Exxon Mobil Begins Defense in New Hampshire MTBE Trial

By Don Jeffrey & Sarah Earle - Mar 4, 2013 12:00 AM ET

Exxon Mobil Corp. (XOM), on trial in New Hampshire for contaminating residents’ drinking water with a gasoline additive, will try to persuade a jury that federal law required the use of the chemical and that it didn’t harm anyone.

Exxon Mobil, the last defendant in the state’s $818 million lawsuit alleging oil companies knew the chemical methyl tertiary butyl ether, or MTBE, would pollute groundwater, begins presenting its case today in Concord. The trial began Jan. 14.

“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.”

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 challenged the estimate and said using 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. The plaintiffs had won $1.65 billion in two cases that alleged financial harm and property damage from an underground gasoline leak in 2006 that released MTBE into the water. The appeals court said Exxon Mobil hadn’t made fraudulent statements and the plaintiffs hadn’t shown they were physically harmed by the leak.

Sole Defendant

Exxon Mobil, based in Irving, Texas, is the sole defendant in New Hampshire’s case since Citgo Petroleum Corp., the Houston-based unit of Petroleos de Venezuela SA, the country’s state-owned oil company, agreed to a $16 million settlement last month. Exxon Mobil executives have said they are committed to continuing the case in court.

“Exxon Mobil has a history of fighting down to the bitter end,” Albert Locher, a lawyer with the district attorney’s office in Sacramento, California, said in a phone interview. Sacramento County sued Exxon Mobil and other oil companies over MTBE contamination. Exxon Mobil’s $100,000 settlement with Sacramento was “relatively small” because it didn’t have a large presence in the market, he said.

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 have been 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.

Federal Regulations

In 2003, New Hampshire sued Exxon Mobil, Shell Oil Co., Sunoco Inc., ConocoPhillips (COP), Irving Oil Ltd., Vitol SA, Hess Corp. and Citgo. All settled before the trial began except Exxon Mobil and Citgo.

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 in order to reduce air pollution, as required under the 1990 Clean Air Act.

“The evidence will show that MTBE worked as intended, improving both air quality and automobile performance in New Hampshire,” Engelmann said.

New Hampshire witnesses have testified that oil companies could have used chemicals other than MTBE to increase the oxygen content of the fuel, such as ethanol.

William Stack, an Exxon Mobil lawyer, said in court that ethanol wasn’t a good choice as an additive because at the time of the federal mandate it caused engine damage and wasn’t widely available.

Elevated Risks

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.

MTBE, which New Hampshire banned in January 2007, 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.

State witness and geologist Graham Fogg 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 odor and taste are terrible,” Locher said of MTBE- tainted water.

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

To contact the reporters on this story: Sarah Earle in Concord, New Hampshire, atsarah_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