Makers of MTBE gas additive seek environmental liability protection as part of ethanol proposal

<br>WASHINGTON (AP) _ Wider use of corn-based ethanol in gasoline is almost a sure thing if Congress passes a pending energy bill. <br><br>In return, makers of the additive it would replace _ which has

Friday, September 27th 2002, 12:00 am

By: News On 6

WASHINGTON (AP) _ Wider use of corn-based ethanol in gasoline is almost a sure thing if Congress passes a pending energy bill.

In return, makers of the additive it would replace _ which has been found to contaminate drinking water _ want protection against future environmental lawsuits. And lawmakers appear close to giving it to them.

A House proposal, gaining support among those trying to craft a compromise energy bill, would give manufacturers of MTBE, the additive now widely used in gasoline and blamed for fouling drinking water supplies in numerous states, a ``safe harbor'' from lawsuits seeking damages.

The liability protection, offered by Rep. Joe Barton, R-Texas, whose state is home to major MTBE producers, is viewed as a final hurdle before approval of a politically popular measure that would triple the demand for ethanol over the next decade. MTBE would be banned nationally within four years under the measure.

Senate sources say the House proposal for liability relief has a good chance of being accepted by Senate negotiators. Democrats and Republicans alike view it as a small price to pay in return for getting the politically popular ethanol provision into an energy bill only weeks before the upcoming elections.

Several of the key Senate races this fall are in farm states, including Missouri and South Dakota. Any congressional action that would triple demand for ethanol has widespread, powerful support.

President Bush has championed ethanol while pursuing farm-state votes. The two most powerful lawmakers on Capitol Hill _ Senate Majority Leader Tom Daschle, D-S.D., and House Speaker Dennis Hastert, R-Ill. _ are from farm states with ethanol production facilities.

The MTBE industry, aware that its future is dim, has tried to get the best deal it can with help from its own allies on Capitol Hill, including Barton, chairman of the House Commerce energy subcommittee, and Rep. Billy Tauzin, R-La., who is chairing the energy bill negotiations. Virtually all the MTBE produced in the United States is made along the Gulf Coast in Texas and Louisiana.

It's only fair, argued Tauzin, that the MTBE makers be given some liability protection by Congress ``when the government is responsible'' for oil companies originally turning to the additive to meet federal air quality requirements. ``We mandated MTBE to help the environment,'' he said.

The ethanol provision already contains liability protection for refiners that blend gasoline with ethanol, Tauzin said, and MTBE makers should be given equal protection.

Environmentalists urged lawmakers to reject liability protection for gasoline blends containing either MTBE or ethanol.

``It's an outrageous proposal,'' the leaders of nearly a dozen groups, from the Sierra Club to the American Lung Association, wrote lawmakers. ``Polluters, not taxpayers or victims of pollution, should pay for the damages caused by their products.''

Rep. Henry Waxman, D-Calif., called the liability protection ``a special interest boondoggle'' that simply ``shields corporate bad actors'' from having to help pay for having polluted drinking water supplies. But an attempt by Rep. Edward Markey, D-Mass., to scuttle the liability provision in the House proposal was turned back by a 10-4 vote.

Scott Segal, an attorney whose clients include MTBE manufacturers, said the liability provision does not preclude lawsuits against those found responsible for MTBE-laden gasoline leaking into water supplies, but would protect against suits claiming MTBE itself was a defective product.

``You can't be held liable for just complying with the law, putting it in the gasoline,'' Segal said in an interview.

Environmentalists cited a California court case earlier this year in which a jury concluded that MTBE, in fact, was a defective product. The case against four oil companies, involving contamination of South Tahoe's water supply, was settled for $60 million before a final ruling could be made on the defect issue.

At least 16 states already have passed measures to ban or significantly limit the use of MTBE in gasoline because of concerns that it is polluting drinking water. Some communities face tens of millions of dollars in cleanup costs from MTBE contamination.

The states are California, Colorado, Illinois, Indiana, Iowa, Kansas, Kentucky, Maine, Michigan, Minnesota, Nebraska, New Hampshire, New York, Ohio, South Dakota and Washington.