NEW YORK (Reuters) - About a dozen oil companies agreed to pay $423 million (217 million pounds) and clean-up costs to settle litigation over decades of groundwater contamination from the gasoline additive and possible carcinogen MTBE, lawyers said on Wednesday.

The settlement affects public water utilities and public agencies in 17 states, attorneys for water agencies said. Refiner Valero Energy (VLO.N: Quote, Profile, Research) confirmed the agreement but added that the court must affirm it.

BP America (BP.L: Quote, Profile, Research), Chevron (CVX.N: Quote, Profile, Research), ConocoPhillips (COP.N: Quote, Profile, Research), Shell Oil (RDSa.L: Quote, Profile, Research), Marathon Oil (MRO.N: Quote, Profile, Research), Venezuela's Citgo Petroleum, Sunoco (SUN.N: Quote, Profile, Research) and Valero agreed to the deal, involving a key ingredient to gasoline for three decades.

"The one big holdout was ExxonMobil (XOM.N: Quote, Profile, Research)," said Robert Gordon, of Weitz and Luxenberg, one of the three lead lawyers for the plaintiffs. Exxon did not immediately comment.

MTBE, or methyl tertiary butyl ether, in 1979 replaced lead in gasoline to make car engines run smoother. Then Congress in 1990 required refiners to use oxygenates like MTBE to clean up tailpipe emissions.

MTBE helps air quality, but it hurts water quality. The additive has leaked into water supplies in many states, sparking the lawsuits. The U.S. Environmental Protection Agency says MTBE is "a potential human carcinogen" and that unlike other gasoline components seeps easily into groundwater because it does not "cling" to soil.

Lawyers said one of the most important parts of the settlement was to clean up the groundwater contamination.

"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.