CORRECTED: Oil companies settle groundwater contamination suit

(Corrects spelling of Victor Sher’s surname)

NEW YORK (Reuters) - A dozen oil companies agreed to pay $423 million in cash plus clean-up costs to settle litigation over groundwater contamination from the gasoline additive, MTBE, lawyers representing public water utilities and public agencies in 17 states, told Reuters.

The settlement, filed in the U.S. District Court in Manhattan, involves BP America Inc (BP.L: Quote, Profile, Research, Stock Buzz), Chevron Corp (CVX.N: Quote, Profile, Research, Stock Buzz), ConocoPhillips (COP.N: Quote, Profile, Research, Stock Buzz), Shell Oil Co (RDSa.L: Quote, Profile, Research, Stock Buzz), Marathon Oil Corp (MRO.N: Quote, Profile, Research, Stock Buzz), Venezuela's Citgo Petroleum Corp, Sunoco Inc (SUN.N: Quote, Profile, Research, Stock Buzz) and Valero Energy Corp (VLO.N: Quote, Profile, Research, Stock Buzz), the newspaper said.

"The one big holdout was ExxonMobil Corp (XOM.N: Quote, Profile, Research, Stock Buzz)," said Robert Gordon, of Weitz and Luxenberg, one of the three lead lawyers for the plaintiffs.

Five smaller companies, including Lyondell Petrochemical Corp LYO.N, the chemical's maker, have not settled.

The most important thing here is not the money, "but that there is going to be treatment of the wells and the affected areas guaranteed for the next 30 years," Gordon said.

The 2003 lawsuit by public water providers in 17 states was consolidated into a single federal case.

The settlement is "a step in the direction of making the parties responsible for the contamination pay for it rather than the folks who drink the water and pay the rates," said Victor Sher, another of the lead attorneys. "It's a significant development."

MTBE, or methyl tertiary butyl ether, was added to gasoline for some three decades to curb smog emissions.

(Reporting by Leslie Gevirtz, Adam Tanner, Peter Henderson; editing by Jeffrey Benkoe and Andre Grenon)