Bayway refinery. Photo: Carmen Natale

A New Jersey appeals court on Monday affirmed the controversial $225 million settlement reached by the administration of Gov. Chris Christie and ExxonMobil over claims of contamination at company facilities in the state.

Appellate Division Judge Carmen Messano, joined by Judges Amy O'Connor and Francis Vernoia, said in a published decision that there was no reason to vacate the settlement agreement.

“We find no mistaken exercise of the judge's discretion in finding the consent judgment was fair, reasonable [and] consistent with the public interest,” Messano said.

The panel largely agreed with the holdings of Superior Court Judge Michael Hogan below, but found that the environmental groups had standing to appeal the judge's approval of the settlement. But the panel ultimately affirmed Hogan's approval of the deal.

It also rejected the challengers' contention that the New Jersey Department of Environmental Protection lacked authority to release ExxonMobil from claims lodged under the federal Comprehensive Environmental Response, Compensation, and Liability Act, or the Superfund.

The DEP “does not need authority from the federal Environmental Protection Agency to decline prosecution of an environmental claim,” Messano wrote. “None of the cases cited by the environmental groups supports their argument that DEP could not include as part of the consent judgment its intention to release Exxon from any CERCLA claims.”

The $225 million figure was reached to compensate the state for damages caused at the refinery facility in Bayonne and at the Bayway Refinery in Linden, as well as at all of its service stations and several other facilities in the state.

The deal, struck in 2015, had been harshly criticized by Democrats, led by now-retired Sen. Raymond Lesniak of Union County, and environmental activists as being too low, but lawyers for the Republican administration noted that the settlement agreement does not cover claims against ExxonMobil for alleged natural resource damages to the Arthur Kill, Newark Bay and other waterways.

Jeff Tittel, the director of the New Jersey chapter of the Sierra Club, said of Monday's ruling: ”We're disappointed that the Appellate Division has ruled against us on the Exxon case. Although it's not a surprise, we still believe that they are wrong. The Appellate Division tends to side with state agencies.”

The Attorney General's Office declined to comment.

Lesniak did not respond to a request for comment.

The settlement agreement was delayed pending a public comment period and subject to a review by Hogan, who approved it, along with some $44 million in attorney fees, in August 2015.

“After giving considerable time and thought to its task, the court finds that the proposed consent judgment is fair, reasonable, in the public interest, and consistent with the goals of the Spill Compensation and Control Act,” Hogan said at the time.

“Nearly every consent decree can be viewed simultaneously as 'a crackdown or a sellout,'” Hogan said, citing a 1994 ruling by a U.S. district judge in Colorado in United States v. Telluride. “This quote rings especially true for the settlement that this court has been tasked with reviewing.”

The settlement, announced in March 2015 by then-Acting Attorney General John Hoffman, came after 11 years of litigation between the state Department of Environmental Protection and ExxonMobil.

Hogan's decision had been eagerly awaited by the Christie administration, Democrats in the Legislature who appeared intent on derailing the governor's presidential ambitions at the time, and environmentalists who have accused the governor of agreeing to a sweetheart deal to appease a corporate ally.

At one point in the litigation, during the administration of Democratic Gov. Jon Corzine, there had been some speculation that ExxonMobil could be ordered to pay up to $8.9 billion in damages. But during a hearing before Hogan, lawyers representing both sides indicated that was never a real possibility. The state's lead attorney, Allan Kanner of Kanner & Whiteley in New Orleans, told the court then that anything significantly above $225 million would be unreasonable in trying to reach a compromise. The Philadelphia Inquirer quoted Hoffman as telling Hogan that ExxonMobil rejected a $325 million settlement offer in 2012, and one of Exxon's lawyers, Theodore Wells Jr., told Hogan the Corzine administration had made settlement offers of $350 million to $400 million. Wells, of Paul, Weiss, Rifkind, Wharton & Garrison in New York, said ExxonMobil rejected those offers and did not make counteroffers.

Ultimately, Hogan said, there was no reason to reject the settlement. “Although far smaller than the estimated $8.9 billion in damages, Exxon's payment represents a reasonable compromise given the substantial litigation risk the DEP faced at trial and would face on appeal,” he said, noting that agencies working in the public interest are “entitled to deference.”

State officials said the agreement represented the largest settlement in an environmental case with a corporate defendant in New Jersey's history.

Hogan also awarded the DEP's outside counsel, New Orleans' Kanner & Whiteley, $44.4 million in counsel fees.