Source: Business Insurance, July 29, 2013
By: Judy Greenwald

A federal appellate court panel has upheld a $104.7 million judgment for New York City against Exxon Mobil Corp. for allegedly contaminating city-owned wells in Queens with a gasoline additive from the mid-1980s through the mid-2000s.

Irving, Texas-based Exxon Mobil said it plans to appeal the ruling to the U.S. Supreme Court.

According to Friday’s 117-page ruling by a unanimous panel of the 2nd U.S. Circuit Court of Appeals in New York in In Re: methyl tertiary butyl ether (MTBE) products liability litigation, in October 2003, New York City sued Exxon and 28 other petroleum companies because of alleged injuries to its water supply from gasoline caused by the release of the chemical methyl tertiary butyl ether, the use of which New York state banned in 2004.

Treatment with the chemical “increased the oxygen content of gasoline and mitigated harm to air quality caused by automobile emissions, thereby furthering the goals of the Clean Air Act,” said the ruling. “Because of spillage and leakage for gasoline stored in underground tanks, however, MTBE-treated gasoline was released into the ground, contaminating groundwater supplies.”

Throughout the next year, the city amended its complaint to include 26 additional petroleum company defendants. All the defendants except Exxon Mobil settled before trial, according to the ruling.

2009 ruling

After an 11-week trial, in October 2009, a federal jury found Exxon liable for failure to warn, negligence, public nuisance and trespass, but acquitted it on liability on design defect and private nuisance charges.

The U.S. District Court entered a $104.7 million judgment against Exxon Mobil and its units. In appealing the court’s ruling, among other arguments, Exxon Mobil said the city’s common law claims are pre-empted by the federal Clean Air Act.