Source: http://www.northjersey.com, October 2, 2014
By: Meghan Grant
The Attorney General’s and Department of Environmental Protection (DEP) offices announced that Occidental Chemical Corp., identified by the state as a principal defendant, has agreed to pay New Jersey $190 million to resolve its liability for cleaning up the Passaic River. The settlement comes on the tail of a trio of additional settlements last year with other companies, a major step in a seemingly never-ending legal battle. However, like funds obtained through an earlier settlement, most of the money is being absorbed into the state’s overall budget. Officials claim the polluters will ultimately fund the cleanup, handled by the Environmental Protection Agency [EPA], and that the settlement funds will be used for additional projects around the river.
Combined with the earlier settlements, this brings the total recovered by the state as a result of litigation to about $355.4 million. Of this amount, $67.4 million is going toward cleaning up the river and similar projects.
The 2015 New Jersey budget indicates that $147.5 million recovered from the Passaic River cleanup litigation are being deposited into the general fund as state revenue. The move is subject to the approval of the director of the Division of Budget and Accounting.
Occidental, the legal successor to Diamond Shamrock Chemicals Company, was the last defendant being pursued by the state. State agencies and Occidental have traded barbs in court for nearly a decade over the Passaic River. In 2005, the DEP filed a lawsuit against Occidental Chemical, Maxus Energy Corporation and Tierra Solutions Inc. In 2011 through a judgment issued by Superior Court Judge Sebastian Lombardi, Occidental Chemical was found liable for cleanup costs associated with the river pollution as a result of the former Diamond Shamrock plant in Newark, having intentionally dumped hazardous pollutants into the river for decades. The plant manufactured Agent Orange and other chemicals. Occidental, Maximus and Tierra filed a counterclaim against close to 70 municipalities, municipal agencies and private companies, alleging the towns were at least partially to blame for the conditions in the river, noting some had storm drains that emptied into the river.
Settlements have arisen out of the litigation between Occidental, the state, the towns and agencies and other “non-discharging” defendant companies.
Despite less than 20 percent of the recovered funds across all the Passaic River litigation going towards environmental remediation, the attorney general and DEP commissioner praised the most recent settlement with Occidental.
“If approved, this is an important legal outcome for the residents of New Jersey, and for our environment,” said Acting Attorney General John Hoffman. “The citizens of our state should not be forced to shoulder the cost of repairing damage to one of our most precious natural resources – the Passaic River – by industrial polluters. Our objective throughout the Passaic River litigation has been to hold accountable those legally responsible for contaminating the river, and we have done so.”
“The cleanup of the lower Passaic River is vital to the health and safety of people who live and work along the river, and is one of the State’s top environmental priorities,” DEP Commissioner Bob Martin said. “The parties responsible for the pollution should be accountable for the expense of the remediation, and not the taxpayers of our state. We have stood firm in that commitment and strongly support the settlement being announced today.”
In 2013, Judge Lombardi approved two prior settlements in the Passaic River litigation totaling $165.4 million with several non-discharging defendants, including Spanish oil company Repsol, S.A., and Argentina-based energy conglomerate YPF, S.A., YPF Holdings, Inc. and YPF International. Also party to that settlement were CLH Holdings, Inc., Maxus Energy Corporation, Maxus International Energy Company and Tierra Solutions, Inc. In it, the state was reimbursed $130 million.
Judge Lombardi also approved a settlement between third-party defendants – including Lyndhurst, Rutherford, North Arlington and East Rutherford and close to 70 other municipalities and public entities – and Maxus Energy Corporation and Tierra Solutions, Inc. Under that settlement, the third-party defendants paid a total of $35.4 million to the State, about $95,000 per municipality.
A public comment period and review by a Superior Court judge are expected by December for this most recent $190 million settlement.
The same decision to re-appropriate settlement monies into the state general fund was the topic of some controversy last summer. The DEP was criticized for reallocating funds anticipated to be obtained through the $130 million settlement away from cleanup. Put forth by the governor in February 2013 and passed by the Legislature the following July, the state budget indicated up to $40 million is expected to be drawn from the settlement and go toward the New Jersey General Fund as state revenue.
Last year, the DEP claimed the move ultimately reimburses taxpayers for costs incurred over this issue – legal, design, architecture, engineering, science studies, work done on the river, the fish advisories issued on the river for some decades, etc.
“[The $40 million] will be used to reimburse the taxpayers for the money they have been spending on processing this Passaic issue. It’s already spent and more,” DEP press director Larry Ragonese said last December.
New Jersey’s legal battles over the river have been going on for close to 30 years, and has already spent a considerable amount on litigation, studies and public health education, Attorney General Office [AGO] spokesperson Leland Moore said. The DEP referred comment on the settlement to the Attorney General’s Office.
“Altogether, the State has spent $153 million on these efforts over that time, some to litigate the case and much more to address a number of contamination-related issues including the exploration of ways to clean up the river, development of fish advisories to protect the public from consumption of fish from the contaminated river, support for EPA in developing the proposed cleanup plan for the lower eight miles, and support for EPA in the larger study of the full 17 miles of the River,” said Moore.
In addition, the state incurred costs and damages beyond those associated with the future cleanup of the Newark Bay Complex, Moore explained, including past cleanup costs and economic damages associated with the loss of tax revenue. These costs needed to be recovered from polluters for the state through litigation.
The Occidental settlement payments supplement the cleanup, said Moore. Parties responsible for polluting the Passaic River will pay for the remediation overseen by the EPA. He reiterated how much the state has already spent on decades of litigation.
Due to the highly concentrated contamination in the river sediment, the lower 17 miles of the Passaic River have been declared a federal Superfund site. This makes it the jurisdiction of the EPA, the lead agency on the upcoming cleanup.
These settlement payments supplement the cleanup of the river, and the defendants and others will pay for cleanup separately, said Moore.
A few months ago, the EPA released a study on the remediation alternatives for the lower eight miles of the Passaic River, placing emphasis on a $1.7 billion plan for a bank-to-bank dredging to remove about 4 million cubic yards of toxic sediment.
The AGO spokesperson call the settlements a “significant victory” for state residents, as the river will be remediated without cost to taxpayers and the state has recovered the millions expended during the decades of legal and environmental efforts.
The parties will cleanup the Passaic River at their own expense, and in addition, pay the state and insure that the EPA will not call upon the state to pay a 10 percent share of the costs.
“The EPA will call on many responsible parties, including Occidental Chemical, to pay the cost of the EPA-endorsed remedy,” Moore said. “The $190 million payment that Occidental has just agreed to make to the State – and the total of $355 million in settlement payments the state has demanded from parties so far in this case – is in addition to whatever share of the $1.7 billion remediation/cleanup costs for which the EPA may hold Occidental and the other parties responsible.”
Although the EPA can legally seek up to 10 percent of cleanup costs from the state, the pending Occidental settlement protects the state against that option, Moore explained. Occidental has agreed to pay up to $400 million more to cover any payment the EPA may seek from the state.
The $67.4 million recovered from all Passaic River settlements to date will be dedicated to natural resource enhancement projects in and around the Newark Bay complex, including projects like parks and river walks, intended to spur development and greater use of the area around the river, Moore said. This is separate from the proposed EPA-lead $1.7 billion cleanup.
Critics of the use of settlement funds by the state general budget have argued that the intention of the state bringing alleged polluters into court was for the sake of funding a cleanup, and that using settlement monies for the general budget goes against that intention.
– See more at: http://www.northjersey.com/community-news/nj-will-take-most-of-cleanup-settlement-to-balance-budget-1.1100587?page=all#sthash.u3ca1RJa.dpuf