Gansler eyes lawsuit over well contamination

Out of gas, but not out of court: Gansler eyes joining “cascade” of litigation over MTBE

Maryland Attorney General Douglas F. Gansler, encouraged by whopping awards and settlements in other states, could join what one analyst calls a "nationwide cascade" of litigation against the oil industry for its use years ago of a gasoline additive that has contaminated groundwater across the state.

Gansler's office is reviewing proposals from outside lawyers aimed at helping the state sue to recover the costs of dealing with the noxious, potentially cancer-causing additive methyl tertiary butyl ether, or MTBE.

Once widely used in gasoline, MTBE has fouled hundreds of household and public drinking-water wells across the state. Gansler's office has begun auditioning outside lawyers to help decide whether Maryland should join other jurisdictions in suing oil companies, gasoline refiners and marketers to pay for the cleanup.

"A number of states have had litigation on MTBE and have brought big fines back," Gansler said in an interview. Law firms that have handled such cases "have suggested that in fact the state can reap great damages from MTBE here in Maryland."

Gansler, a Democrat, leaves office in January, which could pose a problem: The attorney general needs the approval of the governor to bring such a suit.

Former Gov. Robert L. Ehrlich Jr., a Republican, refused to authorize two environmental lawsuits that Gansler's Democratic predecessor wanted to bring, including one over mercury contamination by out-of-state polluters. Gansler pursued both cases after Democrat Gov. Martin O'Malley defeated Ehrlich.

A spokesman for Republican Gov.-elect Larry Hogan said it would be premature to comment. Attorney General-elect Brian E. Frosh, a Democrat, said MBTE litigation is "worth considering." But he said he would need to review information received by Gansler's office.

MTBE was added to gasoline in the 1990s to make the fuel burn more cleanly, reducing smog. But the chemical was prone to leaking from underground storage tanks. It spread rapidly through groundwater and proved tough to filter out.

Scores of states and municipalities have sued. A New Hampshire jury ordered Exxon Mobil Corp. last year to pay $236 million to help the state monitor and clean up groundwater there. ExxonMobil is appealing the verdict.

The Maryland Department of the Environment has identified 673 private wells with more than trace levels of the chemical. In some cases, carbon filters have been installed to remove relatively low levels of the contaminant. In others, residents have hooked up to a new well or public water system. And in still others, the MTBE levels have fallen below the level at which the state requires any remedial action.

But the state is still tracking nearly 200 contaminated wells, and 10 to 20 new cases are discovered each year.

Statewide, 219 community water systems also have detected the chemical in their wells since the mid-1990s, according to MDE spokesman Jay Apperson. In recent sampling, 50 systems reported still finding it.

MTBE has caused cancer in laboratory rats that inhaled high doses, and the Environmental Protection Agency concluded it was a potential human carcinogen. But the agency said the research was too thin to determine the risks to humans who consume minute amounts in drinking water.

State policy requires a public drinking water system to act when contamination exceeds 10 parts per billion. When a private well reaches 20 parts per billion, the state furnishes bottled water and/or carbon filtration. If the state can identify the source of the contamination, it requires the source to take responsibility for providing clean water.

The oil industry stopped adding MTBE in 2005. But the litigation over groundwater contamination has continued.

In April, the Supreme Court refused to review a $105 million verdict against ExxonMobil for contaminating New York City's ground water. Since then, Pennsylvania and Vermont have brought suits seeking hundreds of millions of dollars against dozens of gasoline manufacturers, refiners and distributors.

Professor Robert V. Percival, head of the environmental law program at the University of Maryland School of Law, said municipalities and states have been "fairly successful" in their MBTE claims against the oil industry.

"Cities are saying, 'You're trespassing in our water supply by the contamination, and it requires us to constantly monitor it, and you should be required to clean it up,'" Percival said. The plaintiffs often allege that the oil industry put MTBE in gas even though it knew it was prone to contaminate groundwater and didn't warn anyone.

Oil industry officials argue they were required to use MTBE by Congress, so they shouldn't be held liable. But that defense has failed in several cases, Percival said. He said lawmakers ordered that gasoline burn more cleanly, but didn't prescribe MTBE.

Much of the well contamination in Maryland has been addressed. In cases in which MTBE contamination can be traced, Maryland regulators have required the culpable gas station owner to clean it up. Where responsibility can't be determined, the state handles cleanup with federal grants and funds raised by a fee on oil brought into the state. Officials say those sources totaled about $2.5 million this year.

Private landowners who have brought MBTE claims in Maryland have had mixed results. ExxonMobil was ordered to pay a total of $1.65 billion to more than 500 families and businesses in Baltimore County for harm alleged from a 25,000-gallon fuel leak there eight years ago. But Maryland's Court of Appeals last year threw out most of the awards, including $1 billion in punitive damages.

Big-ticket claims brought on behalf of water providers have fared better.

In 2008, industry defendants agreed to pay more than $400 million to more than 150 municipalities in 17 states to compensate them for removing MTBE from their water supplies.

In Maryland, Worcester County and six towns and cities — including Aberdeen and Taneytown — joined a $20 million lawsuit filed three years ago by 21 water providers against 43 companies that made or sold gasoline containing MTBE. A few of those plaintiffs have settled out of court with at least some of the defendants. Aberdeen, which had to remediate contamination of its well-based water system, accepted a $3.9 million settlement.

Municipalities with MTBE contamination face costly treatment, according to lawyer Robin Greenwald, whose firm, Weitz & Luxenberg, represented the Maryland plaintiffs. Carbon filtration systems to get the contaminant out of drinking water can cost $500,000 to install, she said, and $60,000 every time filters have to be changed.

If Gansler decided to pursue a lawsuit, he said his office likely would retain outside lawyers experienced in such litigation. They'd probably be paid on a contingency basis, splitting whatever damage awards or settlement could be obtained.

Outside law firms were involved in the recent successful cases in other states.

A spokesman for ExxonMobil declined to comment on a potential lawsuit, and attempts to get comment from other oil industry spokespersons were unsuccessful.

But Mark Chenoweth, general counsel for the free-market-oriented Washington Legal Foundation, questioned the use of outside lawyers. He said Maryland ought not sue unless it actually needs funds for cleanup.

His organization filed a friend-of-the-court brief asking the Supreme Court to overturn what the group called an "eye-popping" $104 million jury award against ExxonMobil over MTBE contamination of ground water in New York City.

"Before Maryland goes down the MTBE lawsuit path," Chenoweth said, "it should take a long look at the problems with such lawsuits elsewhere, including contingency-fee lawyers with conflicts of interest running amok, unjustly inflated damage claims, novel market-share-liability theories, juries deliberately kept in the dark about company-funded cleanup efforts, and defendants chosen based on deep pockets rather than any culpable conduct."

Gansler stressed that he's made no decision yet on whether to join the legal fray, but wants expert advice on the prospects for such a case in Maryland. A spokesman declined to say how many proposals had been received.

tim.wheeler@baltsun.com

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