In re Methyl Tertiary Butyl Ether (Mtbe) Products, 1:00-1898. MDL 1358(SAS).

Decision Date03 September 2004
Docket NumberNo. 1:00-1898. MDL 1358(SAS).,1:00-1898. MDL 1358(SAS).
Citation341 F.Supp.2d 386
PartiesIn re: METHYL TERTIARY BUTYL ETHER ("MTBE") PRODUCTS LIABILITY LITIGATION This document relates to: City of Park City v. Alon USA Energy Inc., et al., 04 Civ.2059(SAS) City of Dodge City v. Alon USA Energy Inc., et al., 04 Civ.2060(SAS) Chisholm Creek Utility Authority v. Alon USA Energy Inc., et al., 04 Civ.2061(SAS) City of Bel Aire v. Alon USA Energy Inc., et al., 04 Civ.2062(SAS) City of Sioux City, City of Ida Grove, City of Galva, Iowa v. Amerada Hess Corp., et al., 04 Civ. 1723(SAS) Town of Mishawaka v. Amerada Hess Corp., et al., 04 Civ.2055(SAS) City of South Bend, Indiana v. Amerada Hess Corp., et al., 04 Civ.2056(SAS) North Newton School Corp. v. Amerada Hess Corp., et al., 04 Civ.2057(SAS) City of Rockport v. Amerada Hess Corp., et al., S.D. Ind., 04 Civ. 1724(SAS) Escambia County Utilities Authority v. Adcock Petroleum, Inc., et al., 04 Civ. 1722(SAS) Patrick County School Board v. Amerada Hess Corp., et al., 04 Civ.2070(SAS) Town of Hartland v. Amerada Hess Corp., et al., 04 Civ.2072(SAS) Quincy Community Services District v. Atlantic Richfield Co., et al., 04 Civ. 4970(SAS) Town of Marksville v. Alon USA Energy, Inc., et al., 04 Civ. 3412(SAS) Town of Rayville v. Alon USA Energy, Inc., et al., 04 Civ. 3413(SAS) Buchanan County School Board v. Amerada Hess Corp., et al., 04 Civ. 3418(SAS) Craftsbury Fire District # 2 v. Amerada Hess Corp., et al., 04 Civ. 3419(SAS) Town of Matoaka v. Amerada Hess Corp., et al., 04 Civ. 3420(SAS) Town of Campbellsburg, Indiana v. Amerada Hess Corp., et al., 04 Civ. 4990(SAS)
CourtU.S. District Court — Southern District of New York

Robert Gordon, C. Sanders McNew, Stanley N. Alpert, Weitz & Luxenberg, P.C., New York, NY, for Plaintiffs Town of Hartland and Craftsbury Fire District # 2 and Liaison Counsel for Plaintiffs.

Scott Summy, Laura Baughman, Celeste Evangelisti, Baron & Budd, P.C., Dallas, TX, for Plaintiffs City of Park City, City of Dodge City, Chisholm Creek Utility Authority, City of Bel Aire, City of Sioux City, City of Ida Grove, City of Galva, Town of Mishawaka, City of South Bend, North Newton School Corp., City of Rockport Escambia County Utilities Authority, Patrick County School Board, Quincy Community Services District, Town of Marksville, Town of Rayville, Buchanan County School Board, Town of Matoaka, and Town of Campbellsburg.

Peter John Sacripanti, James A. Pardo, Stephen J. Riccardulli, McDermott, Will & Emery, New York, NY, Liaison Counsel for Defendants.

OPINION AND ORDER

SCHEINDLIN, District Judge.

This multi-district litigation comprises dozens of cases, in which numerous plaintiffs are seeking relief from contamination or threatened contamination of groundwater from various defendants' use of the gasoline additive methyl tertiary butyl ether ("MTBE"). Defendants removed many of the actions from state court, asserting four grounds of federal subject matter jurisdiction: (1) federal agent jurisdiction; (2) substantial federal question; (3) complete preemption; and (4) bankruptcy jurisdiction.1 The plaintiffs in nine New York cases moved to remand.2 On March 16, 2004, I denied the motions, holding that this Court has federal agent jurisdiction pursuant to section 1442(a)(1) of Title 28 of the United States Code, over all MTBE cases pending before it.3 I found, among other things, that defendants had sufficiently alleged that they added MTBE to gasoline at the direction of the EPA, a federal agency, to comply with the requirements of the Reformulated Gasoline ("RFG") Program and the Oxygenated Fuels ("OF") Program.4

At a subsequent status conference, plaintiffs sought clarification of my March 16, 2004 Opinion and Order ("MTBE III Opinion") because several of the plaintiffs are located in areas not covered by the RFG or OF programs. Therefore, plaintiffs argued, there could be no federal agent jurisdiction over cases filed in the non-RFG and non-OF areas as a matter of law.5 Plaintiffs had not distinguished between RFG and non-RFG areas in their prior memorandum of law because they thought they were briefing only the New York cases, and New York is an RFG state.6 I therefore permitted plaintiffs to move for clarification of the Court's MTBE III Opinion.7 The moving plaintiffs reside in parts of California, Florida, Indiana, Iowa, Kansas, Louisiana, Vermont, Virginia, and West Virginia, that are located outside RFG and OF areas.8 I now consider whether federal agent jurisdiction exists over cases filed by plaintiffs in non-RFG and non-OF areas.9

I. BACKGROUND

Familiarity with the Court's previous decisions in this multi-district litigation is assumed.10 I shall describe only those facts relevant to the determination of these motions.

A. MTBE

MTBE is a chemical compound that is a byproduct of the gasoline refining process.11 It has enhanced solubility in water and is chemically attracted to water molecules. Defendants used and continue to use MTBE as a gasoline additive. Sometime after 1979, in order to boost the octane level in higher grades of gasoline, defendants began manufacturing, distributing and/or selling gasoline with MTBE in concentrations averaging approximately two to four percent. Since 1990, defendants have added MTBE to gasoline in concentrations of up to fifteen percent. The publicly articulated justification for adding MTBE to gasoline is that it helps fuel burn more efficiently, thereby reducing air pollution.12

Because of its high solubility, MTBE races through underground water reservoirs, quickly reaching the water table and wells whenever gasoline leaks, spills, or is released into the environment. In addition, MTBE resists physical, chemical, and microbial degradation, which allows it to persist in underground aquifers for many decades, far longer than other components of gasoline. It is known to be carcinogenic in animals and is potentially cancer-causing in humans, as well. Even small quantities of MTBE impart a turpentine-like taste and odor to water, rendering it unfit for human consumption.13

Plaintiffs allege that at all relevant times to this litigation defendants have known that adding MTBE to gasoline would result in massive groundwater contamination. As early as 1980, defendants were aware of MTBE's risk to groundwater because of well contamination in Rockaway, New Jersey and Jacksonville, Maryland. Throughout the 1980s and 1990s, subsequent contamination of other wells and aquifers, as well as scientific studies and reports, confirmed the risks posed by MTBE. Although defendants publicly denied the risks, their own documents confirm that they were aware of the harm posed by their use of MTBE.14

Despite their knowledge of its risks, defendants conspired to mislead the EPA and the public about the hazards of adding MTBE to gasoline. Defendants failed to provide the EPA with information it sought regarding MTBE's safety, and persuaded the EPA not to undertake additional testing.15 These actions constitute "Defendants' pattern of exaggerating the environmental benefits of MTBE while understating or concealing the real environmental hazards, all of which Defendants knew or should have known at the time."16 Defendants continued to use MTBE even though there were safer alternatives available. Plaintiffs claim that defendants had a duty to disclose the risk of MTBE but failed to do so.17

Based on these allegations, plaintiffs assert causes of action for: (1) strict liability for design defect and/or sale of a dangerously defective product; (2) strict liability for failure to warn; (3) negligence; (4) public nuisance; (5) private nuisance; (6) trespass; (7) civil conspiracy; and (8) breach of warranty.18

B. Reformulated Gasoline Program and Oxygenated Fuels Program

During the 1950's and 1960's, Congress enacted a series of statutes in order to encourage and assist the states in curtailing air pollution.19 However, that approach was ineffective, and in 1970, Congress amended the Clean Air Act ("CAA") to increase "federal authority and responsibility in the continuing effort to combat air pollution."20 The amendments required the EPA to set National Ambient Air Quality Standards ("NAAQS") and required states to meet these standards under the EPA's supervision.21 In addition, the amendments established some federal control over fuels, such as requiring the registration of fuels and fuel additives.22

In 1990, Congress again amended the CAA to address air quality issues in areas of the country that were not in compliance with the NAAQS. These federal requirements mandated the production and sale, by specified dates, of cleaner burning RFG and/or OF in certain parts of the country.23

Beginning in 1992, the OF Program required the use of OF gasoline in certain geographical areas for up to four winter months each year. OF must contain at least 2.7 percent oxygen by weight. Beginning in 1995, the RFG Program required RFG to be used year round in nine of the most heavily polluted metropolitan areas. RFG must contain at least two percent oxygen by weight.24 Where OF and RFG areas overlap, OF sold during the four winter months is required to contain 2.7 percent oxygen instead of two percent oxygen while meeting all of the other RFG requirements. The EPA approved the use of seven compounds to achieve the requirements set forth in the RFG and OF Programs: (1) MTBE; (2) ethanol; (3) methanol; (4) tertiary amyl methyl ether ("TAME"); (5) ethyl tertiary butyl ether ("ETBE"); (6) tertiary butyl alcohol ("TBA"); and (7) diisopropyl ether ("DIPE").

As part of the 1990 Amendments, Congress also enacted Anti-Dumping provisions to address concerns of conventional gasoline becoming "dirtier" as a result of the RFG Program. Gasoline refining creates certain byproducts that are "cleaner" and other byproducts that are "dirtier." Therefore, a refiner could theoretically comply with...

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23 cases
  • In re Methyl Tertiary Butyl Ether ("Mtbe")
    • United States
    • U.S. District Court — Southern District of New York
    • 7 d5 Abril d5 2006
    ...329 (S.D.N.Y. 2004); In re MTBE Prods. Liab. Litig., 361 F.Supp.2d 137 (S.D.N.Y.2004) ("MTBE VI"); In re MTBE Prods. Liab. Litig., 341 F.Supp.2d 386 (S.D.N.Y.2004) ("MTBE V"); In re MTBE Prods. Liab. Litig., 341 F.Supp.2d 351 (S.D.N.Y.2004) ("MTBE TV"); In re MTBE Prods. Liab. Litig., 342 F......
  • In re Methyl Tertiary Butyl Ether (Mtbe) Products
    • United States
    • U.S. District Court — Southern District of New York
    • 3 d3 Novembro d3 2004
    ...Ether Prods. Liab. Litig., 341 F.Supp.2d 351 (S.D.N.Y.2004) ("MTBE IV") (declining to abstain); In re Methyl Tertiary Butyl Ether Prods. Liab. Litig., 341 F.Supp.2d 386 (S.D.N.Y.2004) ("MTBE V") (bankruptcy jurisdiction); In re Methyl Tertiary Butyl Ether Prods. Liab. Litig., 361 F.Supp.2d ......
  • In re Methyl Tertiary Butyl Ether (Mtbe) Products, MDL 1358(SAS).
    • United States
    • U.S. District Court — Southern District of New York
    • 23 d5 Junho d5 2006
    ...364 F.Supp.2d 329 (S.D.N.Y. 2004); In re MTBE Prods. Liab. Litig., 361 F.Supp.2d 137 (S.D.N.Y.2004) ("MTBE VI"); In re MTBE Prods. Liab. Litig., 341 F.Supp.2d 386 (S.D.N.Y.2004) ("MTBE V); In re MTBE Prods. Liab. Litig., 341 F.Supp.2d 351 (S.D.N.Y.2004) ("MTBE TV"); In re MTBE Prods. Liab. ......
  • In re Methyl Tertiary Butyl Ether Litigation
    • United States
    • U.S. District Court — Southern District of New York
    • 19 d2 Outubro d2 2004
    ...Ether Prods. Liab. Litig., 341 F.Supp.2d 351 (S.D.N.Y.2004) ("MTBE IV") (declining to abstain); In re Methyl Tertiary Butyl Ether Prods. Liab. Litig., 341 F.Supp.2d 386 (S.D.N.Y.2004) ("MTBE V") (bankruptcy 2. See, e.g., Notice of Removal ¶¶ 36-59 in Patrick County Sch. Bd. v. Amerada Hess ......
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