(CN) - ExxonMobil must pay $236 million for groundwater contamination from a fuel additive used to reduce smog, the New Hampshire Supreme Court ruled.
Exxon and other petroleum companies began adding Methyl Tertiary Butyl Ether, more commonly known as "MTBE," to gasoline in the late 1970s in response to the Clean Air Act and other regulations intended to reduce harmful emissions from automobile usage.
From the companies perspective, the beauty of MTBE was that it provided an octane boost to fuel similar to lead, but was cleaner burning and did foul the catalytic converters then used to curb auto emissions.
The Act didn't mandate the use of MTBE, but its associated costs and other characteristics made it preferable to ethanol and other additives that would have accomplished the same goals.
But studies later found that the chemical often leaks from local gas stations and storage facilities, where it easily contaminates groundwater, and by 2006, petroleum companies were scrambling to remove it from the nation's gasoline supplies.
New Hampshire sued Exxon and several other petroleum companies in 2003, claiming more than 1000 wells in the state are contaminated with MTBE.
More than 5,000 wells have not been tested, but are likely also contaminated. MTBE has a "residence time" of up to 50 years.
Every defendant other than Exxon eventually settled with the state, and case finally went to trial in 2013.
After three months of testimony, a jury found in favor of New Hampshire on all of its claims, and ordered Exxon to pay $816.7 million in damages. The court later reduced that penalty to $236.3 million, but the petroleum company appealed, claiming, among other things, that the state's lawsuit should have been dismissed on the grounds of separation of powers and due process, that the basis for the damages award was flawed, that the state failed to show Exxon departed from the applicable standards of care, and that claims for future well impacts are not ripe.
"As trustee, the State can bring suit to protect from contamination the waters over which it is trustee," Chief Judge Linda Dalianis said, writing for the unanimous court.
The trial court based the damages award on the finding that Exxon's market share for MTBE gasoline was 28.94 percent.
Dalianis said applying market share liability in this case was justified.
"In addition to finding that the State had proven all of the elements of its claims, the jury found: 'MTBE gasoline is fungible'; the State 'cannot trace MTBE gasoline found in groundwater and in drinking water back to the company that manufactured or supplied that MTBE gasoline'; and the State 'has identified a substantial segment of the relevant market for gasoline containing MTBE.'"
The commingling of MTBE gasoline with all gasoline imported into the state prevents New Hampshire from tracing the specific refiner that caused groundwater contamination at any specific well. Given this impossible burden, Exxon may be held liable for its percentage of the supply market, the 50-page opinion stated.
"This is the most significant environmental victory in the history of the state," New Hampshire Attorney General Joseph Foster said in a statement on Friday. "This historic decision sends a clear message that New Hampshire will not permit polluters to endanger the health of its citizens and destroy its natural resources."
A spokesman for Exxon said on Friday that the company is considering appealing the case to the U.S. Supreme Court.
"The state should have sued the parties responsible for spilling gasoline, not the refiners who were compelled by law to add oxygenates to gasoline," Exxon spokesman Todd Spitler told Reuters.
The state Supreme Court reversed the trial court's order imposing a trust covering $195 million of the damages award, which had been requested by Exxon so that the state would be obligated to account for how it spent the money.