N.J. Dep't of Envtl. Protection v. Amerada Hess Corp. ( In re Methyl Tertiary Butyl Ether ("MTBE") Prods. Liab. Litig.)

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In Re Methyl Tertiary Butyl Ether “MTBE” Products Liability Litigation This document relates to: New Jersey Department of Environmental Protection et al. v. Amerada Hess Corporation et al., Case No. 08 Civ. 312 (VSB)

No. 1:00-1898

United States District Court, S.D. New York

July 27, 2022

Leonard Z. Kaufmann

Cohn Lifland, Pearlman, Herrmann & Knopf, L.L.P.

John K. Dema, Scott E. Kauff

Law Offices of John K. Dema, P.C.

Duane C. Miller, Michael Axline

Miller & Axline, P.C.

Daniel Berger, Tyler E. Wren

Berger & Montague, P.C.

Special Counsel for Plaintiffs

David J. Lender, Diane Sullivan

Jed P. Winer

Weil, Gotshal & Manges LLP

Marc A. Rollo, Carlos M. Bollar, Charles J. Dennen

Archer & Greiner, P.C.

Counsel for Defendants Exxon Mobil Corporation and ExxonMobil Oil Corporation

OPINION & ORDER

VERNON S. BRODERICK, UNITED STATES DISTRICT JUDGE:

Before me is a motion filed by Defendants Exxon Mobil Corp. and ExxonMobil Oil Corp. (together, “Exxon”) arguing that certain claims brought in this action should be dismissed “as unripe under” Federal Rule of Civil Procedure 12(b)(1). (Doc. 610 (“Ripeness Br.”)). Because Exxon's argument is inconsistent with binding Second Circuit law, the motion is DENIED.

I. Factual Background and Procedural History^[1]

This action is part of a consolidated multidistrict litigation (“MDL”) related to the alleged contamination of groundwater from various defendants' use of the gasoline additive methyl tertiary butyl ether (“MTBE”) and/or tertiary butyl alcohol, a product formed by the breakdown of MTBE in water. See In re MTBE Prods. Liab. Litig., MDL No. 1358 (SAS), 2015 WL 7758530, at *1 (S.D.N.Y. Dec. 1, 2015). In this action (the “New Jersey case” or the “New Jersey action”), New Jersey^[2] alleges that Defendants'^[3] manufacture or use of MTBE has contaminated, or threatens to contaminate, groundwater within its jurisdiction.

The present motion, brought by Exxon, concerns the extent of the damages, if any, that New Jersey may seek in this action against Exxon over Exxon's allegedly having caused MTBE contamination in the waters of New Jersey. To understand this motion, it is helpful to define some of the remedies available under governing New Jersey environmental law. Under the New Jersey Spill Compensation and Control Act, N.J.S.A. 58:10-23.11 etseq. (the “Spill Act”), the term “remediation” refers to “the reduction of contaminants ‘to risk-based standards.'” (Ripeness Opp. 12^[4] (quoting New Jersey Dep't of Env't Prot. v. Amerada Hess Corp. (“Restoration Opinion”),^[5] 323 F.R.D. 213, 223 (D.N.J. 2017) (citation omitted)). For MTBE, the operative risk-based standard is 70 parts per billion (“ppb”) or less of MTBE in water. See Restoration Opinion, 323 F.R.D. at 217. Remediation can be imposed administratively by the New Jersey Department of Environmental Protection (“NJDEP”). See N.J.S.A. 58:10-23.11b.

“[P]rimary restoration” refers to “the reduction of contaminants to pre-discharge conditions.” Restoration Opinion, 323 F.R.D. at 223 (internal quotation marks omitted). Because “MTBE” is “not naturally occurring in groundwater, the pre-discharge level” is “at or near zero ppb,” meaning that primary restoration is only achieved once near zero ppb MTBE is water is reached. Id. at 227-28.^[6] “[P]rimary restoration damages” thus refers to damages measuring “the cost of restoring resources to their pre-discharge condition.” Id. at 215 n.1 (citing N.J. Dep't of Envtl. Prot. v. Exxon Mobil Corp., 923 A.2d 345, 356 (N.J.Super.Ct.App.Div. 2007)).

By comparison to primary restoration, “compensatory restoration” refers to the damages a polluter may be ordered to pay “for the lost use of the services and value of the contaminated resources during the period of their contamination pending restoration.” Id.

For over a decade now, Exxon has undertaken efforts to remediate MTBE contamination in groundwater at various sites in New Jersey under the framework of remediation plans approved by the NJDEP. (See Ripeness Br. 4-6.)^[7] Over the course of remediation, one of New Jersey's experts on the damages Exxon may be asked to pay has repeatedly lowered his assessment of primary restoration damages, seemingly, as Exxon argues, because remediation has succeeded, at least in part, in abating the amount of MTBE in groundwater at the sites in question. (Id. at 6-10 (citations omitted)).

Exxon filed the present motion under Rule 12(b)(1) on April 6, 2021, along with supporting briefing and an attorney declaration attaching exhibits. (Docs. 609, 610, 611.) New Jersey filed its opposition brief, along with its own exhibits, on June 4, 2021. (Doc. 619.) Exxon filed its reply brief on July 23, 2021, (Doc. 620), and it requested oral argument on the motion that same day, (Doc. 621).

II. Legal Standard

“Determining the existence of subject matter jurisdiction is a threshold inquiry[,] and a claim is properly dismissed for lack of subject matter jurisdiction under Rule 12(b)(1) when the district court lacks the statutory or constitutional power to adjudicate it.” Morrison v. Nat'l Australia Bank Ltd., 547 F.3d 167, 170 (2d Cir. 2008) (citation omitted), aff'd, 561 U.S. 247 (2010); see also United States v. Bond, 762 F.3d 255, 263 (2d Cir. 2014) (describing subject matter jurisdiction as the “threshold question” (internal quotation marks omitted)). While a district court resolving a motion to dismiss under Rule 12(b)(1) “must take all uncontroverted facts in the complaint . . . as true, and draw all reasonable inferences in favor of the party asserting jurisdiction,” “where jurisdictional facts are placed in dispute, the court has the power and obligation to decide issues of fact by reference to evidence outside the pleadings, such as affidavits,” in which case “the party asserting subject matter jurisdiction has the burden of proving by a preponderance of the evidence that it exists.” Tandon v. Captain's Cove Marina of Bridgeport, Inc., 752 F.3d 239, 243 (2d Cir. 2014) (internal quotation marks and citations omitted); see also Ernst v. Gateway Plaza Mgmt. Corp., No. 11 Civ. 1169(PAC)(RLE), 2012 WL 1438347, at *2 (S.D.N.Y. Mar. 14, 2012) (“In deciding jurisdictional issues, the court may rely on affidavits and other evidence outside the pleadings.”).

III. Discussion

A. Ripeness

The crux of Exxon's motion is that, because its remediation efforts appear to be working to achieve the target standard of “less than 70 ppb” at certain MTBE contamination sites, the actions it is already undertaking are “likely to also lead to restoration of those sites to predischarge condition.” (Ripeness Br. 18.) Exxon uses this to assert that New Jersey's claims for primary restoration damages at the sites relevant to this litigation “are not ripe for judicial determination.” (Id.) Exxon says this is so because the extent of primary restoration damages are “conjectural and hypothetical and contingent on the result of the ongoing remediation.” (Id.) To be justiciable, a plaintiff's claim must be “ripe,” meaning that it “must present ‘a real, substantial controversy, not a mere hypothetical question.'” Nat'l Org. for Marriage, Inc. v. Walsh, 714 F.3d 682, 687 (2d Cir. 2013) (quoting AMSAT Cable Ltd. v. Cablevision of Conn., 6 F.3d 867, 872 (2d Cir. 1993)). “The ripeness doctrine is drawn both from Article III limitations on judicial power and from prudential reasons for refusing to exercise jurisdiction.” Id. (quoting Nat'l Park Hospitality Ass'n v. Dep't of Interior, 538 U.S. 803, 808 (2003)). The constitutional requirement “overlaps with the standing doctrine, ‘most notably in the shared requirement that the plaintiff's injury be imminent rather than conjectural or hypothetical.'” In re Methyl Tertiary Butyl Ether (MTBE) Prods. Liab. Litig., 725 F.3d 65, 110 (2d Cir. 2013) (quoting Ross v. Bank of Am., N.A., 524 F.3d 217, 226 (2d Cir. 2008)). Prudential ripeness, meanwhile, requires a court to “evaluate both the fitness of the issues for judicial decision and the hardship to the parties of withholding court consideration.” Nat'l Org. for Marriage, 714 F.3d at 691 (quoting N.Y. Civil Liberties Union v. Grandeau, 528 F.3d 122, 131-32 (2d Cir. 2008)). In other words, while a case may be constitutionally ripe, and thus within an Article III court's authority to decide, a “declar[ation] that a case is not prudentially ripe . . . means that the case will be better decided later.” Simmonds v. I.N.S., 326 F.3d 351, 357 (2d Cir. 2003).^[8]

In an opinion in a case from this MDL, the Second Circuit held that the City of New York's claims against Exxon were both constitutionally and prudentially ripe. MTBE, 725 F.3d at 109-12. In that action, “[t]he City's theory of its legal injury [w]as that, by contaminating the water” at a site that the City had planned to develop for municipal drinking water known as the “Station Six Wells,” “Exxon interfered with the City's right to use that water.” Id. at 110. Exxon argued that asking a jury to assess damages on the claim was too “speculative” to be ripe, given that the City had not yet started to build the facility at the Station Six Wells. See id.

The Second Circuit rejected this argument. It reasoned that “Exxon's extensive discussion of the current disuse of the Station Six Wells and the future steps required to use them addresses the scope of the damages flowing from the injury, not whether there is an injury at all.” Id. The Second Circuit held that “[t]he City's claims [we]re prudentially ripe” because the City

brought suit only after testing showed the presence of MTBE in the Station Six Wells. The Amended Complaint therefore alleged a present injury-namely, that Station Six had already been contaminated with MTBE....[W]hether that injury was significant

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