Tainted NYC Water Will|Cost Exxon $104 Million

MANHATTAN (CN) - ExxonMobil owes more than $104 million to New York City for poisoning the groundwater with the gasoline additive MTBE, the 2nd Circuit ruled.

New York City had sued the oil giant over its release of the additive into six wells in the Jamaica section of Queens from the mid-1980s through the mid-2000s. The wells had been designated for emergencies.

Methyl teriary butyle ether, or MTBE, is a gasoline additive that helps gasoline burn more cleanly and reduces tailpipe emissions. New York City argued that the National Science and Technology Council found that "MTBE is a known animal carcinogen and ... had the potential ... to be a human carcinogen."

MTBE can also cause dizziness, nausea and other nervous-system disorders. New York state banned the additive in 2004, and 20 others states have similar bans.

Numerous Exxon employees claimed during the trial in 2009 that gasoline additives, including MTBE, "might render water undrinkable by humans." They informed Exxon managers that it has "low taste and odor thresholds." The additive purportedly tastes like turpentine.

A jury found Exxon responsible for product liability, failure to warn people about the dangerous nature of its product, trespass, public nuisance and negligence.

On appeal, Exxon argued that the federal Clean Air Act pre-empts the city's common-law claims. From the mid-1990s through 2004, the law required use of gasoline oxygenates, such as MTBE, in New York City.

Exxon also claimed that the city "failed sufficiently to prove the elements of negligence, trespass, public nuisance, and failure-to-warn."

In a 117-page doorstopper, a three-judge panel of the 2nd Circuit 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," Judge Susan Carney wrote for a three-person panel. "In this case, therefore, the presumption that Congress did not intend to preempt state law tort verdicts is particularly strong"

The jury found that the MTBE levels in the Station Six Wells will peak at 10 ppb in 2033 - the maximum contaminant level for MTBE since 2004, according to the ruling.

This finding "is not inconsistent with a conclusion that the city has been injured," Carney wrote.

New York City did not prevail entirely on the appeal, however, failing to persuade the panel that the trial court improperly reduced its compensatory damages.

"The jury found that the cost of removing pre-existing contamination - namely, PCE - was $70 million, and reduced its $250.5 million compensatory damages award accordingly," Carney wrote.

New York City is planning to build a water-treatment plant in Queens that will clean 10 million gallons of the contaminated water per day. It says the water from the wells will be ready within 15 to 20 years as a back-up source for drinking water.

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