP
the
must
context
attempt
of
to
complex
environmental cleanups and a finite source of cleanup funds.”);
Restatement (Second) of Trusts § 176 (1959) (“The trustee is
under a duty to the beneficiary to use reasonable care and skill
to preserve the trust property.”)
The duties owed by a public
trustee do not differ from those of a private trustee.
The
Times of Trenton Pub. Corp. v. Lafayette Yard Cmty. Dev. Corp.,
368 N.J. Super. 425, 438 (App. Div. 2004), aff'd as modified sub
nom., 183 N.J. 519 (2005).
Pursuant to its enabling statute, the Department is charged
with the responsibility to "formulate comprehensive policies for
the conservation of the natural resources of the State, the
promotion
of
environmental
protection
and
pollution of the environment of the State."
the
prevention
of
N.J.S.A. 13:1D-9;
In re Adoption of N.J.A.C. 7:15-5.24(b), 420 N.J. Super. 552,
574 (App. Div.), certif. denied, 208 N.J. 597 (2011).
The
Commissioner
of
the
Department
is
the
designated
natural resource trustee for the State of New Jersey and its
citizens, and the Department’s ONRR represents the Commissioner
in that capacity.
60
In New Jersey, the Commissioner of the
Department of Environmental Protection is
the designated trustee charged with the duty
of administering and protecting the State's
natural resources.
The Department's Office
of Natural Resource Damages represents the
Commissioner
in
this
capacity
and
coordinates with the other trustees.
[ExxonMobil, supra, 393 N.J. Super. at 394.]
In this case, the trustee was represented by John Sacco,
the Administrator of ONRR.
Trial Tr. 4/28/14 (Sacco Direct)
191:14-17, 197:3-9; Trial Tr. (Sacco Cross) 4/30/14 59:16-60:12.
Mr.
Sacco
has
more
than
25
years
of
Department, including 20 years with ONRR.
(Sacco
Direct)
162:3-6,
171:2-172:21,
experience
with
the
Trial Tr. 4/28/14
191:18-20.
The
Commissioners under which he has served in this position have
confirmed that Mr. Sacco implemented the program consistent with
the Department’s policies.44
Trial Tr. 8/7/14 (Campbell Direct)
77:24—78:9, 16:1-17:12 (confirming that he consulted with Sacco
regarding the program and was kept apprised of the particulars
regarding this case); Trial Tr. 8/11/14 (Hahn Direct) 19:5-11,
109:6-10 (describing Mr. Sacco’s work with ONRR as “excellent”);
Trial
Tr.
8/8/14
(Jackson
Direct)
118:16-119:23,
87:14-21
(confirming that John Sacco “worked to assure that [ONRR] used
sound science and that we did it according to the laws of the
State”); 12/13/13 Certification of Commissioner Martin, pp. 3-4
44
No testimony or certifications from Former Commissioner Mauriello were
presented at trial.
61
(stating that Mr. Sacco is the Department’s representative for
ONRR).45
Consistent
with
the
above,
Mr.
Sacco
described
ONRR’s
responsibilities as the natural resource trustee of the State,
which is a fiduciary obligation to maintain, manage, and protect
the public trust and to restore it if it is injured.
4/28/14 (Sacco Direct) 199:20-200:12.
Trial Tr.
This includes ensuring
that the public’s resources are free of contamination.
Ibid.
Mr. Sacco also discussed the concept of agency discretion, which
flows from the Spill Act and aids the trustee in performing its
fiduciary obligations under the Spill Act.
Id. at 200:13-23.
He summed up ONRR’s responsibilities as making the public whole.
Id.
at
201:1-6.
“The
Legislature
has
long
reposed
a
broad
measure of discretion in the DEP to administer the Spill Act.”
Marsh, supra, 152 N.J. at 149.
The Department has been entrusted with the responsibility
of
determining
the
appropriate
action
to
be
taken
against
persons who damage or threaten the environment in light of its
expertise
broadly.
and
Twp.
ability
of
to
Howell
view
v.
those
Waste
Super. 80, 95-96 (App. Div. 1986).
problems
Disposal,
and
solutions
Inc.,
207
N.J.
Obtaining the costs required
to perform restoration work, including the assessment of damaged
45
Commissioner Martin’s Certification was filed in connection
State’s Motion in Limine to preclude his testimony (12/13/13).
62
with
the
natural resources, is part of the Spill Act’s swift justice that
enables
the
Department
to
move
forward
and
quickly
remedy
hazardous contamination as the Legislature intended.
In the context of the initial interlocutory appeal in this
case, the Appellate Division noted its tradition of deferring to
an agency’s interpretation of its authority:
In assessing DEP's claim, we are mindful not
only of the Legislature's explicit directive
that “[t]his act, being necessary for the
general health, safety, and welfare of the
people of this State, shall be liberally
construed to effect its purposes,” N.J.S.A.
58:10-23.11x (emphasis added); see also In
re Kimber Petroleum Corp., supra, 110 N.J.
at 74; Metex Corp. v. Fed. Ins. Co., 290
N.J. Super. 95, 114 (App. Div. 1996), but
also our own longstanding tradition of
deferring, where appropriate, to an agency's
interpretation of its authority.
[ExxonMobil, supra, 393 N.J. Super. at 401.]
Since this matter was filed, the Appellate Division and
Supreme Court have continued to interpret both the Spill Act and
the
Department’s
authority
under
the
Act
broadly,
and
the
Legislature has likewise continued to ratify and enhance the
natural resource damage provisions of the Spill Act.
In all
instances, the Department’s interpretation of the Spill Act has
been upheld and ExxonMobil’s repeated attempts to narrow it have
been rejected.
63
2.
Restoration and remediation are different.
Restoration and remediation are two different concepts with
two
different
purposes
and
branches of the Department.
are
overseen
by
two
different
Throughout the trial, ExxonMobil
sought to improperly merge the two.
Former
Commissioner
Campbell
explained
the
distinction
between the Site Remediation Program and ONRR:
Q And did they have an equal role?
A The truss -- as trustee, the -- I would
say they have different roles, the trustees
and the site remediation program, and often
have different statutory and regulatory
objectives. The site remediation program is
primarily concerned with human health and
immediate – human receptors of discharges
and the -- or potential human receptors. And
the natural resource damage program is more
concerned
with
the
loss
injury
or
destruction of natural resources.
[Trial Tr. 8/7/14 (Campbell Direct) 90:2191:12.]46
The
Appellate
Division
confirmed
that
this
was
the
longstanding position of the Department in its 2007 opinion:
It has been DEP's longstanding position that
“remediation” is just one of the processes
involved in the cleanup of refinery sites
and
removal
of
contaminants
thereon.
According to DEP, remediation involves the
cleanup of contaminants to “risk-based”
levels,
whereas
“restoration”
and
“replacement” requires return of the natural
46
Former Commissioner Campbell also testified that integration of the two
programs was an aspiration of the Department but turned out to occur only on
a site-specific basis. Trial Tr. 8/7/14 (Campbell Direct) 138:13-139:13.
64
resource to its pre-discharge condition
(primary restoration) and replacement of the
natural resource “services and values” lost
in the interim between contamination and
cleanup
completion
(compensatory
restoration).
[ExxonMobil, supra, 393 N.J. Super. at 393.]
One key distinction between remediation and restoration is
that remediation conducted during site remediation activities is
a forward-looking effort focused on risk management, not cleanup
to pre-discharge conditions.
Kenneth Siet, the project manager
for one of ExxonMobil’s primary environmental contractors (TRC),
confirmed that the Baseline Ecological Evaluations (“BEE”) and
Ecological Risk Assessments (“ERAs”) provided for in the Tech
Regs. and site remediation process do not consider or address
historical
discharges
and
associated
damage
to
resources.
Q Was there a BEE done at Bayonne?
A Yes.
Q Okay.
The BEEs performed at the site,
were they concerned with natural resources
that existed at the site at the time the BEE
was performed?
A
The
BEE
was
looking
at
ecological
resources that were present at the site.
Q They don’t look back to what ecological
resources existed back in history, do they?
A No.
65
natural
Q
They’re
correct?
forward
looking
documents,
A Well, they’re current looking documents.
What is the current contamination and what
impact
may
it
have
on
a
particular
ecological area.
Q
Right.
They
discharges, do they?
don’t
look
at
past
A No. The intent is to look at current.
Q And they don’t
conditions, do they?
A Predischarge
please?
look
at
conditions
predischarge
meaning
what,
Q Means before a discharge of a hazardous
substance under the Spill Act.
A No, they do not.
[Trial Tr. 7/8/14 (Siet Cross) 109:2-24.]
See also Trial Tr. 7/10/14 (Ginn Cross) 122:22-25 (confirming
that ERAs are different from NRDAs); Trial Tr. 6/26/14 (Boehm
Cross) 44:7-17 (confirming that BEES and Risk Assessment, unlike
NRDAs
are
forward
looking
and
focused
on
remediation).
ExxonMobil’s efforts to suggest that the NRDA is colored by risk
assessment should be rejected.47
47
ExxonMobil’s assertions in this Court are also inconsistent with its prior
positions in the SRIN litigation against the Department.
Appellants [industry representatives] also argue that
natural resource damage assessment, compensation,
and/or restoration “are legally and administratively
distinct from remediation standards protective of the
environment” and require DEP to pursue natural
resource damage claims through Superior Court actions
rather than through the administrative process. They
66
Moreover, consistent with the Tech Regs., BEEs and ERAs
focus on “environmentally sensitive natural resources.”
e.g.,
Trial
Tr.
1/14/14
(Walters
Direct)
See,
124:15–125:19
(discussing Bayway Baseline Ecological Evaluation, PEX0010).
“Environmentally
sensitive
natural
resources”
comprise
a
subset of natural resources on which site remediation efforts
direct a special focus.
Per the Tech Regs.:
"Environmentally
sensitive
natural
resources"
means
all
areas
defined
at
N.J.A.C. 7:1E-1.8(a),[48] ground water, and
areas and/or resources that are protected or
managed pursuant to the Pinelands Protection
Act, NJ.S.A. 13:18A-1 et seq. and the
Pinelands
Comprehensive
Management
Plan,
NJ.A.C. 7:50.
[Tech
Regs.,
N.J.A.C.
(Definitions), DEX4104, p. 15.]
7:26E-1.8
The Spill Act addresses all natural resources.
See Trial Tr.
8/11/14 (Hahn Direct) 114:10-115:3.
further argue that because site remediation does not
include addressing natural resource damages, the DEP
was unauthorized to include it as a condition
precedent to site remediation approval and issuance
of a “no further action” letter.
[N.J. Site Remediation Indus. Network v. N.J. Dep’t
of Envtl. Prot., No. A-5272-97T3, 2003 WL 22053346,
at *9 (N.J. Super. Ct. App. Div. Apr. 17, 2000),
cert. denied, 165 N.J. 528 (2000).]
48
Section 7:1E-1.8 of the Tech Regs. defines environmentally sensitive areas
(within the Discharges of Petroleum and Other Hazardous Substances Rules) as
including, among other things, surface waters, canals, estuaries, bays,
“[a]ny water resource . . . which is utilized by a public water system,
nonpublic water system, or water system, . . .” bay islands, beaches, dunes,
wetlands and “wetland transition areas,” critical wildlife habitats, prime
fishing areas, submerged vegetation habitat, forest areas, Federal and State
wilderness areas, and wild and scenic river corridors.
67
As Mark Walters explained, BEEs and ERAs are creatures of
site remediation, not natural resource restoration.
Q Is that a -- the way site remediation does
a baseline ecological evaluation, that's
unique to site remediation?
A For the purpose of remediating sites
pursuant to the technical requirements, yes.
Q Is any effort made in the site remediation
baseline ecological evaluation to talk about
post – to talk about restoration projects?
A With respect to the natural resource?
Q Yes.
A
No.
It's
to
look
at
the
current
conditions, the current pathways, current
receptors, current habitats that exist to
try and protect them from that point on.
[Trial Tr. 1/14/14 (Walters Direct) 124:15–
125:19.]
The distinction between ERAs and NRDAs was also discussed
in a peer reviewed publication to which experts from both sides
of this case, Drs. Lipton and Ginn, contributed.
See William
Gala, et al., Ecological Risk Assessment and Natural Resource
Damage
Assessment:
Synthesis
of
Assessment
Procedures,
5
Integrated Envt’l Assessment Mgmt. 515 (2009), DEX1563, p. 1
(hereinafter Gala) (concluding that the different programmatic
objectives
and
legal
requirements
of
ERA
and
NRD
processes
preclude development of a single, integrated process but finding
68
an
opportunity
processes).
for
data
sharing
between
the
two
distinct
The Gala article continues:
Ecological
risk
assessment
can
be
prospective (prediction of the likelihood of
future effects) or current (evaluation of
the likelihood that observed effects are
associated
with
current
exposure
to
stressors).
Natural
resource
damage
assessment is a process by which injuries
(i.e.,
measurable
adverse
changes)
to
natural
resources
are
determined
and
quantified for purposes of establishing
damages. Natural resource damage assessment
is current, retrospective, and prospective,
in that damages can be sought for natural
resource injuries that are occurring, have
occurred in the past, and are reasonably
expected to continue in the future.
[Ibid.]
It
is
restoration,
beyond
is
dispute
a
that
backward-looking
NRDA,
effort
with
its
to
return
natural resources to their pre-discharge conditions.
to
pre-discharge
conditions
goes
beyond
site
goal
of
injured
A return
remediation
activities, which only involve cleanup of contaminants to riskbased levels.
ExxonMobil, supra, 393 N.J. Super. at 406.
Michael Kenney, the Department’s Case Manager for Bayway
and Bayonne from 1991 to 199849 (prior to Mark Walters) also
testified
that
the
Site
Remediation
separate and had different goals.
Direct)
49
83:17—84:9.
Mr.
Kenney
Trial Tr. 2/26/14 (Kenney Direct) 75:7-12.
69
Program
and
ONRR
were
Trial Tr. 2/26/14 (Kenney
further
testified
that
ExxonMobil,
coordinate
although
aware
remediation
and
that
the
natural
Department
resource
sought
to
restoration
at
Bayway and Bayonne, would not coordinate with ONRR and in fact
refused to meet if ONRD50 was represented at the meeting.
Trial
Tr. 2/26/14 (Kenney Direct) 86:19—87:13; see also 12/20/96 Email
fr.
M.
Kenney
to
E.
Demarest,
PEX0631;
4/9/97
Kenney to K. Joyce and J. Boyer, PEX0632.
Email
fr.
M.
Mark Walters also
confirmed that during his time as Case Manager, ExxonMobil did
not want to coordinate remediation and restoration.
Trial Tr.
1/13/14 (Walters Direct) 129:22-130:3.
Further,
compensation
N.J.S.A.
remediation
for
damage
58:10-23.11b.
does
to,
not
or
include
loss
Natural
of,
the
natural
resource
damages
payment
of
resources.
are
also
that
its
expressly excluded from the Bayway and Bayonne ACOs.51
Against
these
facts,
ExxonMobil
contends
remediation efforts would somehow conflict with the restoration
the
Department
seeks,
citing
the
Law
Division’s
unpublished
opinions in N.J. Dep’t of Envtl. Prot. v. Union Carbide, No.
MID-L-5632-07 (N.J. Super. Ct. Law Div. Mar. 29, 2011), and N.J.
Dep’t of Envtl. Prot. v. Essex Chem. Corp., No. MID-L-5685-07
50
ONRR was titled the Office of Natural Resource Damages (“ONRD”) at that
time.
51
Bayway ACO 1991, ¶75 (PEX0505, p. 19); Bayonne ACO 1991, ¶75 (PEX0001, p.
19).
The State specifically addresses ExxonMobil’s recent assertions that
this reservation language should be ignored in part III(C)(2), infra.
70
(N.J. Super. Ct. Law Div. July 23, 2010).
ExxonMobil again
seeks to conflate remediation with restoration.
These cases are
distinguishable on their facts and do not support ExxonMobil’s
claims here.
ExxonMobil has placed considerable reliance on the Essex
and
Union
Carbide
cases.
As
an
initial
matter,
unlike
the
circumstances here, at issue in Essex and Union Carbide were
both
liability
and
damages.
In
addition,
there
are
two
fundamental differences among these two cases and the present
case.
First, the responsible parties in both Essex and Union
Carbide
cooperated
with
the
Department
in
the
remediation
efforts, which, as discussed below, both courts found to be an
important consideration.
Second, both Essex and Union Carbide
were groundwater cases.
Due to the nature of the injury to
groundwater
in
those
cases,
full
remediation
of
injured
groundwater was tantamount to full restoration of the resource.
Because of this, the courts in Essex and Union Carbide used the
terms remediation and restoration interchangeably.
The same is
not true with complex ecosystems, such as salt marshes, where,
as
in
this
case,
remediation
would
achieve
only
a
“triage”
function, whereas primary restoration would achieve a different
result, namely, reestablishment of a functioning marsh.
e.g.,
Union
Carbide,
slip
op.
at
10
(distinguishing
Cf.,
between
groundwater and wildlife resources); Trial Tr. 4/28/14 (Sacco
71
Direct) 201:18-202:12; Trial Tr. 5/14/14 (Sacco Redirect) 68:869:22.
Mr. Sacco testified that remediation and restoration
could in theory be the same, if remediation restored the natural
resource in question to pre-discharge conditions, as was the
case
in
Essex
and
Direct) 90:11-15.
Union
Carbide.
Trial
Tr.
4/29/14
(Sacco
But that was not the case here.
In Essex, the responsible party undertook remediation of
the
groundwater
contamination,
and
the
Department
sought
to
expedite the cleanup with a different restoration plan, which
the defendant opposed.
The court concluded that the responsible
party’s remediation efforts were sufficient because they were
“shown
to
be
effective,”
there
was
no
showing
that
ONRR’s
primary restoration plan would be more effective at restoring
the
groundwater
remediation,
remediation
to
pre-discharge
there
of
was
this
“no
compelling
particular
Essex, slip op. at 9-11.
condition
site
than
reason
should
be
the
current
as
to
why
expedited.”
The court found it significant that
there was a history of collaboration between the responsible
party and the Department’s site remediation program and that the
site remediation program had approved of, and was pleased with,
the ongoing primary restoration, i.e., remediation efforts.
at
9-10.
different
history
of
The
court
primary
also
determined
restoration
collaboration
that
plan,
ONRR
was
relevant
that
72
in
had
to
Id.
proposing
ignored
the
a
this
overall
assessment of the defendant’s compliance with the goals of the
Spill Act and the Department’s enforcement of the same.
Id. at
10.
Similarly, in Union Carbide, the court observed that the
Department, through its site remediation program, approved, and
was satisfied with the progress of, a remediation plan that
would clean the groundwater to Ground Water Quality Standards
(“GWQS”).
above,
See Union Carbide, slip op. at 7-8.
the
Union
Carbide
court
treated
site
As observed
remediation
as
tantamount to primary restoration, finding that there was no
reason
to
enforce
ONRR’s
primary
restoration
plan
over
the
current primary restoration plan, i.e., remediation, which was
already in place.
Union Carbide, slip op. at 8.
The court
reasoned that the Department had not shown why it was entitled
to
enforce
the
Spill
Act
to
achieve
restoration
to
a
more
stringent “pre-discharge” level, given that the defendant had
been fully cooperating with the Department’s site remediation
program and the site remediation program had stated no objection
to the current primary restoration plan, i.e., the remediation
to GWQS levels. Id.
Here, even ExxonMobil does not go so far as to contend that
its remediation efforts at the Sites have effectively restored
the natural resources impacted at Bayonne and Bayway; nothing
could
be
further
from
the
truth.
73
Unlike
Essex
and
Union
Carbide, the people of the State continue to be deprived of the
invaluable natural resources at Bayonne and Bayway.
And the
cooperation between the responsible parties and the Department,
which was central to the findings in Essex nor Union Carbide, is
clearly absent here.
ExxonMobil undertook a calculated risk
when it declined the Department’s invitation to coordinate site
remediation and restoration, a circumstance that the Essex and
Union Carbide opinions do not address.
Thus, these cases are
not instructive, nor do they dictate a result for this case.
3.
ExxonMobil was aware of the Department’s policies and
goals with respect to NRD.
As stated by our Supreme Court, “[t]hose who poison the
land must pay for its cure.”
State of New Jersey v. Ventron
Corp., 94 N.J. 473, 493 (1983).
Our Supreme Court held that the
Spill Act did “not so much change substantive liability as it
established new remedies for activities recognized as tortious
both under prior statutes and the common law.”52
return
of
injured
natural
resources
to
Id. at 499.
their
conditions is required under the Spill Act.
A
pre-discharge
ExxonMobil, 393
N.J. Super. at 393.
52
As such, to the extent ExxonMobil has asserted that it had no
responsibility to protect the environment from damage caused by hazardous
substances, it is incorrect.
74
The State’s interpretation of pre-discharge is consistent
with the instructions of Mr. Sacco, discussed infra, and the
approach was confirmed by Former Commissioner Campbell:
Q Okay. And is it the objective to restore
to pristine conditions?
A In most cases, it is the objective to
restore
the
resources
to
predischarge
conditions
with
the
exception
of
that
category I identified where a third party
who has nothing to do with the defendant's
conduct introduces some other injury that's
unrelated but does affect the -- what would
arguably affect what would otherwise be
called the predischarge condition.
[Trial Tr. 8/7/14 (Campbell Direct) 171:22172:5]
See also Trial Tr. 4/28/14 (Sacco Direct) 202:13-19; Trial Tr.
8/11/14 (Hahn Direct) 82:14-18, 116:8-23.
Industry has been on notice of this since at least 1999.
See Presentation from the Office of Natural Resource Damages on
the Natural Resource Damage Program (June 8, 1999), DEX1163, p.
17.
Indeed, ExxonMobil previously acknowledged that:
this
controversy
is
not
about
whether
polluters must pay, or whether contaminated
sites must be cleaned up, or even about
whether “natural [resource] damages” are
available under New Jersey law.
The answer
to all three questions in New Jersey is an
unequivocal “Yes.”
[Brief of ExxonMobil in Opposition to the
Department’s Appeal of the Dismissal of its
Loss of Use Claims under the Spill Act
(11/30/06), p. 1.]
75
ExxonMobil made repeated efforts to suggest that it was not
put on notice of its obligations to the State under the Spill
Act and common law.
These efforts are misguided. As Former
Commissioner Campbell testified:
everyone is on notice of what the statute
says or charged with notice of what the law
says, and I think the Spill Act pretty
clearly makes the responsible parties aware
that
they
are
responsible
both
for
remediation and natural resource damages.
[Trial Tr. 8/7/14 (Campbell Direct) 82:1623.]
See also Paragon Contractors, Inc. v. Peachtree Condo. Ass'n,
202
N.J.
415,
424-25
(2010)
(reiterating
that
“parties
are
presumed to know the law and are obliged to follow it”); Kessler
v. Tarrats, 191 N.J. Super. 273, 287-88 (Ch. Div. 1983), aff'd,
194 N.J. Super. 136 (App. Div. 1984) (noting that plaintiff was
presumed to know the law in reference to liens for cleanup costs
under the Spill Act).
In as early as 1993, ExxonMobil, a sophisticated company,53
was made aware that the State of New Jersey sought to integrate
natural
resource
assessment
and
53
restoration
into
site
See, e.g., Memo. from W. J. Rowe re: Items Learned from J. Sullivan’s Visit
with Bob Burger, NPC Services, Inc. (July 2, 1993), PEX0003, p. 2 (stating in
part that ExxonMobil can “always win” against regulators as ExxonMobil is
“smarter” and has “better lawyers”); Memo. From J. H. Sullivan re: Items
Learned from Bob Burger, NPC Services, Inc. (June 9, 1992) (same).
76
activities.54
remediation
See
Promulgation
of
Department
Technical Requirements for Site Remediation, N.J.A.C. 7:26E-1,
et
seq.
(identifying
restoration
during remediation); see
as
an
important
component
also 25 N.J.R. 2281, 2289 (June 7,
1993), resp. to cmt. 56 (“[R]estoration of natural resources is
an
important
component
in
any
remediation
effort
and
the
Department has the authority to require it as appropriate.”);
ExxonMobil, supra, 393 N.J. Super. at 393-94.
ExxonMobil’s
Site
Remediation
Project
Brent Archibald,
Manager
for
Bayway,55
confirmed ExxonMobil’s awareness of NRD and that the issue was
not
addressed
2/10/14
by
the
(Archibald
Site
Direct)
Remediation
98:19-100:15
Team.
See
(confirming
Trial
Tr.
that
the
Site Remediation Team was not involved with NRD and that he had
“no authority or power to do anything about NRD” and that it was
a “high profile” issue outside of Site Remediation); Trial Tr.
2/10/14
(Archibald
Direct)
102:13-103:16
(conceding
that
ExxonMobil conducted no wetland restoration work, only wetland
mitigation that Mr. Archibald agreed was different from natural
resource restoration); ExxonMobil’s internal Site Visit Agenda
(Feb.
19,
1997,
PEX0282,
p.
16
(“describing
as
of
1997,
54
Mr. Hahn testified that during his tenure at ONRR, the Site Remediation
Program and ONRR remained separate and distinct entities. Trial Tr. 8/11/14
(Hahn Direct) 122:5-12.
55
Mr. Archibald was identified as being the most knowledgeable regarding the
site conditions at Bayway.
See Trial Tr. 2/10/14 (Archibald Direct) 30:1231:2; Trial Tr. 5/19/14 (Bruzzi Cross) 83:24-84:18; Trial Tr. 7/23/14 (Esch
Cross) 208:22-209:7.
77
ExxonMobil’s
awareness
of
the
Department’s
focus
on
natural
resource restoration: “Project Development: Addressing the Key
Issues . . . . DEP Positioning for NRD Restoration”).
Mr. Hahn,
Ms. Barbara Dietz-Kantor, Mr. Sacco, Mr. Kenney and Mr. Walters
all agreed that this integration never occurred, either on a
program-wide basis or at the Bayway or Bayonne Sites.
8/11/14
Kantor
(Hahn
Depo.
Cross)
121:6-122:12;
Designation)
22:3-8;
Trial
Tr.
Trial
Tr.
Trial Tr.
7/11/14
4/30/14
(Dietz(Sacco
Cross) 189:15-25; Trial Tr. 2/26/14 (Kenney Direct) 80:24-84:15;
Trial Tr. 1/15/14 (Walters Cross) 52:19-23, 53:10-25.
Former
Commissioner
Campbell
testified
that
when
he
was
appointed to the office of Commissioner in 2002, he faced “a
particular set of challenges in terms of the number of natural
resource damage claims that were pending at the Department.”
Trial Tr. 8/7/14 (Campbell Direct) 15:14-17.
In other words,
NRD claims were not being enforced to an appropriate degree.
In
furtherance of the pursuit of NRD claims on behalf of the State,
Former Commissioner Campbell issued Policy Directive 2003-07,
PEX0544.
The Policy Directive clearly stated the Department’s
preference for restoration.
Direct)
117:8-25
restoration).56
See also Trial Tr. 8/11/14 (Hahn
(discussing
ONRR’s
preference
for
Former Commissioner Campbell met quarterly with
56
Former Commissioner Campbell explained that there are no procedural
requirements associated with issuance of a Policy Directive, including no
requirement that one be sent to the public for notice and comment prior to
78
the regulated community and other stakeholders regarding the NRD
program during his tenure in an effort to increase transparency.
Trial Tr. 8/7/14 (Campbell Direct) 62:1-21.
Additionally, the Department offered guidance documents and
posted information about its NRD program on the Department’s
website.
During trial, ExxonMobil stated that these guidance
documents were binding.
e.g.,
Policy
PEX0544,
p.
This is clearly not the case.
Directive
2
2003-07
(cautioning
(Natural
that:
“This
Resource
directive
See
Damages),
creates
enforceable rights, legal or equitable, for any person.
no
Nothing
in this directive limits the discretion of the Commissioner to
make further policy changes in response to public comment and
additional data and analysis.”).
that
ExxonMobil
guidance,
“shall
suggestions,
not
or
Even the ACOs expressly state
construe
comments
by
any
the
informal
advice,
Department,
or
by
persons acting on behalf of the Department, to relieve Exxon of
its obligation to obtain written approvals as required herein,
unless
the
Department
obligations in writing.”
specifically
relieves
Exxon
of
such
Bayway ACO, ¶93 (PEX0001); Bayonne
ACO, ¶93 (PEX0505).
Former Commissioner Campbell testified that “depending on
the nature of the policy,” it may or may not be in writing and
issuance.
Trial Tr. 8/7/14 (Campbell Direct) 45:5–45:21.
However, he
testified that he would have run the Policy Directive by the Department’s
counsel prior to publicizing it. Ibid.
79
might not be released to the public.
Trial Tr. 8/7/14 (Campbell
Direct) 36:1-17; see also Trial Tr. 8/7/14 (Campbell Direct)
28:1-9 (testifying that during his tenure the practice on the
issuance of guidance was varied and whether to seek input from
the
regulated
community
was
discretionary);
id.
at
38:8-13
(explaining further that policies were disclosed to the public
only where “legally appropriate”).
4.
ONRR is actively performing restoration throughout the
State.
Mr.
Sacco
has
completed
dozens
of
restoration projects throughout his career.
(Sacco Direct) 196:24-197:2.
extensive
experience
implementation
of
natural
resource
Trial Tr. 4/28/14
At trial, Mr. Sacco described his
with
restoration
the
scoping,
projects,
and
designing
his
office
and
has
projects it is managing in all of these phases of completion.
Trial Tr. 4/28/14 (Sacco Direct) 156:10-16 (describing ONRR’s
efforts to track the progress of their projects in order to
obtain data for example regarding recovery trajectories), 173:9174:4 (discussing collaborative effort with New York trustee to
carry out salt marsh restoration project on the Arthur Kill and
acquiring area in the headwaters of the Rahway River), 174:5-22,
207:13-24,
216:14-219:9
(explaining
the
steps
of
designing,
permitting, and plain inspects for a 200 acre Mad Horse Creek
project involving saltwater and wetlands restoration, freshwater
80
wetland
restoration,
and
upland
habitat
restoration),
220:5-
221:24; Trial Tr. 4/29/14 (Sacco Direct) 3:14-5:18, 5:19-6:21
(explaining collaboration with foresters who developed a program
in order restore a white cedar forest at Wharton State Park
forest),
6:22-8:7
(describing
working
with
park
personnel
to
come up with a design to restore the Civil War pier at Fort
Mott), 9:19-10:18, 18:11-14, 22:6-23:19, 24:2-26:3, 26:19-28:5
(discussing working with the Corps of Engineers in developing
construction specifications to restore an 80-acre landfill to
wetlands in Lincoln Park), 28:11-29:2 (explaining the various
phases of projects, "[s]ome of these are not constructed yet.
Some are just scoping.
Some have design and some are waiting
just for funding to do design and construction.
all different phases of projects in this area.
So there are
A particular one
is just upstream of the Lincoln Park, this is Laurel Hill.
another old landfill area where a marsh was filled in.
It's
It would
be another great project, just it would entail the fill removal
from the intertidal areas and reestablishing tidal flow.").57
Mr.
Sacco
further
testified
that,
since
part
of
ONRR’s
responsibility is to restore injured resources, his office is
57
See also, e.g., Trial Tr. 4/30/14 (Sacco Cross) 37:14-22, 53:14-18,
120:2-25; Trial Tr. 5/12/14 (Sacco Cross) 113:18-114:11; Trial Tr.
(Sacco Cross) 110:24-111:12, 164:12-165:24, 184:4-185:23, 187:2-13,
211:24, 212:1-227:23; Trial Tr. 5/14/14 (Sacco Cross) 7:10-26:20,
42:24, 53:10-58:9, 121:5-123:20, 124:6-125:18, 134:2-136:15.
81
54:1-6,
5/13/14
199:137:23-
continuously developing additional restoration projects.
Trial
Tr. 4/28/14 (Sacco Direct) 189:9-18.
C. Pre-discharge Conditions at the Sites
1.
Restoration is the return of natural resources to
their pre-discharge condition.
ExxonMobil is liable under the Spill Act for all cleanup
and removal costs, which include restoration.
Restoration under
the Spill Act requires the return of natural resources to their
pre-discharge condition.
405-06.
Campbell
At
trial,
testified
both
that
ExxonMobil, supra, 393 N.J. Super. at
Mr.
the
Sacco
and
requirement
Former
to
Commissioner
restore
natural
resources to pre-discharge condition (i.e., the condition of the
resource prior to the discharge) is and has been the policy of
the Department.58
See Trial Tr. 4/28/14 (Sacco Direct) 202:13-
19; Trial Tr. 4/29/14 (Sacco Direct) 90:6-10; Trial Tr. 8/7/14
(Campbell Direct) 169:20-171:10, 171:22-172:5.59
58
During closing argument ExxonMobil’s counsel acknowledged that restoration
is to pre-discharge condition. Trial Tr. 9/3/14 (ExxonMobil Closing) 77:14-15
(“I’m not disputing they get restoration to the predischarge.
I’m not
disputing that at all.”); id. at 78:5-6 (“Under the statute, they’re entitled
to restoration to the predischarge condition. . . .”); id. at 80:10-12
(“There is no question at all that what the Appellate Division said is
predischarge condition, that’s the requirement.
We don’t dispute it.
We
agree with it.”).
59
Former Commissioner Campbell confirmed that baseline as pre-discharge was
the policy of the Department even before he became Commissioner. Trial Tr.
8/7/14 (Campbell Direct) 178:5-180:7.
82
2.
The State has determined the pre-discharge habitats at
the Sites.
Dr. Southgate and Dr. Lipton investigated the historic predischarge
habitats
at
the
determined
that
relatively
uncontaminated
the
Sites.
Independently,
pre-discharge
habitats
subtidal,
they
consisted
intertidal,
both
of
palustrine
meadow, and upland habitats, as depicted in Stratus’ Figure 2.6:
Pre-discharge Habitats at Bayway, PEX0682, and Stratus’ Figure
2.7: Pre-discharge Habitats at Bayonne, PEX0680.
The natural habitats identified by Dr. Southgate and Dr.
Lipton do not conform to the arbitrary IAOC boundaries used
during
site
multiple
remediation,
IAOCs.
demonstrative
interactive
During
exhibits
maps
and
of
most
trial,
PEX1646
Bayway
and
habitats
the
and
Bayonne
extend
State
identified
PEX1647,
that
across
which
allow
for
as
are
the
overlay of the IAOC boundaries of the Sites onto the historic
habitats determined by Dr. Southgate and Dr. Lipton.
PEX1650,
also identified in Court as a demonstrative exhibit, contains a
key to those layers, including the source materials.
PEX1646, reproduced below, is the interactive map of the
Bayway
Site,
showing
the
IAOC
boundaries
from
P8
(Stratus’
Figure A.3: Investigation Areas of Concern at Bayway) on top of
PEX0682 (Stratus’ Figure 2.6: Affected Habitats at Bayway).
83
84
As can be seen from PEX1646, the historic habitats identified by
Dr. Southgate and Dr. Lipton at Bayway are as follows:
IAOC
Pre-discharge Habitats
IAOC
Pre-discharge Habitats
A01
Palustrine meadow
Upland forest
C03
Intertidal
A02
Palustrine meadow
Intertidal
C04
Intertidal
A03
Palustrine meadow
C05
Intertidal
A04
Palustrine meadow
Upland forest
D01
Palustrine meadow
Intertidal
A05
Palustrine meadow
D02
Palustrine meadow
Intertidal
A06
Palustrine meadow
D03a
Palustrine meadow
Intertidal
A07a
Palustrine meadow
Intertidal
D03b
Palustrine meadow
A07b
Palustrine meadow
Upland forest
D04
Palustrine meadow
A08
Palustrine meadow
Intertidal
D05
Palustrine meadow
Intertidal
A09
Palustrine meadow
Intertidal
D06
Palustrine meadow
Intertidal
Subtidal
A10
Palustrine meadow
Upland forest
Intertidal
SLOU
Palustrine meadow
Intertidal
A11
Palustrine meadow
Upland forest
E01
Intertidal
A12
Palustrine meadow
Upland forest
E02
Intertidal
A13
Palustrine meadow
E03
Palustrine meadow
Intertidal
A14
Palustrine meadow
Upland forest
E04
Palustrine meadow
Intertidal
A15
Palustrine meadow
Upland forest
E05
Palustrine meadow
Intertidal
85
A16
Palustrine meadow
Intertidal
F01
Palustrine meadow
Upland forest
A17
Palustrine meadow
Intertidal
F02
Palustrine meadow
A18
Palustrine meadow
Intertidal
F03
Upland forest
A19
Palustrine meadow
Upland forest
F04
Palustrine meadow
A20
Palustrine meadow
G01
Palustrine meadow
Upland forest
B01
Intertidal
Subtidal
G02
Palustrine meadow
Upland forest
B02
Intertidal
G03
Palustrine meadow
B03
Intertidal
G04
Palustrine meadow
Upland forest
C01
Intertidal
G05
Palustrine meadow
C02
Intertidal
86
Similarly, PEX1647, reproduced below, is the interactive
map of Bayonne, showing the investigative unit boundaries from
P7 (Stratus Figure A.5: Bayonne Refinery AOCs and Other Areas)
on top of PEX0680 (Stratus’ Figure 2.7: Affected Habitats at
Bayonne).
87
As
can
be
seen
from
PEX1647,
the
historic
habitats
identified by Dr. Southgate and Dr. Lipton at Bayonne are as
follows:
Pre-discharge
Habitats
IAOC
Pre-discharge
Habitats
IAOC
"A" Hill Tank
Field
Palustrine meadow
Upland forest
Main Building
Area
Palustrine meadow
Intertidal
Asphalt Plant
Area
Palustrine meadow
Intertidal
MDC Building Area
Palustrine meadow
Subtidal
AV-GAS Tank
Field
Palustrine meadow
Intertidal
No. 2 Tank Field
Palustrine meadow
Upland forest
Domestic
Trade Area
Palustrine meadow
Upland forest
Intertidal
No. 3 Tank Field
Palustrine meadow
Intertidal
Exxon
Chemicals
Plant Area
Palustrine meadow
Upland forest
Intertidal
Pier No. 1 Area
Palustrine meadow
Subtidal
General Tank
Field
Palustrine meadow
Subtidal
Piers and East
Side Treatment
Plant Area
Subtidal
Historical
Extent of
Refinery
Palustrine meadow
Upland forest
Intertidal
Subtidal
Platty Kill Canal
Subtidal
ICI Subsite
Palustrine meadow
Upland forest
Intertidal
Solvent Tank
Field
Palustrine meadow
Subtidal
Intertidal
Low Sulfur
Tank Field
Palustrine meadow
Intertidal
Stockpile Area
Palustrine meadow
Subtidal
Lube Oil Area
Palustrine meadow
Subtidal
Utilities Area
Palustrine meadow
Upland forest
As
discussed
herein,
these
pre-discharge
habitats
are
confirmed by historic maps, surveys and historical narratives,
as well as ExxonMobil’s own documents, including boring logs
88
indicating the presence of meadow mat and former marsh under
ExxonMobil’s
(Walters
pollution
Direct)
(e.g.,
PEX0833;
147:19-148:24;
Trial
Trial
Tr.
Tr.
1/14/14
1/13/14
(Walters
Direct) 14:10-22, 29:12-19; ExxonMobil’s Verification Petition
of Class III-B Groundwater, PEX1085, pp. 16, 32 (containing a
map of former saltwater marsh at Bayway); ExxonMobil’s Bayway
Site Remediation Status and Update from Brent Archibald (May 27,
1998),
PEX0140,
p.
2
(showing
creeks throughout the Site).
witnesses
disputed
the
uplands,
and
tidal
Moreover, none of ExxonMobil’s
habitat
Southgate and Dr. Lipton.
marshlands
types
as
identified
by
Dr.
Professor Klein testified that he
agreed with Dr. Southgate’s conclusion that prior to Standard
Oil’s presence in the Constable Hook area, the area consisted
largely of farmland and marshland.
Cross) 4:6-12.
Trial Tr. 5/21/14 (Klein
Dr. Ginn and Dr. Delaney both agreed that the
area now known as the Sludge Lagoon was historically wetlands.
Trial
Tr.
7/10/14
(Ginn
(Delaney Cross) 225:7-14.
as well.
Lagoon’
Cross)
56:6-18;
Trial
Tr.
6/2/14
ExxonMobil has admitted to this fact
See 6/3/14 Order, (stipulating that “[t]he ‘Sludge
area,
ExxonMobil’s
[was]
waste
formerly
disposal
tidal
wetlands
activities,
and
prior
despite
to
the
purported ‘restoration’ of the area, still contains hazardous
substances.
The organic material that remained of the wetlands
at this location is commonly referred to as ‘meadow mat’ and,
89
according to ExxonMobil, sits atop a layer of glacial till”).
The boring logs taken from the Sites showing meadow mat also
confirm the historical presence of marsh.
See, e.g., Trial Tr.
2/12/14 (Southgate Redirect) 33:16-36:19.
Rather than contest Dr. Southgate’s conclusions, ExxonMobil
complains of the sufficiency of the factual information on which
she relied in reaching her conclusions.60
As discussed in part
IV(A)(3), infra, Dr. Southgate relied on voluminous historical
documents,
articles,
including
personal
surveyed
accounts,
maps,
photographs,
geological
surveys,
newspaper
textbooks,
local histories and ExxonMobil’s own Site History Reports in
reaching her conclusions concerning the conditions of the Sites
prior to ExxonMobil’s acquisition of the land.61
Many of these
geologist surveys and maps depicted both geological features and
vegetation.
ExxonMobil/Standard Oil began acquiring property at Bayonne
in approximately 1877, and, using topographical maps and surveys
from 1881 (PEX0733R) and 1900 (PEX0733T), Dr. Southgate was able
60
ExxonMobil raised these arguments in the context of its Rule 104 motion,
contending that Dr. Southgate’s opinions were net opinions. As discussed in
part IV(A)(3), infra, arguments relating to the sufficiency of an expert’s
factual basis or that an expert failed to consider certain information deemed
relevant by others goes to credibility and weight to be afforded an expert’s
testimony and are not proper Rule 104 challenges. Nevertheless, the State
addressed ExxonMobil’s specific arguments raised in its Rule 104 motion in
that section.
61
Dr. Southgate testified that her analysis went up to the time ExxonMobil,
or Standard Oil, began acquiring property at the Sites, or approximately 1877
for Bayonne and 1907 for Bayway. Trial Tr. 1/29/14 (Southgate Direct) 175:110.
90
to locate salt marshes throughout Constable Hook, which is the
location
of
the
Bayonne
Direct)
181:4-183:12
Site.
Trial
(describing
Tr.
1/29/14
PEX0773R
(Southgate
as
an
1881
topographical map showing hills and marsh); id. at 187:14-189:7
(describing
PEX0733T
topographical
Hook).
map
as
a
showing
1900
marsh
New
Jersey
and
State
railroads
Geologist’s
on
Constable
Using these maps, as well as other historical documents,
including the fact that mill ponds and grist mills were present
at some of the salt marshes, Dr. Southgate was able to confirm
that
these
throughout
salt
the
marshes
early
continued
1900s.
Id.
to
at
receive
189:8-10
tidal
flow
(referencing
PEX0733T, a map from 1900, that shows marsh extending on both
sides of the railroad lines); id. at 210:17-21 (explaining that
tidal flow is critical to mill ponds and grist mills).
Similarly, with respect to Bayway, Dr. Southgate relied on
maps and surveys to identify salt marsh, upland forests and
palustrine areas at what would become the Bayway Site.
Trial
Tr. 1/29/14 (Southgate Direct) 184:20-187:8; Trial Tr. 2/10/14
(Southgate Direct) 206:7-207:20 (relying on a 1900 New Jersey
State Geologist’s map (PEX0733C), which was based on surveys
done from 1885-1893 and shows land cover, topography, roads,
forests, salt marsh, and palustrine or swamp forests); id. at
208:20-210:16 (relying on a map compiled by the Morse family
(PEX0733I)
showing
roads,
Morses
91
Creek,
Piles
Creek
and
associated marshlands, as well as the presence of grist mills);
Trial
Tr.
(relying
2/11/14
on
an
(Southgate
1898
U.S.
Direct)
geological
24:22-25:17,
survey
map
28:9-17
(PEX0733B)
showing topography and identifying salt marshes).
In addition to the maps and surveys, Dr. Southgate relied
on other documents, including a book by John Harshberger, an
article by John Smith, anecdotal evidence from Walter Roll, and
Mr. White’s diaries to confirm the habitats she identified at
the Sites prior to ExxonMobil’s acquisition.
Mr. Harshberger’s
studies of salt marshes and freshwater ponds in northeastern New
Jersey documented the vegetation found in these areas, and the
presence
of
salt
conclusions.
marsh
Trial
vegetation
Tr.
supported
1/29/14
(Southgate
Dr.
Southgate’s
Direct)
212:23-
213:23; Trial Tr. 2/10/14 (Southgate Direct) 212:23-215:11.
Smith,
an
agronomist
Agriculture,
published
for
an
the
New
article
in
Jersey
1907
Department
concerning
Mr.
of
the
maintenance of quality salt marsh hay, and his article confirmed
that salt marshes existed at Bayway in 1907, the year Standard
Oil
began
to
acquire
property
there.
Trial
Tr.
2/10/14
(Southgate Direct) 215:15-217:10.
Dr. Southgate also relied on an interview given by Walter
Roll, a local resident of Linden who, for a newspaper article,
recounted
childhood
memories
of
92
swimming
in
salt
ponds
in
Linden.62
Id. at 217:16-219:1.
The diaries of Mr. White, whose
family had salt hay farms and factories in the Bayonne area,
similarly confirmed the presence of salt marshes.
1/29/14
cited
(Southgate
an
1899
Direct)
State
206:5-18.
Geologist’s
Finally,
report
Trial Tr.
Dr.
that
Southgate
confirmed
the
presence of hardwood forests in certain spots in the Bayway area
shown on the 1900 State Geologist map (PEX0733C), which led Dr.
Southgate to conclude that similar hardwood forests would be
found in the woodlots at Bayway during this time.
2/10/14 (Southgate Direct) 222:2-224:21.
members
investigated
pre-discharge
Trial Tr.
The State’s other team
habitats
and
came
to
conclusions similar to Dr. Southgate’s.
Dr.
Lipton
and
his
team
evaluated
historical
maps,
historical descriptions, topographic profiles, land levels, and
boring logs to determine the pre-discharge habitat types.
Trial
Tr. 3/12/14 (Lipton Direct) 80:1-5; Trial Tr. 3/11/14 (Lipton
Direct) 61:24-62:25.
Dr. Lipton’s analysis of the pre-discharge
habitats
in
resulted
conclusions
consistent
with
Southgate’s.
Trial Tr. 3/10/14 (Lipton Direct) 173:1-16.
noted
because
above,
ExxonMobil
was
unable
to
dispute
Dr.
As
Dr.
Lipton’s conclusions with respect to the pre-discharge habitats,
62
As Dr. Southgate testified, she never solely used anecdotal information to
form an opinion. Rather, she used anecdotes, such as the interview with Mr.
Roll, to confirm or show consistency with other information.
Trial Tr.
1/29/14 (Southgate Direct) 178:11-18.
93
ExxonMobil constructed several strawmen on which to focus its
criticisms.
The
first
two
strawmen
and
created
by
ExxonMobil
unprecedented
definition
relate
of
to
ExxonMobil’s
tortured
“pre-
discharge.”
Because pre-discharge is not defined in the Spill
Act and has not been interpreted by the courts, this is an issue
legislatively delegated to the Department’s broad discretion to
liberally construe.
Nevertheless, ExxonMobil has attempted to
seize this opportunity to give pre-discharge a narrow meaning,
despite
the
instructions
from
both
the
Legislature
and
the
courts that the Department is instructed to interpret the Spill
Act broadly to effectuate its purpose.
According to ExxonMobil, the plain meaning of pre-discharge
condition is the condition at the literal, precise moment right
before the discharge.
Trial Tr. 9/3/14 (ExxonMobil Closing)
80:15-18; id. at 84:21-25.
If ExxonMobil’s definition of pre-
discharge were to be accepted, the State would have no remedy in
cases such as this, where it is not possible to identify the
precise condition of the resource just before the discharge.
See, e.g., Trial Tr. 4/1/14 (Lipton Cross) 120:12-23; Trial Tr.
6/3/14 (Delaney Cross) 9:19-10:4 (agreeing with language in the
Bayway Site History Report (PEX0689A, p. 19) that it would be
impossible
to
identify
the
dates
94
and
sources
of
each
contamination incident).63
This impossible standard of proof is
contrary to the stated purpose of the Spill Act.
See N.J.S.A.
58:10-23.11x (“This act, being necessary for the general health,
safety,
and
liberally
welfare
of
the
people
construed
to
effect
of
its
this
State,
purposes.”);
shall
be
ExxonMobil,
supra, 393 N.J. Super. at 402-03 (“[G]iven the obvious remedial
purposes
of
the
statutory
scheme,
N.J.S.A.
58:10-23.11v,
defendant’s insistence on such a strict interpretation, which
leaves
the
public
less
than
whole
for
its
loss,
is
unwarranted.”).
As a practical matter, the State has established the preoperating habitat at each Site without dispute.
The Department
has
discharges
also
hazardous
established
Sites.
substances
ExxonMobil
that
from
has
operations
the
beginning
failed
modification from discharges.
involved
to
of
activity
disentangle
at
of
the
physical
On this record, the Department
has adequately and appropriately found pre-discharge habitats.
Moreover,
while
a
number
of
witnesses
provided
their
opinions as to the definition of “pre-discharge,” none of the
witnesses
defined
it
with
ExxonMobil seeks to impose.
Direct)
82:14-18
(stating
the
strict
time
component
that
See, e.g., Trial Tr. 8/11/14 (Hahn
that
63
pre-discharge
is
before
the
Dr. Boehm actually asserted that he did not believe the data in this case
would actually allow for a retrospective analysis. Trial Tr. 7/8/14 (Boehm
Redirect) 151:1-8.
95
pollutant was released); Trial Tr. 4/1/14 (Lipton Cross) 118:23119:6 (stating that the pre-discharge habitat is what the land
looked like some reasonable amount of time before the spill).
As
Mr.
Sacco
explained,
there
are
ranges
of
conditions
for
resources and habitats, and by restoring to the habitat that
existed prior to the discharge, the functionality and services
of the damaged natural resources will be restored:
Q
And
predischarge
-restoration
to
predischarge means that you have to restore
the resource to the way it was immediately
before the discharge, right?
A That would be preferable. But there are
ranges of conditions that are associated
with resources. There's different states of
resources before discharges occur.
It may
not always be able to replicate exactly a
predischarge condition, but habitats have
ranges. And if you could put a habitat back,
the likelihood is -- the likelihood of
hitting a point on that range or continuum
of habitat gets us where we need to be in
terms of the trustee.
[Trial Tr.
149:9.]
4/30/14
(Sacco
Cross)
148:22-
Rather than the narrow, impossible definition suggested by
ExxonMobil, the State employed a rational, workable definition
of
pre-discharge
condition,
meaning
restoration
to
a
habitat
that is of the same or similar type and function of the damaged
or
destroyed
habitat.64
As
Dr.
64
Lipton
explained,
given
the
During his closing argument, ExxonMobil’s counsel suggested that the
Department could have passed a rule had the State wanted to insure its
interpretation of “pre-discharge” received deference.
Trial Tr. 9/3/14
(ExxonMobil Closing) 85:1-10.
This argument is emblematic of ExxonMobil’s
96
practical limitations of determining the precise pre-discharge
condition at the exact moment prior to the discharge, he looks
to restore the habitat to a habitat of “like kind and quality,”
such
that
similar
services
will
flow
from
the
different
categories of habitats.
Another direction that we received, and
it is related to the onset of release issue,
is
that
the
directive,
objective,
interpretation that we should be operating
under is that restoration for these sites,
and
that
includes
restoration,
primary
restoration
on
site
and
the
off-site
compensatory
restoration,
should
be
predicated on a predischarge condition. So
that's essentially the base that we're
restoring to.
Now, I mean, I think I testified
earlier that there are limits to that in
practical terms. We don't restore to 1877 or
1900 or whatever it is. Rather, we're just
restoring that habitat type as it would
function today. So, intertidal salt marsh
was the predischarge habitat type, but we're
restoring it today.
[Trial
80:1.]
Tr.
3/12/14
(Lipton
Direct)
79:11-
ExxonMobil’s argument that Dr. Lipton’s pre-discharge condition
opinions are net opinions is based on the use of its strained
position with respect to this case and NRD cases generally and ignores a
basic tenant of NRD practice, which is that each NRD case is unique and is
dependent on the particular facts and circumstances of each case.
Further,
ExxonMobil’s argument ignores the basic principles under New Jersey law
requiring a party to use only the best available evidence allowed by the
nature of the case.
See discussion, supra, part II (A).
As discussed
herein, the term “pre-discharge” is not controversial, unless given the
extreme meaning suggested by ExxonMobil. Defining “pre-discharge” is not the
type of issue rule-making should address, as the facts and circumstances of
each case and the nature of the available evidence will dictate the
specificity required for “pre-discharge.”
97
definition of pre-discharge that requires Dr. Lipton to provide
the precise date and time the habitat changed from the predischarge condition.
For example, during cross examination of
Dr. Lipton, ExxonMobil’s counsel demanded precise dates from Dr.
Lipton regarding the pre-discharge condition.
See, e.g., Trial
Tr. 3/18/14 (Lipton Cross) 113:24-114:1 (“Q. And you are unable
to give me a date as to when the Area A13 ceased to be covered
by palustrine meadow or forest, correct?”); id. at 116:23-117:2
(“Q Okay. Are you able to testify to any reasonable degree of
professional certainty as to a date when you believe Area A14
ceased to be the mixture of meadow and forest depicted in Figure
2.6 of your report?”); Trial Tr. 3/13/14 (Lipton Cross) 111:1216 (“What date did those pre-discharge habitats exist in that
configuration at Bayway?
A What specific date? Q Yes.
can't give you a specific date.”).
Further:
Q So I'm correct, sir, that with respect to
the various predischarge habitats that you
have used in your analysis, you don't
actually know that any of those habitats
were present at the locations in your
analysis on the day the first discharge of
hazardous substance occurred; isn't that
right?
A No. We can't know with specificity to the
day. All we can do is use our best judgment
about the historical information to give us
a sense of the kinds of habitats that were
likely present at that time. But, obviously,
we can't know this to that degree of
precision going back in the past.
98
A Oh, I
[Trial Tr. 4/1/14 (Lipton Cross) 120:12-23.]
As
discussed,
infra,
part
IV(B)(3)(ii),
Dr.
Lipton
explained the factual basis and the methodology used in reaching
his ultimate conclusions regarding the historical habitats, and
his conclusions were consistent with those of Dr. Southgate.
That Dr. Lipton was not able to point to a specific document or
a specific date relative to the pre-discharge condition does not
render his opinions net opinions.
available
information
and
his
inferences
and
assumptions
reasonable
where
information
habitats.
(Lipton
Dr. Lipton used the best
was
professional
lacking
in
to
fill
reaching
This is standard NRDA practice.
Redirect)
45:17-46:4.
61:2-62:1;
ExxonMobil
judgment
in
his
to
make
those
gaps
pre-discharge
Trial Tr. 4/14/14
Trial
Tr.
7/22/14
criticized
Dr.
Lipton’s
(Ginn
Cross)
methods
and
conclusions, but actively declined to conduct its own analysis
and come to its own conclusions as to pre-discharge conditions.
During
closing
argument,
ExxonMobil’s
counsel
cited
Dr.
Lipton’s testimony wherein Dr. Lipton was asked for a document
or something ExxonMobil could use to test Dr. Lipton’s statement
that he had reached his conclusions to a reasonable degree of
professional
certainty.
ExxonMobil
then
suggested
that
Dr.
Lipton’s response, that there is no such document that would
provide that information, supported ExxonMobil’s argument that
Dr.
Lipton’s
opinions
were
net
99
opinions.
Trial
Tr.
9/3/14
(ExxonMobil
(Lipton
Closing)
Cross)
88:8-89:10
(citing
109:19-110:11).
discussed herein.65
This
Trial
is
simply
Tr.
3/13/14
untrue,
as
But more importantly, Dr. Ginn, ExxonMobil’s
NRDA expert, has the expertise to undertake an analysis similar
to Dr. Lipton’s to determine the pre-discharge conditions of the
Sites
and,
ExxonMobil
in
effect,
specifically
“test”
Dr.
instructed
Lipton’s
Dr.
Ginn
conclusions,
not
to
do
but
this.
And, as noted above, although Dr. Ginn did not do a historical
analysis of the pre-discharge conditions, at least for the SLOU
at Bayway, Dr. Ginn agreed with Dr. Lipton’s conclusion that,
historically, the SLOU was a wetland.
Dr. Lipton’s opinions constitute his best estimate of what
the pre-discharge habitats would have been.
(Lipton
Direct)
63:14-19.
ExxonMobil’s
Trial Tr. 3/11/14
impractical
and
impossible interpretation of pre-discharge should be rejected in
favor of the practical definition used by the State.
The
Lipton
second
ignored
assessment.
evidence
strawman
is
development
ExxonMobil’s
and
physical
argument
that
modification
in
Dr.
his
This argument is contrary to the testimony and
adduced
at
trial.
Dr.
Lipton
testified
that
he
excluded any injury to natural resources that was solely caused
65
It is also absurd to imagine that a single document exists that
definitively resolves such an issue, which is why there are lawsuits and
experts are permitted to review the best available evidence and make
inferences and assumptions using their professional judgment.
100
by a physical modification.
86:5-12.
The
ExxonMobil’s
evidence
pollution
Trial Tr. 3/12/14 (Lipton Direct)
at
at
trial
Bayway
showed
and
that
Bayonne
the
was
impact
of
“comingled”
with the development and physical modification of the Sites,
such that the impacts of each cannot be severed.66
4/15/14
(Lipton
Redirect)
Cross) 83:21-84:9.
claimed
physical
17:2-18;
Trial
Tr.
Trial Tr.
7/10/14
(Ginn
ExxonMobil’s argument here is tied to its
modification
defense,
discussed
more
fully
below.
Additionally, unrelated to Dr. Lipton and Dr. Southgate,
ExxonMobil attempted to use Tideland Claims Maps to contradict
certain pre-discharge habitats at the Sites.
In the context of
the video testimony of Martin Mosen, a Department employee and
case
review
officer
for
the
Tidelands
Resource
Council,
ExxonMobil asserted – for the first time in this case - that the
mere fact that the State had not asserted a claim regarding
portions of the Bayway and Bayonne properties pursuant to the
1981
Riparian
Claims
Amendment
meant
that
the
pre-discharge
habitats at those locations could not have been tidally flowed.
This position is incorrect.67
66
The commingling of the development of the Sites and ExxonMobil’s pollution
is further discussed in part II(D).
67
The State objected to the entry of the Claims Maps on this basis.
The
Court allowed the maps into evidence for the limited purpose as stated by
ExxonMobil:
101
The fact that the State did not assert a claim over certain
parcels of property does not demonstrate a lack of tidal flow,
but rather is the result of: (1) a decision not to assert a
claim; (2) a lack of sufficient information at the time the
claims maps were due; and/or (3) a lack of time within which to
assert the claim.
ExxonMobil has previously conceded that there
were in fact wetlands and other tidally flowed portions of its
properties that the State did not claim in connection with the
Riparian Claims Amendment.
Summary
Judgment
on
See ExxonMobil’s Motion for Partial
Plaintiff’s
Claims
for
Natural
Resource
Damages Related to. . .(2) Former Wetlands Not Claimed by the
State Pursuant to the Riparian Claim Amendment. . . .(6/30/08),
pp. 16-18; ExxonMobil’s Reply in Support of same (8/8/08), pp.
15-16.
In the context of that motion, ExxonMobil argued to Judge
Anzaldi that: (1) the State's natural resource damage claims
disregarded the 1981 Constitutional Amendment to quiet title to
formerly
tide-flowed
riparian
lands;
(2)
that
much
of
the
formerly tide-flowed land for which the State seeks damages was
MS. JANGHORBANI: I'm offering for the fact, not that
they retained or claimed it, I'm offering for that
fact that what they retained or claimed was what they
believed to be tidally flowed. That is the limit of
what I'm offering it for, Your Honor.
[Trial Tr. 8/13/14 (Mosen Direct) 30:1-6.]
See also Trial Tr. 8/13/14 (Mosen Direct) 20:4-7.
102
validly transferred to ExxonMobil; or (3) that the State has
waived
and
abandoned
properties.
See
any
right,
ExxonMobil
title
Mtn.
or
interest
in
(6/30/08).
these
ExxonMobil
contended that:
The
legislative
history
underlying
the
Riparian Claim Amendment makes clear that
the people of New Jersey intended the
amendment
to
remove
unclaimed
former
wetlands (referred to in the amendment as
riparian lands) from the public trust.
[Id. at 16.]
ExxonMobil took the position that “[i]f the State failed to
assert timely claims to former tide-flowed property as required
by
the
amendment,
altogether.”
it
ceded
ExxonMobil’s
its
interest
in
the
Reply
(8/8/08)
at
15
property
(footnote
omitted) (emphasis added).
Judge
Anazldi
noted
ExxonMobil’s
acknowledgement
that
properties that were not claimed pursuant to the Riparian Claims
Act
Amendment
did
not
mean
they
were
never
tidally
flowed.
“Exxon argues that the state disavowed interest in the majority
of
those
lands
via
the
1981
Riparian
Claim
Amendment
which
removed from the public trust all former wetlands not claimed by
the
State.”
7/24/14
Letter
Opinion,
p.
4.
(Anzaldi,
J.).
ExxonMobil took the position that the failure of the State to
assert a claim “removed” former wetlands from the public trust
and “forfeited” any claim the State could have made.
103
ExxonMobil
Reply
(8/8/08)
at
16,
17.
ExxonMobil’s
argument
expressly
acknowledged that formerly tidally flowed areas were not in fact
claimed under the deadline set by the Riparian Claims Amendment
and that as a result, the fact that the State did not assert a
claim to them does not actually demonstrate that areas were not
tidally flowed.
In
addition,
ExxonMobil’s
new
Mr.
Mosen’s
argument.
testimony
Mr.
Mosen
does
not
testified
support
that
just
because an area was not claimed by the State did not mean that
the area had not been tidally flowed.
Direct)
53:13-54:5,
70:6-11.
In
Trial Tr. 8/13/14 (Mosen
addition,
the
claims
maps
themselves note that the failure to assert a claim means that a
claim is forfeited, i.e., that a claim may have been viable but
lost given the deadlines imposed by the Amendment.
See, e.g.,
Claim overlay map for Tremley Arthur Kill, DEX1672 (disclaimer).
Finally,
ExxonMobil’s
contentions
are
also
belied
by
the
evidence in this case, including its own submissions to the
Department, which demonstrate that the tidal areas, primarily
wetlands, extended much further into the interior of the Bayway
property
ownership
than
that
under
the
to
which
Riparian
the
State
Claims
asserted
Amendment.
a
claim
See,
of
e.g.,
ExxonMobil’s Verification Petition of Class III-B Groundwater,
PEX1085, pp. 16, 17, 19, 32.
Figures 7 through 10 of PEX1085
include maps that identify extensive interior tidal marshes at
104
Bayway, several of which were relied upon by Drs. Southgate and
Lipton
in
determining
pre-discharge
habitats,
including
the
extent of former salt marshes at Bayway.
ExxonMobil’s
efforts
to
recast
the
factual
and
legal
impacts of the Riparian Claims Amendment should be rejected.
The fact that a claim may not have been made to certain areas on
the Bayway and Bayonne properties is simply not dispositive of
whether the area had historically been a wetland or tidally
flowed.
The State’s pre-discharge habitats were uncontroverted,
and there is no reason why they should not be accepted.
3.
Early operators did not adversely impact the
functioning of the pre-discharge habitats
In addition to identifying the pre-discharge habitats, Dr.
Southgate also confirmed that pre-discharge activities at the
Sites did not adversely impact the functioning of the habitats
at issue.
Dr. Southgate relied on federal agricultural census
records from the Bayway and Bayonne areas, which indicated that
both areas were primarily agricultural areas.
Trial Tr. 2/10/14
(Southgate Direct) 220:14-24 (records for Bayway indicated the
continued
existence
of
farming
from
1850–1880s);
Trial
Tr.
1/29/14 (Southgate Direct) 207:1-208:24 (discussing VanBuskirks
farming records for 1850, 1860 and 1880 near Bayonne); Trial Tr.
2/11/14 (Southgate Cross) 102:13-14 (noting extensive farmland
at Bayonne prior to Standard Oil’s arrival).
105
This farming in
the Linden/Bayway area consisted of dairy farming, mostly in the
uplands, and crops such as Irish potatoes, maize and salt hay,
and
the
farming,
farming
along
in
the
with
Bayonne
fruits
strawberries and tomatoes.
and
areas
was
vegetables
largely
such
as
salt
hay
apples,
Trial Tr. 1/29/14 (Southgate Direct)
206:19-23; Trial Tr. 2/10/14 (Southgate Direct) 221:17-222:1;
Trial Tr. 2/11/14 (Southgate Cross) 104:14-105:2.
According to
Dr. Southgate, the farming continued at the Sites through the
19th
century,
indicating
little,
operations on or near the Sites.
if
any,
impact
from
early
Trial Tr. 2/12/14 (Southgate
Redirect) 39:2-11, 40:4-5; see also Trial Tr. 3/18/14 (Lipton
Cross) 41:8-20 (indicating that given the nature of farming in
the 1800’s there is no reason to think the area wouldn’t grow to
be a palustrine meadow or forest).
Dr. Southgate testified that there were small industries
that developed on Constable Hook.
The Hazard Powder Company was
the first industry to develop in the area.
Trial Tr. 2/10/14
(Southgate Direct) 201:24-202:6; Trial Tr. 2/12/14 (Southgate
Redirect) 40:5-8.
The Hazard Powder Company began acquiring
property on the end of Constable Hook in the 18th and early 19th
centuries (Trial Tr. 2/10/14 (Southgate Direct) 201:24-202:6),
and it was not shown on 1872 Beer’s Atlas (PEX0733S), indicating
that it was no longer in existence in 1872 (id. at 203:8-18).
There is no available information on what, if any, destruction
106
of natural resources occurred at that time.68
Dr. Southgate
testified that there was no indication of an impact from the
Hazard
Powder
40:4-8.
Mill.
Trial
Tr.
2/12/14
(Southgate
Redirect)
Other industrial development on Constable Hook included
a lead and zinc factory owned by Mr. White (previously a sulphur
factory), and a varnish works located east of Platty Kill Creek
in the uplands.
204:6;
Trial
Trial Tr. 2/10/14 (Southgate Direct) 203:19-
Tr.
2/11/14
(Southgate
Cross)
134:10-14.
addition, Prentice Refinery was established in 1875.
2/10/14
Southgate
(Southgate
cited
Direct)
evidence
204:7-14.
that
fisheries
Trial Tr.
Additionally,
on
Robbins
In
Reef
Dr.
and
oyster beds in New York Bay continued to exist into the second
half of the 19th
quality.
century, indicating no impact on the water
Id. at 40:15-17.
Further, Dr. Southgate cited to Mr.
White’s diaries to support her conclusion, wherein, despite the
presence of these factories in the area, farming continued until
at least 1880.
Trial Tr. 2/11/14 (Southgate Cross) 136:8-17;
Trial Tr. 2/12/14 (Southgate Redirect) 40:12-14.
Further, Dr. Southgate testified to the existence of some
industrial development on or nearby the Bayway Site, but as she
68
ExxonMobil is liable for any contamination at the Sites under joint and
several liability. However, there is no evidence that historic contamination
levels were greater than the restoration criteria in this case.
More
important, it is unclear that either the cost of primary or compensatory
restoration would be changed based on the presence of any chemical compound
from these operations.
107
testified, this development was “quite limited to the mouth of
Morses Creek” with very limited development on the Site itself.
Trial
Tr.
2/12/14
(Southgate
Redirect)
38:24-39:1.
Industrialization in Linden included the Russell Bone Company
and S.S. Fale Chemical Works established in 1872.
Trial Tr.
2/11/14 (Southgate Direct) 24:16-26:23 (relying in part on an
1898 U.S. geological survey topographical map (PEX0733B)).
Southgate also identified a tannery nearby.
Neither
the
bone
mill
nor
the
chemical
Dr.
Id. at 26:24-27:2.
factory
were
on
the
Bayway Site, and Dr. Southgate was not sure if the tannery was
located on what would ultimately become the Bayway Site.
27:3-12.
Dr.
industrial
development
Copper
Company
Southgate
and
acknowledged
in
the
the
Swan
the
area,
and
existence
including
Finch
2/11/14 (Southgate Cross) 178:12-179:14.
of
the
Company.
Id. at
other
Mountain
Trial
Tr.
However, when pressed
by ExxonMobil to admit that these other facilities impacted the
natural
resources
beyond
their
own
facilities,
Dr.
Southgate
could not agree, citing the absence of evidence either way and
the impossibility of determining the precise extent of any such
impact.
Id. at 190:13-17, 191:9-25.
Further, as Dr. Southgate
explained, Bayway was mainly an agricultural community through
the 19th century and there was no evidence of any industrial
impairment
of
the
farming
activity.
(Southgate Redirect) 39:2-11.
108
Trial
Tr.
2/12/14
Although it was not part of her analysis for purposes of
her report, ExxonMobil repeatedly pressed Dr. Southgate for an
opinion to support its physical modification argument.69
Dr.
Southgate testified that at Constable Hook, prior to the arrival
of
Standard
Oil,
there
were
several
houses,
a
school
and
a
church, which were built in upland areas not in the marshes.
Trial Tr. 2/11/14 (Southgate Cross) 91:7-10, 96:21-97:1.
While
Dr. Southgate acknowledged that to build these structures, there
would have been some changes such that where the structures were
located would no longer have the plants or whatever was growing
there before (ibid.), there is no reason to believe that the
building of these structures adversely impacted or permanently
destroyed the natural resources in that area.70
Southgate
activities
rebuffed
at
ExxonMobil’s
the
Sites
prior
suggestions
to
that
Standard
adversely impacted the natural resources.
Similarly, Dr.
the
farming
Oil’s
arrival
Just as with the
presence of structures, nothing was done to destroy the ability
of the habitats to continue to function in the absence of the
structures or farms.
“[I]t still maintained the potential to
69
In addition to seeking opinions from Dr. Southgate that were outside of her
report, much of ExxonMobil’s questioning of Dr. Southgate asked whether
something “was possible.”
As the Court noted, questions calling for such
speculation are not helpful, as anything is possible.
Trial Tr. 2/11/14
(Southgate Cross) 191:20-25.
70
Even Dr. Delaney, ExxonMobil’s own expert, would not agree that farming
activities such as those that preceded ExxonMobil’s activities at the Site
were sufficient to destroy all of the natural resources in that area. Trial
Tr. 6/3/14 (Delaney Cross) 38:9-25.
109
continue to be functioning even if agriculture ceased, there
would be plants growing there and it would return most likely to
a previous condition.”
Trial Tr. 2/12/14 (Southgate Redirect)
42:8-15.
While she acknowledged that the dams associated with the
grist
mills
would
control
and
alter
the
tidal
flow,
Dr.
Southgate testified that she does not think this alteration of
tidal flow impacted the quality of the marsh because salt hay
continued
(Southgate
to
be
harvested
Cross)
in
97:2-98:1,
the
area.
100:4-9.
Trial
Dr.
Tr. 2/11/14
Southgate
further
testified that she has no evidence that the improvements to the
marsh areas for farming had any adverse impact on the functional
characteristics of the marsh.
Id. at 101:12-102:3; see also
Trial Tr. 2/11/14 (Southgate Cross) 109:3-25.
Dr. Southgate’s uncontested and uncontroverted opinion was
that
the
functional
acquiring
salt
marshes
habitats
property.
up
at
Bayonne
until
Trial
the
Tr.
and
time
2/12/14
Bayway
were
fully
Oil
began
Standard
(Southgate
Redirect)
39:6-12, 42:4-7.
4.
ExxonMobil’s physical modification argument suffers
from legal and factual infirmities and should be
rejected.
Throughout this litigation, ExxonMobil has argued that the
damage to the State’s natural resources at the Sites was the
result
of
lawful
development
and
110
physical
modification,
as
opposed to its unlawful discharges of hazardous material.
As
discussed herein, there are a number of legal problems with
ExxonMobil’s
argument,
along
with
the
complete
failure
of
factual proof to support it.
ExxonMobil relies heavily on Judge Anzaldi’s June 5, 2009,
ruling
on
ExxonMobil’s
motion
for
relating to physical modification.
partial
summary
judgment
In his Order, Judge Anzaldi
dismissed the State’s claims for damages “that are the result of
physical modifications to the Bayway and Bayonne sites,” but he
declined to include the language in ExxonMobil’s proposed order
that said, “including but not limited to paving roads, filling
wetlands,
laying
down
tanks, and dams.”
pipes,
and/or
constructing
facilities,
6/5/09 Order, (Granting Defendant ExxonMobil
Corporation’s Motion for Partial Summary Judgment on Plaintiff’s
Claims
for
Modifications
Physical
Natural
at
Resource
Bayway
Modification
and
Damages
Bayonne)
Order).
The
Due
(Anzaldi,
exclusion
to
Physical
J.)
(Anzaldi
of
ExxonMobil’s
suggested language was due to the fact that Judge Anzaldi was
only able to provide a generic ruling that the Spill Act creates
liability
only
for
wholesale
damages
discharges.
caused
by
He
the
was
paving
not
able
of
roads
to
exclude
and
other
activities listed in ExxonMobil’s proposed language because the
specific facts had not been presented that would permit him to
determine
that
these
physical
modifications
111
occurred
in
the
absence of unlawful discharges.
A review of the transcript of
the hearing on that motion makes this clear.
In
his
argument
in
favor
of
the
motion,
ExxonMobil’s
counsel noted the distinction between pure physical modification
in the absence of contamination and physical modification that
included contamination:
But I'll respond to any arguments, they
have. But, it was a straightforward motion,
Your Honor. It was made because their
experts did not limit their calculations to
discharges, but actually counted, as I said,
building buildings, roads. They have, you
know, they take one, they take issue with
one point. They say, well, to the extent we
used fill and if the fill was contaminated,
that would be compensable. To the, to the
extent they can prove that contaminated fill
was used and can establish that that
constitutes a form of a discharge, and they
put it in the discharge box, then we'll
litigate
that.
But
this
physical
modifications motion covers far more than
just fill. It covers, as I said, the fact
that we built buildings. There's no question
that when we cut down trees and built a
building or paved the road that impacted
natural resources. But that, that is not
what is covered by the Spill Act.
[Hr’g Tr., 6/1/09, 5:22-6:14
ExxonMobil’s counsel).]
(argument
of
The State’s counsel responded to this position by pointing
out
that
the
development
and
physical
modification
to
which
ExxonMobil referred was on top of or in conjunction with its
unlawful discharges.
See Hr’g Tr., 6/1/09, 6:16-12:3 (argument
of the State’s counsel).
The State noted that its experts found
112
contamination
throughout
the
Sites,
and
ExxonMobil
did
not
provide any witness who could point to any specific location at
either Site that was destroyed solely by physical modification.
Id. at 8:9-10:18.
ExxonMobil’s counsel again ignored the facts and evidence
developed
by
the
State’s
experts,
and,
despite
having
no
evidence of its own to the contrary, argued that the buildings
and development clearly came first before any contamination, and
asked for a ruling that all development activities at the Sites
should be excluded from the State’s claim:
All
we
are
asking
for
is
a
simple
straightforward legal ruling that the Spill
Act is confined to discharges, and that
Exxon Mobil under the Spill Act is only
responsible for discharges of hazardous
material and the resulting damages, and that
the Spill Act does not encompass the paving
of a road or the building of building.
That's all we ask for and I think we are
entitled to do that.
[Hr’g Tr., 6/1/09, 13:1-8
ExxonMobil’s counsel).]
(argument
of
Following the argument, Judge Anzaldi stated that he could
not make a ruling at that time on whether or not buildings were
built
on
contaminated
Decision) 16:10-16.
ground.
Hr’g
Tr.,
6/1/09
Judge Anzaldi further explained:
When we're talking about what is the dollar
damage that comes from that, then the, that
becomes part of complication, due to the
breadth
and
scope
of
the
allege
contamination. And this goes back, perhaps
113
(Anzaldi
before, but at least in 1902, covers the two
sites, approximately 1500 acres. And I
gather this motion by the defense was
saying, it can't be all 1500 acres, it just
can't be.
And when your expert; that's their
argument. When their ex when the plaintiff's
expert says, well, what I did is, I, 1500
acres, and I used this rationale, this
formula for 1500 acres. And they're saying,
but wait a minute, there's a building. Well,
it depends when that building was built,
perhaps,
and
whether
or
not
there's
contamination underneath that building. But
is it possible that some of these buildings
were built on land that had not yet been
contaminated?
And if that were the case, I think
that's the distinction the defense is trying
to say; wait a minute, if we built this
building, or this road, before this area of
the 1500 acres was contaminated, your expert
has to parse this out, they argue. Whether
that's true or not, we'll deal with it. But
they're asking, therefore, for this Court to
then provide some, in effect, in limine type
of ruling.
. . . .
Well, the motion says, from Exxon says,
that they believe that in the computation of
those damages, there should not be included
such
things
as
cutting
down
trees,
installing roads, erecting buildings. And
DEP
responds.
But
there
may
well
be
buildings and roads that were constructed
above land that was contaminated.
At
this
point
neither
party
has
actually pointed to any one structure or
installation which would give the Court more
guidance as to what actually is in dispute;
the specific building, the specific area,
the acreage, the, if the roadway is a threemile road, then there's something. If it's a
100 foot roadway; that's something else. And
114
when and where it came onto, it came into
existence.
. . . .
There
is
no
specific
location
or
building in question. And Counsel points
that out; you know, what building are you
talking about? And then we can address it to
find out was it built on a pond that was
contaminated many years ago, or is it built
on, one of you used the word, pristine land.
So the, the defense is asking this
Court to make a broad, generic ruling. Mr.
Kanner suggests that by ruling that way,
because he really doesn't dispute that the
basis of the plaintiff's claim deals with
discharges of hazardous substance; he's
saying, we can't parse it out. That may be,
as Counsel suggests, an issue that will
create some ongoing problems in the future.
It's clear to this Court, that the
scope of the Spill Act only applies to
discharges of hazardous substance; meaning
any intentional or unintentional action or
admission
resulting
in
the
releasing,
spilling,
leaking,
pumping,
pouring,
emitting, emptying, dumping, and anymore
adjectives that I probably have not had an
opportunity to articulate, of hazardous
substance into the waters or onto the lands
at the two locations that have been in
discussion.
The statute is clear, the Spill Act
deals
with
discharges.
Certainly,
it
doesn’t deal with any claim for damages that
may have been occasioned by cutting down
trees in order to build a, a building; or
cutting down trees because they were putting
in a roadway; or even putting in more
substantial items, a building or the like,
by and of itself is not the basis of the
Spill Act.
115
Plaintiff is only able to seek redress
under the Spill Act for damages that were
result of those discharges, et cetera, et
cetera.
Therefore, defendant Exxon's motion for
summary judgment is granted to the extent
that DEP cannot seek damages under the Spill
Act for any alteration or contamination of a
natural environment that was not the result
of a discharge of a hazardous substance. If
the plaintiff is able to establish that the
ground
underneath
that
building
was
contaminated,
then
they'll
be
able
to
establish that. But for the generic ruling,
there it stands.
[Id.
at
17:5-18:5,
(emphasis added).]
19:6-20,
20:2-21:19
It is clear from Judge Anzaldi’s ruling that only damages to
natural
resources
modification
are
caused
solely
excluded,
but
by
that
development
damages
discharges of hazardous substances are not.
and
physical
resulting
from
Id. at 22:1-7 (“So,
if what, if all you seek Counselor, is a conclusion by this
Court or a ruling by this Court, that the State is liable to, is
able to seek damages under the Spill Act for any alteration or
contamination
of
the
natural
environment,
that
result of a discharge of a hazardous substance.
was
not
the
Your motion is
granted.”).
As
discussed
herein,
the
State
has
met
its
burden
of
showing the required nexus to connect ExxonMobil’s discharges to
the damage to the State’s natural resources at the Sites.
The
State is not required to show that ExxonMobil’s discharges were
116
the sole cause of the damage.71
Nor is the State required to
disprove physical modification.
Rather, the State need only
show
that
ExxonMobil
was
“in
any
damage, which the State has done.
175.
way
responsible”
for
the
Dimant, supra, 212 N.J. at
The burden then shifts to ExxonMobil to provide contrary
evidence
to
discharges
resource
factual
that
were
presented
not
damages.
evidence
in
any
by
way
ExxonMobil
showing
any
the
State,
responsible
simply
damage
failed
to
the
i.e.,
for
to
that
the
natural
produce
State’s
its
any
natural
resources was caused solely by something other than ExxonMobil’s
discharges.
As Judge Anzaldi noted in his ruling set forth above, at
that time, ExxonMobil had not pointed to a specific building or
location that it contended was solely the cause of damage to
natural
resources
independent
of
any
contamination.
During
trial, ExxonMobil still failed to do so.
Instead,
ExxonMobil
presented
the
testimony
of
Dr.
Tod
Delaney, who discussed the development of the Sites, but who was
instructed to completely ignore contamination.
Trial Tr. 6/2/14
(Delaney Cross) 200:19-201:8 (acknowledging that one would have
to have analyzed the fill in order to determine whether the
fill, the contamination in the fill, or a combination of the two
71
See part II(A)(2), supra, discussing ExxonMobil’s burden of proof with
respect to concurrent causation.
117
caused the loss and he did not do that); Trial Tr. 5/21/14
(Delaney Direct) 163:20-164:5 (stating that he did no analysis
of whether or not the fill was contaminated when it was placed
in
the
ground);
Trial
Tr.
6/2/14
(Delaney
Cross)
129:21-23
(stating that he was not charged with looking at contamination);
id. at 131:18-23 (stating that his role was not to look for
contamination); id. at 134:5-10 (stating that he was looking
solely
at
material
as
fill
material,
not
whether
the
fill
contained contaminants); id. at 134:25-135:12 (stating that he
was
not
looking
at
contamination).
By
completely
ignoring
evidence of contamination, Dr. Delaney failed to analyze the
natural resource injuries due to solely physical modifications
as
opposed
to
discharges
of
hazardous
substances,
much
less
separate the two.
Dr. Delaney offered opinions that certain areas of Bayway
sustained
a
complete
loss
of
ecological
services
ExxonMobil’s filling activities at certain times.72
due
to
Trial Tr.
6/2/14 (Delaney Cross) 195:16-23.
As Dr. Delaney testified, he
took
if
a
binary
approach,
meaning
an
area
was
filled,
concluded there was a complete lack of ecological services.
he
Id.
at 197:23-198:12.
72
Dr. Delaney included waste disposal activities as “filling” for purposes of
his analysis. Trial Tr. 6/3/14 (Delaney Cross) 194:16-19.
118
Although Dr. Delaney offered opinions as to when specific
areas of Bayway were “closed out” or physically modified, these
opinions are exclusive of any impact caused by contamination
prior to his “closing out” review of the conditions at that
area.
Trial Tr. 6/2/14 (Delaney Cross) 151:14-152:3.
This is
contrary to the testimony of Dr. Desvousges, who testified that
the separation of the effects of the construction and operation
from
the
release
important.”
of
hazardous
substances
is
“critically
Trial Tr. 6/9/14 (Desvousges Cross) 145:18-146:1,
148:11-149:12.
In
addition
distinction
in
to
his
not
making
analysis,
groundwater in this analysis.
197:1-13.
Dr.
Delaney
did
this
Dr.
critically
Delaney
did
important
not
include
Trial Tr. 6/2/14 (Delaney Cross)
not
quantify
the
services
provided in the areas he referred to as “fringe areas.”
201:9-19.
early
areas.
being
Id. at
He did not investigate contaminant migration from the
developed
upland
areas
to
any
of
the
later
developed
Trial Tr. 6/3/14 (Delaney Cross) 22:21-23:2, 24:12-17.
Dr. Delaney also did not investigate possible leaching and runoff from the solid waste disposal pits on the Site.
26:10-27:19.
Id. at
Additionally, although he had the capability to do
so, he did not calculate the volume of fill at any location on
the Site.
Id. at 77:23-78:7.
And, although he was instructed
not to look at impacts of pollution, Dr. Delaney conceded that
119
kerosene was sprayed extensively at both Sites before and during
operations to kill mosquitoes.
218:3-13.
This
fact
alone
Trial Tr. 6/2/14 (Delaney Cross)
confirms
that
damage
to
natural
resources from the discharge of hazardous substances occurred
prior to and during any physical modifications at these Sites.
Although Dr. Delaney is the only ExxonMobil expert to look
at any site conditions (while ignoring contamination) prior to
1977, he testified that his Bayway opinions started in 1932, not
1908, when ExxonMobil acquired the property.
(Delaney
Cross)
151:14-152:3;
see
also
id.
Trial Tr. 6/2/14
at
153:21-154:18.
Dr. Delaney testified that the Site conditions were different in
1908 than in 1932, which was the focus of his analysis.
Trial
Tr. 6/3/14 (Delaney Cross) 188:5-9.
Thus, by his own admission, the sole ExxonMobil witness
looking at the Sites prior to 1977 did not consider the time
period during which the State’s experts contend the majority of
the contamination occurred at the Sites, and he affirmatively
ignored contamination completely.
Dr. Delaney confirmed that he
made no attempt to apportion natural resource damages between
different
causes
discharge.
result,
Dr.
such
as
physical
modification
or
hazardous
Trial Tr. 6/3/14 (Delaney Cross) 77:18-22.
Delaney’s
opinions
should
be
entitled
to
As a
little
weight, if any, as they do not aid the Court in reaching its
120
decision here as to ExxonMobil’s tenuous physical modification
argument.
Importantly,
Dr.
Delaney
did
not
look
at
what
natural
resources existed prior to the development at the Sites (Trial
Tr. 6/2/14 (Delaney Cross) 147:10-16), and he made no effort to
quantify the amount of natural resource injury, if any, was
caused
by
the
147:17-148:3,
physical
Trial
Tr.
modifications
6/3/14
at
(Delaney
the
Cross)
Sites
(id.
at
79:14-80:20).
This omission is critical to ExxonMobil’s physical modification
defense.
While Dr. Delaney testified about the timing of the
development and physical modification, he testified that he did
not quantify any impact on the natural resources caused by the
physical modification.73
The causal connection is missing from
ExxonMobil’s analysis, meaning ExxonMobil’s HEA is based upon a
baseline condition completely unrelated to the facts of this
case.
During
trial,
ExxonMobil’s
counsel
represented
that
Dr.
Ginn would make the connection that Dr. Delaney failed to make.
Trial
Tr.
6/5/14
(Desvousges
Direct)
61:6-21.
However,
Dr.
Ginn’s testimony clearly refutes this.
Q Okay. To the extent that Exxon may have
built over or on top of natural resources
destroyed by or injured by contaminants,
73
Dr. Delaney was also the only ExxonMobil witness qualified to make this
determination.
See Trial Tr. 6/9/14 (Desvousges Cross) 149:18-150:10
(stating that neither he nor Dr. Ginn have the expertise to perform a
physical modification analysis like Dr. Delaney would have done).
121
that was also -- it was also not part of
your job to investigate whether Exxon had
built over natural resources that had been
damaged or destroyed by contamination at any
point prior to 1977, correct?
A I did not do that evaluation.
Q And that's because it was
scope of your work, correct?
outside
the
A Yes.
[Trial Tr.
29:10.]
7/10/14
(Ginn
Cross)
28:25-
Additionally Dr. Ginn testified:
Q . . . So you've never really tried to do
an analysis of what was caused by physical
modification, what was done by chemical
discharges prior to 1977; that simply was
not work that you did, correct?
A That's correct, prior to 1977.
[Trial Tr. 7/22/14 (Ginn Cross) 67:5-10.]
See also Trial Tr. 7/10/14 (Ginn Cross) 20:19-23 (stating that
he did no investigation of injury prior to 1977); id. at 24:6-9
(stating that he did no assessment of any ecological injury
prior to 1977); id. at 24:17-21 (stating that he did no analysis
of any habitat prior to 1977); id. at 25:16-24 (relying on Dr.
Delaney for pre-1977 habitat assessment).
No one for ExxonMobil
did the analysis to determine the baseline resulting from the
alleged physical modification.
34:17-35:12
(stating
that
Trial Tr. 7/10/14 (Ginn Cross)
when
he
determined
baseline
conditions, he had Dr. Delaney’s physical modification analysis
122
that
did
not
look
operations
and
discharges
relative
at
Dr.
discharges
Ginn
to
did
no
during
the
analysis
construction
of
early
of
the
refinery
timing
refinery
of
operations
himself); id. at 39:2-6 (stating that he did not use anything
from Dr. Boehm to establish baseline conditions); id. at 37:7-18
(stating that neither Dr. Desvousges nor Dr. Rodgers did any
analysis of discharges prior to 1977 that he was aware of and
that
he
used
in
his
baseline
analysis).
Thus,
even
if
ExxonMobil could have surpassed the legal obstacles relative to
its physical modification argument, it failed to provide factual
evidence of the same.
In another last ditch effort, ExxonMobil claims that its
filling
activities
9/3/14
(ExxonMobil
do
not
constitute
Closing)
discharges.
104:16-105:9.
Trial
In
Tr.
support,
ExxonMobil’s counsel cited to the definitions contained in the
Department’s
Tech
Regs.,
DEX4104,
arguing
that
there
separate definitions for “dumping” and “fill material.”
This argument is a non sequitur.
are
Ibid.
First, the material used by
ExxonMobil as fill does not conform to the Tech Regs. definition
of “fill material” cited by ExxonMobil’s counsel during closing
argument, which is “non-indigenous material”. DEX4104, p. 15.
Second, the relevant definition is that of “discharge” and to
the extent ExxonMobil contends that its activities associated
with
the
use
of
contaminated
123
fill
do
not
constitute
a
“discharge” within the meaning under the Spill Act, the Spill
Act and applicable caselaw prove it wrong.
Trial Tr. 9/3/14
(ExxonMobil Closing) 104:16-106:8.
The Spill Act defines “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 . . . .
[N.J.S.A. 58:10-23.11b.]
This definition of “discharge” is broad and essentially covers
any action or omission that causes contaminants to be present
where they were previously absent.
Dimant, supra, 212 N.J. at
161 (“By covering acts and omissions, and by including many
verbs describing the manner in which a hazardous substance might
reach
land
or
water,
the
category
of
what
constitutes
a
‘discharge’ is self-evidently broad.”)74; N.J. Schs. Dev. Auth.
v. Marcantuone, 428 N.J. Super. 546, 559 (App. Div. 2012) (“We
emphasize that imposition of Spill Act liability as a discharger
74
The Court in Dimant also stated in finding that the defendant committed a
discharge under the Spill Act, “[t]hat there was asphalt between the soil and
the drip makes no difference in terms of whether this constituted a release
of hazardous substances: the fluid was leaking into open air space under
which there was no structure to contain it.” Dimant, supra, 212 N.J. at 173.
This further emphasizes the broad interpretation applied to the meaning of
the term “discharge.”
124
requires some act or omission of human conduct which causes a
hazardous material not previously present to enter the waters or
land.”) (internal quotation and citation omitted).
The placing
of fill material containing hazardous substances certainly fits
within
the
broad
definition
of
“discharge.”
Ultimately,
ExxonMobil’s counsel was forced to acknowledge this fact.
Trial
Tr. 9/3/14 (ExxonMobil Closing) 105:15-20; see also Trial Tr.
7/10/14
(Ginn
traditionally
Cross)
163:20-164:2
considered
to
be
(discussing
discharges).
activities
The
only
way
ExxonMobil is able to make an argument to the contrary is to
employ
Dr.
Delaney’s
unprecedented
method
of
ignoring
all
contamination originating from on-site operations in the fill
material.75
D. History of Development and Discharges at the Bayway and
Bayonne Sites.
Based on an extensive review of the available historical
documents
Sites,
and
the
records
pertaining
Department
and
its
to
the
Bayway
and
Bayonne
experts
gained
a
thorough
understanding of the historic development of the Sites and the
contamination
Bayway
and
associated
Bayonne
Sites
therewith.
was
The
concurrent
development
with
the
of
start
the
of
contamination at the Sites; the nature of the expansion of the
75
This same result is seen in ExxonMobil’s efforts to define “baseline” to
include its own pollution. See infra, part II(F)(1)(c).
125
Sites
involved
spills,
leaks
and
other
discharges,
which
included filling with hazardous substances as well as migration
of
contamination
through
from
upland
groundwater.
to
Thus,
low-lying
refinery
areas,
including
construction
and
contamination cannot be divorced.
Based on the historical record, the Department determined
reasonable and appropriate “start dates” for the injury to be
used as an input in the HEA calculation.
(Lipton
damage
This
Direct)
78:12-20.
calculation
was
Department
History
based
from
upon
consistent
Reports
and
The
the
State’s
date
of
instructions
with
other
the
Trial Tr. 3/12/14
experts
onset
given
Spill
information
of
to
Act.
Ibid.
reliable account of the onset of contamination.
their
contamination.
them
relied
Trial Tr. 3/11/14 (Lipton Direct) 173:8-18.76
began
upon
from
the
The
Site
provide
a
Id. at 82:2-13;
The Sites’ build-
out history is laid out below.
Standard
Oil,
ExxonMobil’s
predecessor77,
Bayonne Site in 1877 and the Bayway Site in 1907.
purchased
the
Bayonne Site
History Report, PEX0694A, p. 21, and Bayway Site History Report,
Vol. 1, PEX0689A, p. 16.
76
See also infra, part II(F)(3).
77
“ExxonMobil” and “Standard Oil” are used herein interchangeably to refer to
Exxon Mobil Corp. and its predecessors in interest.
126
Prior to ExxonMobil’s arrival in the areas of the Sites,
there was minimal industrial activity.
Dr. Southgate testified
that the operations that preceded ExxonMobil were of a much
smaller
scale,
altogether.
if
not
outside
of
the
property
boundaries
See, e.g., PEX0733E; Trial Tr. 2/11/14 (Southgate
Direct) 21:20-21:6 (describing small industrial activities at
the mouth of Morses Creek prior to Standard Oil’s purchase of
the
property).
footprints
for
No
these
evidence
entities
of
was
the
potential
analyzed
or
pollution
identified
by
ExxonMobil.
In addition, there is no evidence that the constituents
that may have been emitted or discharged are any different, or
could be segregated, from those emitted by ExxonMobil.
For
example, the Mountain Copper Company operated a copper smelting
facility in IAOCs B01, C04, and C05 in 1902, prior to Standard
Oil’s purchase of the property.
Direct) 234:9-19.
Trial Tr. 5/21/14 (Delaney
Copper is one of the compounds ExxonMobil and
the Department identified as a chemical ExxonMobil needed to
investigate.
Exceedences of criteria for copper were found in
soils and sediment in 36 of the 51 IAOCs at Bayway (see
Table
3.4
Contaminants
that
exceeded
thresholds
in
Stratus
soil
and
sediment samples collected at the Bayway Refinery, PEX1273), not
127
just the IAOCs where Copper Mountain was located.78
reasonable
connection
between
Copper
Mountain
There is no
and
the
copper
found at the other IAOCs where only ExxonMobil had operations.79
Further, there is simply no evidence to support ExxonMobil’s
position that these small isolated operations had an adverse
impact on the habitats at Bayway and Bayonne, as opposed to
Exxon’s large scale operations and dumping practices that took
place throughout the Sites.
1.
Development of the Bayway Site.
a. The initial development at Bayway was primarily
upland areas of the Site.
ExxonMobil began refinery construction at the Bayway Site in
1908.
i.e.,
In 1909, operations began in areas of higher elevation,
the
uplands
and
palustrine
meadow
areas
of
the
Site,
including the Pipestills Area (A01)80 and the Powerformer Area
(A02).81
Small tanks were also present in the Gasoline Blending
78
ExxonMobil has also identified copper as a contaminant of concern that
exceeded risk-based criteria and required additional delineation at various
areas throughout the Site to address ongoing risk. See, e.g., Remedial
Investigation for Bayway Phase IB (AD Little 2000) DEX4065, pp. 101, 198
(identifying copper as contaminant of concern. . .).
79
Although Dr. Boehm attributed copper exceedences at the Sites as
“background,” his definition of background included both naturally-occurring
metals and anthropogenic (or man-made) additions.
See Trial Tr. 6/11/14
(Boehm Direct) 170:3-12.
80
6/3/14 Order, p. 2 (“At A01, the original operations area that processed
crude oil into finer grades started in 1909.”).
81
Ibid. (“At A02, the original operations area that processed crude oil into
finery grades started in 1909.”).
128
Tankfield (A08)82, and the East Retention Basin (A18) served as a
treatment oil/water separator for the Refinery.
Bayway Site
History Report, PEX0689A, p. 57-58.
As soon as operations began at the Site, ExxonMobil, by its
own admission, was discharging hazardous substances.
ExxonMobil
admits that “[a]n operating refinery loses a certain amount of
both crude oil and refined products through leaks, spills, and
the
like.”
ExxonMobil
6/3/14
are
ExxonMobil
Refinery,
“[y]ears
contribute
and
to
(holding
admissions
Internal
explosions
Order
pursuant
documents
of
statements
N.J.R.E.
that
at
including
enlightened
likelihood
prior
to
confirm
operations,
less
the
that
803(b)).
the
Bayway
spills,
fires,
environmental
of
by
encountering
practices
significant
contamination almost anywhere in [Unit A].”
7/9/1993 Memo. From
D.R.
Site
Chapman
to
T.J.
Aruta
re:
History/Site
Characterization Input to Bayway Technology Development Plan,
PEX 9, p. 6; see also Trial Tr. 2/10/14, (Archibald Direct)
69:12-22
(indicating
a
clear
record
of
Dr.
Tod
spills,
fires
and
explosions in Unit A).
Additionally,
(although
he
did
ExxonMobil’s
not
include
this
82
fact
Delaney
in
his
testified
report)
that
Ibid. (“At A08, the Gasoline Blending Tankfield area has been a tankfield
since 1908.”); PEX0689A, p. 47 (“In 1908, 19 small Working Tanks were located
to the west side of Woodbridge Avenue. The Working Tanks contained a variety
of materials such as petrolite, Celsius, water white, standard white, gas
oil, gasoline, treated naphtha, and crude naphtha.”).
129
ExxonMobil
poured
kerosene,
an
early
product83,
refining
throughout the Refineries for mosquito abatement.
6/2/14
(Delaney
constitutes
a
Cross)
218:3-19.
discharge
under
This
the
Spill
Trial Tr.
pouring
Act,
of
and
oil
thus,
ExxonMobil is liable for the damages to natural resources caused
by this activity.
Tankfields
contaminated
as
throughout
a
result
of
the
Refinery
ExxonMobil’s
became
severely
“spills,
overfills,
leaks, sloppy maintenance practices, and tank bottoms spreading
within
diked
areas,”
including
at
the
Gasoline
Blending
Tankfield.
See 7/9/1993 Memo. From D.R. Chapman to T.J. Aruta
re:
History/Site
Site
Technology
Development
Characterization
Plan,
PEX0009
p.
Input
9;
Trial
to
Bayway
Tr.
6/3/14
(Delaney Cross) 172:8-11.
b. Development of Refinery around Morses Creek.
ExxonMobil treated Morses Creek, a public resource, as its
own
private
waste
management
operations at the Bayway Site.
system
from
the
beginning
of
For example, wastewater from the
East Retention Basin was discharged into Morses Creek in the
event of major storms and power failures.
Report, PEX0689A, p. 58.
Bayway Site History
The East Retention Basin also suffered
83
See Bayway Site History Report, PEX0689A, p. 50 (“Early products, between
1914 and 1919, were primarily kerosene and gasoline.”); Trial Tr. 6/2/14
(Delaney Cross) 164:17-21.
130
broken
concrete
wall
necessitated repairs.
Due
to
the
baffles
and
concrete
slabs
that
Ibid.
excessive
discharges
of
hazardous
substances
into Morses Creek, ExxonMobil constructed the No. 2 Dam in 1922
and No. 1 Dam in 1935 to prevent contaminants from entering the
Arthur Kill.
As Mr. Bakun testified:
Dam
1
was
constructed
at
the
–
my
understanding based on reading historical
documents -- at the request of authorities
at the time to keep residual oil and sheen
that may get into Morses Creek from passing
through Morses Creek into the Arthur Kill.
Dam 1 was constructed to allow oil spill
containment and collection within Morses
Creek.
[Trial
17.]84
Tr.
7/24/14
(Bakun
Direct)
123:11-
Morses Creek has served as the discharge point for ExxonMobil’s
refinery
wastes,
either
directly
or
throughout the life of the Refinery.
through
sewer
outfalls,
ExxonMobil designed and
constructed the Refinery using Morses Creek as an integral part
of operations, relying solely upon the State continuing to allow
it to utilize the Creek and always knowing that the Creek was in
84
Although ExxonMobil appeared to take measures to control the pollution
within Morses Creek, those measures were described as “temporary at best, and
did not, nor could not perform the job of providing a satisfactory effluent.”
Memo. Re: Visit of Harbor Inspector (Mar. 24, 1960), PEX0270, p. 1; see also
ibid. (“Here you have a hundred-million-dollar refinery, with up-to-date
manufacturing equipment, and yet you only have a floating log to prevent oil
from leaving your property into the Arthur Kill.”).
131
fact a water of the State, not part of ExxonMobil’s private
waste treatment system.85
c. As ExxonMobil’s operations increased, spills and
leaks increased.
After
continued
initial
to
operations
expand.
Following
began,
the
the
initial
Bayway
Refinery
construction
in
IAOCs A01, A02, A08, and A18, the refinery expanded into areas
such as the East Side Chemical Plant (A07a),86 the White Oils
Area
(A07b),87
the
Conservation
Area
(West
Separator,
BIOX)
(A09),88 the No. 4 Component Tankfield (A12),89 the Cogeneration
Plant (A16),90 the Caverns Area (A17),91 the Tremley Tankfield
85
Morses Creek is classified as a water of the State.
N.J.S.A. 7.8B-1
(“Waters of the State means the ocean and its estuaries, all springs,
streams, wetlands and bodies of surface or groundwater, whether natural or
artificial, within the boundaries of the State of New Jersey or subject to
its jurisdiction.”); id. 7.9B-1.4 (identifying the entire length of Morses
Creek as a water of the State); see also Trial Tr. 7/23/14 (Ginn Cross)
18:23-19:19.
In the late 1980s, ExxonMobil unsuccessfully petitioned the
State to have Morses Creek reclassified for industrial use.
See Trial Tr.
5/15/14 (Bruzzi Direct) 110:14-111:4.
In denying ExxonMobil’s request, the
State stated: “Basically the Department has concluded that although the
existing water quality of Morses Creek is not good, the stream has
significant ecological value and could have more value if the quality of the
process and cooling water discharges from Exxon operations were improved and
contaminated sediments addressed.” DEX0466.
86
“At A07a, the East Side Chemical Plant was a major chemical manufacturing
facility from 1920.”
6/3/14 Order (Mtn. to Treat Prior Statements as
Admissions).
87
“At A07b, the White Oils Plant was in operation from 1924.”
88
“At A09, the West Separator began operating in 1917.”
Ibid.
Ibid.
89
“At A12, the No. 4 Component Tankfield area has been a tankfield since
before 1935.” Ibid.
90
“At A16, from approximately 1930, the Cogeneration Area included the Hydro
Plant.” Ibid.
91
“At A17, the Esso Mixing Plant existed in this area in 1935.”
132
Ibid.
(D01)92,
the
Western
Shore
of
Reservoir
(D06)93,
the
Western
Landfill (E04)94, the 40-Acre Tankfield Separator (F01)95, the
Former
40-Acre
Tankfield
(F02)96,
Separator
and
the
Unit
F
Connector Piperun (F04)97.
As ExxonMobil’s operations increased, its spills and leaks
increased.
6/3/14 Order, (“For any given facility, the quantity
of hydrocarbons lost through leaks and spills will normally be
proportional
to
throughput.”).
Production
at
the
Bayway
refinery reached its maximum capacity during World War II98, as
did ExxonMobil’s discharges.99
6/3/14 Order, (“The proportion of
crude oil and refined products lost through spills and leaks
cannot be exactly determined, but it was almost certainly higher
in the 1930s and 1940s than it is today.”).
period,
there
were
“increased
discharges
During that time
of
waste
to
the
92
“At D01, most of the Lower Tremley Tankfield was constructed between 1922
and 1926.” Ibid.
93
“A D06, the burning drum in this area is identified on a 1933 historical
map.” Ibid.
94
“At E04, the storage tanks in area of the Western landfill were constructed
before 1931.” Ibid.
95
“At F01, the 40-acre Tankfield originally consisted of 14 tanks built in
1926.” Ibid.
96
“At F02, the 40-acre Tankfield separator was built sometime before 1931.”
Ibid.
97
“At F04, the 40-acre Tankfield originally consisted of 14 tanks built in
1926.” Ibid.
98
Trial Tr. 5/20/14 (Klein Direct) 96:2-97:8.
99
That the Refineries were operating during World War II does not excuse
ExxonMobil from its NRD liabilities. See infra, part III(A).
133
receiving waters and onsite disposal facilities at both Bayway
and Bayonne.”
Ibid.
d. ExxonMobil filled marshlands with waste for Refinery
expansion.
Though operations at the Bayway Site initially started in
small portions of upland areas, the Refinery expanded beyond its
original
footprint
into
other
areas
of
upland
forest
and
palustrine meadows, some of which had been previously exposed to
contaminants migrating from upland areas of initial operations.
See,
e.g.,
Trial
Tr.
1/29/14
(Morrison
Direct)
12:9-17
(discussing the flow of contaminated groundwater in the Pitch
Area to areas of lower elevation and surface water bodies of the
Site); see also Trial Tr. 4/14/14 (Lipton Redirect) 131:21-132:3
(discussing generally the migration of contaminates throughout
the Site).
ExxonMobil also constructed refinery structures outside the
upland in undeveloped marshland areas of the Site.
In order to
construct the refinery expansions, however, marshlands needed to
be developed.
ExxonMobil
Trial Tr. 5/21/14 (Delaney Direct) 164:18-165:22.
developed
these
former
marshlands
with contaminated soils and process wastes.
by
filling
them
Brent Archibald,
Bayway Site Remediation: Status and Update (5/27/98), PEX0140,
p. 2 (“Marshland development included filling with contaminated
soils and process waste.”); Trial Tr. 1/13/14, 194:18-19, 197:5-
134
21 (Walters Direct) (“The source of the fill is from operations
that
took
[place]
at
the
site.
Debris
from
generations
of
various refining processes. . . . The fill is placed in lowlying areas of the site.
And in these low areas, which were
former marshes, were repositories of it.”).
For example, ExxonMobil “developed [the East Site Chemical
Plant
(IAOC
A07a)]
by
filling
marshland
with
various
waste
materials including white oil filter clay.”
Memo. from D.R.
Chapman
Characterization
to
T.J.
Aruta,
“Site
History/
Site
Input to Bayway Technology Development Plan” (July 9, 1993),
PEX0009, p. 9.100
The East Side Chemical Plant began operations
in 1920, processing lighter hydrocarbons refined from crude oil
in the Refinery Area to produce alcohols, white oils, and other
petroleum
chemicals.”
At
the
early
facility,
known
as
the
Alcohol Plant, “accidents and fires were common place.”
East
Side Chemical Plant Log Book (1988), PEX0804A, p. 31.
Acid
leaks
were
(referring
repairing
also
to
the
constant
breaking tasks”).
to
lose
chemical
common
“days
acid
throughout
of
the
shoveling
leaks,
and
area.
sulfur
doing
Id.
into
other
at
the
messy
37
pit,
back-
The East Side Chemical Plant was also known
products
to
the
atmosphere
and
sewers
throughout the Refinery, which were used to handle and transport
100
White oil clay is described as a slurry that “contains 20% oil, 50% H20 and
30% clay.” Memo. To Messrs. T.C. Kelly and M.W. Sprigg from J.W. Olson re:
Solid Waste Disposal Survey (Apr. 28, 1972), PEX0804A, p. 180.
135
wastes.
Trial Tr. 4/14/14 (Lipton Redirect) 82:7-20, 140:23-
141:18; ESCP Log Book (1988), PEX0804A, p. 40 (“Bayway set out
to stop ‘Seeping Tom’ in 1949 by cutting product ‘lost to the
atmosphere and sewers.’”).
The East Side Chemical Plant was expanded in 1938.
facilitate
with
such
white
expansion,
filter
clay
meadow
and
and
other
marshlands
refinery
waste
including nickel, zinc, and palladium catalysts.
History Report, PEX0689A, pp. 52, 62.
were
To
filled
products,
Bayway Site
ExxonMobil continued to
use these hazardous materials as fill during the 1950s.
Id. at
52 (“During the 1950s, white fill material was still used to
fill in the marshlands area between Cheimco Avenue and the New
Jersey Turnpike.”).
in
Area
A07a
is
This account of the chemicals used as fill
consistent
with
the
Department’s
experts’
determination of the contaminants that exceeded thresholds in
soil and sediment samples collected at and around that area.
Stratus Table 3.4, PEX1273, p. 2.
e. ExxonMobil used contaminated creek dredgings as fill
throughout the Site.
Contaminated creek dredgings from Morses Creek were also
used as fill throughout the Site.
Dredge spoils from Morses
Creek were disposed of in the Pitch Area, as well as other areas
throughout the Refinery, including the 336 Creek Dredgings Area
136
(B01),101 the 301 Creek Dredgings Area (B03),102 the No. 1 Dam
Creek Dredgings Area (C04),103 and the 519 Creek Dredgings Area
(D04).104
Trial Tr. 1/13/14 (Walters Direct) 198:12-199:25.
Dr.
Lipton wrote in his report and testified at trial that these
areas currently “look and smell like petroleum waste dumps.”
See Trial Tr. 4/14/14 (Lipton Redirect) 118:10-119:12.
The dredgings from Morses Creek used as fill throughout the
Site were contaminated.
ExxonMobil was discharging hazardous
substances into Morses Creek since at least 1920.
own
internal
documents
describe
the
Creek as “gelatinous, oily emulsion.”
Remediation
(Dec.
investigation
of
6,
1996),
Morses
sediments
lining
Morses
J.T. McMillan Visit: Site
PEX0630,
Creek
ExxonMobil’s
p.
again
10.
confirmed
A
1997
that
the
“[u]ppermost stream bed sediments throughout the length of the
creek lack obvious grains and contain emulsified oil.”
Refinery
1996
Supplemental
Remedial
Investigation:
Bayway
Waste
Management Area, Morses Creek, and 40-Acre Tankfield (Vol. I of
101
“At B01, filling of this area with dredge material is shown in a 1935 map.”
6/3/14 Order, (Mtn. to Treat Prior Statements as Admissions).
102
“At B03, the Tank 301 Creek Dredgings Area was filled sometime before
1940.” Ibid.
103
“At C04, from 1969, dredgings were used as fill.”
Ibid.
104
“At D04, prior to 1961, the area was occupied by aboveground, diesel
storage tanks.” Ibid. “By 1974, the entire area had been filled and leveled
with unknown materials. Between 1969 and 1977, creek dredgings from Morses
Creek reportedly were placed over approximately one-half acre within this
area.”
Bayway Site History Report, PEX0689A, p. 121 (internal citations
omitted).
137
IV),
DEX2768,
p.
340.
That
report
further
described
the
contamination in Morses Creek as follows:
Three to ten feet of sediment overlie native
material at every location sampled along
Morses Creek; the distinction between native
material
and
overlying
sediment
is
physically and chemically obvious.
The
sediment is dark brown without obvious
particle structure, and appears oily.
The
sediment
typically
contains
varying
concentrations of a uniform suite of PAH
compounds.
Certain metals are also present
above benchmark values.
VOCs, mainly BTEX
compounds, and TPH were also detected, but
benchmark values are not available for
comparison
purposes.
The
highest
VOC
concentrations were detected at transects D
and
E.
Pesticides
(particularly
4-4
DDD/DDE/DDT) exceeded benchmark values in
sediment from five of the seven transects.
[Id. at 346.]
Sediment
boring
logs
from
Morses
Creek
describe
the
sediments as “black stained” and “sticky,” having “strong HC
[hydrocarbon]
visible.”
&
sediment
feet.
odor,”
PEX1523, p. 15.
“sludge-like”
material”
sulfur
(id.
at
at
17).
(id.
material
even
having
“some
product
Further logs describe sediment as
16)
reaching
and
and
“HC
Transects
depths
saturated
from
of
up
Morses
to
and
stained
Creek
depict
approximately
10
Id. at 2.
ExxonMobil’s Rick Harley acknowledged that the sediments in
Morses
Creek
were
contaminated
and
also
described
bubbling up from the sediments in Morses Creek.
138
chemicals
Harley Depo.
Designation (Joint Exh. 1) 183:24-184:17 (“I mean, we knew there
was contaminated sediment in the bottom of Morses Creek. What we
thought about pop-ups was that there was some kind of physical
or chemical process going on in the sediment that created this
bubble of gas. . . . What it was describing is like a bubble
that came up from the bottom of Morses Creek and when it reached
the top and burst, so to speak, would create a sheen.”).
Taking all of the available information, as well as his own
observations, into account, Dr. Lipton explained how he reached
the reasonable conclusion that Morses Creek dredgings disposed
of throughout the Site were contaminated:
Obviously, we visited areas around Morses
Creek and showed some documentation of
materials that are currently in sediment
there
and
the
sediment
concentrations
themselves in Morses Creek indicate elevated
concentrations of hydrocarbons. I think it's
reasonable to conclude, especially since we
know that Morses Creek was dammed early in
the period of the refinery operations and
was
retaining
oil,
that
Morses
Creek
sediments
would
have
been
themselves
contaminated
at
least
with
petroleum
hydrocarbons, if not other materials.
[Trial Tr. 4/14/14, 119:12-22 (Lipton
Redirect).]
f. ExxonMobil disposed of its refinery waste in
marshlands and low-lying areas of the Site.
In
addition
to
filling
activities,
ExxonMobil
used
wetlands of the State for its waste disposal activities.
waste
disposal
areas
–
which
139
ExxonMobil
refers
the
These
to
as
“landfills,”
but
actually
are
uncontrolled,
unlined,
and
unpermitted and therefore, not consistent with the proper use of
a
landfill
(Trial
Tr.
1/14/14
(Walters
Direct)
18:19-19:1)
include: the Pitch Area, Boat Lines Dredging Area and the Poly
Ditch Dredgings Area within Unit A; Tank 301 Creek Dredgins Area
and the Tank 336 Creek Dredgings Area within Unit B; Tank 319
Waterfront Landfill, Fire Fighting Landfill and the No. 1 Dam
Creek
Dredgings
Tankfield
Former
Area
Separator,
Diesel
in
Unit
Tank
519
Tankfield
C;
the
Creek
Landfill
Former
Lower
Dredgings
in
Unit
Landfills; and the Sludge Lagoon Operable Unit.
Area
D;
the
Tremley
and
the
Unit
E
PEX1043, p. 28.
Admittedly, ExxonMobil “dump[ed] material there just because it
[was] convenient.”
landfills
PEX0804A, p. 184.
included:
refinery
Materials dumped into the
garbage,
rubble
and
demolition
debris, filter clays, catalyst, coke, drums, pallets, and other
refinery waste products.
See ibid.
Materials used in the East Side Chemical plant, the White
Oil Area, and other areas within Unit A were also disposed of in
landfills
throughout
the
refinery.
As
described
in
the
Site
History Report, “some of the materials (such as filter cake)
used as fill in Unit A, particularly in the ESCP and White Oil
Area, were also disposed in landfills (usually outside of Unit
A).
For example, nickel, zinc, and palladium catalysts and
white oil filter clay from the ESCP, which were often disposed
140
of
in
landfills
outside
of
Unit
A,
were
material in several areas in the ESCP.”
Report,
PEX0689A,
p.
62.
also
used
as
fill
Bayway Site History
Additional
contaminants
were
manufactured and used in processes on site as well.
Flit, a pesticide containing DDT, was manufactured at the
Bayway and Bayonne Refineries beginning in the 1920s.
ESCP Log
Book, PEX0804A, p. 28 (“Standard began manufacture of Flit, an
insecticide,
packaging
at
to
Bayonne
Bayway
in
in
1923
1926.”);
and
moved
5/12/1993
production
Letter
and
from
D.R.
Chapman to Brian Blum, PEX1733, p. 2 (“FLIT was a group of
products of different formulations including liquids, aerosol
sprays, powders, and insect repellent lotions.
Among the active
ingredients
were
lindane,
listed
on
pyrethrins,
various
formulations
methoxyclor,
DDT,
piperonyl
chlordane,
butoxide,
tiocianoacetato . . . Also, another active ingredient was listed
as insecticidally active petroleum hydrocarbons, with a footnote
designating this as “Aromin,” presumably a proprietary name.”)
(emphasis added).
At Bayway, FLIT was manufactured in the East
Side Chemical Plant area (A07a) as well as the White Oils Area
(A07b).
See 5/12/1993 Letter from D.R. Chapman to Brian Blum,
PEX1733,
p.
2
(“Composition
of
FLIT
insecticide.
FLIT
was
manufactured in a building (several stories high) in the East
Side
Chemical
(“Pesticide
Plant
area.”);
components
such
1993
as
DDT,
141
Aruta
Memo,
Lindane,
PEX
9,
Chlordane,
p.
6
etc.
were blended with a mineral oil base in the White Oils area.”).
ExxonMobil’s attempt to attribute its DDT pollution to mosquito
abatement,
while
not
an
excuse
to
its
liability,
is
thus
DDT,
were
misplaced.
That
materials
from
A07a
and
A07b,
including
dumped throughout the landfills at the Site is supported by Dr.
Boehm’s Figure 6.5 (DEX1529T).
Figure 6-5 from Dr. Boehm’s
report (DEX1529T) indicates that the highest levels of DDT were
found in area A07b (where DDT was manufactured) and landfilling
areas throughout the Site including Units B and C, the area
bordering the SLOU and Unit D, as well as one point in Morses
Creek.105
Although Dr. Boehm attributes all distribution of DDT
throughout the Site to “background,” a review of all available
evidence instead supports the State’s contention that DDT was
among
the
hazardous
substances
that
ExxonMobil
discharged
throughout the Site.106
Further evidence of ExxonMobil’s filling of marshlands with
refinery wastes is seen in boring logs throughout the Site that
105
The particular location along Morses Creek with higher DDT elevations
further confirms that ExxonMobil used the sewers throughout the refinery to
transport and dispose of its refinery wastes. A drawing of the operational
areas and surface water outfalls at the Bayway Refinery shows that the point
where DEX1529T shows high levels of DDT is the points of the “Linden-Roselle
Combined Sewer Outfall” and the “Fire Booster Pump House Outfall.”
Unit H
Operational Areas and Surface-Water Outfalls (Figure 3-23), DEX4300GG.
106
This is a further example of Dr. Boehm improperly attempting to label a
responsible party’s pollution “background” to create a de minimis exception
to the Spill Act, which Dimant explicitly rejected. Dimant, supra, 212 N.J.
at 173.
142
show contaminated fill material directly on top of layers of
meadow mat, or what used to be an intertidal marsh habitat.
Trial Tr. 1/13/14 (Walters Direct) 147:19-148:24 (“[Meadow mat
is] a description in the boring log indicating the location of
what was the bottom of a former marsh that would create this
material
that
was
termed
meadow
mat.”);
Trial
Tr.
1/14/14
(Walters Direct) 29:12-19 (“Meadow mat is formed originally on
the surface of the existing habitat, it’s the grasses, weeds of
the meadows, of the marsh that gets compressed once material was
filled into those areas, and it’s given this name, meadow mat.
It looks like a mat of, thin layer, relatively thin layer of
compressed vegetation.”).
For example, boring logs from the Central Landfill (E03)
show the presence of meadow mat at a depth of six feet covered
with “black HS saturated waste material . . . very strong odor,
product saturated water at 4’ w/ sheen on it.”
(describing
soil
excavated
from
boring
PEX0830, p. 7
location
ETP13W);
see
also id. at 14 (depicting location of ETP13W within IAOC E03).
The presence of meadow mat in the boring logs confirms that area
IAOC was once a healthy intertidal marsh habitat that has since
been smothered by ExxonMobil’s waste.
The Pitch Area (IAOC A18) was also once marshland, but
ExxonMobil
used
this
area
as
143
an
unlined,
undefined
waste
disposal area.107
pure
pitch
From at least 1940, this area was filled with
material,
batch
still
bottom
and
other
materials
leftover from the refinery process that could no longer be used,
as indicated in the Site History Report and confirmed by the
sampling data.
Mr. Walters described the discharges at the
Pitch Area as follows:
The pitch area, there are two aspects of it.
There is the pitch area itself, which was
the location where refinery waste, the thick
products that were -- couldn't be used after
refining the leftovers would be disposed
into a pit, and then there is this what's
termed the mudflat area, which really is an
area that receives spoils from dredging of
Morses Creek, at least these so-called
spoils, the material they were dredging out
of Morses Creek was this oily, gelatinous
contaminants that would be settling out into
Morses Creek and filling it up where
periodically they would have to remove it.
And they would place -- they placed it in
this area of the mudflat.
[Trial Tr. 1/14/14 (Walters Direct) 34:1435:2.]
Mr. Walters further testified about the substances found within
the Pitch Area:
107
Dr. Delaney testified that he saw evidence that ExxonMobil first excavated
the vegetation out of the area prior to discharging refinery wastes. Trial
Tr. 6/3/14 (Delaney Direct) 200:3-12 (“Q And have you seen any evidence of
excavation of meadow mat?
A Yes, when we were looking at the evidence of
excavation here in A18. Q So do you believe A18 was formally a wetland? A
Yes. Q And so what conclusion do you draw from the absence of meadow mat in
A18?
A That the area was excavated so that they could, in fact, put the
pitch into the excavation.”). Even if Dr. Delaney were correct in that the
undefined sub-area was first excavated prior to dumping, that would not
excuse ExxonMobil from liability for the natural resource damages in the
area, as such excavation was done in the course of waste disposal activities
(i.e., in preparation for a discharge of hazardous substance). A contrary
interpretation would make little sense.
144
Q What did the ExxonMobil people tell you
about what was out in the pitch area?
A Well, that was their definition of pitch,
it
was
still
bottoms
and
petroleum
distillate residues. And they agreed, they
actually reported that that material was, in
fact, in there.
Q So when we -- when we see the expression
pitch, still bottoms, petroleum distillate
residues, that's a term that was developed
by Exxon to describe the pitch area, is that
your understanding?
A Yes, that's my understanding.
Q How much pitch are we talking about? A
little bit sprinkled on some dirt?
A Well, as I explained before, the pitch area I
divided up into this mudflat area, and the actual
pitch disposal area. And in that pitch disposal
area, there was, I think I recall something like,
you know, 13 feet of the material in place.
THE COURT:
off.
I'm
sorry,
your
voice
dropped
THE WITNESS: I believe it was around 13 feet
of this material in place at the pitch area.
THE COURT: Of this material being -THE WITNESS: Being the pitch.
THE COURT: The pitch itself?
THE WITNESS: Yes.
Q
The
pitch,
still
distillate residue?
bottoms,
A Yes.
Q Okay. Did you say 13 feet?
145
petroleum
A Thirteen feet in the
disposed of the pitch.
area
where
they
Q Pure pitch?
A Pardon me?
Q Was it pure pitch?
A That's what the sampling indicated. It's a
mixture of things. The tar flat or the
mudflat part of it had a veneer of this
stuff which, you know, was what was dredged
from Morses Creek.
Q You've been out to the tar flats and pitch
area. For purposes of your answer, you're
sort of lumping the two together, is that
fair?
A Yeah.
Q You've been out there a number of times,
is that fair?
A Yes.
Q All right. Have you ever experienced any
odors out there?
A Yes.
Q Well, in your own words, tell us what you
see, feel, smell at the pitch area.
A Well, during the last site visit out onto
the pitch area, we -- I recall standing on
this area and feeling a sensation of not
being in mud, but this material just kind of
subsiding under our feet, kind of like a
tar, and at that point, scraping away this
thin cover of sediment. I just got a sample
on a stick just to observe it, and it had a
very strong petroleum odor to it.
[Id. at 46:12-48:20.]
146
Mr. Walters’ observations of the Pitch Area are similar to those
of other Department employees who had visited the Site in the
past.
See,
Scientist,
e.g.,
BEERA/ETRA,
Memo.
to
From
John
Edward
Boyer,
Demarest,
Technical
Research
Coordinator,
DRMR/BEERA (2005), PEX0687, p. 3 (describing observations of the
Pitch Area from an April 18, 2005 visit); see also Trial Tr.
1/14/14 (Walters Direct) 51:13-25 (describing observations from
2005 visit with Dr. Demarest).
Site visits are not the only
evidence of this.
The sampling data indicates that throughout the Pitch Area
there is benzene in the groundwater and the presence of metals,
PAHs and VOCs in the pitch material.
PEX1043, p. 11; see also
PEX140
Archibald,
(5/27/98
Presentation
by
Remediation—Status and Update”).
B.
“Bayway
Site
Geological cross sections of
the Pitch Area are dominated by the presence of “black pitchlike material” throughout.
See, e.g., PEX1043, p. 52.
Furthermore, pop-ups can be seen throughout the Pitch Area
(as well as other areas throughout the Site).
(Walters Direct) 19:2-20:13.
Trial Tr. 1/14/14
Mr. Walters described pop-ups as:
a term that Exxon used to describe when
periodically material that is in one of
these landfills really or anywhere on the
site where there's an oily thickness, oily
material at times finds a way to come up
through the ground and spread out over the
top of the ground. It occurs when the
viscous oily sludge becomes less viscous and
can flow. There is pressure from above from
147
other landfill materials, and as the stuff
begins to flow, it's almost like, I guess
you can compare it to magma coming through.
It finds a way through the other debris and
eventually reaches to the top. It gets
through that cover material and it spreads
out across the top of the landfill.
[Trial Tr.
20:13.]
1/14/14
(Walters
Direct)
19:2-
See also id. at 23:2-24:5.
Dr. Lipton observed and photographed a pop-up in the Pitch
Area during his 2006 site visit.
See PEX1567; PEX1566.
described his observations of the area as follows:
Q What stood out? I'm sorry. I'm sorry. What
stood out about Morses Creek and the pitch
area?
A Well, I had actually never been to a place
quite like that before in my experience.
When looking at just aerial photos or photos
-- or, in fact, if you look at this photo
[PEX1566], what I had assumed that I was
looking at was a creek with sediments
alongside the creek. And it was an unusual
experience
to
find
that
this
material
adjacent to the creek on which we were
standing, when I took this photo, was really
this tarry, oily kind of stuff. It was also
kind of soft. It was about 140 degrees
[sic], I think, when we were out there, and
there's strong petroleum fumes coming off of
the material. And so, it was, it was
certainly a memorable location.
Q You've never seen anything like the pitch
area?
A I had not seen anything like that.
[Trial
23.]
Tr.
3/10/14
(Lipton
148
Direct)
123:2-
He
See also id. at 125:4-18.
The contamination at the Pitch Area can only be matched by
that at the Sludge Lagoon Operable Unit (“Sludge Lagoon” or
“SLOU”).
In 1940, ExxonMobil began dumping process wastes into
the Sludge Lagoon.
Bayway Site History Report, PEX0689A, p.
126; PEX0017, p. 3 (“Sludge Lagoon Area Used For Disposal of
Petroleum Contaminated Plant Wastes (1940-1955).”).
The Sludge
Lagoon area was “formerly tidal wetlands prior to ExxonMobil’s
waste disposal activities,” 6/3/14 Order, that “were used as
[unlined]
surface
impoundments
for
the
disposal
of
refinery and chemical plant wastes” starting in 1940.
various
PEX1047,
p. 8; see also PEX0689A, p. 125 (“The lagoons consist of unlined
impoundments . . . .”).
Also within the Sludge Lagoon area is the White Oil Filter
Clay area, the Tank Bottom Weathering area, and the Former Paint
and Sandblast area.
De-Watered
Oily
PEX1047, p. 7; PEX0017, p. 3 (“Sand Filters
Materials
from
Refinery
and
Chemical
Plant
Operations (1970-1975); Filter Clay Area Used for Disposal of
Clays from Production of White Oils (1950-1972); Tank Bottoms
Weathering Area Received oily Sediments for Weathering/Disposal
(1940-1961).”).
The Sludge Lagoon is the most contaminated area at the
Bayway
Site.
PEX0282,
(Walters Direct) 200:7-13.
p.
14;
see
also
Trial
Tr.
1/13/14
An ExxonMobil document reports there
149
being more than 105,000 tons of sludge, and 700,000 tons of
contaminated
soil
in
this
area
alone.
PEX0282,
p.
14.
ExxonMobil described the sludge composition as an “emulsion of
solids, water and oils,” with an average oil content of 23%.
PEX0017, p. 4.
The chemical sampling data confirmed that this
sludge consisted of more than 44 analytes that exceeded the
Department’s contaminant thresholds.
108
See PEX1273, p. 5.
Other waste disposal areas at Bayway include landfills and
waste disposal areas in Unit C, Unit D and Unit E.
C,
the
Waterfront
Area
contains
two
landfills
Within Unit
that
received
refinery waste, chemical plant waste, and Morses Creek dredgings
in the past.
ExxonMobil
Bayway Site History Report, PEX0689A, p. 103.
dumped
oily
sludges,
ESCP
filter
cake,
white
oil
filter cake, API separator bottoms, TEL sludges, and catalysts
into the Tank 319 Waterfront Landfill (C01) beginning in 1950.
Unit C also contains former marshlands that were used for waste
disposal.
Landfills
What
are
now
are
often
known
to
referred
contain
to
as
small
the
Waterfront
pockets
of
free
product; PAHs in surface soil; VOCs in groundwater; VOCs, PAHs,
and lead in subsurface soils; and tar seeping to the surface.
PEX140, p. 12; see also PEX0689A, pp. 104-05 (“Wastes that were
reportedly landfilled here [Tank 139 Waterfront Landfill Area]
108
Although ExxonMobil has made attempts to control the migration of pollution
from the Sludge Lagoon, as of the close of discovery in this case, those
efforts were ineffective and contaminants were still migrating from the area.
Trial Tr. 1/14/14 (Walters Direct) 4:6-5:25.
150
include trash, concrete rubble, oily sludges, WSCP filter cake,
white oil filter cake, API separator bottoms, TEL sludges, and
catalysts.”).
The waterfront landfill at the Fire Fighting Area (IAOC
C02) showed exceedences.
Pop-ups of petroleum product were also
observed throughout area C02.
See PEX1043, p. 177; Trial Tr.
3/10/14 (Lipton Direct) 126:1-19 (describing PEX1568 as showing,
“dark black, blacky gray features that . . . are now kind of
hardened
petroleum,
almost
asphalty
kinds
of
material
that's
going to somehow extrude out of the soil and has then kind of
weathered into this crust”).
Unit D has been used as a dumping area for refinery wastes
since the 1920s.
this area.
ExxonMobil spread tank bottoms within dikes in
Additionally, white oil filter clays and WSCP filter
cake were landfilled in area D03.
PEX0009, p. 17; PEX0689A, p.
122.
As the Refinery continued to expand, tankfields and other
refinery structures were demolished and the rubble was disposed
of alongside the refinery wastes into the former marshlands.
For
example,
“Area
[D04]
was
demolition of former tankfield.”
The
Tremley
lagoons and pits.
Tankfield
filled
(about
5
acres)
after
PEX0009, p. 17.
area
also
contains
various
sludge
Wastes handled within these disposal areas
include oily sludges, acid sludge, TEL sludge, API separator
151
bottoms, WSCP filter cage, jet filter clay and white oil filter
clay.
PEX0804B,
PEX0804A, p. 180.
p.
448
(4/28/1972
Memo
from
R.S.
Lewis);
A Site History Deliverable describes the
Tremley Tankfield pits:
D. Existing Oily Solids Pits—These pits,
located in the Trem[]ley Spoils Area, were
used for oily solids disposal for many
years.
J.A. Simpson has surveyed the pits
and found that there are 13 pits measuring
approximately 150 x 150 x 20 feet.
This
material causes leaching and runoff problems
during
rainstorms.
The
pits
occupy
approximately 20 acres of land which could
be used for a land intensive solids disposal
program (land farming).
In addition the
government would not look too kindly on the
area if it was ever inspected.
. . . .
White
Oil
Clay—Spent
Filter
Clay
(Attapulgus)
is
steam
wasted
from
the
filters to the slurry drum. Steam is blown
through the slurry to separate oil and to
keep the solids suspended.
A vac truck
deposits the material in an open pit in the
Tremley Spoils Area.
The slurry contains
20% oil, 50% H2O and 30% clay. Drainage in
the area is very poor (improvements designed
in P.S. 1261) and flooding results.
Clay
and oil are subsequently carried into Morses
Creek during storms.
The steaming breaks
down the clay structure and the accumulation
in the pits never dries.
It has a quick
sand consistency. We tried putting the clay
slurry in the sanitary land fill but it
could not be contained (too much water) and
it was discontinued.
Disposal in the pit
is a cheap but unacceptable way of disposing
of this clay. (2400 tons/ yr of slurry).
[PEX0804A, p. 180 (emphasis added).]
152
See also id. at 184 (“Unfortunately, the land fill is the most
economical and convenient disposal method for our wastes.
We
tend to dump material there just because it is convenient.”).
ExxonMobil disposed of much of its refinery wastes in the
Unit E landfills, including the Clean Fill Area (E01)109, the
Eastern
Landfill
(E02)110,
the
Central
Landfill
and
Landfarm
(E03)111, the Western Landfill (E04)112, and the Southern Landfill
(E05)113.
The
Site
History
Report
describes
the
layers
of
contaminated fill that overlie meadow mat throughout the Clean
Fill Area:
6 to 10 feet of silty-clay fill with gravel,
concrete, and wood underlie the northern
portion of the Clean Fill Area. Immediately
below the fill is 6 to 10 feet of “chemical
fill.” In the southern portion of the area,
however, the chemical fill is overlain by a
thin layer of roots and vegetation.
An
organic tidal marsh deposit, known as meadow
may, is found beneath the chemical fill,
varying in thickness from 2 to 3 feet.
109
“At E01, the Clean Fill Area was used as a disposal area by American
Cyanamid from as early as 1940.”
6/3/14 Order (re: Pl.’s Mtn. to Treat
Statements as Admissions).
110
“At E02, the landfill east of the landfarm was active in the 1960s and
activity is observed in a 1961 aerial photograph.” Ibid.
111
“At E03, the Central landfill received refinery waste from 1950.” Ibid.
112
“The landfill west of the Landfarm was probably in use from 1961 until
1976.” Bayway Site History Report, PEX0689A, p. 139.
113
“At E05,
photograph.”
Admissions).
operations began before 1940 as
6/3/14 Order (re: Pl.’s Mtn.
153
shown in a 1940 aerial
to Treat Statements as
[Bayway
145.]
Site
History
Report,
PEX0689A,
p.
Although the Clean Fill area by name would indicate it is clean,
chemical
fill
can
be
found
throughout
the
area.
Trial
Tr.
1/13/14 (Walters Direct) 166:3-167:21.
Similar
findings
were
made
at
the
other
landfills
throughout Unit E, though the areas were filled with differing
waste products.
Ibid.
For example, Mr. Walters testified that:
E 03 which is the central landfill, had
predominantly free waste and petroleum waste
and chemicals as well as debris from various
generations of petroleum refining over the
history of the site. E 02 which would be the
eastern landfill, very similar. E 04, more
construction debris, but also a lot of -there was also petroleum waste.
Q E 04, what's the name of that?
A E 04 is the western landfill.
Q Western, sorry. Go ahead.
A Then E 05 the southern landfill, that
again similar to the eastern landfill, a lot
of petroleum waste and refinery waste.
[Ibid.]
The
chemical
State's
sampling
experts
data
confirm
Mr.
and
boring
Walters'
logs
reviewed
testimony.
by
See,
the
e.g.,
PEX1273; PEX0827; PEX0828; PEX0829; PEX0830; PEX0831.
During the cross examination of Dr. Lipton, counsel for
ExxonMobil suggested that there was clean fill associated with
154
the construction of the New Jersey Turnpike placed in a small
section of the Eastern Landfill (E02) in 1951, ten years prior
to the State’s start date for the beginning of contamination in
the area.114
Trial Tr. 3/19/14 (Lipton Cross) 24:11-27:10.
Dr.
Lipton, however, testified that there was evidence that there
were hazardous substances disposed of in area E02 prior to being
covered with the clean fill material alluded to by counsel for
ExxonMobil.
Ibid.
Such evidence can be found in the boring logs, including
within
ExxonMobil’s
PEX1196.
Phase
2
Remedial
Investigation
(1999),
Boring location ESB-23, shown on page 297 of PEX1196,
falls within the area of “bulge of white” pointed out by counsel
for ExxonMobil in the 1951 photograph of IAOC E02 (DEX4276).
The accompanying boring log for the ESB-23 boring location is
found at PEX0830, pp. 8A-9.
The soil boring log for ESB-23
shows the presence of meadow mat at a depth of approximately 8
feet, at the same depth where a “hydrocarbon odor” was noted (an
indication
Description”
of
contamination,
table
heading
as
above).
noted
in
PEX0830,
the
p.
“Geological
8A.
This
indication of contamination is noted below the presence of “pale
yellowish brown . . . sand,” present in the shallow soils of the
114
The 1961 start date
conservative start date.
infra, part II(F)(1)(d).
selected for Area E02 is another example of a
Though conservative, it is not unreliable.
See
155
area.115
Ibid.
evidence
that
That the contamination is noted at depth is
the
initial
fill
dumped
into
the
area
was
contaminated, though it may have later been covered by clean
fill.
See Trial Tr. 6/24/14 (Boehm Cross) 89:4—90:7 (discussing
presence of contamination atop meadow mat in boring logs as
indicator that contamination was discharged into the resource
(as opposed to being filled first)).
The initial disposal of contaminated fill prior to having
clean fill placed over it in IAOC E02 is further supported by a
1955
document
prepared
by
ExxonMobil.
Long
Range
Plan
Grades and Drainage Improvement (Aug. 31, 1955), DEX0769.
for
The
Long Range Plan contains a discussion of improvements to be made
throughout the Site, including a cleanup of “unsightly” areas
adjacent to the New Jersey Turnpike:
Before
the
New
Jersey
Turnpike
was
constructed, this area was seldom seen by
the public. It has now become our front
yard, with thousands of people viewing this
part of the refinery daily. Inasmuch as
these areas are unsightly and can be seen
from the Turnpike, it is proposed in this
long range plan to cover them with hydraulic
fill
from
the
future
reservoir
and
waterfront improvements. Should other fill
material be made available, it too could be
115
Similar evidence is also found in the well boring log for GMW-193.
PEX1194, p. 490; see also PEX1196, p. 297 (locating GMW-193 within area E02).
That well log indicates the presence of “brown meadow mat” at depths of 9
feet, immediately covered with “grey and black silty clay” fill at depths of
7.5 to 9 feet, and finally, “grayish brown sand” (such as that pointed out by
counsel for ExxonMobil) in the shallow depths of 0 to 7.5 feet. PEX1194, p.
490.
156
used. Care should be exercised not to dump
large pieces of concrete or similar material
that would interfere with the driving of
piles,
should
it
become
necessary
to
eventually use this area.
These areas, once they are brought up to an
acceptable grade of +11.50 ft., should be
leveled off so that they will drain. Also,
it may be desirable to plant grass in those
locations that could be observed from the
Turnpike, as this will greatly improve the
appearance of the Refinery.
[Id. at 61.]
g. Historic Fill
Historic
indigenous
elevation
fill
is
material,
of
the
defined
by
deposited
site,
the
to
which
Tech
Regs.
raise
was
the
as
“non-
topographic
contaminated
prior
to
emplacement, and is in no way connected with the operations at
the
location
limitation,
residue,
of
construction
demolition
waste.”
emplacement
Tech
debris,
debris,
Regs.,
and
fly
N.J.A.C.
which
dredge
ash,
or
includes,
spoils,
without
incinerator
non-hazardous
7:26E-1.8,
DEX4104,
solid
p.
16.
Because the fill throughout the Site is indigenous to the Site
and was connected to the operations of the refinery, it does not
fit
within
the
definition
Jersey Tech Regs.
of
“historic
fill”
under
the
New
Trial Tr. 4/29/14 (Sacco Direct) 107:17-
108:11; id. at 138:22-139:2 (“Everything that was -- all the
fill
generated
on
this
site
contaminated by Exxon.”).
157
was
generated
by
Exxon
and
Both the Department and ExxonMobil’s experts agreed that
once an area was filled, the natural resources in that area were
completely destroyed and ceased to provide any services.
Trial
Tr. 6/2/14 (Delaney Cross) 194:16-195:23 (“Q All right. So is it
your opinion that there was a 100 percent loss of ecological
services as a result of this filling?
A In those areas where it
got to 100 percent when we actually blacked out the area, yes,
except for those areas where we had fringe.
In those fringe
areas, no, that was still an active area for whatever was there
prior.”); id. at 201:9-15 (“Q All right. But you did, you're
comfortable
with
assuming
100
percent
service,
ecological
service loss with respect to the areas that have been filled,
correct?
A With respect to the areas that had been filled, how
they were filled and over the time period that they were filled,
yes.”); id. at 197:14-22; id. at 198:4-12; see also Trial Tr.
7/9/14 (Ginn Direct) 235:22-236:1.
Although currently there may be vegetation growing on top
of ExxonMobil’s waste pits, the vegetation present is not native
to
the
area
and
does
not
provide
the
same
services
habitats present prior to ExxonMobil’s discharges.
as
the
Mr. Sacco
described the impact that these invasive species have on the
former habitats at the Bayway Site (describing PEX1754):
A This is an example of a large stand of
phragmites
taking
over
the
freshwater
wetland at the site. They generally aren't
158
tolerant
of
standing
water.
They
can
tolerate having their feet wet so-to-speak,
soggy soils, but if you get into areas where
there's standing water, they don't readily
colonize.
What happens is, as the upland plants,
the upland stand tends to be in the soggy
areas and it has an ability to get oxygen to
its roots and its underground stems. But as
it moves out into the submerged areas, it
doesn't, it doesn't invade as quickly into
these submerged areas, so you basically see
it around the margin of a pond. But what it
will do is send these rhizomes, which are
underground stems, out into these areas
where there's little oxygen and it will
transport, they're big thick, big hollow
underground stems so they'll basically get
their oxygen from the upland portions of the
plant and transport it down to these
submerged areas where there's little oxygen.
And then what you begin to see is this slow
invasion and filling in of these ponds. And
you can see, you can see the stature of
these systems out in the pond out there kind
of decreasing with increasing distance from
the bank of the pond. That's what's going on
here. So eventually this whole area will be
filled in with phragmites.
Q And what is the native species that should
be here?
A
Well,
this
is
sitting
on
top
of
contaminated fill which is sitting on top of
the native Spartina alterniflora marsh that
historically was in this location.
[Trial Tr. 4/29/14 (Sacco Direct) 38:6-39:6
(emphasis added).]
Though areas throughout the Sites may be currently covered by
opportunistic wetlands, they are severely contaminated and have
no resemblance to the healthy, native marshlands that existed
159
prior to ExxonMobil’s discharges.
For example, the Tank 336
Creek Dredgings Area (IAOC B01) was filled with dredge spoils
from Morses Creek.
Bayway Site History Report, PEX0689A, p. 96
(“Unit B contains disposal areas (the Tank 301 Creek Dredgings
Area and the Tank 336 Creek Dredgings area) . . . .Dredgings
from Morses Creek, which may contain contaminated sediment, were
used as fill in the Tank 301 Creek Dredgings Area from 1969 to
1977 . . . and possibly before 1940.
Morses Creek dredgings and
steamer dock spoils were also used as fill during the 1940s and
again in the 1970s during bulkhead construction along Morses
Creek.
Disposal
in
see
also
1970s.”);
both
these
areas
ceased
3,
1993
Site
July
in
the
late
History/Site
Characterization Input to Bayway Technology Development Plan,
D.R. Chapman to T.J. Aruta,
PEX0009, p. 33 (“Unit B Tank 336
Dredgings—Years of Operation: 1940 to 1960 (approximate); Waste
Material Disposed or Handled: Arthur Kill dredgings and possibly
Morses Creek dredgings.”); 6/3/14 Order, (“At B01, filling of
this
area
with
dredge
material
is
shown
in
a
1935
map.”).
Sampling data from IAOC B01 shows exceedences “for VOCs, metals,
TPH,
and
benzene
PAHs
in
in
the
fill/waste,
groundwater.”
and
PEX1043,
p.
pentachlorophenol
115.
and
Thirty-seven
hazardous substances exceeded restoration criteria in IAOC B01.
PEX1273, p. 3.
marshlands
on
Thus, although these areas may appear to be lush
the
surface,
as
Dr.
160
Rodgers
conceded
and
the
chemical sampling data confirms, appearances can be deceiving.
Trial Tr. 8/5/14 (Rodgers Cross) 165:21-166:2.
2.
Development of the Bayonne Site
ExxonMobil
began
Site in 1877.
its
refinery
operations
at
the
Bayonne
Similar to Bayway, the refinery at Bayonne was
also susceptible to spills, leaks and explosions; the operations
at
Bayonne
began
subsequently
in
areas
expanded
into
of
higher
marsh
elevation
areas
and
where
then
refinery
infrastructure was built upon contaminated fill; and ExxonMobil
disposed of its refinery wastes throughout the wetlands at the
Site.
Prentice Refining Co. had begun small refinery operations
at
part
of
property.
the
Site
prior
to
ExxonMobil’s
purchase
of
the
These operations were within the upland forest areas
and palustrine meadow areas within the “A” Hill Tankfield, the
Lube Oil Area, and the Pier No. 1 Area, as well as the Main
Building Area in the areas east of the Platty Kill.
6/3/14
Order; Trial Tr. 2/10/14 (Southgate Direct) 204:18-205:8; Trial
Tr. 5/20/14 (Klein Direct) 39:14-17; Trial Tr. 6/3/14 (Delaney
Cross)
62:7-63:3;
Bayonne).
Prentice
Prior
Refinery
see
to
also
PEX0681
ExxonMobil’s
operated
for
(Historic
arrival
only
two
2/10/14 (Southgate Direct) 204:18-205:8.
at
Habitats
the
years.
at
Site,
the
Trial
Tr.
ExxonMobil purchased
the refinery infrastructure, which when operating was prone to
161
cracking,
explosions
and
(Delaney Cross) 165:7-20.
Bayway
Refinery,
when
also began to occur.
other
spills.
Trial
Tr.
6/2/14
Thus, just as was the case at the
operations
began
at
Bayonne
discharges
6/3/14 Order, (“An operating refinery
loses a certain amount of both crude oil and refined products
through leaks, spills, and the like.”).
ExxonMobil was pouring
kerosene throughout the Bayonne Site apart from conducting any
refining operations.
Trial Tr. 6/2/14 (Delaney Cross) 218:3-
19.116
ExxonMobil expanded its operations at the Bayonne Refinery
throughout the early 1900s.117
No. 2 Tankfield around 1907.
Sweeting stills were built in the
6/3/14 Order.
Buildings were
116
Kerosene was produced at the Bayonne Site as early as 1887 at the Main
Building Area. 6/3/14 Order.
117
As previously discussed in the context of Bayway, when Bayonne’s refinery
output increased so did their discharges. See 6/3/14 Order, (“For any given
facility, the quantity of hydrocarbons lost through leaks and spills will
normally be proportional to throughput.”).
Maximum discharges likely
occurred during World War II, when the refineries reached their maximum
levels of production.
Ibid. (“The proportion of crude oil and refined
products lost through spills and leaks cannot be exactly determined, but it
was almost certainly higher in the 1930’s and 1940’s than it is today;
A
refinery working beyond its normal capacity, or where normal periodic
maintenance is foregone or deferred, will tend to lose more hydrocarbons to
leaks and spills than a refinery where periodic maintenance can be performed
on schedule; During World War II, there were increased discharges of waste to
the receiving waters and onsite disposal facilities at both Bayway and
Bayonne; During World War II, the receiving waters most impacted by these
discharges from Bayway were the Arthur Kill and Rahway River, and from
Bayonne, the Upper New York Bay;
During World War II, outside waste
management units, sludge lagoons, sludge pits, muck pits and spoil areas
would have also been directionally impacted by increased production activity;
During wartime productions, it is likely that the load on the condensers
would increase, which would result in more oily water and sediment reaching
the separators.
From this, inevitably more oil and more oily sediment
reached the Arthur Kill (via Morses Creek) from Bayway and the Upper New York
Bay from Bayonne than otherwise would have been the case.”).
162
constructed at the Piers and East Side Treatment Plant Area as
well
Ibid.
as
the
Utilities
Area
in
1918
and
1920,
respectively.
Between 1920 and 1921, storage tanks appeared at the No.
3 Tankfield, the Asphalt Plant Area, the Exxon Chemicals Plant
Area,
and
the
Solvent
Tankfield,
and
crude
stills
were
constructed in the AV-GAS Tank Field and the Stockpile Area.
6/3/14 Order.
Finally, the General Tank Field was constructed
in approximately 1925 and the Low Sulfur Tankfield was developed
in approximately 1932. Ibid.
As was the case at Bayway, ExxonMobil developed low-lying
areas at Bayonne by filling the marshlands with refinery waste
and construction debris.118
An ExxonMobil document describing
past disposal practices at Bayonne confirms:
A large portion of the Site along the
shoreline consists of and that has been
reclaimed from the Kill Van Kull Waterway
and Upper New York Bay.
This area is
characterized by variable depths of cinder
(and/or ash) fill overlying soft marine or
estuarine deposits.
In addition to cinders
and/or ash, construction debris was noted in
several historical boring logs.
The fill
material is discussed in the Site History
Report.
The cinders and ash were a
byproduct of plant operations.
118
132 acres of subtidal habitat at the Bayonne Site were destroyed with clean
fill prior to being contaminated.
Because of the fill, those subtidal
habitats were altered, becoming intertidal habitats.
Trial Tr. 3/13/14
(Lipton Cross) 101:14-102:23. Those 132 of “new” intertidal salt marsh were
later contaminated by ExxonMobil’s discharges from the refinery, and as such,
the HEA calculation reflects those acres as being injured intertidal salt
marsh habitats. Ibid.
163
[Bayonne ACO Site
PEX1610, p. 63.]
History
Deliverables,
See also Bayonne Site History Report, PEX0694A, p. 50.
Further,
ExxonMobil
also
Bayonne Site as waste pits.119
used
wetlands
throughout
the
As described in a 1979 ExxonMobil
report: “Apparently, a number of abandoned waste disposal sites
may be in the refinery area.
and
their
exact
certainty.”
locations
These date back several decades,
are
no
longer
known
with
any
Bayonne Terminal and Chemical Plant, Hydrogeologic
Studies for Exxon USA Report (July 16, 1979), PEX1610, p. 397.
Above-ground storage tanks (“ASTs”) used to store refinery
products
throughout
the
Bayonne
Site
were
“subject
to
overfilling, tank leaks, pump failures and line leaks” that also
contributed to contamination at the Site.
Report, PEX0694A, p. 66.
Bayonne Site History
ExxonMobil acknowledged that these
discharges occurred, even though they were not documented prior
to 1970.
Ibid.
In addition to the tons of contaminated waste underlying
the Bayonne Site, a sea of free product flows below the surface
of
the
property.
Harley
Depo.
Designation
(Joint
Exh.
1)
103:13-15 (“Q. (BY MR. KANNER) There was a lot of pollution in
Bayonne, subsurface, correct? A lot of free product? A. There
119
ExxonMobil admits disposing of waste products throughout the Site from at
least 1956.
6/3/14 Order, (“Oily wastes from petroleum refining were
disposed of at the Bayonne facility from 1956 to 1965.”).
164
was a lot of free product, yes.”).
This is the result, in part,
of petroleum products discharged from refinery operations and
waste
disposal
activities
seeping
into
the
ground.
7/16/79
“Bayonne Terminal and Chemical Plant, Hydrogeologic Studies for
Exxon USA” Report, PEX1610, p. 404 (“It is our understanding
that, in the past, significant quantities of hydrocarbons have
seeped into the ground.
This problem was noted as long ago as
1958 when two pumps were employed to skim oily ground water from
specially constructed wells.”).
Mr. Walters described the free product found throughout the
Bayonne Site:
Q Would you explain what you had meant by
free product?
A Yes. As relates to the Bayonne site, the
oil, the area was literally saturated with
oil. And once that occurs, the pore space in
the matrix in the soil material can't hold
any more oil so it becomes free flowing. So
that's meant by the term free product, and
it's usually recoverable at that point.
Q Is it because the soil is saturated?
A Yes.
Q Does it float on top of the groundwater?
A Yes.
Q And how thick was it?
A There were wells that indicated various
thicknesses, anywhere between up to 2 feet
to 13.
165
[Trial Tr. 1/13/14 (Walters Direct) 142:216.]
See also id. at 139:3-10 (“[I]n the case of Bayonne, the site
was totally saturated with oil.”).
Mr. Walters’ descriptions of Bayonne are consistent with
Dr. Morrison’s findings regarding contamination throughout the
Site.
While
discussing
ExxonMobil’s
May
1958
Report
Groundwater Conditions (PEX0883), Dr. Morrison testified that:
In most places, the upper ground water
contains a large percentage of oil and other
liquid leaking from previous and present
refinery units. Two pumps are in constant
service at present, drawing off the crude
oil and oil products that are floating on
top of the ground water in the refinery
property.
Q And how does that relate to your work,
please?
A It goes, again, to the issue of context
and understanding the contamination at the
Bayonne facility. And specific to this
document, which is a 1958 document in which
free product has already been identified and
removed, fast forwarding to 1977, which 17
separate free product plumes have been
identified at the facility, one of which in
and around the ICI property was identified
as containing an estimated 7 million gallons
of product with measurements as much as 18
feet in height in one of the monitoring
wells. It's also my understanding for more - subsequent to 1977, there are still 17
free product plums that are identified in
the Bayonne facility. So all of those in
total provided a framework to understand the
contamination
at
the
Bayonne
facility
relative to free product on ground water.
166
on
[Trial Tr. 1/29/14 (Morrison Direct) 16:617:6.]
There are also records of Bayonne being “saturated" as of
at least 1973.
in
In a 1973 memorandum, Verne Farmer, a geologist
ExxonMobil’s
Exploration
Department,
reported
his
observations of the Bayonne Site:
On Thursday, June 21, I visited the Bayonne
Plant
to
examine
and
discuss
problems
related to the underground migration of
spilled oil and products.
The dominant
impression resulting from this one day
exposure was that the entire area has become
nearly saturated with repeated spills and
leakages during the century or so in which
it has been an oil-handling facility of one
kind or another.
[Memo.
From
Verne
PEX1618, p. 3.]
Farmer
(8/16/1973),
In fact, due to the severity of the pollution problem at
Bayonne, upon signing the ACO in 1991, it was necessary for
ExxonMobil to delay the traditional remedial investigation in
order
to
take
immediate
throughout the Site.
action
to
stop
the
flow
As described by Mr. Walters:
Q Okay. I want to break up the two sites for
just
a
second,
if
I
might.
Was
the
investigation
of
Bayonne
handled
any
differently
than
the
investigation
of
Bayway, and if so, how?
A Yes. The Bayonne site, although smaller in
area, had significant amount of free product
that was in the ground and the normal
process where you would go, and once you've
identified
a
location
where
there's
contamination,
you
would
then
go
and
167
of
oil
delineate that contamination. Because there
was so much oil in the ground at Bayonne, it
was decided that this is an immediate
concern that needed to be addressed right
away without further delay because the oil
was migrating into the surface water and
there was the potential for indoor air
concerns. And so we, along with Exxon's
proposals, decided to defer the remedial
investigation and get right into a mode of
product recovery. And we termed that an
internal
remedial
measure,
and
that's
something you put in place before you have
all of the remedial investigation activity
completed. But that was only because it was
so bad out at the Bayonne site and action
needed to be taken immediately.
[Trial Tr. 1/13/14 (Walters Direct) 137:15138:12.]
Extensive studies were done to determine the location of the
contamination throughout the Site, including the location of the
plumes of free product in the groundwater underneath the Site,
which were utilized by the State’s experts in determining the
extent of natural resource damages at the Bayonne Site.
e.g.,
Parsons
PEX0865C.
2006
Bayonne
RIWP
(re:
Groundwater
See,
Plumes),
120
Despite
ExxonMobil’s
accelerated
efforts
to
control
the
pollution at Bayonne, oil could still be seen floating along the
Platty Kill during Dr. Lipton’s 2006 visit to the Bayonne Site.
120
Throughout the trial, ExxonMobil made disingenuous attempts to confuse the
record with allegations that there was insufficient sampling of contamination
at Bayonne.
These arguments, however, were focused solely on soil sampling
and
completely
ignored
the
well-documented
presence
of
contaminated
groundwater flowing beneath the majority of the Site.
168
Trial Tr. 3/10/14 (Lipton Direct) 128:18-129:23 (describing a
photograph of Platty Kill Creek (PEX1570) that depicts “tarry
residue alongside the sides of the pilings,” and “oil floating
along the surface of the water”); id. 130:6-24 (describing a
photograph of Platty Kill Creek (PEX1571) that depicts “swirls
of kind of oily goo” and “a petroleum residue crust along that,
the bottom part of sort of that decomposing, decomposing wooden
pylons beneath the little pipe”).
E. ExxonMobil’s Obligation
Restore the Sites
ExxonMobil
discharged
into
acknowledges
the
waters
to
Fully
that
and
Characterize
hazardous
the
lands
and
substances
at
the
to
were
Bayway
and
Bayonne Sites throughout ExxonMobil’s ownership and operations.
The ACOs ExxonMobil entered into with the Department require
that
ExxonMobil
determine
the
nature
and
extent
contamination present as a result of these discharges.
of
the
Pursuant
to the ACOs, ExxonMobil recognized the need to “conduct remedial
investigation
alternatives
(RI)
and
feasibility
(FS),
and
to
develop
study
and
of
remedial
implement
a
action
plan
for
remedial action to remove or remediate the hazardous substances
and
pollutants
from
the
Site.”
Bayonne ACO, PEX0505, ¶12.
Bayway
ACO,
PEX0001,
¶12;
The work conducted by ExxonMobil
pursuant to the ACO relates only to site remediation; it does
not include any natural resource damage work.
169
See Bayway ACO,
PEX0001,
¶75;
III(C)(2).
Bayonne
ACO,
PEX0505,
¶75;
see
also
infra
p.
ExxonMobil’s efforts at the Bayway and Bayonne Sites
thus far have been solely focused on risk-based remediation.
Although it says it is cleaning up the Sites, this is simply not
the reality of the situation, as ExxonMobil has completed no
natural
resource
restoration.
Trial
Tr.
1/13/14
(Walters
Direct) 129:22-130:2 (“Q Had any NRD restoration been done by
the time you got involved in the case? A No. Q And as of 2008
when discovery ended in this case, did you -- had any site
restoration projects been undertaken by Exxon to the best of
your knowledge? A No."); see also Trial Tr. 8/29/14 (Messina
Cross) 15:24-17:3 (stating that the remediation investigations
completed at the sites have not restored any natural resources
of the State).
“‘[R]emediation’ to risk-based standards is different from
‘restoration’ of natural resources to pre-discharge conditions
(primary
restoration)
services
and
restoration).”
values
or
lost
‘replacement’
through
of
the
compensation
ecological
(compensatory
ExxonMobil, supra, 393 N.J. Super. at 406.
The
goals of site remediation and natural resource restoration are
different: remediation is a risk-based program with the forwardlooking
goal
of
managing
risks
to
human
health
and
the
environment (i.e., focusing on present conditions with an eye
towards eliminating future exposure), while restoration focuses
170
on
first
determining
the
extent
of
past
harm
to
natural
resources and then returning those damaged resources to their
pre-discharge
condition.
Trial
Tr.
3/10/14
(Lipton
Direct)
151:4-152:13; Trial Tr. 4/28/14 (Sacco Direct) 201:18-202:12;
see also Gala (1999), PEX1563; Harley Depo. Designations (Joint
Exh. 1) 69:19-70:6.
Typically, the Department’s Site Remediation Program does
not perform natural resource restoration work, and ONRR does not
do site remediation work.
See, e.g., Trial Tr. 1/15/14 (Walters
Cross) 52:4-53:24 (“I don't recall any of my colleagues ever
doing, going out and doing natural resource damage assessments,
as
they
would
be
done
by
the
Office
of
Natural
Resource
Restoration. We were looking at the extent of contamination,
whether or not there were sensitive ecosystems, surface water,
sediment, the impact, and there was an attempt to develop, I
guess,
a
procedure
to
collect
that
information
and
make
it
available for the Office of Natural Resource Restoration.”).121
Although those within the Site Remediation Program may use
the term “restoration” in the course of their work, it is not
121
Although there may be instances in which a responsible party elects to
complete natural resource restoration in conjunction with its remediation
work. (Trial Tr. 4/29/14 (Sacco Direct) 90:14-15 (“If remediation achieves a
predischarge condition, then they would be the same.”). ExxonMobil did not
avail itself of that opportunity at the Bayway and Bayonne Sites. See, e.g.,
Trial Tr. 2/26/14 (Kenney Direct) 80:19-81:14; (“Email from Michael Kenney to
Edward Demarest (Dec. 20, 1996), PEX0631 (“Exxon wants nothing to do with
ONRD and has made this very plain to me on numerous occasions.”); Email from
Mike Kenney (Apr. 9, 1997), PEX0632 (“[Exxon] will not integrate/coordinate
ONRD with SRP.”).
171
intended to have the same meaning as in the NRD context, i.e.,
returning a resource to its pre-discharge condition.
Walters, testified:
Q Just to clarify the record, you were asked
a lot of questions about restoration. I'd
like you to give the Court, take a moment
and define for the Court the various
meanings you have, or different types of
restoration that you're aware of by virtue
of your work in SRP.
A Well, SRP, from my perspective working in
SRP,
there
was
some
definition
of
restoration in the technical rules that
applied to when you're doing some type of
intrusive remediation work. And you needed
to make sure that if you dug out an area,
for instance, of contaminated soil, you
needed to replace that like similar type
soil to that area. That was the concept of
restoration that we had.
Q Is there another way to refer to that type
of restoration?
A It's more like a mitigation issue than,
you know, than natural resource restoration.
Q To mitigate where the harm was caused?
A From the result of the remediation, yes.
Q From the remediation?
A Yes.
Q And do you have an understanding of what
predischarge restoration refers to?
A Yes, I'm not really well versed in it, but
it's, you know.
Q Is that what ONRR does?
172
As Mr.
A That's what ONRR does.
Q Give
would.
us
your
best
explanation,
if
you
A It would be restoring a resource, whatever
that might be, to its -- to the condition
that it was in prior to -- prior to the
discharge.
Q And that's not something you did in SRP?
A No.
[Trial
Tr.
1/27/14
179:20-181:3.]
(Walters
Redirect)
See also id. at 214:5-215:2; Trial Tr. 1/28/14 (Walters Recross)
119:8-123:16.
ExxonMobil may not rely on any representations
other than in writing that it has satisfied any obligations to
the State.
Bayway ACO, PEX0001, ¶93; Bayonne ACO, PEX0505, ¶93;
see also Trial Tr. 1/13/14 (Walters Direct) 173:16-176:8.
The
Site
Remediation
Program
oversees
the
remedial
investigation at the Bayway and Bayonne Sites and approves or
denies proposed remedial action plans submitted by ExxonMobil.
ExxonMobil offered Frank Messina's testimony in support of the
erroneous
proposition
that
the
Department
selects
remedial
actions through the approval process, including, but not limited
to,
the
remediation
work
performed
located at the Bayway refinery.
Direct)
71:7-72:2.
Despite
Mr.
at
the
40-acre
Tankfield
Trial Tr. 8/27/14 (Messina
Messina’s
opinions
to
the
contrary, the Tech Regs., specifically N.J.A.C. 7:26E-5.1(c),
173
dictate otherwise. On cross examination, Mr. Messina conceded
that the Tech Regs. under which ExxonMobil performs remediation
at Bayway and Bayonne specifically provide that ExxonMobil, not
the
Department,
actions.
Trial
is
Tr.
responsible
8/29/14
for
(Messina
selection
Cross)
of
remedial
5:21-6:22.
Mr.
Messina clarified his prior testimony and confirmed that the
Department is limited to either approving or disapproving the
remedial action selected by ExxonMobil, as opposed to having the
power to select remedies itself.
Id. at 6:23-7:2.
Pursuant to its obligations under the ACO, ExxonMobil has
conducted
significant
work
to
delineate
the
contamination at the Bayway and Bayonne Sites.
extent
of
the
ExxonMobil used
the Site History Reports to guide them in locating contaminated
areas.
Trial Tr. 1/28/14 (Walters Redirect) 25:11-26:16.
The
Phase 1A Remedial Investigation at Bayway directed sampling to
these areas, then would “step away” in an attempt to find an
area of the Site that was not contaminated.
As Mr. Walters
explained, to delineate the extent of contamination,
what you would do is step, step away to a
point where it's -- where you would expect
it to be clean based on other work that was
being done and then collect a sample in that
apparent clean zone. Sometimes it may not
come up clean. There was some contamination
in it. Then you would take more samples
until you did finally see that it was clean.
. . .
But you wouldn't be taking a lot of
samples of, you know, the contamination
itself once you know it's there.
174
[Trial Tr. 1/13/14 (Walters Direct) 178:415.]
Subsequent phases of the Remedial Investigation, including Phase
1B and Phase 2, were designed based on the findings of the Phase
1A Remedial Investigation.
27:18-28:9.122
Trial Tr. 1/28/14 (Walters Redirect)
Those investigations did not begin with the same
“biased sampling” approach as Phase 1A.
The focus and approach
of each phase of the remedial investigation is different.
example,
an
internal
ExxonMobil
memo
describes
the
For
“Phased
Approach” of remedial investigations to include three general
phases:
The
“Explore”
Phase
locations of Contamination.”
includes
the
“Identifca[tion]
of
The “Define” Phase is described as
“Defin[ing] Boundaries of Clean/Contaminated Areas” followed by
the “Confirm” Phase, which includes “Fill[ing] Data Gaps for
Risk Assessment/Remedial Action.”
See Exxon Corporation Visit
Bayway/Bayonne Site Remediation (June 14, 1995), PEX0295, p. 13.
These three phases are identified by ExxonMobil in another of
its internal documents as Phase 1A, Phase 1B and Phase 2.
R.E.
Wilhelm / F.B. Sprow Visit, Site Remediation (June 2, 1998):
“Bayway Remedial Investigation – Staged Approach,”
12.
The
testimony
elicited
by
ExxonMobil
PEX1616, p.
regarding
biased
sampling relates only to Phase 1A and does not describe the
methodology or approach of the phases undertaken thereafter as
122
Due to the severity of the contamination present at the Bayonne Site, the
remedial investigation did not take the same approach. Id. at 28:10-23.
175
the focus of each stage differs.
(Hannig
Cross)
180:24-181:21
See e.g., Trial Tr. 8/12/14
(confirming
that
he
was
only
describing sampling methodology implemented in connection with
Phase 1A of the remedial investigation and that he did not know
whether the answers would apply to Phase 1B or Phase 2 as he was
no longer involved at the time those phases were performed).
When questioned about the sampling approach taken during
Phase 1A, Dr. Morrison explained:
I can say that this general methodology is
not uncommon in environmental investigations
where an area of a known spill is known and
then one steps out from these areas of known
contamination to identify the extent of the
contamination so that one can design a
proper remediation response to the areas.
[Trial Tr. 1/29/14 (Morrison Cross) 27:1318.]
In response to further questioning about the Phase 1A Remedial
Investigation’s focus on areas of suspected contamination, Dr.
Morrison stated:
“Why else would one perform an investigation
if there isn't suspected contamination?”
also
id.
at
30:6-31:7. Indeed,
the
Id. at 29:24-30:5; see
over
20
years
of
site
investigation activities employed standard protocols and focused
on issues that required further delineation rather than issues
that
were
not
contamination
in
subject
areas
to
of
dispute,
known
for
waste
example,
disposal.
extensive
As
such,
ExxonMobil’s efforts to now suggest that these investigations
176
and data sets are insufficient is simply unsupported by the
record.
F. The State’s NRDA and Claim in This Case.
The
Sites
NRDA,
is
restoration
which
includes
consistent
and
with
New
replacement
58:10-23.11u.b(4),
a
DEX4103,
restoration
Jersey
“where
p.
50.
law
plan,
that
allows
practicable”.
As
Former
for
these
for
N.J.S.A.
Commissioner
Campbell and John Sacco both testified, the Department seeks to
restore
injured
resources
when
possible,
which
is
with its obligations to preserve the public trust.
consistent
Dr. Lipton
explained, based on the directions he received from Mr. Sacco,
he
understood
that
“there
was
a
clear
preference
for
doing
primary restoration whenever that was practicable with this goal
of cleaning things up.”
Trial Tr. 3/11/14 (Lipton Direct) 3:22-
5:4 (explaining further that such an instruction is not unusual
in his practice).
conjunction
with
The restoration plan, prepared by 3TM in
Ronald
Ostermiller
and
Stratus
Consulting,
addresses the physical work of restoration and replacement of
resources performed by removing hazardous waste, adding clean
fill, replanting, and other restoration activities, as well as
the loss of use of those resources.
The vague and unproven
“concerns” of Phillips 66 do not undermine the practicability of
the State’s restoration plan.
177
1.
Underlying considerations for the State’s NRDA.
a. Natural
resource
damage
assessments
are
site
specific and are informed by the applicable legal
and policy framework.
The
witnesses
specific.
in
this
case
agreed
that
NRDAs
are
site
Trial Tr. 7/22/14 (Ginn Cross) 135:20-24 (agreeing
that “each site has to be treated in a site-specific fashion
based on the unique injuries and damages at each site”); Trial
Tr. 6/9/14 (Desvousges Cross) 21:7-21 (testifying that analyses
are site specific); Trial Tr. 3/10/14 (Lipton Direct) 143:6144:18 (explaining that each NRDA is dependent on regulatory
context, as well as site context and contaminant context).
NRD assessments are also subject to applicable legal and
policy determinations.
See Trial Tr. 3/11/14 (Lipton Direct)
10:18-11:11; Trial Tr. 3/12/14 (Lipton Direct) 77:14-78:8;
also
Trial
Tr.
that
instructions
governing
law);
(agreeing
that
4/29/14
to
the
Trial
for
(Saco
regulatory framework”).
expert
Tr.
“NRDA
Direct)
it
team
7/10/14
is
91:23—92:12
were
(Ginn
important
(confirming
consistent
Cross)
to
see
with
149:7-12
consider
the
Additionally, as Former Commissioner
Campbell testified, policies relating to interpreting a statute
”would
be
a
very
case-specific
interpretation.”
8/7/14 (Campbell Direct) 37:23-38:2.
178
Trial
Tr.
b. Federal regulations on NRDA.
John Sacco testified that although it is not bound by them,
on
occasion
the
Department
would
refer
to
federal
NRD
regulations in conducting assessments, often when working with
other federal trustees, explaining that “trustee council [often]
used those regulations as guidance and we were respectful of
that because we were all working on these problems together.”
Trial Tr. 4/29/14 (Sacco Direct) 110:19—111:4.
The Department
of Interior’s NRD regulations:
establish an administrative process for
conducting
assessments
that
includes
technical criteria for determining whether
releases have caused injury, and if so, what
actions and funds are needed to implement
restoration. The regulations are for the
optional use of trustees. Trustees can use
the
regulations
to
structure
damage
assessment work, frame negotiations, and
inform restoration planning. If litigation
is necessary to resolve the claim, courts
will give additional deference—referred to
as a “rebuttable presumption” in CERCLA—to
assessments performed by federal and state
trustees in accord with the regulations.
[Natural Resource Damages for Hazardous
Substance, 73 Fed. Reg. 57259-01, PEX1716,
p. 2.]
See
also
Trial
Tr.
8/7/14
(Campbell
Direct)
219:5–221:3
(describing the fact that federal NRDA regulations, unlike other
federal regulations, have never been binding on federal trustees
179
unless a rebuttable presumption is sought).123
As such, the
federal guidelines can be informative to the State’s analysis.
John Sacco and Former Commissioner Campbell confirmed that
the
State
has
not
assessment of NRD.
promulgated
regulations
specific
to
the
See Trial Tr. 4/30/14 (Sacco Cross) 133:17-
134:12; Trial Tr. 8/7/14 (Campbell Direct) 22:15-24.
Because of
this, the State assesses each case based upon the particularized
circumstances.
c. Establishment of an appropriate background level,
baseline, or a reference site for NRDA should
exclude a responsible party’s discharges.
Initially, a NRDA requires a determination of the aerial
extent of injury.
The Department’s Tech Regs. define injury to
mean:
any adverse change or impact of a discharge
on a natural resource or impairment of a
natural resource service, whether direct or
indirect, long term or short term, and that
includes the partial or complete destruction
or loss of the natural resource or any of
its value.
[N.J.A.C. 7:26E-1.8, DEX4104, p. 16.]
Dr. Lipton testified that he used this definition of “injury”
based upon his discussions with John Sacco.
(Lipton Direct) 94:15-95:5, 99:9-22.
Trial Tr. 3/11/14
The State’s interpretation
that the presence of contamination satisfies this definition of
injury is also consistent with the plain language of the Tech
123
New Jersey has no analogous rebuttable presumption provision.
180
Regs. as well as caselaw interpreting the Spill Act.
Jersey Supreme Court clearly stated that
The New
“[t]here is plainly
no de minimis exception to the Spill Act's prohibition against
the discharge of a hazardous substance.” Dimant, supra, 212 N.J.
at 173.
ExxonMobil’s position that an adverse change, amounting to
injury
under
the
Tech
Regs.,
must
be
demonstrated
with
a
toxicological effect is not only refuted by common sense but
also
by
conceded
its
that
own
an
witnesses.
adverse
Both
change
or
Dr.
Ginn
impact
and
to
Mr.
an
Harley
ecological
resource can be the result of a physical impact, without having
a toxic effect.
Trial Tr. 7/10/14 (Ginn Cross) 155:16-156:8;
Harley Depo. Designations (Joint Exh. 1) 239:24-240:13.
Although ExxonMobil’s experts agreed that baseline should
include
only
factors
other
than
the
discharge,
their
actual
approach and criticisms of the State’s approach ignored this
tenet.
“in
Trial Tr. 7/10/14 (Ginn Cross) 142:7-10 (agreeing that
[his]
experience,
whether
it's
in
New
Jersey
or
other
states, that there's a distinction made between wastes that are
generated by the responsible party and any other waste, whether
it's
anthropogenic,
additional
et
infirmities
cetera.
of
.
.”).
ExxonMobil’s
The
State
experts’
(Rule 104 Briefing) of this submission.
in
addresses
Volume
II
See also Trial Tr.
7/22/14 (Ginn Cross) 81:4-82:5 (testifying that baseline should
181
exclude the impacts from the discharge that is being studied and
agreeing that he cannot represent to a reasonable degree of
certainty that ExxonMobil’s pollution is not mixed in with his
assessment of baseline); Trial Tr. 7/23/14 (Ginn Cross) 30:19-25
(agreeing that goal of reference area selection is to exclude
substances from the release being assessed);124
Trial Tr. 7/9/14
(Ginn Direct) 67:25-68:18 (describing a “changing” baseline as
one
that
is
“due
to
factors
other
than
the
discharge”,
discussing Ginn Demonstrative 17).125
ExxonMobil’s
Dr.
Boehm
did
not
actually
contribute
to
ExxonMobil’s NRDA, but instead, similar to ExxonMobil’s other
experts, lodged complaints about the State’s assessment approach
without
acknowledging,
let
alone
following,
New
legislative, regulatory or policy determinations.126
Jersey’s
Dr. Boehm
acknowledged that an appropriate background determination would
include an area that has not been impacted by the area to which
it is being compared.
Trial Tr. 6/24/14 (Boehm Cross) 213:23-
124
Despite agreement with this fundamental principle, Dr. Ginn admitted that
the reference areas he selected in the Arthur Kill in connection with his
analysis were, unbeknownst to him, within the footprint of ExxonMobil’s 1990
Inter-Refinery Pipeline Spill. Trial Tr. 7/23/14 (Ginn Cross) 34:14-25.
125
Additionally, although Dr. Ginn initially took the position that he was
unaware of any significant disagreements on how “baseline” is defined, he
later conceded that the interpretation of baseline is a contested issue in
NRDA practice.
See Trial Tr. 7/10/14 (Ginn Cross) 14:19-15:1, 17:11-18:17,
18:20-19:20 (discussing Dr. Ginn’s testimony before Congress noting that the
federal regulations provide a reasonable definition of baseline, that
trustees interpret baseline more like “pristine” conditions, and also
confirming that Congress has not subsequently changed its definition of
baseline).
182
214:2; see also Trial Tr. 7/8/14 (Boehm Recross) 169:18-170:3
(stating
that
influenced
it
by
is
the
important
activities
that
on
reference
the
areas
Sites).
are
Dr.
not
Boehm
acknowledged that his background analysis did not conform to the
Tech Regs.
Trial Tr. 6/25/14 (Boehm Cross) 145:6-11 (“It does
not follow tech reg definition, it follows diffuse anthropogenic
background definition.”); id. at 155:6-13 (testifying that he
did
not
break
out
natural
background
from
background as required by the Tech Regs.).127
other
types
of
In fact, Dr. Boehm
acknowledged that his opinion would be different if he had used
the
definition
of
“background”
from
New
Jersey’s
Trial Tr. 6/26/14 (Boehm Cross) 167:9-22.
notion
of
Department
background
to
is
consider
the
in
Reg.
The Tech Regs.’s
appropriate
assessing
Tech
standard
injury
and
for
the
determining
restoration endpoints.
d. Injury assessment – historical reconstruction &
addressing uncertainties
As described above, the State sought to reconstruct the
pre-discharge
conditions
of
the
ExxonMobil’s activities over time.
attempt
to
perform
a
full
Sites
and
from
Dr. Ginn confirmed that an
historical
127
discharges
reconstruction
of
Trial Tr. 6/25/14 (Boehm Cross) 140:24-141:15, 169:18-172:8 (acknowledging
that he performed no analysis of topography, wind patterns or other issues
described in the Tech Regs. to know whether his reference areas would be
impacted by Bayway activities), 183:20-184:12 (confirming that his background
definition includes permitted and unpermitted releases from ExxonMobil).
183
discharges to the condition of natural resources prior to the
discharges
and
any
impact
of
physical
modification
absent
discharges is scientifically appropriate in a NRDA, but that, at
the direction of ExxonMobil’s counsel, he did not perform such a
reconstruction.
Trial Tr. 7/10/14 (Ginn Cross) 30:6-23.
In
fact, Dr. Ginn admitted that not looking at available historical
information is actually unprecedented in NRDA.
Id. at 68:4-
69:23.
However, the State’s NRDA did undertake such a reconstruct,
to
the
extent
requirements
possible
regarding
and
the
consistent
pre-discharge
with
the
legal
conditions.
As
discussed more fully below, the State’s experts looked at a
number
of
types
of
information
and
were
required
to
make
reasoned, professional judgments about the historical discharges
and conditions of the Sites.
81:12-17
(explaining
that
Trial Tr. 3/12/14 (Lipton Direct)
his
conclusions
are
“based
on
his
experience and judgment, his technical analysis was based on
reliable
science
and
produced
reliable
results”).128
Additionally, although Dr. Ginn acknowledged that groundwater
128
For example, Dr. Lipton also explained his interpretation of the evidence
associated with approximately 132 acres on the north side of the historic
boundaries of ExxonMobil’s Bayonne property. Trial Tr. 3/13/14 Lipton Cross)
101:20-103:12. Based upon available records, Dr. Lipton observed that these
acres were originally subtidal but appear to have been initially filled with
uncontaminated fill and according to Dr. Southgate had growing Spartina
indicative of intertidal habitat) prior to the onset of
ExxonMobil’s
contamination. To address this complexity, these 132 acres were included as
intertidal habitats in the State’s HEA. Ibid.
184
should have been analyzed if there was a concern about an impact
to the aquifer, ExxonMobil performed no analysis of groundwater
at the Sites.
Trial Tr. 7/10/14 (Ginn Cross) 8:16-18, 9:10-16
(conceding that although groundwater is a natural resource, he
performed no analysis of groundwater).
State’s
analysis
included
Unlike ExxonMobil’s, the
consideration
of
the
extent
duration of contamination in the groundwater at the Sites.
e.g.,
Trial
Tr.
1/28/14
(Morrison
Direct)
and
See,
162:12-163:21
(explaining the risk of not seeing the whole picture if one is
“look[ing] at the [chemical] database in a void, without an
understanding that there’s large areas that are impacted that
aren’t part of the chemical database” including boring logs and
the thickness of free product plumes in groundwater); see Trial
Tr. 7/10/14 (Ginn Cross) 8:16-18 (confirming that he did no
analysis
of
groundwater
at
either
Site);
Trial
Tr.
6/25/14
(Boehm Cross) 156:1-4 (stating that he is offering no opinions
on groundwater).
Failure to consider groundwater contamination
was not ExxonMobil’s only shortcoming.
ExxonMobil’s proffered experts agreed that the exercise of
informed professional judgment is standard practice in NRDAs.
Trial Tr. 7/22/14 (Ginn Cross) 151:9-24.
Mark Walters explained
that ExxonMobil and the Site Remediation Program agreed that
extensive
sampling
was
not
already known to be present.
needed
where
contamination
was
Trial Tr. 1/13/14 (Walters Direct)
185
177:18-24.
Former Commissioner Campbell also confirmed the need
to draw inferences where limited sampling is available.
Tr. 8/7/14 (Campbell Direct) 185:24–186:18.
Trial
Drs. Desvousges and
Ginn have written regarding the fact that responsible parties
and trustees may have substantial differences in professional
judgment on HEA input parameters:
Furthermore, available data often are not
adequate
for
accurate
and
appropriate
estimates
of
HEA
input
parameters.
Consequently, some of the input parameters
typically
are
based
on
professional
judgment.
Not
surprisingly,
individual
experts working on NRDAs for PRPs and
trustees may have substantial differences in
professional
judgment
on
these
input
parameters, especially given the adversarial
nature of many NRDAs. Such situations can
lead to alternative sets of HEA input
parameters and concomitant differences in
the
estimated
amount
of
compensatoryrestoration habitat.
[Richard W. Dunford, Thomas C. Ginn, &
William H. Desvousges, “The Use Of Habitat
Equivalency Analysis In NRDAS”, Ecological
Econ. 49 (2004), DEX0567, p. 19.]
Such
professional
judgment
was
required
to
complete
a
comprehensive picture of the environmental conditions, because,
as
ExxonMobil’s
Site
History
Report
for
Bayway
acknowledged:
“[I]t would be impossible to identify the date(s) and source(s)
of each contamination incident.”
(1993), PEX0689A, p. 19.
186
Bayway Site History Report,
Mr. Sacco described Bayway as the most contaminated site in
the State.
Trial Tr. 4/29/14 (Sacco Direct) 146:13-15.
In
describing the history of contamination throughout the Sites,
Mr. Sacco noted that the upland areas were used for initial
refinery
operations
and
were
subject
to
spills,
explosions from the beginning of operations.
(Sacco
Cross)
40:6-41:15;
Trial
Tr.
leaks
and
Trial Tr. 5/13/14
5/14/14
(Sacco
Redirect)
84:25-85:25; Trial Tr. 4/29/14 (Sacco Direct) 134:2-15.
Then,
as ExxonMobil built-out the refinery, it filled the meadows with
refinery
wastes
disposal areas.
and
used
the
wetlands
as
uncontrolled
waste
Trial Tr. 4/29/14 (Sacco Direct) 76:16-77:23,
134:2-136:24, see also supra, part II(D).
Dr. Lipton explained the directions he received from Mr.
Sacco as including: (1) a preference for primary restoration as
reflected in the Policy Directive 2003-07, PEX0544, p. 1;129 (2)
preference for restoration, as opposed to money damages; (3)
encouragement of the use of the habitat equivalency analysis
(“HEA”);130 (4) preference for the use of existing data where
available
and
reliable;
(5)
restoration
should
be
to
pre-
129
Former Commissioner Campbell confirmed this preference. Trial Tr. 8/17/14
(Campbell Direct) 106:14-109:1 (stating that “among a range of options the
Department would prefer to see direct restoration. There may be -- you know,
there are all sorts of reasons why in any given case that might not be
feasible, very small claims where the amounts wouldn't really support a
restoration project. But I think it has the same meaning it has in common
usage.).
130
The Department’s use of HEA as a methodology in NRDA is also referenced in
the Policy Directive 2003-07 PEX0544, p. 2.
187
discharge condition; (6) damages are retroactive to the time of
the
release;
(7)
liability
is
joint
and
several;
(8)
contamination should be used as an indicator of the need for
restoration
and
as
a
basis
for
injury
determination;
(9)
compensatory damages should be quantified on an acreage basis
rather than parsing habitats into various subsets of services;
and (10) the presence of infrastructure did not exclude any area
from the NRD analysis.
12:10;
Trial
Tr.
Trial Tr. 3/11/14 (Lipton Direct) 3:13-
3/12/14
84:21, 85:5-86:4.
(Lipton
Direct)
80:10-81:11,
83:21-
Each of these instructions has a sound legal
and public policy foundation and are the types of decisions that
fall
within
the
Department’s
expertise.
No
instruction
is
contrary to law or science.
The
State
exercised
concerning
its
Trial
4/29/14
Tr.
discretionary
primary
and
(Sacco
decisions
discretion
in
compensatory
Direct)
included
certain
restoration
73:8-74:22.
the
decisions
decision
The
to
plans.
State’s
limit
the
footprint of the primary restoration plan to areas outside of
the refinery operations, the use of conservative assumptions for
start dates, and the use of a ten-year ramp-up period for the
upland
Ibid.
areas
for
purposes
of
the
compensatory
restoration.
Dr. Ginn confirmed that Stratus employed a ten-year ramp
up in the HEA for upland areas and agreed that ramp ups are
often used to address uncertainties in NRDAs.
188
Trial Tr. 7/22/14
(Ginn Cross) 46:15-25; see also Trial Tr. 4/29/14 (Sacco Direct)
74:7-22 (explaining that for the State’s HEA, “[the Department]
started
to
operations
assess
began
damage
because
at
we
the
knew
year
that
when
the
we
knew
that
operations
were
inherently messy but we didn't assess full injury at that time.
We waited and we ramped it up over a 10-year period to be
conservative, that a full hundred percent injury didn't occur
until at the end of that 10th year”).131
Dr. Lipton also excluded naturally occurring constituents
from consideration in the analysis.
Direct) 108:10-109:1.132
naturally
occurring
Trial Tr. 3/11/14 (Lipton
In addition to the exclusion of certain
materials,
the
State’s
analysis
was
also
conservative in:
the sense that by not considering mixtures
in any fashion or any potential for joint
effects, looking at threshold exceedences on
a chemical-by-chemical basis, that chemicalby-chemical exceedence factor, if you will,
will necessarily under -- be lower than the
– some sort of an additive exceedence.
131
Under these circumstances ExxonMobil’s contention that the use of
conservative estimates renders the conclusion “wrong” is without merit.
Indeed as described herein, in the context of this case the State’s experts
and ONRR utilized the best information available along with professional
judgment and erred on the side of caution such that, for example, when
determining an injury start date, they selected time frames when injury was
not disputable. This does not mean that injury did not occur prior to the
date selected but rather that the most defensible injury start date based
upon available facts and reasonable inferences was used.
132
Although Dr. Boehm initially would not agree that the State had excluded
certain naturally occurring substances from its analysis of injury, when
presented with the list of analytes ultimately used by Stratus, he
reluctantly confirmed that the examples of naturally occurring constituents
cited to him, Aluminum and Cadmium, were not included.
Trial Tr. 6/25/14
(Boehm Cross) 156:7-15 (referencing Table 3.2 of the Stratus report PEX1271).
189
[Trial
94:9.]
Tr.
7/11/14
(Lipton
Direct)
93:22-
Despite these considerations, the data and information about the
Sites demonstrated extensive contamination that has adversely
impacted and largely destroyed what natural resources existed at
these Sites.
This contamination persists at these Sites to this
day.
2.
The State’s Primary restoration plan and cost
estimates.
a. Primary restoration plan for Bayway and Bayonne
Primary restoration is the return of an injured natural
resource to its pre-discharge condition.133
(Sacco
Direct)
90:6-10;
ExxonMobil,
393
Trial Tr. 4/29/14
N.J.
Super.
at
398.
Under the Spill Act, the Department is entitled to recover the
costs
of
primary
restoration
is
DEX4103, p. 50.134
restoration
of
“practicable.”
injured
N.J.S.A.
at
398.
when
such
58:10-23.11u(b)(4),
ExxonMobil does not dispute that it is liable
for such costs under the Spill Act.
Super.
resources
Despite
ExxonMobil, supra, 393 N.J.
acknowledging
its
liabilities,
133
The “pre-discharge condition” is the condition the resources were in before
a discharge. Trial Tr. 4/28/14 (Sacco Direct) 202:13-19 (Sacco Direct); See
also supra, part II(C)(1).
Contrary to assertions by ExxonMobil, the predischarge condition does not mean “pristine.”
See Trial Tr. 4/30/14 (Sacco
Cross) 134:20-138:6; Trial Tr. 8/7/14 (Campbell Direct) 162:22-172:5.
134
The Department is also entitled to abatement of the public nuisance caused
by the contamination at the Refineries.
See infra, part II(H).
Implementation of the primary restoration would provide such relief as it
will include the excavation and disposal of the most contaminated areas at
these sites. Trial Tr. 2/24/14 (Horsak Direct) 184:4-7, 186:9-14.
190
ExxonMobil has failed to work with the Department or present its
own plan for primary restoration of the natural resources that
it has damaged.
Trial Tr. 4/29/14 (Sacco Direct) 198:15-17;
Trial Tr. 7/22/14 (Ginn Cross) 184:2-4.135
The Department, with assistance from its team of experts,
prepared and presented a primary restoration plan for the Bayway
and Bayonne Sites that is practicable, and when implemented,
will
restore
valuable
resources
and
associated
services
that
were lost as a result of centuries of ExxonMobil’s discharges.
Under
the
implement
prepared
billion.136
Spill
this
by
Act,
plan,
Randy
ExxonMobil
which,
Horsak
is
liable
according
of
3TM,
to
is
for
the
the
cost
costs
to
estimate
approximately
$2.63
Trial Tr. 2/12/13 (Horsak Direct) 160:24-161:2.
The Department developed its proposed primary restoration
plan consistent with its obligations as trustee of the natural
resources of the State of New Jersey, as well as the purposes
and goals of the Spill Act.
As Mr. Sacco explained:
All natural resource trustees have the
fiduciary obligation to maintain the public
135
As noted, ExxonMobil’s remediation efforts at the Sites to date have not
included any pre-discharge restoration.
See Trial Tr. 1/13/14 (Walters
Direct) 129:22-130:3; Trial Tr. 8/29/14 (Messina Cross) 15:24-17:3; Harley
Depo. Designations (Joint Exh. 1) 107:24-108:21 (testifying that NRD was not
ExxonMobil’s focus while he was in charge of site remediation and that when
he left the ExxonMobil Site Remediation Team in 1997, NRD was just beginning
to be discussed).
136
The $2.6 billion estimate is in 2006 dollars and would need to be adjusted
for inflation to sufficiently fund the restoration project.
Trial Tr.
2/12/14 (Horsak Direct) 147:13-19; see also infra, part II(F)(2)(b)(viii).
191
trust, to manage it, to protect it, to
restore it if it's injured. The very serious
responsibility
of
taking
the
public's
resources and making sure that that corpus
is transferred to the next generation in as
good a condition as when the trustee
received it when he hands it off to the next
generation, that is primacy in terms of
trustee
responsibility.
There's
an
obligation to ensure that the public's
resources are contaminant free. And the very
-- that's a very strong concept that flows
from our Spill Act here in New Jersey.
[Trial Tr.
200:12.]
4/28/14
(Sacco
Direct)
199:25-
See also Hackensack Meadowlands Dev. Comm’n v. Mun. Sanitary
Landfill
Auth.,
68
N.J.
451,
477
(1975)
(“In
this
area
[of
environmental concern] the State not only has a right to protect
its own resources, but also has the duty to do so, in the
interests of its citizens, as well as others.”).
The
Spill
Act
states
that
the
construed to effect its purposes.”
23.11x, DEX4103, p. 52.
in
implementing
the
act
“shall
be
liberally
Spill Act, N.J.S.A. 58:10-
This provides the Department discretion
Spill
Act,
including
the
selection
of
appropriate damages remedies on a case-by-case basis.
Mr. Sacco
testified
liberally
to
the
Act’s
requirement
that
it
be
construed:
Q Let's go through some of these points if
we could. Liberal construction, what does
that mean as it relates to the Department's
ONRR responsibilities?
192
A We're to interpret the act liberally to
effectuate
its
purposes.
We
take
very
seriously our fiduciary obligation to do
restoration and we combine that with this
liberal construction concept in the Spill
Act and we'll apply that on a site-specific
basis. We consider sound science, all of the
data and situations that are presented at a
site,
and
whether
or
not
there's
a
cooperative aspect or not in dealing with
those responsible for the pollution at a
site.
[Trial
71:5.]
Tr.
4/29/14
(Sacco
Direct)
70:19-
Mr. Sacco further explained that:
Another very important and strong concept
from our Spill Act is agency discretion. The
Department has -- the legislature has given
the
agency
a
lot
of
discretion
in
implementing the Spill Act. So we take those
three concepts, responsibilities and when
we're approaching a site or a matter, we'll
use the circumstances, the facts, the data,
all the things that would be present at a
particular site in a particular situation
and apply those general responsibilities to
execute
our
main
responsibility
of
maintaining the public trust and restoring
it if it's injured.
[Trial Tr. 4/28/14 (Sacco Direct) 200:9-23.]
Ultimately, it is the goal of the Spill Act to restore the
public’s resources when damaged to make the public whole.
Tr.
4/28/14
(Sacco
Direct)
200:24-201:6
(“We
have
Trial
the
responsibility to put back -- you know, improve resources that
are impaired. The term is to make the public whole. I think that
193
encompasses
Consistent
really
with
what
the
it's
goal
all
of
about
making
to
the
be
a
trustee.”).
public
whole,
the
Department has developed a bias for the restoration of resources
when the circumstances allow.
93:9-23;
see
also
Policy
Trial Tr. 4/29/14 (Sacco Direct)
Directive
(“Preference for Restoration.
preference
resource
is
for
the
protection
in
2003-07,
PEX0544,
p.
1
For all claims, the Department's
performance
lieu
of
of
restoration
payment
of
work
money
and
damages,
provided that reasonable allowance is made for monitoring and
oversight to ensure accountability.”).
Former DEP Commissioner
Bradley Campbell explained that “among a range of options the
Department
would
prefer
to
see
direct
[primary]
restoration.
There may be -- you know, there are all sorts of reasons why in
any given case that might not be feasible, very small claims
where the amounts wouldn't really support a restoration project”
but it was his view that “restoration is always preferable to
payment
of
106:14-109:1.
as well.
damages.”
Trial
Tr.
8/17/14
(Campbell
Direct)
This same preference is held by federal trustees
See Ohio v. U.S. Dep’t of the Interior, 880 F.2d 432,
443-448 (D.C. Cir. 1989) (expressing a bias for restoration and
rejecting a least-cost alternative requirement.).
The Spill Act does not require the performance of a costbenefit analysis prior to awarding funds to implement a primary
restoration plan.
This is consistent with the “polluter pays”
194
principle recognized by the New Jersey Supreme Court in Ventron,
which stated that “[t]hose who poison the land must pay for its
cure.”
94 N.J. at 493.
Thus, a responsible party cannot escape
liability for restoration under the Spill Act simply because it
would be expensive to clean up the mess that it has made.
If the Department was unable or unwilling to pursue primary
restoration, and was solely limited to compensatory restoration
projects,
the
corpus
of
natural
resources
would
continually
decline and the public would forever be without the natural
resources
Department
lost
as
provided
a
result
its
of
experts
polluters’
with
discharges.
instructions
consistent
with these goals and preferences, as described by Dr. Lipton:
Q Was there any discussion about the
relative amount of on-site restoration that
should be done as opposed to the relative
amount of off-site restoration that should
be done?
A Well, at a general level, at a broad
level, yes. I don't know about numerically,
but certainly what was expressed was a
preference for on-site primary restoration
as opposed to off-site restoration if the
primary restoration could be done, if it was
practicable.
Q
On-site
restoration
is
a
expensive than off-site, correct?
lot
more
A Certainly.
Q So did anyone ever explain to you
reason for this preference for on-site?
195
The
the
A Well, I guess what was, you know, my
understanding of what was articulated was
that the goals of the program were to get
contaminated places cleaned up and restored,
and that if you just shift all of your
restoration
from
primary
[onsite
restoration]
to
compensatory
[off-site
restoration], then you're never cleaning up
anyone's, you know, waste. So hence, the
preference for primary restoration when
feasible or practicable.
[Trial Tr. 3/13/14 (Lipton Cross) 65:18 –
66:2 (emphasis added).]
The
Department’s
proposed
primary
restoration
plan
will
achieve the goal of restoration to the extent resources are
restorable given the circumstances of this case.
4/29/14
(Sacco
Direct)
Direct) 33:22-34:6.
71:14-18;
Trial
Tr.
Trial Tr.
4/30/14
(Sacco
Mr. Sacco testified that based upon the
Department’s extensive restoration experience, he believes the
proposed restoration will be successful ecologically, but that
to the extent it fails, the State, not ExxonMobil, bears that
risk.
Mr.
Trial Tr. 4/30/14 (Sacco Direct) 36:6-17.
Ostermiller
offered
their
opinions
from
Mr. Horsak and
an
engineering
perspective, and both believe that there were no reasons why the
primary
restoration
project
could
not
be
implemented.
The
opinions of Mr. Ostermiller regarding refinery infrastructure
relocation remain unchallenged by ExxonMobil as Mr. Ostermiller
was
the
only
ExxonMobil
refinery
failed
to
expert
present
in
a
196
this
cost
case.
In
estimating
addition,
expert
to
challenge the cost estimate prepared by Mr. Horsak.
See, e.g.,
Trial Tr. 2/24/14 (Horsak Cross) 167:9-168:14; Trial Tr. 2/26/14
(Ostermiller
Redirect)
66:8-12.
ExxonMobil’s
experts
agreed
with the State’s experts that onsite restoration was feasible
from an ecological perspective (Trial Tr. 8/6/14 (Rodgers Cross)
46:19-47:18),
as
well
as
“engineeringly
feasible”
(Trial
Tr.
Bayway
and
6/2/14 (Delaney Direct) 119:24-120:13).
The
proposed
primary
restoration
projects
at
Bayonne will provide “tremendous uplift to the ecology in that
region”
that
ExxonMobil’s
has
been
lost
discharges.
93:24-94:9.
The
for
Trial
the
Tr.
Hudson-Raritan
past
century
4/29/14
Estuary
(Sacco
has
wetland habitats to pollution in the past.
due
lost
to
Direct)
valuable
Trial Tr. 4/29/14
(Sacco Direct) 17:25-18:10 (discussing Hudson-Raritan Foundation
map
of
historic
wetland
habitats
(Sacco
Demonstrative
6)).
There is a tremendous opportunity present at the Bayway and
Bayonne
Sites
estuary.
to
restore
salt
marsh
habitats
within
Trial Tr. 4/30/14 (Sacco Direct) 36:22-41:11.
this
Both
the Department and ExxonMobil agree that the restoration of such
habitats would provide important services to the ecology and
economy
of
the
State.
Direct)
18:15-21:24,
See,
e.g.,
23:16-24:1;
Trial
Trial
Tr.
Tr.
4/29/14
8/4/14
(Sacco
(Rodgers
Direct) 40:14-41:20; Trial Tr. 7/10/14 (Ginn Cross) 115:5-14.
The location of these particular restoration projects is unique
197
in that they have the potential to increase interconnectivity
between existing habitats and thus, provide greater value to the
overall
region
restoration.
(“[E]ven
as
well
Trial
though
as
Tr.
they're
to
the
3/10/14
particular
(Lipton
surrounded
by
location
Direct)
industrial
of
135:12-18
areas,
they
remain valuable ecologically and, in some ways, may be even
greater value to both preserve and create pockets of functional
habitat. And this would be, you know, the primary restoration of
these habitat areas would be part of that kind of contribution
to overall ecological value.”).
The
parameters
of
the
primary
restoration
plan
were
ultimately determined by the Department after receiving input
from its experts.
Trial
Tr.
parameters
Trial Tr. 2/12/14 (Horsak Direct) 127:12-14;
3/11/14
provided
(Lipton
by
Direct)
the
156:7-14.
Department,
Based
Mr.
on
Horsak,
the
with
assistance from Mr. Ostermiller, developed an engineering cost
estimate providing the specific components of the project and
the cost to implement each.
Both
the
parameters
of
the
plan
and the cost estimate are set forth in the 3TM Report and the
Quad
Report,
experts.137
and
were
testified
to
by
the
Department’s
The parameters of the restoration plan set forth by
137
Contrary to suggestions by counsel for ExxonMobil, the primary restoration
plan is not contained within the artist’s rendition of the restored habitats
prepared by Biohabitats (DEX4604 (Bayway) and DEX4629 (Bayonne)). Trial Tr.
4/30/13 (Sacco Direct) 121:10-20.
As explained by Mr. Sacco, those images
were prepared in the course of trial to convey the objectives for the Sites,
198
the Department provide for a plan that can be accomplished and,
when completed, will allow the refinery to continue to operate
while restoring valuable natural resources to the State of New
Jersey.
The costs of implementing the Department’s plan, given
the scope of the project, are reasonable.
Therefore, ExxonMobil
is liable for such costs.
b. The Department’s proposed primary restoration plan
and cost estimate.
i.
Areas to be restored
The Department’s primary restoration plan would restore 464
acres of intertidal salt marsh habitat, 59 acres of palustrine
forest habitat, and 28 acres of upland forest habitat at the
Bayway Site.
At Bayonne, the Department’s plan proposes 25
acres of intertidal salt marsh restoration.
areas
to
Department
be
included
considered
in
the
the
primary
areas
where
In selecting the
restoration
plan,
contamination
was
the
most
prevalent, areas outside of current refinery operations, and the
areas where the pre-discharge habitats could be restored.
Trial
Tr. 4/30/14 (Sacco Direct) 9:6-13.
After
reviewing
the
chemical
sampling
data
and
the
groundwater data findings of Dr. Morrison and Dr. Lipton (id. at
9:21-10:6, 30:2-12), the Department concluded that “[a]ll areas
[of the Bayway Site] exhibited contamination.
Some areas had
as is often done in the course of restoration projects when shopping ideas to
other agencies. Trial Tr. 4/28/14 (Sacco Direct) 179:4-22, 184:24-188:16.
199
diffuse contamination. But for the large majority of the site,
it was grossly contaminated, not only in terms of volume but
concentration.”
Id. at 10:20-25.
reached at the Bayonne Site.
The same conclusions were
Id. at 31:8-10, 32:17-24. Although
the entirety of the Sites were injured and therefore in need of
restoration, the Department determined that restoration should
not
be
pursued
in
areas
where
refinery
or
chemical
plant
operations were ongoing.
The areas of the Sites not included in
the
plan
primary
restoration
are
compensatory damages calculations.
included
wholly
within
the
Trial Tr. 3/11/14 (Lipton
Direct) 17:13-21 (“And then as much of [primary restoration]
that we can get done, then we’ll look at the residual.”).
The areas to be restored to intertidal salt marsh habitat
at Bayway include the low-lying areas in Units B and C,138 the
Pitch Area (IAOC A18), the Sludge Lagoon, Unit E, and portions
of Unit D,139 while the other parts of Unit D would be restored
to palustrine forest habitat.
See 3TM Figure 5: Location Map of
138
The specific IAOCs within Units B and C included in the primary restoration
footprint are IAOCs C01 (Tank 319 Waterfront Landfill Area), C02 (Fire
Fighting Landfill), C03 (Eastern Waterfront Landfill/Pier), C04 (No. 1 Dam
Creek Dredgings Area), and C05 (Steamer Dock Area), as well as B01 (Tank 336
Creek Dredgings Area), B02 (Western Waterfront Tankfield), and B03 (Tank 301
Creek Dredgings Area). Trial Tr. 4/30/14 (Sacco Direct) 17:8-19:12.
139
The specific IAOCs within Units E and D included in the primary restoration
footprint are IAOCs E01 (Clean Fill Area), E02 (Eastern Landfill), E03
(Central Landfill and Landfarm), E04 (Western Landfill), E05 (Southern
Landfill), D02 (Former Lower Tremley Tankfield Separator), D04 (Tank 519
Creek Dredging Area), and D05 (SLOU Boundary) (Trial Tr. 4/30/14 (Sacco
Direct) 20:21-23:22), as well as the reservoir area, which includes D03A
(Current and Former Diesel Tankfield) and D06 (Western Shore or Reservoir).
Id. at 23:23-25:24.
200
Restoration
Areas
and
Slurry
Walls
(Bayway),
PEX0298-0043;
Stratus Figure 4.3: Plan for On-site Restoration at the Bayway
Facility,
PEX0683.
Unit
F
will
also
be
restored
to
a
combination of palustrine forest and upland forest habitats.140
3TM Figure 5: Location Map of Restoration Areas and Slurry Walls
(Bayway),
PEX0298-0043;
Restoration
Morses
Creek
restored.
10.
at
the
and
Stratus
Bayway
Piles
Figure
Facility,
Creek
will
4.3:
Plan
PEX0683.
also
be
for
On-site
Additionally,
cleaned
up
and
Trial Tr. 4/29/14 (Sacco Direct) 202:21-202:7, 205:8-
At Bayonne, the areas to be restored to intertidal salt
marsh habitats include portions of the Stockpile area, Platty
Kill area, Pier No. 1,141 the Solvent Tankfield, and Piers and
East
Side
Restoration
Treatment
Areas
areas.
and
Slurry
3TM
Figure
Walls
4:
Location
(Bayonne),
Map
of
PEX0298-0042;
Stratus Figure 4.3: Plan for On-site Restoration at the Bayonne
Facility, PEX0681; see also Trial Tr. 4/29/14 (Sacco Direct)
206:13-21.
140
The specific IAOCs within Unit F included in the primary restoration
footprint are IAOCs F01 (40-Acre Tankfield), F02 (Former 40-Acre Tankfield)
and F03 (40-Acre Tankfield Undeveloped Property). Trial Tr. 4/30/14 (Sacco
Direct) 25:25-27:3.
141
In the area near Pier No. 1, the
pre-discharge habitat was palustrine
forest, but it made more sense given the changes to the landscape over time
that have created a source to salt water and the tides to restore to
intertidal salt marsh habitat. Trial Tr. 4/30/14 (Sacco Direct) 31:11-32:16
(“[G]iven that there is limited opportunity to do primary restoration here in
the proximity of the area where we could do it to a saltwater source and
tides, we decided that it was just more appropriate to convert this -- well,
it's already been converted, but to put this area back to intertidal salt
marsh rather than what it was before the refinery operations began.”).
201
It
was
a
goal
of
the
Department
to
develop
a
primary
restoration plan that would allow the refinery to continue to
operate.
Trial Tr. 4/29/14 (Sacco Direct) 73:8-14; Trial Tr.
4/30/14 (Sacco Direct) 9:6-13, 12:11-25.
Each of the areas
within the primary restoration footprint are outside of areas
where current refinery operations take place at the Site, or
were
at
the
time
that
the
submitted to ExxonMobil.142
Sludge
Lagoon
disposal
of
Management
and
wastes
Area,
the
in
expert
Morses
were
drafted
and
Units B, C, and E, as well as the
Pitch
the
reports
Area
at
Bayway,
past.
See
Bayway
Creek,
40
Acre
were
used
for
Refinery
Waste
Tankfield
1996
Supplemental Remedial Investigation, PEX1043, p. 28 (listing the
waste management areas at the Bayway Site).
Mr. George Bakun, a
Phillips 66 employee, testified that Phillips 66 is unable to
use the Sludge Lagoon area, as well as the landfills in Areas
E02, E03, E04, and E05 for any refinery activity. Trial Tr.
7/24/14 (Bakun Direct) 158:9-22; Trial Tr. 7/24/14 (Bakun Cross)
190:18-191:13;
see
also
Trial
Tr.
142
2/10/14
(Archibald
Direct)
Although there were no refinery operations in the area at the time (Trial
Tr. 4/30/14 (Sacco Direct) 27:16-22), at trial, Mr. Bakun testified that
since 2006, when the Department’s primary restoration plan was developed and
provided to ExxonMobil, a rail yard has been constructed in the 40-Acre
Tankfield (Unit F). Trial Tr. 7/24/14, 106:1-9 (Bakun Direct). Should the
Court find that as a result of this project that primary restoration in Unit
F is no longer practicable, the acreage of the area should be removed from
the total plan for primary restoration and the acreage for compensatory
restoration would be adjusted accordingly. Trial Tr. 3/11/14 (Lipton Direct)
16:3-17:22 (“[A]s primary goes down, compensatory goes up and vise versa.”);
Trial Tr. 4/30/14 (Sacco Direct) 43:11-15.
See infra, part II(F)(2)(c) for
further details for adjusted numbers.
202
76:6-16 (“[C]ertainly there are places in the plant where waste
disposal
made
it
unfit
for
certain
types
of
development.”).
There is no longer an active refinery at Bayonne.
Bayonne Site
History Report, PEX0694A, p. 38; see also Trial Tr. 4/30/14
(Sacco
Direct)
Ostermiller’s
32:25-33:8.
Therefore,
infrastructure
by
incorporating
replacement
plans
Mr.
(discussed
below), the primary restoration plan is designed to have minimal
interference with refinery operations and will not disrupt the
current refinery owner’s use of the property.
ii.
Pre-construction study and design
The Department’s primary restoration plan set forth in its
expert reports is in its conceptual phase.
conceptual does not make it unreliable.
discredit
also
the
restoration
misdirected.
plans
Restoration
and
That the plan is
ExxonMobil’s efforts to
associated
plans,
like
testimony
remedial
are
plans,
necessarily carry with them uncertainties as was described in
Great Lakes:
Similarly,
Great
Lakes
questions
the
validity of the work of Mr. McCabe, the
engineering expert who designed the project
(in accordance with the instructions from
the United States) to repair the grounding
site of the Captain Joe. Great Lakes makes
much of the fact that Mr. McCabe would not
guarantee
the
success
of
his
design;
incorrectly implying that Mr. McCabe does
not think his design will work. This lack of
a guarantee is irrelevant.
203
The Court realizes that these types of
restoration projects are typically rife with
uncertainties
regarding
their
success
(despite the willingness of more than one of
the United States’ witnesses to “bet his
life on it”). However, this does not
automatically
render
them
scientifically
unreliable. These uncertainties are due to
both the relative lack of research in the
field and the nature of the projects
themselves, neither of which is grounds to
exclude otherwise reliable and relevant
scientific testimony. See Kumoho Tire at
4183.
Therefore, Mr. McCabe’s testimony
will not be excluded.
[United States v. Great Lakes Dredge & Dock
Co., No. 97-10075-CIV, 1999 WL 1293469, at
*2 (S.D. Fla. July 28, 1999).]
See also infra, part IV(E).
To
move
forward
with
the
restoration
of
the
damaged
habitats, there will first need to be further pre-construction
study
and
project.143
design
Trial
to
Tr.
develop
2/13/14
more
specific
(Horsak
Direct)
details
of
123:3-20.
the
Mr.
Horsak’s cost estimate includes line items for such design work,
which is expected to take approximately two years to complete
and cost $28,324,530.144 Trial Tr. 2/24/14 (Horsak Direct) 48:11-
143
ExxonMobil’s John Bruzzi described various drawings and schematics of
tanks, pipelines and other refinery infrastructure that would be utilized in
further developing details of the plans.
See Trial Tr. 5/15/14 (Bruzzi
Direct) 65:6-8 (confirming familiarity with maps of the refineries depicting
locations of refinery infrastructure).
144
The cost estimates provided below make up the line items that Mr. Horsak
included in his base case, which was then used as an input into his Monte
Carlo analysis. See infra, part IV(E).
204
25.145
This
($11.5
million),
number
includes
which
costs
were
Ostermiller’s cost estimate.
for
infrastructure
originally
included
design
in
Mr.
The pre-construction design phase
of the primary restoration project will consist of additional
engineering
design
of
cleanup
activities,
infrastructure
rebuilding design, and wetlands construction design (3TM Table
4-2:
Summary
Pro-Forma
Economic
Analusis,
PEX0298-0064),
including acquiring the required permits and the preparation of
documents and submittals of bids to contractors.
Trial Tr.
2/24/14 (Horsak Direct) 51:22-54:15.
iii.
To
return
the
Clean-up and removal of contamination
Bayway
and
Bayonne
Sites
to
their
pre-
discharge conditions, all contamination from soil, sediment, and
groundwater must be removed.
200:20-201:6.
Trial
Tr.
4/29/14
(Sacco
Direct)
The Department’s primary restoration plan calls for
the excavation of contaminated soils, dredging of contaminated
sediment in Morses Creek and Piles Creek, as well as the cleanup
of contaminated groundwater.
The
excavation
and
removal
of
contaminated
soils
and
sediments throughout the areas to be restored account for a
large portion of the costs of the primary restoration project.
145
The 3TM Report contained a mathematical error, incorrectly stating that the
sum of $14,162,265 and $14,162,265 was $26,324,530. See PEX0298-0064.
Mr.
Horsak corrected that error on the stand, recognizing that the total should
have been written as $28,324,530.
Trial Tr. 2/24/14 (Horsak Direct) 48:1125.
205
ExxonMobil’s waste is pervasive throughout the areas within the
primary restoration footprint; in some places, contamination can
be found at depths up to 30 feet.
Direct)
158:23-159:21;
see
also
Trial Tr. 4/28/14 (Sacco
Trial
Tr.
1/13/14
(Walters
Direct) 148:25-149:21 (describing the extent of contamination on
top
of
meadow
mat).
Approximately
9
million
tons
contaminated soil must be removed from the Sites.
of
Trial Tr.
4/29/14 (Sacco Direct) 136:25-137:15; see also 3TM Table 4-3:
Summary of Metrics and Costs, PEX0298-0066.
To successfully
restore fully functioning habitats to these areas, this waste
and contaminated soil must be excavated and properly disposed of
offsite.146
Further, to restore intertidal salt marsh habitats it is
essential
to
explained
in
reach
the
intertidal
context
of
elevations.
discussing
his
As
Mr.
prior
Sacco
research
experience:
A As I mentioned earlier, it was -- it's
pretty easy to get Spartina going in an
area. You have to get the elevations right,
and by getting the elevations right, it
enables the daily tidal influence, and these
plants depend on tides. So if you get your
elevation to that intertidal zone, your
plants will become established. Once your
plants become established, all the other
attributes, the functions and the services
146
In some limited areas
restoration plan calls for
cleanup may consist of less
with hand tools, in order to
(Sacco Direct) 77:24-78:22.
throughout the Bayway Site where the primary
the restoration of palustrine forest habitats,
invasive means than excavation, such as cleanup
keep existing forests intact. Trial Tr. 4/29/14
206
and the values that flow from that type of
habitat begin to come on line. That's what
we envision at Bayway when we do our primary
restoration, and at Bayonne. This research
really tracked how those functions and
services come on line after you establish
that marsh. And it gives me a very firm
understanding of the science that goes into
creating a new marsh, a restored marsh.
Q What is the relation between excavation at
Bayway and Bayonne as proposed and this
elevation issue that you've been discussing?
A Well, there's a lot of excavation that
needs to occur at these sites to get them
down to this intertidal elevation. We know
that they've been filled with petrochemical
waste, and in some instances, it's 30 feet
high. So we have 30 feet of waste sitting on
the public's marshes out there. That has to
be removed before we can get to that
intertidal elevation, the critical elevation
for restoring the habitats that used to be
there before they were destroyed by Exxon.
[Trial Tr.
159:21.]
ExxonMobil’s
Dr.
4/28/14
Rodgers
(Sacco
agreed
Direct)
that
158:23-
excavation
necessary in the course of restoration projects:
Q Okay. Can we break that down? I think you
agreed with the State that some excavation
is always going to be necessary if you need
to get the elevation correct and intertidal
waters come in. Leaving aside contamination,
you'd agree that some amount of excavations
is often a part of wetland restoration work,
true?
A
Some
excavation
is
often
restoration work, yes, sir.
207
part
of
is
often
[Trial
18.]147
Tr.
8/6/14
(Rodgers
Cross)
21:10-
The total cost to excavate and remove contaminated soil and
sediment from the Bayway and Bayonne Sites is $1.52 billion.
Trial
Tr.
2/12/14
(Horsak
Direct)
186:8-25.148
These
costs
include the transport and disposal of 4.554 million cubic yards
of contaminated soil, at a cost of $134 per ton.
2/24/14 (Horsak Direct) 5:14-22.149
Trial Tr.
The excavation and disposal
of contaminated sediment from Morses Creek and Piles Creek will
cost
an
additional
respectively.
$178.1
million
and
$238.7
million,
3TM Table 4-3: Summary of Metrics and Costs, PEX
298-0069.
The primary restoration plan also includes plans to clean
up the contaminated groundwater in these areas.
Contaminated
147
Strangely, Dr. Rodgers testified that one of the many services of wetland
habitats included flood prevention (Trial Tr. 8/4/14 (Rodgers Direct) 40:1441:20 (describing services that wetlands provide as including “flood
amelioration”); Trial Tr. 8/5/14 (Rodgers Direct) 3:20-4:11 (“In addition,
they - - wetlands maybe involved in flood prevention. . . .”) but later
changed his testimony to assert that the State’s primary restoration plan
would increase the risk of flooding.
Trial Tr. 8/5/14 (Rodgers Direct)
20:12-21:11. Dr. Rodgers’ inconsistencies regarding flood hazards associated
with wetlands renders his criticisms of the State’s restoration plan
incredible.
148
During the course of excavation, monitoring wells throughout the Site will
need to be removed, at a cost of $100,389. PEX0298-0069.
149
The unit rates for cleanup are for hydrocarbon contamination, although
there are other hazardous substances known to be throughout the Refineries
that would also be removed when encountered.
Trial Tr. 2/24/14 (Horsak
Direct) 14:2-14 (“The costs that we received from the New Jersey contractors
were for hydrocarbons. We know from other information from Stratus, for
example, that some of these areas within the refinery could contain heavy
metals, pesticides, PCBs, chlorinated pesticides. And if those wastes were
included with the hydrocarbon waste, more likely than not those costs -those unit rates would be higher and they could be substantially higher.”)
208
groundwater
extends
throughout
restoration footprint.
contaminated
Stratus
576
acres
of
the
primary
See Stratus Figure 3.2: Locations of
groundwater
Figure
the
3.2:
at
the
Bayway
Approximate
Refinery,
Location
of
PEX0684;
Groundwater
Petroleum Plumes at the Bayonne Refinery, PEX1569.
During the
excavation process, saturated soil will be unearthed and the
liquids
will
need
contaminated soil.
to
be
disposed
of
separately
from
the
Trial Tr. 2/24/14 (Horsak Direct) 21:4-23:5
(“Q Okay. And what was the purpose of treating this groundwater?
A During the excavation process, you will be excavating material
that is saturated and you have to do something with the liquids.
Q
Okay.
A
liquids.”).
And
the
something
is
to
basically
treat
those
This contamination must be removed and disposed of
properly for the restoration to be successful.
To
estimate
the
cost
to
remove
and
treat
contaminated
groundwater, Mr. Horsak determined the volume of groundwater to
be removed (774 million gallons) and the treatment time (45
months).
Id. at 23:20-25:5.
Mr. Horsak estimated the cost per
gallon for treatment of groundwater to be .0179 cents for a
total cost of $13,909,000.
Following
similar
the
structures
Id. at 25:6-12.
treatment
will
of
be
groundwater,
installed
to
slurry
walls
segregate
or
the
groundwater contamination from other non-restored areas of the
Sites.
Trial
Tr.
4/28/14
(Sacco
209
Direct)
187:9-13.
Such
techniques have proven to be successful in precluding migration
of contamination into restored areas of a site and are commonly
used by the Department.
Id. at 188:17-189:8; see also Trial Tr.
2/24/14 (Horsak Direct) 25:13-27:15 (“[T]he slurry wall would be
used to isolate the wetland from any contaminated release from
any ongoing operations.”). Mr. Horsak estimated the total cost
of
slurry
wall
installation
to
be
$5.3
million.
Trial
Tr.
2/24/14 (Horsak Direct) 25:13-27:15.
After the soil is excavated and the contamination disposed
of, the restoration areas will need to be backfilled with clean
fill in order to construct the wetlands.
(Horsak
Direct)
187:3-19.
Here,
Trial Tr. 2/12/14
backfilling
of
soil
will
consist of 4.554 million cubic yards and will cost $25 per ton,
for a total of $153 million.
Direct) 5:23-6:12.
Ibid.; Trial Tr. 2/24/14 (Horsak
The backfilling of clean sediment will cost
approximately $44.7 million.
and Costs, PEX 298-0069.
3TM Table 4-3: Summary of Metrics
The total cost for soil, sediment and
water cleanup is approximately $2.159 billion in 2006 dollars.
Ibid.
iv.
Infrastructure removal and
reconstruction
As previously stated, in developing the primary restoration
plan, it was an important goal of the Department to allow the
Bayway Refinery to continue to operate.
210
To assist Mr. Horsak
with
the
issues
associated
with
the
existing
refinery
infrastructure, the Department retained Ronald Ostermiller, a
professional
engineer
design and operations.
41:15.
Mr.
with
extensive
experience
in
refinery
Trial Tr. 2/24/14 (Horsak Direct) 40:21-
Ostermiller
described
the
scope
of
his
work
as
follows:
A The intention was to accomplish the
restoration while the refinery continued to
operate
both
during
the
work
and
subsequently. The refinery offsite assets in
some cases at least, exist in areas that are
going to be part of this restoration and
they require modifications, additions or
relocations. The goal was to develop a
preliminary or conceptual project design and
cost
estimate
for
the
refinery
asset
modifications, additions and relocations,
and that was to be an adjunct to the overall
project conceptual plan and estimate that
was being prepared by 3TM.
[Trial Tr.
156:5-16.]
2/25/14
(Ostermiller
Direct)
Mr. Ostermiller provided 3TM with a conceptual design and
cost
estimate
for
removing
and
replacing
existing
pipelines,
electrical cables, access roads between the refinery and dock
area, necessary to implement the primary restoration plan.
Mr.
Horsak worked up the cost estimates for removal of the majority
of the demolition and removal costs for existing infrastructure
and
included
Mr.
Ostermiller’s
replacement
additional inputs in his final cost estimate.
(Horsak Direct) 41:10-15.
211
cost
estimates
as
Trial Tr. 2/24/14
First,
restoration
pipeline,
Mr.
Ostermiller
plan
will
lateral
determined
require
(or
the
auxiliary)
lines, and seawater extensions.
that
the
replacement
pipelines,
primary
of
a
seawater
main
supply
Mr. Horsak determined that the
cost to remove the existing pipes was $1.6 million (PEX 2980069), while Mr. Ostermiller estimated that the replacement of
these
pipes
(Ostermiller
would
cost
Direct)
$118.9
185:4-9;
million.
Quad
Table
Trial
Tr.
III-1:
2/25/14
Summary
of
Estimated Cost, PEX 301-A.
The pipe racks will be made of steel and will rest upon
drill piers with a concrete foundation to cap the drill footing.
Trial Tr. 2/25/14 (Ostermiller Direct) 163:21-164:5.
The main
pipe rack will consist of 24 pipes and some electrical conduits.
Id. at 164:10-23.
seawater
supply
It would be constructed together with the
lines
(described
below)
in
approximately 20 feet high and 20 feet wide.
171:16.
a
structure
Id. at 170:25-
Mr. Ostermiller measured the necessary length of the
pipe racks based on images from Google Earth.
He concluded that
the main pipe rack would be 3,865 feet long and cost $40.8
million
to
electrical
187:12.
install,
conduits.
with
Id.
an
at
additional
164:24-165:2,
$3.9
million
181:6-12,
for
186:20-
The three lateral pipe racks would be 5,970 feet, 2,350
feet, and 2,400 feet, for a total of 10,720 feet and a cost of
212
$57.6
million,
million.
plus
electrical
conduit
and
wiring
for
$6.4
Id. at 165:20-166:10, 172:1-9, 184:1-3, 188:8-13.
The refinery’s sea water cooling lines, which are used for
once-through cooling in the refinery, will also be replaced.
The existing cooling lines will be replaced by three, 60-inch
seawater lines at the base of the pipe rack that would be about
1,200 feet on average, and cost approximately $15.7 million.
Id. at 165:4-10, 173:1-8; PEX0301-A.
extensions,
extend
to
network.
1,200
the
feet
tie
Trial
169:19-170:4.
each,
point
Tr.
The
are
for
2/25/14
In addition, three header
included
the
refinery’s
(Ostermiller
installation
in
of
the
the
cooling
Direct)
sea
extensions will cost approximately $4.9 million.
design
to
water
165:11-19,
water
header
Id. at 184:21-
185:3.
Mr. Ostermiller prepared a schematic for each of the main
and lateral pipe runs, as well as the seawater extension.
at 170:16-175:16.
Id.
As Mr. Ostermiller explained, the schematic
shows the length and height of the infrastructure installations,
as well as the location of 30-feet-deep slurry walls that will
accompany each structure to ensure that newly restored wetlands
will not become re-contaminated by leaks or spills from the
pipelines.
Id. at 173:9-20.
The total cost for the relocation of pipelines and pipe
racks—($118.9
million)—includes
213
costs
for
installation
of
foundational
elements
such
as
piers,
foundations,
bents,
fittings, valves, insulation and painting (id. at 185:12-186:5),
as well as a causeway to allow access along the pipe racks to
the dock area.
Because
Id. at 170:5-15.
there
are
existing
tanks
and
other
refinery
structures in the footprint of the primary restoration plan, the
plan
also
provides
for
the
removal
of
these
tanks
and
tank
Trial Tr. 2/24/14 (Horsak Direct), 18:17-19:13.150
foundations.
Six storage tanks will be removed from the restoration area and
replaced, including two 180-feet diameter tanks, and four others
with 120-feet, 116-feet, 90-feet, and 94-feet diameter bases.
Trial Tr. 2/26/14 (Ostermiller Direct) 175:17-176:5.
for
removal
Horsak’s
of
cost
the
tank
estimates,
foundations
while
Mr.
were
The costs
developed
Ostermiller
by
Mr.
estimated
the
cost to remove the actual tanks and replace the tanks.
total
cost
for
tank
foundation
removal
is
$5.4
The
million.
PEX0298-0069.
The
estimated
$17,276,400.
cost
to
relocate
these
storage
tanks
is
Trial Tr. 2/25/14 (Ostermiller Direct) 180:10-12;
Quad Table III-1: Summary of Estimated Cost, PEX301-A.
Mr.
Ostermiller developed that cost estimate by first using curve
estimates for API storage tanks provided in Gulf Coast numbers.
150
The locations of the tanks to be removed are depicted in PEX0298-0045,
PEX0298-0046, and PEX0298-0047; see also Trial Tr. 2/24/14 (Horsak Direct)
94:1-11.
214
The costs were broken down by area: Area F tanks, $7.3 million,
and Area C tanks, $3.1 million.
Direct)
177:24-178:5;
see
Trial Tr. 2/26/14 (Ostermiller
also
PEX0301-A.
The
sum—($10.4
million)—was then adjusted by 15% ($1.9 million) to reach the
New Jersey equivalent for the second quarter of 2006 using the
Nelson-Farrer
index.
Trial
Tr.
2/26/14
176:16-177:23, 178:7-25, 179:19-21.
(Ostermiller
Direct)
$2.1 million was also added
to account for the costs for pumps and piping necessary to make
the tanks functional.
Id. at 179:6-18.
Together with the costs
to remove the existing tanks, the total cost to replace the
storage tanks is approximately $17.3 million.
Id. at 179:22-
180:12; see also PEX0301-A.
The pipe and rack relocation, the electrical conduit and
wiring,
and
the
tank
relocation
cost
estimates
total
$146.5
million in direct costs. Trial Tr. 2/26/14 (Ostermiller Direct)
190:3-25.
costs,
Mr. Ostermiller then added to that estimate indirect
including:
engineering
and
project
management
($21.9
million); contractors’ profit ($14.6 million); tax, insurance,
and freight ($11.7 million), for a total of $48.3 million.
at 191:1-193:4.
together,
the
Id.
Adding the direct and indirect cost estimates
total
cost
for
the
infrastructure
replacement,
including the costs for design, is approximately $194.8 million.
Id. at 193:6-9; see also PEX0301-A.
215
v.
Wetlands construction
of tidal flow
and
restoration
Following the excavation of contaminated soil and sediment,
backfilling
with
replacement,
clean
wetlands
soil,
are
and
to
infrastructure
be
constructed
and
removal
and
tidal
flow
restored in the area of intertidal wetland habitats restoration.
This will consist of soil grading and/or sediment placement, at
an
estimated
vegetation,
cost
at
a
$16,997,570.
of
cost
Trial
PEX0298-0069.
Mr.
$9.4
of
Tr.
million,
$41,376
2/24/14
Horsak
as
per
acre,
(Horsak
also
well
as
for
a
Direct)
included
total
of
27:16-28:12;
costs
enhancements and communications: $576,800 each.
planting
for
public
PEX0298-0069;
Trial Tr. 2/24/14 (Horsak Direct) 35:23-37:4.
After
the
wetland
vegetation
has
been
planted,
it
is
necessary to restore the tidal flow to the area so that the salt
marsh habitats can come to life.
To restore the tidal flow to
the low-lying areas of the Refinery, intertidal elevations will
first
need
Additionally,
to
be
the
dams
restored,
along
as
Morses
previously
Creek
will
removed.
Trial Tr. 4/29/14 (Sacco Direct) 10:19-21.
the
is
dams
essential
to
the
successful
discussed.
need
be
Removal of
restoration
wetlands:
A Well, the key to our restoration is to
bring tides back into this area where they
once formerly flowed. All the blue in this
depiction is all marsh plain, and to
216
to
of
the
maintain salt marsh plain you need to have
twice daily tides and the dam is precluding
that from happening.
[Id. at 11:19-24.]
Using
reliable
estimated
that
removed.
At
information
8,889
a
about
cubic
cost
of
the
refinery,
yards
of
the
dams
removal
at
$62.50
Mr.
Horsak
needed
per
to
cubic
be
yard,
provided to Mr. Horsak from potential contractors, the total
cost
of
dam
removal
is
estimated
to
be
$555,000.
Trial
Tr.
2/24/14 (Horsak Direct), 17:7-18:15.
Bulkheads would also need to be removed from Morses Creek
and
Piles
Creek
to
allow
for
wetlands
restoration.
At
the
instruction of the Department, Mr. Horsak included the costs to
remove
the
information
bulkheads
available
in
to
his
him,
cost
Mr.
estimate.
Horsak
Using
estimated
that
volume of bulkheads to be removed was 86,000 cubic yards.
cost
of
$62.50
per
cubic
removal is $5.4 million.
vi.
yard,
the
total
cost
for
the
the
At a
bulkhead
Id. at 16:1-17:6.
Wetlands
maintenance
activities
and
monitoring
The build-out of the Bayway and Bayonne restoration project
is
expected
Direct)
to
take
64:14-24;
eight
see
also
years.
Trial
PEX298-0048.
Tr.
To
4/29/14
ensure
(Sacco
that
the
primary restoration project is successful and that all of the
potential
benefits
are
obtained,
217
it
is
essential
that
the
restored
wetlands
be
managed
and
monitored
for
a
sufficient
period of time following the completion of the construction. See
Trial
Tr.
4/29/14
(Sacco
Direct)
63:17-64:13
("[W]e
like
to
monitor our projects around 20 years. We try and keep funding
available to do that. You know, not just to study them but to
ensure that the public is getting what we promised."); id. at
79:6-14. The Department’s plan calls for a 22-year monitoring
period following the 8-year construction phase, the total life
expectancy of the project being 30 years, which Mr. Horsak found
to
be
reasonable.151
Id.
at
64:25-65:17;
Trial
Tr.
2/13/14
(Horsak Direct) 128:16-21.
At Bayway and Bayonne, wetlands monitoring will consist of
taking and reviewing aerial photographs to document the growth
of the wetlands; field monitoring; lab testing; field supervisor
monitoring;
sediment
renourishment;
periodic
spill
clean-up;
groundwater monitoring well installation, sampling and analysis;
abandonment of monitoring wells at the close of the monitoring
period; and program management.152
Trial Tr. 2/24/14 (Horsak
151
A 30-year project life span is also standard for ExxonMobil’s remediation
projects at the Sites. See, e.g.,
Remedial Action Work Plan: Caverns Area
(December 2007), PEX0512, p. 49 (“For cost estimating and planning purposes,
the project life was set at 30 years. . . .”); Remedial Action Work Plan:
Gasoline Blending Tankfield (Dec. 2007), PEX0511, p. 43 (“For cost estimating
and planning purposes, the project life was set at 30 years. . . .”); see
also Trial Tr. 2/10/14 (Archibald Direct) 140:5-23.
152
Program management costs are estimated to be $1 million per year during the
construction phase of the project, then drop to $500,000 per year during the
monitoring and maintenance period.
Trial Tr. 2/24/14 (Horsak Direct) 47:248:6.
218
Direct)
28:18-35:22.
monitoring
and
The
maintenance
total
is
unit
cost
approximately
for
wetlands
$31.7
million.
Ibid.
The Department specified the need for a 22-year monitoring
period based on experience and extensive research on the issue.
John Sacco, Chief of ONRR, is a leading researcher on the amount
of time necessary for restored marsh habitats to reach full
capacity.153
During
the
course
of
his
research,
it
was
determined that even 18-year-old wetlands had not yet reached
100% productivity.
Q Go ahead, what was the research you did in
that context?
A I looked specifically at this invertebrate
fraction and how it colonized these marshes
through time. And we found basically that,
you know, the marshes I looked at I believe
were from 1 to 18 years of age. And in that
amount of time, the invertebrate communities
were still not stacking up to their natural
marsh counterparts. We were seeing about
half the densities in the artificiallyestablished marshes than were in the natural
marshes. And we tied that into organic
matter. It takes time for soil, organic
matter to develop. These things feed on
that. And we got, you know, drew the link
between the soil, carbon, organic matter and
the invertebrate communities.
Q And what conclusions did you reach about
the productivity of the young marsh versus
an older marsh in your research?
153
Mr. Sacco’s publication on the trajectory of invertebrate communities in
artificially established salt marshes has been relied upon by numerous
scientists in the field. Trial Tr. 4/28/14 (Sacco Direct) 154:19-155:14.
219
A The plant productivity comes on line
pretty quickly. The invertebrates through
the initial research I did with my thesis
work and then some subsequent studies that I
was involved with, it shows that it takes
between 10 and 15 years, maybe 12 and 18, in
there, but it's really -- you need a decade,
a decade and a half before you start seeing
the invertebrate community stacking up in
these artificially established marshes to
their natural marsh counterparts.
[Trial Tr.
138:11.]
Mr.
Sacco
4/28/14
testified
as
(Sacco
to
the
60:8-61:15
(“You
have
to
137:8-
importance
maintenance plans in restored marshes.
Direct)
Direct)
of
long
term
Trial Tr. 4/29/14 (Sacco
look
after
especially in the first five to ten years.
these
things,
The plants, as I
talked about a little bit yesterday, they don't set up their
root systems firmly until after about five years.
So up until
that time, there's a lot of danger that things will get moved
around
by
erosion.").
The
restored
vulnerable in the first five to 10 years.
area
is
especially
Ibid.
The State’s planned length of needed monitoring is also
supported by research regarding recovery rates.
For example, in
Environmental Assessment; Determining Salt Marsh Equivalence in
Service to Service Scaling of Salt Marsh Restoration (PEX0357),
authored
they
by
Elizabeth
investigated
the
Strange
time
and
within
other
which
Stratus
certain
development is achieved in salt marsh restoration.
220
researchers,
ecological
See Strange
et
al.,
Environmental
Equivalence
Restoration,
in
Service
PEX0357,
p.
Assessment;
Determining
Salt
Marsh
to
Scaling
Salt
Marsh
5
Service
(Table
2)
of
(identifying
a
range
of “[y]ears to achieve maximum level of services for different
services and metrics” of two to 30 years).154
The authors explain that:
As restoration scaling methods continue
to evolve, it is critical to consider the
meaning of "equivalence" and "recovery,"
given the variation inherent in ecological
data and in the rates of development of
different ecosystem components. Our analysis
makes
clear
that
conclusions
about
equivalency will depend critically on the
data and assumptions used to implement
scaling methods.
In salt marsh restoration, structural
measures
such
as
vegetative
ones
may
indicate full recovery within a relatively
short time, but functional measures often
reveal a significant lag in the recovery of
ecological
processes
such
as
nutrient
cycling that are necessary for a fully
functioning
marsh.
As
a
result,
100%
recovery of some ecological services may
represent only partial recovery of the
system as a whole.
Moreover, short-term recovery may not
imply long term sustainability (Zedler 1993,
1996, Simenstad and Thorn 1996).
154
Contrary to the State’s position, which is supported by scientific
literature from researchers in the field, Dr. Rodgers’ criticisms of the
length of the State’s proposed monitoring period is unsupported and based
solely on Dr. Rodgers’ experience in constructing wetlands to be part of
waste treatment systems as opposed to functioning ecosystems.
Trial Tr.
8/5/14 (Rodgers Direct) 29:8-30:15 (citing no literature to support his
opinion that wetlands can reach full functionality in one year).
221
[Id. at 7-8 (emphasis added).]
In
light
of
the
recovery
timelines
for
many
attributes
of
wetland functions, a 22-year monitoring period is appropriate.
vii.
Total
estimated
restoration
costs
for
primary
The items discussed above were included within Mr. Horsak’s
Summary of Metrics and Costs for the primary restoration project
at Bayway and Bayonne.
items
is
Horsak’s
PEX0298-0069.
approximately
base
case
$2.4
in
his
The total of these line
billion,
Monte
which
Carlo
served
as
probability
Mr.
analysis
performed to account for contingencies that should arise in the
course of the restoration project.155
Trial Tr. 2/12/14 (Horsak
Direct) 133:25-134:10; Trial Tr. 2/24/14 (Horsak Direct) 102:1013.
Mr. Horsak’s base case estimate was estimated to be within
-30
and
+50
percent
of
the
actual
project
costs,
which
appropriate given the current stage of project planning.
Tr.
2/12/14
contractors
Department
Sites.
(Horsak
typically
in
the
See, e.g.,
Direct)
submit
course
of
139:7-14.
similar
the
cost
Trial
ExxonMobil’s
estimates
remediation
efforts
is
own
to
the
at
the
Remedial Action Work Plan: Caverns Area
155
As Mr. Horsak explained, a contingency is “a cost or a task that is
contingent upon something that is either unknown or partially known or beyond
our control, considering the circumstances that we're at, at the time, and
the level of project definition.”
Trial Tr. 2/12/14 (Horsak Direct) 179:610.
Contingencies are necessary elements of cost estimates, because “there
are always unknowns on a project. There are always things that come up down
the road that people did not anticipate. Trial Tr. 2/12/14 (Horsak Direct)
111:1-3.
222
(December 2007), PEX0512, p. 50 (“This is an order of magnitude
engineering cost estimate that is expected to be within minus 30
to
plus
Action
50
Work
percent
Plan:
of
the
Gasoline
actual
project
Blending
cost.”);
Tankfield
Remedial
(Dec.
2007),
PEX0511, p. 43 (“For cost estimating and planning purposes, the
project life was set at 30 years. . . .”); see also Trial Tr.
2/10/14 (Archibald Direct) 138:17-140:4 (“Q Is that a pretty -is that standard in the industry of cost estimates at this stage
of
the
process?
A
I
believe
that's
the
case.”);
Trial
Tr.
8/29/14 (Messina Cross) 54:10-58:20 (“There's no more definitive
number given to DEP than this range of minus 30 to plus 50 of
the actual project cost? A In this document, that is correct,
yes.”).
Mr. Horsak used the base case of $2.4 billion as an input
into his Monte Carlo analysis, which was used to generate a cost
distribution ranging from expected costs on the low end to the
high end of the base case. Trial Tr. 2/12/14 (Horsak Direct)
119:2-11.
From that cost distribution curve output from the
Monte Carlo simulation, Mr. Horsak selected the number at the
95th
percentile,
outlay.
$2.63
billion,
as
the
total
estimated
cash
Id. at 134:21-24 (“[I]f you funded this project at
2.63, 2.631 billion dollars, there's a 95 percent chance or
probability
that
that
cost
would
funding would be sufficient.”).
223
not
be
exceeded,
that
the
There is nothing speculative
about the 95th percent probability.
(in
2006
dollars)
is
the
Therefore, $2.63 billion
estimated
cost
to
implement
the
Department’s primary restoration plan for which ExxonMobil is
liable to pay.
challenge
Mr.
ExxonMobil failed to present any witnesses to
Horsak’s
cost
estimate
for
the
Department’s
primary restoration plan.
viii.
The
Court
has
Escalation rate.
requested
that
the
parties
suggest
the
appropriate inflation or escalation rate that it employ related
to the cost estimates for on-site restoration, including but not
limited to those of Mr. Horsak and Mr. Ostermiller. The State
suggests
that
(inflation)
the
cost
Court
indices.
use
The
the
Nelson-Farrar
Nelson-Farrar
Refinery
Indices
are
published in the Oil & Gas Journal156 on the first of the each
month
and
are
compiled
by
Gary
Farrar,
Oil
&
Gas
Journal
Contributing Editor. As was testified to by the State’s expert
in
engineering
and
project
development,
Ron
Ostermiller,
the
Nelson-Farrar Indices are used in the refining world as the
proper inflationary rate for refinery related costs.
2/25/14 (Ostermiller Direct) 178:12-19.
Trial Tr.
As the costs of the
proposed on-site restoration are taking place at a refinery, the
State suggests that there can be no more appropriate index for
156
Nelson-Farrar Monthly Cost Index, Oil & Gas Journal, available
http://www.ogj.com/articles/print/volume-112/issue-7/processing/nelsonfarrar-monthly-cost-indexes.html (subscription required).
224
at
the Court's use in this regard.
For the Court's benefit, the
State has calculated the escalation factor using the NelsonFarrar Index from 2006 to 2014 and determined that it is a
factor of 1.31.
c. The Department’s proposed primary restoration plan
is practicable
No
New
Jersey
court
has
interpreted
the
meaning
of
“practicable” under the Spill Act. Interpreting practicable in
light of the purposes and goals of the Spill Act involves two
components:
whether
it
can
be
done
from
perspective and from an ecological perspective.
factor
identified
in
the
Spill
Act
to
be
an
engineering
Cost is not a
considered
in
the
practicability analysis.
The State’s primary restoration plan is practicable.
The
team of experts that developed the plan specifically considered
the issue and have confirmed that the plan to restore acreage of
injured
habitats
at
Bayway
and
Bayonne
can
be
successfully
accomplished from an engineering standpoint and in coexistence
with operating refinery at Bayway.
As an initial matter, the
restoration plans were designed to take place outside of the
active refinery operations:
So how did the Department go about deciding
if this was practicable, this plan at
Bayway?
225
A Well, the footprint of the primary
restoration plan, as I mentioned, is away
from the active refinery operations. So we
did not want to interfere with the refinery
operations. So staying away from that would
minimize, to a great extent, any impact on
refinery operations. So it was practicable
to stay in that area.
[Trial Tr. 4/30/14 (Sacco Direct) 12:11-19.]
To the extent the recent construction associated with the 40
Acre Tankfield IAOCs F01, F02 and F03 (collectively Unit F)
results
in
a
determination
by
this
Court
that
it
is
not
practicable to restore the acreage in that Unit, the following
adjustments can be made.
Initially based upon the components in
Mr. Horsak’s/3TM’s report, the seventy-two acres in Unit F, if
removed
from
the
primary
restoration
plan
will
result
decrease in the primary restoration costs of $153,774,371.
in
a
The
items specific to Unit F infrastructure removal and other unit
costs associated with the primary restoration plan for this area
are detailed in the 3TM report.
PEX0298, pp. 59, 66, 68.
Then
adjusting the HEA to include the 40-Acre Tankfield increases the
Bayway compensatory damages by $9 million (the resulting total
is
$3,769,000,000
instead
of
$3,760,000,000).157
157
Additional
The revised calculations to include no primary restoration in Unit F at the
Bayway Site are as follows:
226
scenarios as the Court finds appropriate may also be run in the
HEA.
Dr. Lipton confirmed that, from an ecologist’s perspective,
the
restoration
plans
as
designed
should
be
ecologically
successful.
Q As you sit here today, are you offering an
opinion on the feasibility or practicability
of the on-site restoration plan?
A The feasibility or practicability of the
on-site restoration plan from an engineering
perspective, I can't speak to. The only
thing that I can speak to and that I can
offer opinion on is that the restoration of
these types of habitats in these sorts of
areas is feasible.
Q I'm asking specifically, are you offering
an opinion that the on-site restoration
plan, the specific plan for the Bayway site,
is it your opinion that that is practicable?
. . . .
A And what I guess my answer is, that I'm
offering no opinion about the engineering
feasibility or practicability. The only
opinion that I can offer about this is that
it's feasible to restore these kinds of
habitats in these sorts of areas.
. . . .
Habitat
Type
Intertidal
and
Subtidal
Palustrine
Meadow
Upland
Meadow
Total
debit
(DAYs)
149,24
5
215,69
9
35,407
On-site
restoration
credit
(DAYs)
Revised
total
debit
(DAYs)
Credit
per acre
restored
offsite
(DAYs)
Offsite
restoration
required
(acres)
cost per
acre
($mill)
Cost
(millions)
916
148,330
21.8
6,809
$0.274
$1,866
26
215,673
20.3
10,626
$0.161
$1,711
0
35,407
16.6
2,137
$0.090
$192
total
(millions)
$3,769
227
I'm saying that this kind of plan, in this
kind of area is practicable.
Q But it is not your opinion that
specific
plan
proposed
for
Bayway
practicable because that's
the
is
A That's fair. That goes to the engineering
element.
[Trial Tr. 3/12/14
118:8,
118:13-17,
added).]
Mr.
Horsak,
testified
the
that
primary
given
his
(Lipton Cross) 117:21119:21-120:2
(emphasis
author
of
experience
the
with
restoration
refineries
expertise in engineering, that the plan was “doable.”
Q I understand all that. I don't think that
answered the question I was asking you. You
did not offer -- you're not offering any
opinion
in
this
case
concerning
the
feasibility
or
practicability
of
your
proposed restoration plan, correct?
A. I think it's [] feasible. Is it doable?
Yes, it's doable.
[Trial Tr.
166:5.]
2/24/14
(Horsak
Cross)
165:23-
Mr. Horsak further explained:
Q Mr. Horsak, are you offering any opinion
in this case as to the feasibility or
practicability of your proposed restoration
plan?
A Yes. Let me explain. The cost estimate
that we prepared for the Court using the
metrics that we were provided, assuming that
this is basically a ten-yard line moving
down the road within the context of us being
a plus or minus number on our cost estimate,
228
plans
and
his
I believe that the work that
provides what you suggested.
we've
done
Q And what analysis did you do in this case
to determine that you -- that your proposed
restoration plan is feasible or practical?
A I believe all of the line items that are
in
the
cost
estimate
have
associated
feasibility -- I don't want to use the term
feasible, because we're going to go on
another rabbit trail here. But each of these
line items can be implemented. And the way
I
look
at
that
is,
let's
take
a
hypothetical, and this might help the Court
as well. Let's assume that Exxon decided to
expand their refinery from 200,000 barrels a
day, which is their current capacity, or
somewhere around there, to 500 barrels a
day. And they needed to dig up all this
waste and move it out, and they needed to
put in some roads and pipelines, and they
wanted to get the refinery expansion on line
in four, five, or six years, could they find
a way of removing all this stuff and finding
the contractors to do this? I would say yes,
because this happens all the time in
industry because of market shifts.
[Trial Tr.
168:14.]
See
also
Trial
2/24/14
Tr.
(Horsak
2/25/14
Cross)
(Horsak
167:19-
Redirect)
94:19-23
(confirming “that the various components that are involved in
[the
Mr.
restoration]
Ostermiller
plan
[he]
assisted
believe[s]
Mr.
Horsak
are
in
all
the
executable”).
development
of
refinery infrastructure removal and restructuring at Bayway158 in
order to allow the refinery to continue to operate. See Trial
158
Mr. Ostermiller did not work on the primary restoration plan for Bayonne as
there is no longer an operating refinery at that location.
229
Tr.
2/25/14
(Ostermiller
Direct)
156:1-16
(stating
that
the
“intention was to accomplish the restoration while the refinery
continued to operate both during the work and subsequently”).
It
was
experience,
Mr.
and
Ostermiller’s
understanding
opinion,
of
the
based
needs
upon
of
his
refinery
operators, that the project can be accomplished.
Q Yes. Could the infrastructure relocation
project that you authored in your report be
completed?
A There's no reason that can't be completed.
It's garden variety work. There's absolutely
no reason it can't be completed.
[Trial Tr.
66:8-12.]
2/26/14
(Ostermiller
Redirect)
In addition to there being no requirement in the Spill Act
that
primary
restoration
cost
less
than
potential
off-site
restoration, ExxonMobil’s repeated suggestions that the State’s
on-site restoration plan is more expensive per acre than offsite is misleading.
In so arguing, ExxonMobil has taken the
total primary restoration costs and simply divided by the number
of acres proposed for restoration at Bayway and Bayonne.
In
light of the environmental conditions that are present at Bayway
and Bayonne, the per acre figures include more than restoration
expenses;
restoration
excavation
specifically,
are
of
the
primarily
hazardous
areas
waste
substances
230
targeted
disposal
and
for
areas
proper
primary
requiring
disposal
of
contaminants.
Bakun,
who
No one can reasonably dispute this.
works
for
Phillips
66,
the
current
Notably, Mr.
owner
of
the
Bayway Refinery, confirmed that Phillips 66 is not able to use
the waste disposal areas at the Bayway Site.
Trial Tr. 7/24/14
(Bakun Cross) 158:9-22 (testifying that Phillips 66 is unable to
use/develop Waste Management Areas at Bayway such as the SLOU,
Pitch Area and Landfill Areas which cover more than 124 acres at
Bayway, not including Morses Creek and Creek Dredgings Areas.).
The specific restoration costs associated with the proposed
plans
total
$2.6
billion.
Stratus
and
3TM
determined
the
metrics required to perform the restoration work and prepared
cost estimates for the restoration work based upon metrics from
similar projects.
These costs are specific to the Bayway and
Bayonne Site conditions and, as described above, are comprised
of the following categories of work:
1. Program Management / Design
$
45,324,530
2. Cleanup of Soil, Sediment and Groundwater $2,158,746,741
3. Infrastructure Demolition
$
15,981,519
4. Infrastructure Reconstruction
$
182,702,135
5. Wetlands Construction
$
33,287,118
6. Wetlands Monitoring
$
20,788,847
[3TM Primary Restoration Cost Estimate, PEX0298, p. 75.]
By
excluding
needed
excavation
and
infrastructure
costs
(both to clean up affected resources and to restore appropriate
231
tidal elevations but also permit the continued operation of the
refinery) a more representative average per acre for the actual
restoration project cost can be calculated.
three
remaining
restoration
Management/Design,
Wetlands
The costs of the
categories
Construction,
of
Program
and
Wetlands
Monitoring total $99,400,494. Applying 576159 acres to this total
results
contrast,
in
an
the
Compensatory
average
average
per-acre
intertidal
Restoration
cost
of
per-acre
calculation
$172,570.30.
costs
using
used
the
By
in
the
HEA
is
approximately $274,000 per acre. This is the vast majority of
the
habitat
restoration
sought
by
the
State.
These
cost
estimates include costs for land acquisition that the State will
have to expend in order to acquire property on which to conduct
compensatory restoration projects.
Had
ExxonMobil
hazardous
waste
properly
disposed
initially
or
had
of
or
addressed
ExxonMobil
this
actively
participated in the cleanup of the Sites in the context of site
remediation,
instead
of
pressing
for
institutional
controls,
much of the on-site restoration costs would be significantly
reduced
as
the
State
would
need
only
focus
on
actual
restoration, instead of both removal of remaining on-site waste
and restoration of injured resources in addition thereto.
159
This is the total primary restoration footprint: 551 acres proposed for
Bayway plus 25 acres proposed for Bayonne.
232
ExxonMobil also asserted largely generic concerns regarding
the ability of the refinery to continue to operate in light of
the restoration work.
proof
on
this
ExxonMobil
In addition to a lack of affirmative
issue160
focuses
on
the
assertion
the
is
operating
also
without
refinery
at
merit.
Bayway,
currently operated by Phillips 66, arguing that operations would
have
to
shut
down
if
Morses
Creek
cannot
be
used.
However,
ExxonMobil presented no expert testimony on this topic161, there
is no evidence suggesting that the State will not permit the
current
fashion,
operator
and
to
continue
ExxonMobil’s
to
use
attempted
Morses
Creek
invocation
of
in
a
some
third
party’s interests is entitled to little weight, especially where
ExxonMobil could have subpoenaed this third party to testify at
trial and did not.
In
addition,
the
factual
evidence
within
this
record
actually supports the State’s position that restoration of this
waterway is possible.
Initially, as noted above, Morses Creek
160
Despite the fact that the State engaged two engineers and developed a plan,
ExxonMobil elected not to counter the plan with an expert of its own and
instead (as discussed herein) relied on speculation from fact witnesses.
161
Prior to trial, ExxonMobil took the position that the practicability of the
State’s Primary Restoration plan was properly the subject of expert
testimony. See Def.’s Brief In Support of Mtn. To Preclude Testimony of Mr.
Ostermiller (2/4/14), p. 2 (“[T]he feasibility of relocation and rebuilding
aspects of a refinery and associated costs are seemingly central to the issue
of damages.”).
233
is
a
State-owned
ExxonMobil
Site
waterway.162
Manager
Mr.
for
the
Archibald,
Bayway
the
Site
former
Remediation
activities, conceded that Morses Creek could be restored, but
that it would simply be expensive.
Trial Tr. 2/10/14 (Archibald
Redirect) 183:24-184:9.
The
Bayway
water needs.
Refinery
has
both
process
water
None of the parties dispute this.
and
cooling
Morses Creek
and the reservoirs above Dam No. 2 have historically been and
are currently used as part of refinery operations.
ExxonMobil has argued that restoration where the reservoirs
are and removing them from ExxonMobil’s waste water regime and
limiting
Phillips
refinery
economically
stated
that
he
66’s
was
use
of
Morses
not
viable.
not
speaking
Creek,
Mr.
for
would
Bakun,
the
make
who
the
expressly
current
refinery
operator, Phillips 66, is not an environmental engineer and has
no
operations
experience.
In
addition,
Phillips
66
was
on
notice that the State wanted Morses Creek restored at the time
it purchased the Refinery.
(Mar.
8, 1991),
Ltr. From N.J. DEP to ExxonMobil
DEX0466, p. 2
(“[T]he Department’s primary
reason for maintaining the SE3 classification of this stream is
162
N.J.S.A. 7.8B-1 (“Waters of the State means the ocean and its estuaries,
all springs, streams, wetlands and bodies of surface or groundwater, whether
natural or artificial, within the boundaries of the State of New Jersey or
subject to its jurisdiction.”); id. 7.9B-1.4 (identifying the entire length
of Morses Creek as a water of the State).
234
to protect and enhance the ecological value of the stream and
the wetlands around it.”).
Importantly,
Mr.
Bakun’s
testimony
actually
supports
practicability as it relates to Phillips 66’s water needs.
As
to process water, Mr. Bakun testified that Phillips 66 already
obtains almost 50% of its process water as purchased water not
from the reservoirs.
Trial Tr. 7/24/14 (Bakun Cross) 120:3-14.
Moreover, Mr. Bakun testified that the only hindrance to the
refinery’s use of entirely purchased process water is simply
upgrading their municipal supply system. Id. at 121:19-122:12.
Mr.
Bakun
also
stated
without cooling water.
that
the
refinery
cannot
operate
However, Mr. Bakun also acknowledged
that alternatives to once-through cooling water systems exist
that would eliminate and/or substantially reduce discharges to
Morses Creek, and that Phillips 66 has actually implemented some
of these systems at the Bayway Refinery. Id. at 164:7-17.
As
Mr. Bakun conceded, “[t]he use of . . . recirculating cooling
water tower[s] would . . . [substantially] reduce[ ] the thermal
load of the cooling tower blowdowns to Morses Creek . . ..”
Trial
Tr.
7/24/14
(Bakun
Cross)
174:14-17;
see
also
id.
276:3-7 (agreeing that reductions would be substantial)).
fact,
the
trial
(Draft
confirms
very
draft
NJPDES
this,
permit
Permit
stating
that
ExxonMobil
(Feb.
1,
presented
2013),
“construction
235
of
during
DEX1620,
cooling
p.
at
In
the
13)
towers
could significantly reduce heat load and thermal discharges on a
long term basis . . . .”
In addition, Mr. Bruzzi testified that
scientific and technological innovations occur, and refineries
are routinely upgraded.
Trial Tr. 5/19/14 (Bruzzi Cross) 162:6-
23.
The only issue ExxonMobil has raised to cooling towers is
the
additional
practicability
cost.
under
Cost,
the
however,
Spill
Act.
is
not
Had
a
the
counter
New
to
Jersey
Legislature intended cost to be a factor to be considered in
primary restoration it could have, as evidenced by the cost
component
e.g.,
included
NOAA,
within
Natural
the
Resource
federal
Damage
NRDA
regulations
Assessments,15
See,
C.F.R.
§
990.54 (describing the evaluation of restoration alternatives in
order
to
“[o]nce
obtain
a
trustees
rebuttable
have
presumption,
developed
a
and
stating
reasonable
range
that
of
restoration alternatives under § 990.53 of this part, they must
evaluate the proposed alternatives based on, at a minimum: (1)
The
cost
to
carry
out
the
alternative
.
.
..”).
However,
consistent with the goals of the Spill Act, the Legislature did
not include nor amend the Spill Act to place a cost limitation
on restoration.
Again raising the specter of costs, counsel for ExxonMobil
has
suggested
that
the
Freshwater
Wetland
Protection
Act
(“FWPA”) case, Tanurb v. New Jersey Dep’t of Envtl. Prot., 363
236
N.J. Super. 492 (2003), should guide the Court’s practicability
analysis in this case.
That case is inapposite for a number of
reasons.
Tanurb involved a permit application under the FWPA, by
which New Jersey assumed responsibility for freshwater wetland
permitting
from
the
United
States
Environmental
Protection
Agency and the Army Corps of Engineers, and which mirrors the
federal
standards
under
permitting program.
the
Clean
Water
Act
section
404
Under the FWPA a permit will be issued for
dredging and filling activities in freshwater wetlands if, among
other things, there is no “practicable alternative.”
practicable
alternative”
Act,
which
under
requirement
practicability
is
parrots
the
The “no
determined
Clean
“taking
consideration cost, existing technology and logistics.”
Water
into
Fund
for Animals, Inc. v. Rice, 85 F.3d 535, 543-44 (11th Cir. 1996)
(citing 33 U.S.C. §1344(b)(1), 40 C.F.R. §230.10(a)).
adopted
the
same
practicability
language
for
The FWPA,
acquiring
a
freshwater wetlands permit. N.J.S.A. 13:9B-10 (“[A]n alternative
shall be practicable if it is available and capable of being
carried
out
technology,
purposes.”).
after
and
taking
into
logistics
Thus,
the
in
consideration
light
practicability
of
cost,
existing
overall
project
language
that
takes
“cost” into account was adopted from federal law, as was the
237
entire statutory scheme at issue in Tanurb.
The same is not
true of the practicability language in the Spill Act.
In addition, the two statutory schemes have very different
purposes
and
goals,
and
should
be
understanding of these considerations.
“is
to
preserve
all
wetlands
allowing a permit is met.”
501.
unless
interpreted
with
an
The purpose of the FWPA
the
rigorous
standard
Tanurb, supra, 363 N.J. Super. at
The “no practicable alternative” requirement is one of the
FWPA’s rigorous standards that must be met prior to destructive
conduct within a freshwater wetland.
other
hand,
sustained
was
within
enacted
the
“to
State
[hazardous substances].”
as
The Spill Act, on the
provide
a
liability
result
of
any
N.J.S.A. 58:10-23.11a.
for
damage
discharge
of
Damages under
the Spill Act expressly include the cost to restore wetlands and
other natural resources that have been adversely impacted by a
discharge.
Because
the
goals
behind
the
two
programs
are
different — the FWPA, to regulate impact to existing wetlands,
and the Spill Act, to proactively restore damaged or destroyed
wetlands by making the polluter pay—the terms within each, where
undefined, must be interpreted to provide sufficient flexibility
to
achieve
Therefore,
the
goals
the
cost
of
each
Act
component
of
on
a
the
case-by-case
basis.
considerations
of
“practical alternatives” under the FWPA should not apply to the
238
practicability
requirement
for
primary
restoration
under
the
Spill Act.
ONRR has completed dozens of restoration projects similar
to the one proposed for the Bayway and Bayonne sites.
Trial Tr.
4/28/14 (Sacco Direct) 196:18-197:2; Trial Tr. 4/29/14 (Sacco
Direct)
26:8-17
(“Q
Has
the
Department
of
Environmental
Protection had experience with restoration projects with each of
those types of habitats [included in the plans for Bayway and
Bayonne]? A Yes.”).
These projects include a range of projects,
including the restoration of intertidal and freshwater wetland
habitats at Woodbridge Creek (Trial Tr. 4/29/14 (Sacco Direct)
54:16-24),
Old
Place
and
Saw
Mill
Creek
(Trial
Tr.
4/29/14
(Sacco Direct) 24:16-20), and Chevron Perth Amboy (Trial Tr.
4/29/14 (Sacco Direct) 24:23-25:4); restoring white cedar stands
in Wharton State Park (Trial Tr. 4/29/14 (Sacco Direct) 5:256:7);
and
the
removal
of
run-of-the-river
dams
to
eliminate
obstacles from fish passages along the Raritan River (Trial Tr.
4/29/14 (Sacco Direct) 4:8-25), among many others.
Most similar to the proposed project at Bayway and Bayonne
is the recent restoration project completed at Lincoln Park.
See Trial Tr. 4/29/14 (Sacco Direct) 29:6-43:4. There, 35 acres
of a waste site were restored to intertidal wetland habitat
adjacent
to
the
Hackensack
River.
The
former
waste
site
contained up to 16 to 18 feet of fill in some areas, and diffuse
239
contamination
in
properly capped.
others,
that
was
excavated,
relocated
and
The wetlands restoration project consisted of
clearing the invasive vegetation that had infiltrated the site,
excavation to intertidal elevations, backfilling the area with
clean fill, planting native vegetation, and restoring the tides
to the area to allow the habitat to flourish.
These
same
elements
are
each
incorporated
into
the
Department’s primary restoration plan for the Bayway and Bayonne
Sites.
As was done at Lincoln Park, the invasive vegetation
that has taken over the landscapes at Bayway and Bayonne will be
cleared; the site will be excavated to remove extensive waste
and diffuse contamination, as well as to return to intertidal
elevations
to
allow
for
daily
tidal
flow;
the
area
will
be
backfilled to replace the contaminated fill with clean fill; and
wetland vegetation will be planted throughout the Sites.
Department’s
projects
demonstrated
confirms
its
success
ability
in
to
its
various
successfully
The
restoration
implement
the
proposed restoration plans at Bayway and Bayonne.
d. The Department’s primary restoration plan will
provide unique benefits to the citizens of New
Jersey.
It
is
undisputable
that
restoring
the
pre-discharge
habitats at Bayway and Bayonne would bring unique and valuable
benefits to the State of New Jersey.
240
Estuaries are important
habitats due to the productivity that is associated with the
mixture of fresh and salt water.
The Hudson-Raritan Estuary, of
which the restored wetlands at Bayway and Bayonne would be a
part, is of particular importance.
More than 18 million people
are within the drainage area of the Estuary, each gaining both
direct
and
indirect
benefits
from
these
resources.
Wetland
habitats in this area provide recreational use to millions of
neighboring
residents,
protection,
serve
as
improves
a
home
water
for
quality,
important
provide
species
flood
for
the
commercial fishing industry, and provide habitats for numerous
species.
Trial Tr. 4/29/14 (Sacco Direct) 18:15-21:24, 23:16-
24:1; Trial Tr. 8/4/14 (Rodgers Direct) 40:14-41:20; Trial Tr.
7/10/14 (Ginn Cross) 115:5-14.
The Hudson-Raritan Estuary is currently comprised of only
20% of the wetlands that were historically present.
4/29/14
(Sacco
restoration
habitats
in
plan
the
Direct)
would
Estuary
18:9-10.
increase
by
the
The
proposed
acreage
approximately
Trial Tr.
of
2.5%.
salt
primary
marsh
Trial
Tr.
4/30/14 (Sacco Direct) 36:22-41:11. This restoration would have
a significant positive impact on the Estuary.
Ibid.
(“The
proposed plan, especially at Bayway, will put back a contiguous
area of marsh that is really missing from the Arthur Kill area.
There are very few areas left where we have an entire creek
system with its associated tributaries and marsh plain. Getting
241
back 500 acres of a contiguous marsh would just be tremendous
for this area.”).
The importance of restoring wetland habitats that have been
lost in this area has been recognized by the Department, as well
as
various
other
Environmental
stakeholders,
Protection
including
Agency.
Trial
the
Tr.
United
States
4/29/14
(Sacco
Direct) 17:13-19 (“There's a whole program at EPA that deals
with
the
management
and
promotion
and
dissemination
of
information about this estuary. There are a lot of stakeholders
that are involved, and it's just a way to get the estuarine
community
and
periodically
decision-makers
to
talk
about
ways
and
to
scientists
improve,
to
together
improve
the
estuary.”).
The
464
acres
of
contiguous
salt
marsh
habitats
to
be
restored at Bayway alone would increase the interconnectivity
between
other
marsh
habitats
throughout
the
Hudson-Raritan
Estuary, thereby increasing the overall ecological value of the
entire area.
Trial Tr. 3/10/14 (Lipton Direct) 134:2-20, 135:2-
18 ("[W]hen completing the primary restoration at the Bayway
site, you would create another one of these pockets of habitat .
. . . And the more of these pockets that are present, the better
for
the
overall
function
of
this
environment
and
you
have
greater connectivity between these pockets. By connectivity I
mean birds can go from area to area. They can do stopovers.
242
There's different opportunities for small fish to go in and hide
in the grass, or to spawn . . . . And even though they're
surrounded
by
industrial
areas,
they
remain
valuable
ecologically and, in some ways, may be even greater value to
both preserve and create pockets of functional habitat. And this
would be, you know, the primary restoration of these habitat
areas would be part of that kind of contribution to overall
ecological value."); see also Trial Tr. 3/12/14 (Lipton Direct)
101:21-104:18 (describing in lay terms that “[t]he more habitat
the better”).
When the salt marsh habitats are restored at Bayway and
Bayonne,
these
benefits
will
immediately
flow.
Trial
Tr.
4/29/14 (Sacco Direct) 57:9-58:10 (“So there's a whole pyramid
of life that builds once you get the habitat established . . . .
you
establish
services
a
habitat
associated
with
and
all
that
the
habitat
other
will
attributes
flow.
There's
reason to be looking at any of the other components.
and
no
The key
thing is, put the habitat back and then everything else flows
from there.").
Although it is not the focus of the restoration plan, human
use benefits will also result from implementation of the primary
restoration plan at Bayway and Bayonne.
As Mr. Sacco explained:
By
restoring
those
systems,
all
the
ecological tributaries that are associated
with marsh basically come to the marsh on
243
the tides or they'll fly to the marsh from
the estuary or they'll swim up to the marsh.
With each incoming tide, all of these
resources
will
come
in
and
use
the
intertidal areas that we restore. With the
outgoing tide, they'll all go back out in
the estuary. We realize that people won't be
on these sites but they will be on the
estuary,
and
they
could
utilize
the
resources that have all been produced and
been enhanced by us restoring these large
salt marsh areas.
[Trial Tr. 4/29/14 (Sacco Direct) 9:6-18.]
The Legislature recognized the importance of protecting and
restoring these and other habitats throughout the State of New
Jersey in enacting the Spill Act.
The Department has acted in
accordance with the purposes and goals of that act in developing
a primary restoration plan that would begin the work to make the
public
whole
for
the
natural
resources
lost
as
a
result
ExxonMobil’s discharges at the Bayway and Bayonne Sites.
Department’s
Act’s
plan
minimal
recover
the
is
practicable,
threshold
costs
of
that
must
implementing
thereby
be
meeting
surpassed
such
a
plan.
in
the
of
The
Spill
order
Thus,
to
the
Department is entitled to recover $2.6 billion from ExxonMobil
to fund the proposed primary restoration project at the Bayway
and Bayonne Sites.
3.
The State’s compensatory restoration plan.
An off-site/compensatory restoration component was required
for the State’s NRD claim in order to make the public whole in
244
light of the amount and duration of injury at these Sites.
The
compensatory component, which addresses loss of use, includes
the loss associated with areas that were not targeted for onsite restoration because they were part of active refinery or
ongoing operations, as well as loss of use damages for all areas
dating back to the time of the initial discharges.
Contrary
to
ExxonMobil’s
argument,
abandoned its loss of use claim.
Closing
Argument)
10:2-11:7
the
State
has
not
Trial Tr. 9/3/14 (ExxonMobil
(arguing
that
“The
Appellate
Division. . . said that the only . . . type of compensatory
restoration damages available under the Spill Act are damages
for
what
is
called
loss
of
use.
But
for
whatever
reason,
plaintiff chose not to present evidence of a loss of use. . . .
in the actual trial they abandoned it, for whatever reason”).
ExxonMobil’s
position
contradicts
testimony of its own experts.163
lost
ecological
116:17-117:15.
services.
the
record,
including
the
The State’s claim is focused on
Trial
Tr.
4/29/14
(Sacco
Direct)
The Appellate Division expressly confirmed that
compensatory restoration, loss of use, “include both ‘human use’
163
Dr. Desvousges confirmed that “the fundamental concept behind HEA is that
compensation for lost ecological services can be provided by restoration
projects that provide comparable services.”
Trial Tr. 6/9/14 (Desvousges
Cross) 47:5-1 (confirming agreement).
245
and ‘ecological’ services.” ExxonMobil, supra, 393 N.J. Super.
at 393.164
The compensatory, loss of use, component of damages has
been
computed
(“HEA”),
which
litigation.
by
is
the
use
of
a
method
“habitat
embraced
equivalency
by
both
analysis”
sides
in
this
ExxonMobil’s Drs. Ginn, Rodgers, and Desvousges all
contributed to a HEA performed on ExxonMobil’s behalf and the
State’s compensatory damages calculation was performed by Dr.
Lipton with the assistance of employees in the Department and
Mr. Robert Williams.
the
standard
The HEA calculation in this case employs
equation,
with
case
specific
inputs
discussed
below, in order to calculate the Discounted Acre Years (“DAYs”)
required to balance the equation.
An estimated cost component
(representing the costs typically associated with restoration
projects of similar habitats) is then applied to the DAYs.
In
this
case,
the
categories
of
habitats
for
which
restoration costs were developed include off-site creation of
intertidal
habitats.
marsh,
palustrine
marsh,
and
forested
uplands
The result is a value for the appropriate scale of
compensatory restoration, in this case, totaling $6.4 billion.
164
At the time of this decision, the Appellate Division was aware of
ExxonMobil’s arguments regarding the private nature of the properties at
issue (i.e., that there is no site access nor direct human use).
246
a. HEA
The
Unsworth
foundational
and
Richard
paper
on
Bishop,165
HEA
in
was
authored
which
these
by
Robert
economists
reasoned that:
Given the: high cost of primary research,
uncertainty
inherent
in
available
methodologies, the lack of a sufficient
literature
base
to
support
benefits
transfer, and the need to address damage
estimation quickly and at low cost, we
propose an environmental annuities based
approach to damage assessment This approach
is based on the assumption that the public
can be compensated for past losses in
environmental services through the provision
of additional services of the same type in
the future. This approach is particularly
attractive when viewed in the legislative
context of CERCLA and OPA, the two primary
natural resource damage laws, in which
Congress explicitly made restoration of
environmental services the primary goal.
[Robert E. Unsworth & Richard C. Bishop,
“Assessing Natural Resource Damages Using
Environmental Annuities” 11 Ecological Econ.
35 (1993), DEX0488, p. 6.]
Unsworth and Bishop designed the model seeking to simplify the
approach and to avoid limitations that accompany attempts to
estimate values of natural resources:
Clearly, alternative, less data- and less
research-intensive techniques for wetland
valuation would be useful. In this paper,
we describe the theoretical basis of a
simplified
approach
that
provides
one
alternative to conventional economic damage
165
Dr. Desvousges described Unsworth and Bishop as the founders of HEA.
Tr. 6/4/14 (Desvousges Direct) 134:22-135:10.
247
Trial
assessment.
. . . .
In some cases the cost of estimating the
value of services provided by a wetland
system will be substantial, and even if such
an effort is undertaken, uncertainty about
the resultant estimates may be unacceptable
for litigation purposes. Our proposed model
is intended to avoid these data limitations,
while defining a way to compensate the
public for lost use and non-use values when
releases of oil and toxics have reduced
wetland services.
[Id. at 2 (emphasis added).]
And the authors recognized that the reliability or acceptance of
their
proposed
method
would
not
necessarily
be
limited
traditional economic principles:
There are two principal assumptions
inherent in this approach. Tire first is
that the value of wetland services is
constant through time.
. . .
The second principal assumption is that
the cost of creating new wetland does not
significantly over- or understate the true
damages resulting from wetland loss. That
is, under CERCLA and OPA, the polluter must
provide monetary compensation to the public
for
interim
lost
services.
Clearly,
replacement costs are a poor cousin to
theoretically correct welfare-based measures
of economic damage. For example, the value
of all services provided by an acre of
wetland could be significantly less than the
cost of creating new wetland. In such cases
the polluter may argue that this approach
overstates the true damages.
248
by
It is interesting to note that the
court in Ohio versus the U.S. Department of
Interior
held
that
compensable
damages
should
include
the
cost
of
restoring,
replacing, or acquiring the equivalent of
lost resources as long as the cost of such
actions is not "grossly disproportionate" to
the value of services provided by such
resources (State of Ohio v. U.S. Department
of Interior, 1989). Thus, even in cases in
which the cost of creating new wetland
exceeds the expected value of services lost,
the courts may support such claims.
[Id. at 3 (emphasis added).]
Unsworth and Bishop concluded that there was an environmental
annuities-based approach that could provide an alternative to
traditional economic damage assessments:
Given the high cost of primary research,
uncertainty
inherent
in
available
methodologies, the lack of a sufficient
literature
base
to
support
benefits
transfer, and the need to address damage
estimation quickly and at low cost, we
propose
an
environmental
annuities-based
approach to damage assessment This approach
is based on the assumption that the public
can be compensated for past losses in
environmental services through the provision
of additional services of the same type in
the future.
[Id. at 6 (emphasis added).]
Thereafter the method was formally recognized and named, in
an
article
authored
by
Bruce
Peacock,
Habitat
Equivalency
Analysis: Conceptual Background and Hypothetical Example (1999),
DEX3968.
In the article Mr. Peacock explains:
249
The fundamental concept behind HEA is that
compensation for lost ecological services
can be provided by restoration projects that
provide comparable services. Such projects,
referred to as Compensatory restoration, are
intended to replace the services that the
public forgoes pending the recovery of
injured natural resources to their baseline
conditions.
[Id. at 2.]
Dr. Lipton described the general background of HEA in part
as:
First of all, in terms of the history, the
history of Habitat Equivalency Analysis, or
HEA, I'll start to referring to this as HEA,
dates back into the early 1990s, was
originally
developed
by
NOAA,
National
Oceanic and Atmospheric Administration. It's
been applied many, many sites around the
country and has been incorporated in various
regulations,
has
been
the
subject
or
commented on a number of peer-reviewed
publications, and essentially it's in wide
use and indeed has become the most widelyused method of quantifying restoration-based
damages.
[Trial
22.]
Tr.
3/11/14
(Lipton
Direct)
14:12-
Dr. Desvousges testified that:
Q . . . the fundamental concept behind HEA
is that compensation for lost ecological
services can be provided by restoration
projects that provide comparable services?
And
you
understand
that
as
comparable
services to the services that were lost
initially, correct?
A Yes.
250
[Trial Tr. 6/9/14 (Desvousges Cross) 47:511.]
Two
of
ExxonMobil’s
authored
an
experts,
article
Drs.
discussing
Ginn
the
and
use
Desvousges,
of
HEA,
co-
and
in
particular, stated that it is well suited to address loss of
ecological services, which is the primary concern in this case.
Despite the lack of guidance and peerreviewed literature, HEA has increasingly
become the tool of choice to address
ecological services for both trustees and
PRPs when developing a restoration-based
natural resource damage (NRD) settlement for
oil spills, hazardous-substance releases,
and
other
causes
of
natural
resource
injuries in certain areas.
[Dunford,
Ginn,
DEX0567, p. 3.]
i.
&
Desvousges,
supra,
Reliability and general acceptance of
HEA
All experts with experience in performing HEAs agreed that
HEA is a mathematical formula.
See Trial Tr. 6/4/14 (Desvousges
Direct) 115:6-116:11 (describing the HEA equation).
Dr. Ginn
testified that HEA equation is a “generally accepted formula
used in conjunction with an NRD assessment.”
(Ginn
Cross)
methodology
“regulatory
throughout
3:14-17.
is
“very
Dr.
commonplace”
agencies,
the
Lipton
country.”
trustees,
Trial
Trial Tr. 7/22/14
explained
in
NRDA
and
Tr.
that
and
is
responsible
3/12/14
(Lipton
the
HEA
used
by
parties
Direct)
6:16-25, 58:23-59:22; see also 7:7-11 (confirming that the HEA
251
used in this case is the same but the inputs are different).
Dr. Ginn also confirmed that, since its inception, the “basic
theory and the basic formulation of HEA did not change.”
Tr.
7/9/14
(Ginn
Direct)
42:10-12
(discussing
the
Trial
HEA
methodology).
Over the past ten years, the HEA methodology has matured,
has gained popularity among both natural resource trustees and
responsible parties, and has also been used more frequently in
complex
cases.
Trial
Tr.
7/9/14
(Ginn
Direct)
41:2-42:20.
Further, Roach and Wade wrote in their 2006 article that:
The past decade has witnessed a significant
shift in the objectives and procedures of
natural resource damage assessment (NRDA).
This transformation has refocused NRDA away
from monetary damage estimates obtained
using
traditional
welfare
economics
(Burlington, 2002). Instead, the current
NRDA
framework
emphasizes
public
compensation
through
in-kind
ecological
restoration projects. The motives for the
evolution of NRDA are both legal and
practical (Flores and Thacher, 2002).
[Brian
Roach
&
William
Wade,
“Policy
Evaluation Of Natural Resource Injuries
Using
Habitat
Equivalency
Analysis,”
Ecological Econ. 421 (2006), PEX 1728, p. 3]
The authors also explain that the HEA methodology:
is
most
straightforward
when
the
compensatory projects provide services of
the same type and quality as the injured
resource. This allows a one-to one scaling
between the injury and the compensation
using the same metric (NOAA, 2000). For
example, the creation of 1000 acre-years of
252
wetland services measured as a discounted
present value, compensates for an interim
service loss of 1000 acre-years of wetland
services so long as the created and injured
wetland lands are of similar type and
quality. If identical compensatory projects
are not available, then scaling ratios need
to be determined. For example, created
wetlands are often of lower quality than
natural wetlands.
HEA requires scaling ratios when the
projects provide the same type of service,
but of different quality. HEA also requires
scaling ratios when out of kind projects are
chosen for compensatory restoration (i.e.,
the
compensatory
projects
provide
a
different type of ecological service than
the injured resource). HEA is appropriate
for assessing damages to ecological services
and is the preferred methodology when "the
on-site
uses
are
primarily
ecological/biological and the off-site human
uses are difficult to quantify" (Julius et
al., 1995, p. 3).
[Id. at 3 (emphasis added).]
This sentiment is reiterated in the Dunford article, discussed
supra, which confirms that an explicit monetary valuation of
services is not required in HEA:
[A] technique like HEA that requires no
explicit monetary values is helpful in
achieving an NRDA settlement, because it
avoids the acrimony that often accompanies
estimates of monetary values for ecological
services.
[Dunford,
Ginn,
DEX0567, p. 20]
&
Desvousges,
supra,
Dr. Desvousges also acknowledged the shift towards restoration
in
a
handbook
he
coauthored
253
with
Venetia
Skahen
titled
Techniques to Measure Damages to Natural Resources: Final Report
(1987)
(prepared
questioned
confirmed
for
about
the
CERCLA
portions
Task
of
article’s
PEX1744.166
Force),
this
article,
conclusion
that
Dr.
When
Desvousges
restoration
cost
approaches are distinct from traditional economic approaches:
Q Okay. And would you agree that you
describe how, in this article or this
handbook, how the measurement of restoration
costs
are
different
from
economic,
traditional economic valuation? Isn't that
correct? Isn't that one of the things you
do? That's a yes or no.
A Are they different than traditional? Is
that your question? I'm sorry. I lost your
question.
Q Yeah. You describe the measurement of
restoration cost as being different
economic valuation?
from
A Yes. I agree, yes, I do.
[Trial
Tr.
6/09/14
100:17—101:3.]
Dr.
that
Desvousges
the
also
acknowledged
restoration
cost
acceptance in the courts.”
(Desvousges
that
approach
the
has
Cross)
handbook
gained
concludes
“widespread
Id. at 103:21—104:10.
Drs. Ginn and Desvousges’ HEA, like the State’s, was also
based upon the premise that the ecological values of particular
habitat types were constant over the approximately thirty-year
time frame considered:
166
Document discussed during cross examination of Dr. Desvousges on 6/9/14 but
not admitted.
254
Q You didn't perform an independent analysis
regarding whether the value of services
flowing
from
your
habitat
categories
remained constant from 1977 till 2008, did
you?
A No, I did not.
. . . .
Q . . . You did not perform an assessment
regarding whether the value of services
flowing
from
your
habitat
categories
remained constant from 1977 till 2008, did
you?
A I did not.
Q Your HEA assumed that the value remained
constant over the time frame of 1977 till
2008, correct?
A That is
correct.
[Trial Tr.
44:12.]
The
Unsworth
and
an
assumption
7/23/14
of
(Ginn
Bishop
article,
HEA.
That's
Cross)
43:22-
supra,
made
the
same
constant value assumption as well, engaging in no monetary value
analysis. DEX0488, p. 5 (describing hypothetical analysis from
1968 to 1998 and using a 3% discount rate).
The absence of an
explicit valuation step in HEA, as opposed to a constant value
assumption, is further demonstrated when compared to the Value
Equivalency
Analysis
(“VEA”),
traditional
economics
approach
which
and
valuation:
255
is
does
more
require
akin
an
to
a
explicit
HEA is used to scale damages (debits) and
the
benefits
of
remediation
(credits)
through units of habitat. For example, the
impacts of a given incident are calculated
in terms of discounted-hectare years that
describe the aerial extent of harm over
time.
Remediation
credits
also
are
calculated in terms of discounted-hectareyears that describe the ecological services
that
will
accrue
during
and
following
remediation. Recent advances in HEA methods
enable treatment of partial service losses,
impacts
from
multiple
stressors,
and
inclusion
of
scalars
that
reflect
differential productivity or scarcity of
different habitat types.
. . . .
[Describing VEA] Value equivalency analysis
(VEA) is implemented in situations where
remediation of similar habitats or resources
is either infeasible or undesirable. VEA is
used
to
scale
impacts
with
complementary/compensatory
remediation
actions based on stated preference measures
of individuals’ values.
[Stratus
Consulting,
Review
Report
on
Resource
Equivalence
Methods
and
Applications (July 12, 2007), DEX0607, p.
6.]
Dr.
Desvousges
confirmed
that
HEA
and
VEA
are
different
methodologically, with VEA requiring a stated preference survey
to determine economic values.
Cross) 93:17—94:3.
described
the
Trial Tr. 6/09/14 (Desvousges
Consistent with this sentiment, Dr. Lipton
approach
to
value
ecological sense:
256
in
HEA
as
being
in
the
Q And there's a bullet point [on Lipton
Demonstrative 18] there that says very high
ecological value slash productivity, right?
A Yes.
Q Okay. What measure of value are you using
to make that statement?
A I'm not using any measure of value. This
is a -- just a typical description from
ecological literature, generally accepted
that
intertidal
salt
marsh
is
highly
productive and consequently is of value to
the ecosystem.
Q Okay. But how do we measure that value?
A I don't know exactly how you would measure
that value. There are lots of different
kinds of descriptors about how one might
measure productivity, whether it is in terms
of diversity or biomass or yield or the
value of the habitat for recruitment of
young of year. Actually, this is a good
illustration of why the explicit service-byservice model tends to fail. There's no one
specific measure of value.
Q
In
making
the
statement
that
the
intertidal
salt
marsh
has
very
high
ecological value, did you do any analysis of
diversity at Bayonne or Bayway?
A No, this isn't specific to Bayonne or
Bayway
conditions.
This
is
a
general
statement about the ecological value of
intertidal salt marsh.
[Trial Tr. 3/31/14 (Lipton Cross) 176:1-25.]
257
In
the
context
of
the
Essex167
trial,
Dr.
Desvousges
acknowledged that no express monetary valuation is required in
HEA where you have a similar quality resource:
Q Did you give testimony in the Essex trial
about HEA?
A Yes.
. . . .
Q In discussing -- in that case, you were
asked some questions about the work you did
in this case, correct?
A Yes, I was.
Q All right. And your testimony in the Essex
trial was in 2010, about two years after you
had written your reports in this case?
A I believe that's correct, yes.
Q Okay. And one of the -- and you had some
comments about habitat equivalency analysis
in that case?
A Yes.
. . . .
Q You said there was no public access to the
Bayonne
and
Bayway
site,
which
you've
testified to on direct?
A Yes.
Q And then the question asked by the State
was, so there was no service? And your
answer was, no, no use service, correct.
Question: But yet you still calculated a
non-use value? That's a yes or no. Answer: I
don't know, frankly, as to whether it's a
use value or a non-use value. The whole
167
N.J. Dep’t of Envtl. Prot. v. Essex Chem. Corp., No. MID-L-5685-07 (N.J.
Super. Ct. Law Div. July 23, 2010).
258
point
behind
using
habitat
equivalency
analysis is that – is that you leave the
values undirect -- you don't measure them
directly because you take two things that
have the same value and so the values cancel
out but it only cancels out if you've got
the services, the same services that you've
quantified for both the injured resource and
the compensatory resource. Do you see that?
A Yes, I do.
. . . .
Q But you agree you say you don't, you don't
have
to
measure
these
values
directly
because you take two things that have the
same value and so the value cancels out;
isn't that correct?
A Yes. I do say that.
Q All right. And it only cancels out if
you've got the services, the same services
that you've quantified for both the injured
resource and the compensatory resource,
correct?
A Yes.
Q That's still your testimony, correct?
A Yes.
[Trial Tr. 6/9/14 (Desvousges Cross) 117:16121:19.]
“Natural
resource
agencies
have
clearly
adopted
resource restoration as a new paradigm in NRDA.”
compensatory
Roach & Wade,
supra, PEX1728, p. 3; Trial Tr. 6/9/14 (Desvousges Cross) 60:2461-3.168
168
The move towards restoration cost alternatives was made
Additionally Roach and Wade explain that:
259
in light of the difficulties in obtaining valid monetary damage
estimates for natural resources.
pp.
4-5
damages
(“The
and
disjunction
compensation
Roach & Wade, supra, PEX1728,
between
via
monetary
resource
measurement
enhancement
of
projects,
along with the difficulties of obtaining valid monetary damage
estimates,
scaling
has
led
methods
measuring
resource
based
damages
in
on
trustees
to
ecological
monetary
prefer
services.
terms,
compensatory
Instead
of
‘service-to-service’
approaches such as HEA recognize that, as an approximation, the
values humans place on natural resources are proportional to the
ecological
habitats
services
provide
these
natural
resources
services
provide.
including
Ecological
water
maintenance, wildlife habitat, and flood control.”)
quality
Similarly,
as described in Matthew Zafonte & Steve Hampton169, Exploring
Welfare Implications of Resource Equivalency Analysis in Natural
The value-to-value approach described previously is
the only method that guarantees the appropriate level
of compensation from a welfare economics perspective.
However, this approach is not used by resource
agencies because of the difficulty in estimating the
economic value of both the resource injury and the
compensatory
restoration
projects.
Conducting
original economic research for each NRDA case is
cost-prohibitive and the database of values that
could be used in a benefits transfer is quite
limited.
Another issue relevant to ecological
economics is that the value-to-value approach is
anthropocentric – ensuring the maintenance of human
welfare but not necessarily ensuring the ecological
integrity of the environment.
[Roach &
added).]
169
Wade,
supra,
PEX1728,
Both authors are traditional economists.
260
p.
1
(emphasis
Resource Damage Assessments, 61 Ecological Econ. 134 (2006), the
authors conclude that “[i]ndeed, nearly every pollution damages
case in the past five years has employed REA as the primary
method to quantify damages to wildlife and habitat.”
Id. at 2.
Additionally, Zafonte and Hampton wrote that:
NOAA recommended that the calculation of
compensation for biological injuries be
based upon restoration projects, where the
sizes of those projects are "scaled" using
habitat equivalency analysis (HEA) and the
cost of the projects becomes the measure of
damages. At the same time, natural resource
agencies were suffering negative experiences
using more traditional valuation methods,
especially contingent valuation (Thompson,
2002). Since that time, HEA has evolved into
the
more
generic
resource
equivalency
analysis (REA) and has become the primary
method
for
calculating
damages
from
pollution events nationwide.
[Id.
at
1
omitted).]
(emphasis
added)
(footnote
This shift towards restoration cost-based methodologies was
also detailed in connection with the Department of Interior’s
(DOI) 2008 re-promulgation of certain of its NRD regulations and
inclusion
of
HEA
as
compensatory damages.
an
approved
methodology
for
calculating
DOI stated in part that:
A natural resource damage assessment is an
evaluation of the need for, and the means of
securing, restoration of public natural
resources following the release of hazardous
substances or oil into the environment.
261
[Natural Resource Damages for Hazardous
Substance, 73 Fed. Reg. 57259-01, PEX1716,
p. 2.]
In the 2008 re-promulgation, HEA was included as a methodology
to value the loss of resources and their services.
The federal
regulations promulgated by NOAA and DOI explicitly include the
HEA
methodology.
Federal
See,
Regulations
11.83(c)(2)(ix),
based
valuation
HEA,
are
Valuation
(DOI)
issued
Methodologies
in
2008,
from
43
DOI
C.F.R.
PEX1716, p. 2 (including HEA as a restoration
methodology);
C.F.R. 990 (same).
like
e.g.,
see
also
NOAA’s
OPA
Regs.,
15
DOI noted that restoration-based methods,
different
than
economic
valuation
methods.
Natural Resource Damages for Hazardous Substance, 73 Fed. Reg.
57259-01
PEX1716,
p.
4
(“Methodologies
that
compare
losses
arising from resource injury to gains expected from restoration
actions
are
frequently
simpler
and
more
transparent
than
methodologies used to measure the economic value of losses.”).
DOI
went
on
to
confirm
the
importance
of
restoration-based
natural resource damage valuations:
A. Further Emphasizing Restoration Over
Economic Damages
.
.
.
The
NRDAR
advisory
committee
recommended
that
DOI
should
amend
its
current regulation to explicitly authorize
trustees to use the cost of restoration
actions that address service losses to
calculate all damages, including interim
losses.
Providing
the
option
for
a
“restoration-based” approach to all damages
better
comports
with
CERCLA's
overall
262
restoration objectives. It also promotes an
earlier
focus
on
feasible
restoration
options, which can encourage settlements by
providing
opportunities
for
designing
creative
and
cost-effective
actions
to
address losses. We are revising 43 CFR
11.83(c) to provide trustees with the option
of estimating compensable values for losses
pending restoration
utilizing the cost of
implementing projects that restore those
lost
natural
resource
services.
Methodologies that compare losses arising
from resource injury to gains expected from
restoration actions are frequently simpler
and more transparent than methodologies used
to measure the economic value of losses. Our
revisions include four examples of projectbased
assessment
methodologies—conjoint
analysis,
habitat
equivalency
analysis,
resource equivalency analysis, and random
utility
models—which
have
been
used
successfully to resolve claims under both
the CERCLA and the OPA regulations.
[Id. at 4.]
ii.
ExxonMobil
Dr. Hausman’s Rule 104 testimony170
regarding the Habitat Equivalency
formula does not contradict the
evidence in this case and is
irrelevant.
proffered
Dr.
Hausman
expert
regarding
Rule 104 issues associated with the HEA methodology.
However,
170
as
an
In the months before Trial, ExxonMobil filed a certification of Dr. Jerry
Hausman.
See 11/11/13 Hausman Certification, DEX2500.
The State moved to
strike the Certification and following briefing and oral argument, the Court
ruled that Dr. Hausman would only be allowed to testify for Rule 104 purposes
and outlined limitations thereon.
5/20/14 Letter Opinion, pp. 2-3.
Specifically, the Court held that Dr. Hausman could not testify regarding:
the merits of whether Dr. Lipton’s methodology is good or bad or the best
methodology; Dr. Lipton's application of the methodology or offer opinions
regarding Dr. Lipton's application and alleged mistakes and assumptions.
Ibid.
263
Dr. Hausman, an economist with a traditional welfare economics
background, actually has no expertise in HEA.171
performed a HEA.
He has never
Trial Tr. 8/11/14 (Voir Dire during Hausman
Direct) 142:17-19.
He has never been qualified as a HEA expert
or invited to speak on the subject or teach it.
11,
145:16-25,
146:3-5.
Dr.
Hausman’s
only
Id. at 145:9published
work
mentioning HEA involves a single sentence in a 2012 contingent
valuation article in which he referred to HEA as an alternative
method of valuation.172
Hausman
Direct)
14:19-22.
Trial Tr. 8/11/14 (Voir Dire during
146:13-20;
Trial
Tr.
8/12/14
(Hausman
Cross)
Moreover, although Dr. Hausman was initially hired in
this case by ExxonMobil in 2009173, he has almost no experience
with
HEA.
Trial
Trial
Tr.
8/11/14
Tr.
8/11/14
(Voir
Dire
(Hausman
during
Direct)
Hausman
173:13-174:8;
Direct)
154:4; Trial Tr. 8/12/14 (Hausman Cross) 14:23-15:8.
153:12Despite
171
When presented with the realities regarding the widespread reliance upon
HEA among NRDA practitioners, both trustees and responsible parties, Dr.
Hausman responds that: “What a subset of people might do whose profession
depends on the use of this I could care about less.”
Trial Tr. 8/12/14
(Hausman Cross) 43:7-18.
172
Indeed, as an economist Dr. Hausman takes the position that there is no
generally accepted method by which to determine the value of non-use
services. Trial Tr. 8/11/14 (Hausman Direct) 171:6-172:23. In this vein, he
has described the determination of natural resource values as the “impossible
task of valuing something for which no market transactions exist.” Statement
before Congress of Jerry Hausman, Mcdonald Professor of Economics,
Massachusetts Institute of Technology (1995) DEX1693, 3.
173
See Trial Tr. 8/12/14 (Hausman Cross) 12:3-11 (explaining “I did a little
bit of work in 2009, and then I never heard back from the lawyers so I had
stopped working. I didn't do any billing, and then in 2013 they contacted me
again and asked, you know, if I would work on the case.”).
264
his lack of experience and any expertise with either HEA or NRDA
contexts, like ExxonMobil’s Drs. Ginn and Rodgers, Dr. Hausman
acknowledges that HEA is a reliable methodology.
Trial Tr.
8/11/14 (Voir Dire during Hausman Direct) 146:21-23; Trial Tr.
8/12/14 (Hausman Cross) 17:17-18:17.
Dr.
Hausman
took
the
position
that
the
HEA
methodology
should include an explicit monetary valuation of resources and
their services to humans.
such
test
accompanies
But Dr. Hausman acknowledged that no
the
formula.
See
Trial
Tr.
8/12/14
(Hausman Cross) 66:13-67:19 (walking through the steps of the
HEA analysis which does not include a step where a monetary
valuation is performed).
iii.
Discount rate
The HEA formula also requires use of a discount rate.
HEA
incorporates the discount rate into the integration of damages
over time so that damages that occur in different years are
weighted
differently.
Using
a
discount
rate,
damages
that
occurred in the past are compounded, and damages that occur in
the future are discounted.
time
is
included
Discounting the value of a good over
standard
practice
in
in
standard
HEA
the
economics,
model.
and
See
discounting
Nat’l
Oceanic
is
&
Atmospheric Admin., Habitat Equivalency Analysis: An Overview 7
265
(rev. 2000) (hereinafter NOAA 2000).
In its guidance on the use
of a discount rate, NOAA concludes that:
In sum, a 3 percent social rate of time
preference has been justified by economists
on
the
basis
of
several
arguments.
Regardless of whether the discount rate is
the social rate of time preference (measured
by either the after-tax real rate of
interest or the government borrowing rate)
or the rate of productivity, historical
evidence shows that 3 percent is within the
range of normal variation. Based on these
facts, and the discount rate policies and
practices
of
other
government
agencies
summarized in Appendix C, NOAA suggests the
use of a 3 percent real discount rate for
discounting
interim
service
losses
and
restoration gains, unless a different proxy
for the social rate of time preference is
more appropriate.
. . . .
Because
of
the
difficulty
in
determining the rate of time preference for
goods (such as natural resources) that are
not generally sold in a market, a real rate
of three percent (3%) is recommended as a
riskless
rate,
unless
justification
is
presented for a rate more appropriate for
the specific context.
. . . .
Existing economic literature suggests that
three percent (3%) is a reasonable choice
for the social rate of time preference,
given that it is the middle of the range of
values for the subjective rate of time
preference implied by long-run growth models
of the U.S. economy. Further, 3% is at the
lower end of the range of the financial
opportunity costs of consumption, which are
relatively low for individuals who are net
266
savers, and much higher for individuals who
are net borrowers.174
[NOAA, “Discounting and the Treatment of
Uncertainty
in
Natural
Resource
Damage
Assessment: Technical Paper 99-1” (Feb. 19,
1999)(hereinafter NOAA 1999) PEX0860, pp.
14, 33.]175
Dr. Lipton explained his considered decision to use a discount
rate of 3% in this case.
Q Just for the record, you used a discount
rate of three percent. I think your earlier
testimony was that was standard for NRDAs
with respect to calculating debits. Is it -with respect to credits, is three percent a
typical or standard number?
A It's typical and standard, particularly in
the U.S. And it would be necessary to use
the same discount rate, I guess, you know,
desirable to use a similar discount rate on
both sides to have things expressed in a
present value basis. I suppose you could
have fluctuating discount rates, but the
practice is to use the same.
174
DOI also recommends the use of a 3% discount rate:
The Department of the Interior's recommendation on
discounting is presented in an issue paper titled
"The appropriate Discount Rate for Social Policy
Analysis:
Discussion
and
Estimation"
by
Bruce
Peacock. (USDOI 1995) Interior recommends a 3 percent
annual rate as the appropriate discount rate for
social policy analysis. This rate is based on both
opportunity
cost
and
intertemporal
equity
considerations.
[Id. at p. 43.]
See also Peacock, supra, at p. 6 (employing 3% discount rate in example).
175
The NOAA paper demonstrates the variability of treasury bills over a period
of time, one of the things 3% is designed to accomplish is to establish
something within the range of normal variation as noted by NOAA. See
Discounting and the Treatment of Uncertainty in Natural Resource Damage
assessment (Feb. 19, 1999), PEX0860, p. 39.
267
[Trial
50:3.]
Tr.
3/11/14
(Lipton
Direct)
49:17-
Dr. Ginn confirmed that a 3% discount historical as well as
future discount rate is the “value most commonly used” in HEA
and that he cannot recall ever using a discount rate in a HEA
other than 3%.
Q . . . [Y]ou used a 3 percent discount rate
in your HEA, correct?
A Yes, I did.
Q You stated in your report that historical
and future discount rate of 3 percent is the
value most commonly used in HEAs, correct?
A That's correct.
Q You've never done a HEA using anything
other than 3 percent as the discount rate,
correct?
A I don't believe I have.
[Trial Tr. 7/23/14 (Ginn Cross) 43:11-21.]
Dr. Desvousges also confirmed the use of 3% in his HEA and that
most of the “scores” of HEAs he has seen have used 3% as well.
Q Thank you. Now, you used in your report,
in your HEA that covered the period from
1977 to the date of your report, you used a
three percent discount rate in your HEA
calculation, correct?
A That's correct.
Q And you agree that NOAA has endorsed the
use of three percent as a discount rate,
correct?
268
A Within the circumstances in which they've
used it, yes.
. . . .
Q How many HEAs can you point to -- how many
HEAs have you seen in your life, in your
professional life?
A I don't know.
Q Scores?
A Scores, that's fair.
. . . .
Q And would you agree that the vast majority
of those use three percent?
A Most of them have, yes, that I recall.
[Trial Tr. 6/10/14 (Desvousges Cross) 25:526:8.]
Use
of
a
3%
discount
rate
is
standard
industry
practice
calculating damages at least as far back as 1980.
1999,
supra;
NOAA
2000,
supra.
However,
in
See NOAA
selection
of
the
appropriate discount rate that would be applied as far back as
the late 1800s is a matter of debate among economists.
consistency
with
standard
practice
and
absent
For
information
suggesting the superiority of an alternative approach under the
circumstances of this case, the State applied a constant 3%
discount rate for all calculations.
Although Dr. Desvousges’
HEA covered a period as far back as 1977 and he critiqued the
State’s use of the standard 3%, Dr. Desvousges did not develop
269
an alternative to the 3% rate that is customarily used in HEAs.
Trial Tr. 6/10/14 (Desvouges Cross) 26:14-18.176
b. Inputs to the HEA.
Dr.
Lipton
described
calculation.
(referring
Trial
to
Tr.
Lipton
the
steps
3/11/14
Demonstrative
associated
(Lipton
Slide
with
Direct)
24).
the
HEA
33:12-13
Dr.
Lipton
further explained the interplay between primary and compensatory
restoration in a HEA:
The foundation of the method is that
compensation
for
damage
resources
is
provided
through
restoration.
And
that
equivalency
analysis
enables
you
to
calculate
the
amount
of
compensatory
restoration
needed
to
offset
loss,
accounting for both the extent and the
duration of harm. And I guess I go back and
define again this term, interim loss, which
I'll probably use again in the future as
meaning the total damage over time from the
onset of the incident through the completion
of restoration and recovery to pre-spill
conditions,
netting
out
any
benefits
associated with primary restoration.
[Trial
23.]
See
also,
Tr.
Trial
3/11/14
Tr.
(Lipton
3/11/14
Direct)
(Lipton
15:11-
Direct)
16:3-17:22
(explaining the relationships between compensatory and primary
restoration and indicating that one of those relationships is
176
Curiously, although Dr. Desvousges’ HEA in this case commenced in 1977 and
he assumed constant value and employed a fixed 3% discount rate, in his zeal
to discredit the State’s HEA he asserted that he had never seen a HEA that
went further back in time than 1981. Trial Tr. 6/10/14 (Desvousges Redirect)
107:12-14;
Trial
Tr.
6/10/14
(Desvousges
Recross)
127:11-128:3
(acknowledging, when pressed, his use of a constant 3% back to 1977).
270
that
“as
versa”).
primary
goes
The
down,
compensatory
inter-relationship
goes
between
up
and
vice
primary
and
compensatory restoration is also described as follows:
Before the scale of compensatory restoration
can be determined, trustees must select
appropriate primary restoration measures.
This is because the total quantity of lost
services to be replaced by compensatory
restoration depends, in part on how fast and
how
and
how
completely
injured
natural
resources are restored to their baseline
conditions through primary restoration.
[Peacock, supra, DEX3968, p. 3.]
See also Trial Tr. 3/11/14 (Lipton Direct) 31:13-21 (describing
the use in HEA of “the Debit to refer to the loss or injury, and
credit to refer to the benefits gained through restoration with
the objective of balancing debits and credits as though one were
balancing an accounting ledger”).177
Significantly,
natural
because
restoration
work,178
ExxonMobil
the
has
remedial
not
conducted
measures
that
any
were
being undertaken at the Sites did not alter the end dates for
the HEA calculations.
177
Dr. Lipton utilized a simplified HEA example to demonstrate the mechanics
of the calculation and the influence of different inputs. Trial Tr. 3/11/14
(Lipton Direct) 34:14-54:5 (explaining a simplified HEA calculation and the
credit/debit balancing issue; using Plaintiff Lipton Demonstratives 25
through 29).
178
See Trial Tr. 1/14/14 (Walters Direct) 150:8-12 (confirming that ExxonMobil
has not conducted natural resource restoration at the Sites); Trial Tr.
8/29/14 (Messina Recross) 141:23-142:23 (agreeing that none of the Site
Remediation projects at Bayway and Bayonne were submitted to or approved by
ONRR.).
271
Q Of the things you just mentioned in your
answer, did you take any of them into
account in the calculations you made in your
HEA analysis?
A Yes, we considered all of those things in
our HEA.
Q
They're
reflected
in
the
numerical
calculations, that's your testimony?
A Well, they're reflected in that there were
none
of
those
things,
no
remediation
activities that we were aware of as of the
time that we completed our work in 2006 that
would modify or alter our conclusions that
all of these areas had contamination and,
therefore, met the State's injury test.
Q Did you do an analysis of that?
A Well, I don't know what exactly you mean
by analysis, but we reviewed all the RI
documents.
I
recall
speaking
with
Mr.
Walters about the efficacy of remedial
actions.
So,
yes,
we
considered
those
things.
Q And you came to a professional judgment
that none of those remedial actions would
affect your calculations of injury?
A That's correct, because none of those
remediation
actions
represented
a
restoration to pre-spill conditions.
[Trial Tr.
51:10.]
3/18/14
(Lipton
Cross)
50:14-
ExxonMobil’s decision not to perform, and to actively avoid,
restoration activities at Bayonne or Bayway, increases the debit
side of the HEA equation and is offset initially only by credits
associated with the proposed restoration plan.
272
This in turn
increases
the
resulting
make the public whole.
compensatory
restoration
required
to
Such a framework is consistent with the
goals of the Spill Act as confirmed by the Appellate Division in
this case.
that
the
ExxonMobil, supra, 393 N.J. Super. 388 (reasoning
Spill
Act’s
provisions
are
designed
to
incentivize
polluters to take timely action to remedy discharges).
i.
Acreage of injured habitat.
Dr. Lipton described the first input into the HEA as being
the areal extent of the pre-spill habitat types179
that were
adversely affected by pollutant releases:
Q We're on HEA data inputs. How much harm
has occurred? What are you referring to
here?
A In this case, what we did in applying our
Habitat
Equivalency
Analysis
was
we
calculated
the
area
of
the
pre-spill
habitats previously defined in the first
step
that
were
adversely
affected
by
pollutant releases.
[Trial
28:3.]
Dr.
Lipton
Department
also
used
Tr.
3/11/14
explained
acres
of
(Lipton
that
the
habitat
as
Direct)
27:23-
approach
taken
a
and
metric
by
the
that
the
individualized services associated with a habitat type were not
individually valued, but rather presumed to be similar in a
similar acre of habitat:
179
The pre-discharge habitat types are discussed more fully below in part
II(C), supra.
273
We didn't enumerate every individual benefit
that would be associated with the intertidal
marsh other than that intertidal marsh would
provide the kinds of ecological benefits
that
intertidal
marsh
provides
without
trying to enumerate or isolate each of them.
[Trial
20.]
Tr.
3/13/14
(Lipton
Cross)
161:16-
Although ExxonMobil’s experts contended that a discounted
acre year was an inappropriate measure and argued that the HEA
required an express service loss, Dr. Desvousges acknowledged
that under the parameters employed by the State in this case,
that
the
use
of
DAY180
or
DSAY
would
not
have
changed
the
ultimate result in either Dr. Desvousges’ report or the Stratus
report:
Q . . . You have a report. You use DSAY. If
you had just used Discounted Acre Years, you
would have gotten, and assumed a hundred
percent service loss, you would have gotten
the exact same number, correct?
A Within my report, yes.
. . . .
Q And then if we put your report aside and
just look at the Stratus report, you're
going to get the exact same number if you
assume
a
hundred
percent
service
loss
whether you use Discounted Acre Year or
Discounted Service Acre Year, correct?
180
Additionally, the Case Study used by Unsworth and Bishop, which involved
the Great Swamp National Wildlife Refuge, like the State’s HEA here, included
both a 100% service loss assumption as well as the use of a Discounted Acre
Year. Unsworth and Bishop, supra, DEX0488, p. 5.
274
A In terms of the numbers relative to the
way
that
they
define
their
baseline
condition, yes.
[Trial Tr. 6/10/14 (Desvousges Cross) 24:510, 24:12-18.]
Drs. Ginn and Desvousges’ use of “scalars” to categorize and
assign
a
ratio
of
productivity
is
further
support
for
the
concept of a habitat / acre based metric in HEA as opposed to
the
individualized
services
analysis
proposed
by
ExxonMobil.
See Trial Tr. 7/22/14 (Ginn Cross) 103:25-104:6 (describing his
assignment of a numeric value for different types of habitat on
a per-acre basis, with salt marsh being the most valuable, as
being “based on a relative ratio of the kind of productivity and
the relative value of that habitat.”); See Trial Tr. 7/22/14
(Ginn Cross) 108:5-109:9 (conceding that although he assigned
relative values to acres of habitat, the “organic productivity
and the relative services of each of those habitats” used in his
scalar analysis were not itemized or described in his report);
DEX5053
(identifying
scaling
factors
for
8
habitat
types).
Additionally, Dr. Ginn, who did not actually perform or detail
an express loss of services calculation in his HEA, agreed that
placement of approximately two feet of soil (such as that used
in capping a contaminated area) would result in a 100% service
loss.
66:2-9
Trial Tr. 7/22/14 (Ginn Cross) 23:11-21; see also id. at
(confirming
that
there
are
275
situations
where
a
100%
service
loss
occurs).
Dr.
Delaney
took
a
similar,
binary,
approach in his work, concluding that in developed areas there
was 100% loss of services.
Trial Tr. 6/2/14 (Delaney Cross)
198:4-12.181
ii.
Start dates
Another input required for the HEA calculation is the start
date for injury.
Trial Tr. 3/11/14 (Lipton Direct) 28:11-23
(describing the use of best judgment to determine injury start
dates for use in the HEA model).
The Department determined that
there was sufficient information to make a reasoned decision on
start dates for use in the HEA in this case.
Trial Tr. 4/29/14
(Sacco Direct) 80:13-24 (testifying that the determinations on
start dates based upon available documents, data, the expertise
of Mark Walters and Josh Lipton as well as the inferences drawn
therefrom);
Trial
Tr.
3/12/14
(Lipton
Direct)
7:12-8:11
(explaining that to determine the start date, Stratus “reviewed
really primarily the site history documents and the remedial
investigation reports that had been prepared for the Bayway and
Bayonne sites. We went through those site history reports, we
reviewed the descriptions of the different units and activities
at the sites, we reviewed the different kinds of activities and
descriptions of materials handled and discharged at the IAOCs.
181
Additional particulars regarding the implementation of the NRDA are
contained in Vol. II part IV (B).
276
We also spoke with Mr. Walters at New Jersey DEP about his
knowledge
and
interpretations
related
to
those
site
history
reports. And then based on that review, we made a judgment as to
what we thought the beginning point of the onset of discharges
would have been”).
This is consistent with the testimony of ExxonMobil’s site
remediation
Direct)
project
44:4-15
managers.
Trial
(acknowledging
that
Tr.
2/10/14
additional
(Archibald
samples
and
borings can always be placed but that such additional work would
not likely change the picture of the environmental conditions at
Bayway); Harley Depo. Designations (Joint Exh. 1) 96:23-97:1,
98:24-99:4, 195:25-196:9 (explaining that sampling was performed
“all over the property” and that ExxonMobil was “willing to
connect the dots and assume that between two contaminated wells
there was contamination as well”).
The start dates are based upon IAOC and AOC delineations
and are reflected in tables contained in the Stratus Report.
See PEX 1582, 1584, 1587, 1589, 1591, 1579.
As described above,
the start dates for injury at Bayonne and Bayway were largely
based
upon
associated
commencement
therewith.
In
of
operations
that
regard,
and
the
the
start
discharges
dates
are
generally similar, with some being more conservative than those
assigned by Dr. Delaney as the commencement of operations.
Pl.’s
Delaney
Demonstrative
1
277
(Bayway)
and
Pl.’s
See
Delaney
Demonstrative 2 (Bayonne) (identifying, side by side, both the
commencement of operations / start dates assigned by Dr. Delaney
and Stratus); see also 6/3/14 Order (re: Pl.’s Mtn to Treat
Statements as Admissions).
Dr.
Lipton
described
the
results
that
these
parameters
rendered in the HEA calculation.182 On the debit side of the
equation, the results totaled 679,887 in habitat loss, reflected
in DAYs for both Bayway and Bayonne.
of
Natural
PEX1594.
Resource
Loss
for
Stratus Table B.3: Summary
Bayway
and
Bayonne
Refineries,
The HEA results on the credit side of the equation
calculated the environmental benefits of off-site replacement
projects.
of
Stratus Table B.4 Calculated Environmental Benefits
Off-site
Replacement
Projects,
PEX1595;
see
also
Stratus
Table B.5: Acres of Off-Site Habitat Restoration Required as
Replacement,
based
upon
PEX1596.
habitat
Stratus’
types,
are
HEA
spreadsheets,
reflected
in
which
DEX4409A
are
through
DEX4431A.183
iii.
Compensatory restoration costs.
182
Dr. Ginn confirmed that he was able to recreate Stratus’ HEA calculation
and confirmed that the math was correct.
Trial Tr. 7/22/14 (Ginn Cross)
57:22-58:17.
183
These spreadsheets were also submitted in native format. Compact Disc of
Native Stratus HEA Spreadsheets, PEX1645; see also
PEX1302 (Containing a
“read me” file with explanations and a directory of the structure associated
with the native spreadsheets).
Dr. Lipton also prepared a simplified HEA
spreadsheet that combines all of the individualized spreadsheets. See Pl.’s
Lipton Demonstrative 88 (CD with simplified HEA spreadsheets).
278
For the areas on the Site where primary restoration cannot
be performed or loss of use damages are concerned, replacement
acreage needed to make the public whole is calculated using the
HEA methodology.
174:14.
See Trial Tr. 3/10/14 (Lipton Direct) 173:22-
A per acre restoration cost is then applied to the
needed habitat acres, resulting in a compensatory restoration
figure.
Tr.
See Trial Tr. 3/11/14 (Lipton Direct) 50:15-54:5; Trial
3/12/14
ExxonMobil
(Lipton
that
the
Direct)
174:5-14.184
actual
projects
to
Any
be
criticism
performed
by
with
compensatory restoration funding is belied by its own experts’
approach, which also did not identify specific projects, but
rather types of projects.
47:8-48:4.
The
ultimately
determined
See Trial Tr. 8/5/14 (Rodgers Direct)
calculation
by
of
compensatory
multiplying
the
cost
damages
per
acre
is
of
restoration costs (per habitat type) with the number of acres
that resulted from the HEA calculation.
Offsite
Restoration
Costs,
Exxon
See Stratus Table 4.3:
Bayway
and
Bayonne
Sites,
PEX1278.
iv.
Stratus,
Department,185
with
the
Per acre costs for palustrine and
intertidal habitats.
assistance
of
personnel
from
the
pulled actual costs associated with restoration
184
Dr. Lipton testified that “on a per unit basis,” off-site projects
generally cost less than on-site projects. Trial Tr. 3/11/14 (Lipton Direct)
185:12-16.
185
Trial Tr. 3/13/14 (Lipton Cross) 33:5-24.
279
projects in the northeast region of the United States in order
to determine an appropriate per acre cost for the restoration of
palustrine
and
intertidal
habitats.
See
Trial
Tr.
3/12/14
(Lipton Direct) 20:22-27:8 (describing approach to determining a
per unit cost for restoration projects).
In
order
to
calculate
a
per
acre
restoration
cost
for
intertidal wetland projects, Stratus looked at actual intertidal
wetland construction performed in the Northeast by entities such
as the Army Corps of Engineers, the Department and NOAA.
Tr. 3/12/14 (Lipton Direct) 10:11-27:19.
Trial
In order to develop an
average per acre cost for all acres restored by this suite of
projects, the total acres and the total cost of all of the
projects were first added up separately.
Ibid.
The average
per-acre cost was then calculated by dividing the total cost of
all of the projects by the total acres for all of the projects.
Ibid.
The final cost per acre for restored intertidal wetland
developed using this methodology is $274,000, inclusive of a
1.5% line item for oversight and administration costs of ONRR
were it to implement the project.
Per-acre
Cost
for
Intertidal
See Stratus Table C.4: Final
Habitat
Restoration,
PEX1602.
Based upon the cost per acre for mitigation credit from private
New Jersey wetland mitigation banks and the costs for wetland
creation and enhancement conducted by the New Jersey Land Use
Regulation Program (from 2000 to 2002), Stratus developed a per-
280
acre cost for palustrine meadow/forest habitat restoration of
$161,000,
also
inclusive
administration of ONRR.
of
a
1.5%
cost
for
oversight
and
See Stratus Table C.7: Final Cost for
Palustrine Meadow/Forest Habitat Restoration, PEX1605.
Because
of
limited
information
available
on
upland
forest/meadow restoration projects Dr. Lipton sought out someone
with
expertise
in
forestry,
particularly
assist with estimating restoration costs.
in
New
Jersey,
to
See Trial Tr. 3/12/14
(Lipton Direct) 33:11-18; id. at 34:20-35:14 (describing routine
reliance in NRDA upon contractors who regularly conduct certain
restoration work to assist with cost estimates for purposes of
compensatory
restoration
calculations).
Dr.
Lipton
obtained
estimated restoration costs for projects in upland forest areas
from
Bob
Williams,
who
has
extensive
forestry
experience,
including management of thousands of acres in New Jersey.
Trial
Tr. 4/16/14 (Williams Direct) 7:24-8:20 (confirming his work in
reforestation
Rutgers);
forestry
forest
while
obtaining
his
degree
id.
at
7:20-20:16
(describing
work
in
New
involving
restoration,
(testifying
to
his
Jersey
and
reforestation);
responsibility
for
in
forestry
over
25
management
id.
forest
at
years
from
of
services,
36:21-38:4
stewardship
and
management of over 100,000 acres of forest land throughout the
state).
The upland meadow/forest cost for restoration based
281
upon Mr. Williams’ input totals $90,000 per acre186.
See Stratus
Table C.10: Cost of Upland Habitat Restoration, PEX1598.187
The resulting per acre costs for habitat restoration offsite are:
Habitat
Offsite
Restoration
cost (per acre)
Intertidal
Wetlands
Palustrine Meadow
/ Forest
Upland Forest
$274,000
$161,000
$90,000
Table C.11: Final Per Acre Costs (based upon habitat type) for
Offsite Restoration, PEX1599.
Application of these per acre
costs to the required off-site restoration acres results in a
cumulative total of $6,364,000,000.188
Off-site
Replacement
Costs,
Exxon
See Stratus Table 4.3
Bayway
and
Bayonne
Sites,
PEX1278.
G. Summary of the State’s NRD Claim.
The details of the State’s claims consist of the following
components as detailed more fully above189:
186
This figure also includes a 1.5% ONRR oversight and administration cost.
187
See also Mr. Williams’ cost estimates identifying the actions necessary to
develop an upland forest/meadow restoration project and the high as well as
low end cost estimates for the same. PEX1642 and PEX1643.
188
As of 2006.
189
All of these figures are as of 2006, when the State’s expert reports,
including the NRDA, were prepared.
282
o Primary
Restoration:
The
costs
to
perform
the
on-site
primary restoration projects and Bayway and Bayonne amount
to $2.6 billion.
This figure includes:
o Primary restoration plan, as determined by ONRR with
participation from Stratus, and
o Primary restoration engineering plan and cost estimate
prepared by 3TM and Quad Consulting.
o Compensatory Restoration:
o The compensatory restoration component of damages
is
captured
in
HEA
calculations
performed
Stratus for the Bayway and Bayonne Sites.
by
These
calculations total $6.3 billion.
o NRD Assessment costs are recoverable pursuant to the Spill
Act and as confirmed by the Appellate Division in this
case.
2011
N.J. Dep’t of Envtl. Prot. v. Exxon Mobil Corp.,
WL
2304026
(N.J.
App.
Div.
May
31,
2011).
Appellate Division concluded:
We disagree with defendant's focus on
DEP's
application
for
“litigation
costs,” allegedly arising from the
choice to pursue litigation instead of
administrative
action
against
defendant. The trial judge made clear,
and we agree, that DEP's entitlement to
reimbursement does not turn on whether
DEP ultimately “wins” the litigation,
but rather in successfully proving to
the trier of fact that the experts'
analysis was “appropriate, reasonable”
and able to “stand up to scrutiny.”
283
The
Whether
in
litigation
or
in
administrative
action,
DEP
required
expert analysis of the type of natural
resource damage restoration needed, and
if
defendant
did
not
prepare
a
reasonable analysis on which DEP could
rely, then defendant must be equally
responsible to pay the reasonable costs
of that analysis in either forum.
These
assessment
costs
total
$1.2
million
as
detailed
below.
o This includes work performed by DEP experts, NRDA
and restoration planning.
that
these
expenses
instructions
and
were
were
Mr. Sacco testified
consistent
incurred
with
under
his
his
oversight.
Trial
Tr.
4/29/14
(Sacco
Direct)
168:3-170:6;
Trial
Tr.
4/30/14
(Sacco
Direct)
3:9-8:2.
reasonable
expect.190
He
also
and
confirmed
consistent
Trial
190
Tr.
with
4/29/14
that
they
what
(Sacco
he
were
would
Direct)
In addition to the Appellate Division’s affirmation that the State need not
be successful in its claim to recover assessment costs, given the nature of
environmental assessment work, the fact that certain inquiries or tasks were
performed but not used does not negate their importance to the investigation.
For example, Dr. Ginn confirmed that he was compensated for investigations
and other work that was not ultimately used for any of his conclusions, such
as investigating possible reference sites.
Trial Tr. 7/23/14 (Ginn Cross)
46:6-13.
Additionally, although Dr. Boehm purportedly reviewed all of the
soil and sediment data collected during site remediation, the analysis he was
tasked with excluded any data below two feet. He was paid for reviewing data
he ultimately ignored in his analysis.
Trial Tr. 6/24/14 (Boehm Cross)
167:23-168:18 (confirming that he did not rely on much of the data Dr. Lipton
considered in his injury analysis).
284
170:1-6.
Depositions
and
general
litigation
support were excluded.
o The
invoices
for
the
assessment
work
are
contained in PEX1625, PEX1662, and PEX1663, and
include work performed by the following experts:
Professor Southgate
$ 34,228.19
Dr. Blancher/TEA
$257,887.54
Mr. Horsak/3TM
$135,517.23
Dr. Lipton/Stratus
$416,900.90
Dr. Morrison/DPRA
$336,501.07
Mr. Williams
$
Mr. Ostermiller
$ 16,102.30_
Total
2,400.00
$1,199,537.23
See Sacco Demonstrative 22; see also Trial Tr. 4/30/14 (Sacco
Direct) 41:20-45:2 (providing a summary of the NRD assessment
costs).
These components result in the following NRD claim, in
2006 dollars:
o Primary Restoration-
$2.6 billion
o Compensatory Restoration-
$6.3 billion
o NRD Assessment Costs-
$1.2 million
o Attorneys’ Fees and Cost Recovery:
In addition to the assessment costs discussed
above, the State and Special Counsel seek an award
of attorney fees and costs from ExxonMobil to the
extent allowed by statute and a prior ruling of this
285
Court.
The
attorney
fee
and
cost
reimbursement
issues in this matter implicate three determinations
needed
by
this
Court
that
include
fee
shifting
considerations as well as fees on a contingent basis
and
reimbursement
of
certain
costs
from
any
recovery.
The trial court previously ruled that the State
was entitled to attorney fees.191
Pursuant to R.
4:42-9(d), the State intends to file an application
for fees and costs with the Court following issuance
of a judgment as the terms of such are needed before
issues related to attorney fees and cost awards can
be determined.
Because of the complexity of the issues and
their dependence upon the provisions in this Court’s
post-trial ruling on damages available to the State,
and consistent with R. 4:42-9(d), the State proposes
to
file
an
application
for
fees
and
costs
that
addresses all issues identified below within 20 days
of the issuance of this Court’s written ruling as to
damages,
if
any,
recoverable
by
the
State.
“The
necessary implication of R. 4:42-9(d) is that an
application for the allowance of attorneys' fees in
a case governed by that rule has to be presented
before the entry of the final judgment or, possibly,
at
the
latest,
within
ten
days
thereafter
motion to alter or amend the judgment.”
by
a
Czura v.
Siegel, 296 N.J. Super. 187, 190 (App. Div. 1997).
The three determinations include:
191
Such a ruling is consistent with the statutory goal of making the public
whole by compensating expenses incurred in connection with those efforts.
286
1. Allowable
the
reimbursement
Spill
Act,
of
which
costs
pursuant
expressly
to
authorizes
recovery from a responsible party of costs for
successfully litigating a claim under the Act.
N.J.S.A.
58:10-11u(b)(2)
[Department]
Superior
may
Court
commence
for
states
a
that:
“the
civil
action
in
costs
of
any
the
investigation, cleanup or removal, and for the
reasonable costs of preparing and successfully
litigating an action under this subsection.”
2. In
addition,
previously
the
State
litigated
the
and
ExxonMobil
issue
of
recoverability of attorney fees under the Spill
Act.
The court denied ExxonMobil’s application
to dismiss and held that:
The court finds that the
Appellate Divisions guidance,
as well as the spirit and
purpose of the act, as argued
by NJDEP, should allow for
fees to be given for all
legal costs associated with
remediation and restoration
of the site but not for loss
of or loss of use of natural
resources. As outlined above,
there are two sections to
this case: the remediation
and
restoration
of
the
physical
land,
and
money
damages sought to compensate
the state for loss of, and
loss
of
use
of
natural
resources.
As to the first
section,
dealing
with
restoration,
the
Appellate
Division has clearly stated
that party [sic] can obtain
the costs of legal services
necessary to remediate the
287
environmental insult. This is
because those costs are the
direct result of fulfilling
the purpose of the Spill Act,
the
remediation
and
reclamation of polluted land.
On the other hand, the court
is not convinced either the
statute
itself,
or
the
guidance
from
the
higher
courts
requires
giving
counsel fees for any claims
where
only
money
damages,
above
what
is
needed
to
restore the land, are being
sought. This court is simply
not confronted with adequate
precedent or legal argument
which
effectively
requires
such wide ranging imposition
of counsel fees for damages
sought
outside
the
traditional
scope
of
the
Spill Act.
[1/22/09 Letter Opinion,
10 (Anzaldi, J.)]
p.
3. The Attorney General of the State of New Jersey
retained outside counsel to represent the State
in this litigation.
In the within litigation,
the law firm of Kanner and Whiteley, L.L.C.,
acted
as
Pursuant
Special
Special
to
Counsel
contractual
Counsel
and
to
the
Plaintiff.
agreements
the
State,
between
and
in
compliance with a June 17, 2004, Order entered
by
the
Special
Honorable
Counsel
Jack
are
M.
paid
Sabatino,
J.S.C.,
pursuant
to
the
Contingency Fee Schedule set forth in R. 1:2171.
That Rule requires the attorneys to seek
the approval of the Court for fees related to
288
recoveries in excess of $2 million.
Counsel’s
retention
agreement
Special
provides
for
a
presumptive percentage recovery.
Given the various aspects of these agreements,
rules and prior rulings, unless otherwise directed
by
this
Court,
the
State
intends
to
submit
its
application within 45 days of any written ruling on
damages,
and
in
no
event
later
than
10
days
following the entry of judgment.
o Abatement of Public Nuisance: See part II(H)below.
o Any Other Relief as appropriate
See Sacco Demonstrative 23; see also Trial Tr. 4/30/14 (Sacco
Direct) 45:3-14.
H. The State’s Common Law Claims
ExxonMobil's liability under common law theories of strict
liability and public nuisance is not in dispute here.
The trial
court previously found that ExxonMobil’s “destructive conduct”
resulted
in
“significant
damage
to
the
natural
environment”
constituting abnormally dangerous activity as a matter of law.
ExxonMobil, supra, 2008 WL 4177038.
While there may be disputed issues of fact
concerning the extent of the damage that has
occurred, the facts that relate to the basis
of liability are not disputed. It is
undisputed that during its operation and
ownership of the subject properties, Exxon
discharged hazardous substances. DEP is
entitled to summary judgment on its claim of
public nuisance as to liability. DEP is left
to its proofs as to damages.
289
[Id. at 7.]
Pursuant to its nuisance claim, the State is entitled to
abatement
of
the
public
nuisance
caused
by
contamination of the Sites as set forth herein.
ExxonMobil’s
Implementation
of the primary restoration plan, discussed in part II(F)(2),
would
provide
restoration
such
damages
relief.
The
primary
and
compensatory
supporting
the
State’s
Spill
Act
claim
likewise follow from the State’s strict liability claim.
Strangely, ExxonMobil argues that the State’s nuisance and
strict liability claims are limited to groundwater.
simply
not
the
case.
First,
there
is
no
such
This is
limitation
recognized in Judge Anzaldi’s August 29, 2008, opinion granting
the State’s motion for partial summary judgment as to liability
on its public nuisance claim. See, e.g., N.J. Dep’t of Envtl.
Prot. v. Exxon Mobil Corp., UNN-L-3026-04, 2008 WL 4177038 at *3
(Law
Div.
Aug.
contamination
at
29,
the
2008)
Sites
(Anzaldi,
and
J.)
noting
“at
(discussing
least
some
the
seven
million gallons of oil, ranging in thickness from 7 to 17 feet,
is contained in the soil and groundwater” under Bayonne; the
contamination
for
former
wetlands
area
referred
to
as
the
Pitch/Mudflat Area at Bayway and noting that ExxonMobil raised a
variety of objections to the State’s common law claims and that
ExxonMobil’s
most
prominent
objection
290
is
that
the
State
is
precluded
from
bringing
these
claims
because
the
lands
in
dispute are not subject to the public trust); see also id. at 4
(noting that the pollutants that escaped from Bayway and Bayonne
“have
impacted
the
wildlife
and
contaminated
wetlands
and
marshes”).
Additionally, the Pretrial Order governing this trial does
not
support
ExxonMobil’s
argument.
The
Pretrial
Order
acknowledges the prior finding of liability regarding the Spill
Act, as well as public nuisance and the doctrine of abnormally
dangerous
activity,
and
includes
State’s
remedy
of
abatement
nuisance
claim
in
the
in
discussion
issues
of
connection
of
the
damages
with
and
its
factual
Order (12/19/13), p. 2.
public
and
contentions and damage claims for purposes of trial.
the
legal
Pretrial
There is no mention of a limitation on
these claims to groundwater issues, nor is there any mention of
exclusion
or
abandonment
of
the
State’s
common
law
claims
specifically, or of groundwater claims generally, as ExxonMobil
contends.
ExxonMobil’s
groundwater
argument
misses
the
mark.
The
State’s damage claim does not value groundwater independently of
the habitats and the State is not seeking compensation for the
injured
formula,
groundwater
but
the
pursuant
injured
to
the
groundwater
291
groundwater
was
valuation
considered
in
the
State’s NRDA and resulting claim for damages.
As Mr. Sacco
explained:
Q What role, if any, did groundwater
contamination, existence of free product
plumes play in your habitat-based approach?
A Well, it was part of the contamination
that's present at both the sites. But in
terms of the primary restoration, you know,
we -- the goal is to clean that footprint
out and then segregate it from adjacent
sources of contamination. We, in terms of
the HEA where that groundwater will be left
in place, we did not evaluate it for this
case.
[Trial
21.]
Tr.
4/29/14
(Sacco
Direct)
114:12-
See also Trial Tr. 4/29/14 (Sacco Direct) 78:23-79:1 (stating
that the State did not monetize damages specific to groundwater
in this case).
ExxonMobil’s
State’s
counsel
examination.
introduce
At
argument
in
that
documents
Environmental
a
and
misconstrues
colloquy
time,
from
Economic
statements
during
Mr.
ExxonMobil’s
the
New
Development
v.
Sacco’s
counsel
Jersey
from
the
cross
sought
Society
Campbell,
Dkt.
to
for
No.
MER-L-343-04 (Sabatino, J.S.C.) (“SEED”) litigation, to which
the State objected.
The State’s objection was based on the fact
that the SEED litigation related to the groundwater valuation
formula that the State had published for purposes of encouraging
settlements of groundwater claims.
292
The State did not use the
groundwater valuation formula to value groundwater damages in
this case, and as such argued it was not relevant.
Tr.
5/1/14
(Sacco
ExxonMobil’s
attempt
Cross)
to
147:6-153:6,
translate
this
See Trial
156:25-157:9.
exchange
into
the
suggestion that groundwater contamination is not at issue in
this
case
Further,
as
part
as
groundwater
of
the
discussed
was
part
State’s
above,
of
this
the
case
analysis
State
but
is
misguided.
reiterated
it
was
not
that
valued
independently for part of the State’s damage claim.
III.
ExxonMobil’s Proofs and Defenses
A. Enumerated Defenses and Repackaged World War II Defense.
The Spill Act limits defenses available to a responsible
party such as ExxonMobil against claims of liability to “an act
or
omission
caused
combination
these
solely
thereof.”
defenses
is
by
war,
N.J.S.A
applicable
sabotage,
or
God,
58:10-23.11g(d)(1).
here.
However,
or
None
throughout
a
of
the
trial, ExxonMobil sought to admit evidence that it contended
supports
a
defense
of
"war"
under
the
Spill
Act,
arguing
essentially that any acts or omissions occurring during wartime
can be considered exculpatory under the Act’s enumerated defense
of war.192
Act
192
and
ExxonMobil's approach stretches the language of the
the
purpose
of
the
war
defense
beyond
any
rational
ExxonMobil has articulated no limits that would apply to such a defense.
293
interpretation.
It is also an argument that failed ExxonMobil
in this case when ExxonMobil tried to remove the case to federal
courts.
ExxonMobil
has
provided
no
evidence
that
its
acts
or
omissions resulting in discharges of hazardous substances were
taken at the direction of the Petroleum Administration for War
or otherwise sanctioned by the United States as part of the war
effort.
Such evidence would be required before a defendant was
allowed to invoke this defense, one of three limited exceptions
to the strict, joint and several liability scheme set forth in
the Spill Act.
Under the Spill Act, “[o]nly discharges caused by acts of
war or acts of God [do] not occasion strict liability, and even
under
those
circumstances,
the
person
responsible
for
the
substance discharge [is] obligated to mitigate damages to the
extent practicable.”
N.J. Dep't of Envtl. Prot. v. Ventron
Corp., 94 N.J. 473, 496 (1983).
The Spill Act is the State’s
analog to CERCLA, and although its terms are in many instances
distinct, “the law under the act has developed along parallel
lines to that of CERCLA.”
Stearns & Foster Bedding Co. v.
Franklin Holding Corp., 947 F. Supp. 790, 810-11 (D.N.J. 1996)
(citing SC Holdings, Inc. v. A.A.A. Realty Co., 935 F. Supp.
1354, 1365 (D.N.J. 1996); Fishbein Family P’ship v. PPG Indus.,
294
871 F. Supp. 764, 772 (D.N.J. 1994); N.J DEPE v. Gloucester
Envtl. Mgmt. Servs., 821 F. Supp. 999, 1009 (D.N.J. 1993)).
The Ninth Circuit narrowly construed the CERCLA “act of
war” defense and did not interpret it to include acts taken
pursuant to government direction during wartime.
v.
Shell
Oil
Co.,
294
F.3d
1045,
1061-62
(9th
United States
Cir.
2002)193
(citing Ribas y Hijo v. United States, 194 U.S. 315, 322, 24
S.Ct. 727, 48 L.Ed. 994 (1904)) (finding that the seizure of an
enemy vessel was an “act of war” because “[t]here is no element
of contract”); United States v. Winchester & Potomac R.R. Co.,
163 U.S. 244, 256–57, 31 Ct.Cl. 450, 16 S.Ct. 993, 41 L.Ed. 145
(1896) (finding that a seizure of Confederate railroad materials
was an “act of war” because it “had no element of contract, but
was wholly military in character”)).
Furthermore, in that case
the Court held that even if it had accepted the defendant’s
position that the involvement of the United States in wartime
production of avgas was an “act of war,” the oil companies could
not show that the actions taken to dispose of the waste were
cause “solely” by an act of war.
Ibid.
ExxonMobil has simply
provided no basis to interpret the exceptions to the Act in the
193
The facts of Shell are similar to the circumstances of this case in that
the oil companies in Shell had other disposal options for their waste and
they were not compelled by the government to dump waste in any particular
manner.
See id.
295
manner
it
has
suggested.
In
addition,
it
has
not
provided
factual evidence to support even its interpretation.
In the context of removal and subsequent remand of this
matter
in
2005,
ExxonMobil’s
Judge
Cavanaugh
allegation
that
had
occasion
certain
of
to
its
examine
production
activities during World War II were under control of the federal
government.
381
See N.J. Dep’t of Envtl. Prot. v. Exxon Mobil Corp.
F.Supp.2d
398
(D.N.J.
2005).
In
his
opinion
ordering
remand, Judge Cavanaugh found that ExxonMobil did not have a
basis, either legally or factually, to claim that the federal
government
exercised
control
over
discharge of hazardous waste.
ExxonMobil’s
disposal
and
The Court had before it a large
amount of historical information (see Pl.’s Mtn. in Limine to
Exclude
Testimony
of
Professor
Klein).
Ultimately
Judge
Cavanaugh rejected ExxonMobil’s assertions: “Defendant has not
offered
any
government
evidence
exercised
substances.”
supporting
control
ExxonMobil,
ExxonMobil,
in
information
that
conclusion.
In
the
over
supra,
context
would
of
warrant
addition
its
to
claim
the
disposal
381
this
the
of
F.Supp.2d
trial,
revisiting
rejecting
that
Judge
federal
hazardous
at
provided
406.
no
Cavanaugh’s
ExxonMobil’s
factual
assertions, Judge Cavanaugh concluded that there was no legal
basis for ExxonMobil’s argument:
296
An examination of the case law cited by each
party reveals much about the merits of
Defendant's
assertions.
Not
one
of
Defendant's cited cases holding that the
government exercised the requisite amount of
control to trigger federal officer removal
involves an instance of disposal of toxic
substances
ordered
produced
by
the
government. . . . In contrast, cases relied
upon by NJDEP, which found federal officer
removal
inappropriate,
illustrate
the
distinction
between
governmental
control
over
manufacture
and
production
versus
disposal. . . . Accordingly, as Defendant
has not offered any evidence supporting its
claim that the federal government exercised
control over the disposal of hazardous
substances, this Court should hold that
Defendant
has
not
met
its
burden
to
demonstrate the requisite causal nexus to
invoke
the
protections
of
the
federal
officer removal statute.
[Id. at 405-06.]
Moreover, even if such a defense were available to excuse
ExxonMobil from liability for natural resource injuries caused
by
acts
of
war
from
1941-1945,
Professor
Klein,
the
only
ExxonMobil witness to discuss events during World War II, was
unable to correlate any discharges of hazardous substances or
direction
to
discharge
with
the
war
effort.
Professor
Klein
found no evidence that the government directed the discharge of
pollution at either site during the war nor did he find that the
government directed ExxonMobil's management of waste streams at
either site during the war.
Trial Tr. 5/21/14 (Klein Cross)
65:21-25; id. at 66:1-17. Further, Professor Klein could not
297
cite to any evidence that the government instructed ExxonMobil
to ignore existing environmental regulations during the war, nor
could he identify a single specific discharge at either Site
between 1941 and 1945 that was the result of the government's
direction. Id. at 66:18-67:4.
ExxonMobil has failed to meet its burden with respect to
its alleged affirmative defense of war.
B. ExxonMobil’s Experts Have a Demonstrated Bias, Thus, They
Lack Credibility and Their Testimony Should be Given
Little, if Any, Weight.
Throughout their respective testimony, ExxonMobil’s experts
took implausible positions that undermined their credibility and
indicated that little, if any, weight should be afforded to
their
expert
opinions
and
testimony.
These
positions
were
guided in part by the directions of ExxonMobil’s counsel but
also demonstrated bias.
experts
demonstrated
a
For example, a number of ExxonMobil’s
surprising
willingness
to
depart
from
standard practices in their fields of expertise in order to
support
ExxonMobil’s
contrived
litigation
strategy.
Much
of
this testimony is discussed throughout the State’s brief, and
Rule 104 issues are addressed with more specificity in Volume II
of this briefing.194
However, additional examples not otherwise
discussed are set forth below.
194
The Rule 104 briefing identifies additional issues that affect the weight
of ExxonMobil’s experts’ opinions.
298
1.
ExxonMobil’s experts’ opinions were tainted by
improper instructions from counsel.
While it is undisputed that NRDAs are retrospective and
involve an investigation of historical discharges back to the
time of the release, at the instruction of counsel, ExxonMobil’s
experts actively ignored all evidence of historical discharges,
and in some instances, evidence of discharges altogether.
result,
ExxonMobil’s
experts
failed
to
provide
any
As a
credible
testimony regarding the impact of ExxonMobil’s discharges on the
State’s natural resources, the key issue in this case.
Professor Klein and Dr. Delaney are the only two ExxonMobil
experts who did any pre-1977 retrospective analysis, but neither
provided an evaluation of historic discharges, the primary issue
in
this
case,
or
even
looked
at
any
contamination
issues.
Professor Klein provided a historic perspective of the industry
generally, with little analysis relative to the specific Sites
at
issue.
adverse
impact
resources
5/20/14
His
at
testimony
of
the
(Klein
and
opinions
ExxonMobil’s
Bayway
Direct)
and
discharges
Bayonne
61:2-7
did
Sites.
(stating
that
not
concern
on
the
See
the
natural
Trial
Professor
Tr.
Klein
“doesn't look at the operations at the refinery” and “he's not
analyzing the discharges at the refinery”); Trial Tr. 5/21/14
299
(Klein
Cross)
66:25-67:4
(failing
to
identify
any
specific
blindly
followed
discharge at the Sites).195
Contrary
to
his
training,
Dr.
Delaney
instructions from ExxonMobil’s counsel and completely ignored
evidence of any pre-1977 discharges and contamination, focusing
instead solely on the physical development of the Sites.
Tr.
6/2/14
(Delaney
Cross)
131:18-132:22
Trial
(explaining
Dr.
Delaney’s assignment was not to look at contamination but rather
to
look
supra,
at
how
part
the
site
II(C)(4).
was
Dr.
otherwise
Delaney
developed);
has
the
see
also
capability
to
investigate historic contamination at hazardous wastes sites,
but failed to utilize any of his knowledge from past experiences
in
this
case
and
ignored
standard
guidelines
regarding
site
investigations, which are designed to determine the nature and
extent of pollution.
Trial Tr. 6/2/14 (Delaney Cross) 129:15-24
(agreeing
purpose
that
“the
of
a
site
investigation
is
to
determine if any contamination is present”).
The remaining ExxonMobil experts conducted their analyses
based
on
specifically
current
site
instructed
conditions.
by
These
ExxonMobil’s
experts
counsel
not
investigate site conditions, injury or impact pre-1977.
195
were
to
Trial
Indeed, at the instruction of ExxonMobil’s counsel, Dr. Klein eliminated a
section of his report that addressed detriments to New Jersey associated with
ExxonMobil’s early industrial activities.
Trial Tr. 5/21/14 (Klein Cross)
4:19-6:12.
300
Tr. 7/10/14 (Ginn Cross) 20:24-21:6 (stating that he did not
investigate any injury prior to 1977 pursuant to instructions
from ExxonMobil’s counsel);
67:15-70:7
(stating
that
Trial Tr. 8/6/14 (Rodgers Cross)
he
did
not
perform
the
analysis
necessary to determine whether natural resources were injured as
a
result
of
discharges
prior
to
1977);
Trial
Tr.
6/5/14
(Desvousges Direct) 70:5-10 (stating that he used 1977 as his
start date on the advice of ExxonMobil’s counsel); see also
infra, parts V(D)(1)(a)&(b), V((F)(2).
Because the historical
habitats were destroyed by the time these experts began their
analyses, their opinions are not relevant to this case.196
Additionally, as discussed supra, part I(B)(1), pursuant to
additional instructions from ExxonMobil’s counsel, its experts
provided
opinions
regarding
only
a
fraction
of
the
Sites,
ignoring the majority of acreage containing injured resources
for which the State seeks restoration.
See Trial Tr. 7/9/14
(Ginn Cross) 198:17-200:19 (limiting one portion of his analysis
to
what
ExxonMobil’s
counsel
indicated
were
public
trust
tidelands); Trial Tr. 8/5/14 (Rodgers Direct) 58:5-24 (basing
one portion of his analysis on potential public trust lands and
counsel provided acreage); Trial Tr. 6/5/14 (Desvousges Direct)
196
As a result, the HEA upon which these flawed opinions are based is also
flawed.
301
107:15-109:8
(discussing
his
HEA
associated
with
public
tidelands).
These instructions, which are inconsistent with applicable
law, tainted the expert analyses and opinions of the ExxonMobil
experts, rendering them both unreliable and irrelevant to the
issues before the Court.
2.
ExxonMobil’s experts have a demonstrated bias.
None of ExxonMobil’s experts has ever performed a NRDA for
a trustee.
Rather, to the extent ExxonMobil’s experts have NRDA
experience, it is in representing the responsible party.
Trial
Tr. 7/10/14 (Ginn Cross) 12:5-21; Trial Tr. 6/5/14 (Desvousges
Cross) 121:8-18.
In those circumstances, the goal of the expert
is to limit liability as much as possible.197
7/10/14 (Ginn Cross) 12:5-21.
See Trial Tr.
The same is true with respect to
their testimony here.
a. Dr. Desvousges’ opinion regarding the reliability of
the HEA methodology changed during the course of
trial, demonstrating a bias and lack of credibility.
As demonstrated by Dr. Desvousges’ testimony, his opinion
as to the reliability of the HEA methodology used by Dr. Lipton
197
Dr. Ginn’s 2003 presentation, “Science-based Defenses to NRD Claims:
Baseline, Injury, Causation, and Restoration,” PEX0248, discussed defensive
strategies aimed at limiting liability, including a focus on the definition
of baseline, relating the release to the injury, effects on an organism
versus effects at habitat level, quantification of resource services and
quantification or scaling of damages or restoration alternatives. Id. at 2.
This is precisely the roadmap ExxonMobil and its experts followed in this
case.
302
changed during the course of the case.
In his expert report and
deposition, Dr. Desvousges referred to HEA as a sound method
that
resulted
in
resource damages.
a
reliable
estimate
of
potential
natural
Trial Tr. 6/9/14 (Desvousges Cross) 4:14-5:20.
In fact, ExxonMobil had a team of experts, which included Dr.
Desvousges,
perform
its
own
HEA,
and
Dr.
Desvousges
further
opined in his expert report that HEA was based on sound damage
assessment and economic principles.
Ibid.
Additionally, he
noted that HEA was developed by two natural resource economists
to
value
lost
resource
services
and
scale
compensatory
restoration without assigning a monetary value to the services.
Id. at 9:10-25.
Despite
all
of
his
prior
statements
attesting
to
the
reliability of HEA, and despite having participated in a HEA
himself on behalf of ExxonMobil, at trial Dr. Desvousges changed
his testimony, opining that HEA is not a generally accepted
methodology.
Dr.
Trial
Desvousges
Certification,
essentially
methodology.
Tr.
6/5/14
(Desvousges
a
similar
statement
made
which
stating
he
submitted
that
Trial
Tr.
HEA
is
6/9/14
after
not
a
Direct)
in
his
his
Rule
expert
generally
(Desvousges
65:18-22.
Cross)
104
report,
accepted
37:3-7.
Further, although at trial he confirmed: (1) that in his expert
report he wrote that HEA is a sound methodology resulting in a
reliable
estimate
of
NRD;
and
303
(2)
that
in
his
Rule
104
Certification he wrote that HEA is not a generally accepted
methodology, Dr. Desvousges refused to admit that his opinion
changed. Id. at 37:3-18.
To address the fact that he participated in a HEA in this
case, at trial Dr. Desvousges offered a qualification that the
ExxonMobil HEA was done solely to provide an illustration or
counterpoint to the State’s analysis.
Id. at 65:9-17.
Notably,
this qualification was not included in his expert report and is
inconsistent with Dr. Desvousges’ assurance to the Court that
his
HEA
conclusions
certainty.
were
offered
to
a
reasonable
degree
Trial Tr. 6/9/14 (Desvousges Cross) 26:9-20.
of
Dr.
Desvousges even disparaged his own HEA, testifying that because
his HEA went back to 1977, it violated the assumptions of the
changes in value about which he offered testimony.198
6/5/14 (Desvousges Cross) 152:6-24.
Trial Tr.
However, since his expert
report was written before he changed his opinion on HEAs, he did
not include this caveat in his expert report either.
Ibid.
Rather, these limitations were created for purposes of trial in
an
effort
to
conform
to
ExxonMobil’s
trial
strategy,
which
involved a concerted effort to discredit the methodology used by
198
He never identified either the 1997 value or the current value of wetlands.
He also never explained how it would be possible to ascertain the value of a
non-market natural resource in the past.
Dr. Desvousges nevertheless
maintained that values must be the same to use HEA, but at the same time
conceded values are not, and cannot, be measured.
Trial Tr. 6/9/14
(Desvousges Cross) 124:6-9, 124:21-125:16.
304
Dr.
Lipton
to
calculate
compensatory
restoration.
Dr.
Desvousges’ changing testimony and refusal to acknowledge the
same,
undermines
his
own
testimony
for
lack
of
credibility
rather than Dr. Lipton’s.
What has not changed about Dr. Desvousges’ opinion is his
insistence that NRDAs require the selection of the least costly
alternative.
Despite
the
D.C.
Circuit’s
ruling
in
Ohio
v.
United States Department of Interior, rejecting the least-cost
alternative
requirement,
Dr.
Desvousges
requirement was applicable in this case.
testified
that
such
880 F.2d 432, 443-448
(D.C. Cir. 1989); Trial Tr. 6/5/14 (Desvousges Cross) 142:19143:22 (acknowledging that he is aware of the D.C. Circuit’s
opinion); see also id. at 148:15-19 (“Q And you continue to
submit reports in Federal cases and still argue for a least-cost
alternative, is that not correct? From an economics point of
view. A
Yes, I do.”).
Throughout his testimony, Dr. Desvousges
exhibited his reluctance to accept applicable law and policy
that guides NRDA practice, thereby demonstrating his bias in
favor
of
responsible
parties
and
his
eagerness
to
provide
opinions to advance their positions.
b. Dr. Boehm’s use of unsupported limitations and
restrictions to serve as a basis for his criticism
of the State’s experts results in biased opinions
that lack credibility.
305
In this case, Dr. Boehm crafted conclusions favorable to
ExxonMobil that lacked any reasonable basis and were unsupported
by the facts of this case.
A critical component of Dr. Boehm’s
testimony was his opinion that the only relevant data is that
from the top two feet of soil.
(Boehm Direct) 109:14-20.
See, e.g., Trial Tr. 6/11/14
Dr. Boehm testified that this “top
two feet” limitation would not hold in certain circumstances,
such as if there were burrowing animals at the site.
109:21-110:2.
Id. at
Dr. Boehm ruled out this exception to his “top
two feet” rule because of Dr. Ginn’s alleged conclusion that
there were no such burrowing animals at the Sites.
110:3-10.
Of course, Dr. Ginn’s analysis did not include an
investigation of burrowing animals.199
Cross)
Id. at
43:8-19.
This
calls
into
Trial Tr. 7/10/14 (Ginn
question
Dr.
Boehm’s
credibility.
Additionally, when the details of Dr. Boehm’s opinions were
analyzed, it became clear that his opinions were presented in a
confusing
and
discredit
Dr.
misleading
Lipton’s
fashion
opinions,
simply
as
the
in
an
analysis
presented had no actual relevance to the case.
effort
Dr.
to
Boehm
For example, Dr.
Boehm offered an opinion that the State overstated the extent of
the contamination at the Sites.
199
Using a pie chart, Dr. Boehm
As discussed infra, part V(C)(3), Dr. Boehm also cited to non-existent NRDA
literature to support his “top two feet” limitation, which also hurts his
credibility.
306
testified that for Bayway, the State ignored that 81% of the
sampling results were non-detects, based on 131,412 soil and
sediment data points.
23.
Trial Tr. 6/26/14 (Boehm Cross) 148:13-
However, once Dr. Boehm explained how he reached his 81%
figure, it became apparent that the 81% non-detects have little,
if
any,
significance.
According
to
Dr.
Boehm’s
math
for
purposes of this opinion, if a sample is taken and tested for
five different chemicals and the results showed a hit for one
chemical and non-detects for the other four, his pie chart for
that analysis would show 20% detect and 80% non-detect for that
sample.
100%
Nevertheless, Dr. Boehm admitted that an area could be
contaminated
due
to
detected. Id. at 152:2-5.
the
presence
of
the
one
chemical
Thus, while it may be an impressive
criticism to say that Dr. Lipton’s opinions are based on a data
set that includes 80% non-detects, in reality, this non-detect
number, as used by Dr. Boehm, is meaningless.
Id. at 150:22-
154:1.
Moreover, Dr. Boehm admitted during cross examination that
the universe of data points he considered in this analysis (the
131,412 soil and sediment samples) did not include data points
for
surface
measurements
water
or
or
groundwater,
NAPL
measurements,
other
information
from
boring
logs,
PID
or
references to contamination at the Sites from ExxonMobil’s site
history reports or other internal documentation, all evidence
307
included in Dr. Lipton’s analysis.
Id. at 149:3-150:21.
In
effect, he ignored everything that hurt ExxonMobil and thus, Dr.
Boehm’s testimony lacked credibility.
c. Dr. Rodgers’ testimony regarding the health of salt
marsh habitats at the Sites and concerns with onsite
restoration, including the threat of bird strikes,
lacks any reasonable basis.
Dr. Rodgers’ opinions about the condition of the wetlands
at the Sites were solely based on their superficial appearances,
contrary to his own belief that “appearances can be deceiving.”
See Trial Tr. 8/5/14 (Rodgers Cross) 165:21-166:2 (“Q You also
agree that in some cases, appearances can be deceiving when
looking at a salt marsh, correct?
A Yes, sir, absolutely.”).
Despite Dr. Rodgers acknowledgement that one must look beyond
just Spartina to understand the health of a salt marsh (id. at
165:21-23), Dr. Rodgers failed to investigate any evidence of
the presence of millions of tons of contamination that underlie
the
allegedly
healthy
Spartina
marsh
at
the
Sites.
Id.
at
166:3-14 (admitting that he did no below-ground sampling at the
Sites).
Given
the
extensive
evidence
of
ExxonMobil
filling
marshlands with waste throughout the Bayway and Bayonne Sites,
it
is
simply
appropriate
to
unfathomable
ignore
that
anything
analysis.
308
Dr.
Rodgers
below
the
would
find
it
surface
in
his
Dr. Rodgers also offered testimony attempting to refute the
State’s on-site restoration plan, citing health and safety risks
posed by bird strikes.
10.
Trial Tr. 8/6/14 (Rodgers Cross) 12:2-
This testimony amounted to a suggestion of something to
possibly
clearly
consider,
was
neither
as
opposed
to
an
well-thought-out
expert
nor
opinion,
and
well-reasoned.
it
Dr.
Rodgers acknowledged that he had not done any type of analysis
to quantify the risk he claimed would be created by the State’s
on-site restoration (id. at 12:17-13:4), that he had not done
any assessment of the final approaches for nearby airports (id.
at 15:16-16:2), that there are numerous other airports in the
vicinity that he did not mention (id. at 16:3-9), that there is
a large bird sanctuary next door to the John F. Kennedy Airport
(id. at 16:10-17), that there are programs in place at these
airports to deal with the risk of bird strikes (id. at 16:2517:6),
and
that
he
did
not
dispute
State
counsel’s
representation that more people are killed at chemical plants or
refineries
than
because
of
bird
Ultimately,
Dr.
Rodgers
testified
strikes
that
(id.
he
at
13:5-14:7).
included
his
ill-
conceived bird strikes opinion because “no one in the world that
I was aware of that was constructing wetlands had taken into
account bird strikes at airports.”
Id. at 18:10-19:9.
These
conclusory statements lack any scientific foundation and were
presented without any data or analysis to back them up.
309
Further,
Dr.
Rodgers
testified
that
low
levels
of
hydrocarbons promote Spartina growth, citing an article by Yuan
Li referenced in his direct testimony (DEX5095, not admitted),
but he was forced to change his mind when he was shown the
conclusion of that article on cross examination.
Q You would agree, however, that these
results really need to be put in context and
should not be interpreted to mean that lowlevel hydrocarbon pollution is beneficial or
inconsequential to the ecosystem, correct?
A I would always put information into
context, and I would, basically, stick with
what
I
said
there,
low
levels
of
hydrocarbons have been observed to promote
Spartina growth.
. . . .
Q You say, the stimulatory -- they say, the
authors say, the stimulatory effect of
chronic, low-level hydrocarbon applications
to both plants and microbial activity in
saltwater microcosms adds to the growing
list
of
observations
that
show
the
resilience of this ecosystem to pollution.
However,
these
results
should
not
be
interpreted
to
mean
that
low-level
hydrocarbon
pollution
is
beneficial
or
inconsequential to this ecosystem.
You see that, don't you?
A Yes, sir.
Q You agree with that, don't you?
A Yes, I do.
[Trial Tr. 8/6/14 (Rodgers Cross) 103:13-21,
104:8-20.]
310
Dr.
Rodgers
simply
was
not
credible,
and
his
testimony
should not be given any weight.
d. Dr. Ginn’s testimony regarding his collaboration
with Dr. Desvousges and Dr. Rodgers on the HEA
inputs lacks credibility.
In
addition
methodology,
Dr.
to
other
Ginn
issues
testified
associated
that
he
with
Dr.
consulted
Ginn’s
with
Dr.
Desvousges (an economist) and Dr. Rodgers (knowledgeable about
wetlands)
to
determine
the
service loss percentages.
HEA
inputs
such
as
scalars
and
Dr. Ginn’s testimony regarding his
meeting with Dr. Rodgers and Dr. Desvousges wherein the three of
them discussed service loss percentages and scalars for each of
the IAOCs at Bayway, but to which he brought no notes and at
which no notes were taken is also not credible.
Q All right. You didn't bring any notes to
this meeting, correct?
A I don't recall. No, I didn't -- I didn't
take any notes at the meeting.
Q You didn't have anything written down when
you went to the meeting. I think you told me
that at your deposition?
A I think I did not, that's correct.
Q All right. Even though you were talking
about 420 some acres roughly for the scope
of your HEA?
A Yes.
. . . .
311
Q Okay. And no one, to the best of your
knowledge, took notes of what was happening
at that meeting, correct?
A I don't have any specific remembrance of
people taking notes. But I believe that -- I
believe that Dr. Bodishbaugh, who was my
colleague who was there, took some notes.
Q I want to go back to your deposition, June
18. Do you know why Dr. Bodishbaugh's notes
were not produced in this case?
A No, I don't.
[Trial Tr. 7/22/14 (Ginn Cross) 54:17-55:2,
56:8-18.]
Moreover,
this
is
not
scientist
conducting
a
the
type
serious
of
behavior
analysis,
and
expected
this
of
a
testimony
undermines Dr. Ginn’s credibility.
e. Professor Klein ignored evidence contrary to his
desired conclusions, undermining the credibility of
his testimony.
Professor
Klein,
ExxonMobil’s
historian,
testified
about
how bias can shape an expert’s analysis and that avoidance of
bias is part of a historian’s professional training.
5/19/14
(Klein
Direct)
185:14-24.
As
discussed
Trial Tr.
infra,
part
V(A), Professor Klein allowed bias to shape his testimony and
conclusions, which were based on intentionally framed questions
designed to achieve a specific result.
Professor Klein’s credibility is undermined by his failure
to
consider
investigated,
all
as
information
opposed
to
relevant
only
312
those
to
that
the
issues
supported
he
his
thesis.200
For example, Professor Klein testified that in the
19th and early 20th centuries, nature was viewed as the enemy,
that natural resources were not valued by Americans until the
environmental movement in the 1960s, and that New Jersey sought
economic development above all other considerations.
However,
on cross examination, counsel for the State presented Professor
Klein with a number of documents showing contrary information
that Professor Klein ignored, discounted, or did not discover in
his outcome driven investigation.201
This contrary evidence included the book entitled Forcing
the
Spring,
the
Transformation
of
the
American
Environmental
Movement by Robert Gottlieb (PEX1697), which discussed President
Theodore
Roosevelt’s
initiatives
resource
development
beginning
of
in
forest
1901
and
protection
the
rise
and
of
organizations such as the American Conservation League and the
National
Conservation
Association
(Trial
Tr.
5/20/14
(Klein
Cross) 115:24-124:17); the 1884 Sludge Acid Law202 under which
Standard Oil was prosecuted in 1886 for discharges of pollution
(id.
at
168:17-172:9);
the
1937
200
New
As discussed infra, part V(A), this is also
methodology in Professor Klein’s field of expertise.
201
On
report
but he
Cross)
Jersey
contrary
Deleterious
to
accepted
cross examination, Professor Klein admitted that his original draft
did have a section on negative consequences of ExxonMobil’s actions
deleted that section from his final report. Trial Tr. 5/21/14 (Klein
4:19-6:12.
202
This Act and a number of others are part of the State’s request for
judicial notice, as discussed supra, part I(A).
313
Substances Act (id. at 172:10-174:23); and an August 21, 1886
Bayonne Herald article entitled “Sludge Acid, Who Causes the
Great Nuisance” (PEX0322) (Trial Tr. 5/21/14 (Klein Cross) 14:717:10). See also Trial Tr. 5/21/14 (Klein Cross) 59:18-60:25
(discussing oystermen complaining of the refuse oil produced by
these companies affecting the oysters and fishing grounds).
Additionally, Professor Klein testified as to the alleged
benefits
the
Bayway
and
Bayonne
refineries
provided
to
the
people in those areas and in the State of New Jersey, but in
analyzing these benefits, Professor Klein ignored evidence of
the
costs
associated
with
the
presence
of
these
refineries.
Trial Tr. 5/20/14 (Klein Cross) 159:6-160:9, 163:7-11.
Finally, Professor Klein also offered testimony to support
ExxonMobil’s “act of war” defense, which is discussed, supra,
part III(A).
Professor
Again showing his bias and lack of credibility,
Klein
offered
opinions
to
put
ExxonMobil
in
a
favorable light with respect to its war effort, while ignoring
evidence to the contrary.
Professor Klein neglected to discuss
the fact that Standard Oil refused to cooperate with the United
States
military
but
readily
process to Nazi Germany.
73:16
(discussing
a
provided
its
synthetic
rubber
Trial Tr. 5/21/14 (Klein Cross) 69:24-
March
27,
1942
New
York
Times
article
entitled “Arnold says Standard Oil gave Nazis Rubber Process,”
PEX1690). Moreover, as discussed more fully below, he offered no
314
testimony
showing
that
the
United
States
military
directed
ExxonMobil’s disposal practices.
Professor Klein’s testimony lacks credibility and should be
given little, if any, weight.
This bias in favor of defendants, geared towards limiting
liability,
testimony
is
engrained
provided
by
in
the
analysis,
ExxonMobil’s
experts.
conclusions
and
Accordingly,
little, if any, weight should be given to their testimony and
opinions.
C. Additional Asserted Defenses and Arguments.
1.
Offset
a. ExxonMobil is not entitled to any offset in damages
for its purported social benefits.
The Spill Act does not provide for an offset or credit.
ExxonMobil has cited no legal authority for an offset associated
with the purported social benefits of its operations.
Indeed,
the Supreme Court has previously rejected such an argument in
Ventron, supra, 94 N.J. 473, explaining that while the Court
“recognize[d] that one engaged in the disposing of toxic waste
may be performing an activity that is of some use to society[,]
[n]onetheless, ‘the unavoidable risk of harm that is inherent in
it requires that it be carried on at his peril, rather than at
the expense of the innocent person who suffers harm as a result
315
of it.’”
Id. at 493 (citation omitted).203
ExxonMobil is not
entitled to a social-benefits offset as a matter of law.
ExxonMobil did not put forth any evidence to quantify any
social benefits of its operations.
In addition, the Legislature
expressly found that the protection and preservation of natural
resources is vital to New Jersey’s economy.
N.J.S.A. 58:10-
23.11a (finding that “New Jersey’s lands and waters constitute a
unique and delicately balanced resource; that the protection and
preservation
of
these
lands
and
waters
promotes
the
health,
safety and welfare of the people of this State; that the tourist
and recreation industry dependent on clean waters and beaches is
vital to the economy of this State[,]” and declaring “that the
discharge of petroleum products and other hazardous substances
within or outside the jurisdiction of this State constitutes a
threat to the economy and environment of this State . . ..”).
Professor
Klein
was
the
only
ExxonMobil
witness
who
attempted to identify alleged benefits, but he did not quantify
them.
Further,
Professor
Klein
did
not
consider
easily
identifiable detrimental impacts in addition to the pollution.
Trial Tr. 5/20/14 (Klein Cross) 159:6-160:9 (confirming that he
203
Judge Anzaldi, in finding that ExxonMobil’s acts and omissions constituted
a public nuisance and abnormally dangerous activity, likened ExxonMobil to
the defendants in Ventron. ExxonMobil, supra, 2008 WL 4177038, at *7 (“The
damage to the contaminated sites resulted from both the active disposing and
accidental spilling of hazardous substances.
The resulting harm was great.
Just as with the defendants in Ventron, Exxon is not saved by the fact that
its activities produced some benefit to society.”).
316
did not perform an analysis of the costs due to the presence of
the refineries because that was not one of the questions from
ExxonMobil).
When presented with evidence of negative costs associated
with the presence and operations of the refineries by the State
during
trial,
“isolated
Professor
incidents”
that
Klein
hastily
could
be
labeled
ignored
alleged social benefits to which he testified.
in
the
favor
evidence
of
the
See, e.g., Trial
Tr. 5/20/14 (Klein Cross) 145:13-147:8 (disregarding information
contained in a February 13, 1881, New York Times article about
an oil tank explosion at Bayonne (PEX1693)); id. at 147:24150:22 (excluding information contained in a September 29, 1886
New York Times article regarding sludge acid from refineries
including Standard Oil polluting the waters of the Kill van Kull
(PEX1679)); id. at 150:23-152:11 (failing to include information
contained in a June 26, 1892, New York Times article regarding
pollution complaints from residents of Bayonne (PEX1695)); id.
at 161:2-162:15 (failing to include anything about allegations
of price fixing, poor wages, and working conditions); id. at
194:23-195:6 (failing to include anything about the backlash or
negative opinions regarding the Standard Oil Trust); Trial Tr.
5/21/14 (Klein Cross) 39:12-40:14 (failing to consider the cost
associated with environmental impacts of the refineries); id. at
43:21-48:14 (failing to include information about Standard Oil
317
raising the price of gasoline in Trenton in response to new
trust laws (PEX1685)); id. at 48:20-49:2 (ignoring evidence of
poor labor standards and strikes); id. at 64:7-18 (providing no
analysis of ExxonMobil’s profits, tax payments, tax deductions,
or subsidies).
As discussed herein, Professor Klein’s failure to do an
impartial and objective analysis not only resulted in unreliable
opinions, but it also demonstrated the lack of credibility in
Professor
Klein’s
Professor
Klein
testimony.
acknowledged
See
that
also
his
infra,
opinion
part
and
V(A).
testimony
would differ if he had been offering opinions for the State as
opposed to ExxonMobil.
This
is
Trial Tr. 5/21/14 (Klein Cross) 7:1-18.
quintessential
expert
testimony
opinions should be given no weight.
for
hire,
and
his
This Court should again
reject any social-benefits offset request made by ExxonMobil.
b. The extent of pollution at Bayonne and Bayway and
the necessity for restoration of the State’s natural
resources
thoroughly
contradict
ExxonMobil’s
argument that a damages award would be a “windfall”
for the State.
ExxonMobil’s notion that an award based on the costs of
restoration
“windfall”
required
to
compensatory
make
the
damages
public
award
is
whole
is
somehow
disingenuous.
a
The
Department seeks damages to compensate the public for its losses
after decades of toxic pollution by ExxonMobil.
318
Those damages,
while considerable, are in proportion to the staggering history
and extent of pollution at Bayway and Bayonne.
The Trustee has an affirmative fiduciary duty to preserve
public trust resources.
Hackensack Meadowlands Dev. Comm’n v.
Mun. Sanitary Landfill Auth., 68 N.J. 451, 477 (1975) (“In this
area [of environmental concern] the State not only has a right
to protect its own resources, but also has the duty to do so, in
the interest of its citizens, as well as others.”).
As the
record demonstrates, the Department fully intends to use any
compensatory
State.
the
award
to
restore
the
natural
resources
of
the
For example, John Sacco offered detailed testimony about
Department’s
restoration
history
projects,
of
intent
commitment
to
to
restoration
perform
natural
resource
in
this
case, and specific restoration projects and opportunities the
Department could pursue with a compensatory restoration award
both on-site and off-site.
Direct)
28:11-29:2
marshland),
See, e.g., Trial Tr. 4/29/14 (Sacco
(reestablishing
29:3-15
(Liberty
tidal
State
flow
Park
at
Laurel
project),
Hill
175:2-15
(numerous opportunities for restoration in areas that interact
with
the
Atlantic
restoration
Morses
at
Creek
adjacent
to
(restoring
bight
Bayway),
area),
Morses
system),
202:20-204:8
204:9-205:4
Creek),
headwaters
of
200:20-201:6
(vision
205:5-7
Piles
(vision
(sludge
Creek),
319
for
(vision
for
restoring
restoring
lagoon),
206:3-7
for
marsh
205:8-10
(Morses
Creek
would
reconnect
marsh
to
estuary),
206:13-19
(vision
for
restoration of Bayonne).204
Moreover,
ExxonMobil
put
on
no
quantifiable
support of its allusion to a “windfall” award.
trial
actually
contradicts
ExxonMobil’s
evidence
in
The evidence at
argument.
For
one
thing, the record reflects that off-site restoration is less
ecologically
valuable
than
on-site
4/29/14 (Sacco Direct) 18:15-21:24.
restoration.
Trial
Tr.
Unwsorth and Bishop, supra,
acknowledge that off-site “created wetlands are often of lower
quality than natural wetlands” which supports the concept of
primary
restoration
and
suggests
that
acres are less ecologically valuable.
compensatory,
Id. at 3.
created
Roach and
Wade, supra, mirror this sentiment:
Another issue is that the ecological service
provided by compensatory restoration may not
be of the same quality as the injured
resource. Restored or created habitats are
typically of lesser quality than “natural”
habitats.
For example, restored wetlands
normally do not achieve the same level of
ecological function of natural wetlands . .
.
.
These
factors
imply
that
the
204
To the extent that ExxonMobil purports to object that the State might not
actually perform aspects of its restoration plan, not only is the objection
speculative and contrary to the record, but it is also nonjusticiable. See
In re Methyl Tertiary Butyl Ether (MTBE) Prods. Liab. Litig., No. 1:00-1898,
2014 WL 3778176, slip op. at *2 (S.D.N.Y. July 30, 2014) (“[R]egardless of
how the City spends the funds, Exxon cannot show how it would be injured.
[By analogy, in a personal-injury case,] . . . [i]f the jury awards the
plaintiff ten thousand dollars but the plaintiff declines the surgery or dies
before undergoing the surgery, the defendant is not entitled to a refund from
the plaintiff or the plaintiff's estate. The defendant is still liable for
the injury it caused. Thus, Exxon lacks standing . . . .” (footnotes omitted)
(citations omitted) (internal alterations omitted)).
320
compensatory restoration should be provided
at a ratio greater than one-to-one when
compared to the injury.
[PEX1728, p. 9.]
Nevertheless, the Department has consistently made conservative
estimates in calculating injury and compensatory damages.
See,
e.g., Trial Tr. 4/29/14 (Sacco Direct) 73:15-21 (10-year ramp-up
for upland areas), 73:22-74:2 (1940 start date for Morses Creek
despite discharges beginning prior to 1920).205
c. ExxonMobil lacks a legal and factual basis for
requesting an offset for costs it expended in its
limited site remediation efforts.
The Spill Act provides no offset for expenses incurred in
the site remediation process.
That alone should be enough to
reject ExxonMobil’s request for an offset for its remediation
expenses.
Awarding an offset for site remediation costs, in
particular when none is provided for under the Spill Act, would
create a perverse incentive for polluters to follow ExxonMobil’s
example
of
refusing
to
coordinate
site
remediation
and
restoration efforts and refusing to address its natural resource
liability,
waste.
further
Polluters
delaying
cleanup
interested
in
of
destructive
saving
money
hazardous
work
with
regulators to coordinate site remediation and NRD.
205
The Department’s approach in calculating injury and damages seems
particularly conservative when viewed in context of the full remedies
available under the Spill Act, which authorizes, among other remedies and
penalties, treble damages against polluters under certain circumstances. See
N.J.S.A. 58:10-2311f(a); In re Kimber Petrol. Corp., 110 N.J. 69 (1988).
321
Moreover,
even
if
there
was
a
valid
legal
basis
for
a
remediation cost offset, the circumstances and record of this
case do not support such an offset.
ExxonMobil proceeded with
its site remediation projects well aware that the State had
reserved its right under the ACOs to bring NRD claims in the
future.
(E.g.,
PEX0001,
19).206
p.
The
Department
offered
ExxonMobil an opportunity to integrate its site remediation with
site restoration, but it refused.
E.g., Trial. Tr. 2/26/14
(Kenney Direct) 80:24-90:10; see also PEX0631; PEX0632.
Furthermore,
ExxonMobil
failed
to
secure
“no
further
action” letters or response action outcomes for its remediation
projects, the Department did not endorse those projects, and
ExxonMobil did not present invoices to the Department for those
projects.
Tr.
Trial Tr. 8/29/14 (Messina Cross) 27:19-41:1; Trial
8/29/14
(Messina
Recross)
141:23-142:23.
None
of
those
projects, moreover, involved restoration or replacement of the
State’s natural resources.
E.g., Trial Tr. 8/29/14 (Messina
Cross) 27:19-41:1; Trial Tr. 8/29/14 (Messina Recross) 141:23142:23.
The
Department
ExxonMobil’s
remediation
resolve
extensive
the
has
consistently
efforts
natural
have
resource
occurred at Bayonne and Bayway.
206
not
maintained
been
adequate
destruction
that
that
to
has
As Frank Messina, ExxonMobil’s
ExxonMobil’s argument to the contrary is addressed separately below in part
III(C)(2).
322
current
Site
Remediation
Manager,
acknowledged,
ExxonMobil’s
remedial investigation efforts have not cleaned up a “speck” of
contamination or restored the natural resources of the State.
Trial Tr. 8/29/14 (Messina Cross) 15:24-17:3.207
Ultimately, ExxonMobil’s claim that it “cooperated with the
State in an unsuccessful effort to curb the pollution of the
tract can hardly justify foisting on the public the cost of the
cleanup and containment,” Ventron, supra, 94 N.J. at 499, or,
for
that
matter,
of
restoration
and
replacement.
Even
if
remediation costs were a valid basis for offset under the Spill
Act,
ExxonMobil
costs.
failed
to
produce
adequate
evidence
of
its
ExxonMobil’s star witness on this point, Frank Messina,
testified as to some of ExxonMobil’s site remediation costs from
memory and without reference to any documentation.208
Tr.
8/29/14
(Messina
Cross)
10:21-11:5.
See Trial
Consequently,
Mr.
207
Importantly, these costs would necessarily include the expenses associated
with site investigation preparation as well as conducting the investigations
and the collection of data. It is this information, as discussed infra, that
both parties relied upon in preparing their assessments in this case. The
State elected to use these data and information in an effort to limit
additional costs. As such, ExxonMobil has already benefitted from the use of
data and information it was required to prepare in the context of Site
Remediation efforts rather than additional collection of data and information
that would be taxable to ExxonMobil as part of cleanup and removal costs
under the Spill Act.
ExxonMobil, 393 N.J. Super. at 403 (finding that
“cleanup and removal costs” is construed broadly and includes compensatory
restoration, administrative oversight costs, the costs of legal services
necessary to remediate an environmental insult, and the costs of natural
resource restoration).
208
While the Court ultimately admitted a document that generally corroborated
the figures on redirect, the admission was for the limited purpose of
confirming Mr. Messina’s recollection regarding remedial cost figures. Trial
Tr. 8/29/14 (Messina Redirect) 134:5-14.
323
Messina was only able to make a “ballpark” “guesstimate” that
ExxonMobil expended approximately $20 million in its remedial
investigation
at
Bayway
and
$10
to
$20
million
at
Bayonne.
Trial Tr. 8/29/14 (Messina Cross) 14:15-15:9, 15:24-17:3.
Mr.
Messina did not testify from his own independent knowledge of
the costs but from his review of ExxonMobil’s “rolling-total”
records.
See Trial Tr. 8/29/14 (Messina Redirect) 137:24-138:5,
138:25-139:2.
Mr.
Messina’s
testimony
lacks
credibility
and
does nothing to support ExxonMobil’s request.
Moreover,
the
Department
maintains
its
objection
to
the
testimony absent any supporting documentation or advance notice
to the Department as such runs contrary to the best evidence
rule.
Trial Tr. 8/29/14 (Colloquy) 130:9-24; see N.J.R.E. 1002;
Abtrax Pharm., Inc. v. Elkins-Sinn, Inc., 139 N.J. 499 (1995);
see also
2004)
Dye v. United States, 360 F.3d 744, 749-50 (7th Cir.
(citing
federal
counterpart
to
N.J.R.E.
1002)
(“[T]he
‘writing’ wherein the FSA claims Dye exercised the option is
missing from the record without explanation. . . .
[W]e remind
the FSA of the best evidence rule, and its obligation to produce
the actual key document[.]”); Dobson v. Twin City Fire Ins. Co.,
No. SACV 11-0192 DOC, 2012 WL 2708392, at *7 (C.D. Cal. July 5,
2012)
(unpublished)
(holding,
with
respect
to,
among
other
things, “testimony by the . . . Insured Plaintiffs giving their
‘best estimate’ as to the amounts they paid to defend the . . .
324
Action,” that “the purported evidence of such costs is excluded
under
the
best
evidence
rule.
.
.
.
Here,
the
‘original
writing[s]’ [are] the invoices [and] . . . Plaintiffs' payments
. . . . [Plaintiffs’ testimony is] exactly the kind of selfserving and unreliable statements that the best evidence rule is
designed
to
exclude.”
cases)).209
(collecting
The
actual
invoices, not produced by ExxonMobil, are the best evidence and
are required to prove the costs.
The Court should decline to
consider Mr. Messina’s testimony as to costs.
Mr. Messina was
unable to detail what expenses are actually included in these
undocumented
sums.
For
example,
Mr.
Messina
was
unable
to
testify whether consultant fees, such as those incurred by Dr.
Thomas
Ginn,
were
included
in
the
total
remediation
costs
allegedly incurred by ExxonMobil.
Trial Tr. 8/29/14 (Messina
Cross)
Messina
18:25-19:4.
Further,
Mr.
made
no
effort
to
determine whether or not legal fees incurred by ExxonMobil were
included in the total remediation costs for Bayway and Bayonne.
Id. 21:9-15.
Mr. Messina was unaware whether fees expended on
benchmarking studies such as PEX0266 (comparing typical costs
209
See also N.J.R.E. 1006 (“The contents of voluminous writings or photographs
which cannot conveniently be examined in court may be presented by a
qualified witness in the form of a chart, summary, or calculation.
The
originals, or duplicates, shall be made available for examination or copying,
or both, by other parties at a reasonable time and place.”); AEL Indus., Inc.
v. Loral Fairchild Corp., 882 F. Supp. 1477, 1487 (E.D. Pa. 1995) (“The
exhibits offered by AEL are summaries of the costs allegedly incurred as a
result of the delay and additional work performed.
AEL admitted at trial
that it had failed to make available to Loral the time cards that formed the
basis of these claims. . . . [T]he exhibits must be excluded[.]” (citing
federal counterpart to N.J.R.E. 1006)).
325
for Site Remediation in New Jersey to those in other states)
were included in the remediation totals for Bayway and Bayonne.
Id. 21:19-23:17.
Lastly, Mr. Messina was unable to identify a
single dollar that was spent at Bayway and Bayonne excavating
contaminated soil and removing it off site that was part of
ExxonMobil’s alleged remediation costs incurred prior to 2008.
Id. 25:11-26:5.
Other evidence presented at trial also called into question
the
veracity
ExxonMobil
of
ExxonMobil’s
internal
costs.
memorandum
on
For
site
instance,
remediation
one
urges
employees to bury regulators in data to “buy[ ] . . . more time”
and
another
instructs
how
to
“‘win’
against
[r]egulators.”
(PEX0003, p. 2 and PEX0164, p. 2).210
This suggests that not all
of
in
the
costs
ExxonMobil
incurred
connection
with
site
remediation would be appropriate for reimbursement even if some
reimbursement for costs was authorized.
In addition, post-2008
remediation costs, which the State also objected to as falling
outside the Discovery cutoff, are further suspect due to the
uptick
in
ExxonMobil’s
advancement of this case.
Cross) 14-15.
remedial
210
litigation
efforts
following
the
See, e.g., Trial Tr. 8/29/14 (Messina
Especially in view of the fact that ExxonMobil’s
investigation
did
not
“clean
up
a
speck
of
The costs associated with “burying” certainly are not a legitimate offset.
326
contamination,”
ExxonMobil’s
failure
to
document outlining its costs speaks volumes.
(Messina Cross) 15:24-17:3.
produce
a
single
Trial Tr. 8/29/14
Itemized invoices, rather than Mr.
Messina’s “guesstimate” “ballpark” numbers, are necessary for an
accurate assessment of any offset.
authorized
by
the
Spill
Act,
Even if such an offset were
ExxonMobil
failed
to
provide
evidence sufficient to show that an offset should be given.
2.
This Court should reject ExxonMobil’s last-ditch
effort to manufacture ambiguity in the ACOs, which
unambiguously reserve the State’s rights to bring NRD
claims.
The language of the ACOs is clear and does not limit the
Department’s
claims
for
NRD
in
any
way.
To
the
contrary,
paragraph 75 expressly reserves the State’s right to bring NRD
claims.
Bayway
ACO,
PEX0001,
p.
19
(“This
Administrative
Consent Order shall not be construed to affect or waive the
claims of federal or State natural resource trustees against any
party for damages for injury to, destruction of, or loss of
natural resources.”); Bayonne ACO, PEX0505, p. 18.
As a preliminary matter, ExxonMobil’s suggestion that the
Court should interpret the ACOs contrary to their plain text is
both
untimely
and
inappropriate
given
the
law
of
the
case.
ExxonMobil’s argument regarding the scope of the ACOs is more
properly directed at liability, not the quantum of damages, and
as such is not an appropriate subject for reconsideration during
327
this trial.
Moreover, Judge Anzaldi and the Appellate Division
have both spoken to this issue.
See ExxonMobil, supra, 393 N.J.
Super.
75)
at
purposes,
392
(citing
ACO
of
ACOs
each
remediation
the
program
did
¶
not
(“Significant
recognized
preclude
that
the
for
the
State
present
DEP’s
from
site
seeking
further relief for damages to natural resources[.]”); accord May
26, 2006, Letter Opinion, (Anzaldi, J.), at *1-2.
because
ExxonMobil
raised
this
issue
anew
Nevertheless,
during
summation,
purportedly with respect to the proper measure of damages, the
Department briefly addresses ExxonMobil’s contention.
At various points during the later stages of this trial,
ExxonMobil
contended
that
paragraphs
16,
74,
and
75
of
the
ACOs,211 when read together, limit the Department’s claims for
NRD in two ways.
It argues that the ACOs restrict the scope of
the Department’s recovery to (1) NRD claims under federal law
(CERCLA),212
which
typically
does
not
allow
for
retroactive
liability for NRD, and/or (2) only those NRD claims that arose
after the signing of the ACOs.
(See, e.g., Trial Tr. 6/25/14
(Esch Direct) 18:12-21:16.
Contrary
to
ExxonMobil’s
arguments,
the
language
of
the
ACOs is clear and does not limit the Department’s claims for NRD
211
The language of these paragraphs, as well as most of the language in the
Bayway and Bayonne ACOs, is identical.
212
The State has made no claims under CERCLA.
328
in any way.213
Paragraph 16 of the Bayway and Bayonne ACOs
states in relevant part:
The Department shall not seek, demand,
or otherwise claim any civil or civil
administrative fines, or penalties from, or
initiate any action for civil or civil
administrative fines or penalties against or
otherwise refer for criminal prosecution
against Exxon Mobil . . . based upon [its]
acts
or
omissions
(including,
without
limitation, failures to report), or any
continuing releases, migration or discharges
of hazardous substances or pollutants, in
connection with or arising in any way out of
the
production,
manufacture,
blending,
recycling,
storage,
disposal,
discharge,
handling, treatment, or transportation of
such hazardous substances or pollutants
occurring prior to the effective date of
this Administrative Consent Order, whether
known or unknown. . . .
[PEX0001, p. 5 and PEX0505, p. 4.]
Paragraph 74 provides:
Nothing in this Administrative Consent
Order shall preclude the Department from
seeking civil or administrative penalties or
any other legal or equitable relief against
Exxon for matters not set forth in paragraph
16 of this Administrative Consent Order or
for
violations
of
any
New
Jersey
environmental
statute
or
regulation
occurring after the effective date of this
Administrative Consent Order.
[Id. at 19 and 18.]
Paragraph 75 of the ACOs states:
213
Moreover, if it truly believed that the Department’s liability was limited
by the ACOs, ExxonMobil would have raised this argument earlier, for example
when the State moved for summary judgment on liability under the Spill Act,
when the State sought retroactive application of the Spill Act, or when the
State provided its expert reports to ExxonMobil.
329
This Administrative Consent Order shall
not be construed to affect or waive the
claims of federal or State natural resource
trustees against any party for damages for
injury to, destruction of, or loss of
natural resources.
[Id.]
“The objective in construing a . . . contract . . . is to
determine the intent of the parties.”
N.J.
213,
223
(2011).
“The
Kieffer v. Best Buy, 205
judicial
task
is
simply
interpretative; it is not to rewrite a contract for the parties
better
than
themselves.”
give
or
different
from
the
one
Ibid. (citation omitted).
contractual
terms
‘their
plain
they
wrote
for
“Thus, [courts] should
and
ordinary
meaning,’
unless specialized language is used peculiar to a particular
trade,
profession,
or
industry[.]”
Ibid.
(citing
N.J.S.A.
12A:1–205)) (other citations omitted).
“If a[ ] . . . provision is unambiguous, then the words
presumably will reflect the parties’ expectations.”
supra, 205 N.J. at 223 (citation omitted).
An ambiguity in a contract exists if the
terms of the contract are susceptible to at
least
two
reasonable
alternative
interpretations.
To determine the meaning
of the terms of an agreement by the
objective manifestations of the parties’
intent, the terms of the contract must be
given their plain and ordinary meaning.
[Schor v. FMS Fin. Corp., 357 N.J. Super.
185, 191 (App. Div. 2002) (quoting Nester v.
330
Kieffer,
O’Donnell, 301 N.J. Super. 198, 210 (App.
Div.
1997))
(internal
quotation
marks
omitted).]
“A party that uses unambiguous terms in a contract cannot be
relieved
from
unexpressed
the
language
intent
that
simply
the
because
language
it
had
a
secret,
should
have
interpretation contrary to the words’ plain meaning.”
Ibid.
an
“On the other hand, when in the context of the document
itself and the transaction to which it pertains the terminology
employed, despite a facile simplicity, actually is not free from
doubt as to its meaning, the party is permitted to introduce
proof of extrinsic circumstances bearing on the alleged proper
interpretation of the language used.”
Id. at 192; see Conway v.
287 Corp’t Ctr. Assocs., 187 N.J. 259, 269 (2006) (quoting Atl.
N. Airlines, Inc. v. Schwimmer, 12 N.J. 293, 301 (1953)) (“We
consider
all
of
the
relevant
evidence
that
will
assist
in
determining the intent and meaning of the contract. . . . ‘This
is
so
even
ambiguity.’”
when
the
contract
(emphasis
added)).
on
Of
its
face
course,
is
this
free
does
from
not
overcome the general rule of contract interpretation that the
plain text controls in the absence of true ambiguity or “doubt
as to its meaning,” Schor, supra, 357 N.J. Super. at 192, or
deceptively simple text at odds with “obvious meaning in the
minds of the parties,” Conway, supra, 187 N.J. at 269 (citation
and quotation marks omitted).
In sum, Conway, relied upon by
331
ExxonMobil,
did
interpretation.
not
alter
the
first
principle
of
contract
This is reaffirmed in cases post-dating Conway
by several years, which continue to hold that “[i]f the language
is clear, that is the end of the inquiry.”
Chubb Custom Ins.
Co. v. Prudential Ins. Co. of Am., 195 N.J. 231, 238 (2008); see
also e.g., Kieffer, supra, 205 N.J. at 223.
Considering the foregoing principles, paragraph 75 of the
ACOs
expressly
ability
to
injury
to,
PEX0001,
p.
and
bring
unambiguously
claims
destruction
19
and
against
of,
PEX0505,
reserves
the
ExxonMobil
for
or
loss
p.
18.
of
Department’s
damages
natural
That
“for
resources.”
clause
explicitly
reserves the Department’s ability to bring claims for NRD, and
imposes
no
temporal
or
legal
limitation
on
the
scope
of
recoverable NRD claims.
If ExxonMobil and the Department had agreed to preserve NRD
claims only under federal law or for damage occurring after the
date of the agreement, the ACO could easily have stated such
limitation(s).
language
in
For
example,
paragraph
75
the
parties
mirroring
the
could
language
have
of
added
existing
paragraph 74 — namely, the phrase “occurring after the effective
date
of
this
Administrative
Consent
Order.”
Ibid.
It
is
significant that similar limiting language could have been added
to paragraphs 75, but was not.
See, e.g., Levison v. Weintraub,
215 N.J. Super. 273, 276 (App. Div. 1987) (holding that the
332
terms of an attorney-approval clause in a real estate contract
were
unambiguous
and
observing
that
“the
contract
does
not
provide that it becomes enforceable once such approval is given.
This could have been provided for, but was not.”) (emphasis
added)) (case cited with approval in, among other things, Kutzin
v.
Pirnie,
124
N.J.
500,
507
(1991));
see
also
ExxonMobil,
supra, 393 N.J. Super. at 392 (citing ACO ¶ 75) (“Significant
for present purposes, each of the ACOs recognized that the DEP’s
site remediation program did not preclude the State from seeking
further relief for damages to natural resources[.]”).
In sum,
the text of paragraph 75 is clear, and accordingly, that should
be “the end of the inquiry.”
Chubb, supra, 195 N.J. at 238; see
also e.g., Kieffer, supra, 205 N.J. at 223.
a. ExxonMobil’s argument runs contrary to the parol
evidence rule because it would “modify” or
“curtail” the plain terms of the ACO.
Despite
contends
the
that
plain
language
ExxonMobil
and
of
paragraph
Department
75,
ExxonMobil
negotiators
tacitly
harbored a different intention with respect to the reservation
of the trustee’s right to bring NRD claims in the future.
The
Court
use
should
reject
ExxonMobil’s
strained
invitation
to
parol evidence to contradict or modify the terms of the ACO.
ExxonMobil has relied on three principal cases in support
of its parol evidence argument: Schwimmer, supra, 12 N.J. 293;
333
Conway, supra, 187 N.J. 259; and Pacifico v. Pacifico, 190 N.J.
258 (2007).
None is availing to ExxonMobil’s position.
Schwimmer
concerned
release
language
invoked
by
the
defendant to bar the plaintiff’s claims for conversion of an
airplane.
12 N.J. at 298-301.
Our Supreme Court affirmed the
trial court’s holding, that the language of the release was
plain
from
release.
of
the
the
text
and
Id. at 306-07.
parties
is
to
the
circumstances
surrounding
the
The court explained that “[t]he intent
be
found
in
the
writing
as
the
sole
memorial of their bargain, and it operates as a bar to this
action.”
Id. at 306.
The Schwimmer court explained that extrinsic evidence was
admissible to assist in interpreting contract terms, but not to
“modify[ ] or enlarg[e] or curtail[ ] its terms[,]” stating:
Evidence of the circumstances is always
admissible in aid of the interpretation of
an integrated agreement. This is so even
when the contract on its face is free from
ambiguity. The admission of evidence of
extrinsic facts is not for the purpose of
changing the writing, but to secure light by
which to measure its actual significance.
Such evidence is adducible only for the
purpose of interpreting the writing—not for
the purpose of modifying or enlarging or
curtailing
its
terms,
but
to
aid
in
determining the meaning of what has been
said. So far as the evidence tends to show,
not the meaning of the writing, but an
intention wholly unexpressed in the writing,
it is irrelevant.
[Id. at 301-02 (other citation omitted).]
334
Conway involved the interpretation of a bonus clause in an
attorney’s
retainer
agreement
that,
on
its
face,
appeared
deceptively simple when considered on its own. However, in the
context
of
other
documents
that
accompanied
the
retainer
agreement, it became clear that the substantial bonus was in
fact intended to be contingent upon an additional key condition
that did not occur.
See 187 N.J. at 262-64.
(providing for
bonus “[s]hould the lawsuit produce any modification of the zone
change which permits construction of any type, residential or
commercial or the sale or lease of the property to a third
person.”).
In Conway the city ultimately voted to rezone the lot at
issue while the lawsuit plaintiff filed on behalf of defendant
was still pending.
his bonus.
Following the rezoning, the plaintiff sought
Defendant refused to pay the bonus, finding the
conditions were not satisfied since the access issue to the
property
was
not
resolved
and
the
property
had
not
been
developed.
Our Supreme Court, relying heavily on Schwimmer, explained
that extrinsic evidence may be useful in interpreting contract
terms:
In general, the parol evidence rule
prohibits the introduction of evidence that
tends
to
alter
an
integrated
written
document. Restatement (Second) of Contracts
335
§ 213 (1981). . . .
[However,] [w]e
consider all of the relevant evidence that
will assist in determining the intent and
meaning of the contract. As we explained in
Schwimmer, [e]vidence of the circumstances
is
always
admissible
in
aid
of
the
interpretation of an integrated agreement.
This is so even when the contract on its
face is free from ambiguity. The polestar of
construction is the intention of the parties
to the contract as revealed by the language
used, taken as an entirety; and, in the
quest for the intention, the situation of
the parties, the attendant circumstances,
and the objects they were thereby striving
to attain are necessarily to be regarded.
The admission of evidence of extrinsic facts
is not for the purpose of changing the
writing, but to secure light by which to
measure
its
actual
significance.
Such
evidence is adducible only for the purpose
of interpreting the writing—not for the
purpose
of
modifying
or
enlarging
or
curtailing
its
terms,
but
to
aid
in
determining the meaning of what has been
said. So far as the evidence tends to show,
not the meaning of the writing, but an
intention wholly unexpressed in the writing,
it is irrelevant. The judicial interpretive
function is to consider what was written in
the context of the circumstances under which
it was written, and accord to the language a
rational
meaning
in
keeping
with
the
expressed general purpose.
[Id. at 268-69 (quoting Schwimmer, supra, 12
N.J. at 301-02).]
The court framed the issue as:
whether
the
language
in
the
retainer
agreement
indicating
that
Conway
was
entitled to a bonus if the lawsuit produced
“any modification of the zone change which
permits
construction
of
any
type,
residential or commercial or the sale or
lease of the property” was intended to mean
336
that roadway access to the property was also
required before the bonus was earned.
[Id. at 270.]
The court found that the extrinsic evidence produced by the
defendant, i.e., the draft complaint and memorandum, as well as
a mediation position paper, demonstrated that such access to the
property was also required before the bonus was earned.
“[T]he
evidence clearly established that the parties intended the bonus
would be earned only if Conway were successful in obtaining both
a
zoning
change
and
access
to
the
property
to
permit
development. Because access to the property was not attained,
the bonus was not earned.”
Id. at 271.
Pacifico is a divorce case involving the interpretation of
a settlement agreement.
190 N.J. 258.
The agreement gave the
wife the right of first refusal of the marital home in the event
that the husband wished to sell the property, but was silent as
to how to value the property if the wife exercised her right.
The husband argued for current market value and the wife argued
for the value as of 1996, the date of the agreement.
262.
Id. at
Our Supreme Court concluded, in relevant part, that the
clause was ambiguous and that because there was a palpable,
documented
property,
disagreement
the
Appellate
evidentiary hearing.
as
to
the
Division
Id. at 267.
337
proper
was
way
correct
to
to
value
order
the
an
Nothing in Schwimmer, Conway, or Pacifico, is inconsistent
with
the
well-established
rules
of
contract
interpretation
discussed above, chief among them the principle that “[i]f the
language is clear, that is the end of the inquiry.”
Chubb,
supra, 195 N.J. at 238; see also e.g., Kieffer, supra, 205 N.J.
at 223.
Importantly, ExxonMobil does not attempt to offer evidence
that
paragraph
75
of
the
ACOs
could
be
susceptible
to
two
objectively reasonable alternative interpretations, whether on
its face or otherwise.
Cf. Conway, supra, 187 N.J. at 269;
Schwimmer, supra, 12 N.J. at 301.
ExxonMobil merely asserts
that the meaning of the term “natural resource damages” has
somehow changed, likening natural resource damages to something
like
an
iPhone.
(quoting
Cf.
Nester,
Schor,
supra,
301
supra,
N.J.
357
N.J.
Super.
at
Super.
210)
at
191
(internal
quotation marks omitted) (“‘An ambiguity in a contract exists if
the
terms
of
the
contract
are
susceptible
reasonable alternative interpretations.’”).214
to
at
least
two
ExxonMobil points
to no “obvious meaning” in the minds of both parties that is at
odds
with
the
plain
meaning
of
214
the
term
“natural
resource
ExxonMobil’s assertions about the Department’s prior practices, for example
that the Department had not previously pursued historical claims or claims
for soil contamination, are not only red herrings but are also inaccurate.
See, e.g., N.J. Dep't of Envtl. Prot. v. Occidental Chem. Corp., No. A-006711T2, 2012 WL 1392597, at *12 (N.J. Super. Ct. App. Div. Apr. 24, 2012)
(discussing Department’s “1988 complaint alle[ging] that at some point in the
mid-1960s, Monsanto intentionally poured waste liquids into an unlined pit on
the property, and contaminated the soil and groundwater”).
338
damages.”
Conway,
supra,
187
N.J.
at
269-70
(alteration,
citation, and internal quotation marks omitted).
ExxonMobil’s
bare assertion in this regard offers no interpretive aid of the
kind
envisioned
by
the
New
Jersey
Supreme
Court
in
Conway,
is
attempted
end-run
Schwimmer, and others.
Instead,
ExxonMobil’s
argument
around the plain language of the ACOs.
an
Extrinsic evidence “is
adducible only for the purpose of interpreting the writing—not
for the purpose of modifying or enlarging or curtailing its
terms[.]”
Schwimmer,
supra,
96
Conway, supra, 187 N.J. at 269.
N.J.
at
656;
accord,
e.g.,
ExxonMobil’s suggested reading
of the term “natural resource damages” to mean “natural resource
damages solely under federal law” or “NRD occurring only after
the
date
of
this
Agreement”
would
significantly
“curtail[ ]” the term “natural resource damages.”
“modify”
or
Schwimmer,
supra, 96 N.J. at 656; see also e.g., Harker v. McKissock, 12
N.J. 310, 322-23 (1953) (“Extrinsic evidence of a substantially
different intention is not admissible to overcome and qualify
the intrinsic force of the written words[.]”).
ExxonMobil’s
argument falls squarely within the parol evidence prohibition
and should be rejected.
b. Even if it were relevant, the evidence supports
rather than contradicts the plain meaning of the
ACOs.
339
Even assuming arguendo that extrinsic evidence was relevant
to
interpreting
the
ACOs,
the
evidence,
consistent
with
the
clear terms of paragraph 75, demonstrates that the ACOs only
settled
penalties
for
alleged
failures
to
report
historical
spills and reserved the Department’s right to bring all of its
claims for NRD.
See ACOs para 16 PEX0001, p. 5 and PEX0505, p.
4.
ExxonMobil principally relied on the testimony of Donald
Esch, an ExxonMobil negotiator, in support of its parol evidence
argument.
No
other
ExxonMobil
fact
witness
(including
John
Hannig, who also negotiated the ACOs) testified to this release
theory.
However, Mr. Esch testified he recalled absolutely no
discussion
of
NRD
during
the
negotiations.
7/23/14 (Esch Cross) 167:25-168:24.215
See
Trial.
Tr.
Brent Archibald, the Site
215
On cross examination, confronted with his June 25, 2014 direct testimony,
Mr. Esch testified as follows:
Q The fact is, you don’t recall, you don’t recall any
talk of natural resource damages whatsoever during
the ACO negotiations; isn't that correct?
A That’s correct.
Q Okay. And isn’t it true that – I’m going to go
through a list of things -- that none of these things
were discussed in your presence as it relates to the
negotiations of the ACO? NRD claims were not
discussed; is that correct?
A I don’t recall any discussions.
Q The words natural resource damages were never
talked about as part of the ACO negotiations; isn’t
that correct?
A That’s correct. As near as I can recall.
Q Natural resource injuries were not discussed,
correct?
A No.
. . . .
340
Manager
for
Bayway
and
the
individual
ExxonMobil
employees
identified as the most knowledgeable regarding NRD,216 confirmed
his understanding that paragraphs 74 and 75 of the ACOs reserved
the Department’s right to bring claims for NRD under state and
federal laws.
Trial Tr. 2/10/14 (Archibald Redirect) 181:22-24
(“Q That you understood that paragraph 75 reserves state and
federal claims for NRD? A Yes.”).
ExxonMobil’s own press releases on the ACOs also confirm
that the company knew that it had not resolved NRD, but only
penalties for failures to report historical spills.
PEX1773, p.
1 (Plant Notice dated Nov. 22, 1991 stating: “In addition to the
basic
agreement
focusing
on-site
characterization
and
remediation, Exxon has agreed to a payment of $3 million for
alleged incomplete reporting of historical spills at the three
sites and to establish a trust fund for a financial guarantee
for the overall effort.”), and p. 2 (Press Release dated Dec. 2,
1991 stating: “Under the agreement, the company will make a $3
million
payment
for
alleged
incomplete
reporting
discharges on its properties.”).
Q And you didn't discuss natural resource injuries or
natural resource damages with anyone from the State;
isn't that right?
A That is correct.”
[Trial. Tr. 7/23/14 (Esch Cross) 167:25-168:24;
see Trial Tr. 6/25/14 (Esch Direct) 69:2-14.]
216
See, supra, part I(B)(4).
341
of
past
Set against these facts, ExxonMobil’s citation to passing
references
internal
to
historic
presentation
spills
on
in
site
a
bullet-point
remediation
item
in
developments
an
(see
DEX4215, p. 4), and to draft language in an internal memorandum
on
remediation
(see
DEX4832,
35)217
p.
are
unavailing.
ExxonMobil’s citation to the testimony of Barbara Dietz-Kantor,
one of the Department’s ACO negotiators, is likewise misleading
because
Ms.
Dietz-Kantor
testified
as
to
the
function
of
paragraph 16 of the ACOs, not the release for NRD claims in
paragraph
75.
110:14-23);
See
see
Trial
also
Trial
Tr.
7/11/14
(Dietz-Kantor
Direct)
Tr.
7/11/14
(Dietz-Kantor
Direct)
107:18-19 (discussing Paragraph 16 of the ACOs).
In addition, Mr. Esch testified that ExxonMobil had its own
in house and outside counsel negotiating the agreement and that
he would not have relied upon the State’s attorneys to explain
the
terms
counsel.
of
the
Trial
ACOs
Tr.
but
7/24/14
instead
(Esch
would
Cross)
7/23/14 (Esch Cross) 164:10-165:12.
Kantor
every
testified
word
of
that
the
ExxonMobil
ACO.
See
upon
6:3-11;
his
own
Trial
Tr.
In addition, Ms. Dietz-
and
Trial
rely
its
Tr.
counsel
7/11/14
negotiated
(Dietz-Kantor
Direct) 112:25-113:4 (“Q Do you remember any negotiations with
ExxonMobil over the terms reflected in paragraph 75? A I do not
217
See DEX4832, p. 1 (“Attached for your consideration and comment is a draft
of the Project Execution Plan . . . .
I would like to emphasize the word
draft[.]”).
342
specifically remember discussions about that paragraph. There
were a lot of discussions, protracted discussions about every
word.”); PEX0001, p. 15 / PEX0505, p. 14 (reflecting that the
parties changed the term “shall” to “may” in paragraph 60 by
interlineation); Trial Tr. 8/29/14 (Messina Cross) 61:19-64:5
(same).
ExxonMobil
has
relied
on
DEX4822,
an
Administrative
Consent Order (ACO) for an unrelated site executed between the
Department and Occidental Chemical Corporation as well as other
responsible
parties
to
support
its
position
that
the
preserved natural resource damage claims under federal law.
ACOs
As
described in correspondence to the Court on October 1, 2014, the
State’s objection to the use of this exhibit on the grounds of
relevance was sustained and thereafter ExxonMobil did not seek
to move the document into evidence.
Despite this, ExxonMobil
maintains that the document was admitted. Even if this Court
finds that the exhibit was admitted, the ACO does not support
ExxonMobil’s argument.
As described above, whether or not there
was boilerplate language provided to ExxonMobil, ExxonMobil’s
attorneys directly negotiated every word of the ACOs.
As such,
the agreements made by other parties, and the impact thereof, is
irrelevant to the dispute before this Court.
Thus,
even
considering
evidence
proffered
by
ExxonMobil
beyond the four corners of the ACOs, there can be no doubt that
the Department reserved its right to bring this suit for all
343
natural resource damages, whenever occurring.
reject
ExxonMobil’s
ambiguity
in
the
attempt
face
of
at
this
paragraph
late
75’s
The Court should
stage
clear
to
and
inject
manifest
reservation of the State’s right to bring NRD claims.
3.
Policy and regulatory arguments
a. Failure to “speak with one voice.”
ExxonMobil
has
argued
that
ONRR’s
approach
to
natural
resource damage claims in this case is somehow improper as it is
different from the other programs overseen by the Department.
This argument is flatly contradicted by both the realities of
the operations of the Department and the record before this
Court.
ExxonMobil has primarily latched on to the Brownfield218
Program, the Landfill219 Program, Bureau of Land Use Regulation220
(which oversees the regulation of freshwater wetland) and the
218
Trial Tr. 8/29/14 (Messina Cross) 80:3-25 (discussing the former ExxonMobil
property on which a Walmart was constructed as part of a brownfield
redevelopment and confirming that ExxonMobil’s sole involvement was the
continuation of its remedial obligations).
219
As the State’s deposition designee from the Bureau of Solid and Hazardous
Waste Management that oversees landfill management and closures, Michael
Gerchman confirmed that the areas referred to by ExxonMobil as landfills are
not regulated under his program and that he has received no closure plans
associated with the Bayway or Bayonne sites.
Trial Tr. 8/13/14 (Gerchman
Direct) 84:6-85:11 (confirming that no ExxonMobil waste disposal area is
overseen by his Department or covered under the Landfill Contingency and
Closure Act); see also, id. at 87:4-7.
220
The State’s deposition designee for the Wetlands Program, Virginia Kopkash,
explained that the Wetlands Program is not connected to ONRR.
Trial Tr.
8/11/14 (Kopkash Vid. Desig.) 246:21-25; see also,
Trial Tr. 8/11/14
(Kopkash Direct) 232:4-5, 237:14-239:28 (Explaining that designation as
freshwater wetlands under the wetlands program does not analyze or indicate
that the wetlands are a “healthy habitat”).
344
Site Remediation Program in this regard, asserting that natural
resource
damage
claims
against
it
policies of these other programs.
are
inconsistent
with
the
The fact that the more than
50 programs and units within the Department have different goals
and policies is not only understandable, it is expected.
Moreover, the claims in this case are brought by a natural
resource trustee, under a program overseen by the Office of
Natural Resource Restoration, not these other programs, and is
brought
pursuant
provisions.
to
specific
Department
legal
theories
decisionmakers
were
respect to Department policy and goals.
(Campbell
Direct)
29:25-30:22,
and
statutory
consistent
with
See Trial Tr. 8/7/14
34:8-23,
37:8-22
(discussing
distinctions among regulations, policies, and practices, and the
interplay with the Department’s delegated discretion).
For
pick,”
instance,
confirmed,
Bradley
for
Campbell,
example,
the
ExxonMobil’s
“#1
draft
Department’s
policy
or
practice of treating contamination as tantamount to injury, see
e.g., Trial Tr. 8/7/14 (Campbell Direct) 147:1-19, 148:17-149:5,
151:23-152:25, 153:1-154:1, 167:18-23, and the meaning of predischarge condition, Trial Tr. 8/7/14 (Campbell Direct) 162:22172:5, 178:5-180:7.
Former Commissioner Campbell’s testimony is
consistent with the testimony of other witnesses in Department
leadership, including, most saliently, John Sacco.
See, e.g.,
Trial Tr. 4/30/14 (Sacco Cross) 209:22-210:5 (same); Trial Tr.
345
5/1/14 (Sacco Cross) 46:15-47:2, 84:19-85:16 (contamination is
tantamount to injury); Trial Tr. 5/12/14 (Sacco Cross) 99:15100:2 (same); Trial Tr. 4/30/14 (Sacco Cross) 148:22-149:9 (predischarge condition).
While ExxonMobil attempted to elicit testimony to create
the appearance of dissent among Department personnel, it was
unsuccessful.
See, e.g., Trial Tr. 8/11/14 (Hahn Direct) 64:7-
13; (“Q As you sit here today, do you have an understanding or a
recollection
of
what
is
Predischarge
is
before
meant
the
by
predischarge
pollutant
was
condition?
released
into
A
the
environment.”), Trial Tr. 8/11/14 (Hahn Redirect) 126:10-20 (the
Department would look at injury on a “case-by-case basis” and an
investigation
natural
might
resource);
be
required
Trial
Tr.
to
determine
7/11/14
“impact”
104:6-105:25
on
a
(Barbara
Dietz-Kantor Direct) (detectability of contamination is not the
only criterion, and agreeing that toxicology could be relevant
to determining “ecological injury”); Trial Tr. 8/8/14 (Jackson
Direct) 99:1-13 (agreeing that in the abstract, though not with
“this particular site,” that contamination might not necessarily
cause “damage”).
None of this testimony refutes or calls into
question the unequivocal testimony of the State’s witnesses.
In
particular,
the
Department’s
consistency
in
defining
“injury” is further reflected by Former Commissioner Campbell’s
testimony
that,
in
his
experience,
346
both
natural
resource
trustees and the regulated community have long been aware that
trustees treat contamination as tantamount to injury.
As Mr.
Campbell
itself
explained,
the
notion
that
contamination
is
injurious,
is consistent with the practice of federal
trustees implementing the statute and it –
you know, I think it is generally a position
that the regulated community has been aware
of for many years.
And I say that because
among the amendments to NRD that were sought
by the regulated community during, you know,
during the 12 years or so I was working on
this at the federal level were amendments to
limit the statute to say that mere presence
of contamination was not an injury. And so
that experience certainly suggested to me
that it was well known that in the regulated
community that a trustee -- the trustees
took that position.
[Trial Tr. 8/7/14 (Campbell Direct) 147:7147:19.]
ExxonMobil’s
refrain
that
“contamination
does
not
equal
injury” rings particularly hollow given the evidence of severe
contamination at Bayonne and Bayway.
As John Sacco described
it, “at the Exxon facilities, it's not just contamination, it's
complete
and
total
destruction
They're covered with waste.”
99:23-100:2.
experience
And
in
as
the
public's
resources.
Trial Tr. 5/12/14 (Sacco Cross)
confirmed
evaluating
of
by
every
contaminated
witness
sites
either
with
any
in
the
context of Site Remediation or for a Natural Resource Damage
347
Assessment, such an analysis is performed on a case by case
basis—taking into account the particulars of each site.
ExxonMobil’s argument that the Department, as a whole, is
required to speak with “one voice” is a red herring and is not
supported
by
the
evidence
in
case.221
this
It
is
also
an
impractical argument when dealing with an agency of government
with multiple legislative missions.
In addition, the argument
is another effort to revisit ExxonMobil’s unsubstantiated claim
that
it
was
not
on
notice
of
its
natural
resource
damage
obligations and liabilities.
b. ExxonMobil’s
argument
insisting
that
the
Department must promulgate regulations for every
conceivable
scenario
is
refuted
by
sound
principles of administrative law as well as
common sense.
The
Spill
regulations
Act
enable
and
and
the
guide
duly
the
promulgated
Department’s
enforcement actions at Bayonne and Bayway.
discretion
is
afforded
to
the
technical
Trustee
present
A great deal of
in
selecting
an
appropriate restoration plan given the particular facts of every
case.
ExxonMobil has provided no support for its position that
the
Department
must
promulgate
regulations
to
cover
every
221
Finally, to the extent that ExxonMobil contends that the Department failed
to speak with one voice with respect to coordinating remediation and
restoration, as discussed above, in part II(B)(2), SRP and ONRR necessarily
have different roles. Additionally, ExxonMobil was offered an opportunity to
coordinate, but it refused and has also not performed any natural resource
restoration. As such it cannot avail itself of this argument.
348
conceivable scenario that may arise.
The decision-making that
informs the exercise of the Department’s enforcement discretion
need not be accompanied by formal rulemaking.
Cf. Metromedia,
Inc. v. Dir., Div. of Taxation, 97 N.J. 313, 331-32 (1984).
The
Department’s application of its enforcement discretion in any
given
case,
coverage
by
definition,
encompassing
a
is
not
large
“intended
segment
of
to
the
have
wide
regulated
or
general public,” but “rather [only] . . . an individual or a
narrow
select
group”;
it
is
not
“intended
to
be
applied
generally and uniformly to all similarly situated persons”; it
is
not
“designed
to
operate
only
in
future
cases,
that
is,
prospectively”; it does not “prescribe[ ] a legal standard or
directive”;
and
it
does
not
reflect
a
new
administrative
“policy” or “interpretation of law or general policy.”
see
also
Trial
(discussing
regulations
Tr.
8/7/14
differences
and
interplay
(Campbell
among
with
Direct)
policies,
Trustee’s
Ibid.;
29:25-30:22
practices,
discretion
and
and
explaining that “the policy of having a fiduciary responsibility
as
a
trustee
to
evaluate
potential
claims
and
pursue
those
claims where appropriate, . . . is driven by the statute and not
by the views or caprice of any given person administering the
statute”), 37:8-22 (comparing fiduciary obligations of Trustee
to exercise enforcement discretion to same obligation of U.S.
Attorneys in criminal cases); cf., e.g., In re N.J.A.C. 7:1B-1.1
349
et seq., 431 N.J. Super. 100, 134 (App. Div. 2013) (quoting In
re Request for Solid Waste Util. Customer Lists, 106 N.J. 508,
519
(1987))
(“Permissible
investigating,
publicizing,
‘informal
agency
planning,
action
and
includes
supervising
a
regulated industry.’”); In re New Jersey State Planning Comm’n
Resolutions No.2003-03 & No.2003-04, No. A-1629-03T3, 2005 WL
3822074, at *11-13 (N.J. Super. Ct. App. Div. Mar. 3, 2006)
(upholding agency’s informal development of a “State Plan” for
“the growth, development, renewal and conservation of the State
and its regions” because it was “not a regulation, but a policy
guide,” “a set of recommendations” that “creates a vision or
design for the future” that “provides a context, a vision, and a
process within which . . . more specific plans can be developed
and implemented to achieve the policy objectives of the planning
area”)..
Ultimately, ExxonMobil’s disagreement amounts to one over
the proper interpretation of the Spill Act itself, which is a
legal
endeavor,
and
associated
definition of “injury.”
regulations,
such
as
the
As discussed herein, the Department’s
application of the Spill Act and the technical regulations is
both consistent with the Legislature’s directives and reasonable
under
the
facts
of
this
case.
This
Court
should
reject
ExxonMobil’s attempt to interpose additional red tape in the
restoration process by requesting formal rulemaking for every
350
conceivable
principles,
Department
as
well
action.
as
common
Sound
sense,
administrative
contradict
law
ExxonMobil’s
argument.
c. In contending that the Department purportedly
brings this action prematurely or otherwise
failed to adhere to the technical regulations,
ExxonMobil conflates ecological risk assessment
with natural resource damage assessment, two
importantly different processes.
ExxonMobil persists in conflating two processes necessary
for site remediation: baseline ecological evaluations (BEE) and
ecological risk assessments (ERA), with natural resource damage
assessments (NRDA), the process necessary for site restoration.
As discussed supra, those processes have important differences
in
their
respective
purposes
and
procedures
and
ExxonMobil’s
effort to shield itself from the scope of the State’s natural
resource
damage
claims
by
focusing
on
risk
assessment
is
unfounded.
In
sum,
in
arguing
that
the
Department’s
enforcement
actions at Bayonne and Bayway were premature per the technical
regulations,
processes
Even
ExxonMobil
relating
beyond
to
this
persists
site
in
remediation
threshold
conflating
and
site
distinct
restoration.
misapprehension,
however,
ExxonMobil’s argument is also misplaced because, as the record
demonstrates,
the
ERA
conducted
351
at
the
Bayway
site
was
a
“hybrid” BEE and ERA.222
Trial Tr. 5/1/14 (Sacco Cross) 51:21-
53:2, 57:5-22, 59:4-19; see also DEX5063, at p. 2 ¶ 2 (Draft
Letter from Michael Kenny to John Hannig noting:
[t]he Department clarified that a BEE is the
basic equivalent of a USEPA screening level
risk assessment. Therefore, future BEEs must
include (as per the NJDEP's July 9, 1996
comment letter) tables comparing benchmarks
to EEZ contaminant levels, comparison of
benchmarks to contaminant levels in specific
EEZs, and use of additional screening values
for soil (as per the BEE for the Exxon
Bayway Refinery)).
Moreover, as the Appellate Division recognized in its 2011
opinion,
ExxonMobil’s
“natural
resource
remediation
is
(App.
2011)
Div.
contention
damages
ongoing,”
during
that
appeal
that
be
sought
while
site
420
N.J.
should
ExxonMobil,
contradicts
ExxonMobil’s
Super.
assertion
at
409
that
the
State waited too long in bringing its natural resource damage
claims.
timed
and
The Department’s enforcement action is appropriately
consistent
with
the
requirements
of
the
technical
regulations and the ecological needs unique to the Department’s
site restoration effort.
4.
Prejudgment interest
Prejudgment interest is made available in tort actions by
Rule 4:42-11(b) of the Rules Governing the Courts of the State
222
The Bayonne BEE was very limited in scope and only considered
terrestrial habitats, of which there are none remaining at Bayonne.
352
site
of
New
Jersey.223
“Although
prejudgment
interest
in
a
tort
action is expressly governed by R. 4:42–11(b), ‘the award of
prejudgment interest on contract and equitable claims is based
on equitable principles.’”
Litton Indus., Inc. v. IMO Indus.,
Inc. et al., 200 N.J. 372, 390 (2009) (quoting Cnty. of Essex v.
First Union Nat'l Bank, 186 N.J. 46, 61 (2006)).
“The allowance
of prejudgment interest is a matter of discretion for the trial
court.”
Essex, supra, 186 N.J. at 61 (citing In re Estate of
Lash, 169 N.J. 20, 34 (2001)).
“Similarly,
the
rate
at
which
prejudgment
interest
calculated is within the discretion of the court.”
is
Litton,
supra, 200 N.J. at 390 (citing Musto v. Vidas, 333 N.J. Super.
52, 74–75 (App. Div. 2000)).
[T]he primary consideration in awarding
prejudgment interest is that “the defendant
has had the use, and the plaintiff has not,
of the amount in question; and the interest
factor simply covers the value of the sum
awarded for the prejudgment period during
which the defendant had the benefit of
monies to which the plaintiff is found to
have been earlier entitled.”
[Ibid. (quoting Rova Farms Resort, Inc. v.
Investors Ins. Co., 65 N.J. 474, 506
(1974)).]
223
Rule 4:42-11(b) provides in part that:
the court shall, in tort actions, including products
liability actions, include in the judgment simple
interest, calculated as hereafter provided, from the
date of the institution of the action or from a date
6 months after the date the cause of action arises,
whichever is later, provided that in exceptional
cases the court may suspend the running of such
prejudgment interest.
353
“Unless
the
manifest
allowance
denial
interfere.’”
of
of
prejudgment
justice,
an
interest
appellate
‘represents
court
should
a
not
Ibid. (quoting Essex, supra, 186 N.J. at 61); see
also e.g., Meshinsky v. Nichols Yacht Sales, Inc., 110 N.J. 464,
478–79 (1988) (holding that denial of prejudgment interest was
an abuse of discretion in a contract case)).
The Spill Act does not preclude the award of prejudgment
interest.
See N.J.S.A. 58:10–23.11g; R. 4:42-11(b) (providing
that prejudgment interest is available in tort actions “except
as provided by law”); Interfaith Cmty. Org. v. Honeywell Int’l,
Inc., 263 F. Supp.2d 796, 859 (D.N.J. 2003) (observing that
prejudgment interest is available for the Spill Act suits as it
is not precluded by the Act), aff’d, 399 F.3d 248 (3d Cir.
2005).
cases,
Courts have awarded prejudgment interest in Spill Act
in
particular
in
instances
in
which
the
responsible
parties engaged in “dilatory tactics” that delayed remediation
and
restoration
of
contaminated
sites
and
“rebuffed
.
.
.
entreaties” to cooperate in cleanup in favor of litigation.
Similarly, the common law theories of strict liability and
public
strictly
nuisance,
liable,
for
do
which
not
ExxonMobil
preclude
354
an
was
award
previously
of
found
prejudgment
interest.224 See Interfaith Cmty. Org., supra, 263 F. Supp.2d at
822, 825-26, 859 (finding, in a RCRA and New Jersey common law
case arising from Honeywell’s contaminated chromium production
site,
that
Honeywell
“embarked
on
a
dilatory,
foot-dragging
scheme for twenty years” that significantly delayed remediation
of
the
site,
interest
as
flowing
from
and
to
awarding,
the
among
plaintiff’s
Honeywell’s
other
claim
strict
things,
for
liability
prejudgment
lost-rent
under
damages
New
Jersey
common law); Hatco Corp. v. W.R. Grace & Co. Conn., 849 F. Supp.
931, 980 (D.N.J. 1994) (holding prejudgment interest available
in Spill Act contribution action and holding that the equities
favored
[the
prejudgment
plaintiff’s]
remediation]
and
interest
entreaties
consciously
because
[to
the
become
chose
to
defendant
“rebuffed
involved
travel
the
in
site
litigation
route”), aff’d in part, vacated on other grounds, and remanded,
59 F.3d 400, 414 (3d Cir. 1995) (addressing CERCLA right to
jury).
The same factors are present in ExxonMobil’s case.
the
public
whole,
and
given
the
long
course
of
hard
To make
fought
litigation leading up to restoration of the public’s natural
224
In addition, as the Spill Act has been held to codify common law, Ventron,
supra, the availability of prejudgment interest in toxic tort claims supports
the application of prejudgment interest to the Spill Act. See, e.g., Milazzo
v. Exxon Corp., 243 N.J. Super. 573 (Law Div. 1990) (finding that where
amendment to the NJ Law Against Discrimination provided that “all remedies
available in common law tort actions shall be available to prevailing
plaintiffs”, the amendment incorporated the Court Rule providing for
prejudgment interest under the Act).
355
resources, an award of prejudgment interest pursuant to R. 4:42–
11(b) and the rate schedule set by R. 4:42-11 or the Court’s
inherent equitable powers is appropriate.
See, e.g., Litton,
supra, 200 N.J. at 390.
ExxonMobil has asserted that the Department is not entitled
to use the HEA method in determining the Department’s damages
because the model compounds the value of the NRD claim prior to
the date of its filing suit, in contravention of R. 4:42-ll(b).
This argument is without merit.
restoration based damages.
damages
associated
with
The HEA formula calculates
The availability of loss of use
destruction
of
natural
resources
was
already resolved in the State’s favor by the Appellate Division.
ExxonMobil, supra, 393 N.J. Super at 407.
The issue of interest
during the period in which litigation has been necessitated is
distinct
from
the
calculation
interest
rule
simply
allows
of
for
damages.
the
The
application
prejudgment
of
interest
rates to a damage award, whereas here, a party has proven a
claim and was deprived of the benefits of the claim during the
period of litigation.
506
(explaining
that
See, e.g., Rova Farms, supra, 65 N.J. at
“[t]he
equitable
purpose
of
prejudgment
interest is to compensate a party for lost earnings on a sum of
money to which it was entitled, but which has been retained by
another”).
ExxonMobil’s position would result in a wholesale
rejection of any formula that incorporates the time-value of
356
money through use of a discount rate.
The State cannot be made
whole without the inclusion of prejudgment interest.
5.
ExxonMobil’s due process arguments lack merit
ExxonMobil tried to inject a constitutional dimension into
this case in various respects, including in its opposition to
the admission of site history reports and other site remediation
documents
as
Department
ancient
ought
environmental
occurring
laws
before
documents,
not
to
be
and
allowed
compensate
1977
when
to
for
the
its
contention
enforce
and
that
the
remediate
Spill
Act
the
State’s
pollution
was
passed.
ExxonMobil’s invocation of constitutional principles is of no
avail
in
this
constitutional
damages
arguments
trial.
are
Most
attempts
to
of
ExxonMobil’s
reserve
issues,
presumably for post-judgment or appellate review, but they are
perfunctory and not well elaborated, and, moreover, precluded by
the
law
of
periodically
suggesting
this
case.225
persists
that
this
in
Court
Nevertheless,
its
must
because
constitutional
perform
an
ExxonMobil
arguments,
analysis
in
connection with any judgment, the Department addresses why these
arguments continue to be misplaced.
a. Ancient document rule
225
Additionally, as pointed out by the Court during oral argument on the
State’s Request for Judicial Notice, this constitutional argument regarding
due process and takings is not included in the Pretrial Order. Trial Tr.
4/28/14 (Judicial Notice Argument) 14:1-15:9.
357
ExxonMobil argued throughout the trial that the admission
of the site history reports for Bayway and Bayonne, much of
which accompanied Mark Walters’ testimony,226 as well as other
materials prepared and/or submitted to the Department in the
context of Site Remediation activities, violated ExxonMobil’s
due process rights.
However, ExxonMobil conceded in its letter
brief, wherein it initially raised this issue, that it:
recognize[d] that Rule 803(c)(16) is binding
on the Court, but . . . reserve[d] the right
to argue at an appropriate time to an
appropriate court that the rule should be
modified in light of changed circumstances
since its adoption[,] . . . includ[ing]
innovations
in
document
storage
and
retrieval technology.
[See Letter Br. of ExxonMobil (1/12/14) at 3
n.1.]
Accordingly,
the
Department
understands
ExxonMobil
to
have
waived this argument for present purposes.
Regardless,
ExxonMobil’s
argument
lacks
merit.
The
admission of historical documents into evidence does not violate
a civil litigant’s right to due process.
authority
to
enact
evidentiary
constitutional concerns.
rules
States have broad
without
implicating
ExxonMobil asserts that the ancient-
document rule is somehow invalid in the circumstances of this
226
See, e.g., Bayway Site History Report Vols. I & II PEX0689 A-B and Bayonne
Site History Report Vols. I-III PEX0694 A-C; see Trial Tr. 1/13/14 (Colloquy)
183-84, 202; Trial Tr. 1/14/14 (Colloquy) 78-80 (site history reports
admitted, Exxon counsel rested on argument in letter brief regarding
purported inadmissibility).
358
case.
aid
However as with many evidentiary rules, it is simply an
fact-finding.227
to
longstanding
support
to
muster.228
documents
exception
the
The
to
notion
the
that
ancient-document
hearsay
the
rule
rule,
passes
rule
lending
is
a
strong
constitutional
Courts have routinely affirmed the admissibility of
created
considering
decades
whether
the
and
even
ancient
centuries
nature
of
before
the
without
documents
introduced additional fairness or due process concerns—including
227
See In re Commitment of G.G.N., 372 N.J. Super. 42, 57-58 (App. Div. 2004)
(“[D]ue process demands that evidence be reliable in substance not that its
reliability be evaluated in ‘a particular manner.’” (citation omitted));
Keith A. Findley, Judicial Gatekeeping of Suspect Evidence: Due Process and
Evidentiary Rules in the Age of Innocence, 47 Ga. L. Rev. 723, 730 (2013)
(“Issues related to the reliability of evidence . . . are generally deemed
outside the scope of constitutional regulation and are instead left to state
law and the rules of evidence.”); State v. Bunyan, 154 N.J. 261, 266 (1998)
(citing Montana v. Egelhoff, 518 U.S. 37, 43 (1996) (“Traditionally, rules of
evidence were the sole province of state law.
That viewpoint was recently
affirmed by the United States Supreme Court[.]”).
228
See, e.g., Wright & Miller, 31 Fed. Prac. & Proc. Evid. § 7113 (1st ed.
1971) (“The common law . . . developed an . . . ancient-documents exception
to the hearsay rule.”). That a rule or practice was permitted at common law
makes it more likely to pass constitutional muster in the modern day.
See
Montana v. Egelhoff, 518 U.S. 37, 43-44, 116 S. Ct. 2013, 2018, 135 L. Ed. 2d
361 (1996) (citing, among other things, Medina v. California, 505 U.S. 437,
446 (1992) (“Historical practice is probative of whether a procedural rule
can be characterized as fundamental.”) (explaining that “[o]ur primary guide
in determining whether [a] principle . . . is fundamental is, of course,
historical practice.
Here that gives respondent little support[,]” and
reviewing various sources setting forth the evidentiary rule at common law in
England and the early United States)). Cf. Nat’l Bd. Labor Relations v. Noel
Canning, 134 S. Ct. 2550, 2567 (2014) (emphasizing that the Court “put[s]
significant weight upon historical practice” and that “long settled and
established practice is a consideration of great weight” in constitutional
adjudication) (citation omitted) (alteration omitted); Fisher v. United
States, 425 U.S. 391, 420 & n.4 (1976) (Brennan, J., concurring) (“‘The
language of the Constitution cannot be interpreted safely except by reference
to the common law and to British institutions as they were when the
instrument was framed and adopted.’”).
359
cases in with ExxonMobil introduced the ancient documents in
question.229
The dearth of contrary authority speaks volumes.230
This Court should not revisit its sound decision to allow
the site history reports and related materials into evidence.
b. Due process and takings
At various stages of trial, ExxonMobil has contended that
the Department’s enforcement of the Spill Act and its common law
environmental
principles.
counterparts
implicate
due
process
or
takings
The gravamen of ExxonMobil’s arguments is that the
“retroactive”
application
of
the
State’s
environmental
laws
would be unfairly surprising or burdensome. See, e.g., Trial Tr.
4/28/14
(Oral
Argument
on
the
State’s
Request
for
Judicial
Notice and the State’s Motion in Limine to Exclude Professor
Klein) 14:1-15:9, 15:24-17:9, 92:20-95:25, 101:7-102:8 (raising
229
See Sokaogon Chippewa Cmty. v. Exxon Corp., 805 F. Supp. 680, 686-710 (E.D.
Wis. 1992), aff’d, 2 F.3d 219 (7th Cir. 1993) (permitting introduction of
treaty documents and related letters dated between 1842 and 1854 under the
ancient-document rule to establish that plaintiff Tribes did not have certain
property rights to land acquired by ExxonMobil); Johnson v. Exxon Co. U.S.A.,
No. 01-98-01220-CV, 1999 WL 417372 (Tex. App. June 24, 1999) (unpublished)
(affirming, in toxic tort case, admissibility of early 1940s records relating
to ExxonMobil’s transfer of real property, on which hazardous substances were
stored, to public-school district under Texas’ ancient-document rule); see
also, e.g., George v. Celotex Corp., 914 F.2d 26, 28-30 (2d Cir. 1990)
(affirming admission of an inculpatory unpublished, 1947 scientific report on
asbestos plants); Columbus-Am. Discovery Group, Inc. v. Unidentified, Wrecked
& Abandoned Sailing Vessel, 742 F. Supp. 1327, 1342-43 (E.D. Va. 1990)
(holding that newspaper articles dealing with sinking of ship published in
1857 were admissible under ancient-document rule), rev’d on other grounds,
974 F.2d 450 (4th Cir. 1992).
230
In its letter brief, ExxonMobil cited for support E. Enters. v. Apfel, 524
U.S. 498 (1998), and Nobrega v. Edison Glen Assocs., 167 N.J. 520, 544-45
(2001). Neither case addressed the ancient document rule. Moreover, for the
reasons expressed in further detail below both cases are factually and
legally distinguishable from the present case.
360
“as
applied”
retroactive
constitutional
application
of
issues
the
Spill
associated
Act
in
with
this
the
case).
ExxonMobil has indicated, however, that it merely intends to
reserve these issues for future proceedings.
Tr. Br. at 121).
(E.g., ExxonMobil
Indeed, pursuant to Ventron, supra, 94 N.J. at
498, and the law of this case as discussed above, see 1/22/09
Letter
Opinion,
(Anzaldi,
J.)
and
5/8/14
Letter
Opinion,
on
Pl.’s Mtn. in Limine to Exclude Professor Klein, p. 4-5, the
Spill Act and common law of New Jersey regarding environmental
contamination
and
natural
resource
damages
are
retroactive.
ExxonMobil did not adduce any reason why that liability-phase
ruling ought to be revisited in this trial.
Nevertheless, the
Department briefly responds to ExxonMobil’s arguments.231
ExxonMobil’s reliance on Eastern Enterprises v. Apfel, 524
U.S. 498, 118 S. Ct. 2131, 141 L. Ed. 2d 451 (1998) (plurality
op.),
and
Nobrega
v.
Edison
Glen
Associates,
167
N.J.
520
(2001), for its constitutional due process and takings argument,
is misplaced for a number of reasons, chief among them that
retroactive liability under the Spill Act and State common law
simply recognizes that the law has never allowed individuals or
corporations to pollute with impunity, nor authorized them to
231
The Department reserves the right to assign additional reasons at a later
point should ExxonMobil continue to press these constitutional arguments in
the future.
361
foist
the
costs
of
environmental
contamination
onto
the
i.
Retroactive application of the Spill
Act is not a due process violation.
public.232
To the extent the Court considers ExxonMobil’s due process
argument regarding the retroactive application of the Spill Act,
ExxonMobil’s argument can be quickly rejected.
The primary case repeatedly cited by ExxonMobil during trial
to
support
its
due
process
argument
is
Eastern
Enterprises.
Contrary to ExxonMobil’s arguments, Eastern Enterprises does not
support
ExxonMobil’s
due
process
contentions.
This
is
a
plurality opinion, and the decision by the plurality was not
made on due process grounds.
The plurality opinion, authored by
Justice O’Connor, held:
Eastern also claims that the manner in which
the Coal Act imposes liability upon it
violates substantive due process. . . .
Because we have determined that the third
tier of the Coal Act’s allocation scheme
violates the Takings Clause as applied to
Eastern, we need not address Eastern’s due
process claim.
[E. Enters., supra, 524 U.S. 537-38.]233
232
Constitutional jurisprudence in this context recognizes preexisting,
“inherent limitations” on a private party’s use of resources affecting the
public trust. See Lucas v. S.C. Coastal Council, 505 U.S. 1003, 1028-29, 112
S. Ct. 2886, 120 L. Ed. 2d 798 (1992); see also, e.g., Raleigh Ave. Beach
Ass’n, supra, 185 N.J. at 51-52 (detailing long history of public trust
doctrine at common law).
233
The plurality did not reach the substantive due process question. Id. at
537-38.
Justice Kennedy, concurring in part and dissenting in part, wrote
that he would not have reached the takings question in this case or resolved
362
ExxonMobil
also
process argument.
of
substantive
found
it
relies
on
Nobrega
to
support
its
due
However, despite the Nobrega Court’s review
due
process
appropriate
to
principles,
avoid
the
the
Court
ultimately
constitutional
question
presented, a choice the Court evidently made due to the unusual
facts of the case, see id. at 545-50.
The
plaintiffs
were
homeowners
who
had
purchased
condos
from the defendants, the condo complex’s developers and sellers,
before 1991.
The plaintiffs alleged that the defendants had
knowingly failed to disclose that the complex was located very
near
to
Jersey’s
several
New
Superfund
Residential
sites,
Real
in
Estate
contravention
Off-Site
of
New
Conditions
Disclosure Act, the New Jersey Consumer Fraud Act, and related
common law principles.
Id. at 526-27.
The plaintiffs further
alleged that once the complex’s proximity to the Superfund sites
became
known,
precipitously.
the
value
Id. at 527-28.
of
their
properties
dropped
The defendants moved to dismiss,
it in the same way as the majority, but that he believed the Coal Act
violated Eastern Enterprises’ substantive due process rights because it had a
significant retroactive effect and bore little relation, if any, to any
conduct on the part of the company. Id. at 549-50 (Kennedy, J., concurring
in part and dissenting in part). While Justice Kennedy urged that the case
implicated substantive due process, the Third Circuit has held that Justice
O’Connor’s plurality opinion, and not Justice Kennedy’s separate opinion, is
the controlling opinion of the Court. Berwind Corp. v. Comm'r of Soc. Sec.,
307 F.3d 222, 234 (3d Cir. 2002) (citing Marks v. United States, 430 U.S.
188, 193, 97 S. Ct. 990, 51 L. Ed. 2d 260 (1977) (explaining circumstances
under which plurality opinions of the Court are controlling)).
Therefore,
Eastern Enterprises is properly viewed as a takings case—not a due process
case.
363
contending that a provision of the Disclosure Act exonerated
sellers from liability for their failure to disclose off-site
conditions prior to 1995, the Act’s effective date, even though
similar remedies were previously available under the Consumer
Fraud Act and the common law.
Id. at 528.
The Supreme Court held that the motion to dismiss should
have been denied.
contention
that
substantive
due
The Court avoided reaching the plaintiffs’
the
retroactivity
process,
id.
at
of
the
545,
statute
instead
violated
invoking
an
“equitable” principle favoring the preservation of preexisting
rights of action and remedies, especially when the loss of those
rights or remedies would be essentially fortuitous, id. at 54850 (“[A] key element in evaluating retroactive change is whether
the
Legislature
Retroactive
has
denied
application
of
a
claimant
the
all
Disclosure
remedies
Act
would
. . ..
deprive
those plaintiffs of any remedy for violation of a right—the
right to disclosure—that the Disclosure Act affirms, although in
a different manner than that [previously available] . . ..
We
find it manifestly unjust to deprive plaintiffs of the right to
notification
merely
because
they
suffer
the
misfortune
of
standing in the window of time between” two periods in which
plaintiffs could seek such relief).
The Court reversed and
remanded the case for an application of those principles in the
first instance.
Id. at 550.
364
Here, the same concerns are not present — the “retroactive”
application
of
the
Spill
Act
does
not
create
any
unfair,
fortuitous dissymmetry among litigants, and the Spill Act does
not extinguish any remedies or rights of action.
The Nobrega
Court expressed equivocation regarding the due process question,
instead
relying
presented,
Enterprises.
not
to
much
on
the
like
unusual
the
U.S.
factual
Supreme
scenario
Court
in
the
case
Eastern
Here, ExxonMobil has had a preexisting obligation
pollute
the
State’s
natural
resources;
its
liability
under the common law and the Spill Act is no different from that
of any other polluter in the State, except perhaps with respect
to the magnitude of damage the company’s pollution has caused.
See Ventron, supra, 94 N.J. at 499; N.J. Dep’t Envtl. Prot. v.
Exxon Mobil, supra, 393 N.J. Super. at 400.
ii.
Retroactive application of the Spill
Act is not a takings violation.
Nor does Eastern Enterprises support a takings argument.
As noted, Eastern Enterprises was decided by the plurality on
takings grounds, as opposed to due process.
Eastern Enterprises
is highly fact-intensive and limited in its reach.234
234
As the Third Circuit recognized, “the only binding aspect of the fragmented
decision in Eastern Enterprises is its ‘specific result,’ i.e., the Act is
unconstitutional as applied to Eastern Enterprises. . . . [Therefore, that
case] . . . mandates judgment for the plaintiffs only if they stand in a
substantially identical position to Eastern Enterprises with respect to both
the plurality and Justice Kennedy’s concurrence.”
Berwind, supra, 307 F.3d
at 234 (citations and quotation marks omitted).
365
The Court analyzed the three most significant factors it
identified
-
the
economic
impact
of
the
regulation,
its
interference with reasonable investment-backed expectations, and
the character of the governmental action.
524 U.S. at 529.
E. Enters., supra,
And, the plurality held that the Coal Act
effected an unconstitutional regulatory taking because: (1) the
economic impact was substantial, depriving the company of $50 to
$100
million,
which
was
disproportionate
to
the
company’s
“experience with the plan” because the company contributed to
the previous funds and ceased its mining operations in 1965, id.
at 530; (2) the Act “substantially interfere[d] with Eastern’s
reasonable
requirement
investment-backed
of
funding
expectations”
former
employees’
by
imposing
lifetime
a
health
benefits, when no such requirement was in place when the company
was
in
the
coal-mining
business,
decades
after
the
company
ceased to participate in the industry, id. at 532; and (3) the
“nature of the government action” was “quite unusual” in that
“Congress’
solution
to
the
grave
funding
problem
that
it
identified single[d] out certain employers to bear a substantial
burden, based on the employers’ conduct far in the past, and
unrelated to any commitment that the employers made or to any
injury they caused,” id. at 537.
This same analysis would produce a different outcome under
the facts of this case.
For example, it was significant in
366
Eastern Enterprises that there was no similar law in existence
prior to the Coal Act.
In discussing the retroactive liability,
the Court stated, “legislation might be unconstitutional if it
imposes
severe
retroactive
liability
on
a
limited
class
of
parties that could not have anticipated the liability, and the
extent of that liability is substantially disproportionate to
the parties’ experience.” Id. at 528.
This is not the case
here.
One of the rationales for the retroactive application of
the
Spill
Act
in
New
Jersey
is
that
the
Spill
Act
simply
codified existing law. ExxonMobil, supra, 393 N.J. Super. at
400.
New Jersey has historically had a panoply of common law
remedies available to it, both before and after the enactment of
the Spill Act.
“[O]ur Supreme Court has held that the Spill Act
did ‘not so much change substantive liability as it establishes
new remedies for activities recognized as tortious both under
prior statutes and the common law.’”
499.
In
other
words,
the
Spill
Ventron, supra, 94 N.J. at
Act
“do[es]
no
more
than
duplicate the result that could have been achieved” under the
State’s common law. See Lucas, supra, 505 U.S. at 1029; see,
e.g.,
Matthews
v.
Bay
Head
Imp.
Ass’n,
95
N.J.
306,
316-17
(1984) (tracing history of public trust doctrine at common law).
Further, although a company like ExxonMobil that owns and
operates an oil refinery may very well have a set of reasonable
367
investment-backed expectations, when it operates a refinery on
the banks of a salt marsh in a vital, delicate natural resource
like the Hudson River Estuary, a blank check to pollute is not
among
those
reasonable
expectations.
Any
refinery
operator
would reasonably expect to conduct its operations within the
bounds of the State’s environmental laws and the public trust
doctrine, two inherent, longstanding pre-existing limitations on
the company’s right to use the land.
In this trial, ExxonMobil offered no proof to dispute the
limited
Bayonne.
nature
of
the
grants
issued
to
it
at
Bayway
and
Cf. E. Cape May Assocs. v. N.J. Dep’t Envtl. Prot.,
343 N.J. Super. 110 (App. Div. 2001) (finding no regulatory
taking in enforcement of Freshwater Wetlands Protection Act and
rejecting “reverse public trust doctrine” argument that 1903 and
1907 grants to fill wetlands withdrew right to regulate).
Not a
single piece of evidence suggested any immunity for polluting
activity.
New Jersey’s robust public-trust doctrine and the
limited nature of the grants or permits issued to ExxonMobil to
proceed with industrial operations on Bayway and Bayonne further
demonstrate that there has been no taking.
In
conclusion,
it
is
undeniable
that
individuals
or
corporations may not, and have never been allowed to, pollute
the State’s natural resources with impunity.
invoking
the
“defenses”
of
constitutional
368
ExxonMobil, in
due
process
and
takings principles, merely reiterates its displeasure with the
prospect of conforming its conduct to the requirements of the
Spill Act.
ExxonMobil and its predecessors polluted at the site
for over a century, and the pollution will require considerable
expense
and
effort
to
remedy.
That
does
not
make
the
enforcement of the Spill Act unconstitutional, however.
Environmental
always
imposed
corporations’
laws
and
inherent
ability
to
the
public
limitations
pollute.
trust
on
There
doctrine
have
individuals’
and
is
no
“taking”
associated with the enforcement of the Spill Act.
And as the
U.S.
Court
Supreme
Court
and
the
New
Jersey
Supreme
have
frequently reiterated, laws — like the Spill Act — that regulate
economic
and
industrial
conditions,
even
if
they
have
retroactive effect, are constitutional so long as they have a
rational basis.
Given the undeniably compelling state interest
at stake with environmental protection and restoration, there
can be no question that the Department’s enforcement of the
Spill Act in this case has, at minimum, a rational basis.
The
Spill Act is well within the State’s police power available
under the Tenth Amendment to the U.S. Constitution as well as
its inherent authority to enforce the public trust.
See, e.g.,
Phillips Petrol. Co. v. Mississippi, 484 U.S. 469, 475, 108 S.
Ct. 791, 98 L. Ed. 2d 877 (1988) (“It has been long established
that the individual States have the authority to define the
369
limits
of
the
lands
held
in
public
trust
and
to
recognize
private rights in such lands as they see fit.”).
The Court should continue to reject ExxonMobil’s last-ditch
effort to inject a constitutional dimension into this case.
Conclusion
The
factual
proceedings
and
expert
demonstrates
evidence
presented
ExxonMobil’s
conscious
during
and
these
continued
disregard for the environment and the rights of the citizens of
New Jersey.
The damage resulting from ExxonMobil’s acts and
omissions is staggering.
this
submission,
available
the
regarding
As described above and in Volume II of
State
the
has
compiled
historical
the
acts
and
best
evidence
omissions
of
ExxonMobil and, the associated injury to the State’s resources.
The State’s experts have used standard, accepted practices to
interpret
the
information
available
and
to
craft
consistent with the Spill Act and NRD practice.
seeks
to
make
the
public
whole
for
its
losses
a
remedy
That remedy
by
restoring
resources that were destroyed and providing additional funding
for
additional
projects,
proportionate
to
the
loss.
ExxonMobil’s approach to the claims raised by the State has been
to unsuccessfully challenge and attempt to limit the reach of
the Spill Act (and the common law that predated it) in order to
avoid its obligations.
The Legislature expressly directed that
the
is
Spill
Act,
which
implemented
370
by
the
Department,
a
fiduciary with substantial expertise, be read broadly in order
to
effect
its
purpose.
ExxonMobil’s
continued
efforts
to
frustrate that directive should be rejected and the State should
be
awarded
costs
to
restore
ExxonMobil’s discharges.
371
the
habitats
destroyed
by