Congress is wrangling over a federal energy bill filled with
pork. But budget waste has garnered less attention than one of the
bill’s most sensible provisions, limiting legal liability for
producers of methyl tertiary butyl ether (MTBE). Government
normally shouldn’t protect companies from lawsuits, but Washington
is largely responsible for the problem — the focus of a number of
lawsuits, including scores of consolidated cases being heard in New
York.
MTBE began as a gasoline additive in 1979 to make gasoline burn
more cleanly. Congress mandated use of oxygenates to reduce carbon
dioxide emissions, intending to subsidize already heavily
subsidized ethanol.
However, MTBE proved to be the superior product. It could be
shipped via pipelines and emitted less pollution than ethanol. The
Sierra Club called MTBE one of the ten most environmentally useful
products.
Unfortunately, the additive can contaminate the water supply if
it leaks from a pipeline or storage tank. The result is unpleasant,
not dangerous.
Robert M. Hirsch of the U.S. Geological Survey explained: “MTBE
is primarily an aesthetic (taste and odor) problem.” Thankfully,
seepage is limited. Said Hirsch, “MTBE levels do not appear to be
increasing over time and are almost always below levels of concern
from aesthetic and public health standpoints.”
According to the EPA, MTBE has contaminated just 16 of nearly
4,000 public water systems, or .4 percent, requiring clean-up.
(Traces of MTBE, requiring no action, have been detected in
others.)
Notes Nathan Vardi of Forbes, “This would not, in other
words, be the stuff of toxic tort litigation in any legal system
but the American one.” But it is the American legal system. Thus,
writes H. Sterling Burnett of the National Center for Policy
Analysis, “trial lawyers [are] acting like sharks who smell blood
in the water.”
Chemical and oil companies have gone to Congress in response,
setting off a political firefight. Rich Henning, a spokesman for
United Water, which supplies water in Connecticut and has filed a
MTBE suit, complains that the firms “are trying to hide behind
Congress rather than deal with the issue.”
Actually, the Congress and EPA recognized the potential problem
when they mandated use of oxygenates and approved MTBE for use,
respectively. Contamination occurs because pipelines and tanks
leak, not because MTBE makers are careless. The Geological Survey’s
Hirsch explained: “The few locations in our database with high
concentrations of MTBE may be associated with leaking underground
storage tanks.”
Indeed, leakage has dropped as tanks have improved. The EPA
reports that new MTBE releases are down 60 percent from those
between 1998 and 2000.
All of which means that the fault lies with those who own
pipelines and tanks. And, reports the EPA, the responsible parties
clean up about 95 percent of all spills.
But chemical and oil companies have deeper pockets than
independent gas station owners. And today defendant negligence has
increasingly little to do with negligence lawsuits. Enter the trial
bar.
Just three law firms handle most MTBE cases and actively troll
for new clients among states and cities. Some municipalities are
suing simply because they fear that contamination might eventually
occur.
Estimates of potential damage claims are enormous. Frederick
Baron of the Dallas law firm Baron & Budd argues that “the
liability of the oil companies is in the billions.”
But liability for what? A few years ago Santa Monica won a $200
million in 2003 MTBE settlement. Afterwards, it admitted that
“there likely was very little public exposure” to the additive.
Moreover, it was not “aware of” any health problems resulting from
the contamination. But, then again, money, not health, always was
the issue.
Ironically, the use of MTBE is being phased out. However,
liability for past cases remains.
The legislation before Congress would simply protect the MTBE
makers from product liability suits based on the claim that the
additive is per se defective, rather than that product makers were
negligent. Anyone responsible for leaky storage tanks or pipelines
would remain liable under several theories, ranging from negligence
to breach of contract to breach of warranty.
But a finding of fault would require a demonstration of fault.
Which seems fair for anyone seeking millions or hundreds of
millions of dollars in damages. The provision is no corporate
bailout.
There are many bad provisions in the energy bill now before
Congress, but restricting MTBE liability isn’t one of them. With
the House and Senate looking for a compromise, legislators should
resist the temptation to do the trial bar’s bidding by removing the
provision.
