Phil Brennan, NewsMax.com
Thursday, April 18, 2002

The verdict by a San Francisco jury Tuesday went against the defendants even though in adding MTBE, or methyl tertiary butyl ether, to their gasoline, the oil companies had acted under orders from the federal government.

The Feds Made Them Do It

The federal Clean Air Act mandates that areas not meeting air quality standards must use MTBE or ethanol to reduce vehicle pollution, the defendants argued. In California, the refiners chose MTBE, which they can make from petroleum instead of buying ethanol from the Midwest.

The argument failed to save the defendants from the guilty verdict, the first of its kind. The jury found that gasoline with the additive MTBE is a defective product and held that two major oil companies knew of the chemical's dangers but still withheld that information from the public when they put it on the market.

The product liability suit was brought by the South Tahoe Public Utility District over contamination of the district's groundwater in 1998 after MTBE pollution forced it to close a third of its drinking-water wells.

The jury found that Shell Oil Co., Lyondell Chemical Co. (formerly Atlantic Richfield Chemical Co.) and Tosco Corp. (now part of Phillips Petroleum) had put a defective product on the market when they began selling gasoline with MTBE added.

They also found that Shell and Lyondell acted with malice when they withheld information about the chemical. According to Wednesday's San Francisco Chronicle, the South Lake Tahoe district's lawyers had presented evidence that the companies promoted MTBE even though they knew it could contaminate water supplies.

Scott Summy, an attorney in the Dallas firm of Baron and Budd, which has MTBE cases in California, New York, Florida and Illinois, told the Chronicle the verdict was "very significant."

'Early Knowledge'

"The jury was presented with ample evidence that these companies had early knowledge that predicted these problems," Summy said. "They failed to disclose the information they had and also promoted the additive in gasoline despite the fact that it had inherent problems." The additive has proved to be a major environmental headache nationwide, the Chronicle explained. Spilling from leaky underground storage tanks, it travels faster in the groundwater than gasoline and takes longer to break down. California has set a maximum limit for drinking water because MTBE is a suspected carcinogen.

Richard Drury, a lawyer with Communities for a Better Environment, told the newspaper that the punitive damages for MTBE contamination could reach billions of dollars nationwide from suits filed by cities, water districts, private well owners and perhaps consumers of tainted water.

The oil companies exhibited "the same type of knowing indifference to the public health" that tobacco companies did in promoting cigarettes. "In this case, it's also indifference to the environment," Drury said.

"It was proven that the companies' own scientists for almost a decade were saying, 'Don't put MTBE on the market, or you're going to create a big environmental disaster.' The companies put it out anyway. It wasn't an innocent mistake," Drury said.

Drury has a lawsuit before the same court charging that Exxon, Mobil and Tosco engaged in unfair business practices in marketing MTBE, the Chronicle wrote. A state justice Tuesday denied the companies' request to throw out the case and allowed a stalled trial to proceed.

ChevronTexaco, Unocal, Shell and Atlantic Richfield Co. settled last year. They agreed to clean up almost 1,300 sites around the state.

"It should reverberate in the executive suites and board rooms of oil companies and cause them to realize they have embarked on a legal strategy that will bring them nothing but grief," Joe Lawrence, Santa Monica's assistant city attorney, told the Los Angeles Times. The city has sued seven major oil companies and 11 other firms for allegedly tainting much of its drinking water with MTBE.

Cleanup costs could reach $200 million, according to the U.S. Environmental Protection Agency. The case is expected to go to trial next year.

Lawrence said several dozen similar cases have been filed across the nation.

Cleanup nationwide is expected to cost at least $29 billion, according to a study commissioned by Santa Monica and other cities. California is phasing out use of the chemical by Jan. 1, 2004.

Davis Delays Phaseout

Democrat Gov. Gray Davis, facing a tough re-election battle, recently delayed the statewide phaseout of MTBE in gasoline until January 2004.

The delay, Davis said, buys time for construction of transportation and fuel-blending facilities needed to replace MTBE with ethanol, produced mostly from corn grown in the Midwest. He feared disruption in ethanol supplies would cause long lines and price spikes at gas stations.

A product that might interest you:
Free E-mail Alerts From NewsMax.com
Read more on this subject in related Hot Topics:
California Governors Race
Health Issues