Since the late 1970s, gasoline producers have been adding a fuel additive known as Methyl Tertiary Butyl Ether, or MTBE, to American car fuel. Its use rose steadily through the late 1990s, part of an effort to create cleaner-burning gasoline and improve the general air quality. But as a result of leaky underground fuel-storage tanks, MTBE has found its way into the water supply of over 45 million Americans. Although the substance itself isn’t considered a health hazard, it does help transport known carcinogens like benzene that otherwise wouldn’t pose a threat to humans. What’s more, a few drops of MTBE can make an entire water supply undrinkable. The cost to clean up public water supplies across the country has been estimated at $30 billion.
Seventeen states have now voted to ban the use of MTBE in gasoline, but the battle over phasing it out nationwide has been held up in Congress by disagreements over who should pay for the mess. Companies responsible for MTBE pollution are counting on congressional allies, not least House Majority Leader Tom DeLay, to make sure things stay that way.
In late 2001, the California Supreme Court heard a case, South Lake Tahoe Public Utility District vs. Atlantic Richfield Co., to determine whether twelve oil and gas companies—including ARCO, Shell Oil, and Lyondell—knowingly distributed MTBE-laced gasoline that they knew would contaminate drinking water and pose health risks for millions of Americans. During the trial, a slew of incriminating documents and depositions forced the oil companies to admit they had deliberately kept the dangers of MTBE secret, even as they were lobbying Congress to draft laws that would increase production of fuel laden with the stuff. Caught in the act, the twelve defendants finally agreed to pay $69 million in cleanup costs. In 2003, 18 companies were again brought to court by the city of Santa Monica, and eventually settled for what would ultimately amount to close to $300 million in cleanup costs. A precedent was being set.
After the Santa Monica case, Washington finally took action: In late 2003, three House Republicans, DeLay, Billy Tauzin, and Joe Barton, introduced a waiver in the House energy bill that would exempt MTBE producers and distributors from the liabilities they were being exposed to in the courts. Not coincidentally, both DeLay and Barton hail from a state, Texas, with six of the nation’s largest MTBE producers, which account for over 80 percent of all MTBE produced in the U.S. (Most of the rest is produced in Louisiana, Tauzin’s home state.) Also not coincidentally, oil and gas has been a top industry contributor to both representatives for over 15 years, having raised $558,000 for DeLay and $931,000 for Barton since 1989. In the 2004 election, Lyondell and Valero—two of the top MTBE producers—were among their biggest contributors.
The problem was that more than a hundred members of Congress who favor DeLay’s industry MTBE waiver also hail from districts with at least some MTBE contamination, and given growing public awareness about the issue, very few of these representatives could vote for the waiver in a stand-alone vote. DeLay needed to get the liability waiver bundled into the House’s comprehensive energy bill so as to give these members cover to vote for the waiver. To make sure no Republican would have to vote on MTBE alone, DeLay simply had the House Rules Committee waive the right to a floor vote on MTBE. It worked, and the House passed both the energy bill and the waiver, but the bill was held up in the Senate prior to the 2004 elections.
This past April, DeLay pushed a nearly-identical energy bill through the House. It didn’t go entirely smoothly this time around: Rep. Lois Capps, a California Democrat, challenged the MTBE waiver as an unfunded mandate, thus forcing a standalone vote for the provision on the floor. Fortunately for those representatives needing cover to vote for the provision, House Republicans have a strict policy of voting together when working within the framework of a bill. (Representatives are only allowed to dissent on final pieces of legislation.) In the end, DeLay got his waiver through 219-213 and the full energy bill passed quickly thereafter. The House is still waiting for a conference with the Senate, which has not shown any indication that it will pass any legislation that includes MTBE liability protection. Some of the most outspoken opponents of the waiver are, in fact, Senate Republicans, including Judd Gregg and John Sununu of New Hampshire—a state that sued 22 MTBE producers last October for spoiling public waters.
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Although it’s true that Congress can pass whatever it has the votes to pass, one question lingers: How on earth can Tom DeLay justify the use of Congress to shield an industry that has been found guilty in multiple courts? DeLay’s rationale: Congress had originally required that industry use MTBE, and therefore it has a responsibility to protect oil and gas companies from the consequences. DeLay argued that when the Environmental Protection Agency amended the Clean Air Act in 1990, it mandated the use of MTBE as a gasoline additive. But a recent federal court decision ruled that oil and gas companies had in fact made their own decision to use MTBE. Indeed, back in March 1994 both DeLay and Barton signed a letter to the EPA stating that they knew the amended Clean Air Act had not mandated any particular fuel. “The point can be made no more clear,” said the letter.
So DeLay and other waiver proponents have recently taken a new tack, arguing—weakly—that Congress had, in subsequent legislation, created a de facto mandate for MTBE. But what the law actually mandated was that, in certain parts of the country with high levels of smog, gasoline must contain at least 2 percent oxygenates to help reduce air pollution. Adding MTBE would meet this goal, and the alternatives—including ethanol and methanol—were not available in great quantities, so it is reasonable to assume that Congress knew MTBE would be needed to reach the mandated goals. Nevertheless, this line of reasoning ignores the fact that the oil and gas industry also began using MTBE of its own accord beginning in 1979. By 1991, the industry was adding over 100,000 barrels of MTBE per day to the national gasoline supply. The 2 percent rule didn’t begin coming into effect until three years later, so regardless of what Congress may or may not have mandated, who should be liable for the damage resulting from MTBE used prior to 1994? No one seems to be asking this question.
In fact, when the EPA set out to draw up a rule for gasoline additives in the late 1980s, MTBE wasn’t even under consideration: The agency was planning to increase the use of renewable fuels such as methanol and ethanol, which would likely have excluded the use of MTBE. But the oil and gas industry wanted to secure a market for MTBE—which had become a profitable product during the 1980s—and so it actively lobbied for a rule that would secure the continued use of the additive. As ARCO’s Manager of Business Development at the time testified in court, “[T]he refining industry brought [MTBE] forward as an alternative to what the EPA originally proposed, the EPA did not initiate reformulate gasoline.”
When the EPA, in response, asked the oil and gas companies to document the known health hazards posed by MTBE, the industry concealed what it knew. In a 1984 memo an Exxon employee wrote, “[W]e have ethical and environmental concerns that are not too well defined at this point.” A 1987 memo from an ARCO executive admitted that the industry lacked evidence to refute any claims that MTBE plumes spread further than gasoline or that MTBE posed serious cleanup issues. Despite that, when the EPA issued their request for additional information industry executives were preparing documents claiming that “MTBE doesn’t increase the benzene levels in drinking water,” and “MTBE spreads only slightly further than gasoline components like benzene in the groundwater”—statements they knew to be false. Contrary to public industry claims, one internal memo noted that “the number of well contamination incidents is estimated to increase three times following the widespread introduction of MTBE into gasoline.” Reviewing these acts a decade later the California Supreme Court ruled in Tahoe that the industry had acted “with malice.” So much for DeLay’s argument that the industry was not at fault for MTBE pollution.
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Regardless of whether DeLay gets the MTBE waiver passed, both the oil and gas industry and their backers in Congress surely know that it will make for bad PR if they are seen as doing nothing about cleaning up leaky tanks and MTBE-tainted water supplies. Presumably that’s why the House authorized up to $1 billion for the Leaky Underground Storage Tank (LUST) fund to aid in cleanup. Industry advocates have claimed that this should be more than enough to get the job done, though critics point out that cleanup from the two California cases alone will cost well over a quarter billion dollars, and cleanup costs nationwide have been estimated at $12 billion to $64 billion.
As industry advocates rightly point out, that LUST fund money will help local agencies leverage additional private money; in 96 percent of all cleanups to date, a combination of state, and private-insurance money has helped foot the bill. Problem is, many states are strapped for cash, and it’s not a sure thing that the industry itself will be paying for the cleanup. In most lawsuits, the party held responsible is an independent gas station owner, who most likely has done nothing wrong. Another problem is that Congress is merely authorizing $1 billion; there is no guarantee it will ever appropriate that much money. Congress, after all, didn’t appropriate any new cleanup funds for 2005, an omission that has helped caused over 130,000 leaky storage tanks to go untreated in recent years.
Yet even an effective LUST fund would still be a partial solution at best. Even if every tank site were cleaned up today, the number of contaminated water supplies would continue to grow in the future, largely due to the vast quantities of MTBE already working their way through the ground. Drivers will spill gasoline at the pump while they are filling up, and accidents will happen no matter how careful people are. Without a ban on MTBE, which is the only way to prevent MTBE spills, and adequate funding for cleaning up water supplies, water utilities and their customers will still be saddled with massive costs.
Perhaps in acknowledgment that LUST isn’t up to the task, Republicans have been discussing a deal on MTBE currently being brokered by Joe Barton and Rep. Charlie Bass (R-NH). Bass, whose state is facing major cleanup costs, has stated that he will not vote for the final version of the energy bill if it contains an MTBE waiver, unless, that is, some sort of deal is struck to help clean up states like his. Meanwhile, Sen. Judd Gregg (R-NH) announced last week that he now has the votes to filibuster any energy bill with the MTBE liability language included. Backers of MTBE liability may be wondering whether the waiver is the best way to go. That—plus the possibility that the waiver could be challenged in federal court—may spur the oil and gas industry to discuss a nationwide settlement on MTBE cleanup. In such a scenario, industry would most likely have to offer sufficient financial support for cleaning up contaminated water supplies, in exchange for protection from liability. Indeed, this may prove the oil and gas companies’ only way to avoid the hundreds of individual lawsuits that have mounted against them.
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There is still more to the story than liability protection. Assuming that MTBE will eventually be phased out, Congress has set aside $2 billion to enable oil and gas companies to transition into new fuel sources. But the phase-out date for MTBE—set for December 31st 2014—isn’t even assured; the energy bill contains three exemptions that could allow companies to use MTBE indefinitely. For starters, the EPA administrator will have the power to authorize the use of up to 50,000 barrels of MTBE-added gasoline per day after the phase-out date. Second, the president will be granted the power to extend or do away with the deadline. Third, states are allowed to waive the restriction on MTBE and continue using it. While no state aside from Texas is likely to wish to use MTBE beyond 2014—indeed, 17 states have already banned it—these exemptions are troubling, not least because the oil and gas industry could receive $2 billion while continuing to sell vast amounts of MTBE.
Perhaps most disturbingly, there’s a matter of precedent at stake. While the Senate has asked that risks of future additives be adequately assessed before they’re approved for use, the House has rejected such language. Should the energy bill be passed as is, and were we to find ourselves stuck with a “defective” additive in the future, industry would be set to get away with it all over again.
