Some of the nation's largest oil companies have agreed to pay about $423 million in cash to settle a lawsuit brought by more than a hundred public water providers, claiming water contamination from a gasoline additive. The terms of the settlement were submitted for approval in the federal court for the Southern District of New York. Under the terms, the companies also agreed to pay 70 percent of the future cleanup costs over the next 30 years.
The defendants that agreed to the settlement included BP, Royal Dutch Shell, ConocoPhillips, Chevron, Marathon Oil, Valero Energy, Citgo and Sunoco. Six other companies named in the lawsuit, including Exxon Mobil, did not agree to the deal, said Scott Summy, a lawyer at Baron & Budd and a counsel for the plaintiffs.
In the lawsuit, the plaintiffs, which include 153 public water systems in New York, California and 15 other states, claimed that the additive, a chemical called methyl tertiary butyl ether, or MTBE, was a defective product that led to widespread contamination of groundwater. The suit contended that the chemical was used by oil companies, even though they knew of the environmental and health risks that it posed.
Low levels of MTBE can make drinking water supplies unpalatable because of its "offensive taste and odor," according to the U.S. Environmental Protection Agency.
The agency has also found that the compound caused cancer in laboratory rats that were exposed to high doses.
Since the mid-1990s, hundreds of lawsuits have been brought against oil companies for their use of the chemical. This deal, if approved, would be the largest settlement to date. MTBE has been used since 1979 to increase octane levels in gasoline but its use became more widespread after the 1990 Clean Air Act mandated the use of an oxygenate in certain cities to reduce smog and other pollutants.
When mixed with gasoline, the additive ensured that the fuel burned more thoroughly, thereby reducing air pollution.
But after being widely adopted, it was found to corrupt groundwater. Even in small amounts, the additive makes water smell and taste like turpentine.
In 2005, some 130,000 barrels a day of MTBE were produced, involving about 1 percent of the nation's gasoline. Oil companies stopped using it in 2006.
The oil industry has fought hard to avoid penalties related to its use of the additive, arguing that it should not be forced to pay for the cleanup of a product that it was mandated to use. Estimates of the cost of a total cleanup of MTBE have run to the tens of billions of dollars.
"No court has ruled that gasoline with MTBE is a defective product," said Rick Wallace, a lawyer at Wallace King Domike & Reiskin in Washington, who represents Chevron and Shell. "This settlement does not concede the point. Quite the contrary, the settling companies are prepared to vigorously defend the product."
The risk has prompted the oil industry to stop using it and look for another additive. That eventually led to the development and use of ethanol.
Source: The New York Times| By JAD MOUAWAD