NJ District Court rules that NJDEP waived its NRD claims

On September 29, 2010, in FMC v. American Cyanamid consolidated with U.S. v FMC Corporation, Judge Cavanaugh of the U.S. District Court for New Jersey granted summary judgment to FMC Corporation ruling that the NJDEP had waived its right to assert claims for natural resource damages (NRD) for a Superfund site in Franklin Township, N.J. The parties agreed that in 2001 a coordinator for the NJDEP Office of Natural Resource Recovery (ONRR) prepared a written internal memorandum in which it was stated that the NJDEP would not assess NRD for the site because the groundwater plume did not extend off-site and because the proposal was being reviewed to re-inject treated water into the ground. The position was conveyed orally to counsel for FMC. This position was consistent with the NJDEP’s policy for recovery of NRD which had been implemented in the 1990s. The policy was subsequently changed in 2002 and the change was memorialized in Policy Directive 2003-07 which provided that the ONRR would employ a settlement formula to evaluate and assess NRD, including for on-site groundwater. The position that there would be no claim for NRD for the FMC site; however, was subsequently confirmed during the course of settlement discussions in a letter from the office of the Attorney General in 2003. Judge Cavanaugh concluded that the letter to FMC from the ONRR in 2003 (along with the prior statement in 2001) constituted a knowing and intentional waiver of any claims for NRD for the groundwater at the site. The court rejected the government’s argument that it can change its policies for the benefit of the public without creating rights in parties who claim to have relied on an old policy. The court agreed that the government can change its policies, but concluded that it cannot expressly waive its rights two times in the span of two years “and then about face years later.” The judge concluded that allowing such a result “would serve to completely alter the calculus of the litigation and undermine settlement negotiations that the parties engage in with the State.” The claims of New Jersey for NRD were, therefore, dismissed. This case demonstrates that New Jersey’s policies on NRD are continually developing. It is unlikely that a memorandum stating that the NJDEP will not be seeking NRD will be available in most cases. This decision does, however, indicate that the effort to obtain NRD for groundwater that is not likely to go off site is, at its core, a decision based on policy, not necessarily science. DiFrancesco, Bateman, Coley, Yospin, Kunzman, Davis & Lehrer, PC (www.dbnjlaw.com ) is a full service law firm in New Jersey which provides a broad range of legal services, including the representation of clients in environmental and defense of toxic exposure matters. For additional information about the matters in this bulletin or in the firm’s environmental practice, please contactSteven A. Kunzman, Esq. who heads our Environmental and Latent Injury Litigation Department

DiFrancesco, Bateman, Kunzman, Davis, Lehrer & Flaum PC (http://www.dbnjlawblog.com) is a full service law firm in New Jersey which provides a broad range of legal services. For additional information about the matters in this bulletin or in the firm’s Employment Practice, please contact Richard P. Flaum, Esq.

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