News Column

ExxonMobil Is Only Firm Left in MTBE Lawsuit

Feb. 22, 2013

David Solomon, The New Hampshire Union Leader, Manchester

The state can add another $16 million to the more than $120 million it has already collected from oil companies as a result of a 10-year-old lawsuit over the gasoline additive MTBE, thanks to a previously announced settlement with Citgo, a subsidiary of the national oil company of Venezuela.

Citgo and ExxonMobil were the only two defendants to refuse to settle before a long-awaited trial got under way in Concord on Jan. 14. Two days into the trial, now entering its second month, the state and Citgo announced that they had reached a deal and asked the court to sever Citgo from the case.

Terms of the deal were signed on Feb. 12 and filed with the Merrimack County Superior Court on Feb. 15, the deadline both parties had agreed to. ExxonMobil now remains the only defendant in a suit that named 23 oil companies or their subsidiaries when it was filed in 2003.

In return for $16 million, the state agrees to forfeit all claims against Citgo related to the pending lawsuit. In the agreement, Citgo denies any liability and states that it has "good and valid defenses to all the state's claims."

"Among other things, Citgo asserts that gasoline containing MTBE is not a defective product and that Citgo's use of MTBE in gasoline was lawful and not negligent. Nevertheless, Citgo wishes to resolve this lawsuit to avoid the costs, expense and uncertainty inherent in litigation."

The state maintains that oil companies are liable for widespread pollution due to MTBE in gasoline that leaked or spilled into groundwater. ExxonMobil is now the only oil company left to defend against that claim in court.

As oil companies settled over the years, the Attorney General released the details of each agreement, but as the trial approached, the defendants complained that the ongoing release of settlement information would compromise their position with a jury. The judge ordered attorneys for the state to avoid discussion of any new settlements, but the Attorney General's Office has had to reply to right-to-know requests from the media.

The last announcement from Attorney General Michael Delaney came in early November, when he issued a press release stating that Shell Oil and Sunoco settled for $35 million. A right-to-know request from the New Hampshire Union Leader revealed that Irving Oil settled for $57 million on Nov. 19; Vitol for $2 million on Nov. 26; and ConocoPhillips for $10.5 million on Dec. 4.

Citgo moved for a mistrial on the opening day, while ExxonMobil moved for a mistrial on Feb. 7, both of which were denied by Superior Court Judge Peter Fauver.

The trial continues this week at the Warren G. Rudman Federal Courthouse in Concord, where the state is expected to wind up its case before a week-long recess for the February school vacation. ExxonMobil is expected to begin its defense when the trial resumes in March.

ExxonMobil faces the largest liability due to its substantial share of the gasoline market in New Hampshire.

The state is seeking to apportion liability on the basis of market share. Since ExxonMobil controlled 30 percent of the market, the state is seeking 30 percent of $800 million, the estimated cost of testing, treating and monitoring all public and private water supplies in the state.

That would put ExxonMobil's potential liability at about $245 million. Citgo had only 3 to 9 percent of the market, depending on the year, so could have been liable for somewhere between $24 million and $72 million.

All of the settlement money obtained so far is being held in trust, pending resolution of the trial.

When all the settlement money is in and all legal fees paid, the balance will go toward testing for and mitigating groundwater pollution throughout the state.



Source: (c)2013 The New Hampshire Union Leader (Manchester, N.H.) Distributed by MCT Information Services


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