ExxonMobil Case Jury Told MTBE Hard to Detect in Water

A gasoline additive that contaminated New Hampshire’s drinking water was hard to detect, even at high concentrations, a former state engineer told jurors who will decide ExxonMobil Corp.’s liability for the chemical.

Fred McGarry, who retired from the New Hampshire Department of Environmental Services, testified for the state in Concord today that residents didn’t complain about contaminated wellwater because the additive methyl tertiary butyl ether, or MTBE, often eluded detection by taste or smell.

“One of the concerns with regard to MTBE is that if it starts at a very low concentration and gradually builds up, you don’t really notice it that much,” McGarry said. “You become acclimated to it.”

New Hampshire may seek more than $200 million from ExxonMobil, the last defendant on trial in the $816 million lawsuit filed in 2003. The trial began Jan. 14. This is one of scores of cases involving MTBE filed in the U.S. since 2000 against refiners, fuel distributors and chemical makers.

ExxonMobil, based in Irving, Texas, has argued that it was complying with federal regulations that pre-empt state law when it put MTBE into gasoline. The chemical was added to make gasoline burn more thoroughly and thus reduce air pollution, as required under the 1990 Clean Air Act.

Kent Colburn, another former New Hampshire environmental services official, testified Jan. 28 that the state wouldn’t have participated in a federal clean-air program called Reformulated Gasoline, or RFG, if Exxon had warned it about the additive’s risks.

MTBE’s Risks

ExxonMobil said the state was aware of MTBE’s risks when it joined the RFG program in 1991 because there had been studies of the additive for several years. New Hampshire re-entered the clean-air program in 1997. By 1999, it was trying to get out.

Cross-examining McGarry today, James Quinn, an ExxonMobil lawyer, referred to a state-commissioned study showing that levels of MTBE would decrease significantly in a relatively short time. New Hampshire said that levels of MTBE above 13 parts per billion make water unfit to drink. The additive was banned in the state as of January 2007.

“Their conclusion was that, within six years of the ban, wells with concentration levels as high as 10,000 parts per billion would be down below 13 parts per billion, isn’t that right?” Quinn asked.

Contrary Results

“That’s what it says,” McGarry replied. “But we’re certainly getting results that are contrary to that statement.”

New Hampshire has said MTBE leaked from gas stations, vehicle junkyards and underground storage tanks. The state has said that about 40,000 wells are contaminated with MTBE and about 5,590 are at levels determined to be unfit for drinking.

MTBE, which is highly soluble in water and 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, an attorney for New Hampshire, said in opening remarks to the jury.

The number of contaminated wells is a factor in determining monetary damages if ExxonMobil is found liable. The state is also seeking damages based on 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, monitor and clean up the groundwater, New Hampshire could be seeking about $245 million from the company.

Citgo Dismissal

On Jan. 15, New Hampshire Superior Court Judge Peter Fauver agreed to dismiss the other defendant in the trial, Citgo Petroleum Corp., while the company and the state work to complete a settlement. Citgo is the Houston-based unit of Petroleos de Venezuela SA, the country’s state-owned oil company.

Citgo’s market share ranged from 3.1 percent to 8.7 percent, New Hampshire said. Based on those figures, the state could be seeking $25 million to $71 million from Citgo. If an accord isn’t reached by Feb. 15 and no extension is approved, Citgo would be reinstated to the trial.

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. Shell and Sunoco agreed to pay New Hampshire $35 million in a settlement announced in November.

New Hampshire has received more than $100 million in settlements from defendants so far, according to court papers.

MTBE lawsuits have also 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.

New Hampshire’s lawyers said this week they hoped to conclude their case by Feb. 21. ExxonMobil would then begin presenting its case.

The case is New Hampshire v. Hess Corp., 03-C-0550, New Hampshire Superior Court, Merrimack County (Concord).

    Before it's here, it's on the Bloomberg Terminal. LEARN MORE