Bloomberg News

ExxonMobil Denied Mistrial in New Hampshire MTBE Suit

February 09, 2013

ExxonMobil Corp. (XON:US) lost its bid for a mistrial in a lawsuit by New Hampshire claiming it contaminated the state’s water supply with a gasoline additive.

ExxonMobil moved for the mistrial, claiming that a state witness’s remark in front of the jury violated the judge’s previous order to not talk about two funds for cleaning up contaminated sites. New Hampshire Superior Court Judge Peter Fauver ruled before the trial began that no mention could be made of the funds because the jurors might believe the state didn’t need any more money for the cleanup.

“A mistrial is not warranted,” Fauver said in his ruling yesterday. “Irreparable prejudice has not resulted from trial testimony to date.”

Gary Beckett, a hydrogeologist, testified Feb. 6 that cost is a factor in monitoring groundwater contamination by the additive methyl tertiary butyl ether, or MTBE.

“There’s not enough money to find everything out about a site,” he said.

Fauver sent the jury home on Feb. 7 so that the two sides could argue the issue before him. The trial began on Jan. 14.

The New Hampshire funds have received $213 million from the oil companies since 1989 through a 1.5 cents-a-gallon fee on all oil products imported into in the state. The funds have $4 million left in them, the state has said.

‘Hands Tied’

“Now we’re in a situation, hands tied behind our back, where we can’t say that the state does have resources for remediation,” ExxonMobil lawyer James Quinn told the judge Feb. 6. Quinn asked Fauver to reconsider his ruling.

Fauver said he wouldn’t reverse his opinion.

“Defendant’s argument that the state received money from collateral sources, so its damages figure should be reduced, remains inappropriate, and defendants will not be entitled to present it to the jury,” Fauver said in the ruling.

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

ExxonMobil, based in Irving, Texas, has argued in court that it isn’t liable because it added MTBE to gasoline to comply with federal regulations, which pre-empt state law. Oil companies added MTBE to make gasoline burn more thoroughly in order to reduce air pollution, as required under the 1990 Clean Air Act.

Additive Banned

New Hampshire banned the additive as of January 2007.

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

The state is seeking monetary damages in part based on ExxonMobil’s 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.

Citgo Dismissed

On Jan. 15, Fauver agreed to dismiss Citgo Petroleum Corp., the other defendant, from this trial 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. If an accord isn’t 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. (SHOI:US), Sunoco Inc. (SUN:US), ConocoPhillips, Irving Oil Ltd., Vitol SA and Hess Corp. (HES:US) All settled before the trial began except ExxonMobil and Citgo.

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.

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

To contact the reporter on this story: 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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