Refiners Settle MTBE Case for $422 Million

Representing 153 public water providers (including municipalities, water agencies, and private water companies) from 17 states, Baron and Budd, P.C., recently announced the largest settlement to date with many of America's leading oil companies over drinking water contamination caused by the gasoline additive methyl tertiary butyl ether (MTBE).

The settlement stems from cases pending in a federal Multi-District Litigation (MDL) court in New York established to hear MTBE cases nationwide.

"Today's landmark settlement marks a significant step toward protecting the long-term viability of drinking water resources across the United States" said, Baron and Budd shareholder Scott Summy, co-lead counsel for all plaintiffs in the MDL. "Many of these public water providers were facing federal legislation that would grant immunity to the oil companies for MTBE product liability lawsuits at the time these cases were filed. I am proud to have represented the courageous and responsible water providers and municipal governments who took this step to protect their communities."

Settling defendants in the case include BP Amoco, Atlantic Richfield, Chevron, ConocoPhillips, Shell, Marathon, Valero, CITGO, Sunoco, Hess, Flint Hills, El Paso Merchant Energy, and Tesoro. These companies – representing approximately 70 percent of the country's oil refiners – have agreed to pay $422 million to the plaintiffs to address public drinking water wells that are contaminated with MTBE. The settlement also requires the settling defendants to pay their share of treatment costs for wells owned or operated by the plaintiffs that become contaminated by MTBE in the future and qualify for treatment over the next 30 years. Conspicuously absent from the settlement is ExxonMobil, which will face the first trial over MTBE in September.

MTBE, which was added to gasoline at varying levels between 1979 and 2007, has leaked from underground storage tanks and contaminated nearby groundwater throughout the United States. Internal oil company documents discovered by Summy and one of his co-shareholders, Celeste Evangelisti, demonstrated that, in the mid-1980s prior to adding MTBE to gasoline on a large scale, many of the oil companies were well aware of the problems posed by MTBE to drinking water but failed to disclose the risk to government regulators or the public. (Communities For a Better Environment v. Unocal Corporation - 1998).

At extremely low levels, MTBE can give drinking and bathing water the strong taste and odor of turpentine, rendering it non-potable in affected communities. A Drinking Water Advisory issued by the U.S. Environmental Protection Agency states that MTBE is a "possible human carcinogen."

"No human health studies or long-term carcinogenicity studies on animals were conducted by the oil companies prior to adding MTBE to the nation's gasoline supply," said Baron & Budd founder Russell Budd. "The American public should not have been used as guinea pigs."

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