E15 liability bill prompts concerns of far-reaching effects

Source: Amanda Peterka, E&E reporter • Posted: Friday, April 20, 2012

The sponsor of a bill meant to protect producers and retailers of E15 said yesterday he was rewriting part of it after the measure prompted concerns that it would exempt oil companies from liability over contaminated drinking water.

Rep. John Shimkus (R-Ill.) described himself as “eating some humble pie” after some of his colleagues and groups said the broad-reaching bill would affect lawsuits over water contaminated with methyl tert-butyl ether (MTBE). A section of the bill currently dismisses all ongoing civil lawsuits in state and federal court over fuels and fuel additives, including MTBE.

“The concerns about MTBE took a lot of us by surprise,” said Shimkus, chairman of the House Energy and Commerce Committee’s subpanel on environment and the economy.

At its core, H.R. 4345 protects fuel producers, engine manufacturers and retailers against damages that occur as a result of U.S. EPA-approved fuels or fuel additives. It is meant to shield companies from liability over any problems that occur with E15, or gasoline blended with 15 percent ethanol.

EPA has approved E15 for use in vehicles from model years 2001 and newer, but auto, oil and engine groups are worried that it will damage engines (Greenwire, April 4).

Like E15 itself, the Shimkus bill has fervent backers and opponents. Its supporters include the ethanol industry, big oil companies and convenience store operators, while environmental organizations, the drinking water industry and consumer advocates are squarely against it.

Critics say the bill would have far-reaching effects by exempting oil companies from damage that occurs from use of any of the 1,500 registered fuels and 7,500 registered fuel additives in the market.

“This is Big Oil’s dream to avoid accountability,” American Association for Justice President Gary Paul said. “This bill grants industrywide corporate immunity for leaking underground tanks and defective fuels and fuel mixtures.”

One of those registered additives, MTBE, has been linked to cancer in animal studies and does not biodegrade easily, environmental groups warn. Several states have banned MTBE, and in 2005, Congress rejected similar liability protections for the substance.

Although Shimkus said at a hearing yesterday that he would address MTBE in his bill, opponents said they still had concerns over protections for consumers and liability for pollution.

“Rather than working to ensure our communities have safe and affordable drinking water, we are considering legislation to allow oil companies and others to pollute groundwater with impunity,” House Energy and Commerce Committee ranking member Henry Waxman (D-Calif.) said. “That is very disturbing to me, and I hope that my fears are not going to be realized.”

Co-sponsoring the bill are Reps. Collin Peterson (D-Minn.), Cathy McMorris Rodgers (R-Wash.), Mike Ross (D-Ark.) and John Sullivan (R-Okla.).

The bill carries the unlikely combination of support from both the American Fuel & Petrochemical Manufacturers and the ethanol industry lobby Renewable Fuels Association.

For oil companies and retailers, the liability protection is critical as E15 is introduced and is used to meet the requirements of the renewable fuel standard.

Supporters of the bill say that an EPA-approved label for E15 gas station pumps will not deter drivers from using the fuel in unapproved vehicles, such as older cars, lawn mowers, snowmobiles and boats. Retailers and companies say they should not be subjected to “frivolous” lawsuits brought about by consumers making poor choices.

The bill is just “common sense,” said House Energy and Commerce Chairman Fred Upton (R-Mich.), “like saying the retail store that sells you antifreeze is not liable if you take it home and drink it.”

The concern over liability is so great that some major oil refiners, among them the nation’s largest ethanol producers, have said they will not sell E15 if they do not receive protections.

“It is safe to say that we would be extremely reluctant to put E15 into the market without adequate liability protection along the lines contemplated by the legislation,” Stephen Brown, a lobbyist for Tesoro Corp., said after yesterday’s hearing.

This is not the first attempt at addressing liability in ethanol-gasoline blends. A bill introduced in the last couple of sessions of Congress by Rep. Charles Gonzalez (D-Texas) would allow consumers to sue the federal government over damage done by ethanol blends.

Rep. Gene Green (R-Texas) is a co-sponsor of the bill, H.R. 523, and yesterday pushed for its passage.

“When the government requires that manufacturers produce products in specific formulations,” said Green, ranking member of the Energy and Commerce subpanel, “the government should be responsible for the liability risks associated with those formulations.”