In Re: Methyl Tertiary Butyl Ether Products Liability Litigation

Background

This case is part of a consolidated multidistrict litigation concerning groundwater contamination caused by releases of gasoline containing methyl tertiary butyl ether (MTBE). The Commonwealth of Pennsylvania alleges that the defendants, including Exxon Mobil Corporation and ExxonMobil Oil Corporation (collectively, ExxonMobil), are liable for actual or threatened MTBE contamination in Pennsylvania’s drinking water. Pennsylvania’s remaining claim against ExxonMobil is for negligence, and this opinion concerns 52 sites for which claims had been made to Pennsylvania’s Underground Storage Tank Indemnification Fund (USTIF).

Pennsylvania created the USTIF to pay certain owners, operators, and installers for costs and damages arising from releases from underground storage tanks. It also created a separate Storage Tank Fund (STF), which supports Pennsylvania’s storage-tank programs, including costs incurred by the Department of Environmental Protection (DEP). The USTIF can provide some funding to the STF.

In 2012, Pennsylvania and ExxonMobil entered into a settlement agreement. ExxonMobil paid $8.5 million, and Pennsylvania released and agreed not to sue ExxonMobil for certain claims related to reimbursement applications, USTIF payments resulting from those applications, and other recovery for environmental-remediation costs at properties for which ExxonMobil had filed or would file a reimbursement application. The agreement did not release ExxonMobil from obligations to take corrective action addressing leaking underground storage tanks at its facilities.

In an earlier round of this case, the court held that the settlement agreement barred Pennsylvania’s statutory claims seeking recovery of corrective-action costs paid by the USTIF to ExxonMobil or others. The court did not hold that the agreement necessarily barred all claims for monetary damages, including costs not related to the USTIF.

ExxonMobil’s Motion

ExxonMobil moved for partial summary judgment on all remaining claims concerning the 52 USTIF sites. Summary judgment is a decision without a trial when the evidence shows no genuine dispute about a fact that could affect the outcome and the moving party is entitled to judgment under the law.

ExxonMobil argued that the settlement agreement released Pennsylvania’s claims for DEP oversight costs, loss-of-use damages, restoration costs, and an injunction requiring steps to reduce or address MTBE contamination. It argued that the release covered these claims because the USTIF helps fund the STF and pays for corrective actions. Pennsylvania responded that DEP oversight costs are paid from the STF, not through the USTIF payments covered by the settlement agreement, and that its other claims also fell outside the agreement’s language.

Court’s Analysis

Judge Cote held that the settlement agreement did not necessarily release the claims. Under Pennsylvania law, settlement agreements are interpreted as contracts, with the court seeking the parties’ intent from the written agreement.

As to DEP oversight costs, the court found that the release covered payments made from the USTIF as a result of reimbursement applications or claims. The agreement did not state that it covered damages sustained by the STF merely because the STF receives some funding from the USTIF. The USTIF payments that indirectly fund DEP oversight costs did not result from reimbursement applications. The court also rejected ExxonMobil’s argument that Pennsylvania suffered no injury because some funds came from the USTIF. ExxonMobil had not shown that the USTIF should be treated as separate from Pennsylvania, and the STF also receives money from sources other than the USTIF.

The court reached the same conclusion concerning loss-of-use damages, restoration costs, and an injunction. The settlement agreement was broad, but it was not unlimited; it covered claims connected to the specified reimbursement applications and resulting USTIF payments, not every claim connected to contamination at a site for which someone had submitted a reimbursement claim. The earlier opinion’s statement that remediation costs were not carved out of the release did not mean that every remediation-related cost was released regardless of its connection to USTIF claims.

Disposition and Limits of the Ruling

The court denied ExxonMobil’s February 25, 2025 motion for partial summary judgment as to all claims concerning the 52 USTIF sites.

The court stressed that its holding was narrow. It only interpreted the settlement agreement. It did not decide whether Pennsylvania is actually entitled to recover DEP oversight costs, loss-of-use damages, or restoration costs, or to obtain an injunction. The court also did not resolve disputes about whether Pennsylvania has admissible evidence supporting those recoveries or whether restoration costs differ from remediation costs covered by Pennsylvania’s storage-tank regulatory system.