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Most oil companies in MTBE lawsuits settle

Major oil companies' multimillion-dollar payment to 153 public water systems to cleanse wells of a potentially carcinogenic gasoline additive could grow if more tainted wells are discovered over the next 30 years.
/ Source: The Associated Press

Major oil companies' have agreed to pay 153 public water systems to cleanse wells of a potentially carcinogenic gasoline additive, a deal that could grow if more tainted wells are discovered over the next 30 years.

Companies including ConocoPhillips, Chevron Corp., BP PLC's BP America Inc., Royal Dutch Shell PLC's Shell Oil Co., Valero Energy Corp. and Marathon Oil Corp. agreed to pay $422 million to settle lawsuits claiming wells were contaminated by MTBE, a chemical that was once a key gasoline ingredient.

The agreement announced Thursday also calls for the companies to pay 70 percent of cleanup costs for wells newly tainted by MTBE at any point over the next 30 years, said Scott Summy, an attorney representing water systems in 17 states.

That means the total paid water systems by the settling companies most certainly will rise, said Summy, with law firm Baron & Budd PC in Dallas.

"Some of it (the contamination) continues to occur," Summy said.

But Rick Wallace, an attorney who represented some of the oil companies in the case, said that is far from certain.

"It remains to be seen whether this will occur at any given well," said Wallace, with law firm Wallace King Domike & Reiskin in Washington.

Since widespread use of MTBE ended in 2006, "the extent of MTBE in the environment is declining," Wallace said.

MTBE, or methyl tertiary butyl ether, is a chemical added to gasoline to boost its octane level and cut air pollution. It was first added to gasoline in 1979, but its use declined after it was banned in a number of states. Since 2006, MTBE has been replaced by other ingredients, including ethanol and alkylate.

MTBE has been found in ground water, including in some communities' drinking water supplies. The Environmental Protection Agency said the chemical is a potential human carcinogen at high doses, although it is unclear at what level it poses a health risk.

Money to be used to filter water
MTBE moves quickly through soil and into groundwater from leaks in gasoline storage tanks, according to a statement from Suffolk County, N.Y., which will receive $73.4 million as part of the settlement.

"Pumped up as raw water into the treatment stations scattered throughout Suffolk County, it must be filtered out with charcoal and lots of it," Suffolk County said. "Costs for this ... (have) nearly tripled in the last five years and will continue to skyrocket. The lawsuit sought ... funds from the oil companies to filter out MTBE to non-detect levels."

The first of the lawsuits were filed in 2003. Wallace said it would be difficult to detail each oil company's reasons for settling.

"This was the result of long, difficult negotiations," which began in 2006, he said.

Suffolk County, which discovered MTBE in more than 100 of its 500 drinking water wells, will receive the largest chunk of settlement funds, Summy said. He said he hasn't calculated an average settlement amount, and declined to release a list detailing how much money individual water systems are due to receive. Water systems covered by the settlement are scattered across the country, but the majority are based in the Northeast.

Attorneys also declined to specify how much each oil company is contributing to the settlement.

Exxon hasn't settled
The settlement agreement must still be approved by a federal judge. Some of the settling companies face additional MTBE litigation from other water systems that are not a part of the settlement.

Several other companies sued by the water systems did not agree to settle, including Exxon Mobil Corp. and Lyondell Chemical Co. Both companies have said they plan to vigorously defend themselves in trials set to begin in September.

"These suits are without merit, and as far as we are concerned, our conduct didn't cause physical injury or damages," said Prem Nair, an Exxon Mobil spokeswoman, who added that Exxon has no intention of negotiating a settlement.

"Lyondell has consistently maintained that it should have no liability in these cases and the company has been dismissed outright or won most cases like this," said Lyondell spokesman David Harpole in a statement.

Wallace noted that MTBE served important environmental purposes, including reducing air pollution.

Summy said he could not say exactly how much money the water systems are seeking from the other companies, including Exxon, that they are suing: "It's several hundred more millions in addition to this."