As the US Congress resumed energy bill negotiations last week, environmental and public interest groups called on lawmakers to reject a pending Senate provision designed to exempt fuel ethanol from federal and state product liability lawsuits. The coalition also wants lawmakers to reject a possible House proposal to expand liability protections to the clean fuel additive methyl tertiary butyl ether.
"We urge you to strike the loophole from the energy bill in conference and to ensure that renewable fuels are not subject to a lesser liability standard than other motor vehicle fuels or fuel additives. In addition, we understand that representatives of the oil industry are trying to expand the liability loophole to include MTBE, which is an outrageous proposition given the widespread water contamination caused by MTBE to date," the Sept. 18 letter said.
The US Public Interest Research Group spearheaded the letter, also signed by the American Lung Association, American Rivers, Earthjustice, Environmental Defense, Friends of the Earth, League of Conservation Voters, National Environmental Trust, Natural Resources Defense Council, Sierra Club, and Physicians for Social Responsibility.
Pending business
Last year, integrated oil companies, US Northeast states, most environmental groups, and agricultural interests crafted a compromise regarding federal clean fuels programs. Oil companies agreed to support a Senate provision giving states a flexible MTBE phase-out plan to address concerns over groundwater contamination. Major oil companies, meanwhile, won the stipulation that the current 2 wt % oxygen requirement in federal reformulated gasoline be eliminated.
Agricultural interests also got a guarantee that the fuel ethanol market would be robust, thanks to a renewable fuels mandate. That mandate, while controversial, still has the support of key policymakers on Capitol Hill and in the White House. It seeks to nearly triple the ethanol market to 5 billion gal/year by 2012 and includes a bank-and-trade program. Ethanol producers, with the blessing of some integrated oil companies, also successfully negotiated a "safe harbor" provision designed to shield them from the kind of lawsuits MTBE producers are facing.
House discussions
The House version does not include an ethanol mandate. It does authorize $200 million for MTBE-related clean- up, as does the Senate measure.
House negotiators, meanwhile, are said to be favoring accepting the ethanol mandate in deference to the powerful hold that the issue has in the politically pivotal US Midwest. But in return, some House lawmakers from districts with petrochemical plants want MTBE manufacturers also to have liability relief. House negotiators also are said to endorse a Senate provision authorizing the Department of Energy to give grants to US merchant MTBE producers that want to convert facilities to other chemical feedstocks, such as iso-octane. But that provision does not shield ether producers from the kind of product liability-related lawsuits ExxonMobil Corp. and Halliburton Co. have faced on asbestos.
Fuel suppliers fear lingering legal problems even though some courts have recently ruled in industry's favor. A recent New York state court, for example, held refiners can't be held liable when groundwater is contaminated with MTBE-blended gasoline that came from a leaking fuel tank. But another lawsuit, in northern California, lingered for 4 years until refiners and gasoline distributors settled for $28 million. MTBE supporters note, however, that most of the settlement costs reflect problems associated with leaking storage fuel tanks, not just MTBE use.
Environmental group concerns
Environmental groups, many of which earlier agreed to endorse the Senate clean fuel provision because they expect it to mean the phase-out of MTBE, now are worried about what the House may consider. Along with eyeing product liability relief for MTBE, House negotiators are said to be considering similar liability protections for ethanol and related clean fuel additives such as ethyl tertiary butyl ether (ETBE). That in turn could lead to backsliding of clean water protections, say public interest and environmental groups.
In the letter, groups warn that extending liability coverage could deny affected communities appropriate redress, eliminate an important disincentive to pollute, and create a dangerous precedent for future environmental policy.
"Already concerns have been raised that renewable fuels, like ETBE...may contaminate groundwater. Ethanol may inhibit the breakdown of other, more toxic components in gasoline and increase the spread of benzene and other hydrocarbons around leaking storage tanks. Moreover, as much-needed research on existing fuels goes forward and new renewable fuel technologies develop, new and unanticipated public health and environmental hazards may well emerge," the letter said.
Liability issues
Supporters of the liability language say there are provisions in the bill requiring industry to test fuels. The Senate bill also expands the Environmental Protection Agency's discretion to regulate fuels to protect water. And supporters maintain that the ethanol "safe harbor" provision is designed to limit product defect claims and is not meant to discourage gasoline tank spill cleanups.
Similarly, the Senate language does not give any ether, ethanol-based or otherwise, special protections.
On ethanol, the Senate bill also makes sure communities can make polluters pay, ethanol interests said.
"This is an extremely limited provision," said Monte Shaw of the Renewable Fuels Association. "It would not preclude the responsible parties to pay when there has been a spill or leak or contamination. They are still 110% liable for those actual cleanup costs."
Environmental groups, however, say that language still is not a substitute for liability protections. "Product defect claims are the clearest way to hold accountable manufacturers whose products cause injuries to public health or the environment.
"In addition, the liability loophole could undercut state product defect protections by giving bad actors the ability to argue that the federal government has preempted such state laws," the group said.