Exxon lawyer: $8.9B pollution damage claim came 'out of thin air'

By S.P. Sullivan | NJ Advance Media for NJ.com
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on April 15, 2015

The Bayway refinery in Linden, owned by Phillips 66, is the subject of a settlement agreement between the state and Exxon Mobil, its former owner.


A lawyer for Exxon Mobil sharply criticized New Jersey's claims about harm done by decades of pollution at two refinery sites, saying the state's $8.9 billion damage claim came "out of thin air."

Jack Balagia, general counsel for the oil giant, claimed on the company's website Wednesday the expert reports that formed the basis of the state's case had "no scientific or economic foundation."

Those comments come as Gov. Chris Christie's administration moves toward a $225 million settlement in the case, which has seen intense criticism from environmentalists and the governor's opponents in the legislature.

The Exxon deal would be the largest single environmental settlement of its kind in New Jersey history, but would be far less than the billions the state claimed it was owed.

The suit was first brought in 2004 and dragged through the courts until going to trial last year. Lawyers for the state said the company had caused "staggering and unprecedented" pollution at the two sites, known as Bayway and Bayonne.

Expert reports commissioned by the state assessed the cost of undoing of more than 100 years of pollution at $8.9 billion, claiming it would take $2.5 billion to restore damage within the footprint of the facilities and an additional $6.4 to restore enough wetland and forestland "to compensate for the decades of harm."

Balagia said those reports, prepared by Colorado-based Stratus Consulting, were flawed.

"Unfortunately, it is not uncommon for people to file lawsuits and claim huge amounts of money in order to force a settlement, and in this case it resulted in the largest environmental settlement in New Jersey history," Balagia wrote. "But no one should delude themselves into thinking that the state's $8.9 billion damage claim was anything more than a high-stakes negotiating tactic, devoid of any scientific or economic legitimacy."

Before a judge could rule in the case, the attorney general's office notified him they had reached an agreement with Exxon. The $225 million deal is now in a public comment period before being sent to the judge in June for final approval.

A spokesman for Attorney General John Hoffman declined comment Wednesday, and representatives from Stratus could not immediately be reached.

But Balagia's comments drew stern rebuke from critics of Exxon's $225 million deal with the administration, some of whom have vowed to fight the agreement in court.

"It must be nice to sit in a corporate office in Texas and tell the residents of Linden and Bayonne, who have lived in the shadow of this pollution for years, that they are delusional for thinking Exxon Mobil would actually do something about it," said Debbie Mans, head of the environmental group NY/NJ Baykeeper, who accused the company of "trying to reargue the case in the media."

Jeff Tittel, director of the New Jersey Sierra Club, said Exxon fought a pollution suit in the Exxon-Valdez oil spill for nearly two decades and wouldn't have made any deal with New Jersey unless they thought they'd lose at trial.

"If they really thought they were winning, then why didn't they go to court and have to pay zero?" Tittel asked. "Let them open their books and let them show what they think their costs are, then."

Assemblyman John McKeon (D-Essex), who has called for an inquiry into how the state pursues pollution cases, said the Stratus report was "incredibly solid."

"Even if somewhere in the middle lies the truth, it's a long fall from $8.9 billion to $225 million," McKeon said Wednesday.

Christie has defended the agreement, calling it "a really nice settlement."

Tittel said both Exxon and the governor were "trying to justify the unjustifiable."

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