Bloomberg News

ExxonMobil Challenges New Hampshire Witness Over MTBE

February 12, 2013

A groundwater expert has vacillated on how much work must be done on New Hampshire sites contaminated with a gasoline additive, an ExxonMobil Corp. (XON:US) lawyer said in a trial to determine whether the company is liable for damages.

Gary Beckett, a state witness who is a hydrogeologist, testified yesterday that 228 sites in the state require additional monitoring because of contamination by the additive methyl tertiary butyl ether, or MTBE, at a cost of $85,000 each. He said 85 of those sites need even more extensive work.

“Your opinions have changed a bit over the course of the case, right?” David Lender, a lawyer for ExxonMobil, asked Beckett today during cross-examination in court in Concord. Had Beckett relied on the state’s standard for MTBE in drinking water of 13 parts per billion, fewer sites would require additional testing, Lender said.

“If that had been the only criteria, yes,” Beckett said. “I’ve expanded the criteria to be more robust and more encompassing of all the site information.”

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 number of wells found to be contaminated with MTBE is one factor in determining damages if ExxonMobil is found liable.

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

Federal Law

ExxonMobil, based in Irving, Texas, has argued in court that it isn’t liable for damage 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.

The state was aware of MTBE’s risks when it opted into a clean-air program in 1991 because the additive already had been studied for several years, ExxonMobil said in court.

New Hampshire banned the additive as of January 2007.

State witness Gary Lynn, a manager of the state Department of Environmental Services’ petroleum mediation section, testified that MTBE still shows up in wells six years after it was banned.

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, 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.

Monetary Damages

Besides the number of contaminated wells, the state is seeking monetary damages 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.

On Jan. 15, New Hampshire Superior Court Judge Peter 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, that 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.

Companies Settle

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.

The case is one of scores involving MTBE that have been filed since 2000 against oil refiners, fuel distributors and chemical makers. MTBE lawsuits have 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 the company liable for polluting wells in the city. ExxonMobil has appealed.

The New Hampshire trial began Jan. 14. The state said it may rest its case Feb. 21.

The case is New Hampshire v. Hess Corp., 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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