Bloomberg News

ExxonMobil Challenges New Hampshire Witness Over MTBE

February 20, 2013

ExxonMobil Corp. challenged New Hampshire’s assertion that it sold about 30 percent of the gasoline containing an additive that contaminated the state’s drinking water, a jury was told.

Justine Hastings, an economics professor at Brown University, testified for the state today in New Hampshire that she used tax records and company reports to the government to determine how much gasoline ExxonMobil sold there from 1988 to 2005. The state expects to use market share information in seeking damages if the company is found liable.

New Hampshire said it could cost about $818 million to test, monitor and clean up its groundwater. Based on its market share estimate of 30 percent for ExxonMobil, it might ask the jury for an award of $245 million.

Cross-examining Hastings, ExxonMobil lawyer Deborah Barnard said she should have used refinery data for the market share estimate instead of the methods she used. Barnard reminded her that when questioned by lawyers before the trial she had said refinery information was a possible method of calculation.

Hastings said in court she provided a refinery-data estimate of 6.9 percent for the jury to look at, then rejected that figure because it didn’t accurately represent market share.

“Gasoline is co-mingled, and it can’t be traced from a refinery to an endpoint,” Hastings said. “If you tried to measure how many molecules come from a refinery to an endpoint, there’s no data to base that measurement on.”

Federal Regulations

ExxonMobil has argued in court that it isn’t liable for damage because it added methyl tertiary butyl ether, or 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.

In testimony for the state yesterday, Duane Bordvick, who worked at oil refiner Tosco Corp., said his company made MTBE- free gasoline in California that met Clean Air Act requirements as early as 1999. Tosco is now a unit of ConocoPhillips (COP:US) Co.

Bruce Burke, an oil refinery expert, testified that ethanol could have been used in place of MTBE.

“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., said.

Engine Damage

ExxonMobil lawyer William Stack said ethanol wasn’t a good choice as a gasoline additive because at that time it wasn’t in adequate enough supply and also because it caused damage to engines.

The company has also argued that the state was aware of the risks of MTBE when it agreed to participate in a federal clean- air program.

MTBE, which New Hampshire banned as of January 2007, is highly soluble in water and can be carried great distances from where it leaked. It leaked from gas stations, vehicle junkyards, underground storage tanks and pipe fittings, the state said.

ExxonMobil is the last defendant in the state’s case. Citgo Petroleum Corp. filed a $16 million settlement agreement with the state on Feb. 15.

New Hampshire had received more than $100 million in settlements from defendants before Citgo settled, according to court papers.

Suits Consolidated

Besides ExxonMobil and Citgo, New Hampshire also sued Shell Oil Co., Sunoco Inc., ConocoPhillips, Irving Oil Ltd., Vitol SA and Hess Corp. All settled before the trial began except ExxonMobil and Citgo.

This 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 its case tomorrow. ExxonMobil would then present its case.

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)
    • $80.7 USD
    • -1.80
    • -2.23%
  • HES
    (Hess Corp)
    • $98.0 USD
    • -0.98
    • -1.0%
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