A federal appeals court ruled last week that ExxonMobil (2012 revenues: $467.3 billion) must pay a jury verdict of $104.7 million to New York City for poisoning six wells in the Jamaica section of Queens with the carcinogenic gasoline additive MTBE from the mid-1980s through the mid-2000s. The city sued Exxon and other oil companies in 2003, alleging that they knew their use of MTBE would pollute groundwater.

MTBE (Methyl teriary butyle ether) is a gasoline additive that helps gasoline burn more cleanly and reduces tailpipe emissions, but also causes cancer, dizziness, nausea and various nervous-system disorders. New York banned MTBE in 2004, as have 20 other states.

Several Exxon employees testified during the 2009 trial that MTBE “might render water undrinkable,” and that they informed Exxon managers that it has “low taste and odor thresholds.” A jury found Exxon liable for product liability, failure to warn the public about the dangers of MTBE, trespass, public nuisance and negligence. It also awarded $250.5 million in compensatory damages, which it reduced by the costs for cleaning up other contamination not related to its gasoline. District Judge Shira Scheindlin denied punitive damages because she found the company hadn’t recklessly disregarded the risks.

On appeal, Exxon argued that federal Clean Air Act provisions requiring the use of additives pre-empt the city’s common-law claims and that the city had not met its burden of proof. 

The three-judge panel in Manhattan rejected those arguments and affirmed the jury verdict. “Imposing state tort law liability for negligence, trespass, public nuisance, and failure-to-warn - as the jury did here - falls well within the state's historic powers to protect the health, safety, and property rights of its citizens,” wrote Judge Susan Carney. “In this case, therefore, the presumption that Congress did not intend to preempt state law tort verdicts is particularly strong.” The court also found that New York had proved its case.

The case is one of many around the country against oil refiners, distributors and retailers over MTBE. Exxon announced that will appeal the ruling to the U.S. Supreme Court, where corporations often find sympathetic ears. 

As usual, there were no criminal charges against any of the executives who approved the poisoning of the wells.

-Matt Bewig

To Learn More:

Tainted NYC Water Will Cost Exxon $104 Million (by Chris Fry, Courthouse News Service)

Exxon Mobil’s $105 Million MTBE Defeat Upheld on Appeal (by Don Jeffrey, Bloomberg)

In re Methyl Tertiary Butyl Ether Products Liability Litigation (Court of Appeals for the Second Circuit) (pdf)

Obama Administration Sues Exxon for Polluting Pennsylvania Drinking Water with Toxic Fracking Waste (by Noel Brinkerhoff, AllGov)

30 Toxic Chemicals Found at Exxon Pipeline Spill Site in Arkansas (by Noel Brinkerhoff and Danny Biederman, AllGov)

Exxon Found Guilty (again) in Longest State Trial in New Hampshire History (by Noel Brinkerhoff, AllGov)