NJDEP and the Terrible, Horrible, No Good, Very Bad Day – Trial Judge Rejects NJDEP’s Approach to Natural Resource Damages

New Jersey’s Natural Resource Damage (“NRD”) program is cobbled together from an aging policy directive issued in 2003, an Appellate Division decision, NJDEP v. Exxon Mobil Corporation, [393 N.J. Super 388 (App. Div. 2007)] and a handful of lower court rulings on various and sundry motions. There is no specific enabling statute and the agency has never adopted any formal regulations. In short, it’s the type of program which is bound to leave the regulators, the regulated community (and the lawyers who advise them) with plenty of questions. Because there are no clear rules, New Jersey’s NRD program has generated a significant amount of litigation.

A July 26, 2010 ruling issued by the Middlesex County Superior Court following a ten day trial indicates that New Jersey’s approach to NRDs might be in for some careful scrutiny. Of course, a trial court’s findings have limited value as precedent. Nevertheless, the recent ruling in NJ Dept. of Environ. Protection v. Essex Chemical can only be viewed as a disaster for the present ad hoc approach to NRDs favored by the New Jersey Department of Environmental Protection.

In this case, New Jersey’s experts were left without the presumption that usually flows from following duly promulgated rules. Without this presumption New Jersey’s experts were unable to meet their burden and the plaintiff simply failed to prove its case. This is the second time New Jersey has stumbled at the expert proof phase of an NRD case. It is especially noteworthy that the trial judge rejected a modified Resource Equivalency Analysis proposed by New Jersey’s experts. New Jersey is attempting to use this novel method in several other cases and the state may now be forced to change course.

New Jersey’s NRD program is both novel and evolving. So it is hardly surprising that when issues come before the courts, the state and its experts will have good days and bad days. They recently had a very bad day.

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