Oil companies to pay $28M in MTBE settlement

SAN FRANCISCO — Shell Oil Co., Shell Products Co., Equilon Enterprises LLC and Texaco Inc. agreed to pay $28 million to settle with the South Tahoe Public Utilities District regarding pollution of methyl tertiary butyl ether (MTBE) in Lake Tahoe. The Associated Press (AP) reported that the companies maintain they aren't liable, despite the settlement. "We felt that settling now was the best thing to do to no longer deal with protracted litigation costs," said Shell spokesman Cameron Smyth said in the article. In April, a jury found the companies liable for pollution with the suspected carcinogen, according to AP. The utilities district sued the companies in 1998 after MTBE pollution forced it to close one-third of its drinking water wells. The south Tahoe area has shallow wells, many near gas station storage tanks, and surface runoff helped the chemical reach drinking water, AP reported. Dennis Cocking, spokesman for the district, said in the article the $69 million from both Monday's settlement and prior settlements in the case should cover the cost of cleanup as well as legal fees. It likely will cost $35 million to $40 million to clean the wells, Cocking said, though some estimates have ranged as high as $45 million, according to AP. During trial, water district lawyers produced documents they said showed the companies knew MTBE could move through groundwater, AP said. A spokesman for the Oxygenated Fuels Association said the problem stemmed from faulty underground tanks, not the additive, according to AP. Monday's deal, approved by Judge Carlos Bea, also included a separate $300,000 settlement between the utilities district and a Tahoe gas station. Two weeks ago, AP said, Lyondell Chemical Co., once a leading MTBE producer, agreed to pay $4 million to settle the case. Shell Oil Products US announced in June it would join other suppliers and stop using MTBE in gasoline sold in California by the end of 2002.