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For Immediate Release:  
For Further Information:
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June 6, 2007   

Lee Moore
609-292-4791

Office of The Attorney General
- Anne Milgram, First Assistant Attorney General
Division of Law
- Robert Gilson, Director

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Appeals Court Recognizes State’s Ability to Seek “Loss of Use” Damages;
Earlier Ruling Reversed in Exxon Mobil Property Contamination Case

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TRENTON – First Assistant Attorney General Anne Milgram announced today that the state has prevailed in its appeal of a trial court ruling that found the Department of Environmental Protection (DEP) could only seek clean-up and restoration costs -- not compensatory damages related to destruction of a natural resource – from Exxon Mobil in the aftermath of contamination at two Exxon refinery sites.

In a written opinion issued today, the Appellate Division ruled that DEP’s claim for compensatory restoration or “loss of use” damages related to ground water and other pollution caused by Exxon refineries in Linden and Bayonne is consistent with the language and intent of the New Jersey Spill Compensation and Control Act.

A trial court ruled otherwise in July 2006. It found Exxon Mobil liable for costs related directly to clean-up and restoration of the properties at issue, but dismissed claims in a state lawsuit seeking compensation for lost use of a natural resource as beyond the Spill Act’s statutory reach. Today’s Appellate decision reverses that finding and returns the case to the trial court level for argument on whether DEP’s claim for loss of use damages against Exxon Mobil is supported by the evidence.

“Today’s Appellate ruling is significant because it recognizes not only the state’s authority under the Spill Act to require polluters to clean up and restore properties they’ve contaminated, but to seek compensation on behalf of New Jersey’s citizens for natural resources lost to pollution. We look forward to presenting our proofs at the trial level,” said First Assistant Attorney General Milgram.

“This is an important victory for our environment and the people of New Jersey,” said Department of Environmental Protection Commissioner Lisa P. Jackson. “The Appellate court's decision removes all doubt that responsible parties must compensate the public for the value, use and benefits lost because of injuries to the natural resources that rightfully belong to the people.”

Exxon Mobil and its corporate predecessors operated petroleum refineries and petrochemical manufacturing and storage facilities at the 1,300-acre Linden site (Exxon Bayway) and the 288-acre Bayonne location (Exxon Bayonne) since the early 1900s.

Between 1909 and 1972, the two refineries were interconnected by pipeline and typically operated as a single, integrated refinery and petrochemical facility.

Throughout decades of operation, the two facilities discharged hazardous substances – including petroleum products – into the soil and groundwater both on and underneath the Linden and Bayonne properties.

The Exxon Bayway property, located at 1400 Park Avenue in Linden, is contaminated with benzene and other petroleum hydrocarbons. Hazardous substances from the Bayway plant are also present in surface water and wetlands adjacent to the site.

The Exxon Bayonne facility, located on East 22nd Street in Bayonne, operated through 1972 as a site for petroleum refining. Since then, it has been used principally as a storage location for petroleum products, a wholesale distribution facility, and as a manufacturing site for oil additives. Contamination at the property includes a variety of petroleum-product-related pollutants.

Both the Linden and Bayonne refinery properties are subject to Administrative Consent Orders (ACOs) for site remediation entered into between Exxon Mobil and DEP in 1991, and clean-up work continues at both properties today.

The ACOs did not, however, limit or preclude the state from pursuing legal claims for natural resource damages.

In August 2004, the state filed its current lawsuit against Exxon Mobil after being unable to reach agreement with the firm as to what constituted adequate restoration of the Linden and Bayonne sites to “pre-discharge” condition, and what was adequate compensation to the State for its lost natural resources.

In its lawsuit, the state contended that discharges related to decades of oil refining, petrochemical manufacturing and petroleum product distribution had polluted the groundwater and surface water. In addition, the suit charged that wetlands and indigenous plants and animals had been harmed and vital wetlands functions had been compromised, such as improving water quality, trapping sediment, recharging groundwater and protecting shorelines from erosion.

Deputy Attorney General Richard Engel handled the matter for the state along with outside counsel. Outside counsel included Allen Kanner and Elizabeth Peterson from the firm of Kanner & Whiteley LLC of New Orleans, and attorneys Bruce Nagel and Wayne Greenstone of Nagel Rice LLP of Roseland.

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