[cai-asia] MTBE settlement by oil companies
Hassaan Ghazali
a good precedent seems to have been set.
regards,
Hassaan
Oil companies settle MTBE groundwater suit
New York, May 08: About a dozen oil companies agreed to pay USD $423
million and clean-up costs to settle litigation over decades of
groundwater contamination from the gasoline additive and possible
carcinogen MTBE, lawyers said on Wednesday.
The settlement affects public water utilities and public agencies in
17 states, attorneys for water agencies said. Refiner Valero Energy
Corp confirmed the agreement but added that the court must affirm it.
BP America Inc, Chevron Corp, ConocoPhillips, Shell Oil Co, Marathon
Oil Corp, Venezuela`s Citgo Petroleum Corp, Sunoco Inc and Valero
agreed to the deal, involving a key ingredient to gasoline for three
decades.
"The one big holdout was ExxonMobil Corp," said Robert Gordon, of
Weitz and Luxenberg, one of the three lead lawyers for the plaintiffs.
Exxon did not immediately comment.
MTBE, or methyl tertiary butyl ether, in 1979 replaced lead in
gasoline to make car engines run smoother. Then Congress in 1990
required refiners to use oxygenates like MTBE to clean up tailpipe
emissions.
MTBE helps air quality, but it hurts water quality. The additive has
leaked into water supplies in many states, sparking the lawsuits. The
US Environmental Protection Agency says MTBE is "a potential human
carcinogen" and that unlike other gasoline components seeps easily
into groundwater because it does not "cling" to soil.
Lawyers said one of the most important parts of the settlement was to
clean up the groundwater contamination.
"There is going to be treatment of the wells and the affected areas
guaranteed for the next 30 years," Gordon said.
The 2003 lawsuit by public water providers in 17 states was
consolidated into a single federal case.
The settlement, filed in US District Court in Manhattan, is "a step in
the direction of making the parties responsible for the contamination
pay for it rather than the folks who drink the water and pay the
rates," said Victor Sher, another of the lead attorneys. "It`s a
significant development."
Five smaller companies have not settled, including the former Lyondell
Petrochemical Corp, largely a chemicals maker but also owner of a
Houston oil refinery. The company is now LyondellBasell Industries,
one of the world`s biggest chemicals companies.
When MTBE gets into groundwater, it makes the water taste and smell
like turpentine.
Trying to make gasoline less-polluting has proven a difficult task for
oil refiners, who have long said they added MTBE to the fuel mix
because of government mandates for cleaner fuel, especially in big
cities and in the summer.
Support began to crumble for MTBE in the late 1990s when two states
that accounted for 40 percent of its use -- California and New York --
announced intentions to phase out the additive.
Ethanol began to replace MTBE in earnest by 2005, when about 4 billion
gallons were added to the US gasoline supply.
Now, oil companies face the issue of using corn-based ethanol to burn
cleaner gasoline, also in part because of government mandate. But
using corn for fuel is linked to higher food prices.
"The MTBE decisions were made because there simply wasn`t anything
practical that could be used in the volume needed," said John Felmy,
chief economist with the industry advocate American Petroleum
Institute.
Federal mandates require that the 141 billion gallons of U.S. gasoline
expected to be used in 2008 should contain 9 billion gallons of
ethanol. That requirement will increase to 15 billion gallons by 2015
and to 36 billion gallons by 2022.
Felmy said the oil industry turned to MTBE instead of ethanol in the
1990s as the ethanol industry was not developed enough to handle the
volume required.
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