EXXON settles with NJ over Environmental Damage.

                                      Comments due by March 15, 2015

A long-fought legal battle to recover $8.9 billion in damages from Exxon Mobil Corporation for the contamination and loss of use of more than 1,500 acres of wetlands, marshes, meadows and waters in New Jersey has been quietly settled by the state for around $250 million.

The lawsuits, filed in 2004, had been litigated by the administrations of four New Jersey governors, finally advancing last year to trial. By then, Exxon's liability was no longer in dispute; the only issue was how much it would pay in damages.

The stakes were high, given the enormous cost the state's experts had placed on restoring and replacing the resources damaged by decades of oil refining and other petrochemical operations, as well as of the public's loss of use of the land.

"The scope of the environmental damage resulting from the discharges is as obvious as it is staggering and unprecedented in New Jersey," the administration of Gov. Chris Christie said in a court brief filed in November.

But a month ago, with a State Superior Court judge believed to be close to a decision on damages, the Christie administration twice petitioned the court to hold off on a ruling because settlement talks were underway. Then, last Friday, the state informed the judge that the case had been resolved.

The parties have not announced the deal publicly, and it still must be approved by the judge. But some legal and environmental experts ​who were told about the agreement asked why New Jersey would suddenly settle a case that it had fought strenuously for more than a decade.

Richard B. Stewart, a New York University law professor and a former head of the Justice Department's environmental division, noted the "striking disparity between the damages claimed, which have been exhaustively litigated, and the settlement amount," particularly with a judicial ruling expected soon.

Mr. Stewart said it was hard to assess the agreement without knowing the evidence. But he added, "It raises questions."

The documents that made reference to the settlement, which had not been filed publicly, were obtained after a request by The New York Times. They do not reveal the settlement amount; the figure was provided by two people who were told about it, and who spoke on the condition of anonymity because the deal was not yet public.

A spokesman for Mr. Christie referred questions about the settlement to the attorney general's office. A spokesman for the acting attorney general, John J. Hoffman, said the office had no comment, as was its practice with pending litigation. Exxon also declined to comment.

Peter H. Lehner, executive director of the Natural Resources Defense Council, said that New Jersey, "in the first instance, should be applauded for bringing this and for pursuing it aggressively over the course of four administrations."

Photographer | CNBC

Governor Chris Christie

"But," Mr. Lehner continued, "some will wonder about the benefits of settling now, rather than after the judge's ruling."

The settlement comes at a time when Mr. Christie, a potential contender for the Republican presidential nomination in 2016, is experiencing the lowest approval ratings of his tenure, and has been forced to defend his decision to reduce state pension payments.

The state chapter of the Sierra Club this week criticized his budget proposal, saying it would hurt environmental protections. Kevin Roberts, a spokesman for Mr. Christie, said on Thursday that the governor stood by his environmental record, and that the Sierra Club had been "reflexively partisan in its criticism of the governor."

A review of state campaign finance databases shows no record of Exxon's making any campaign contribution to Mr. Christie, either through its political action committee or directly, in those years available online. In fact, the records show, Exxon made no contributions of any kind in New Jersey from 2009 to 2013 at the state level.

The damage to the Bayonne and Linden (known as Bayway) sites dated back many years. "Contamination of the land and water at the Bayway and Bayonne refineries began as early as the 1870s in Bayonne and the early 1900s in Bayway and continues to this day," the state's expert report says.

"Today, many of these dredge fill areas still look and smell like petroleum waste dumps," the report continues. "Spilled materials from pipeline ruptures, tank failures or overflows, and explosions have resulted in widespread groundwater, soil and sediment contamination."

The attorney general's office said in its brief in November that the sites had been "adversely affected by or buried under the discharge of hazardous substances," including over 600 identified chemicals.

On the Bayway site, a 2007 court opinion noted, marshland adjacent to a creek was "now mostly covered with a tar of petroleum products or filled with other hazardous constituents and debris." Another 45 acres comprised "sludge lagoons," one-time tidal marshes that had been used as hazardous waste disposal facilities.

The state had set the cost of primary restoration of the sites at $2.6 billion; the state also sought $6.3 billion for what it described as compensatory or "loss of use" damages, intended "to make the public whole."

The damages trial, held before Judge Michael J. Hogan in Mount Holly, N.J., lasted from January through September 2014. The judge was to rule once the closing briefs were filed in November.

Exxon had vigorously contested the lawsuit, and in its brief after the trial said that it had long ago taken responsibility for cleaning up the contamination; that there were "fully functioning" marshes, forests and wildlife on the sites; and that, because they had been closed to the public for years, the state was seeking a windfall "for something the public never lost."

Exxon argued that the state's arguments "ignore the evidence, science and the law" and that no damages should be awarded.

It was unclear when the talks began. A deputy state attorney general, Richard F. Engel, emailed Judge Hogan on Jan. 29, saying the parties were engaged in "serious settlement negotiations" and asking him to "defer the issuance of a decision in this matter."

Two weeks later, Mr. Engel again wrote to the judge, saying "a few critical points" still needed to be resolved and asking that he delay his decision until Feb. 20.

By then, Mr. Engel added, "we are confident that we will have an agreement or our efforts to settle will have ended."

​Then last Friday, Mr. Engel ​wrote to Judge Hogan​, saying the parties had reached a settlement "which is memorialized in a final, agreed upon, consent judgment​."

​Mr. Engel said the agreement would be submitted for public comment in April and would then be submitted for court approval in May, "unless comments received during the public notice and comment period necessitate a change."

If the settlement is approved, Judge Hogan will presumably not release his opinion, and ​whatever damages he would have set will not be made public.

(NYT and CNBC)