Bloomberg News

Jury in Exxon Case Told MTBE Still in New Hampshire Wells

February 05, 2013

A gasoline additive that contaminated New Hampshire’s drinking water still shows up in wells six years after it was banned, an expert on fuel spills told a jury deciding whether ExxonMobil Corp. is liable for the damage.

Gary Lynn, a manager of the state’s petroleum remediation section, testified for the state in Concord today that the additive methyl tertiary butyl ether, or MTBE, has recently been detected in sites including a daycare center’s water supply. He said the chemical moves through water quickly and unpredictably.

“It’s widespread in drinking-water wells and it shows up frequently in places that we don’t expect it,” Lynn said. “Groundwater levels are very high in New Hampshire, which makes our state very vulnerable.”

New Hampshire might be seeking more than $200 million from ExxonMobil, the last defendant on trial in the $816 million lawsuit filed in 2003. The trial began Jan. 14. The case is one of scores involving MTBE brought since 2000 against oil refiners, fuel distributors and chemical makers.

ExxonMobil, based in Irving, Texas, has argued that it can’t be held liable because when it put MTBE into gasoline it was complying with federal regulations that pre-empt state law. The company contends MTBE was added to make gasoline burn more thoroughly and thus reduce air pollution as required under the 1990 Clean Air Act.

Clean-Air Program

Kent Colburn, who once worked for New Hampshire’s Department of Environmental Services, testified Jan. 28 that the state wouldn’t have participated in a federal clean-air program called reformulated gasoline, or RFG, if ExxonMobil had warned of the the additive’s risks.

ExxonMobil said in court papers the state was aware of MTBE’s risks when it opted into the RFG program in 1991 because several years of studies on the additive had already been done. New Hampshire extended its participation in the the clean-air program in 1997. By 1999, the state was trying to get out of it.

MTBE, which is highly soluble in water and thus can be carried great distances from where it leaked, is a “toxic chemical that does not belong in the state’s drinking water,” Jessica Grant, an attorney for New Hampshire, said in opening remarks to the jury. It leaked from gas stations, vehicle junkyards, underground storage tanks and pipe fittings, the state said.

New Hampshire said that about 40,000 wells are contaminated with MTBE and about 5,590 at levels determined to be unfit for drinking. The additive was banned in New Hampshire as of January 2007.

Monetary Damages

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

ExxonMobil’s share was about 30 percent, the state said. Based on an estimated cost of $816 million to test for, monitor and clean up the groundwater, New Hampshire could be seeking about $245 million from the company.

On Jan. 15, New Hampshire Superior Court Judge Peter Fauver agreed to dismiss the other defendant from this trial, Citgo Petroleum Corp., while the company and the state work to complete a settlement. Citgo is the Houston-based unit of Petroleos de Venezuela SA, the country’s state-owned oil company.

Citgo Liability

Citgo’s market share ranged from 3.1 percent to 8.7 percent, New Hampshire said. Based on those figures, the state could be seeking $25 million to $71 million from Citgo. If an accord’s not reached by Feb. 15 and no extension is approved, Citgo would be reinstated to the trial.

Besides ExxonMobil and Citgo, New Hampshire also sued Shell Oil Co., Sunoco Inc., ConocoPhillips (COP:US), Irving Oil Ltd., Vitol SA and Hess Corp. All settled before the trial began except ExxonMobil and Citgo. Shell and Sunoco agreed to pay New Hampshire $35 million in a settlement announced in November.

New Hampshire has received more than $100 million in settlements from defendants so far, according to court papers.

MTBE lawsuits have also been consolidated in federal court in New York for pretrial evidence-gathering and motions. In 2009, a federal jury ordered ExxonMobil to pay New York City $104.7 million after finding it liable for polluting wells in the city. ExxonMobil has appealed.

New Hampshire’s lawyers said last week they hoped to conclude their case by Feb. 21. ExxonMobil would then begin presenting its case. Previously, the lawyers had said the trial could last more than four months.

The case is 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


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Companies Mentioned

  • COP
    (ConocoPhillips)
    • $80.98 USD
    • 0.48
    • 0.59%
  • HES
    (Hess Corp)
    • $100.07 USD
    • 0.67
    • 0.67%
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