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The Exxon Settlement Paves the Way for future reviews of NRD claims

Judge Hogan has tried and overseen many environmental cases and that fact was evident in the over 80 page decision that he wrote last week upholding the frequently maligned $225 million settlement between the state DEP and the oil giant. While many people argued the state should have gotten more, largely because the state itself proclaimed the value of the case to be around 9 billion dollars, the Judge sought to provide a more realistic context in which the deal was made and proclaimed that it was a deal worthy of court approval.  In fact he gave the deal just that.

 Noteworthy from the decision is that the court employed the federal guidance in evaluating the settlement since New Jersey law lacks similar guidance.  It appears that just about everyone thinks that was a good idea and we can envision that this will now become the modality in which this kind of review will take place from that opinion forward.

 The Court also pointed to numerous litigation risks that warranted a lower settlement amount, retroactivity being the most significant.  While a trial judge had found earlier in the case that natural resource damages could be assessed going back to the 1800s, when the damages first started, and that duration of harm factored largely in creating the 9 billion dollar penalty exposure, the Court observed that if that issue as to retroactivity had been reversed on appeal, the maximum exposure would be only a tenth of that amount.  In that case $225 million did not seem half bad.

 While the opinion was fantastic and thorough, and while it really will provide guidance for future similar reviews,  to some it may resemble that last episode of the Sopranos that left so many wishing there had been a little more.  Some may suggest, for example, that the decision seemed to place too much of the litigation risk on the State, and not enough on Exxon. 

Some might even criticize the heavy reliance on the Commissioner’s certification with attachments, implying that the Commissioner is a partisan doing what was expected of him by the Governor.  In general some may find fault with the overall deference given to the settlement, with an abnormal amount of public criticism having been expressed from some people who understand these issues and had what they perceived to be important objections.

No opinion and no settlement are ever without critics.  The opinion seems beyond successful appeal and rightfully warrants merit and respect.   No matter what, at the end of the day there will be some who still do not understand how a claim supposedly worth so much was settled for what to some seems to be a lot lot less.

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