MTBE ruling a loss to oil industry: South Tahoe was 1st to get punitive settlement
August 1, 2005
A provision protecting oil companies from lawsuits over the gas additive MTBE was thrown out of the energy bill Congress passed Friday, meaning cities can continue to sue to pay for cleanup of the drinking water contaminant.
The issue is close to the heart of South Lake Tahoe.
In 2001, the city’s water district was the first in the nation to file, go to trial and settle a suit over the additive after it was found contaminating 12 wells. The wells, along with several gas stations, were shut down.
After more than a year of litigation, South Tahoe Public Utility District won $69 million from 33 oil companies. It used the money to drill two new wells, as well as treat contamination. It still has $20 million in its coffers for future MTBE cleanup.
“A lot of what came out in our trial provided the information to battle the disinformation distributed by the oil industry in Congress,” said Dennis Cocking, spokesman for the district.
He said soon after South Tahoe’s suit, they started hearing rumblings that the oil industry was seeking protection from Congress.
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The district was involved in a coalition to lobby Congress to drop the language from the bill. The MTBE Coalition is a collection of water agencies, both national and local, and government organizations like the National Coalition of Cities and the National Conference of Mayors.
Oil companies have argued MTBE is not a defective product, saying leaky oil tanks are the problem. This remains their stance today.
But in their suit, the water district was able to prove the oil industry knew what they were getting into.
The water district provided notes by oil industry engineers to their higher ups stating the additive – which stands for methyl tertiary butyl ether – is water soluble, moves faster and further than other constituents of gasoline, has serious potential threats to groundwater if there are drinking water wells nearby, and needs to be handled differently.
MTBE is listed as a possible carcinogen by the Environmental Protection Agency. At very low levels, it can be tasted and smelled in water. It tastes like turpentine, Cocking said.
The water district jumped on the contaminant for this reason, despite a lack of clear evidence of its harmfulness to human health. In a resort community known for its clean air and water, tapwater that tastes like turpentine wasn’t going to fly, Cocking said.
“As soon as your public loses confidence in its drinking water, it could be economically disastrous,” he said.
The concern over the MTBE language in the energy bill was not just the prohibition on MTBE lawsuits, but also any precedent it might set.
“If the precedent was set by giving them immunity from litigation, other companies producing chemicals would take advantage of that,” Cocking said.
The suit was STPUD vs. Arco et al.