Bloomberg News

Exxon Mobil Made No Specific MTBE Warnings: Witness

March 07, 2013

Exxon Mobil Corp. found no need to issue warnings about MTBE to customers, a former employee testified in the New Hampshire trial over whether the company is liable for contaminating water with the gasoline additive.

The Irving, Texas-based oil company is trying to convince a jury that federal law required the use of the additive, methyl tertiary butyl ether, and that it didn’t harm anyone in New Hampshire. The company began presenting its case March 4 in Concord in a trial that started Jan. 14.

Victor Dugan, who retired last year from Exxon, testified March 5 that the additive was extensively researched before being added to fuel in 1985 to reduce air pollution, and that its benefits outweighed the risks. Gasoline dealers and distributors were given adequate warnings about the hazards of gasoline and how to deal with leaks, he said.

Cross-examining Dugan yesterday, Jessica Grant, a lawyer for the state, asked why the company hadn’t released specific warnings about MTBE. She also asked about the decision to use the additive nationwide after testing it in selected markets.

“We followed it cradle to grave and found that it did not pose a risk,” Dugan said. “It was leaking underground storage tanks that posed the risk.”

Exxon Mobil is the last defendant in the $818 million lawsuit (XOM:US) over claims that oil companies knew MTBE would contaminate groundwater and didn’t alert the state to the risks.

“There is simply no MTBE crisis,” Charles Engelmann, a company spokesman, said by e-mail. “MTBE hasn’t been used in the state since 2005, and there is not a single personal injury being claimed in this lawsuit.”

Economist’s Testimony

The state seeks damages from Exxon Mobil based on its share of gasoline sales in New Hampshire during the period covered by the lawsuit. An economist testified for the state that it was about 30 percent. Based on an estimated cost of $818 million to test, monitor and clean up wells, New Hampshire might be seeking at least $245 million from the company.

Exxon Mobil (XOM:US) challenged the estimate, saying refinery data would have shown a market share as low as 6.9 percent.

In Maryland last week a court of appeals reversed two jury verdicts against Exxon Mobil in MTBE cases in which plaintiffs won $1.65 billion on claims of financial and property damage from an underground leak in 2006 that released MTBE into the water. The appeals court said Exxon Mobil hadn’t made fraudulent statements and the plaintiffs failed to show physical harm.

Exxon Mobil is the sole defendant on trial in New Hampshire since Citgo Petroleum Corp., the Houston-based unit of Petroleos de Venezuela SA, the country’s state-owned oil company, agreed last month to a $16 million settlement.

Multiple Cases

New Hampshire’s suit is one of scores of cases involving MTBE filed since 2000 against refiners, fuel distributors and chemical makers. Other cases were consolidated in federal court in New York for pretrial evidence-gathering and motions.

A federal jury in 2009 ordered Exxon Mobil to pay New York City $104.7 million after finding it liable for polluting wells in the city. The company has appealed.

New Hampshire in 2003 sued Exxon Mobil, Shell Oil Co., Sunoco Inc., ConocoPhillips (COP:US), Irving Oil Ltd., Vitol SA, Hess Corp. (HES:US) and Citgo.

The company argues that in adding MTBE to gasoline it was complying with federal regulations, which pre-empt state law. The additive was used to make gasoline burn more thoroughly to reduce air pollution, as required under the 1990 Clean Air Act.

Studies by the American Petroleum Institute were cited in court showing that at mid-to-high levels of ingestion or inhalation, MTBE elevated the risk of brain tumors, liver cancer, blood cancer and kidney cancer in mice and rats.

Health Studies

Exxon Mobil said there has been no evidence that MTBE causes illness in humans.

MTBE is highly soluble in water and can be carried great distances from the source of leaks. It leaked from gas stations, vehicle junkyards, underground storage tanks and pipe fittings, the state said.

The state estimated that about 40,000 New Hampshire wells are contaminated with MTBE and that 5,590 have levels determined to be unfit for drinking. The state said that level is 13 parts of MTBE per billion parts of water.

The case is State of 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 sarahearle.nh@gmail.com; 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

  • XOM
    (Exxon Mobil Corp)
    • $104.13 USD
    • 0.59
    • 0.57%
  • COP
    (ConocoPhillips)
    • $86.55 USD
    • 0.53
    • 0.61%
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