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Energy Bill's ethanol mandate could raise NY gas prices by 10 cents/gallon;
MTBE liability waiver will force New Yorkers to shoulder cost of cleaning toxic
spills caused by oil companies

Schumer urges bipartisan effort to stop Energy Bill filled with special
interest giveaways, releases new data showing impact on New York State

The Energy Bill moving through Congress this week spells bad news and big bills for New Yorkers,  Senator Charles E. Schumer said today, as he detailed two provisions that would have a particularly negatively impact on New York.

Schumer said the ethanol mandate in the Energy Bill would require gas refiners throughout the country to use ethanol to reformulate their gasoline, a requirement that could drive New York gas prices up by as much as 10 cents/gallon. A second provision would extend liability protections to the makers and distributors of ethanol, MTBE and other gasoline additives, making it impossible for a community impacted by a toxic spill to take those responsible to court.

"If there was ever a time for sanity on Capitol Hill, this is it," Schumer said.  "The Congress is on the verge of passing a bill that takes billions from the pockets of working America and passes it on to a handful of big companies.  We need a bipartisan effort to stop this bill from moving forward and we need it now because this bill is going to send gas prices, water bills, property taxes all through the roof and it's going to give big oil companies a green light to pollute."

The ethanol mandate is expected to cause gas prices in New York to shoot up by an average of 7 to 10 cents a gallon starting in 2005.  Nationwide, prices are expected to rise on average by 4 to 9.7 cents per gallon.  In 2013, the bill requires ethanol to be used by an ever increasing amount determined by the percentage equivalent to the proportion of ethanol in the entire US gas supply.

"The ethanol tax is an astonishing, anti-consumer requirement that forces every refiner in the country to use an ever-increasing amount of ethanol or pay a penalty.  But guess who really gets stuck with paying that fine - you, me, and anyone else who drives and pays for gas," Schumer said.  "As more ethanol is used and gasoline consumption grows, ethanol producers will be hitting the lottery while the nation's drivers will be losing their shirts every time they fill their tanks.  Maybe they have a different name for it in the Corn Belt, but in my neighborhood that's called highway robbery."

For states like New York, ethanol is expensive because it cannot be transported using traditional means like pipelines and needs to be trucked and barged into the region. With only a handful of companies controlling ethanol production, Schumer said supply problems would also drive up gas costs. "If you are far away from these ethanol plants, it has to be produced, put on a truck, a barge, sent down to Mississippi, and then, by boat, sent all around the country and then loaded back, put on a truck, and put into the gasoline. You can see why it is so pricey," Schumer said.

New Yorkers will also find themselves unable to hold the makers of ethanol, MTBE and other gasoline additives accountable if those products are found to be defective, contaminate groundwater, or cause other pollution problems.  For example, if MTBE pollutes an area's groundwater, communities will be barred from holding the manufacturers and oil companies that produced and used the defective additives in their gasoline accountable in court.  As a result, taxpayers will be forced to pay for any clean-ups while those responsible for the pollution are let off the hook. A September Zogby poll found that 86 percen t of Americans favor holding oil and petrochemical companies responsible for paying to clean up the MTBE pollution.

MTBE came into wide use after changes to the Clean Air Act in 1990 required that reformulated gasoline containing an oxygenate be sold in areas like New York with poor air quality. When the potentially cancer-causing chemical leaks out of an underground storage tank into an underground water system, the poison does not break down, moves through the water quickly, and makes the water smell and taste like turpentine.  
In New York, there are about 10,000 MTBE spills that need to be cleaned up, according to the New York State Department of Environmental Conservation (DEC).  The average cost per clean-up is about $1 million which translates to a cost of about $10 billion statewide, although costs can run as high as $4 to $8 million to clean larger spills.

Since the oil companies responsible for the spills will be protected from any lawsuits, the cost of cleaning spills that, among other things, contaminate groundwater, will be passed on to individuals through property taxes, water and other bills.  In Long Island, for example, the average water bill is expected to rise by 66 percent to cover the costs of MTBE cleanup.  Overall, the cost for cleaning up MTBE on Long Island would be between $260 and$540 million for its 130 public water supplier wells that are impacted by MTBE.  Nationwide, the cost is expect to exceed more than $29 billion.

"This may be the single worst special-interest giveaway to polluters that I have ever seen in more than 20 years in Washington." Schumer said. "The idea that we should let the companies whose product literally poisoned our groundwater get away free - and instead force innocent New Yorkers to pay for the cleanup - is so incredible and so audacious that words fail to describe it."

The "Safe Harbor" provision would prevent petroleum companies from having to pay a cent to clean up the damage their toxic product created by making a blanket declaration that chemicals added to gasoline as part of the energy bill's ethanol mandate or MTBE can be considered a "defective product" in a court, even if the chemical is classified as a carcinogen.

The provision is particularly galling in light of a decision by a California jury 18 months ago that found "clear and convincing evidence" that three major oil companies acted "with malice" and were liable for polluting ground water with MTBE. During the case, plaintiffs uncovered internal industry documents showing companies had known for years about the dangers of MTBE while they still were promoting its use.

Although Schumer and others prevented this provision from being added into the Senate version of the Energy bill this summer, the final agreement includes the "Safe Harbor" provisions.


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Schumer Nov. 19, 2003
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