Essex Chemical Successfully Challenges NJDEP's Natural Resource Damage Suit

by Cole Schotz

The New Jersey Appellate Division sides with Essex Chemical Corporation, a subsidiary of DOW Chemical, in a suit filed by the NJDEP in its effort to obtain both restoration and compensatory natural resource damages (“NRDs”) pursuant to the Spill Compensation and Control Act (“Spill Act”).  The Court held that Essex Chemical did not need to pay $8 million sought by the NJDEP under the Spill Act. 

In NJDEP v. Essex Chemical Corp., A-0367-10, the Court held that the NJDEP failed to prove by a preponderance of evidence that Essex Chemical’s cleanup plan was inadequate.  The NJDEP’s NRD claims against Essex Chemical stemmed from the discharge of hazardous substances on property that Essex Chemical previously owned and operated as a paper products preparation facility located in South Brunswick, New Jersey.  Essex Chemical was remediating the Property with the oversight of the NJDEP.  The lower court dismissed both of NJDEP’s NRD claims.  The NJDEP subsequently appealed the decision, which was the subject to the recent Appellate Division case.

Primary Restoration Damages

The NJDEP sought $5.7 million in Restoration NRDs to implement an alternative groundwater remedy at the Property, which, it was claimed, would remediate the groundwater in ten years.  The trial court found that the NJDEP did not establish that they were entitled to damages to restore the Property to pre-discharge conditions in that expedited timeframe.  The trial court evaluated several factors including cost and public harm in deciding that the NJDEP’s arguments were lacking.  In this case, the Appellate Division indicated that the NJDEP, which maintained the burden of proof on the issue of damages, had to establish by a preponderance of the evidence that its expedited remediation plan should be implemented rather than Essex Chemical’s plan of in-situ remediation.  The trial court and the Appellate Division both held that the NJDEP did not show the need to restore the Property to pre-discharge conditions within ten years, especially when the NJDEP did not show that contamination remaining on-site was causing harm to any sensitive receptors or pose any threat to the public health, safety or welfare.  The Appellate Division pointed to the fact that Essex Chemical had spent over $5 million in remediating the groundwater with the NJDEP’s oversight.  The pace at which Essex Chemical was performing the remediation was reasonable and the proposed remediation plan was already approved by the NJDEP.  
Compensatory Resource Damages

Further, the NJDEP sought over $2 million in Compensatory NRDs for alleged loss of use of NRD services, which in this case was groundwater.  The Appellate Division affirmed the trial court’s dismissal of the claim.  The Court found that they were not required to provide NJDEP’s experts any special deference where the expert’s opinions were based on economic factors in lieu of environmental factors.  Further, and more importantly, the Appellate Division agreed with the trial court’s finding that an award of compensatory NRDs was not warranted based on the expert testimony that the NJDEP presented.  The NJDEP failed to establish why they used the Resource Equivalency Analysis (“REA”) methodology to calculate NJDEP’s loss of use of groundwater for the NRD claim.  The REA determines how much restoration would be needed to offset the nature resource injury.  Using the REA, NJDEP’s expert calculated how much groundwater was allegedly injured by contamination at the Property, and then proposed a certain amount of acreage to be purchased for future protection and re-charge of groundwater.  The assessed value of the acreage to be purchased was the monetary amount of compensatory NRDs sought by the NJDEP.  The trial court noted that the REA is ordinarily used where NJDEP is calculating the injury to wildlife, where it is impossible to quantify lost services or use.  There was no instance presented at trial, where the REA was used to value loss of use for groundwater.  As such, the Appellate Division affirmed that the application of the REA analysis to this case was flawed and unconvincing. 

Even assuming that the application of the REA was accepted, the Appellate Division noted that the expert’s analysis would have potentially provided NJDEP with a windfall because there was no adjustment for the different types and quality of services provided by the undeveloped land that would have been acquired.  For example, the Appellate Division discussed the fact that, in addition to groundwater protection, open space provides for public recreation and suitable habitat for wildlife.  The Court found the expert’s analysis unfairly imposed on Essex Chemical costs that were in no way related to the injury resulting from the contamination.  Further in developing comparables used in the REA, NJDEP failed to utilize industrial properties such as the Property in question nor did it take into consideration zoning, location, utilities, tax rates and aesthetics, all of which effect the price of land.  The Court found that the damages were not indicative or equivalent to the loss. 


This case is good news for those challenging NRDs, as it puts a significant dent in NJDEP’s basis for calculating NRDs.  It is unclear whether the NJDEP will challenge this ruling and appeal to the New Jersey Supreme Court.  However, given the time and money spent in developing and defending the REA methodology, an appeal is likely.


Written by:

Cole Schotz

Cole Schotz on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.