A federal appellate court panel has upheld a $104.7 million judgment for New York City against Exxon Mobil Corp. for allegedly contaminating city-owned wells in Queens with a gasoline additive from the mid-1980s through the mid-2000s.

Irving, Texas-based Exxon Mobil said it plans to appeal the ruling to the U.S. Supreme Court.

According to Friday's 117-page ruling by a unanimous panel of the 2nd U.S. Circuit Court of Appeals in New York in In Re: methyl tertiary butyl ether (MTBE) products liability litigation, in October 2003, New York City sued Exxon and 28 other petroleum companies because of alleged injuries to its water supply from gasoline caused by the release of the chemical methyl tertiary butyl ether, the use of which New York state banned in 2004.

Treatment with the chemical “increased the oxygen content of gasoline and mitigated harm to air quality caused by automobile emissions, thereby furthering the goals of the Clean Air Act,” said the ruling. “Because of spillage and leakage for gasoline stored in underground tanks, however, MTBE-treated gasoline was released into the ground, contaminating groundwater supplies.”

Throughout the next year, the city amended its complaint to include 26 additional petroleum company defendants. All the defendants except Exxon Mobil settled before trial, according to the ruling.

After an 11-week trial, in October 2009, a federal jury found Exxon liable for failure to warn, negligence, public nuisance and trespass, but acquitted it on liability on design defect and private nuisance charges.

The U.S. District Court entered a $104.7 million judgment against Exxon Mobil and its units. In appealing the court's ruling, among other arguments, Exxon Mobil said the city's common law claims are pre-empted by the federal Clean Air Act.

%%BREAK%%

New York City also appealed the decision, stating the District Court should not have instructed the jury to offset its damages award to New York by the cost of remediating pre-existing contamination. It also appealed the court's ruling that the city was not entitled to punitive damages.

The appellate court affirmed the District Court's ruling in its entirety. “In the Clean Air Act Amendments of 1990, Congress did not require Exxon to use MTBE in its gasoline,” said the ruling.

The appellate court also held “that the evidence is insufficient to permit a reasonable jury to consider awarding punitive damages.”

Commenting on the ruling, Exxon said in a statement, “MTBE was added to gasoline to meet regulatory requirements to solve U.S. air pollution. MTBE has not been used for seven years, cleanup successfully continues, and the myriad data shows MTBE detections decreasing. We acknowledge the decision out of the 2nd Circuit and will be filing an appeal to the United States Supreme Court.”