N.J. Environmental Agency Takes Aim at Pollution Damage to Water Supply and Other Resources

Agency Will Use Outside Counsel to Strengthen Enforcement

New Jersey’s Department of Environmental Protection (NJDEP) will use the services of outside counsel Allan Kanner & Associates, P.C., to pursue recovery of compensation for pollution-related damages to natural resources, especially groundwater, Commissioner Bradley Campbell said at a round-table seminar hosted by consulting firm BEM Systems, Inc.

The agency announced plans last year to aggressively pursue recovery of claims or restoration under the state’s natural resource damage (NRD) laws, which require compensation for the lost "use value" of damaged natural resources.

The BEM seminar, titled "Natural Resource Damage Assessments: A Real-World Perspective," brought together experts from the regulatory, scientific, legal, insurance, scientific and environmental activist communities to discuss the application and effects of the new NRD initiative. NJDEP will publish its updated policy "before Labor Day," Campbell said.

Even aquifers that are not now used for potable purposes will be subject to NRD assessments, Campbell noted. "The fact of the matter is that for both industrial and residential growth in the State of New Jersey, one of the most significant constraints--and the biggest long-term constraint--is scarcity of water supply," he commented, "and this program is one of many initiatives to help address that."

To help pursue NRD claims, NJDEP has retained New Orleans-based Allan Kanner, a national trial firm with a strong record in environmental litigation, on a special-counsel basis, Bradley said, noting that "the terms of that agreement are consistent with the terms that have been set for other counsel in similar cases by the Attorney General."

NJDEP also hopes to considerably speed up implementation of restorations. "In addition to being the national leader in addressing these claims in a thoughtful and systematic way, I think New Jersey can also be a leader in showing that the transition time from resolution of the claim to on-the-ground restoration can be compressed significantly," he said.

In theory, responsible parties will have the option of reducing NRD costs by voluntarily initiating settlements. But Stephen Noble, an environmental specialist with reinsurance giant Zurich North America, cautioned, "From an insurance perspective, I would advise responsible parties to wait until the state initiates a claim. If voluntary NRD settlements are negotiated, it’s possible that all bets are off."

Noble’s observation prompted Commissioner Campbell to respond, "I guess I would counter that if you wait for us to initiate, the price has, by definition, gone up."

NRD payments will go to a special fund for restoration of aquifers, streams, wetlands and estuaries to their original condition and not into the state’s general budget. Andrew Willner, director of the New York/New Jersey Baykeeper, said his group would insist payments assessed for damages that occurred within in certain watersheds should be used specifically for restoration within those watersheds, or even within smaller "sub-watersheds."

Other topics covered at the seminar included the amounts responsible parties may be required to pay; implementation of "resource-to-resource" restoration projects in lieu of direct monetary compensation; possible "settlement scenarios" for various types of damage situations; and the role of community and environmental organizations in developing remediation alternatives.

Other participants at the BEM seminar were were Richard J. Conway, Jr., Schenck, Price, Smith & King, Morristown; Peter J. Herzberg, Pitney, Hardin, Kipp & Szuch LLP, Morristown; William H. Hyatt, Jr., Partner, Kirkpatrick & Lockhart LLP, Newark; Mark Rochel, Ph.D., CH2M Hill; and Prof. Carter Strickland, Jr., Rutgers Environmental Law Clinic, Newark, N.J. The moderator was Donald W. Richardson, CPG, BEM Systems’ Director of Remediation Services.

BEM Systems, Inc.

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