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Deal with Citgo could leave ExxonMobil as only defendant left in the MTBE suit

New Hampshire Union Leader

January 16. 2013 11:05PM

CONCORD - Lawyers for New Hampshire and Citgo Petroleum Corp. are close to a deal that would leave ExxonMobil as the only oil company left in an $800 million lawsuit that started with 22 defendants in 2003 over water contamination caused by the gasoline additive MTBE.

On Tuesday, while Citgo attorney Nate Eimer was making his opening argument in a Superior Court trial expected to last four to six months, the company and the state were preparing a joint motion to sever Citgo from the case.

The motion, filed on Wednesday, indicates that the parties are working on a consent agreement with a Feb. 15 deadline. If no out-of-court settlement is reached by then, they could agree to continue negotiations or return to court.

The state has received an estimated $120 million in settlements from other defendants in the case, which has wound its way through state and federal courts for the past decade. Only Citgo and ExxonMobil refused to settle as the trial date approached.

The possibility of a settlement with Citgo does not appear to have influenced ExxonMobil's position, at least not for now.

"We're pleased with the start of the trial, and nothing has happened that would change our approach to this litigation," said ExxonMobil spokeswoman Claire Hassett. "We added MTBE in response to a federal mandate. There were no other feasible alternatives available at that time; the characteristics of MTBE were known and the benefits substantially outweighed the risks."

The state argues the oil companies did have other options, like ethanol, but continued to manufacture and distribute MTBE without warnings as to its potential dangers.

The Attorney General's Office declined to comment on the motion to sever, and attorneys for Citgo were unavailable for comment.

ExxonMobil faces the largest liability in the case due to its substantial share of the gasoline market in New Hampshire. The state is seeking to apportion liability on the basis of market share.

Since ExxonMobil controlled 30 percent of the market, the state is seeking 30 percent of $800 million, the estimated cost of testing, treating and monitoring all public and private water supplies in the state.

That would put ExxonMobil's potential liability at about $245 million, according to opening arguments by the state's lead attorney in the case.

Citgo had only 3 to 9 percent of the market, depending on the year, so would be liable for somewhere between $24 million and $72 million. Irving Oil settled for $57 million on Nov. 19.

ExxonMobil has appealed a 2009 federal jury order to pay New York City $104.7 million after finding it liable for polluting wells in the city.

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