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In what the plaintiff’s lawyer called a first in the nation, Exxon Corp. will pay a California water district $12 million to settle a lawsuit alleging that a controversial gasoline additive that pollutes drinking water is a defective product. An Exxon spokeswoman said, however, that under the terms of the settlement all allegations in the case, including that the additive is defective and may be harmful to people, are denied. Exxon would not discuss the settlement further. The agreement was reached recently in San Francisco Superior Court between lawyers for Exxon and the South Lake Tahoe Utility District. The California district had shut down 12 of its 34 wells due to contamination from an additive that is commonly found in gasoline leaking from gas station tanks. The additive, methyl tertiary butyl ether, is also known as MTBE. The water district’s lawyer, Vic Sher of Miller, Sher & Sawyer in Sacramento, said the settlement was the first to be based on a claim that gasoline blended with MTBE and produced by a major oil company is a defective product. Most MTBE suits only seek damages involving leaks from underground gas tanks and cleanup. UNDRINKABLE, BEFOULED WATER MTBE is a major national problem because it is “water soluble and travels farther and faster in groundwater than regular gasoline, and doesn’t biodegrade,” Sher asserted. “It renders water undrinkable, with a foul taste.” It has also been identified as a suspected carcinogen by the U.S. Environmental Protection Agency (EPA). Lawsuits over gas tank leaks containing MTBE have been filed from New York to Missouri to Texas to the West Coast and many states in between. The South Tahoe suit was filed in 1998 against a number of oil companies and gasoline providers and stations. Settlements had previously been reached with Atlantic Richfield, BP, 7/11 Citgo and Tesoro for a total of about $7 million, said Sher. Actions against several other oil companies and gas suppliers, including Chevron and Shell, are due to go forward in September, Sher added. South Tahoe Public Utility District v. Atlantic Richfield, No. 999128. Sher alleged that Exxon knew of the threat to drinking water from MTBE and failed to take steps to avoid the problem. “The issue of MTBE as a defective product is an important one and [this case] is a step in the right direction,” he said. “The issue will be with us for some time to come.” Ironically, although there is widespread agreement that MTBE causes problems, the federal government has refused to rescind its requirement that the additive be added to gasoline in certain states to help gas burn more cleanly and cut air pollution. California Gov. Gray Davis has called MTBE a “significant risk” to the environment and ordered it banned in the state by 2002. When the EPA denied a waiver from the MBTE requirement last June, the state of California filed suit. FIVE SETTLE UP And last month, five major oil companies reached a settlement with a San Francisco Bay area environmental group that could force the companies to clean up their own sites contaminated with MTBE. Scott Summy of Cooper & Scully in Dallas, who represented the environmental group, filed the first MTBE suit in the country in North Carolina in 1997. He agreed that the Exxon case was the first to involve allegations that MTBE was a defective product. “We feel there’s enough evidence to show MTBE is a human carcinogen,” he said. “Only time will tell, but you shouldn’t treat people like guinea pigs.” Lauren Kerr, a spokeswoman for Exxon Mobil Corp. in Fairfax, Va., acknowledged that MTBE makes water smell and taste bad. However, she said it had not been shown that the additive has adverse effects on people or animals or that it is defective and shouldn’t be on the market. Still, “We recognize that MTBE is a concern to customers,” Kerr said. “And Exxon agrees that a phase-down of MTBE is needed.” The attorney for Exxon, Warren George of the San Francisco firm of McCutcheon, Doyle, Brown & Enerson, did not return calls seeking comment.

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