Environmental Valuation & Cost-Benefit News

Some of the nation’s largest oil companies have agreed to pay about $423 million in cash to settle a lawsuit brought by more than a hundred public water providers, claiming water contamination from a ... gasoline additive [methyl tertiary butyl ether, or (MTBE)].

The ... companies also agreed to pay 70 percent of the future cleanup costs over the next 30 years.

MTBE has been used since 1979 to increase octane levels in gasoline, but its use became more widespread after the 1990 Clean Air Act mandated the use of an oxygenate in certain cities to reduce smog and other pollutants. When mixed with gasoline, the additive ensured that the fuel burned more thoroughly, thereby reducing air pollution.

Low levels of MTBE can make drinking water supplies unpalatable because of its “offensive taste and odor,” according to the Environmental Protection Agency. The agency has also found that the compound caused cancer in laboratory rats that were exposed to high doses. Even in small amounts, the additive makes water smell and taste like turpentine. MTBE. is now banned in 23 states, including New York and California.

The defendants that agreed to the settlement include BP, Royal Dutch Shell, ConocoPhillips, Chevron, Marathon Oil, Valero Energy, Citgo and Sunoco. Six other companies named in the lawsuit, including Exxon Mobil, did not agree to the deal....The plaintiffs include 153 public water systems in New York, California and 15 other states.

In the lawsuit the plaintiffs claimed that MTBE was a defective product that led to widespread contamination of groundwater. The suit contended that the chemical was used by oil companies, even though they knew of the environmental and health risks that it posed.

...This deal, if approved, would be the largest settlement to date.

In 2005, some 130,000 barrels of M.T.B.E. were produced a day, representing about 1 percent of the nation’s gasoline supplies.

The oil industry has fought hard to avoid penalties related to its use of the additive, arguing that it should not be forced to pay for the cleanup of a product that it was mandated to use. Estimates of the cost of a total cleanup of M.T.B.E. have run to the tens of billions of dollars.

In 2003 and 2005, the Republican-dominated Congress tried to pass a provision that would have shielded M.T.B.E. manufacturers from litigation, but failed.
...
The high risk of lawsuits related to M.T.B.E. has prompted the oil industry to stop using it in 2006 and use ethanol as an oxygenate replacement.

By Jad Mouawad
FOR FULL STORY GO TO:
http://www.nytimes.com/2008/05/08/business/08oil.html?_r=1&th&emc=th&oref=slogin
The New York Times www.NYTimes.com
Published: May 8, 2008