In Re: Methyl Tertiary Butyl Ether ("MTBE") Products Liability Litigation

Filing 3937

REPLY AFFIDAVIT of Leonard Z. Kaufmann in Support re: (344 in 1:08-cv-00312-SAS) MOTION to Approve Consent Judgment.. Document filed by New Jersey Department of Environmental Protection. Filed In Associated Cases: 1:00-cv-01898-SAS-DCF, 1:08-cv-00312-SAS(Axline, Michael)

·

UNITED STATES D1STRICT COURT.
SOUTHERN DISTRICT OF NEW YORK

____________________________

~x

IN RE: METHYL TERTIARY BUTYL
ETHER ("MTBE") PRODUCTS
LIABILITY LITIGATION

Master File No. 1:OO~ 1898
MDL 1358(SAS)
No. M2l-88

This document relates to:
New Jersey Department of
Environmental Protection et al.,
v. Altantic Richfield Co., et al.,

08 Civ. 00312

_____________________________x
SIDRA A. SCHEINDLIN, U.S.D.J.
DECLARATION OF LEONARD Z. KAUFMANN

LEONARD Z. KAUFMANN does hereby state, under penalty of perjury, that the following is
true and correct to the best of my knowledge.
1.

I am a member of the bar of the State of New Jersey and am admitted to practice in

the United States District Court for the Southern District of New York.
2.

I am a member of the firm of Cohn Lifland Pearlman Herrmann & Knopf which is

Special Counsel to the Attorney General of New Jersey for this litigation. Thus, we are counsel for
plaintiffs in this matter.
3.

I am also one of the attorneys serving as Special Counsel in the litigation

encaptioned New Jersey Department of Environmental Protection et al v ExxonMobil
Corporation et al. venued in the Superior Court of New Jersey, Law Division Gloucester County,

Docket No. L-1 063-07. It is referred to hereinafter as the ".ST Terminals Litigation."

.,

4.

In the ST Terminals Litigation, plaintiffs sued defendants for, inter alia, natural

resource damages.
5.

ExxonMobil owned and operated the facility unti11989. Defendant Kinder Morgan

Liquid Terminals, LLC ("KMLT") owned and operated. the facility from 1989 to 2000. Defendant
Support Terminals Operating Partnership LP and its successors ("ST") owned and operated the
facility after 2000.
6.

In 2011, plaintiffs reached a settlement agreement with KMLT and ST. Although

ExxonMobil had participated in the settlement discussions, plaintiffs were unable to reach accord
with ExxonMobil. The settlement required KMLT and ST to conduct cleanup operations to a
specified level and to pay a certain amount in cash.
7.

The settlement also released ExxonMobil for all liability for post 1989 discharges.

(The pertinent parts of the Consent Judgment are attached hereto as Exhibit "A").
8.

Despite receiving a complete release for liability for all discharges other than its

own, ExxonMobil opposed the settlement. In opposing the settlement, it made essentially the same
arguments it makes now in opposing the settlement in the matter at bar. It claimed that plaintiffs
had not properly calculated the damages, and that ExxonMobil would be left with a
disproportionate share of liability. Excerpts from ExxonMobil's brief are attached hereto as
Exhibit "B."
9.

As evidenced by Exhibit "A," the court did enter the Consent Judgment. Since that

time, plaintiffs have served expert reports specifically delineating the pre-1989 damages.
10.

The ST Terminals Litigation remains active at this time.

11.

Pursuant to 28 U.S.C. 1746, I declare under penalty of perjury that the foregoing is

true and correct to the best of my knowledge.

Dated: March 10, 2014
"

I

· EXHIBIT "A"

"0"

.

.....

MARC PIDLIP FERZAN

.\

r\
.,

...

\.

\

1.

·1

'.
ACTING ATTORNEY GENERAL OF NEW JERSEY
Richard J. Hughes'Justice Complex
25 Mar~et Street : .
.POBox093
J'renton, NJ 08625"()093
Attorney 'for Plaintiffs
I

RECEIVED &RLED
.SEP 2· 820ft
Anne. McDonnell P
J.en.

By:.Richard F. Engel
Deputy Attorney General
[phone]
Scott E. Kauff, Esq.
Spec~ Counsel to the
Attorney General
Law Offices of John K. Dema
11300 Rockville Pike, Suite 112
Rockville, Maryland 20852
[phone]

Barry A. Knop~ Bsq;
, Leonard Z; Kaufmann, Esq.
..' . Special Cpunsel to the Attorney General
. Cohn, Lifland, Pear~ Hermann
& Knopf: L.L.P.
Park 80 Pl~ West~One
Saddle Broo~ NJ 07663
. (201) 84S-9600

.

NEW JERSEY DBPARTMENT OF
:. SUPERIOR COURT OF NEW JERSEY
ENVIRONMENTAL PROTECTION.. TIlE
LAW DIVISION: .
COMMISSIONER OF THE ~EW JERSEY
: GLOUCESTER COUNTY
DEPARTMENT OF-ENVIRONMENTAL
. DOCKET NO.: 1..-1063-07
. PROTECTION, and THE ADMINISTRATOR 0 :
THE NEW JERSEY SPILL COMP~SATION
CML ACTIDN
·.FUND,
Plaintiffs,

-vs. ORDER ENTERING CONSENT
• EXXON MOBIL CORPORATION fIkIa.EXXO~ : JUDGMENT·
CORPORATION and KINDER MORGAN
LIQUI1)S TERMINALS.. L.L.C. flkla. GATX
TERMINALS CORPORATION,

Defendants,

. .,_.

EXXON MOBIL CORPORATION flkJa EXXO~ :
CPRPORATION,

Defendant/Third-Party Plaintiff,

-vs., SUPPORT TERMINALS OPERATING·
PARTNERSHlP,L.P. and PACIFIC ATLANTIC:
TERMINALS, L.L.C..,
...
..
. Third-Party Defendants.
.,.~

This
A~orney

matter

having been brought before the

General Of New Jerset (Richard F.

Engel~

~ourt

by Marc Philip Ferzan, Acting

Esq. Deputy Attorney General appearing),

and by Cohn Lifland Pearlman Herrmann. & Knopf LLP, Special Counsyl to the Attorney
Oeneral of New Jersey (Leonard Z. Kaufmann, Esq. appearing), attorneys for plaintiffs in the
within matter and on notice to David Edelstein, Esq. of Archer & Greiner~ P.C. attorneys for

Defendant, ExxonMobil Corporation; Ross A. Lewin, Esq. of Drinker Biddle & Reath, LLP
attorneys for Kinder Morgan Liquids Terminals, LLC; and Edward F. McTiernan, Esq. of
Gibbons, PC and Todd Mensing, Esq. (~dmitted Pro Hac Vice) attorneys for Support Terminals
,

,

Operating PmiJ?ership, 'LP and Pacific Atlantic Terminals. LLC, for an order entering the
Consent Judgment and the Court having read the papers submitted 'in support thereof lUld in
oppositio~ thereto, and the Court having heard oral argument, and good cause having been

shown for the making and granting of the within order;
IT IS on this

JJ

day of

¥

,2011

ORDERED as'follows:
1.

The Consent Judgment attached hereto shall be arid herby is entered by the

Court and effective as ofthls date.

,JA~
ANNE McbONNEU.., P'J.Ch.

Hon. Anne McDonnell~ J.S.C.

__ Unopposed

MARC-PHILIP FERZAN
ACTING ATTORNEY GENERAL OF NEW JERSEY
Richard J. Hughes Justice Complex
25 Market ,Street
,

,

PO Box 093

Trenton, NJ 08525-0093
Attorney fo.r Plaintiff~
:By:, Richard F. Engel .
Deputy Attorney General
, (609)

984-4863

Gordon C.'Rhea, Esq.
ppecial qounsel
the Attorney
General
'Richa~dson, Patrick, Westbrook
& Brickman, L.L.C.
" 1037 'ChuClk Dawley Boulevard,
Building A
'
Mt. Pleasant, Be 29464
[phone]

to

John K. Perna, Esq.
Scott E. Kauff't Esg:.
Special Counsel ~o the Attorney
General
Law Offices of John K. Dema,
P.C.
1236 Strand Street, Suite 103
Christiansted, St •. Croix
U.S. Virgin Islands 00820-5008
[phone]

A. Kn0PX 1 Esq.
Leonard Z. Kaufm~, Esq.
Specfal Gounsel to the Attorney General
Cohn I Lifland, Pearlman, Herrmann & Knopf, L.L.P.
Park 80 plaza West-One
Saddle Brook, ~J 07663

~arry

PROf/ 10S027(a.1

SUPERIOR COURT OF NEW JERSEY
LAW DIVISION
GLOUCESTER COUNTY
DOCKET NO. L-1063-07

NEW JERSEY DEPARTMENT OF
$NVIRONMEN'I'AL PROTECTION; THE
COMMISSIONER OF THE NEw JERSEY
DEPARTMENT OF ENVIRONMENTAL
PROTECTION; and THE
ADMINISTRATOR OF ~ NEW JERSEY
SPILL COMPENSATION FUND,

Civil.Acti9n

CONSENT·JUDGMENT

Plaintiffs, .

v.
EXXON·MOBIL CORPO~TION f/k/a
. EXXON CORPORATION; KINDER'
MORGAN LIQUIDS TERMINALS, LLC
f/k/a GATX TERMINALS
CORPORATION; and SUPPORT

TERMINALS OPERATING PARTNERSHIP
. L. P .; and PlAINS PRODUCTS
TERMINALS LLC a/k/a PACIFIC
ATLANTI C TERMINALS L. C. I
Defendants.

This mat ter was opened to the court by the· At.torney General
of New Jersey,

qppearing,

Richard F. Engel Esq.

and·· Leonard

pearlman Herrmann
Offices

of

John

&

Z.

Deputy. Attorney General

I

Kaufmann

Esg.

I

of· Cohn

Knopf and Scott E. Kauff,Esq.

K.

General, . appearing

Dema,
as

Special

attorneys

Counsel

for

to

I

Lifland

of· the Law

the Attorney

plaintif·fs

New

Jel:'sey

Department of Environmental Protection {\lDRP").1 the Col\lmissioner
of

the

New

Jeraey

Department

of

Environmental

Pro~ection

("Commissioner" ), and the Administrator of the New Jersey Spill
Compensation

PROll 1080272.1

Fund

( "Administrator") (col1ect·ively r

2

\\the

Plaintiffs ll )
~ttorneys

I

Ross A. Lewin, Esq., Drinker Biddle &: Reath' LLl? r

for defendant

Kinder Morgan' Liquids

GATX "Terminals Corporation (\\I<ML'l'")

Terminal

f/k/a

and GATX Corporation, Todd

W. Mensing Esq., Ahmad, Zavitsanos, &: Anaipakos, P,C. and' Edward
F, McTiernan Esq. I Gibbons P.C. attorneys for Support Terminals
.
.
Operating Partnership L.P. ("ST") and Plains' Products Terminals

Ltc

Terminals

Atlantic

f/k/a

(collect!vely,.

L.L.C.

KMLT and PPT shall be known hereafter as "the

("Partie~1I being defined

Performing Parties"); and the Parties
as Plaintiffs I

the Performing parties, ST, and GATx Corporation

·colleotively)

having

amicably

resolved

their

dispute

before

trial:

BACKGROUND

I.
.

A.

..~

The Plaintiffs. initiated this action on June 25, 2007

by f.iling

a

complaint

against EjQt:onMobil . Corp.

Corp.

f/k/a/

("ExxonMobil" )
and
KMLT,
pursuant
to
the
.
Cornpensatio~ and Control Act, N.J.S.A. 58:10-23.11 to

Exxon
spill

.

("the Spill Act")

I

-23.24

and the common law. The complaint was amended

on. May 27, 2010 to add ST and PPT as defendants.

B.

ExxonMobil,

through predecessors,

KMLT,

BT,

operated a

and

PPT,

terminal

either
for

directly or

the storage of

petroleum and other products at Third' Street· and Billingsport

3

to paragraphs

.
.
or 8· as determined Plll"suap,t to N. J. A. C.

7,

6.,

7: 26C-4. 5,

incurred after the effective date of this Consent

Judgment,

or

required by

activities
constitute

the

sole

Performing
restoration

of

i~

shall

and

the' Site.

in

6,

Paragraphs

7

exclusive

Seotion
and·

·Without

8

the

VII,

above,

obligation(s)

shall

limiting

of

the

remediation

cleanup,

concerning

Parties

nothing

p~ovided

as'. otherwise

or

the

foregoing,

this Consent Judgment shall require, and Plaintiffs

not

otherWise

demand,

tbat

the· Performing

parties

establish or maintain hydraulic control of contamination at or
emanating

from. the

Terminal

or

any other

off-site

location

impacted by discharges at the Site.

9.

Upon the sale of the Terminal or substantially all of

the assets of the Terminal to a party which is not a' related
entity

PPT,

to

severally be
t~e

amount

under the

Performing

Parties

shall

respons.ible for providing financial
of

($1,500,000)

the

and

One

Million

Five

Hundred

jointly

and

assurance in

Thousand

Dollars

in the form of assurances acceptable to DEP

then-applicable regulations for

remediation funding

spurces.

VI •

10.
above,

PLAINTIFFS I COVENANTS

& RELEASE

In consideration of the actions set forth in Section V

and subject. to the completion of all· such obligations,

PR011 loa0272.1

1.1

,

,
....
,.

and except

as· otherwise provided

Plaintiffs

covenant

not

to

in Section' VII' below,

sue,

or

to" take

the

judicial" .

administrative or other action for rei~ursement of Past Cleanup
~nd

Removal

Costs,

incluq.ing

Post

1989

Cleanup

and. R.emoval

Costs, and Future Cleanup and RemoVal Costs the 'Plaintiffs have
for the Site'against the' Released Parties or to otherwise compel
.remediation pursuant to the Spill Act or otherwise.
1t.

In further

obligatio~s

cons.ideration of the performance of the

of Section V' above, and subject to the fulfil1ment

Of said obligat.ions, and except as otherwis~ ~rovided in' Section
VII below,

not

to

the Plaintiffs fully and' forever release,

sue,

and

administrative
plaintiffs'
a~~inst

agree

or

other

causes

of

not

to

action

otherwise
for

actions' for

any

take

and

Natural

covenant
judicial,

all

,of

Re'source

the

Damages

the Released Parties.
In

a,

12.

consideration

of

the

actions

set

forth

in

Section V above, the Plaintiffs fUlly and forever covenant not
to

sue,

and

administrative,
reimbursement

agree
or

not. to

other

of Post '1989

otherwise

action

take

against

judicial,

EXxonMobil

Cleanup and Removal

for

Costs' or to

otherwise compel remediation of ·the Site pursuant to the Spill
Act or otherwise,
agreement

but the foregoing' co:venant not. to.... "~G.and

shal.l· be

limited

to

any matters.

arising

discharges at the Site occurrip.g after November 29 t

PR01!108Q272.1

. 18

~

. ..

out

of

1989 .only

and shall not apply whatsoever to 'any matter of any sort arising
out of discharges at the Site prior to November 29, 1989.

b.

In

consideration of

Section V
release,

above,

action

take

against

Damages,

actions

the Plaintiffs

covenant

otherwise

the

not

su~,

to,

judicial,

set

fully
and

and

agree

administra~ive,

ExxGnMobil

but the i;oregoing'

for

f9rth

re.lea~e,

forever
not

or

Natural
cov~nt

in

to

,other

Resource
not to,

and 'agreement shall be limited to any matters

sue,

arising out of discharges at the Site occurring after'
Noyem?er 2,9, 1989 only and shall not apply whatsoever
to any matter of any sort arising out of discharges at
the Site prior to November 29, 1969.
c.'

The purpose of the foregoing provisions is to

protect ExxonMobil from any liabilities. arising out of
post-November 29, 1989' discharges and to preserve in
.
'

their

entirety

any

and .without .prejudice

and

all

liabilities of ExxonMobil to any Party attributable to
discharges at the Site of any contaminants prior to
November

29,

1989.

'Accordingly,

the

releases',. covenants and agreements shall

any

~laims

~_qt

for~going

apply to·

against, or any liabilities of, ExxonMobil

related to discharges at the' site prior to November

,-,'

29, 1989.

I?RO~/

1D80272.1 .

19

....... ....
~. ~

~--

-

.. ...

-.~ ~-.-

.. ...... --.
'

_-.. -_ .. ......
..
,

~-.~~

.. ...
~

Within

.13 ..

Judgment,

five

{S}

days

after entry

of

this

Consent

Plaintiffs shall file a stipulation dismissing, with

prejudice and without
Atl\ended Complaint

posts, all claims 'in the Complaint and

against

defendants

KMLT,

ST,

and PPT and

dismissing, with prejudice and without costs, all dlaims in the
Complaint

and

Amended

based on dis'charges at

Complaint against

defe~dant

ExxonMobil

the Site from and after November 29,

1989 . .

VII. PLAINTIFFS 1 RESERVATIONS

14.

The' Performing Parties ·agree that the settlement terms.

reflected in this Consent Judgment are premised on compliance
with all lawfully impo,sed requirements' for remediation as set
forth in the Spill Act, LSRA or otherwise for discharges at the
J
Property ,after the e·ffective date of this Consent Judgment as
w~ll

as Performing l?arties" obligation to remediate MTBE at the

Site

in

accordance

with

this

Consent

Judgment.

A material

failure to implement the activities required by Paragraphs 6, 7,
am:!, 8

a~pve

may give rise to additional liability for Natural

Resource Damages to the extent that such fail ure increases the
scope or duration of

injuries .to natural, resources,

and the

Department expressly reserves its right to pur~ue'the Performing
Parties

for

such incr-e,ased scope or' duration of

injuries to

natural resources to the extent that the Department can satisfy

PROl/ 1:080272.1

20

~

..

i

I
-

EXH I BIT "B"

-

MARC A. ROLLO, ESQ
DAVID F. EDELSTEIN, ESQ.
ARCHER & GREINER
A Professional Corporation
One Centennial Square
P.O. Box 3000
Haddonfield, NJ 08033-0968
[phone]
Attorneys for DefendantiThird-Party Plaintiff,
Exxon Mobil Corporation
NEW JERSEY DEPAR1MENT OF
ENVIRONMENTAL PROTECTION, THE
COMMISSIONER OF THE NEW JERSEY

! ..

SUPERIOR COURT OF NEW JERSEY
LAW DIVISION
GLOUCESTER COUNTY

DEPARTMENTO~ENV1RONMENTAL
PROT~CTION,

and THE ADMINISTRATOR DOCKET NO.: L-I063-07
OF THE NEW JERSEY SPILL
COMPENSATION FUND,
Plaintiffs,

v.
EXXON MOBIL CORPORATION flkla
EXXON CORPORATION, and KINDER
MORGAN LIQUIDS TERMINALS, L.L.C.
flkJa GATX TERMINALS CORPORATION,
Defendants.
EXXON MOBIL CORPORATION,
Defendant IThird-Party Plaintiff,

v.
SUPPORT TERMINALS OPERATING
PARTNERSHIP, L.P. and PACIFIC
ATLANTIC TERMINALS, L.L.C.
Third-Party Defendants.

BRIEF IN OPPOSITION TO MOTIONS TO APPROVE CONSENT JUDGMENT

TABLE OF CONTENTS

INTRODUCTION ......................................................................................................................... 1
PROCEDURAL AND FACTUAL mSTORY ............................................................................. 6
A. .

THE TERMINAL ...................................................................................... 6

B.

ENVIRONMENTAL CONDITIONS AT THE TERMINAL ................... 6

C.

EXXONMOBIL'S CONTRIBUTION ACTION ................... ~ .................. 7

D.

NJDEP'S NRD CLAIMS ......................................................................... 8

E.

THE PROPOSED CONSENT JUDGMENT ............................................ 8

ARGlJMENT ............................................................................................................................. ~ ... 9

1.

STANDARD OF REVIEW ................................................................................... 9

II.

THE CONSENT JUDGMENT DOES NOT REPRESENT A FAIR
APPORTIONMENT OF NRD LIABILITY. ....................................................... 10

III.

THE PROPOSED CONSENT JUDGMENT DOES NOT REPRESENT A
FAIR APPORTIONJv1ENT OF LIABILITY FOR REMEDIATION OF
SOIL AND· GROUNDWATER........................................................................... 13
A.

EXXONMOBIL IS NOT RESPONSIDLE FOR MTBE
CONTAMINATION IN THE EASTERN tANKFIELD ....................... 14

B.

NIDEP rvrrSCHARACTERIZES THE RECORD CONCERNING
TliE WES'I'ERN TANJ(FIELD ......... ;: ................................................... 16
1.

EXXONMOBIL'S CONTRIBUTION TO PRESENT
CONDmON8 IN THE WESTERN TANKFIELD .................... 17

2.

GATX'S CONTRIBUTIONS TO CONDITIONS IN THE
WESTERN TANKFIELD ........................................................... 17

C. .

NJDEP rvrrSCHARACTERIZES THE RECORD CONCERNING
THE PIPING ALLEy .............................................................................. 19

D. \.

NJDEP MISCHARACTERIZES THE RECORD CONCERNING .
THE LOADIN'G RACK .......................................................................... 20

E.

SUMMARy ........ ;.·....:................................................................................ 22

IV.

NJDEP DID NOT UNDERTAKE A MEANINGFUL ANALYSIS OF
SETTLING DEFENDANTS' COMPARATIVE FAULT.................................. 22

V..

THE PROPOSED CONSENT ruDGMENT VIOLATES PROCEDURAL
DUE PROCESS ................................................................ :.................................. 24

CONCLUSION ............................................................................................................................ 25

' • • '.~.~'.~. " •.••••' . . . . . . . '

'.~'.; ••• " _ ••'.'.'~;"

• • • • R" • R • • " • • • ~., ~ • _

•

..~ ...... _ •• I.".' ."

' . ' , ' , . . . . . . . . . . . . . . . . . . . . . . . . . _ . . . ..

i'

ARGUMENT

I.

STANDARD OF REVIEW

"Ill assessing a proposed consent decree,.the Court must 'satisfy itself that the settlement
is reasonable, fair, and consistent with the purposes that [the applicable statute] is intended to
serve." United States v. Alliedsignal, Inc., 62 F. Supp. 2d 713, 719 (N.D.N.Y.. 1999). To be
substantively fair, the·settlement "must be based upon, and roughly correlated with, some
accepta1:?Ie measure of comparative fault, apportioning liability among the settling parties
according to rational (if necessarily imprecise) estimates of how much harm each [party] has
done." Id.
The reviewing court "must eschew any rubber stamp approval in favor of an independent
evaluation." Kelley v. Wagner, 930 F. Supp. 293, 297 (B.D. Mich. 1996). While the court may
ultimately defer to the agency when the agency has carefully applied its technical expertise to
evaluate the reasonableness of the settlement, the court must first "undertake an independent
assessment of the Consent Decree." Dep't. of Planning and Natural Res. v. Century Alumina
Co.,2008 WL 4693550 at *3 (D.V.I. Oct. 22,2008).1 In other words, "[d]eference ... does not
mean turnirig a blind eye to an empty recor4.on a critical aspect of settlement evaluation."
United States v. Montrose Chem. Corp., 50 FJd 741,748 (9th Cir. 1995) ..
Courts have repeatedly refused to approve consent decrees when the government could
not demonstrate that the settlement represented a fair apportionment of fault between the settling
and non-settling defendants. See, ~ Montrose, 50 F.3d at 746-48 (reversing trial court's
approval 9f consent deGr~~~se plaintiff had not produced evidence of its total damages and,
therefore, there was no way to determine if the settlement constituted a reasonable

1 Century Alumina is an Wlpublished opinion, a true and correct copy of which is attached to the Certification of
David Edelstein as Ex. F.

9

apportionment); Alliedsignal, Inc., 62 F. Supp. 2d at 723 (refusing to approve consent decree
because settlement did "not apportion liability according to rational estimates of how much harm
each PRP has done"); Kelley, 930 F. Supp. at 298-299 (refusing to enter consent decree because
settlement amount did not represent a fair allocation of settling defendant's fault); Arizona ex reI.
Arizona Dep't 6f EnvtL Quality v. Acme Laundry & Diy Clemg Co., 2009 WL 5170176 at *2

(D. Ariz. Dec. 21, 2009) (refusing to approve consent decree because plaintiff did not produce
evidence indicating total amount ofNRD);2 Century Alumina Co., 2008 WL 4693550 at *3-7
(refusing to enter consent decree because the agency did not provide the court with an estimate
of the projected response costs)..

II.

THE CONSENT JUDGMENT DOES NOT REPRESENT A FAIR
APPORTIONMENT OF NRD LIABILITY
In order to determine whether the Consent Judgment represents a fair apportionment of

NRD, it is necessary to compare the costs and damages that will be required in the future against
the costs and damages that Settling Defendants are assuming in the Consent JudgJIlent. As the
Ninth Circuit held in Montrose, ''the proper way to gauge the adequacy of settlement amounts to
be paid by settling PRPs is to compirre the proportion oftotal projected costs to be paid by the
settlers with the proportion of liability attributable to them, and then to factor into the equation
any reasonable discounts for litigation risks, time savings, and the like that may be justified."
Montrose, 50 F.3d at 746-47.
If the record is not clear about the total damages that plaintiffs are seeking, then a court
cannot approve the settlement. Id See also Acme Laundry, 2009WL 5170176 at *2 ("[w]e
cannot evaluate the fairness and reasonableness of the parties' proposed consent decree at this.
2 Acme Laundry is an unpublished opinion, a true and correct copy ofwhich is attached to the Certification of David
Edelstein as Ex. G.

10

......;.. ..-.-....

-.":~

.. :'.-' ...... "Y- ..'...... .

time because they have not provided a preliminary estimate of the natural resource damages at
issue"); Century Alumina, 2008 WL 4693550 at *3-7 (court could not evaluate faiiness of

,

i

i

settlement "without an estimation of the total response costs").

I
I.

Montrose is closely analogous to the present case .. There, the United States and the State
of California sued several corporate defendants to recover NRD and cleanup costs under
CERCLA. A mediator issued a'twelve page report recommending a settlement with some of the
defendants based in part upon the litigation risks and the benefits to the parties of an early

:".

~.

!

settlement. Id. at 745. Significantly, the mediator's report did not include an estimate of the
. total NRD being sought by plaintiffs. Id. The trial court approved the consent decree anyway, '"
The Ninth. Circuit reversed, finding that the trial court could not have "adequately
determined that the settlement was substantively fair without having some benchmark with
which to compare it." Id. at 746. The Ninth Circuit went on to clarify that '''fair' and
..

'reasonable' are, by.their very nature comparative tenns" and, therefore, in order to determine
whether the settlement represented a fair apportionment of liability the trial court needed to
compare the settlement amount against the total damages. Id. at 746-47. Because the total
damages were not known, it was impossible for the trial court to determine whether the
settlement represented a fair apportionment. Id. at 748.
Similarly, NJDEP has not specifically articulated its alleged damages. While this case
has been pending, the NJDEP lost two other groundwater NRD cases involving similar Claims.

In both of those cases, the trial court dismissed the NJDEP's NRD claims, finding that NRD
were not appropriate because the sites were being actively remediated under SRP and there was
no evidence that the public actually lost the use of any groundwater. See NJDEP v. Essex
Chemical Corp., Docket No. MID-L-5685-07 (March 29,2011) and NJDEP v. Union Carbide

11

QQnb Docket No. MID-L-5632~07 (July 23, 2010)? In the wake of those decisions, NJDEP
indicated that it is no longer seeking to implement the $81 million primary restoration plan called
for by its experts in this case~ See Exs. J and K to Edelstein Cert. But, NJDEP has not offered
any new expert reports or explained how this modification affects, if at all, the damages it is
seeking. See Ex. L to Edelstein Cert. Instead, NJDEP maintains that it is looking for
ExxonMobilto complete the remediation and restoration of the Tenninal "whatever the scope of

the future cleanup activities may be." See Ex. M to Edelstein Cert. (emphasis added).
ExxonMobil has repeatedly requested discovery as to any change in the relief sought by NJD EP,
but NJDEP has refused, opting for a stay of discovery instead. See Exs. N, 0 and P to Edelstein
Cert.
Thus, it is not clear at this point whether NJDEP is still claiming $84.2 million in NRD or·
whether it seeks a lesser amount and, if so, what amount. As the Ninth Circuit explained in
Montrose, a court cannot "adequately determine[] that [aJ settlement [is] substantively fair
without some benchmark with which to compare." Here, if the "benchmark" is still $84.2
million, apportioning only $1.1 million to Settling Defendants is unfair and unreasonable under
any view. If the "benchmark" is now something lower than $84.2 million, NJDEP must indicate
what that new benchmark is. Until it does so, there is simply no way to determine whether
Settling Defendants payment of$l.l million represents a fair apportionment ofNRD liability.

3 Essex Chemical and Union Carbide are unpublished opinions, true and correct copies of which are attached to the .
Certification of David Edelstein as Exs. H and I.

12

.• __

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THE PROPOSED CONSENT JUDGMENT DOES NOT REPRESENT A FAIR
APPORTIONMENT OF LIABILITY FOR REMEDIATION OF SOIL AND
GROUNDWATER.
Another fundamental problem with the proposed Consent Judgment is that it shifts the

costs of remediating contamination caused by Settling Defendants to ExxonMobil. NJDEP
obscures this unfairness by claiming that ExxonMobil will be released for discharges that
occurred after it sold the Tenninal. But, as a practical matter, NJDEP knows that is not true.
SRP has already concluded that contamination in many portion~ of the Terminal is comingled,
making it impossible to remediate only the contaminants still remaining from ExxonMobil's
priox: operations. See Exs. B and C to Edelstein Cert. So, unless ExxonMobil is released from
responsibility for all comingled contamination, ExxonMobil will still be left remediating Settling
Defendants' post-1989 contamination, along with its own, with no ability to recoup from Settling
. Defendants their fair share of the those remediation costs.
For example, under the Consent Judgment, Settling Defendants would be excused from
their obligation to:
•

Investigate and remediate the MTBE groundwater plume in the Eastern Tankfield,
even though they are solely responsible for that plume;

•

Maintain hydraulic control of the MTBE groundwater plume in the Eastern
Tankfield;

•

Investigate and remediate the soil contamination they caused in the Western
Tankfield;

•

Investigate and remediate the soil contamination ~ey caused in the Loading
Rack; and

•

Investigate and remediate the soil contamination they caused in the Piping Alley.

In contrast, if the Consent Judgment is approved, SRP still will require ExxonMobil to:
•

Continue pumping and treating contaminated groundwater throughout the
Terminal, including the Settling Defendants' MTBE plume in the Eastern
Tankfield;

13

-,,

•

Continue maintaining hydraulic control of the Settling Defendants' MTBE plume
in the Eastern Tankfield;

• Investigate and remediate the co-mingled soil contamination in the Western
Tankfield; _
• Investigate and remediate the co-mingled soil contamination in the Piping Alley;
and
• Investigate and remediate the co-mingled soil contamination in the Loading Rack.
Due to the contribution protection provided to Settling Defendantsin the Consent
Judgment, ExxonMobil will be required to incur all of these costs without the ability to recover
from Settling Defendants their fair share of the costs. Tbis is true even though SRP' s historical
record confirms that Settling Defendants' discharges will substantially increase future
remediation costs throughout the Terminal.

A.

ExxonMobil is Not Responsible for MTBEContamination in the Eastern Tankfield
NJDEP contends that it is fair to relieve Settling Defendants of their liability for cleanup

costs in other portions of the Terminal because the Consent Judgment will relieve ExxonMobil
of its obligation to remediate MTBE in the Eastern Tankfield. 4 This argument overlooks the
undisputed record that ExxonMobil did not contribute to the MTBE in the Eastern Tankfield.
Therefore, the Consent Judgment does not constitute a quid pro quo in which Settling
Defendants are assuming ExxonMobil's responsibility for contamination in one portion of the
Tenninal, while ExxonMobil assumes their responsibility in another portion. Rather, this is a
situation where NJDEP is allowing Settling Defendants to simply walk away from their
remediation and restoration responsibilities outside of the Eastern Tankfield.
The only material that Exxo~obil ever stored in the Eastern Tankfield was heating oil.
See Ex. Q.to Edelstein Cert., Before ExxonMobil sold the Terminal to GATX, sampling results
...
",

~

~e Eastern Tankfield consists of an area with seven above ground tanks (Tank 174 and Tanks 176-181) located
along the eastern bounda!)' of the Terminal. See Ex., A to Edelstein Cert.

14

--";~--~--~~""--"-'-"'-""---,,,

... _-,, ..- .....

,,-,

-_ .... -".

conflrmed that there was no MTBE contamination in the Eastern Tankfield. I4:.; ~ also
Renzulli Aff. at ~ 11. After GATX began storing pure MTBE in the Eastern Tankfield in 1992,
groundwater sampling revealed steadily increasing trends ofMTBE contamination. For
example, MTBE concentrations in one well, P-SA, jumped from non-detect in 1988 to 3,610
parts per billion ("ppb") in July 1994. See Renzulli Aff. at 'j\14. In May 2000, l\.1TBE was
detected in another well at a concentration of 6,400,000 ppb, and it climbed to 8,030,000 ppb by
November 2000. rd. at 'j\16 These extraordinarily high concentrations ofMTBE can only be
attributed to a discharge of pure MTBE occurring after ExxonMobil sold the Tenninal. Id. at ,
17.
~otably,

SRP agrees that ExxonMobil is not responsible for MTBE contamination in the

Eastern Tankfield_ SRP has explained:
The 1988 sample results were nondetect for MTBE. Also, Exxon's 1987 storage
records show that MTBE was not stored in these tanks. Based on this data the
NJDEP agrees with Exxon that the MI'BE contamination downgradient o/tanks
178-181 is GATX's responsibility.
,- .
See Ex. Q to Edelstein Cert. (emphasis added). See also Ex. R to Edelstein Cert. ("the NJDEP
considers that based upon the soil and ground water investigations performed to date, the MTBE

contamination in the area of Tanks 176-181 to have occurred subsequent to Exxon's
occupation") (emphasis added); Ex. D. at 257:12-260:6.
Even Settling Defendant ST's environmental consultant concluded that "it was GATX's
MTBE in the soils andgroundwater." See Ex. S to Edelstein Cert. at 42:10-14. Similarly,
Settling Defendant Plains' head of remediation concluded that the contamination in the Eastern

15

i

Tankfield Was from discharges of pure MTBE that post-dated ExxonMobil's operations. See Ex.
T to Edelstein Cert. at 100:12-17; 106:14-17; 110:24-111; 238:5-8. 5
Thus, it is universally recognized that ExxonMobil is not responsible for MTBE in the
Eastern Tankfield. Accordingly, NJDEP's rationale for approving the Consent Judgment-that

it is fair and reasonable to release Settling Defendants from their remediation obligations in the
rest ofthe Terrnin~l because ExxonMobil is obtaining a release for MTBE in the Eastern
Tankfield-is fundamentally flawed.

B.

NJDEP Mischaracterizes the Record Concerning the Western Tankfield
The Western Tankfield is an area in the central portion of the Terminal, generally

consisting of Tanks 164-170, 172, 173, 175

~d

182, where each of the defendants stored

gasoline and other petroleum products during their respective operations. See Ex A. Unlike the
pureMTBE contamination in the Eastern Tankfield, the contamination in the Western Tankfield
primarily consists of dissolved petroleum constituents, including benzene, toluene, ethylbenzene,
and xylene (collectively' "BTEX"), as well as naphthalene and MTBE. See Ex. V to Edelstein
Cert. at 2.
SRP has aclmowledged that Settling Defendants are responsible for some of the
contamination in the Western Tankfield. See Ex. W to Edelstein Cert. at 10. According to SRP,
the contamination in the Western Tankfield is "a co-mingled plume" and, therefore, "it is not
possible to determine which operators are responsible for contamination in deeper soils and
ground water due to co-mingling." See Ex. C at 2. Yet, the Consent Judgment relieves Settling
Defendants of their responsibility to remediate soil and groundwater contamination in the

the numerous inspection repo~ revealing problems with its tanks in the Eastern Tankfield, see Ex. U to
Edelstem Cert., GA TX repeatedly advised NJDEP throughout the 1990' s that there was no evidence of any
problems with the tanks and refused to accept responsibility for cleaning up the steadily increasing MIBE
contamination.
5Despite

16

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i.
j.

._............... -.-:

::I' .................... '
.

Western Tankfield and provides them with contribution protection against claims by
ExxonMobil for future remediation costs in the Western Tankfield.

1.

ExxonMobil's Contribution to Present Conditions in the Western
Tankfield

ExxonMobil's pre-sale sampling revealed a large plume of petroleUm in the soils,
elevated levels of dissolved petroleum constituents (BTEX) in the groundwater, and several pits
that had been historically used by ExxonMobil's predecessors to dispose of residue from tankcleaning.
In the early 1990's, ExxonMobil began to actively remediate this contamination.
.ExxonMobil installed a system of recovery wells that have removed virtually all of the free
.

product. See Ex. XtoEdelstein Cert. at 5; .... also Renzulli Aff. at, 8. Inaddition,
~
ExxonMobil has actively remediated the dissolved BTEX groundwater plume through the pump
and treat system at the Valero Property. As a result of these efforts, the .dissolved B TEX plume
demonstrated steadily decreasing trends through the early 1990's, which prompted the SRP to
approve a modified remedial approach that was based upon natural attenuation of the

··contamination.· See Renzulli Aff. at, 9-. ExxonMobil also excavated the,majority of the tank
bottom pits, and the SRP has not required any further remediation of those areas: Id. at , 8.

2.

GATX's Contributions to Conditions in the Western Tankfield

GATX is responsible for several significant spills in the Western Tankfield in the 1990's,
which caused contaminant concentrations to significantly increase and substantially exacerbated
past and future cleanup efforts in this area.
First, a leak from Tank 164 resulted in a discharge of 420 gallons of gasoline in 1993.
See Ex. Y to Edelstein Cert. One year later, the same tank leaked again, discharging at least 500

17

!.

more gallons. 6 See Ex. Z to Edelstein Cert. Groundwater sampling demonstrated that these
discharges had a significant itnpact on soil and groundwater conditions. Before the Terminal
was sold to GATX, the monitoring well adjacent to Tank 164 showed average concentrations of
..

benzene at 50 ppb, toluene at 191 ppb, and xylene at 336 ppb. See Renzulli Aff. at ~ 26. In
1995, after the sale and the Tank 164 discharges, benzene levels increased dramatically to 2,920
ppb, toluene levels increased to 475 ppb, and xylene levels increased to 1,390 ppb. Id. BTEX
concentrations continued to increase for several years, peaJdng in 1997 at 6,900 ppb. 7 ld. at, 27.

In se~king approval of the Consent Judgment, NJDEP overlooks these discharge even though ST
and J>lains acknowledge that the releases from Tank 164 impacted soil and groundwater in the
Western Tankfield. See Ex. AA to Edelstein Cert. at 8,10,19,20,21; Ex. S at 174:3-175:2; Ex.
Tat 123:13-126:2.
Second, Tank 164 was not the only leaking tank in the Western Tankfield during
GATX's operations. In 1995, holes were discovered in Tanks 165 and 167. See Ex. BB to
Edelstein Cert. GrOlmdwater sampling near those tanks demonstrated that benzene levels had
increased from pre-sale levels of 110 ppb to 3,600 ppb in 1996. See Renzulli Mf. at ~ 31. By
1997, those levels had increased to 31,000 ppb. Id. Again, NJDEP does not discuss the effects
of these leaking tanks in its moving papers.
Third, MTBE levels also substantially increased in the Western Tankfield during
GATX's operations. The only detection ofMTBE in the Western Tankfield during
ExxonMobil's operations occurred in 1988, when MTBE was. detected in well W-5 at a
concentration of 170 ppb. See Renzulli Aff. at, 37. By 1992, ExxonMobil had successfully
6GATX's consultant originally estimated that 5,000 gallons of gasoline were discharged. See Ex. Z to Edelstein
Cert.
7Sampling from the wells downgradient of Tank 164 similarly demonstrated increasing trends ofBTEX
contamination after the discharges.

1.8

remediated this MTBE to a non-detect leveL Id. Yet, two years later, during GATX's
operations, MTBE was detected in W-5 at a concentration of 59,400 ppb. Id. at ~ 38. Again,
NJDEP does not consider this data.

C.

NJDEP Mischaracterizes the Record Concerning the Piping Alley
The Piping Alley consists of an extensive set of above-ground pipes that connect a

marine dock on the Delaware River to the tanks in the central portion of the Terminal. See Ex.
A. Free product was detected in this area before ExxonMobil sold the Terminal to GATX and,
'ltS

part of its ongoing remediation efforts, ExxonMobil has been pumping and treating impacted

groundwater beneath the Piping Alley.
This ongoing remediation has been hindered by several significant spills that occurred
after-ExxonMobil sold the Terminal. SRP records demonstrate that Settling Defend,ants are
responsible for considerable contanrination in this area.

, In 1996, an estimated 93 gallons ofMTBE were spilled when a truck driver left a valve
open during loading. See Ex.

te.

The spill occurred in an area lacking adequate contai.ru.llent,'

for which NJDEP had previously cited GATX. See Ex. DD. The well down-gradient of this
area, which had been non-detect for MTBE before the Spill, thereafter sh~wed consistent
concentrations ofMTBE. See Renzulli Aff. at ~ 43.

In 1997, GATX discharged 15,000 gallons of ethanol when a gasket failed. See Ex. EE.
NJDEP dismisses this spill on the grounds that it has not been the subject of discovery, but
ExxonMobil's efforts to take discovery about this spill have been blocked by the request: of
NJDEP and the Settling Defendants for a stay of discovery. See PI. Br. at 7, n.6.
In 1999, oil was found "seeping up through the ground" from a break in an underground
pipeline. See Ex. FF. Thereafter, free product began appearing regularly in a down- gradient

19

!

well. See Renzulli Aff. at ~ 47." GATX made no effort to recover the free product or remediate
the groundwater.

In 2003, a leaking valve sprayed 50 gallons of pure MTBE across soil in the Piping
Alley. See Ex. GG. ST excavated the impacted surface soils, but "it did not conduct any
groundwater remediation. MTBE is now present in groundwater down-gradient from this area.
See Renzulli Aff. at ~ 50.

In 2009, Plains reported a loss of 500 gallons of ethanol from a tank adjacent to the
Piping Alley. "See Ex. RH. Plains has not investigated the impacts from this discharge.

In its haste to obtain approval ofthe Consent Judgment, NJDEP overlooks all of these
" discharges by Settling Defendants. Despite SRP's acknowledgment that Settling Defendants are
responsible for soil and groundwater contamination in the Piping Alley, the Consent Judgment
relieves Settling Defendants of their remediation responsibilities in this area and provides them
with contribution protection against claims by ExxonMobil for future remediation costs.

D.

NJDEP Mischaracterizes the Record Concerning the Loading Rack
The Loading Rack is located in the northern comer of the Terminal. It consists of several

truck bays and overhead pipe~ where tanker trucks load and unload product. See Ex. A.
Contamination in this area primarily consists of BTEX and MTBE. In 1985, ExxonMobil
discovered a 120,000 gallon un<;lerground leak of heating oil and installed a remediation system
that recovered 110,000 gallons by 1987. See Renzulli Aff. at ~ 8. Since 1987, ExxonMobil has
continued to remove smaller amounts of product through passive bailing. Id. There is no free

product left in the Loading Rack. Id. NJDEP emphasizes the volume ofthe 1985 release in its
moving papers, but it fails to mention that ExxonMobil has already removed all of the free
.'.~

.

product.

20

NJDEP also ignores SRP records indicating that Settling Defendants are responsible for
some of the contamination currently present in the Loading Rack. For example, SRP has
explained:
Given the length of time since [the 1985 heating oil spill] occurred, as well as, the
compounds detected in shallow soils (BTEX, lead and MTBE), the NJDEP
considers this contamination to be NOT solely from a historic fuel oil discharge
and that an expanded investigation is warranted.
Given the volatile organic compounds (VOC) detected in the shallow soils and the
relatively high rate of vertical migration of these VOC, the NJDEP considers the
contamination detected in 2002 to be the result ofa much more recent
discharge ofgasoline, likely during either GATX's or ST Services tenancy . ...

vac

I

See Ex. II at 2 (emphasis added). See also Ex. R at 4 (the agency "continues to consider that the
existence oflead, MTBE and BTEX compounds in the soils of this area are the likely result of
gasoline discharges occurring at this location over a long period oftime during Exxon's,
GATX's and ST Services' tenancy").
Even Settling Defendants have admitted that subsequent spills during therr respective
operations contributed to the current conditions in the Loading Rack. Internal GATX notes
describe "new sources" of contamination in the area after 1998. See Ex. JJ. Likewise, the
consultant for ST and Plains testified that the contamination profile in the shallow soils in the
Loading Rack is most .likely the result of incidental spills that post-date ExxonMobil's
operations. See Ex. S at 271:14-272:17; 276:19-25; 280:21-281:18.
Despite this record, the proposed Consent Judgment relieves Settling Defendants of their
responsibility to remediate soil and groundwater contamination in the Loading Rack and
provides them contribution protection against claims by ExxonMobil for future remediation
costs.

21

.>

E.

Summary
SRP's n~c()rds confirm that Settling Defendants are responsible for soil and groundwater

conditions throughout the TenninaL Those records also make clear that ExxonMobil is not
responsible for the MTBE contamination in the Eastern Tankfield. While advocating for
approval ofthe Consent Judgment, ONRR has ignored this record. Given the significant impacts
that Settling Defendants' discharges have had throughout the Terminal, it is unfair and
unreasonable for the Consent Judgment to limit Settling Defendants' cleanup obligations to the.
MTBE

in the so~ls of the Eastern Tankfield, while providing Settling Defendants with

contribution protection for all other future remediation costs. It follows that the Court should
not approve the Consent Judgment.

IV.

NJDEP DID NOT UNDERTAKE A MEANINGFUL ANALYSIS OF SETTLING
.
'.
.
DEFENDANTS' COMPARATIVE FAULT.

.AB evidenced by NJDEP's mischaracterizations about the sources of contamination
currently present at the Terminal, the Consent Judgment is not based upon a careful evaluation of
the record, but rather broad generalizations about the parties' comparative fault that have little
technical support. In fact, the NJDEP's experts, Michael Rafferty and Harvey Cohen, testified
that they did not undertake any comparative fault analysis. Rafferty testified that he did not
review where the contamination originated or how concentrations changed over time. See Ex.
KK at 132:18-133:8. Similarly, Cohen testified that he "did not try to link specific
contamination in groundwater to specific sources on the site." See Ex. LL at 116:19-20; 130:14131:8; i 79:12-14; 256:3-5; 435:13-15. Consequently, neither Rafferty nor Cohen were able to
offer an opinion as to how NRD or future remediation costs should be apportioned to each of the

22

defendants. See Ex. KK at 132:18-133:8; Ex. LL at 118:23-119:12; l30:14-131:8; 196:10197:6; 253:14-20; 254:21-255:1; 391:19-396:13; 432:19-435:15.

In addition, nobody within NJDEP with knowledge of Settling Defendants' discharges, or
their potential impacts, evaluated the proposed Consent Judgment. ·NJDEP

asse~s

that John

Kosher and Maurice Migliarino reviewed the proposed Consent Judgment. See PI. Br. at 28.
Kosher is ExxonMobil's case manager working within the Bureau of Industrial Site Remediation
which oversees ISRA cleanups. GATX is not subject to ISRA and, therefore, Kosher has not
overseen any of GATX's actions. Kosher repeatedly testified that he lacked information about
GATX's discharges. See Ex. D at 233:6-234:16; 236:11-240:19. Migiliarino, Kosher's
supervisor, has even less knowledge about GATX's discharges, being only peripherally involved
in the day-to-day oversight of the Terminal. Thus, the two "most knowledgeable" people who
participated in the negotiations had no knowledge about the liability of Settling Defendants.
The only other NJDEP employees who reviewed the proposed Consent Judgment were
John Sacco and Elizabeth Fernandez, both of whom work in ONRR. But, according to Sacco,
ONRR has never undertaken any effort to evaluate the comparative fault of the defendants and,
consequently, does not know whose discharges are currently impacting particular areas of the
Terminal. See Ex. E at 71:6-12; 69:10-70:2; 186:6-14. 8
As this testimony demonstrates, NJDEP did not undertake a meariingful evaluation of
Settling Defendants' relative fault. Consequently, it could not have reasonably determined that
the proposed Consent Judgment represents a fair apportionment ofNRD between Settling
Defendants and ExxonMo bit.
8ExxonMobil sought to depose NJDEP personnel who oversaw the.investigation of GATX' s spills and was told that
they no longer work at the agency and could not be located. ExxonMobil thereafter issued a deposition notice to
NJDEP pursuant to Rule 4: 14-2(c) to take the deposition of the individual within the agency most knowledgeable
aboutthe impacts from GA TX' s spills. NJDEP objected to the notice and obtained a stay of discovery before the
deposition could occur...

23