May 15, 2008

Municipal Water Systems Settle MTBE Case with Oil Companies

Oil companies will pay total of $423 million

About 150 municipal water systems throughout the U.S. have reached a settlement with BP Amoco, Atlantic Richfield, Chevron, Shell and several other oil companies regarding the alleged contamination of water supplies by the gasoline additive methyl tertiary butyl ether (MTBE).

Under the terms of the settlement, the oil companies will pay a total of $423 million in cash immediately to the water systems, and they will pay 70% of the costs of removing MTBE from the affected water supplies over the next 30 years.

The single largest beneficiary of the settlement was reportedly the Suffolk County Water Authority on Long Island, N.Y., which will receive about $73.4 million after deducting attorney’s fees. MTBE was detected in about 450 of the Suffolk County Water Authority’s 600 wells. The California Water Service Co., San Jose, Calif., will reportedly receive $49.7 million to clean up MTBE contamination found in 27 wells.