Bloomberg News

Exxon Mobil Had No Alternative to MTBE, Witness Says

March 07, 2013

Exxon Mobil Corp. lacked viable options to adding MTBE to gasoline, a witness told a New Hampshire jury that will decide whether the company is liable for contaminating drinking water with the chemical.

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

Thomas Eizember, an Exxon Mobil executive who was in charge of dealing with U.S. Environmental Protection Agency regulations in the 1990s, said it had to blend MTBE with gasoline because other companies were adopting the chemical.

“In the Northeast in particular we don’t control our proprietary distribution system,” Eizember told the jury today. “We share a lot of terminals. We share almost all the pipelines. Sharing the facilities greatly increases the reliability, but it means I can’t do something different necessarily than someone else is doing.”

Cross-examining Eizember, Jessica Grant, a lawyer for the state, asked if he had been aware that another Exxon Mobil (XOM:US) executive had warned the company in a report that if MTBE leaked into the groundwater the costs of monitoring and cleaning it up would be high.

“No, I was led to believe the opposite,” Eizember said. “I wasn’t aware of any information that said we needed to take increased remediation costs into consideration.

Adequate Warnings

Victor Dugan, a former Exxon employee, testified March 5 that MTBE was extensively researched before it was added to fuel and that its benefits outweighed the risks. He also said gasoline dealers and distributors were given adequate warnings about the hazards of gasoline and how to deal with leaks.

Exxon Mobil is the last defendant in the state’s $818 million lawsuit (XOM:US) alleging oil companies knew MTBE would contaminate groundwater and didn’t alert the state to the risks. New Hampshire seeks damages based on the company’s share of gasoline sales in the state, which an economist said was about 30 percent. With 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 said using refinery data would have shown a market share as low as 6.9 percent.

Underground Leak

In Maryland on Feb. 26 a court of appeals reversed two jury verdicts against Exxon Mobil. The plaintiffs won $1.65 billion in two cases alleging 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.

New Hampshire’s suit is one of scores of cases involving MTBE filed since 2000 against refiners, fuel distributors and chemical makers. Other MTBE lawsuits were consolidated in federal court in New York for pretrial evidence-gathering and motions. In 2009, a federal jury ordered Exxon Mobil to pay New York City $104.7 million after finding it liable for polluting wells in the city. Exxon Mobil has appealed.

In 2003, New Hampshire sued Exxon Mobil, Shell Oil Co., Sunoco Inc., ConocoPhillips (COP:US), Irving Oil Ltd., Vitol SA, Hess Corp. (HES:US) and Citgo Petroleum Corp. All except Exxon Mobil reached settlements with the state.

Reduce Pollution

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

“There is simply no MTBE crisis,” Charles Engelmann, an Exxon Mobil spokesman, said in an 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.”

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 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 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)
    • $103.37 USD
    • -0.91
    • -0.88%
  • COP
    (ConocoPhillips)
    • $86.03 USD
    • -0.22
    • -0.26%
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