Settlement concludes first MTBE products trial.

Months after a jury found five major defendants liable in the first products liability suit over the gasoline additive MTBE, the final one has settled.

The suit--filed by a California utility company against the chemical's producers and fuel manufacturers, refineries, and distributors--sought to recoup millions of dollars to cover the costs of cleaning up public water supplies contaminated with the additive. (South Tahoe Public Util. Dist. v. Atlantic Richfield Co., No. 999128 (Cal., San Francisco County Super. Ct. Aug. 5, 2002).)

More than a dozen defendants settled before the case went to trial. In April 2002, a jury found the remaining five defendants liable for selling a "defective" product and failing to adequately warn of the dangers of MTBE. It also ruled that two defendants, Shell Oil and Arco Chemical, acted with "malice" by withholding information. With the potential for punitive damages looming, the five defendants who went to trial settled individually before the penalty phase of the trial started.

Duane Miller of Sacramento, California, who represented the plaintiffs, said, "We took the position that the product was defective because its social costs out weighed any benefit and that the defendants failed to adequately warn, and the jury agreed with us. I think the message is that if certain members of the oil industry go to the jury on these types of claims, they're going to face similar outcomes."

When added to gasoline, the oxygenate methyl tertiary butyl ether (MTBE) is purported to help fuel burn cleaner and therefore reduce air pollution. After Congress passed the Clean Air Act Amendments of 1990, requiring that oxygenates be added to fuel in the most heavily polluted areas of the country, MTBE became the additive of choice. The compound was less expensive to make and transport than other additives, such as ethanol.

However, it is highly water soluble and nonbiodegradable underground, making it an immediate threat to groundwater supplies. Leaks of MTBE-treated gasoline from cracked underground storage tanks and even minor spills when consumers pump gas can contaminate local water supplies. The EPA has characterized the compound as a "potential human carcinogen," but these claims dealt only with the taste and odor problems it causes in drinking water.

The jury's finding of malice was based primarily on evidence that the industry knew of MTBE's threat to water as early as 1980 but failed to warn about it, Miller said.

"The other thing that impressed them was a study done in Europe where scientists found that MTBE caused taste and odor problems at levels below a part per billion," he added.

"That study was never shared with any government officials, never published, and was not even shared with other researchers who were then asked to repeat the research but nog test at levels lower than 25 parts per billion. The critical fact that it could cause similar problems at very, very low levels was withheld from the public and the government."

Other cases have been filed by local governments and individuals across the country. "The South Tahoe case is an important precedent for state governments, municipalities, and water districts that could seek large damages in MTBE cases," said Jon Hinck of Portland, Maine, co-chair of ATLA's MTBE Litigation Group. Other cases have been filed in Dallas; Santa Monica, California; Orange County, California; Plainview Water District, New York; Suffolk County, New York; and Pascoag, Rhode Island.

In several suits on behalf of individual private-well owners, class action certification has been sought. State courts in Maine and North Carolina and a federal court in New York have denied class status, said Hinck. Miller said he expects some of these owners to bring individual suits.

Oil industry officials, even some not involved in the litigation, have requested multiple copies of the South Tahoe trial transcript. "They were spending literally tens of thousands of dollars to read the testimony" from this trial, Miller said.