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August 21, 2001

Judge Signs Oil MTBE Cleanup Order

A judge signed an agreement Monday forcing five major oil companies to clean up sites they own that have been contaminated with the gasoline additive MTBE, as part of a settlement with a San Francisco Bay area environmental group.

Superior Court Judge Stuart Pollack's signature made the settlement formal.

``I think this is a very imaginative solution that has been proposed,'' Pollack said. ``In my view this is a very sensible approach that has been taken.''

The group, Communities for a Better Environment, claimed the companies knew the chemical could leak into groundwater. CBE said the settlement will help protect the state's groundwater by making the laws that require oil companies to clean up MTBE enforceable.

The group sued Shell, Chevron, Texaco, Equilon Enterprises, Unocal, Arco, Tosco, Exxon and Mobil in 1998. The first five have settled, and are covered by Pollack's order.

``What Chevron has agreed to do is what it does as a matter of policy, which is to comply with governmental orders concerning the investigation and clean up of releases from service stations where it's responsible,'' said Robert Goodman, an attorney representing Chevron.

Arco, Tosco, Exxon and Mobil are still in litigation. Exxon and Mobil have merged since the suit was filed.

CBE said the companies violated the state's Unfair Competition Act by using MTBE in such a way that it contaminated groundwater. The group sued under that act in 1998 because the chemical is not on a list for the state's Safe Drinking Water & Toxic Enforcement Act, which would have allowed the state to force the companies to clean up their sites.

``For the first time, this order puts teeth into the laws that are designed to clean up MTBE contamination,'' said Richard Drury, CBE's legal director. ``As a result of today's order, for the first time, there will be penalties, there will be consequences if a company fails to clean up the contamination that it caused.''

Pollack expressed concerns about a dispute over the payment of CBE's attorneys' fees, saying it would be ``very, very unfortunate'' if litigation continued based on those fees. The settlement says CBE claims it has the right to recover such fees from settling and nonsettling defendants, but the defendants disagree.

If a solution isn't reached, the issue would come back before the judge.

``The first thing CBE has to establish in this case before it can get any attorneys' fees is that it was successful, and I think if you talk to these defendants most of them will not take the position that CBE has succeeded in any meaningful extent in this case,'' said Lawrence Cox, attorney for Arco.

Unocal is the only company that has agreed to pay the fees.

Equilon is already involved in cleaning up MTBE, said Cameron Smyth, a spokesman for the company.

``The stipulated judgment that we've agreed to simply allows us to continue to do the remediation we've done in the past and are currently doing,'' he said.

Officials at the other oil companies affected could not immediately be reached for comment.

MTBE, or methyl tertiary butyl ether, is added to gasoline to reduce air pollution. The Agriculture Department announced plans last year to ban the oxygenate after it was found to taint groundwater supplies in several states. Oil companies have until the end of 2002 to phase out MTBE.

The settlement affects about 700 sites, and another 700 sites are still being contested. The estimated cost of the cleanup is between $150,000 to $275,000 a site, not including the cost of replacing the contaminated water. California is believed to have more than 10,000 contaminated sites, CBE spokesman Denny Larson.

 

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