Efforts to pass the energy bill that fell two votes short of clearing the Senate in November will resume this month. Filled with subsidies and tax breaks for special interests and pork-barrel spending (search), the overall bill is hard for limited government-types like me to swallow.
It does have one potentially saving grace, however ― the bill’s provision limiting the liability of manufacturers of the gasoline additive known as MTBE (search) might prevent another unjustified billion-dollar bonanza for trial lawyers.
No, I don’t like taxpayer money being lavished on special interests. But some things are worse than pork ― one of them is allowing unscrupulous trial lawyers to extort billions of dollars from innocent businesses.
The Clean Air Act Amendments of 1990 (search) required gasoline refiners to add so-called “oxygenates,” such as MTBE or ethanol, to gasoline to help it burn cleaner and reduce tailpipe emissions.
It’s important to note that, while the 1990 law didn’t specifically require the use of MTBE, everyone knew that MTBE would be widely used. MTBE was preferred because it was easier to blend with gasoline and was less expensive than alternative oxygenates.
What then was essentially federally mandated use of MTBE, unfortunately, coincided with another significant and then-longstanding environmental problem ― leaking underground storage tanks at gasoline stations.
Gasoline that contained MTBE exacerbated the problem in some cases because it readily mixes with water, resulting in contaminated groundwater (search).
Still, it has been a limited problem as MTBE has been found in less than one percent of groundwater sources used for drinking in California, the bellwether state for MTBE litigation. Though MTBE has affected the taste and odor of the water in some cases, no harm to health has been identified.
Despite the relatively modest problem associated with MTBE in groundwater, trial lawyers have already racked up big wins.
In November, Shell, ChevronTexaco and ExxonMobil tentatively agreed to pay $92.5 million to the city of Santa Monica, Calif., for MTBE cleanup ― about $30 million of which goes to the lawyers.
The lawyers made another $20 million from an earlier $69 million lawsuit settlement between MTBE makers and the city of South Lake Tahoe, Calif. The companies were forced to settle, as indications were the juries were prepared to award even more astronomical amounts.
One successful lawsuit often leads to another. Hundreds more lawsuits have already been filed around the country.
If MTBE manufacturers are protected by the energy bill’s limited liability provision, the trial lawyers claim, states and local governments will not be able to sue for cleanup funds and damages.
This is simply not true.
The liability protection provision in no way hampers the ability of anyone to sue a manufacturer, refiner, retailer, or transporter of MTBE. If there is environmental contamination by MTBE, parties can still go to court to identify the parties responsible for the contamination and secure funds for cleanup and appropriate penalties.
What the liability protection clause does is prevent lawsuits based on the notion that MTBE is a “defective product.”
If MTBE is deemed to be a defective product then the lawyers can sue anybody even remotely connected to the fuel additive’s chain of custody, without having to prove who actually spilled or leaked the MTBE.
In essence, all the lawyers need to do under current law is say: “MTBE is a bad product. Pay us.”
However, if trial lawyers are forced to try cases based on their individual facts and circumstances, they’d have to do a lot more work and risk smaller settlements ― that is less money for them. That’s why they’re scared to death that Congress will pass the energy bill in its current form.
The money trail between the trial lawyers and energy bill-blocking Democrats in Congress is no secret. Fred Baron, the most notorious MTBE trial lawyer in the country with more than 50 MTBE cases pending, has contributed to many Senate Democrats.
MTBE is not a defective product. It works to reduce tailpipe emissions just like it was intended. The fact that MTBE could contaminate groundwater was not unknown when Congress essentially required its use. Leaking underground gasoline storage tanks were also nothing new when MTBE was mandated.
What is defective, however, is the notion that trial lawyers should be able to reap astronomical fees by suing businesses that were merely implementing an ill-conceived federal law.
Steven Milloy is the publisher of JunkScience.com, an adjunct scholar at the Cato Institute and the author of Junk Science Judo: Self-Defense Against Health Scares and Scams (Cato Institute, 2001).