Exxon Mobil Won’t Face Punitive Damages in New York Water Case

By Thom Weidlich

Oct. 15 (Bloomberg) -- Exxon Mobil Corp. won’t face punitive damages in a trial in which New York City accuses it of poisoning water wells with a gasoline additive meant to improve air quality, the trial judge said.

U.S. District Judge Shira Ann Scheindlin in Manhattan ruled in the company’s favor yesterday. A jury is deliberating on whether Exxon Mobil, the biggest U.S. oil company, is liable for injuring the city by poisoning five wells in and near the Jamaica area of the borough of Queens with methyl tertiary butyl ether, or MTBE.

“The city has not provided sufficient evidence to allow this jury to” rule on punitive damages, Scheindlin said.

Victor Sher, a lawyer for the city at Sher Leff LLP in San Francisco, declined to comment.

The city asked for $250.5 million in compensatory damages to treat the water.

The Exxon Mobil case is part of larger litigation over MTBE. More than 70 lawsuits filed by water providers and state and local governments were consolidated before Scheindlin for pretrial information-gathering, according to an industry Web site.

BP Plc, Chevron Corp.,ConocoPhillips, Hess Corp. and Royal Dutch Shell Plc were among 33 companies that settled with New York. Exxon Mobil, based in Irving, Texas, was the lone holdout.

Exxon Mobil lawyers argued that the wells were turned off and unusable because of contaminants other than MTBE, including perchloroethylene, or PCE, a chemical used in dry-cleaning clothes, which the company says is the main cause of the area’s contamination.

1999 Merger

Exxon and Mobil, which merged in 1999, began using MTBE in the 1980s to boost octane. Additives such as MTBE are chemical compounds that raise the oxygen content of gasoline to make it burn more cleanly and efficiently.

The city argues the company could have used ethanol as an oxygenate in New York. Exxon Mobil used MTBE to save money, it said.

In an earlier phase of the trial, the jury ruled that MTBE will contaminate the wells’ output at a peak level of 10 parts per billion in 2033. It had also ruled that the city intends to build the treatment plant.

The case is City of New York v. Exxon Mobil Corp., 04-cv-03417, grouped with others in the master-file case, In Re: Methyl Tertiary Butyl Ether (“MTBE”) Products Liability Litigation, 00-cv-1898, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Thom Weidlich in New York at tweidlich@bloomberg.net.