The Safe-Harbor Provision for Methyl Tertiary Butyl Ether (MTBE)

CRS Report for Congress
The Safe-Harbor Provision for Methyl Tertiary
Butyl Ether (MTBE)
Aaron M. Flynn
Legislative Attorney
American Law Division
Summary
Methyl tertiary butyl ether (MTBE) is a fuel additive in wide use throughout the
United States. Due to leakage from underground storage tanks and other sources of
exposure, MTBE has been found in the drinking water supplies of several states.
Whether to shield certain parties from MTBE-related liability proved controversial in
the 108^th Congress, and ultimately no legislation addressing the issue was enacted. In^th
the 109 Congress, the Energy Policy Act of 2005 (H.R. 6) has been passed by the
House of Representatives; it contains a safe-harbor provision protecting any potential
defendant, such as MTBE manufacturers and distributors, from claims asserting that
MTBE is a “defective product,” a common standard for liability under products liability
jurisprudence. Additionally, the H.R. 6 provision includes language applying the safe-
harbor retroactively, potentially barring numerous pending lawsuits. Exemption from
liability related to MTBE contamination remains controversial and may again become
the subject of debate in the 109^th Congress. Accordingly, this report analyzes the legal
implications of the safe-harbor provision found in H.R. 6. This report will be updated
as necessary.
Legal liability for methyl tertiary butyl ether (MTBE) contamination has played a
prominent role in the debate over U.S. energy policy. MTBE is a petroleum fuel additive
that has commonly been in use since the 1970s and is now primarily used as a fuel
oxygenate. Legislation in the 108^th Congress would have dealt with MTBE in a variety
of ways, although none of the proposals were enacted.¹ In the 109^th Congress, the Energy
Policy Act of 2005, H.R. 6, has passed the House of Representatives with a safe-harbor
provision shielding certain parties from specified forms of liability associated with MTBE

¹ Some legislative proposals, such as S. 2095, would have provided for the eventual
discontinuation of MTBE use but would not have provided parties associated with MTBE with^th
any special protections from liability. Other legislation, such as H.R. 6 from the 108 Congress,
would have provided a safe-harbor provision protecting certain parties from specified forms of
liability associated with MTBE contamination.
Congressional Research Service ˜ The Library of Congress

contamination.² Specifically, the H.R. 6 provision would exempt all potential defendants
from liability arising from “defective product” claims for fuel additives, including MTBE,
and fuels blended with such additives, so long as certain conditions are met. This MTBE
safe-harbor would not insulate a responsible party from other liabilities, such as
responsibility for environmental cleanup. The safe-harbor provision is also written to
apply retroactively to September 5, 2003, thus barring claims made in numerous lawsuits
already filed in courts throughout the country.
The rationale behind the H.R. 6 form of liability protection is that MTBE use in
gasoline was precipitated by federal mandates and that leaking storage tanks and other
sources of exposure, not the product itself, are responsible for current contamination. As
liability related to MTBE contamination remains controversial and may become the
subject of debate in the 109^th Congress, this report analyzes the legal implications of the
safe-harbor provision found in the current version of H.R. 6.
Background
For technical and cost reasons, MTBE’s present use was, in part, precipitated by the
requirements of the 1990 Clean Air Act Amendments, especially the requirement that
reformulated gasoline contain at least 2% oxygen.³ Use of reformulated gasoline is
required in areas that fail to meet federal ozone standards.⁴ MTBE, like all ethers, is
highly soluble and has become more controversial in recent years as reports of water
contamination and resulting lawsuits continue to surface.⁵ Sources of contamination are
varied but are primarily identified with leaks or other spills from Underground Storage
Tanks, a pervasive method of gasoline storage.⁶ At the present time, there is no consensus
on the health effects associated with MTBE contamination, with certain parties claiming
that MTBE is a suspected carcinogen and others claiming that the chemical is relatively
benign.⁷ The EPA has studied the health effects of MTBE, and, so far, the agency has

² The safe-harbor provision has also been included in the Reliable Fuels Act, S. 606 and appears
to be substantially similar to the provision included in H.R. 6 from the 108^th Congress. The safe-^th
harbor does not appear in other comparable legislation that has been introduced in the 109
Congress, H.R. 1608 and S. 650.
³ See, U^NI^TEDS^TATESE^NVI^RONM^ENTALP^ROTECTI^ONA^GENCYR^EP^ORT,A^CHI^E^VI^NGC^LEANA^IR
^ANDC^LEANW^ATER:T^{HE REP}^O^{RT OF THE}B^LUER^I^BBONP^{ANEL ON}O^{XYGENATES I}^NG^ASOLI^N^E,
Pub. No. EPA402-R-99-021, (September 1999); see also 42 U.S.C. § 7545. For further
information, see CRS Report 98-290 ENR, MTBE in Gasoline: Clean Air and Drinking Water
Issues, by James E. McCarthy and Mary Tiemann.
⁴ 42 U.S.C. § 7545.
⁵ See generally U^NI^TEDS^TATESG^ENERALA^C^C^OUNTI^NGO^FFI^CER^EP^ORT,T^ESTI^M^{ONY OF}J^OHN
S^TEP^HENSON,D^I^R^ECTORN^ATURALR^{ESOURCES AN}^DE^NVI^RONM^ENT,B^{EFORE THE}S^UBCOM^M^I^TTEE
^ONE^NVI^RONM^{ENT AND}H^AZARDOUSM^ATERI^A^L^S,C^OM^M^I^{TTEE ON}E^{NERGY AND}C^O^MME^R^C^E,
H^{OUSE OF}R^EP^RESENTATI^V^ES:MTBEC^O^N^T^A^M^I^NATI^ONF^ROMU^NDERGROUNDS^TORAGET^ANKS,
Pub. No. GAO 02-753T (May 21, 2002).
⁶ Id. at 1. For further information, see CRS Report RS21201, Leaking Underground Storage
Tanks: Program Status and Issues, by Mary Tiemann.
⁷ See Earl Ainsworth, Protecting Water: Energy Bill Fuels Rush to File Pollution Claims, 12 N.J.
(continued...)

concluded that the associated risks are minimal at levels typically detected in drinking
water. However, the agency continues to study the issue.⁸
Liability
Title 15 of H.R. 6 (109^th Congress) would address fuel additives. Section 1502 of
that title contains the safe-harbor provision for manufacturers and other parties associated
with MTBE and other fuel oxygenates. The section reads:
(a) In General- Notwithstanding any other provision of Federal or State law, no
renewable fuel, as defined by section 211(o)(1) of the Clean Air Act, or methyl
tertiary butyl ether (hereafter in this section referred to as ‘MTBE’), used or intended
to be used as a motor vehicle fuel, nor any motor vehicle fuel containing such
renewable fuel or MTBE, shall be deemed a defective product by virtue of the fact
that it is, or contains, such a renewable fuel or MTBE, if it does not violate a control
or prohibition imposed by the Administrator of the Environmental Protection Agency
(hereinafter in this section referred to as the ‘Administrator’) under section 211 of
such Act, and the manufacturer is in compliance with all requests for information
under subsection (b) of such section 211 of such Act. If the safe harbor provided by
this section does not apply, the existence of a claim of defective product shall be
determined under otherwise applicable law. Nothing in this subsection shall be
construed to affect the liability of any person for environmental remediation costs,
drinking water contamination, negligence for spills or other reasonably foreseeable
events, public or private nuisance, trespass, breach of warranty, breach of contract, or⁹
any other liability other than liability based upon a claim of defective product.
This language would potentially provide a liability shield for all those who might be
sued for supplying a defective renewable fuel or MTBE itself, as well as fuels blended¹⁰
with MTBE or other additives. The liability shield would take effect so long as the cited
statutory and regulatory requirements were complied with.¹¹ To this end, we note that the
term “manufacturer,” as used in the bill, might apply to manufacturers of MTBE and other
fuel additives, as well as those entities that produce additive-blended, and specifically¹²
MTBE-blended, fuels. EPA regulations issued under the Clean Air Act define fuel and

⁷ (...continued)
L^AW:W^KLY.N^EW^SP^AP^ER 2196 (Nov. 10, 2003).
⁸ See, Announcement of the Drinking Water Contaminant Candidate List, 63 Fed. Reg. 10273
(March 2, 1998); see also U.S. Environmental Protection Agency, MTBE (methyl tertiary butyl
ether) and Underground Storage Tanks available at [http://www.epa.gov/swerust1/mtbe/]; see
alsoU^NI^TEDS^TATESE^NVI^RONM^ENTALP^ROTECTI^ONA^GENCYO^FFI^{CE OF}R^{ESEARCH AND}
D^EVELOP^M^ENT,A^{SSESSMENT OF}P^OTENTI^ALH^EALTHR^I^S^{KS OF}G^ASOLI^N^EO^XYGENATEDW^IT^H
M^ETHYLT^ERTI^ARYB^UTYLE^THER(MTBE), Pub. No. EPA/600/R-93/206 (November 1993).
⁹ H.R. 6, 109^th Cong. § 1502(a) (2005).
¹⁰ While the safe-harbor provision would apply to other additives and additive blended fuels, such
as ethanol or bio-diesel, this report is primarily focused upon MTBE and MTBE-blended fuels
and does not address issues specific to other additives.
¹¹ H.R. 6, 109th Cong. § 1502(a) (2005).
¹² Blending of MTBE with fuel is typically done by refiners. Other additives may be blended at
(continued...)

fuel additive manufacturers to include those who cause or direct “the alteration of the
chemical composition of a bulk fuel, or the mixture of chemical compounds in a bulk
fuel, by adding to it an additive,” and those who produce, manufacture, import, or sell fuel
additives.¹³ Section 211 of the Clean Air Act appear to implicitly adopt this definition of
“manufacturer,” and specifically indicates that the term encompasses importers.¹⁴ Thus,
it appears relatively clear that the applicability of the safe-harbor provision would depend
upon compliance with section 211 of the Clean Air Act and any relevant EPA regulations
by a potentially large group of manufacturers.
Assuming the safe-harbor’s applicability, the type of liability protection that would
be provided would necessarily depend on the term “defective product,” which appears to
refer to state products liability claims.¹⁵ Products liability is a traditional common law
tort. A tort is a civil action to recover damages for injuries caused by means other than
breach of contract. The usual standard of liability in tort actions is negligence, which is
the failure to exercise due care. In products liability cases, however, courts apply strict
liability instead of negligence as the standard for recovery.¹⁶ Thus, absent the safe-harbor
provision, an MTBE manufacturer or distributor, for instance, could be held liable for a
defective product that causes injury even if the party had exercised due care in all phases
of production.
There are three different types of product defects that can give rise to liability:
manufacturing defects, design defects, and failures to adequately warn of product
hazards.¹⁷ A product with a manufacturing defect is one that is not in the condition in
which it was designed to be.¹⁸ A product with a design defect is one that is in the
condition in which it was designed to be, but was not designed in the safest feasible
manner.¹⁹ If a manufacturer has used the safest feasible design, but that design has an
inherent danger that is not obvious to users of the product, then the manufacturer must
warn users of the danger or be liable for failure to warn.²⁰ While manufacturers are often
the target of such litigation, and while the exact contours are a matter of state law, liability
often extends beyond manufacturers to distributors, sellers, and even to commercial
lessors and bailors.²¹ Thus, absent a safe-harbor provision, most entities involved in the
production, distribution, and sale of fuel additives or blended fuel, even those who would
not be deemed manufacturers under the relatively broad definition found in the Clean Air

¹² (...continued)
different stages of production.
¹³ 40 C.F.R. § 79.2 (2003).
¹⁴ 42 U.S.C. § 7545(b), (o).
¹⁵ See, e.g., Restatement (Third) of Torts: Prod. Liab. § 1 (1998).
¹⁶ See, e.g., Dawson v. Chrysler Corp., 630 F.2d 950, 962 (3^rd Cir. 1980).
¹⁷ See, e.g., Restatement (Third) of Torts: Prod. Liab. § 2 (1998).
¹⁸ See, e.g., id. § 2(a).
¹⁹ See, e.g., id. § 2(b).
²⁰ See, e.g., id. § 2(c).
²¹ See, e.g., id. § 1; Wright v. Newman, 735 F.2d 1073, 1077 (8^th Cir. 1984).

Act and EPA regulations, could potentially be held liable for a defective product under
any of the above-mentioned theories.
The broad language of the MTBE safe-harbor provision would likely apply to all
three concepts of products liability and effectively prevent liability from attaching under
such theories. Additionally, while the safe-harbor’s applicability is conditioned upon
certain actions taken by additive or blended-fuel manufacturers, the provision would
likely apply to all potential defendants in a products liability claim. Similarly, failure on
the part of a manufacturer to comply with the cited environmental provisions would likely
remove the liability shield for all potential defendants.²²
Finally, while potential defendants could be shielded from defective products-related
liability, it appears that they would remain susceptible to other types of legal claims.
Indeed, the language of the provision specifically maintains that other bases of liability,
such as environmental remediation costs, drinking water contamination, trespass, public
or private nuisance, breach of warranty, breach of contract, and negligence for reasonably
foreseeable events are not to be affected by the safe-harbor provisions.²³ It is worth noting
that reaching MTBE manufacturers and those who blend fuels may prove more difficult
under these other bases of liability. As stated previously, most contamination occurs due
to leaking underground storage tanks located at individual gas stations. Liability for this
contamination could attach to the party responsible for such tanks, but that party is not
necessarily the fuel manufacturer or refiner.
Retroactive Application
As is not an uncommon practice, Congress has indicated in H.R. 6 that the safe-
harbor provisions would apply retroactively, meaning that the law, if enacted, would
govern events in the past back to the specified date. The provision states:
(b) Effective Date. — This section shall be effective as of September 5, 2003, and²⁴
shall apply with respect to all claims filed on or after that date.
In this particular case, the safe-harbor’s retroactive application would effectively bar
products liability claims in several pending lawsuits. It is well-settled that Congress has
the power to legislate retroactively, effectively closing off a remedy in the courts, under
certain circumstances.²⁵ Primary among these circumstances is the requirement that there
be no final decision in the case.²⁶ Such legislative action must also satisfy due process.
In this context, it has been established that due process will not be violated when the

²² H.R. 6, 109^th Cong. § 1502(a) (2005).
²³ Id.
²⁴ Id. § 1502(b).
²⁵ See United States v. Schooner Peggy, 5 U.S. 103, 110 (1801); Landgraf v. U.S.I. Film Products,

511 U.S. 244, 280 (1994); Kaiser Alum. & Chem. Corp. V. Bonjourno, 494 U.S. 827, 837-38^th

(1990); Kopec v. City of Elmhurst, 193 F.3d 894, 903 (7 Cir. 1999); Henderson v. Scientific-^th
Atlanta, Inc., 971 F.2d 1567, 1573 (11 Cir. 1992).
²⁶ Plaut v. Spendthrift Trust, 514 U.S. 211, 218-19 (1995). A decision is not considered final
until all appeals have been taken or the time for appeals has lapsed.

legislation has “a legitimate legislative purpose furthered by a rational means,” a standard
that is quite deferential to the Congress.²⁷
But while Congress has the power to cut off pending MTBE lawsuits, it is an
altogether separate question whether exercise of that power effects a Fifth Amendment
taking of private property (the underlying causes of action), requiring compensation.²⁸
The crux is straightforward: do the accrued MTBE causes of action that would be
extinguished constitute “property”? Of particular significance is how this inquiry would
be resolved in two courts, the U.S. Court of Federal Claims and its appellate court, the
U.S. Court of Appeals for the Federal Circuit, since the former has exclusive jurisdiction
over takings claims against the United States seeking more than $10,000.²⁹ But while the
Federal Circuit has held accrued causes of action to be property, it has done so apparently
only as regards extinguishment of international claims.³⁰ Were these courts faced with
extinguishment of state-law claims, as in the case of the MTBE litigation, they might be
tempted to follow the rule that “property” under the Takings Clause is normally defined
by reference to state law. Our preliminary review suggests that state courts are divided
as to the property status of accrued causes of action.³¹
In sum, whether enactment of a safe-harbor provision similar to that contained in
H.R. 6 would effect a taking of the MTBE plaintiffs’ accrued product-liability causes of
action must be deemed an open question.

²⁷ General Motors Corp. v. Romein, 503 U.S. 181, 191 (1992).
²⁸ The Fifth Amendment Takings Clause states: [N]or shall private property be taken for public
use, without just compensation.” The Clause is designed to “secure compensation in the event
of otherwise proper interference amounting to a taking.” First English Evangelical Lutheran
Church v. Los Angeles County, 482 U.S. 304, 315 (1987).
²⁹ 28 U.S.C. § 1491(a).
³⁰ See, e.g., Abrahim-Youri v. United States, 139 F.3d 1462, 1465 (Fed. Cir. 1997).
³¹ We refer here to accrued causes of action prior to being reduced to final, unreviewable
judgment. Once reduced to final, unreviewable judgment, preliminary research indicates near-
unanimous support for property status.