U.S. Court of Appeals upholds damage award for MTBE case against ExxonMobil

A U.S. Court of Appeals in New York upheld a jury’s US$104.7 million damage award against ExxonMobil Corp. for contaminating New York City wells with the gasoline additive methyl tertiary butyl ether (MTBE). The court said that the award for compensatory damages to clean up contaminated wells was proper, denying ExxonMobil’s challenge to the 2009 verdict.
ExxonMobil, which is based in Irving, Texas, said it plans to appeal the ruling to the U.S. Supreme Court.
New York sued ExxonMobil and other oil companies in 2003, alleging that they knew MTBE would pollute groundwater. ExxonMobil argued, however, that state laws are pre-empted by the Clean Air Act, which required oil companies to reformulate gasoline to reduce air pollution from vehicle emissions.
“We reject Exxon’s argument that the jury’s verdict conflicts with and is therefore pre-empted by the Clean Air Act Amendments of 1990,” the appeals panel said.
This case is one of several cases filed by municipalities, states and individuals against oil refiners, distributors and retailers over MTBE. Many, including New York City’s, were consolidated in New York federal court for evidence gathering.
A state appeals court in Maryland in February reversed two jury awards totaling US$1.65 billion against ExxonMobil over MTBE contamination, ruling that the company had not made fraudulent statements and that the property owners who sued had not demonstrated physical harm.
In April, a jury in New Hampshire state court ordered ExxonMobil to pay US$236 million in damages for contaminating groundwater with MTBE. The company has appealed that verdict.
The New York jury determined that it would cost US$250.5 million to treat the water and remove MTBE. U.S. District Judge Shira Scheindlin ruled that Exxon Mobil should not be liable for the entire cleanup cost because the wells contained pollutants not from gasoline. She also denied punitive damages because the company had not recklessly disregarded risks.