Order Code RS21676
Updated February 4, 2005
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.
Whether to shield certain parties from MTBE-related liability proved controversial in
the 108th Congress, and ultimately no legislation addressing the issue was enacted. 108th
Congress legislation included S. 2095, S. 791, H.R. 3940, and H.R. 2253, each of which
would have provided for the eventual discontinuation of the additive but did not provide
parties associated with MTBE with any special protections from liability. Other 108th
Congress legislation, including the conference-reported version of the Energy Policy Act
of 2003 (H.R. 6) contained a safe- harbor provision protecting any potential defendant,
such as MTBE manufacturers and distributors, from products liability claims.
Additionally, the H.R. 6 provision included language applying the safe-harbor
retroactively, potentially barring several pending lawsuits. Exemption from liability
related to MTBE contamination remains controversial and may again become the subject
of debate in the 109th Congress. Accordingly, this report analyzes the legal implications
of the safe-harbor provision found in H.R. 6. This report will be updated as necessary.
The legal status of methyl tertiary butyl ether (MTBE) has played a prominent role
in the debate over future 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.
Legislation in the 108th Congress dealt with MTBE in a variety of ways. S. 2095, one of
the later versions of omnibus energy legislation, would have provided for the eventual
discontinuation of the additive but did not provide parties associated with MTBE with any
special protections from liability. The conference-reported version of H.R. 6, the
predecessor to S. 2095, contained 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 have insulated a responsible party from other liabilities, such as responsibility for
environmental cleanup. The safe-harbor provision was also written to apply retroactively
Congressional Research Service ˜ The Library of Congress

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to September 5, 2003 and would have barred numerous lawsuits already filed in courts
throughout the country.
The rationale behind the H.R. 6 form of liability protection 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 in the 109th Congress, this report analyzes the legal
implications of the safe-harbor provision found in previous 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, especially the requirement 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 (108th Congress), the Energy Policy Act of 2003, would have dealt
with fuel additives. Section 1502 of that title contained the safe-harbor provision for
manufacturers of MTBE and other fuel oxygenates. The section read:
(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 have potentially provided 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 would have taken effect so
long as the cited statutory and regulatory requirements were 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 the
term encompasses importers.12 Thus, it appears relatively clear that the applicability of
the safe-harbor provision would have depended 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 have applied 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 that would
have been provided would necessarily depend 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 have likely applied
to all three concepts of products liability and effectively prevented liability from attaching
under such theories. Additionally, while the safe-harbor’s applicability was conditioned
upon certain actions taken by additive or blended-fuel manufacturers, the provision would
have likely applied to all potential defendants in a products liability claim. Similarly,
failure on the part of a manufacturer to comply with the cited environmental provisions
would have likely removed the liability shield for all potential defendants.20
Finally, while potential defendants could have shielded themselves from defective
products-related liability, it would appear that they would have remained susceptible to
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., id. § 2(a).
17 See, e.g., id. § 2(b).
18 See, e.g., id. § 2(c).
19 See, e.g., id. § 1; Wright v. Newman, 735 F.2d 1073, 1077 (8th Cir. 1984).
20 H.R. 6, 108th Cong. § 1502(a).

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other types of legal claims. Indeed, the language of the provision specifically maintained
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 were not to have been affected by the
safe-harbor provisions.21 It is worth noting that 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 indicated in H.R. 6 that the safe-harbor
provisions would have applied retroactively, meaning that the law, if enacted, would have
governed events in the past back to the specified date. The provision stated:
(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 have
effectively barred several pending lawsuits claiming that 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
legislative 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
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
21 Id.
22 Id. § 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).
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).

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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 a safe-harbor provision similar to that contained in
H.R. 6 would effect a taking of the MTBE plaintiffs’ accrued product-liability causes of
action must be deemed an open question.
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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