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IN RE METHYL TERTIARY BUTYL ETHER

July 13, 2004.

IN RE: METHYL TERTIARY BUTYL ETHER ("MTBE") PRODUCTS LIABILITY LITIGATION. This document relates to: COUNTY OF SUFFOLK and SUFFOLK COUNTY WATER AUTHORITY, Plaintiffs,
v.
AMERADA HESS CORP., ATLANTIC RICHFIELD CO., BP CORPORATION NORTH AMERICA INC. (f/k/a BP AMOCO CORP.), BP PRODUCTS NORTH AMERICA INC. (f/k/a AMOCO OIL CO.), CHEVRON TEXACO CORP. (f/k/a CHEVRON USA INC. and f/k/a TEXACO REFINING and MARKETING INC. and f/k/a TEXACO, INC.), CITGO PETROLEUM CORP., CONOCOPHILLIPS CO., EL PASO CGP CO., EXXON MOBIL CORP. (f/k/a EXXON CORP.), EQUILON ENTERPRISES, LLC (n/k/a SHELL OIL PRODUCTS US), GETTY PETROLEUM MARKETING INC., LYONDELL CHEMICAL CORP., MOTIVA ENTERPRISES, LLC, SHELL OIL CO., SHELL OIL PRODUCTS US, SUNOCO INC. (R&M), VALERO MARKETING and SUPPLY CO, LYONDELL CHEMICAL CORP., Third-Party Plaintiff, v. MARATHON ASHLAND PETROLEUM LLC, JOHN DOE CORP. #1-50, Third-Party Defendants.



The opinion of the court was delivered by: SHIRA SCHEINDLIN, District Judge

OPINION AND ORDER

This case is one of dozens of cases in a multi-district litigation ("MDL"), 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").*fn1 This opinion relates only to County of Suffolk, et al. v. Amerada Hess Corp., et al., No. 04 Civ. 5425.

On May 6, 2002, plaintiffs County of Suffolk and Suffolk County Water Authority (collectively "Suffolk") filed a complaint in the United States District Court for the Eastern District of New York against many energy companies, not including Amerada Hess Corporation, alleging that defendants were liable for adding MTBE to their gasoline, knowing it would contaminate and create an enhanced risk to groundwater.*fn2 On August 19, 2002, Suffolk filed a separate action against Amerada Hess in state court, alleging the same claims. Thereafter, Suffolk withdrew its complaint from the Eastern District and amended its state court complaint to add essentially the same defendants from the federal action.*fn3

  The state court case proceeded for a year and a half when, on March 22, 2004, defendant Lyondell Chemical Corporation ("Lyondell") filed a third-party complaint against Marathon Ashland Petroleum LLC ("Marathon") for indemnification and contribution should Suffolk succeed on its claims. In response, Marathon removed this case to federal court based on section 1442(a) of Title 28 of the United States Code, the federal officer removal statute. In its Notice of Removal, Marathon cited my March 16, 2004 Opinion and Order, holding that this Court has federal agent jurisdiction over the consolidated MTBE cases.*fn4 The Judicial Panel on Multidistrict Litigation transferred the instant action to me as a related case.

  Suffolk now moves to remand, arguing that: (1) Marathon should be barred from removing the case as a third-party defendant; (2) Marathon is not a federal officer for purposes of the federal officer removal statute; and (3) the Court should abstain from exercising its jurisdiction. For the reasons that follow, Suffolk's motion to remand is denied.

  I. BACKGROUND

  A. The Allegations*fn5

  MTBE is a chemical compound added to gasoline to increase the gasoline's oxygen content and make it cleaner burning. MTBE does not occur naturally but is a byproduct of the gasoline refining process. It is highly soluble in water and does not readily biodegrade. 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. 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. MTBE has been detected in approximately thirteen percent of Suffolk County's water wells, which draw from the county's "sole source" aquifiers and numerous streams.*fn6 Suffolk views the contamination as a significant health risk to the people who depend on the aquifier system for drinking water.*fn7

  Sometime after 1979, defendants started adding MTBE to gasoline in concentrations of approximately two to four percent in order to boost the octane level in higher grades of gasoline. Since the early 1990s, defendants have added MTBE in much higher concentrations, typically eleven to fifteen percent, in all grades of gasoline. MTBE was not the only viable option to achieve octane enhancement. Rather, its use reflected a choice and preference of defendants to profit from a gasoline refining waste byproduct. Suffolk contends that defendants added MTBE to their gasoline, knowing that it would contaminate groundwater, and also that defendants conspired to market MTBE as a gasoline additive in order to maximize their own profits.*fn8

  Based on these allegations, Suffolk asserts claims for (1) public nuisance; (2) strict liability for design defect; (3) strict liability for failure to warn; (4) negligence; (5) private nuisance; (6) violation of New York's General Business Law; and (7) violation of New York's Navigation Law.*fn9

  B. Grounds for Removal

  Marathon removed this action to federal court, asserting federal agent jurisdiction pursuant to section 1442(a). Marathon's allegations in support of removal are essentially identical to those I considered in denying remand in the consolidated cases.

  Marathon asserts that in 1977, Congress amended the Clear Air Act to federalize fuel content requirements.*fn10 Pursuant to the amendment, the United States Environmental Protection Agency ("EPA") has express and exclusive authority to decide what fuels and fuel additives are sold nationwide.*fn11 By Federal Regulations issued in 1979 and 1988, EPA allows MTBE to be added to gasoline in amounts of up to fifteen percent by weight.*fn12

  In 1990, Congress again amended the Clean Air Act. Among other things, the amendments created two programs requiring petroleum refiners to blend oxygenates into gasoline sold throughout much of the country. These programs — the Oxy-Fuel Program ("OFP") and the Reformulated Gasoline ("RFG") Program — were designed to reduce the emission of air pollutants. According to Marathon, Congress was aware when it enacted the amendments that only a small number of oxygenates could be blended with gasoline to meet the requirements, and that MTBE would have to be used in the vast majority of oxygenated gasoline sold in the United States.*fn13 Moreover, Congress drafted the amendments to ensure MTBE could be used because "Congress intended that petroleum refiners use MTBE in gasoline."*fn14 In 1991, pursuant to the 1990 amendments to the Clean Air Act, the EPA approved the use of seven compounds to achieve the requirements set forth in the OFP: (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").*fn15 According to Marathon, "[l]ike Congress, the ...


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