The first lawsuit in the U.S. over contamination stemming from the gasoline additive MTBE was settled in California yesterday, when Shell Oil agreed to pay the South Tahoe Public Utility District $28 million to help fund the cleanup of tainted drinking water wells. The district filed the lawsuit in 1998, after MTBE contamination forced the closure of one-third of South Lake Tahoe’s drinking wells. In total, the district has received more than $69 million in settlements with oil companies, refineries, MTBE manufacturers, gas stations, and gasoline distributors, including Shell, Exxon, and Chevron. The settlements were prompted by a jury’s finding, in April, that MTBE is a defective product, and that some companies were aware of the chemical’s dangers but marketed it anyway. The case could set an important precedent for the 16 other states facing MTBE contamination problems. MTBE causes gasoline to burn more cleanly, but it is also a suspected carcinogen.

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