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MTBE Settlement Despite Lack of Causation and Fault



The San Francisco Chronicle reports that all major oil companies except Exxon have agreed to pay $422 million to settle a lawsuit over the gasoline additive MTBE.

Methyl tertiary butyl ether was added to gasoline in the 1990s to make the fuel burn more thoroughly and cut air pollution, in response to government mandates (the only alternative to MTBE is grain-based ethanol, which is much more expensive and, as we know now, is ecologically catastrophic on the international level). MTBE is perfectly safe as long as storage tanks don't leak. But if tanks leak (an event for which gas station owners, not MTBE producers, are responsible) MTBE can seep into ground water and impart to it a noxious taste. Since tank owners are small fry, California governments went after MTBE producers to recover the costs of cleaning up their wells. I have written about this case at length in the Federalist Society's Engage journal.

Under the agreement, the oil companies will pay $422 million up front. They also agree to cover 70 percent of the cleanup costs for any of the plaintiffs' wells that become contaminated with MTBE within the next 30 years.

The companies argued that they shouldn't have to pay cleanup costs because the government had compelled MTBE's use, because no long-term health effects on humans had been proved, and as a result, and because any fault lay with tank owners, not with MTBE producers. The settlement agreement does not address those arguments, and an attorney representing Chevron in the case said the companies still hold those views. Too bad they're now moot.

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Isaac Gorodetski
Project Manager,
Center for Legal Policy at the
Manhattan Institute
igorodetski@manhattan-institute.org

Katherine Lazarski
Press Officer,
Manhattan Institute
klazarski@manhattan-institute.org

 

Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.