MTBE Water Contamination Litigations
Analysis Group has provided economic analysis on behalf major oil companies in multi-district and state matters involving allegations of contaminations of water supply by the gasoline additive methyl tertiary butyl ether (MTBE). Defendants’ counsel retained Analysis Group to evaluate the damages estimates provided by plaintiffs’ experts and to provide other expert testimony. In one report, we demonstrated that plaintiffs’ experts determined damages without consideration of fundamental economic cost-benefit or incremental-cost principles. We showed that the plaintiffs’ damages estimates were inflated by incorrect allocations of “sunk costs” incurred for reasons other than MTBE contamination. As well, the plaintiffs’ experts’ damages estimates were inflated by methodological errors and unsupported assumptions regarding treatment objectives, carbon usage rates, wage rates, and analytical testing procedures. Using the plaintiffs’ experts’ “rate factor” calculations, a sound methodology and reasonable assumptions, we showed that MTBE treatment costs would result in negligible rate impacts.