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Grant Bosse

Grant Bosse: New Hampshire’s newest revenue scheme: sue the unpopular!

New Hampshire is getting really good at the shakedown.

Last week, a Merrimack County Superior Court jury found Exxon Mobil liable for contaminated well water with the gasoline additive MTBE and awarded the state $236 million, easily the largest jury verdict in New Hampshire history.

Methyl tertiary-butyl ether (MTBE) is an oxygenate. It’s added to gasoline to raise the oxygen level, which not only prevents knocking in older car engines but also burns the gas more completely, resulting in cleaner emissions. In 1990, Congress passed the Clean Air Act, which among many other provisions required that oil companies add oxygenates to their product in order to reduce tailpipe pollution.

The only other possible chemical that would have met the federal standard was ethanol, which not only decreases fuel efficiency but also breaks down in pipelines and large storage tanks. It also wasn’t produced widely enough in 1990 to be a viable additive, so most companies chose MTBE.

In 1991, New Hampshire signed up for the EPA’s program requiring oil companies to use reformulated gasoline rather than subject car owners to tailpipe emissions tests in four counties that exceeded federal air pollution standards.

MTBE came with problems of its own. Unlike ethanol, MTBE is easily absorbed in water and does not break down. One study has shown that in very high concentrations, it is a possible carcinogen. And it smells really bad.

In 2003, then-Attorney General Peter Heed filed suit against 22 oil companies for selling a “deficient product.” In 2004, New Hampshire banned more than trace amounts of MTBE in gasoline, and that went into effect in January 2007. The EPA has since lifted the Clean Air Act’s oxygenate requirements, as cleaner-burning cars made them obsolete.

Over the past decade, most of the oil companies settled with New Hampshire and the other states who saw a good shakedown racket when they saw one. Shell, Sunoco, and Citgo recently agreed to pay a combined $51 million to get out of the lawsuit.

Only Exxon-Mobil held out. The largest American oil company has a company policy to fight nuisance lawsuits, even when the nuisance is a state attorney general.

After hearing testimony for three months, jurors took 90 minutes to find Exxon Mobil liable. They took an additional 20 minutes to reach the $236 million award, based on the state’s estimate of how much it would cost to test, monitor and clean wells statewide.

While we should add the settlement income to state’s balance sheet, wiping out this year’s projected deficit and the need for Gov. Maggie Hassan to raid dedicated funds, we shouldn’t start spending the Exxon money just yet. The company will appeal, and it might win.

Maryland courts recently reversed a $1.65 million ruling in a similar claim, finding that Exxon Mobil didn’t make any fraudulent claims about MTBE, and no one could show they’d been harmed. The company is still appealing a verdict against them from New York.

We shouldn’t sue companies because in hindsight we wish they had complied with regulations differently. The federal government forced oil companies to put extra stuff in their gasoline in order to reduce emissions. State government bought into those regulations in order to get out of an alternative air pollution scheme. Exxon and its competitors chose to use what they saw as the better of two bad options. It turns out that we’re paying for cleaner air with dirtier water. That trade-off was likely a good deal from a public health standpoint, but now we’re trying to sue our way out of the consequences of these government decisions.

Putting MTBE in gasoline was a bad idea, but it’s not like the oil companies wanted to do it. They didn’t mislead anyone about what they were doing. And there is no evidence that MTBE in groundwater has made anyone sick.

We can’t punish most of the politicians whose bad decisions polluted our groundwater. So instead, we’ve picked big companies with deep pockets and little sympathy with a jury. That’s a lousy way to raise money.

(Grant Bosse is editor of New Hampshire Watchdog, an independent news site dedicated to New Hampshire public policy.)

Legacy Comments15

Whether you agree with Grant or not, you have to give him credit for commenting on his columns. Don't hold your breath waiting for Katy to follow suit.

Thanks. I try to respond to reasonable questions and criticisms, if I see a lot of activity under a column. I don't think I need to answer every barb. They give me 800 words a week, so if someone wants to tear me apart, go for it. But it is fun and somewhat productive to engage in some civil discourse once in a while. I'm always happy to see Letters to the Editors stemming from my columns, even if most of them argue I'm an idiot. are wrong on several counts: First, no government forced gasoline providers to put anything into gasoline. The auto makers want gasoline which does not make their engine knock. Originally, it was tetra-ethyl lead; but when earthworks near highways had higher lead content than worms far away, the lead had to be removed. The gasoline companies seized on MtBE for antiknock; that was in the late 1970s. Second, you seem to think that having 2 or 3 parts per billion of MtBE in every one of your cells is OK. Let me suggest that the long term effects of this MtBE is completely unknown. The chemists who invented MtBE sold it to the gasoline companies WITHOUT any long-term studies. So, Grant, maybe you should look carefully into what you write about; before showing how little respect you have for alternate opinions.

Walter, I'm afraid you're wrong. Oxygenates such as lead were added by oil companies for years. However, it was the 1990 Clean Air Act forced the use of oxygenates in all states that opted into the program. NH did so in order to avoid tailpipe emissions tests in four counties. As ethanol production had not yet ramped up from federal subsidies and made it impossible to ship gas by pipeline, most companies chose the widespread of MTBE. It's use was the result of a good-faith effort to comply with government regulation. MTBE may have long-term health effects. We simply don't know. Recovering money for unknown damages is ridiculous. That's why the Maryland suit was thrown out, and why the NH verdict is tenuous. I respect alternative opinions. I just don't respect government looking for private companies to pay for its mistakes.

Minor correction: lead is not an oxygenate--it contains no O2. Both lead and MtBE have anti-knock qualities, so as lead was phased out, MtBE was one additive the oil companies went with. One interesting follow-up point: there is a strong correlation between the phase-out of lead in gasoline and reduced levels of criminal activity. The correlation exists state by state, and internationally.

Education is a remarkable thing. Being able to read and write is an amazing thing as well. However, a little knowledge, acquired from a biased source and repeated in knee jerk fashion is a dangerous thing. Moreover, ability to reason, think and come to common sense conclusions is necessary in any reasonable discussion. Absolute certainty breeds absolute disinformation, poses absolute danger to our freedom and liberty and presents an absolutely bleak future to our economy.

Bruce, Thank you for the clarification. Of course, you're right. Lead was largely replaced with oxygenates. I think I meant to say additives, but got it wrong. I don't think there's much question that removing lead from gasoline was a tremendous net positive. And adding MTBE may have been a net positive as well, as we got much cleaner for 15 years at the expense of slightly dirtier water. New engines make that trade-off obsolete, which is wonderful. If we were to look at all such regulations as trade-offs, while noting the true and sometimes unintended costs, we would be better positioned to judge their worth, and pay their price.

Grant...again you are wrong. The use of MtBE in gasoline goes back to the 1970s. As you state: '...most companies CHOSE the widespread MtBE'...they were not FORCED to use MtBE. Although chemists and doctors don't know the long term effects of MtBE, because it is hydrophililc (i.e. wants to be in water), its potential long-term low level exposure may may be a substantial factor in future health problems. The gasoline companies know this, but have continued to do anything to remove it from the gasoline they sell. Do you really support such anti-social behavior??

Interesting how Mr. Bosse is criticizing the governor for raiding one fund to pay for another and yet he wants to raid this money to be used for general funds. The state sued to test, monitor and clean wells across the state not fund other projects. I'm 100% for dedicated funds, raise the money and only use the money for that.

Where did the legislature set aside money to clean, monitor and test the wells?

NH's use of salt on roadways had poisoned a well of a homeowner at exit 10 off I89.....maybe they should sue the Govt.

Jim, I would not favor putting any proceeds from this lawsuit or the earlier settlements into the General Fund. I have no idea why you think I do. Any money stemming from this litigation should be dedicated to MTBE testing, monitoring, and cleanup. That's quite a different question than whether the State was right to bring such litigation.

""While we should add the settlement income to state’s balance sheet, wiping out this year’s projected deficit and the need for Gov. Maggie Hassan to raid dedicated funds"" I read that as your statement. If it is not going to the general fund, how does it wipe out a penny of the deficit? OR, is this some form of budget gimmicks.

If the settlement income is booked in FY13, it would wipe out the current year deficit, whether it is applied to the General Fund or towards water cleanup in DES. The gimmick is pretending that the settlement income won't come in until FY14 in order to justify a dedicated funds raid. I'm sorry I wasn't clear about that. The current year deficit is across state government, not in the General Fund. The budget does not balance fund by fund, but overall. Most new revenues booked in FY13, with a few exceptions, would count on the state's balance sheet.

Grant is again 100% correct.....if only the democrats could find a spokesman for their tax and spend ways that was even a .1% as correct

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