New Jersey Settles MTBE Pollution Case for Almost $200 Million

A pollution lawsuit initially filed against three major oil companies is settling for almost $200 million, with additional parties still negotiating. In 2007, the state of New Jersey sued a number of oil companies in U.S. District Court for the Southern District of New York over their usage of MTBE (methyl tertiary butyl ether). MTBE was a synthetic chemical added to gasoline to help fuel burn more completely and reduce tailpipe emissions from vehicles. MTBE was approved for use in gasoline by the EPA in 1979, but quickly began to be phased out by many states beginning in 2002, with the Garden State banning the sale of gasoline that containing MTBE in 2005. The concern — MTBE is water soluble and easily contaminates the water supply of areas where it is used. Notably, NJ’s refineries were not in compliance with the regulations laid out by the EPA when MTBE was first approved, leading to problems with environmental contamination. With respect to this settlement, MTBE contaminated NJ waterways through the Bayway Refinery in Linden, New Jersey.

In June 2007, the NJ DEP sued multiple defendants over MTBE pollution in the state, claiming that it damaged millions of gallons of drinking water in communities across New Jersey. The attorney general at the time sought financial damages to cover the cleanup of the MTBE polluted waters, and pointed the fingers at three of the largest oil companies in the area. Rather than proceed to trial, some of the oil companies settled with the state for $196.5 million. Since the inception of the litigation, New Jersey has settled with various other defendants, with the total settlement value now equaling $350 million. New Jersey Attorney General Gurbir Grewal said in a statement that these settlements, “send a message that we are committed to working with the DEP to protect our state’s natural resources and hold accountable companies that pollute.”

Also of significance, this settlement is the first to be finalized since NJ voters approved a constitutional amendment that prohibits funds won in environmental lawsuits to be diverted away from cleanup and restoration of natural resources. In the past, environmental settlement funds were vulnerable to being diverted away to balance the state budgetary items rather than going towards the environment. Following a period of public comment, the settlement was approved. The $350 million arising out of the MTBE litigation settlements will be used to help remediate the waterways, and cannot be shifted to other areas of the state budget. Additional defendants remain in the action and are expected to settle in the coming months.

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