About a dozen of the nation’s largest oil companies have agreed to pay $423 million to settle litigation with 153 public water providers in 17 states that had sued over groundwater contaminated by the gasoline additive methyl tertiary butyl ether (MTBE). The companies also agreed to pay cleanup costs that arise in the next 30 years. Terms of the settlement have been submitted for court approval in the U.S. District Court in the Southern District of New York. The settlement is the largest to date in a case involving the oil-refining byproduct. During the 30 years that oil companies added MTBE to gasoline to curb smog emissions, leaky storage tanks released the additive into the water table in communities throughout the United States.
MTBE is a chemical added to gasoline to boost its octane level and cut air pollution. It was first added to gasoline in 1979, but its use declined after it was banned in a number of states. Since 2006, MTBE has been replaced by other ingredients, including ethanol and alkylate. MTBE has been found in ground water, including in drinking water supplies of several communities. The EPA says the chemical is a potential human carcinogen at high doses, although it is unclear at what level it poses a health risk. MTBE moves quickly through soil and into groundwater from leaks in gasoline storage tanks and that is certainly well-documented.
MTBE has been detected in at least 36 states and has been banned in 23, including California and New York, which accounted for 40% of total MTBE consumption in the country. Fortunately, the settlement doesn’t shield defendants from liability in the event MTBE is shown in the future to carry human health risks. MTBE producers have argued that, because the government mandated the addition of oxygenates to gasoline to help curb smog, the companies shouldn’t be held liable for MTBE damages. The companies in the settlement include BP America Inc., a unit of BP PLC; Chevron Corp.; ConocoPhillips; Shell Oil Co., an arm of Royal Dutch Shell PLC; Marathon Oil Corp.; Citgo Petroleum Corp.; Sunoco Inc.; and Valero Energy Corp. At least six companies have refused to settle, the largest being – to nobody’s surprise – ExxonMobil Corp. As I have learned in litigation, this company sincerely believes it is above the law.
Past estimates indicate that it may take as much as $30 billion to remediate all tainted sites. The local water providers will be compensated according to a formula based on MTBE levels and the size of wells. If MTBE is found to surpass the specified threshold at a given site during the next 30 years, defendants will pay 70% of the water-treatment cost for ten years from the point of detection. Payments will end if the affected area is deemed MTBE-free for one year. At the end of the ten-year period, payments can be extended five more years if the water source still shows a certain level of contamination. The affected community would be barred from suing over the contamination. The law firms of Baron & Budd P.C. and Weitz & Luxenberg P.C. represented the plaintiffs in this litigation and did an outstanding job.
Source: Wall Street Journal
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