By Mica Rosenberg
NEW YORK, July 26 (Reuters) - A U.S. appeals court on Fridayupheld a ruling against Exxon Mobil Corp ordering thecompany to pay $105 million in damages for polluting New YorkCity's groundwater with a toxic gasoline additive.
The U.S. Second Circuit Court of Appeals affirmed a 2009jury verdict that found Exxon contaminated water supply wellswhen methyl tertiary butyl ether (MTBE) leaked from itsunderground storage tanks in the borough of Queens.
The appeals court rejected Exxon's arguments that it wasrequired to use the additive under the federal Clean Air Act.Exxon said it would appeal to the U.S. Supreme Court.
An oxygen-containing substance that is added to gasoline topromote more complete combustion and reduce air pollution, MTBEwas one of several additives recommended by regulators to reduceemissions.
It has now largely been phased out of the U.S. fuel supplybecause of the danger to groundwater.
"MTBE has not been used for seven years," said Exxonspokesman Todd Spitler. "Cleanup successfully continues."
New York City claimed Exxon went ahead and used the chemicalin the 1980s through the first half of the 2000s despitewarnings from its own scientists and engineers that it could beharmful in areas that relied on groundwater for drinking.
MTBE has been identified as an animal carcinogen and apossible human carcinogen and causes water to smell foul andtaste bad.
"Yet again, this company, which carelessly polluted ourgroundwater supply, has been put in its place by a court," NewYork City Mayor Michael Bloomberg said in a statement. "Thisshould be a warning to any company whose actions threaten NewYorkers' health and quality of life."
The water wells in southeast Queens that were contaminatedserve as a backup supply for the city's drinking water when thereservoirs upstate go offline because of repairs or droughts.
The city is planning to install and upgrade treatmentstations to remove the MTBE to ensure the drinking water meetsthe same standards as the upstate system, the New York City LawDepartment said in a statement.
"What's at issue here isn't just the choice to use MTBE,it's the failure to warn people and the failure to take thesteps that ... would have avoided or mitigated the environmentalimpacts of it," said attorney Victor Sher of the SanFrancisco-based law firm of Sher Leff that represented the Cityof New York.
Judges in the Second Circuit said the 11-week New York trialin 2009 was meant to serve as a bellwether case to provideguidance for other MTBE complaints that have been brought aroundthe country.
In April, a New Hampshire jury ruled that Exxon would haveto pay $236 million for MTBE contamination of drinking water inthe state. The company said at the time it had strong argumentsfor an appeal.
Other major oil companies, including Royal Dutch Shell PLC, BP PLC and Chevron Corp, previouslysettled MTBE claims with the city for a total of $15 million,the law department said.
BP (BP.)
