How Energy Bill Sets Stage for a Lawyers’ Bonanza

Published August 22, 2005

published August 5, 2005 by the Mobile (Alabama) Register

WASHINGTON, D.C.–Congress, someone once noted, is the theatre of compromise, the politics of persuasion and the art of kabuki all played out in glorious settings on Capitol Hill. And now, as we pause for the August intermission, is a good time to ponder some tragic aspects of this year’s drama.

As a former chairman of the Senate Energy and Natural Resources Committee, I was fascinated by the last few weeks of the session as House-Senate conferees whittled, chopped and added provisions to produce the first comprehensive national energy bill in more than a decade.

The only things missing from the bill are a few provisions that actually sparked real debate and controversy. One omission makes some sense, while the other does not.

Removing the provision to drill in the Arctic National Wildlife Refuge ultimately may help put the nation on a fast-track to weaning itself from imported oil. Congress plans to take up ANWR drilling in a separate measure unlikely to be torpedoed by filibuster.

While ANWR drilling was controversial in conference committee, the technology exists to drill safely and in a manner that leaves no scars. With the U.S. Energy Information Administration estimating that ANWR is brimming with upwards of 16 billion barrels of oil, and with our country importing roughly 7 million barrels of oil a day, tapping into the vast ANWR reserve would go a long way toward stabilizing gas prices.

The second and most glaring omission from the final energy bill is MTBE liability. Congress shunned the question of whether producers should be exempted from product defect lawsuits because they manufactured the EPA-sanctioned and Sierra Club-endorsed clean fuel additive, MTBE.

MTBE is a chemical compound that belongs to a group called oxygenates. When it was added to the gasoline mix, it actually made fuel burn cleaner and more completely, thus significantly reducing tailpipe pollutants.

When I chaired the Senate Energy and Natural Resources Committee at the start of the 1990s, we upgraded the Clean Air Act to require oxygenates in gasoline in urban areas with particularly bad air quality, like New York City and Los Angeles.

MTBE was the only EPA-certified option available in sufficient quantities at the time. It even received plaudits from the Sierra Club as one of the ten most environmentally useful new products.

And guess what? MTBE really has worked. The EPA has reams of impressive studies showing it dramatically improved air quality in southern California and metropolitan New York.

Unfortunately, there was a risk Congress and the EPA were aware of–MTBE is water soluble. If it leaks from a corroded storage tank, it can flow into nearby water supplies. Because MTBE has a smell and taste like slightly diluted turpentine, the result is unpleasant, although not dangerous.

The EPA says MTBE has contaminated only 16 of the nation’s nearly 4,000 public water systems, and 95 percent of the spills are on the way to being cleaned up by responsible parties. No health problems linked to MTBE have been reported. And the World Health Organization recently noted that MTBE is not a human carcinogen.

Indeed, Robert M. Hirsch of the U.S. Geological Survey calls MTBE “primarily an aesthetic problem involving taste and smell.”

Keep in mind that the liability waiver provision that didn’t survive the House-Senate energy bill conference exempted MTBE manufacturers only from lawsuits charging them with producing a defective product, which it isn’t.

The culprits in this case are rusted-out filling station and distributor storage tanks at the local level. In most cases, their owners have stepped forward to address the problem. In fact, the EPA reports that MTBE discharges have declined some 60 percent as new, leak-proof storage tanks have replaced older ones.

In essence, the ball is now in the personal injury lawyers’ court, which means we’re about to see the latest episode of Jackpot Justice, where, as in the ongoing asbestos crisis, plaintiffs’ lawyers and non-victims get the lion’s share of settlements, while the truly injured walk away with, as we say in Louisiana, “chump change.”

Now the Congress through its inaction has started the clock for MTBE litigation that holds the potential for being a lawyer’s mega-bonanza. Frederick Baron of Dallas’ notorious Baron & Budd, one of three personal injury firms handling the bulk of the MTBE cases, predicts the liability of the producers “is in the billions.”

If Baron is right, that ultimately means oil producers will have billions of dollars less for exploration, extraction and refining the domestic reserves that can help lower gasoline prices at the pump.

There were plenty of sins of commission in the recently passed energy bill, most of them under the labeling of pork.

While postponing consideration of environmentally friendly drilling in ANWR made sense, not providing lawsuit relief to companies that produced government-sanctioned MTBE was a glaring sin of omission.

Former U.S. Senator Bennett Johnston (D-LA) chaired the Senate Committee on Energy and Natural Resources from 1986 to 1994. For more information, call Ralph Conner, Public Affairs Director, 312/377-4000, or email him at [email protected].