Oil companies didn’t have to add MTBE to gasoline to meet federal pollution standards, two witnesses told a New Hampshire jury that will weigh whether ExxonMobil Corp. (XON:US) is liable for contaminating the state’s drinking water with the chemical.
Duane Bordvick, who worked as an executive at oil refiner Tosco Corp. (TOS:US), said in videotaped testimony played today in state court in Concord that his company made MTBE-free gasoline in California that met U.S. Clean Air Act requirements as early as 1999. Bruce Burke, an oil refinery expert, testified that there were alternatives to adding the chemical, methyl tertiary butyl ether.
“Refiners could have used ethanol instead of MTBE back in the ’80s when decisions were being made,” Burke, a senior vice president of consulting for Nexant Inc., told the jury today.
New Hampshire might seek more than $200 million from ExxonMobil, the last defendant on trial in a lawsuit filed in 2003. ExxonMobil has argued that it isn’t liable for damages because it used MTBE to comply with federal regulations, which pre-empt state law. MTBE was used to make gasoline burn more thoroughly to reduce air pollution, as required under the 1990 Clean Air Act.
ExxonMobil has said in court that ethanol wasn’t a good choice because there wasn’t enough of it when the government required an additive. The Irving, Texas-based company has also argued that New Hampshire was aware of the risks of MTBE when it agreed to participate in a federal clean-air program.
MTBE is highly soluble in water and can be carried great distances from where it is leaked. It leaked from gas stations, junkyards, underground storage tanks and pipe fittings, according to the state, which banned the additive as of January 2007. Bordvick said Tosco made MTBE-free gasoline because of evidence that the additive could harm groundwater.
“We wanted to demonstrate that, should regulations change to allow everyone to do this, it could be done,” Bordvick said. “There were significant monies to be spent, but it was doable.” Tosco is now a unit of ConocoPhillips Co. (COP:US)
New Hampshire has said that it could cost about $818 million to test, monitor and clean its groundwater. It’s seeking damages based on the number of contaminated wells and on ExxonMobil’s market share of gasoline sold in the state during the period covered by the lawsuit. Based on an estimate that the company’s share was about 30 percent, New Hampshire could ask the jury for an award of $245 million.
The state has received $213 million from oil companies for two cleanup funds since 1989 through a 1.5 cent-a-gallon fee on all gasoline imported into in the state. The funds have $4 million left, the state said in court.
Citgo Petroleum Corp., the other remaining defendant in the New Hampshire case when trial began, filed a $16 million settlement agreement with the state on Feb. 15.
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.
The state received more than $100 million in settlements from defendants before Citgo settled, according to court papers.
New Hampshire’s suit is one of scores of cases involving MTBE 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 it liable for polluting wells in the city. ExxonMobil has appealed.
The New Hampshire trial began Jan. 14. The state said it expects to rest Feb. 21. ExxonMobil would then present its case.
The case is New Hampshire v. Hess Corp., 03-C-0550, New Hampshire Superior Court, Merrimack County (Concord).
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