Officials eye oil settlement millions
CONCORD - As a trial pitting New Hampshire against ExxonMobil comes to an end, possibly this week, officials are eyeing some of the $136 million the state has already received in settlements with other oil companies.
Sources in the Legislature and Gov. Maggie Hassan's office say they are trying to determine how much of the millions of dollars in play can be used for purposes other than cleaning up groundwater tainted by the gasoline additive MTBE, since banned.
Possible uses: to offset an expected deficit at the end of the current state budget year, or to provide funding for the new biennium, whose budget is now being written.
The judge in the ExxonMobil trial has imposed a gag order regarding existing or potential settlement money and how it might be used, making it difficult to accurately answer the question until the ExxonMobil case is settled. Closing arguments are scheduled for Wednesday. The governor declined to comment on the matter, as did the attorney general.
Experts close to the case, however, suggest that as much as 10 percent of the money that goes to the state could be available for the general fund. They cite a provision in the settlement documents that reads, "10 percent of the settlement proceeds shall be allocated to the State of New Hampshire to reimburse the state for costs, including personnel expenses, related to this lawsuit."
The state has been funding the activities of the Attorney General's Office through the general fund over the 10 years the case has worked its way through the courts, so as far as some lawmakers are concerned, the general fund should be reimbursed, at least to the extent allowed by the settlement terms, and the sooner the better.
A source in the governor's office said the money could help ease a deficit estimated at about $40 million as the state approaches the end of its fiscal year in June. Budget writers talked about including MTBE settlement money in the budget for the next biennium, but as of yet have not done so.
State Sen. Lou D'Allesandro, D-Manchester, believes some of the money could also be taken as reimbursement for expenditures the Department of Environmental Services has already made for MTBE cleanup. "The fact that it's been expended means you could use it," he said. "It would be reimbursement, and as a result of that, it could be used by the state. I've had a couple of discussions with individuals at DES and so forth, just preliminary, nothing concrete, but we will be looking into this."
D'Allesandro serves on the Senate Finance and Ways and Means committees.
The bulk of the money will have to be used for groundwater cleanup, but how much of it can be directed into the general fund based on groundwater mitigation already completed or legal expenses incurred remains to be seen.
"The big question is for this budget biennium," said D'Allesandro. "Is the money available? Obviously, we'll make the inquiry, but it seems to me the answer to that question is Yes."
The amount of money actually available is a complicated calculation. The San Francisco law firm that has prosecuted the case on the state's behalf, Sher Leff, is working on contingency, which usually means about 30 percent of the settlement, although no one will confirm that until the case is settled.
When the oil companies pay up, the checks go to Sher Leff, where the law firm's portion is deducted before the balance is sent to the state.
All of the state's money is in escrow at this point, in a trust account, according to Mary Maloney, assistant attorney general in charge of environmental affairs. "We have to be careful about spending the money because we don't know what we're going to get, the total damages," she said in an interview before the trial got under way.
The settlement documents specify that "the distribution of the funds shall be within the sole discretion of the New Hampshire Attorney General." Attorney General Michael Delaney's recent decision to step down sets the stage for Hassan's appointment of a successor - someone who may be more inclined to release at least some of the money.
Now that all of the cases except for ExxonMobil have been resolved, there is likely to be more pressure to make available what is legally possible. Appeals by either side, after the jury now hearing the case renders a verdict, could go on for years.
The settlement fund recently began to attract attention because, even though the case was filed 10 years ago, the oil companies began to settle only when it became clear that the case would go to trial. As of early 2012, the fund had only accumulated about $6 million, based on a handful of settlements with small companies.
A flurry of settlements in the fall with large companies such as Shell, Sunoco and Irving brought the total to $120 million. Citgo went to trial with ExxonMobil on Jan. 14, but soon settled with the state for $16 million, bringing the total to $136 million.
The state is seeking about $230 million from ExxonMobil, based on its share of the wholesale gasoline market in New Hampshire. The case is expected to go to the jury on Thursday.