Order Code RS21676
Updated June 4, 2004
CRS Report for Congress
Received through the CRS Web
The Safe-Harbor Provision for Methyl Tertiary
Butyl Ether (MTBE)
Aaron M. Flynn
Legislative Attorney
American Law Division
Summary
Methyl tertiary butyl ether (MTBE) is a fuel additive in wide use throughout the
United States. Due to leakage from underground storage tanks and other sources of
exposure, MTBE has been found in the drinking water supplies of several states. The
current version of omnibus energy legislation, S. 2095, now before the Senate, as well
as additional legislation such as S. 791, H.R. 3940, and H.R. 2253, provide for the
eventual discontinuation of the additive but do not provide parties associated with
MTBE with any special protections from liability. Other legislation, including the
conference-reported version of the Energy Policy Act of 2003, H.R. 6, contains a safe-
harbor provision protecting any potential defendant, such as MTBE manufacturers and
distributors, from products liability claims. Additionally, the provision includes
language applying the safe-harbor retroactively, potentially barring several pending
lawsuits. Liability related to MTBE contamination remains controversial and is likely
to again become the subject of debate. Accordingly, this report analyzes the legal
implications of the safe-harbor provision found in the most recent version of H.R. 6.
This report will be updated as necessary.
The legal status of methyl tertiary butyl ether (MTBE) is currently at the forefront
of the debate over the future of U.S. energy policy. MTBE is a petroleum fuel additive
that has commonly been in use since the 1970s and is now primarily used as a fuel
oxygenate. The current version of omnibus energy legislation, S. 2095, now before the
Senate provides for the eventual discontinuation of the additive, but does not provide
parties associated with MTBE with any special protections from liability. The
conference-reported version of H.R. 6, the predecessor to the bill now under
consideration, contains a safe-harbor provision exempting all potential defendants from
liability associated with “defective product” claims for fuel additives, including MTBE,
and fuels blended with such additives. This MTBE safe-harbor would not insulate a
responsible party from other liabilities, such as responsibility for environmental cleanup.
The safe-harbor provision is also written to apply retroactively to September 5, 2003 and
would bar numerous lawsuits already filed in courts throughout the country.
Congressional Research Service ˜ The Library of Congress

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The rationale behind the H.R. 6 provision is that MTBE use in gasoline was
precipitated by federal mandates and that leaking storage tanks and other sources of
exposure, not the product itself, are responsible for current contamination. As liability
related to MTBE contamination remains controversial and is likely to again become the
subject of debate, this report analyzes the legal implications of the safe-harbor provision
found in the previous version of omnibus energy legislation.
Background
For technical and cost reasons, MTBE’s present use was, in part, precipitated by the
requirements of the 1990 Clean Air Act Amendments and their requirements that
reformulated gasoline contain at least 2% oxygen.1 Use of reformulated gasoline is
required in areas that fail to meet federal ozone standards.2 MTBE, like all ethers, is
highly soluble and has become more controversial in recent years as reports of water
contamination and resulting lawsuits continue to surface.3 Sources of contamination are
varied but are primarily identified with leaks or other spills from Underground Storage
Tanks, a pervasive method of gasoline storage.4 At the present time, there is no consensus
on the health effects associated with MTBE contamination, with certain parties claiming
that MTBE is a suspected carcinogen and others claiming that the chemical is relatively
benign.5 The EPA has studied the health effects of MTBE, and, so far, the agency has
concluded that the associated risks are minimal at levels typically detected in drinking
water. However, the agency continues to study the issue.6
1 See, UNITED STATES ENVIRONMENTAL PROTECTION AGENCY REPORT, ACHIEVING CLEAN AIR
AND CLEAN WATER: THE REPORT OF THE BLUE RIBBON PANEL ON OXYGENATES IN GASOLINE,
Pub. No. EPA402-R-99-021, (September 1999); see also 42 U.S.C. § 7545. For further
information, see CRS Report 98-290 ENR, MTBE in Gasoline: Clean Air and Drinking Water
Issues, by James E. McCarthy and Mary Tiemann.
2 42 U.S.C. § 7545.
3 See generally UNITED STATES GENERAL ACCOUNTING OFFICE REPORT, TESTIMONY OF JOHN
STEPHENSON, DIRECTOR NATURAL RESOURCES AND ENVIRONMENT, BEFORE THE SUBCOMMITTEE
ON ENVIRONMENT AND HAZARDOUS MATERIALS, COMMITTEE ON ENERGY AND COMMERCE,
HOUSE OF REPRESENTATIVES: MTBE CONTAMINATION FROM UNDERGROUND STORAGE TANKS,
Pub. No. GAO 02-753T (May 21, 2002).
4 Id. at 1. For further information, see CRS Report RS21201, Leaking Underground Storage
Tanks: Program Status and Issues, by Mary Tiemann.
5 See Earl Ainsworth, Protecting Water: Energy Bill Fuels Rush to File Pollution Claims, 12 N.J.
Law: Wkly. Newspaper 2196 (Nov. 10, 2003).
6 See, Announcement of the Drinking Water Contaminant Candidate List, 63 Fed. Reg. 10273
(March 2, 1998); see also U.S. Environmental Protection Agency, MTBE (methyl tertiary butyl
ether) and Underground Storage Tanks available at [http://www.epa.gov/swerust1/mtbe/]; see
also UNITED STATES ENVIRONMENTAL PROTECTION AGENCY OFFICE OF RESEARCH AND
DEVELOPMENT, ASSESSMENT OF POTENTIAL HEALTH RISKS OF GASOLINE OXYGENATED WITH
METHYL TERTIARY BUTYL ETHER (MTBE), Pub. No. EPA/600/R-93/206 (November 1993).

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Liability
Title 15 of H.R. 6, the Energy Policy Act of 2003, deals with fuel additives. Section
1502 of that title contains the safe-harbor provision for manufacturers of MTBE and other
fuel oxygenates. The section currently reads:
(a) In General.–Notwithstanding any other provision of Federal or State law, no
renewable fuel, as defined by section 211(o)(1) of the Clean Air Act, or methyl
tertiary butyl ether (hereinafter this section [sic] referred to as “MTBE”), used or
intended to be used as a motor vehicle fuel, nor any motor vehicle fuel containing
such renewable fuel or MTBE, shall be deemed a defective product by virtue of the
fact that it is, or contains, such a renewable fuel or MTBE, if it does not violate a
control or prohibition imposed by the Administrator of the Environmental Protection
Agency (hereinafter in this section referred to as the “Administrator”) under section
211 of such Act and the manufacturer is in compliance with all requests for
information under subsection (b) of such section 211 of such Act. If the safe harbor
provided by this section does not apply, the existence of a claim of defective product
shall be determined under otherwise applicable law. Nothing in this subsection shall
be construed to affect the liability of any person for environmental remediation costs,
drinking water contamination, negligence for spills or other reasonably foreseeable
events, public or private nuisance, trespass, breach of warranty, breach of contract, or
any other liability other than liability based upon a claim of defective product.7
This language would potentially provide a liability shield for all those who might be
sued for supplying a defective renewable fuel or MTBE itself, as well as fuels blended
with MTBE or other additives.8 The liability shield will take effect so long as the cited
statutory and regulatory requirements are complied with.9 To this end, we note that the
term “manufacturer,” as used in the bill, might apply to manufacturers of MTBE and other
fuel additives, as well as those entities that produce additive-blended and specifically
MTBE-blended fuels.10 EPA regulations issued under the Clean Air Act define fuel and
fuel additive manufacturers to include those who cause or direct “the alteration of the
chemical composition of a bulk fuel, or the mixture of chemical compounds in a bulk
fuel, by adding to it an additive,” and those who produce, manufacture, import, or sell fuel
additives.11 Section 211 of the Clean Air Act appears to implicitly adopt these definitions
of “manufacturer,” and specifically indicates that term encompasses importers.12 Thus,
it appears relatively clear that the applicability of the safe-harbor provision may depend
upon compliance with section 211 of the Clean Air Act and any relevant EPA regulations
by a potentially large group of manufacturers.
7 H.R. 6, 108th Cong. § 1502(a) (Conference report).
8 While the safe-harbor provision would apply to other additives and additive blended fuels, such
as ethanol or bio-diesel, this report is primarily focused upon MTBE and MTBE-blended fuels
and does not address issues specific to other additives.
9 Id.
10 Blending of MTBE with fuel is typically done by refiners. Other additives may be blended at
different stages of production.
11 40 C.F.R. § 79.2 (2003).
12 42 U.S.C. § 7545(b), (o).

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Assuming the safe-harbor’s applicability, the type of liability protection provided
necessarily depends on the term “defective product,” which appears to refer to state
products liability claims.13 Products liability is a traditional common law tort. A tort is
a civil action to recover damages for injuries caused by means other than breach of
contract. The usual standard of liability in tort actions is negligence, which is the failure
to exercise due care. In products liability cases, however, the courts apply strict liability
instead of negligence as the standard for recovery.14 Thus, absent the safe-harbor
provision, an MTBE manufacturer or distributor, for instance, could be held liable for a
defective product that causes injury even if the party had exercised due care in all phases
of production.
There are three different types of product defects that can give rise to liability:
manufacturing defects, design defects, and failures to adequately warn of product
hazards.15 A product with a manufacturing defect is one that is not in the condition in
which it was designed to be.16 A product with a design defect is one that is in the
condition in which it was designed to be, but was not designed in the safest feasible
manner.17 If a manufacturer has used the safest feasible design, but that design has an
inherent danger that is not obvious to users of the product, then the manufacturer must
warn users of the danger or be liable for failure to warn.18 While manufacturers are often
the target of such litigation, and while the exact contours are a matter of state law, liability
often extends beyond manufacturers to distributors, sellers, and even to commercial
lessors and bailors.19 Thus, absent a safe-harbor provision, most entities involved in the
production, distribution, and sale of fuel additives or blended fuel, even those who would
not be deemed manufacturers under the relatively broad definition found in the Clean Air
Act and EPA regulations, could potentially be held liable for a defective product under
any of the above-mentioned theories.
The broad language of the MTBE safe-harbor provision would appear to apply to all
three concepts of products liability and effectively prevent liability from attaching under
such theories. Further, even if a plaintiff could prove that an MTBE manufacturer had
breached a warranty or been negligent in the manufacture of MTBE, the plaintiff under
the bill apparently could not bring a defective product suit. Additionally, while the safe-
harbor’s applicability is conditioned upon certain actions taken by additive or blended-
fuel manufacturers, in its current form, the provision would appear to apply to all potential
defendants in a products liability claim. Similarly, failure on the part of a manufacturer
13 See, e.g., Restatement (Third) of Torts: Prod. Liab. § 1 (1998).
14 See, e.g., Dawson v. Chrysler Corp., 630 F.2d 950, 962 (3rd Cir. 1980).
15 See, e.g., Restatement (Third) of Torts: Prod. Liab. § 2 (1998).
16 See, e.g., Restatement (Third) of Torts: Prod. Liab. § 2(a) (1998).
17 See, e.g., Restatement (Third) of Torts: Prod. Liab. § 2(b) (1998).
18 See, e.g., Restatement (Third) of Torts: Prod. Liab. § 2(c) (1998).
19 See, e.g., Restatement (Third) of Torts: Prod. Liab. § 1 (1998); Wright v. Newman, 735 F.2d
1073, 1077 (8th Cir. 1984).

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to comply with the cited environmental provisions would appear to remove the liability
shield for all potential defendants.20
While potential defendants could shield themselves from defective products-related
liability, it would appear that they would remain susceptible to other types of legal claims.
Indeed, the language of the provision specifically maintains that other bases of liability,
such as environmental remediation costs, drinking water contamination, trespass, public
or private nuisance, breach of warranty, breach of contract, and negligence for reasonably
foreseeable events are not affected by the safe-harbor provisions.21 Reaching MTBE
manufacturers and those who blend fuels may prove more difficult under these other bases
of liability. As stated previously, most contamination occurs due to leaking underground
storage tanks located at individual gas stations. Liability for this contamination could
attach to the party responsible for such tanks, but that party is not necessarily the fuel
manufacturer or refiner.
Retroactive Application
As is not an uncommon practice, Congress has indicated that the safe-harbor
provisions will apply retroactively, meaning that the law, if enacted, would govern events
in the past back to the specified date. The provision states:
(b) Effective Date.–This section shall be effective as of September 5, 2003, and shall
apply with respect to all claims filed on or after that date.22
In this particular case, the safe-harbor’s retroactive application would effectively bar
several pending lawsuits claiming MTBE is a defective product. It is well-settled that
Congress has the power to legislate retroactively, effectively closing off a remedy in the
courts, under certain circumstances.23 Primary among these circumstances is the
requirement that there be no final decision in the case.24 Such action must also satisfy due
process. In this context, it has been established that due process will not be violated when
the legislation has “a legitimate legislative purpose furthered by a rational means,” a
standard that is quite deferential to the Congress.25
But while Congress has the power to cut off pending MTBE lawsuits, it is an
altogether separate question whether exercise of that power effects a Fifth Amendment
20 H.R. 6, 108th Cong. § 1502(a).
21 H.R. 6, 108th Cong. § 1502(a).
22 H.R. 6 108th Cong. § 1502(b).
23 See, United States v. Schooner Peggy, 5 U.S. 103, 110 (1801); Landgraf v. U.S.I. Film
Products, 511 U.S. 244, 280 (1994); Kaiser Alum. & Chem. Corp. V. Bonjourno, 494 U.S. 827,
837-38 (1990); Kopec v. City of Elmhurst, 193 F.3d 894, 903 (7th Cir. 1999); Henderson v.
Scientific-Atlanta, Inc., 971 F.2d 1567, 1573 (11th Cir. 1992).
24 Plaut v. Spendthrift Trust, 514 U.S. 211, 218-19 (1995). A decision is not considered final
until all appeals have been taken or the time for appeals has lapsed.
25 General Motors Corp. v. Romein, 503 U.S. 181, 191 (1992).

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taking of private property (the underlying causes of action), requiring compensation.26
The crux is straightforward: do the accrued MTBE causes of action that would be
extinguished constitute “property”? Of particular significance is how this inquiry would
be resolved in two courts, the U.S. Court of Federal Claims and its appellate court, the
U.S. Court of Appeals for the Federal Circuit, since the former has exclusive jurisdiction
over takings claims against the United States seeking more than $10,000.27 But while the
Federal Circuit has held accrued causes of action to be property, it has done so apparently
only as regards extinguishment of international claims.28 Were these courts faced with
extinguishment of state-law claims, as in the case of the MTBE litigation, they might be
tempted to follow the rule that “property” under the Takings Clause is normally defined
by reference to state law. Our preliminary review suggests that state courts are divided
as to the property status of accrued causes of action.29
In sum, whether enactment of the energy bill would effect a taking of the MTBE
plaintiffs’ accrued product-liability causes of action must be deemed an open question.
26 The Fifth Amendment Takings Clause states: [N]or shall private property be taken for public
use, without just compensation.” The Clause is designed to “secure compensation in the event
of otherwise proper interference amounting to a taking.” First English Evangelical Lutheran
Church v. Los Angeles County, 482 U.S. 304, 315 (1987).
27 28 U.S.C. § 1491(a).
28 See, e.g., Abrahim-Youri v. United States, 139 F.3d 1462, 1465 (Fed. Cir. 1997).
29 We refer here to accrued causes of action prior to being reduced to final, unreviewable
judgment. Once reduced to final, unreviewable judgment, preliminary research indicates near-
unanimous support for property status.

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