Private Empire: ExxonMobil and American Power (50 page)

Bowen relayed the findings up ExxonMobil’s chain of command. His report reached Steven Polkey in Fairfax. Polkey was an Englishman who had joined Exxon out of a British university, rose through the corporation’s retail gasoline businesses in the United Kingdom and Europe, and then moved to the United States in 2004 to take a senior position in ExxonMobil’s Safety, Health, and Environment department—“She,” as it was known to acronym-savvy corporate insiders. Polkey was now responsible for all of the environmental issues involving spilled gasoline at Exxon and Mobil stations in the United States. When he took the call about Jacksonville, he said later, “I was stunned, I was shocked. . . . I didn’t believe that we could have lost 25,000 gallons.”
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There was no precedent in the retail gasoline division for a leak of this scale—especially one that had been allowed to unfold over six weeks without detection. Worse, the spill had occurred at a gas station known within ExxonMobil as a Consequence I site because it was located near houses that relied on aquifer wells for drinking water.

ExxonMobil promoted itself as one of the safest large industrial corporations in the world; its executives increasingly scoffed in public and private at competitors such as BP that seemed accident prone. By 2006, ExxonMobil’s record was certainly better than the industry norm, but the truth was that, nonetheless, accidents with serious environmental impact or in which workers were injured were regular events at the corporation. They involved pipeline spills, trouble at refineries, accidents at construction sites, and losses of inventory of dangerous chemicals. Since the
Exxon Valdez
accident, under Frank Sprow, the daredevil adventurer and dangerous game hunter, Safety, Health, and Environment had seen worker fatality rates, in particular, fall to the point where if one did occur, it seemed a shocking anomaly inside the corporation. Yet such a massive global enterprise that daily moved toxic materials from beneath the earth to customers at 29,000 retail gas stations, plus large refineries and chemical plants, could hardly expect zero accidents. On the retail gasoline side, ground leaks of as much as 1,000 gallons of gasoline occurred periodically at American stations or storage facilities. ExxonMobil’s Public Affairs and Safety, Health, and Environment departments had developed standardized playbooks to respond to such events. The protocols included prepackaged talking points for communicating with alarmed members of the public. The leak at Jacksonville was exceptionally large, but it was exactly the sort of accident that ExxonMobil’s playbook was intended to address. When Steven Polkey hung up after receiving the news about Jacksonville, he set ExxonMobil’s spill response plans into motion.

Public Affairs faxed Andrea Loiero talking points to use if homeowners around the station or journalists turned up asking questions about all the commotion and activity now taking place at the Jacksonville station, which had been closed to customers as contractors drilled and dug to determine the extent and flow of the leaked gasoline. “We’re investigating,” she was to tell neighboring homeowners. “We’ll provide an update.”

Outside Jacksonville Exxon, a sign soon appeared that explained the station’s closure as well as the presence of so many mysterious trucks and workers drilling in the ground: “Please excuse our appearance. We’re working to serve you better. Fueling facility is temporarily closed for upgrade.”
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T
ransportation fuel—the production, refining, and distribution of gasoline, diesel, jet fuel, and the like—is the second-largest segment of the worldwide energy economy, and the fastest growing. Power generation—the production of electricity—is the largest. The fuel economy’s worldwide growth is mainly a function of rising incomes in previously car-deprived poor countries. In Europe and the United States, however, by 2006, gasoline consumption had reached a plateau and possibly peaked forever.

The retail gasoline stations had always been an unglamorous stepchild division within ExxonMobil. If the value of the land on which corporation-owned stations sat was factored in, the division’s profit margins were embarrassing by ExxonMobil standards, particularly compared with upstream oil and gas production or chemical manufacturing. Since the 1980s, like other large international oil corporations, Exxon had been steadily divesting itself of retail stations: Its total of 29,000 Exxon and Mobil stations worldwide in the early days of Rex Tillerson’s reign as chief executive represented less than half of the 62,000 stations Exxon had operated under its brand alone three decades before.

The environmental and legal aspects of the gas business looked particularly unfavorable. In the euphoric postwar automobile age, neither citizens nor government officials in the United States paid much attention to gasoline’s toxic properties or to the consequences of so much sloshing and spilling of gasoline on and beneath the ground. Only after the rise of environmentalism and the birth of the Environmental Protection Agency in 1970 did federal regulators begin to look seriously at carcinogenic effects of gasoline exposure and to tighten the loose, expedient storage and cleanup practices of retail gasoline sellers. Like other oil corporations that had previously pumped gas without much reason to think about environmental impact, Exxon discovered, as the laws tightened after 1970, that it would henceforth be responsible for hundreds of “remediation sites”—that is, sites where gasoline had leached into the ground at some point in the pre-E.P.A. era and where it now had to be located and scrubbed out as best as possible, whatever the cost.

By 2006, ExxonMobil managed four thousand environmental remediation sites around the United States.
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Of those located at gas stations, many involved “historic spills,” as they were called, that dated to the pre-environmentalism era. The origins and extent of these old leaks were often unknown—all that could be said was that gasoline had somehow gotten into the ground, contaminating the soil and any water that might lie beneath.

To prevent the recurrence of such leaks, the E.P.A. issued regulations in 1998 requiring gas station operators to upgrade their storage tanks, improve the tank hulls, and install more spill buckets and other protections. It also required station operators to install leak detection systems that were better than the old system of physical inventory reconciliation.

The purpose was to protect people from health damage caused by exposure to gasoline. So far as federal scientists could determine, there were two elements in gasoline that might be damaging, if a person suffered sufficient exposure: benzene and methyl tertiary butyl ether, or MTBE.

Benzene is an aromatic hydrocarbon compound long known to cause cancer; it has been formally designated as a “known human carcinogen” by the U.S. Department of Health and Human Services. Benzene was widely used as a gasoline additive in the 1950s. Its use was discontinued, but as the government moved to replace lead in gasoline, to attack air pollution, benzene made a limited comeback as an additive. Regulators limited the amount that could be blended into gasoline, however—no more than 1 percent, precisely because of fears that spilled gas might accidentally leach into groundwater accessed by household drinking wells.

MTBE, the second dangerous element in gasoline, was developed in laboratories to raise gasoline octane ratings; after 1990, government policy encouraged its use to enhance the amount of oxygen emitted when cars burned gasoline, to reduce urban air pollution caused by tailpipe emissions. Nobody had studied MTBE’s health effects, however. Later, based on laboratory tests involving rats, the E.P.A. concluded that MTBE was a “potential human carcinogen at high doses.” That tentative finding led to fast policy reversals by state and federal regulators, who ordered plans to reduce and eventually eliminate MTBE from gasoline. The E.P.A. finding about MTBE’s potential health effects also stimulated massive numbers of lawsuits against oil companies by cities, towns, businesses, and individuals who claimed to have been affected by historical gasoline spills where MTBE had been present in the fuel. ExxonMobil found itself a defendant in hundreds of these cases after 2001. PACER, the computerized system containing records of lawsuits in the American federal court system, contained dozens of listings of civil cases where ExxonMobil stood accused of negligence for allowing MTBE to leach into groundwater because of gasoline spills—even though it had been encouraged by the government to put MTBE into its gasoline in the first place. The corporation’s law department managed these suits as a kind of high-cost division of legal operations, seeking to minimize ExxonMobil’s financial exposure. ExxonMobil’s Washington lobbyists pushed unsuccessfully for Congress to enact laws that would exempt oil corporations from liability, on the grounds that the government had encouraged MTBE’s use. Separately, the corporation accepted that the additive should be phased out: “ExxonMobil recognizes that MTBE use in gasoline has caused concern with some customers,” one of its lobbyists, D. L. Clarke, wrote to a state air pollution regulator in 2003, “and we support phase down of MTBE use in a manner consistent with maintaining reliable and affordable gasoline supplies.”
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On the other side of the issue stood a network of plaintiffs’ lawyers who saw MTBE as an opportunity to sue oil companies and win lucrative verdicts. By the time of the Jacksonville Exxon leak, American plaintiffs’ lawyers who previously had represented victims of tobacco marketing, asbestos exposure, or faulty medical devices traded information and scanned for news of new gasoline leaks and spills. For the Baltimore area plaintiffs’ bar—ambulance chasers, to their critics—it would have been difficult to imagine more enticing news than that which circulated in the last weeks of February around northern Baltimore County: that 24,000 gallons of MTBE- and benzene-laced gasoline had spilled in an area of homes dependent on groundwater wells, and that the world’s largest and least popular publicly traded oil corporation directly owned the gas station responsible for the leak.

In this way, the irresistible force known as Stephen Snyder came to meet the immovable object branded as ExxonMobil.

S
tephen Snyder grew up in a modest row house in West Baltimore. His father and uncles owned clothing stores. In high school, Snyder recalled, he rarely did so well as to earn a B. As an undergraduate at the University of Maryland, he at last began to study, and at the University of Baltimore School of Law, he excelled. He had the gifts of a natural salesperson and worked his way through school selling magazines—he was so successful that he soon was earning more than his father, even before he entered law. At twenty-four, he set up an independent legal practice devoted to “contingency-fee” cases, in which he generally sued corporations on behalf of individuals and got paid only if he won damages or settled for cash. “I don’t think you could hire me for an hourly rate, no matter what,” he explained later. “If I win, I have to have some skin in the game, a piece of the action.” He won his first million-dollar medical malpractice verdict in the 1980s and kept going. United Cable settled a racial discrimination case with him in 1990 for $106 million. The accounting firm Ernst & Young settled over a business bankruptcy matter for $185 million. He won a jury verdict against a bank for $276 million. A contingency attorney such as Snyder generally took about a third of such verdicts as his fee.
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By the time of the Jacksonville Exxon gasoline leak, Stephen Snyder had reached his late fifties. His silver hair was receding from his forehead; he wore his hair cropped. He was not a tall man, but he was broad-shouldered and powerfully built. He had more wealth than even most successful lawyers could imagine. He had fathered five children by two marriages, and two of his sons had followed his footsteps and joined his law firm. And yet Snyder remained deeply restless, driven, and insecure. “How did I do?” he would eagerly ask anyone within earshot after a court appearance. “I just wish he’d take a deep breath and relax,” his second wife, Julie, said. “It’s never enough.”
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Snyder displayed his wealth conspicuously: a diamond-studded Rolex watch; a gold chain with “Steve” encrusted in diamonds; an alligator-skin briefcase; expensive tailored suits. His office wall displayed a framed check written to his firm for $70 million. He almost lost a New Jersey trial when jurors mistook his Rolls-Royce in the parking lot for that of his client. He defied conventional thinking about how lawyers should comport themselves: He flashed his wealth inside the courtroom because he believed jurors would lean his way if they believed he was rich and successful. He wept and shouted at witnesses. He ignored judges when they ruled him out of line.
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Some members of the corporate bar dismissed Snyder as “more showman than lawyer, a flashy cynic who manipulates unsophisticated jurors by twisting the facts,” the
Baltimore
Sun
put it. Even within his own tort or plaintiffs’ law community, he remained emphatically and annoyingly in second place in the city of his birth. Peter G. Angelos, another street-smart University of Baltimore law school graduate, had earned an immense fortune in contingency-fee asbestos and tobacco cases and had used his winnings to purchase the Baltimore Orioles baseball team. Whereas Snyder’s greatest verdicts exceeded $100 million, Angelos had gotten rich from billion-dollar tobacco and asbestos cases.

Snyder was desperate to catch up, to land his own white whale: Jacksonville Exxon seemed to have that potential, or so Snyder concluded as he solicited clients soon after news of the leak became public. He had not been tracking MTBE litigation nationwide, but soon educated himself. The attraction of the Jacksonville case had little to do with its complex environmental aspects. Snyder and his colleagues were drawn instead to the fact that the station had put up a misleading sign during the first day or two after the spill and then ExxonMobil had given talking points to the station manager that she found to be “lies.” Those were the sorts of facts that could turn a jury’s emotions against a giant corporation.