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Published Thursday, October 23, 2008 in Local

Coweta files suit against Shell Oil Company

By Brenda Pedraza-Vidamour

The Newnan Times-Herald

Coweta County and the Coweta County Water and Sewerage Authority filed a $25 million lawsuit Thursday against Houston-based Shell Oil Co. and others over faulty water pipes installed in the county for about 15,000 of its customers during the 1980s and 1990s.

The pipes, which use polybutylene resin manufactured by Shell Oil, were marketed and sold as Blu-Max pipe.

The lawsuit, filed in state court in Fulton County, charges negligence, breach of contract, product liability, fraud and violations of the state’s anti-racketeering law for Shell Oil’s misrepresentation and sales of the plastic pipes.

The pipes were touted to have a 50-year life span, but the county started discovering problems with them as early as 2005 when the water authority started documenting changes in water loss — the difference between the water that’s piped out and water that’s accounted for in customers’ meters.

The industry standard for water loss is 15-18 percent, according to the Coweta water authority which started experiencing 11 percent losses as early as 2005. The losses grew to 38 percent by 2006 and more than 48 percent by 2007. The utility then embarked on an aggressive plan to repair and replace the leaky pipes, which is partly being financed by $27 million in bond issues last year.

“The more we repair, the more failures we find,” said General Manager Ellis Cadenhead. “Of our 24,500 customers, we expect as many as 15,000 of those to have been affected by this defective product.”

The water authority has repaired or replaced about 3,000 of the pipes to date. The pipes are used for service from the water main to the customer’s meter.

Shell Oil and various manufacturers have been sued about a dozen times across the country over misrepresentations related to the PB resin properties of the pipes, which have since stopped being made.

Michael Yarbrough of Frost Brown Todd LLC, who is representing the county and the water authority, said the Columbus, Ohio-based law firm had filed two other similar lawsuits against Shell Oil on behalf of other water districts in other states and has been successful in one of those suits.

Over the years, plastic pipe makers have settled in similar suits, including a $750 million class-action settlement. Counties in Florida and Alabama have also succeeded in reaching settlements against Shell Oil. Cadenhead said while Blu-Max pipe has been installed in other smaller cities and counties in the state, this is the first lawsuit filed in Georgia against Shell Oil and the manufacturers for the faulty pipes.

Besides wanting to be compensated for its losses to date, water authority Chairman Neal Shepard said the authority is also interested in protecting its customers.

“The commissioners and the authority board are doing all we can to protect the customers of our water system. The performance of this pipe has been an utter failure for Coweta County, and we have spent enough of our rate payers’ money to try and solve it,” he said.

Shell Oil, reached in Houston Thursday afternoon, had no comment. A spokeswoman noted the company hasn’t received notice of the suit yet.

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