Hess 2014 Annual Report Download - page 91

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76
HESS CORPORATION AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
76
or governmental entities, were filed in jurisdictions across the U.S. against producers of MTBE and petroleum refiners who produced
gasoline containing MTBE, including the Corporation. The principal allegation in all cases was that gasoline containing MTBE is a
defective product and that these parties are strictly liable in proportion to their share of the gasoline market for damage to groundwater
resources and are required to take remedial action to ameliorate the alleged effects on the environment of releases of MTBE. The
majority of the cases asserted against the Corporation have been settled. In March 2014, the Corporation agreed to settle claims
against it arising out of an action brought by the State of New Jersey for approximately $35 million. The settlement was approved by
the trial judge and the Corporation paid the settlement amount in December 2014. In June 2014, the Commonwealth of Pennsylvania
and the State of Vermont each filed independent lawsuits alleging that the Corporation and all major oil companies with operations in
each respective state, have damaged the groundwater in those states by introducing thereto gasoline with MTBE. The Pennsylvania
suit has been removed to Federal court and has been forwarded to the existing MTBE multidistrict litigation pending in the Southern
District of New York. The suit filed in Vermont is proceeding there in a state court. An action brought by the Commonwealth of
Puerto Rico also remained unresolved at December 31, 2014. The Corporation has recorded reserves for its estimated liabilities for its
unresolved MTBE lawsuits.
The Corporation is subject to loss contingencies with respect to various claims, lawsuits and other proceedings. The Corporation
cannot predict with certainty if, how or when such claims, lawsuits and proceedings will be resolved or what the eventual relief, if any,
may be. Numerous issues may need to be resolved, including through lengthy discovery, conciliation and/or arbitration proceedings,
or litigation before a loss or range of loss can be reasonably estimated. Subject to the foregoing, in management’s opinion, based
upon currently known facts and circumstances, the outcome of such lawsuits, claims and proceedings is not expected to have a
material adverse effect on the financial condition of the Corporation. However, the Corporation could incur judgments, enter into
settlements or revise its opinion regarding the outcome of certain matters, and such developments could have a material adverse effect
on its results of operations in the period in which the amounts are accrued and its cash flows in the period in which the amounts are
paid.