NJDEP Files NRD Lawsuits Following "Loss of Use" Damages Decision

August 16, 2007
Client Alert Newsletter August 2007

On June 6, the New Jersey Superior Court Appellate Division in N.J. Dept. of Envtl. Prot. v. Exxon Mobil Corp. found the New Jersey Department of Environmental Protection's ("NJDEP's") natural resource damages ("NRD") claim for "loss of use" damages consistent with the New Jersey Spill Act. The Appellate Division reversed an earlier Law Division decision, which held that the Spill Act did not allow NJDEP to collect loss of use NRDs. The Appellate Division accepted NJDEP's position that loss of use is a means to measure the reduction of services provided by an affected natural resource and determining its replacement value, and thus is a recoverable NRD element.

While the New Jersey Supreme Court may ultimately weigh in on this issue, the Appellate Division's decision has cleared the way for NJDEP to continue its initiative seeking groundwater NRD claims. NJDEP is still actively pursuing these actions, as seen in several new lawsuits filed just prior to the June 30 expiration of the statute of limitations for many of the state's NRD claims. Until the New Jersey Supreme Court addresses the issue, however, NRD defendants will likely continue to challenge the validity of NJDEP's theory for calculating the loss of use value of contaminated groundwater not in use, as that methodology has not yet been addressed by state courts.