Energy Policy Act of 2003-Conference Report-Continued

ENERGY POLICY ACT OF 2003-CONFERENCE REPORT-CONTINUED

Mr. INHOFE. Mr. President, I have been listening to the debate. I have come to some conclusions. First of all, one of the things the Senator from Maine said that I agree with is this bill does little to reduce our reliance upon foreign countries for our ability to run this great machine called America. I would like to have had more provisions in there. I would have liked to have had some more generous nuclear generation provisions, maybe ANWR, and a few things that would more directly address this. I am hoping we will be able to do this in the future.

The Senator from North Dakota, when he was talking about the bill, said there were several things in here that he didn't like, and many things in here that he would have liked to have had in here. I feel the same way. That is almost by definition the sign of a good bill because neither one of us is real happy with it. However, we both are going to support this bill.

I think we could have gone further. I have been concerned for many years about our dependency, going all the way back to the Reagan administration when Don Hodel, who was the Energy Secretary at that time, and I used to go around the country to explain to people in consumption States that our reliance upon foreign countries for our ability to fight a war is not an energy issue but a national security issue.

Finally, this is the first approach. I have to say President Reagan didn't really address this, the first President Bush didn't address it, President Clinton didn't address it. This President is addressing it. This may not be perfect, certainly it is far from perfect, but it is the first major step since 1980 to correct a problem we all agree is there.

In deference to the time that we have here I am going to concentrate on one thing. There are a lot of things I would like to talk about because I chair the Environment and Public Works Committee. There are a number of issues that are within my jurisdiction. I thank the manager of this bill, Senator Domenici, for his willingness to let me have input even though I am not on the conference over some of these issues that would have been in my committee.

My concern right now, and what I want to address, is the whole idea of the ethanol and MTBE safe harbor provisions. It has been treated as a red herring. I would like to go over what it really is and what it is not. What we have heard on the floor is good rhetoric from the trial lawyers, but it is not factual.

The premise of the ethanol and MTBE safe harbor is simple: If the Federal Government approves and mandates a product, such as it did with ethanol and MTBE, that product should not be considered "a defective product by virtue of the fact that it is, or contains, such a renewable fuel or MTBE." So let's walk through this and see what the safe harbor provision does.

The ethanol and MTBE safe harbor states:

Notwithstanding any other provision of Federal or State law, no renewable fuel, as defined by section 211(o)(1) of the Clean Air Act . . . used or intended to be used as a 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 renewable fuel or MTBE.

That stands to reason. That is perfectly legal. Yet that is the provision to which most of these people are objecting. How can it be reasonable if we mandate something by law and then turn around and say it is defective by definition? It is just not reasonable.

We know that Congress is mandating renewable fuels in this conference report. The energy bill states:

Not later than one year after the enactment of this subsection, the Administrator [of the EPA] shall promulgate regulations ensuring that motor vehicle fuel sold or dispensed in the United States . . . contains the applicable volume of renewable fuel. . . .

That is in essence the language of the legislation that we are considering today.

MTBE was also similarly mandated. The Clean Air Act Amendments of 1990 signed into law by the first President Bush clearly states:

[t]he oxygen content of gasoline shall equal or exceed 2.0 percent by weight. . . .

At that time, Congress knew the only two additives that could be used were MTBE and ethanol. And the Record shows that.

For example, on March 29, 1990, Senator TOM DASCHLE, the author of the floor amendment that established this 2-percent standard, stated during debate:

The ethers, especially MTBE and ETBE, are expected to be major components of meeting a clean octane program.

Under certain forms of an oxygenate mandate, Senator DASCHLE went as far as to note that:

EPA predicts that the amendment will be met almost exclusively by MTBE, a methanol derivative.

Senator DASCHLE recognized what we all know: There are substantial benefits to using MTBE as far as environmental protection is concerned. In the floor debate on the 2-percent standard, Senator DASCHLE cited evidence that:

NOX, hydrocarbons, and carbon monoxide are dramatically reduced by adding the oxygenate MTBE to gasoline.

So it is clear that Congress mandated ethanol and MTBE in 1990, and, in this conference report, is increasing the mandate on ethanol.

Let me go on reading the ethanol and MTBE safe harbor. The safe harbor applies only:

If it [ethanol or MTBE] does not violate a control or prohibition imposed by the Administrator of the Environmental Protection Agency 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.

So the safe harbor in this conference report applies only if you are in compliance with all the tough fuel requirements of the Clean Air Act.

So to review so far, if ethanol or MTBE is used as required by the Federal Government and is in full compliance of the Clean Air Act, it should not be found defective. Alternatively, if a party does not meet the requirements of the Clean Air Act, the safe harbor does not apply, stating that:

the existence of a claim of defective product shall be determined under otherwise applicable law.

It can still be exercised if they don't comply.

Most importantly, the safe harbor does not impact numerous legal mechanisms available for cleanup and damages. Specifically, the safe harbor states that:

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.

In all those other cases, it remains unchanged. The safe harbor does not apply to anything except liability based upon a claim of defective product, assuming they have complied with the Clean Air Act. It is as simple as that.

As the energy conference report clearly states, the safe harbor does not affect liability under other tort theories. Tort law provides a remedy when there is a breach of a duty resulting in harm to a person, property, or intangible personal interests. The following types of actions have been used in environmental cases. These are actions where recovery took place:

Trespass-interference with the plaintiff's possessory interest in his land. Is that affected by safe harbor? No.

Nuisance-intereference with the plaintiff's use and enjoyment of his property-that is not affected by safe harbor.

Negligence-may be a basis for product liability actions, as well as actions involving the release of allegedly toxic materials. negligence could be based on the design of manufacture of the product, or failure to give warnings necessary to make the product safe. Is this affected by safe harbor? No. It is not affected.

Breach of implied warranty-similar to strict products-liability-is not affected by safe harbor.

Under breach of express warranty-if a manufacturer, distributor, or retailer makes express promises regarding a product, the party is liable if the product fails to perform as promised and that failure leads to injury. It is not affected by safe harbor.

The only thing that is affected is in the areas we have been discussing.

Moreover, this safe harbor in no way shape or form impacts any environmental law. The safe harbor provision would not affect liability, and therefore response, remediation and clean-up, under Federal and State laws. The facts of a given situation would dictate which of the following statutes would be most appropriate for an action. Here are examples of environmental laws that could apply. The following are not impacted: The Resource Conservation and Recovery Act, RCRA; Clean Water Act; Oil Pollution Act-OPA; Comprehensive Environmental, Response, Compensation, and Liability Act-CERCLA or Superfund; not to mention natural resource damages available under OPA, CERCLA, and the Clean Water Act. They are not impacted.

Furthermore, the leaking underground storage tanks provision in this energy conference report greatly enhances the amount of resources available to states and localities through the underground storage funds.

If the language and the impact are so clear, why is the debate so muddy? The answer is because trial lawyers stand to lose billions.

What is the positive affect of this safe harbor?

Liability protection is consistent with environmental protection. Without some stability in liability risk, powerful disincentives will be created to continued manufacturing of clean-fuel additives. Why should we manufacture clean fuel additives if there is no protection? Clean fuel programs have saved thousands of lives across the country. Opposition to commonsense legislation may endanger those most susceptible to air pollution impacts by reducing the ready supply of clean fuel additives.

Failure to limit liability endangers future energy security and clean air. Simply put, additive manufacturers will be extremely reluctant to invest in MTBE replacement additives without some sense of certainty that the Federal Government will not allow those investments to become the basis of undue liability. In other words, as additive manufacturers seek access to capital, demonstrating a responsible Federal role in liability limitation may be crucial to justify future investments in clean additive manufacturing. It is simply a supply and demand argument.

In conclusion, I ask my colleagues to look at the facts. The fact is that the safe harbor is a fair and important provision in an important piece of legislation, which is critical to our national and economic security.

The safe harbor only applies to defective products claims.

I believe very strongly we need to have that clarification.

I repeat one more time what is actually written into the law. It says if the Federal Government approves and mandates a product such as ethanol or MTBE, that product should not be considered a defective product by virtue of the fact that it is or contains such renewable fuel or MTBE which is mandated by law. I appreciate the opportunity to clarify that.

I yield the floor.