Bloomberg News

Citgo to Settle New Hampshire Gas-Additive Lawsuit

January 24, 2013

An ExxonMobil Corp. executive approved the use of an additive to gasoline despite a colleague’s recommendation against using it because of the risk of well contamination, a New Hampshire jury was told.

Robert Larkins, a former vice president of marketing for Exxon in the 1980s, testified today in a recorded deposition played in state court.

“She did not say that you cannot or should not put it in there,” said Larkins, who is retired, referring to a colleague’s memo about methyl tertiary butyl ether, or MTBE. “She said there were some concerns, and she recommended against it. Many recommendations are not followed in an organization.”

The memo was by Barbara Mickelson, then an Exxon executive who had been asked by the company to conduct a study of MTBE as a gasoline additive.

Her 1985 report, an exhibit in the case, said in part, “The number of well contamination incidents is estimated to increase three times following the widespread introduction of MTBE into Exxon gasoline. The closing out of these incidents would take longer and treatment costs would be higher by a factor of five.”

ExxonMobil is on trial in Concord in a lawsuit over the claim that it contaminated New Hampshire groundwater with the additive. The trial began Jan. 14.

New Hampshire could be seeking more than $200 million from ExxonMobil, the last defendant on trial in the lawsuit filed in 2003, to clean up the contamination. It’s one of scores of cases involving MTBE filed since 2000 against refiners, fuel distributors and chemical makers.

Citgo Talks

Superior Court Judge Peter Fauver last week excused a second defendant, Citgo Petroleum Corp., the Houston-based unit of Petroleos de Venezuela SA, the country’s state-owned oil company, while Citgo and the state try to reach a settlement.

The oil companies say they complied with federal regulations that preempt state law. MTBE was added to gasoline to make it burn more thoroughly and thus reduce air pollution, as required under the 1990 Clean Air Act, according to the companies.

In yesterday’s testimony for the state, Robert Varney, an ex-New Hampshire Environmental Services Department commissioner, said he was “shocked and stunned” to learn that Exxon was aware of the risks posed by the additive years before it was sold in the state.

He said he didn’t know until the 1990s about the 1985 interoffice memo forecasting an increase in well-contamination incidents with the addition of MTBE.

Cross-Examination

Cross-examining Varney, ExxonMobil lawyer James Quinn said New Hampshire should have been aware of MTBE’s risks because memos, letters and data circulated as early as the 1980s and state employees participated in studies of the chemical.

Graham Fogg, a professor of hydrology at the University of California, Davis, testified last week that about 40,000 New Hampshire wells are contaminated with MTBE and that about 5,590 are contaminated at levels determined to be unfit for drinking.

Lawyers for Irving, Texas-based ExxonMobil challenged Fogg on his methodology and calculations. They said his own projections showed that the level of MTBE in groundwater would naturally decline over time without any cleanup.

The number of contaminated wells is a factor in determining monetary damages if ExxonMobil is found liable. The state is also seeking damages from the companies based on their market share of gasoline sales in New Hampshire during the period covered by the lawsuit.

Other Companies

New Hampshire sued six oil companies besides ExxonMobil and Citgo. The others settled before the trial started. New Hampshire has received more than $100 million in settlements from defendants, according to court papers.

MTBE leaked into the state’s groundwater from spills at service stations, vehicle junkyards and storage tanks. The chemical, which studies have shown to cause cancer in mice and rats at high levels, is no longer added to gasoline.

MTBE dissolves in water and doesn’t biodegrade, so it can be carried great distances from the site of a leak or spill, according to court papers. New Hampshire case filings said MTBE can render drinking water “foul, putrid and unfit for human consumption.”

The case is State of New Hampshire v. Hess Corp. (HES:US), 03-C- 0550, New Hampshire Superior Court, Merrimack County (Concord).

To contact the reporters on this story: Sarah Earle in Concord, New Hampshire, at sarah_earle@comcast.net; Don Jeffrey in New York at djeffrey1@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.


Tim Cook's Reboot
LIMITED-TIME OFFER SUBSCRIBE NOW

Companies Mentioned

  • HES
    (Hess Corp)
    • $97.51 USD
    • -0.22
    • -0.23%
Market data is delayed at least 15 minutes.
 
blog comments powered by Disqus