MTBE liability bomb intolerable as energy policy

Bob Tippee

Comprehensive energy legislation was an unfavorable arena in which to debate limited liability protection for makers of methyl tertiary butyl ether.

Lawmakers were too busy trading favors for pet constituencies to give complex energy issues serious attention.

So they rejected MTBE liability protection, which many mischaracterized as a measure that prevents all lawsuits by parties with grievances about MTBE in water supplies.

It's no such thing. It's protection only against defective-product pleadings, which plaintiffs win simply by showing that defendants made something defective for sale. MTBE isn't defective. It's required by an act of Congress.

Distinctions like that couldn't survive the roiling politics of the unwieldy energy bill. After the bill passed, the National League of Cities (NLC) issued a statement saying the liability protection would have imposed "a multibillion unfunded mandate on local governments by preventing municipalities from suing the producers of [MTBE], a major contaminate [sic] of drinking water." It went on to congratulate itself for having "worked fiercely on behalf of cities and towns across America to protect their rights to seek damages for the cleanup of drinking water sources polluted by MTBE—costs estimated in the range of $25-85 billion."

Those rights were never in jeopardy. The defeated proposal would have protected MTBE makers only against an irrelevant pleading that plaintiffs' lawyers favor because it's easy to win.

The NLC's cost estimate exaggerates the problem but reveals what potential plaintiffs hope to achieve. A study released by the American Petroleum Institute last month estimated that MTBE cleanup costs not covered by responsible parties, insurance, and government cleanup funds total no more than $1.5 billion (OGJ, July 11, Newsletter). Estimates like the NLC's, the study said, come from analysts who ignore established sources of cleanup money, include costs of handling contaminants other than MTBE, overstate the average cost of MTBE cleanup, and fail to account for cleanup that already has occurred.

Municipalities smelling defendant blood are no more likely to hear any of that than were lawmakers craving a legislative trophy.

So an unjust liability bomb dangles over an industry crucial to US oil supply. As energy policy, this is intolerable.

(Online July 30, 2005; author's e-mail: bobt@ogjonline.com)

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