New Hampshire Tank Efforts Couldn’t Stop MTBE, Jury Told

Efforts to improve New Hampshire’s fuel storage systems wouldn’t have been enough to prevent groundwater contamination by a gasoline additive, an expert witness told a jury in the state’s case against ExxonMobil Corp.

Marcel Moreau, an underground storage systems expert from Maine, testified at the state court trial in Concord today that small leaks and spills of gasoline from old cars and gas stations polluted Maine’s water with the gasoline additive, methyl tertiary butyl ether, or MTBE. The testimony of Moreau, a witness called by the state, was to show how easily MTBE could contaminate drinking water supplies, despite efforts by the state, the federal government and the industry itself to make storage tanks leakproof.

“These measures were still not adequate to contain MTBE gasoline,” Moreau said of upgrades and improvements to underground storage tanks. “You could contaminate a million liters of water to a concentration of 0.4 parts per billion with a single teaspoon of MTBE.”

New Hampshire might be seeking 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 since 2000 against refiners, fuel distributors and chemical makers.

ExxonMobil has argued that it was complying with federal regulations that pre-empt state law. They said MTBE was added to gasoline to make it burn more thoroughly and thus reduce air pollution, as required under the 1990 Clean Air Act.

Kent Colburn, the former director of the air resources division of New Hampshire’s Department of Environmental Services, testified yesterday that the state wouldn’t have participated in a federal clean-air program called Reformulated Gasoline, or RFG, if Exxon had warned of the risks of the additive.

MTBE’s Risks

ExxonMobil said the state was aware of MTBE’s risks when it opted into 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 petitioning the Environmental Protection Agency to get out of it.

Robert Larkins, a former vice president of marketing for Irving, Texas-based ExxonMobil, said in taped testimony played in court last week that he approved the use of MTBE despite a colleague’s recommendation in a mid-1980s memo against using it because of its risk to groundwater. The colleague had been asked by ExxonMobil to conduct a study of MTBE.

Moreau testified today that Maine was perplexed when MTBE was detected in wells far from storage tanks with suspected leaks. The spills were traced to places including a grassy spot where a teenager had parked his jalopy and a gas station where a fuel-truck driver had been overfilling tanks.

MTBE, which is highly soluble in water and thus can be carried great distances from where it leaked, can render drinking water “foul, putrid and unfit for human consumption,” according to court papers.

Storage Tanks

Cross-examining Moreau today, ExxonMobil lawyer William Stack said that New Hampshire changed regulations regarding the removal of aging storage tanks in 1990, which contributed to the spread of MTBE.

“If they had followed the 1985 regulations, these tanks would have been out of the ground possibly by as early as 1990, right?” Stack said to the witness.

“That would not have removed all of the tanks, but it would have removed some,” Moreau replied.

New Hampshire has said that about 40,000 wells are contaminated with MTBE, including about 5,590 at levels determined to be unfit for drinking.

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 for, monitor and clean up the groundwater, New Hampshire might be seeking about $245 million from the company.

Citgo Petroleum

New Hampshire Superior Court Judge Peter Fauver agreed Jan. 15 to sever the other defendant from this 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 might 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 except ExxonMobil and Citgo. 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 yesterday they hoped to conclude their case by Feb. 21, sooner than expected. ExxonMobil will then begin presenting its case. Lawyers had said the trial could last more than four months.

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.