NGI The Weekly Gas Market Report / NGI All News Access

House Plan Unveiled to Clean Up MTBE Contamination, Shield Producers from Liability

Rep. Joe Barton (R-TX), chairman of the energy bill conference, and Rep. Charles Bass (R-NH) on Friday announced a plan aimed at resolving the stalemate over the proposed liability protections for producers of the fuel additive methyl tertiary butyl ether (MTBE). The proposal drew immediate objections from House and Senate Democrats.

The plan calls for the creation of an $11.43 billion industry-government fund over a 12-year-period (2006 to 2017) to clean up groundwater contaminated by the gasoline additive MTBE and to compensate the states for other damages, and in return producers of MTBE would be shielded from product liability lawsuits. All industry and federal funding would deposited in a separate trust fund account in the Leaking Underground Storage Tank (LUST) Trust Fund. The plan also provides for matching contributions by the states.

Beyond 12 years, the administrator of the Environmental Protection Agency (EPA) may extend the fund authority upon notice that MTBE contamination still exists in the states.

Barton, chairman of the House Energy and Commerce Committee, was expected to submit the proposal to House-Senate negotiators on the omnibus energy bill on Monday (July 25). The House energy bill includes a provision for liability protection for MTBE producers, but the Senate version does not. The contentious issue sank the energy bill in 2003, and many believe it could do the same this year if a deal isn't reached with Senate energy negotiators.

House Democrats were critical of the Barton-Bass plan. "This proposal will shift billions in MTBE contamination cleanup costs away from the oil industry and onto the American taxpayers," said Reps. Lois Capps, Henry Waxman and Hilda Solis of California, and Edward Markey of Massachusetts. Sen. Charles Schumer (D-NY) echoed the sentiment. "This proposal bails out MTBE polluters at the expense of federal and state taxpayers without even solving the problems of hundreds of thousands of homeowners and municipalities [that] will be left holding the bag."

Under the Barton-Bass proposal, industry would contribute $500 million in the first year and $325 million in each of the following 11 years. Contributions would be made by gasoline retail outlets, finished gasoline producers, merchant producers of MTBE and importers of MTBE, and payments would be due annually, Barton and Bass said.

Finished gasoline refiners would pay the most -- 65.76% or $2.68 billion over the 12-year period. They would be followed by gasoline retail outlets, which would contribute 13.75% or $560 million. Finished gasoline blenders and finished gasoline importers would each pay 6.75% or $275 million. Merchant producers of MTBE would be responsible for 5.75% of $234 million, and merchant importers would pay about $51 million under the plan, or 1.25%.

The plan would transfer $2.4 billion in direct spending from the existing LUST fund balance over the 12 years at a rate of $200 million a year, which would leave the LUST fund account solvent at the end of that period, Barton and Bass said. It also authorizes $2.1 billion from the general treasury.

The proposal requires individual states to make a 25% matching contribution for all remediation activity in their state. States that pay for corrective actions through state fees or taxes will be limited to a 10% matching requirement, the House lawmakers noted.

"If at anytime after the end of the fourth fiscal year (FY2009) the separate trust fund account balance exceeds $2 billion, then the administrator will suspend collecting the fees [from industry] for a period of six months and may continue to suspend as long as the balance remains above $2 billion," the proposal said.

In addition, "if at anytime the industry fees account for more than 60% of the amount available for expenditure in the separate trust fund account, then the administrator will suspend collecting the fees for a period of six months and may continue to suspend as long as the proportionality of fees exceeds 60%."

The EPA administrator would be required to report to Congress at the start of 2009, 2013 and 2017 on the effectiveness of the program and the adequacy of the funding to carry out remediation and compensation for other damages. Absent congressional reauthorization, the fund would sunset at the end of fiscal year 2017.

©Copyright 2005 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.

ISSN © 2577-9877 | ISSN © 1532-1266
Comments powered by Disqus