Chevron settles with utility district
Gasoline refiner Chevron has agreed to pay the South Tahoe Public Utility District $10 million in an out-of-court settlement as its share in the MTBE contamination lawsuit, STPUD officials said.
“While this settlement is significant, our engineering consultants have determined damages to our system will cost tens of millions more and decades to fix. This moves us closer to the point, but we still have a long way to go,” said Robert Baer, general manager of STPUD, in a statement released Friday.
The settlement brings to $31 million the total payment made by defendants who have been accused of negligence, which caused the fuel additive MTBE to leak out of underground storage tanks and contaminate the area’s water supply.
Exxon Mobil Corp., formerly a defendant in the lawsuit, agreed to pay $12 million last year. Another $6 million was paid by Atlantic Richfield Co. and local service station owners. Unical paid $3.25 million.
MTBE, or methyl tertiary butyl ether, is an oxygenate used to make fuel combust more efficiently. MTBE is a suspected cancer-causing agent and at low levels of contamination, it renders water undrinkable. MTBE-tainted water smells and tastes like turpentine.
In 1997, eight wells in Lake Tahoe’s south shore were found to be contaminated with MTBE, which had allegedly leaked out from underground storage tanks. The eight were shut down and four others located dangerously close to the contaminated wells were closed as well as a safety measure.
This brought the number of operating wells in the district to 22, making it a struggle for the district to meet peak summertime demands, according to STPUD.
In November 1998, STPUD filed a lawsuit claiming that 31 defendants, ranging from big oil companies to Tahoe gas station owners, sold MTBE in South Lake Tahoe when they knew, or should have known, that the gasoline additive would reach groundwater, contaminating public water supplies.
Water System specialists Boyle Engineering, hired by STPUD to estimate the damage caused by MTBE, reported that it would take more than $50 million and decades of restoration work to undo the harm.
No specific dollar amount was listed in the lawsuit but the district stated that it sought millions of dollars in compensatory damages needed to investigate and treat the water supply, to dig alternative wells and build distribution systems. The district also sought punitive damages.
The district’s position was bolstered when in Nov. 1999 Gov. Gray Davis ordered that MTBE be phased out from California by 2002 . A year later, El Dorado County banned the sale of the additive in South Lake Tahoe. Though the additive is still legal in Placer County and Douglas County, most of the gas being sold in the Tahoe basin is now MTBE free.
The Chevron settlement comes just two days after a federal court rejected a lawsuit by an international trade organization representing 16 MTBE producers challenging California’s ban on MTBE. It also comes two days before jury selection begins Monday for STPUD’s MTBE contamination lawsuit in San Francisco’s superior court.
Defendant Lyondell Chemical Company, an MTBE producer and a subsidiary of ARCO, has hired consultants to work with its legal team for the jury selection process.
Lyondell argues that it neither manufactures, sells, transports or stores MTBE-blended gasoline, and therefore has been unfairly named a defendant in the lawsuit. It merely manufactures MTBE and told refiners, to whom it sold MTBE, everything that was necessary to ensure safe, responsible handling of the additive.
The accusations ”do not involve our company or our product. We have a strong case,” said David Harpole, spokesman for Lyondell.
The case will be heard in San Francisco in September. The remaining defendants, according to STPUD spokesman Dennis Cocking, are Shell Oil, Tosco, Ultramar, Tahoe Tom’s and Terrible Herbst.
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