MTBE liability threat clouds US energy future

Bob Tippee

Of all the complex issues facing lawmakers trying to fashion comprehensive energy legislation in the US, one should be simple to resolve: protection against defective-product litigation for makers of fuel containing ethanol or methyl tertiary butyl ether.

Yet a provision granting limited liability protection to refiners, who add the oxygenates to meet federal requirements, is a proven bill breaker.

The energy policy challenge can't be clearer. Capacities for the production, processing, and delivery of energy need to grow. Demand is straining the system. Even with conservation, demand will grow unless the economy quits expanding.

US refining capacity works at close to maximum rates. It hasn't grown appreciably in 3 years. Grassroots refinery construction isn't in prospect.

Refiners face pressure not only from steady growth in product consumption but also from tightening fuel specifications and the need to run crudes of diminishing quality. They also face potentially ruinous liability from a storm of lawsuits over leaks of fuel containing MTBE.

Because MTBE spreads fast in the subsurface, it has entered drinking-water supplies, usually in harmless trace amounts. Affected communities have sued, targeting refiners because they have money. Plaintiffs favor product-defect claims in these cases, which require them to show only that a company made the product for sale.

Gasoline isn't defective because it contains MTBE; in fact, it contains MTBE in order to meet federal specifications. And MTBE itself doesn't enter water systems because it's defective. It enters water systems because its containers or handlers are defective.

The limited liability protection sought by refiners wouldn't compromise anybody's right to sue over those eventualities. It would simply remove a legal convenience that has encouraged and misdirected litigation. It would thus relieve liability pressure that refiners don't deserve but that many fear will become a litigation frenzy as damaging as the one that forced asbestos manufacturers into bankruptcy.

Lawmakers serious about energy policy should want refiners to concentrate on meeting product demand and environmental regulations. They should not hesitate to fix a snag in the legal system that distracts from important energy-supply goals and is also, by the way, very unfair.

(Author's e-mail: bobt@ogjonline.com)

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