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Appellate Court Strikes Down DEP “Natural Resource Damage” Restoration

Millions in Public Compensation and Ecological Restoration In Jeopardy

State Comptroller Asked To Investigate DEP Mismanagement 

A Big Win for Dow Chemical

[Update – here is a relevant law article on the legal aspects of DEP’s land valuation methodology.]

We have been following the DEP’s “Natural Resource Damage” program for some time.

That program provides ecological restoration or financial compensation to the public for natural resource injuries suffered as a result of the discharge of toxic pollution at thousands of NJ sites. According to DEP:

Natural Resource Restoration


Restoration: is the remedial action that returns the natural resources to pre-discharge conditions. It includes the rehabilitation of injured resources, replacement, or acquisition of natural resources and their services, which were lost or impaired. Restoration also includes compensation for the natural resource services lost from the beginning of the injury through to the full recovery of the resource.

Examples are:

  • GROUND WATER: non-point source pollution abatement projects, acquisition of land for aquifer recharge
  • WETLANDS and HABITAT: rehabilitation or creation of wetlands / habitat in the appropriate ratios to compensate for the functions and services lost
  • INJURED SPECIES: restoration of appropriate habitat and monitoring of success / research projects
  • LOST PUBLIC USE: enhanced public access, information and interpretive centers

The business community has strongly opposed the DEP NRD program and it was targeted for rollback in Gov. Christie’s DEP Transition Report.

In a huge setback, the Courts just gave the business community what they asked for.

A recent NJ Appellate Court decision struck down DEP’s attempt to recover NRD at a contaminated site in South Brunswick.

[Note – the victorious polluter in the case is Essex Chemical, a wholly owned subsidiary of Dow Chemical, who was responsible for the cleanup, which is still not complete – that’s Dow, of Bhopal fame. See the NJ NRD lawsuit filed.]

The court rejected the DEP’s methodology for calculating economic values and ecological injuries and questioned DEP’s competence.

As such, the decision has broad implications and basically eviscerates the entire NRD program, letting polluters off the hook for millions of dollars in compensation and hundreds of site statewide.

The decision has broad ramifications and puts millions of dollars in NRD compensation and ecological restoration in jeopardy at thousands of contaminated sites across the state.

The tragedy is that this loss was completely avoidable simply by adopting regulations that set out the technical requirements and methodologies for the NRD program, as we previously warned.

Here is an excerpt of my letter today to State Comptroller Boxer:

The public’s economic and environmental interests’ in the NRD program are huge. In a June 29, 2007 press release, DEP announced the filing of 120 NRD lawsuits. The press release claimed:

“The state has filed approximately 120 lawsuits that could result in hundreds of millions of dollars in compensation from polluters who have harmed New Jersey’s natural resources, including numerous manufacturers and marketers of the gasoline additive MTBE, Department of Environmental Protection Commissioner Lisa P. Jackson announced today…

Attorney General Anne Milgram added: “We are working with DEP to ensure that contaminated properties are cleaned up and restored, and that, where appropriate, polluters compensate the residents of New Jersey for the loss of precious natural resources.” http://www.nj.gov/dep/newsrel/2007/07_0037.htm

The state’s lawsuits take a special focus on polluters that have damaged river resources. Lawsuits have been filed against ISP Environmental Services and G-I Holdings Inc., located in Linden along Piles Creek near the Arthur Kill; Mallinckrodt Baker, along the Delaware River in Phillipsburg, Warren County; Genstar Gypsum, located along the Delaware River in Camden, Camden County; and Rhone Poulenc along the Raritan River in Middlesex Borough.

Since its inception in 1994, DEP’s Natural Resource Damage program has recovered more than $51 million and preserved approximately 6,000 acres of open space as wildlife habitat and ground water recharge areas as compensation for pollution resulting from 1,500 contaminated sites and oil spills. However, realization of these important potential economic and environmental benefits for the people of New Jersey of the NRD program is in jeopardy, as outlined in a recent Appellate Court decision.

Read the case and all the relevant background material in links belwo, from our friends at PEER:


Court Ruling Underlines State Futility in Assessing “Natural Resources Damages”

Trenton — The State of New Jersey is forfeiting hundreds of millions of dollars in damages from polluters in contaminated groundwater cases, according to Public Employees for Environmental Responsibility (PEER), which has asked for a review of the program by the state Comptroller. The state’s failure to adopt regulations governing how to calculate “natural resources damages” (NRD) for polluted drinking water has contributed to its inability sustain assessments against polluters.

The state’s most recent setback occurred in the case of New Jersey Department of Environmental Protection, et al. v. Essex Chemical Corporation in which the Appellate Division chastised DEP for failure to make a cogent claim for millions of gallons of groundwater contaminated during 8 years of leaking underground storage tanks. This latest rebuke follows earlier decisions striking down DEP recovery attempts due to not establishing, by regulation, a reliable formula for calculating natural resources damages. In the absence of regulation, courts have found DEP lacked adequate scientific support to proceed on a case-by-case basis, as in the Essex Chemical case.

The absence of a regulatory undergirding for NRD has been known as a serious vulnerability inside DEP for a decade. Even the Christie Transition Report on DEP in January 2010 recognized the problem:

“With respect to the State’s efforts to seek compensation for damages to natural resources (NRD), we recommend that…rules be adopted to provide transparency, certainty and consistency in the assessment of those damages.”

“This is a triple rip-off of taxpayers: First, the public gets stuck with the enormous bill for treatment of tainted groundwater, replacement lines and new wells. Second, the public pays for DEP to play endless rounds of fruitless enforcement tag with corporate polluters. Third, government lawyers waste years in losing litigation,” stated New Jersey PEER Director Bill Wolfe, noting that the Christie DEP also failed to follow through on regulations as urged in its Transition Report. “Is it any wonder that so much of New Jersey’s drinking water is contaminated?”

The state already missed the statute of limitations for pursuing natural resource recoveries in more than 4,600 contaminated sites prioritized by DEP. In 2007, as time was running out, the state filed 120 lawsuits seeking NRD assessments. Those lawsuits, however, appear to be foundering on the lack of regulation and focus. Prospects for any future litigation and ongoing NRD settlement negotiations in an unknown number of groundwater pollution cases also remain clouded.

“This mess was wholly preventable but even now the state is not taking the measures everyone agrees are needed,” Wolfe added. “It appears that we have utterly lost the capacity for enlightened environmental leadership in New Jersey.”

PEER is asking the Comptroller to review the performance of the NRD, determine the extent to which taxpayers are not attaining full NRD recoveries and make recommendations for putting the program back on track in a more transparent and accountable fashion.


Read the PEER call for a Comptroller review

Look at latest court decision striking down state NRD assessment

See past warnings ignored 

Examine high contamination rates in New Jersey’s groundwater

View Christie DEP transition report (NRD recommendation on page 15)

New Jersey PEER is a state chapter of a national alliance of state and federal agency resource professionals working to ensure environmental ethics and government accountability



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