In an exclusive interview with NBC News, Secretary of the Navy Richard Spencer defended the decision, saying the law does not support the claims.
"There is no legal way for the Department of the Navy" to pay damages in these cases, Spencer said. "We are denying the claims to free everybody to take their own course of action."
Spencer acknowledged this will be "tremendously difficult" for the veterans and their families, who will have little chance of receiving a large monetary payout for their losses. Individuals have six months to appeal the decision.
The announcement drew a stinging response from Jerry Ensminger, a Marine veteran who spent 11 years at Camp Lejeune starting in 1970.
"I'm pissed off," said Ensminger, 66, of North Carolina. "The federal government knows they are guilty, so they're using every available legal gymnastics to exonerate themselves."
Ensminger's daughter, Janey, died of cancer at the age of nine in 1985. He said she was the only one of his four children who was conceived and carried while the family was living at Camp Lejeune.
Spurred by Ensminger, Congress passed a bill in 2012 that forced the Department of Veterans Affairs to extend free medical care to veterans and their families exposed to the tainted water.
"It's kind of ironic that we have a part of our federal government that was created to protect our country and our way of life, and these people are now known to be our nation's largest polluter," Ensminger said.
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Believed to be one of the largest water contamination cases in U.S. history, there are roughly 4,500 open tort claims against the Department of the Navy. The Navy wasn't able to provide the exact number of people involved since some claims were filed by groups, and new ones are still coming in. One claim alone sought $900 billion in damages.
From the 1950s until the late 1980s, people living or working at Camp Lejeune, a Marine Corps base in Jacksonville, North Carolina may have been exposed to the drinking water contaminated with dangerous chemicals, according to numerous government studies. Two contaminated wells closed in 1985 but sailors, Marines, families and civilians on the base had already been exposed to the contaminants for decades.
The Department of Veterans Affairs has estimated that up to 900,000 service members were potentially exposed to the contaminated water. In 2017, the Obama administration agreed to provide disability benefits totaling more than $2 billion to the veterans who had been exposed to the tainted drinking water while assigned to Camp Lejeune.
The rule covers veterans who were diagnosed with one of 15 diseases, including leukemia, liver cancer and Parkinson's disease.
The denial of the claims will not impact medical care or disability benefits for the thousands receiving treatment.
Speaking to NBC News, Spencer said his decision was based on the fact that three separate legal statutes make the government immune from the claims.
The first is based on a North Carolina law that sets a strict timeline of 10 years for an injured party to file a civil claim. The law applies even if the injured party is not aware of the exposure until after the 10-year deadline. Because the two wells at Camp Lejeune closed in 1985, the deadline for filing passed in the late 1990s.
The second argument for dismissing all the Camp Lejeune claims is based on an exemption to the Federal Tort Claims Act called discretionary function, which protects the U.S. government from lawsuits in cases in which negligence was not clearly established. In the case of Camp Lejeune, no one was instructed to cut off the water supply, so there's no clear case of negligence, according to Spencer.
The final argument is based on the Feres doctrine, a policy that prevents military members from suing the federal government for injuries incurred during their service.
Spencer said he was briefed on the legal limitations to the claims as soon as he took office 17 months ago. "It became apparent we had to make a decision," he said. Otherwise, he added, the claimants are being kept "in limbo."
During a news conference Thursday announcing the decision, Spencer said he couldn't answer why any of his predecessors didn't make the decision. "I wanted to come to closure on this," he said. "Kicking it down the road provided no value."
Spencer added that claimants can "work with Congress" to see if they can add benefits besides health care and disability.
Over the years, social media has provided an outlet for survivors and families to post about their cases. A Facebook page dedicated to the issue — called The Few, The Proud, The Forgotten — features stories of service members with Non-Hodgkin lymphoma, Parkinson's disease and various cancers, and includes dates of service at Camp Lejeune and the Marine Corps Air Station New River. "I lived in Tarawa Terrace for several years as a young child. Along with many health problems, I have had Hodgkin's lymphoma, parathyroid adenomas, thyroid nodules and uterine tumors," one post said.
A senior defense official said the claimants really have no other legal recourse. "The truth is, there is still no smoking gun about causality," the official said. "There has been no direct evidence of causation of these illnesses to the exposure."
The U.S. military has funded a number of studies to examine whether the chemicals caused the cancers and diseases. While the studies have shown an association between any exposure and the development of certain diseases, they have not shown direct causality. The United States has spent more than $45 million on these studies over the years and has one underway that is expected to conclude in 2022.
Spencer said he is open to more studies if the science changes and shows a direct correlation between the chemicals and these diseases. He said he made this decision so victims have a clear path to move forward.
"We care about all our folks as a family," he said. "We are doing whatever we can on the health care side."
Courtney Kube is a correspondent covering national security and the military for the NBC News Investigative Unit.