Oil & Water Mix it Up, Reach Settlement Over Chemical Seepage
If the government mandates that oil companies use a certain chemical in their gasoline — say, to curb smog — can the companies still be held liable when that chemical seeps into the ground and contaminates water tables across the country?
That was the argument several oil manufacturers — including BP, Chevron and Shell — tried to make recently, but apparently it didn’t work. Today, according to the WSJ, about a dozen oil companies agreed to pay $423 million to settle litigation with 153 water providers in 17 states over leakage of the gasoline additive MTBE, or for you patent lawyers with dual degrees, methyl tertiary butyl ether, an oil-refining byproduct.
The terms of the settlement, which include an agreement by the companies to pay cleanup costs that arise in the next 30 years, were submitted for approval yesterday to an SDNY. Baron & Budd and Weitz & Luxenberg negotiated on behalf of the plaintiffs. Skadden Arps negotiated on behalf of several defendants. Several defendants named in the suit, including ExxonMobil, did not agree to the settlement. (Click here for another report from the NYT).
According to reports, the settlement is the largest to date in a case involving MTBE. The Environmental Protection Agency calls MTBE a “known animal carcinogen” and a “possible human carcinogen.” It has been detected in at least 36 states and has been banned in 23, including California and New York, which accounted for 40% of total MTBE consumption in the U.S. The settlement doesn’t shield defendants from liability in the event MTBE is shown in the future to carry human health risks.
The local water providers will be compensated according to a formula based on MTBE levels and the size of wells, reports the WSJ. If MTBE is found to surpass the specified threshold at a given site during the next 30 years, defendants will pay 70% of the water-treatment cost for 10 years from the point of detection. Payments will end if the affected area is deemed MTBE-free for one year. At the end of the 10-year period, payments can be extended five more years if the water source still shows a certain level of contamination.
Photo: iStockArt
During this action, it was determined that MTBE in water is likely to cause sterilization in humans. Therefore, as part of the settlement all the contaminated water will be bottled and delivered to Tort Reform, his family and the other members of the CofC.
Ridiculous. More proof that Americans are stupid: they bite the hand that feeds them. Without oil, our economy would sink. But when we force oil producers to use additives for the environments sake, and that additive, which shouldn’t be in the gas in the first place and isn’t somethin gas companies are used to using, contaminates the surrounding area, we blame the oil companies instead of ourselves, the idiots who mandated it.
The oil companies also promoted MTBE to stall for years on years ethanol’s entry into the motor fuel supply. Only when MTBE was exposed for what it is, did ethanol gain traction.
Boy I will tell you. I am not a lawyer, just a WSJ subscriber. So I don’t pick sides here. Too old for that anyway. But when I read Tort Reform’s anonymous comment above it just boils my blood how people can become indispensable to profits! Very sad!
ACTUALLY, despite the first sentence of Dan Slater’s post, the government did not mandate that oil companies use any particular chemical. Ethanol (an others) would have been fine as well; the goal was to produce cleaner burning gasoline. Oil companies preferred MTBE because it was a waste byproduct of gasoline refining.
Almost as soon as MTBE was put in gasoline to reduce air pollution during summer months, there were news stories about hazards of MTBE. The government took its time, the bureaucrats did not get their drinking water from wells being contaminated by plumes of MTBE tainted gas from leaky gas station tanks.
The ethanol now being used as a gasoline additive during the summer months is not a carcinogen, just a way to give the good Republican ethanol plant owners a giant tax subsidy.
Blood money, every cent. This MTBE was mandated by the feds and complied with by the oil companies. The worst part about this settlement is that money will be donated to Democrats by the plaintiff’s lawyers. That alone ought to be reason enough to fight to the end on these frivolous lawsuits.
@ Tort Reform: MTBE was NOT mandated by the feds. Get your facts straight.
Since when did facts get in the way of Tort Reform’s message?
The Chamber of Commerce is like a vampire that lives off of Blood money, so spare us the broken-record drivel.
You can call me all the names you want but we are kicking your butt at the Supreme Court and in the state legislatures. We are more organized, more focused and have a better message than any of you bleeding heart liberals who want to give away the wealth of our country to its poor. So whine all you want and call me all the names you want, the fact is that we are winning and you are losing. Just wait till the Supremes deliver the ultimate money shot with the Exxon Valdez ruling. Lights out. Scoreboard!!
All of the comments posted here miss the point completely. In all of these (and other class type) litigation, it matters not whether any true wrong has taken place. Just as in the case of USCA 1983 actions against governmental agencies, these selfish, frivolous lawsuits DO NOT PUNISH the putative wrongdoers. We, the consumers and taxpayers, are the payors of last resort. Only the Marxist left wing (read Democrat) politicians and their collaborators, the trial lawyers, come out ahead. All taxes, all damage awards, and all other costs (of whatsoever nature) are passed through to us. Once again, I bear the shame of a profession, the greed and arrogance of which knows no bounds.
On a related note, Bush has just threatened to veto the farm bill that would help curb speculation in commodities, including of course, crude. Speculators are running wild but Mr. Bushron and Cheneyburton would have none of it. They care not if inflation is spiraling out of control.
George Bush is also threatening to veto the Housing Bill being tabled to help out the homeowners (not speculators, not corporations, not wall street). Shows you the true colors of this president and they run like red socks in a laundry mishap.
Bush’s Job 1:
1) Fertilize the wealth of the rich and elite take their wealth to another level.
2) Impoverish the middle-class.
3) Enrich the middle-east with oil profits from speculative fever gone wild. Bush’s history comes from oil, you know he and his buds are laughing all the way to the bank.
Bush (read republicans) have lowered America to depths never before seen.
Hi webmaster!
Hi webmaster!
I know it’s two months too late, but there are lots of false statements posted here. Much to my embarrassment at cocktail parties, I know a lot about ethanol & MTBE & gasoline. Here are some corrections to what people posted above:
(1) MTBE was required. While Congress’ legislation included ethanol and a couple other chemicals as alternatives, everyone knew that the only way to comply with the regulations was to use MTBE, because those other alternatives were relatively rare boutique chemicals. “EPA predicts that the amendment will be met almost exclusively by MTBE, a methanol derivative.” Sen. Tom Daschle (1990).
(2) MTBE is not a “waste byproduct.” It’s more expensive to make than gasoline and significantly added to the cost of gasoline. In fact, most oil companies argued AGAINST the MTBE requirements in the first place. It was environmentalists who (mistakenly, but with good intentions) pushed Congress to require MTBE in gasoline. Oil companies are happy to have the regulations lifted.
(3) Ethanol is just as much a carcinogen as MTBE, perhaps more. If you want proof, just Google “ethanol MSDS” and read the Material Safety Data Sheets. Also check on “acetaldehide,” a byproduct of ethanol. Note however that neither ethanol nor MTBE is a likely toxin in the very low doses in these cases. Gasoline is nasty, toxic stuff, but that’s largely due to benzene. MTBE is not a problem, especially because you can smell/taste long before it reaches dangerous levels (unlike benzene which is essentially odorless and tasteless).
(4) The hysteria over MTBE was largely a fiction pushed by the plaintiffs’ lawyers who drummed up these lawsuits. Real environmental engineers working in the field now know (and long have known) that MTBE is not really a significant concern for anyone … except for the lawyers that is!
I hope this helps shed some light.
