Oil Companies Liable for MTBE Contamination.

April 22, 2002

A jury in San Francisco has held three oil companies liable for the MTBE contamination of Lake Tahoe in California. Several other companies had settled with the South Tahoe Public Utility District prior to trial. The Tahoe district estimates that clean-up costs could amount to more than $50 million.

"There is a rising gas tax on American consumers - the clean-up costs related to MTBE," said Bob Dinneen, Renewable Fuels Association president. "It doesn't matter whether local governments or oil companies pay for clean-up efforts; the ultimate cost is borne by consumers in the form of higher taxes or higher prices at the pump. The longer MTBE remains a part of our gasoline supply, the higher this tax will be. MTBE clean-up costs amount to the equivalent of a hidden 22 cent per gallon gasoline tax. The current Senate energy bill contains a bipartisan agreement that will ban MTBE nationwide in four years, but efforts to destroy this agreement by reducing or eliminating the renewable fuels standard (RFS) will do nothing more than extend the use of MTBE and force higher pump prices onto the backs of consumers."

A study conducted for the city of Santa Monica, which also is suing oil companies for MTBE contamination, found it will cost at least $29 billion to clean-up MTBE nationwide - or 22 cents for every gallon of gasoline sold in the U.S. last year. According to the U.S. Energy Information Administration, 131.6 billion gallons of gasoline were consumed in 2001.

The Tahoe trial now moves to the penalty phase where the utility district is seeking actual and punitive damages. Similar suits are moving forward in numerous other states. Fourteen states have acted to ban MTBE as a result of water contamination and other bans are pending.