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As Gas Companies Prepare Pollution Settlements, New Jersey Voters Limit How They Can Be Spent

The state is poised to receive hundreds of millions of dollars from BP, ExxonMobil, Shell and Sunoco.

The Passaic River in Paterson, N.J.
The Passaic River in Paterson, N.J.
(AP/Larry Scucci)
This story is part of our 2017 elections coverage.

New Jersey is likely on the cusp of receiving hundreds of millions of dollars from companies settling pollution lawsuits. The largest of those is a proposed $225 million settlement with ExxonMobil for pollution near two refineries in the northern part of the state. Sunoco, BP and Shell have also settled with the state for pollution near gas stations. Together, those settlements could bring in another $165 million.

The state's voters decided by a 2-1 margin Tuesday that the bulk of that money -- and all future pollution payouts -- will be spent on environmental projects, not on general state operations.

Environmentalists successfully pushed a constitutional amendment that will now require the legal payouts to go toward projects like building parks, removing dams or adding bike trails. If voters had rejected the amendment, all but $50 million would have gone into the state’s main checking account to pay for things like health insurance, prisons or schools.

Ed Potosnak, executive director of the New Jersey League of Conservation Voters, one of the groups behind the ballot measure, says it will effectively create a “lockbox” for environmental uses.

“The administration [of outgoing Gov. Chris Christie] has been raiding those funds and diverting them away from polluted communities, away from environmental restoration projects that enhance the neighborhoods, that help restore the habitats, that [allow for] recreational usage of waterways available to residents,” he says. “Instead, that money has gone to general funds to make up for budget shortfalls and bad fiscal decisions."

But the Christie administration wasn’t the only culprit, says Potosnak. Other New Jersey governors have used similar tactics, and the Democratic-controlled state legislature allowed Christie to veto restrictions on the use of environmental settlements. (New Jersey voters on Tuesday elected Phil Murphy, a Democrat, to succeed Christie.)

Even though Potosnak blames lawmakers for many of the diversions, he notes that they were the ones who put the constitutional amendment on the ballot.

“Interestingly, 70 percent of the legislature voted to put the question to the public so that they could stop themselves and the administration from doing this. They’re asking for help,” he says. “In the face of Democrats and Republicans coming together and stealing money from communities that were polluted, this [amendment] makes a lot of sense.”

The amendment echoed similar debates around the country. As governments become more transparent about how tax dollars and other sources of money are spent, lawmakers and taxpayers are pushing for them to be used more wisely or fairly. Last month, for example, Louisiana voters approved a ballot measure that bans future gas tax revenue from funding transportation employee salaries.

Since the 1980s, New Jersey has been pushing for polluters to clean up industrial waste, particularly in the Passaic River watershed near New York City. One of the ways it’s done that is by using a state law nicknamed the “Spill Act,” which not only requires companies to clean up the pollution they caused but also to pay to fix the damage caused by that pollution.

Regarding the Passaic River alone, New Jersey has recovered more than $355 million in three rounds of settlements. That money has been designated for, among other things, restoring the waterfront in Newark and building a marina around the Arthur Kill, the strait of water that separates New York's Staten Island from northern New Jersey.

Debbie Mans, the executive director of NY/NJ Baykeeper, an environmental group, says those types of projects are especially important in poor neighborhoods that have long had to deal with contaminated waterways and a lack of parks and other outdoor recreation areas because of the pollution.

“It makes sense that the money that’s collected for these impacts go back into those communities to make them healthier, to provide more open space and to provide outdoor recreational opportunities. That’s what this whole program is about,” she says. “Allowing it to be diverted to the general fund, where it could go anywhere for any reason undercuts the purpose of the program and does a huge disservice to these communities."

There was no organized opposition to the constitutional amendment.

Meanwhile, environmental groups are still contesting the 2015 Exxon settlement, which falls far short of the $8.9 billion in damages that the state had originally sought. Environmentalists charged that Christie’s office pushed for the deal for political reasons. Although the Christie administration has settled many large natural resource damage cases from previous administrations, it has not launched any of its own.  

This story is part of our 2017 elections coverage.

Dan is Governing’s transportation and infrastructure reporter.
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