CONCORD, N.H. -- A judge has granted a request to remove CITGO Petroleum Corp. from a New Hampshire lawsuit accusing the oil company and another petroleum giant of failing to warn state officials about the gasoline additive methyl tertiary butyl ether (MTBE), reported the Associated Press.
The state's lawsuit against Exxon Mobil Corp. and CITGO went to trial Monday. But a judge Wednesday granted a motion from the state and CITGO to remove the company from the case provided the two sides reach an agreement by Feb. 15. Lawyers for the state declined to say whether that meant a settlement is in the works.
The state sued the companies in 2003 alleging that gasoline containing MTBE was a defective product and that the oil companies had a duty to warn state officials about its special properties and ability to contaminate groundwater in greater levels than traditional gasoline. It estimates that more than 40,000 wells are contaminated and was seeking more than $700 million from both companies to monitor drinking water wells and clean up high-risk sites where MTBE contaminated groundwater.
In opening statements, lawyers said the product wasn't defective--it did what it was supposed to do by reducing lead content in gasoline and making it burn cleaner--and that the state is inflating its estimates of how many wells were contaminated. Oil companies said the state is looking for a scapegoat; The state said it wants to hold companies responsible for their product.
New Hampshire filed its lawsuit in 2003, four years before it banned the use of MTBE.
The case is the first brought by a state over MTBE contamination to reach trial.
The state has received an estimated $120 million in settlements from other defendants in the case, which has wound its way through state and federal courts for the past decade, said a report by The New Hampshire Union Leader. Only CITGO and ExxonMobil refused to settle as the trial date approached.
"We're pleased with the start of the trial, and nothing has happened that would change our approach to this litigation," ExxonMobil spokesperson Claire Hassett told the newspaper. "We added MTBE in response to a federal mandate. There were no other feasible alternatives available at that time; the characteristics of MTBE were known and the benefits substantially outweighed the risks."
The state contends that the oil companies knew MTBE presented a risk of groundwater contamination when they decided to use it. ExxonMobil and CITGO have argued that they were complying with federal regulations that pre-empt state law, and that the additive, meant to make gasoline burn more thoroughly and thus reduce air pollution, never caused any New Hampshire resident to become ill.
In 2003, New Hampshire sued ExxonMobil and CITGO along with Shell Oil Co., Sunoco Inc., ConocoPhillips, Irving Oil Ltd., Vitol SA and Hess Corp. All had settled before this week's trial began, except ExxonMobil and CITGO. Shell and Sunoco agreed to pay New Hampshire $35 million in a settlement announced in November, said a Bloomberg report.
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.
ExxonMobil faces the largest liability in the case due to its substantial share of the gasoline market in New Hampshire, the Union Leader report said. The state is seeking to apportion liability on the basis of market share.
Since ExxonMobil controlled 30% of the market, the state is seeking 30% 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, according to opening arguments by the state's lead attorney in the case.
CITGO had only 3% to 9% percent of the market, depending on the year, according to the Union Leader, so would be liable for somewhere between $24 million and $72 million. Irving Oil settled for $57 million on Nov. 19, said the report.