In re Methyl Tertiary Butyl Ether (Mtbe) Products, No. MDL 1358(SAS).

• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)
• Writing for the Court: Scheindlin
• Citation: 457 F.Supp.2d 324
• Parties: In re: METHYL TERTIARY BUTYL ETHER ("MTBE") PRODUCTS LIABILITY LITIGATION This document relates to: All cases
• Docket Number: No. MDL 1358(SAS).,No. No. M 21-88.,No. No. 1:00-1898.
• Decision Date: 23 June 2006

457 F.Supp.2d 324 In re: METHYL TERTIARY BUTYL ETHER ("MTBE") PRODUCTS LIABILITY LITIGATION
This document relates to: All cases No. MDL 1358(SAS). No. No. M 21-88. No. No. 1:00-1898. United States District Court, S.D. New York. June 23, 2006.

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Scott Summy, Carla Burke, Baron & Budd, P.C., Dallas, TX, Michael Axline, Duane Miller, Miller, Axline & Sawyer, Sacramento, CA, Victor M. Sher, Todd Robins, Sher Leff LLP, San Francisco, CA, Scott Pasternak, Environmental Division, New York City Law Department, New York, NY, Robin Greenwald, Robert Gordon, C. Sanders McNew, Weitz & Luxenberg, P.C., New York, NY, for Plaintiffs.

Nathan P. Eimer, Pamela R. Hanebutt, Lisa S. Meyer, Eimer Stahl Klevorn & Solberg, LLP, Chicago, IL, for CITGO Petroleum Corporation, CITGO Refining and Chemicals Company, L.P., and PDV Midwest Refining, L.L.C.

Peter John Sacripanti, James A. Pardo, Stephen J. Riccardulli, McDermott, Will & Emery LLP, New York, NY, for Defendants.

OPINION AND ORDER

SCHEINDLIN, Judge.

I. INTRODUCTION

In this consolidated multi-district litigation ("MDL"), plaintiffs seek relief from contamination, or threatened contamination, of groundwater from various defendants' use of the gasoline additive methyl tertiary butyl ether ("MTBE") and/or tertiary butyl alcohol ("TBA"), a product that is formed by the natural degradation of MTBE in water. Defendants now move for summary judgment on the ground that plaintiffs' claims are conflict preempted by

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the Clean Air Act ("CAA") because first, "compliance with both federal and state regulations is a physical impossibility;"¹ or second, plaintiffs' state tort claims "stand[ ] as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress."² After hearing oral argument on May 9, 2006 and conducting a thorough review of the facts presented, defendants' motion is denied.

II. BACKGROUND

The parties have already engaged in extensive motion practice, and familiarity with the Court's previous opinions is assumed.³ The facts underlying this case are comprehensively set out in those opinions.⁴

A. The 1990 CAA Amendments

The purpose of the CAA is "to protect and enhance the quality of the Nation's air resources so as to promote the public health and welfare and the productive capacity of its population."⁵ The CAA gives the United States Environmental Protection Agency ("EPA") the authority to set national ambient air quality standards for various air pollutants.⁶ Individual states must devise plans to meet the standards.⁷

In 1990, amendments to the CAA created the Reformulated Gasoline Program ("RFG Program")⁸ to help reduce ozonecausing car emissions, such as volatile organic compounds ("VOCs") and toxic air pollutants.⁹ In order to accomplish this, section 211(k)(2)(B) of the amendments required that reformulated gasoline have a

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minimum oxygen content of two percent.¹⁰ To achieve this minimum oxygen content, gasoline manufacturers add oxygenated fuel to the gasoline. The RFG Program required the use of reformulated gasoline in the nine largest metropolitan areas with the most severe summertime ozone levels.¹¹ Other areas that did not attain the national ambient air quality standards could opt into the program.¹² In addition, the amendments enacted an Oxygenated Fuels ("Oxyfuel") Program, which required that gasoline contain 2.7 percent oxygen by weight during the wintertime in areas that did not attain the national ambient air quality standard for carbon monoxide.¹³ The EPA certified various blends of gasoline for use in the RFG Program, including gasoline with MTBE, however, it did not mandate the use of any one oxygenate.¹⁴ Two of the most widely used oxygenates are MTBE and ethanol.

Section 211(k)(1) of the amendments authorizes the EPA to issue regulations for reformulated gasoline to require "the greatest reduction" in emissions of ozoneforming VOCs during the summer and toxic air pollutants throughout the year "achievable through the reformulation of conventional gasoline, taking into consideration the cost of achieving such emission reductions, any nonair-quality and other air-quality related health and environmental impacts and energy requirements."¹⁵ In 2005, Congress removed the oxygen requirement for reformulated gasoline contained in the CAA.¹⁶ The Energy Policy Act of 2005 now requires the EPA to promulgate regulations to require gasoline "sold or introduced into commerce in the United States" to contain an annual average volume of four billion gallons of renewable fuel starting in 2006 and increasing to seven and a half billion gallons of renewable fuel in 2012.¹⁷

B. Brief Summary of Plaintiffs' Allegations

MTBE is highly soluble in water and does not readily biodegrade. Because of its high solubility, MTBE races through the underground water supply, eventually contaminating wells and underground aquifers. MTBE can persist in underground aquifers for many decades, far

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longer than other components of gasoline. Even in very small quantities, MTBE imparts a foul taste and odor to water and renders it unusable and unfit for human consumption. MTBE is carcinogenic in animals and may be carcinogenic in humans.¹⁸

Sometime after 1979, defendants started manufacturing, distributing, and/or selling MTBE-containing gasoline.¹⁹ By the 1990s, defendants added MTBE to gasoline in concentrations varying between eleven and fifteen percent.²⁰ Plaintiffs allege that defendants chose to add MTBE to gasoline despite their awareness of specific incidents of MTBE contamination and the dangers posed by MTBE.²¹ Defendants misled the EPA and the public about the dangers of MTBE during the process leading up to the 1990 CAA amendments and conspired to convince the EPA and the public that MTBE was harmless and that increased concentrations of MTBE were desirable.²² According to plaintiffs, had the public been warned of the hazards of MTBE, plaintiffs and the public would have sought and demanded alternative oxygenates.²³ Plaintiffs assert that defendants have a duty "not to market any product which is unreasonably dangerous for its intended and foreseeable uses."²⁴ And plaintiffs claim MTBE is "defective and unreasonably dangerous for its intended and foreseeable transportation, storage, handling and uses."²⁵

III. LEGAL STANDARD

Summary judgment is appropriate if the record "show[s] that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law."²⁶ An issue of fact is genuine if "the evidence is such that a jury could return a verdict for the nonmoving party."²⁷ A fact is material when it "might affect the outcome of the suit under the governing law."²⁸ The movant has the burden of demonstrating that no genuine issue of material fact exists.²⁹

In turn, to defeat a motion for summary judgment, the non-moving party must raise a genuine issue of material fact that does "`not rely on conclusory allegations or unsubstantiated speculation.'"³⁰ To do

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so, it must do more than show that there is a "`metaphysical doubt as to the material facts.'"³¹ In determining whether a genuine issue of material fact exists, the court must construe the evidence in the light most favorable to the non-moving party and draw all justifiable inferences in that party's favor.³²

IV. APPLICABLE LAW

Regulation and control of matters related to public health and safety, such as abatement of water pollution, are within the police powers of the states.³³ However, Congress may preempt state law under the Supremacy Clause of Article VI of the Constitution.³⁴ In the absence of explicit statutory language signaling an intent to preempt state law in traditional state areas of regulation, there is a strong "basic assumption" that Congress did not intend to displace state law.³⁵ "Ordinarily, the mere existence of a federal regulatory or enforcement scheme ... does not by itself imply pre-emption of state remedies."

³⁶ "Undoubtedly, every subject that merits congressional legislation is, by definition, a subject of national concern. That cannot mean, however, that every federal statute ousts all related state law.... Instead, we must look for `special features warranting pre-emption.'"³⁷ Thus, "where Congress has not completely displaced state regulation, federal law may nonetheless preempt state law to the extent it actually conflicts with federal law."³⁸ The Supreme Court has warned against "seeking out conflicts between state and federal regulations where none clearly exists."³⁹ "While Congress may preempt or regulate particular branches of

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tort law, particularly as part of a larger regulatory scheme that seeks to redress the injuries previously covered by state law, the Court has made clear the importance of respecting the role of the states as independent sovereigns."⁴⁰

A. Impossibility

"Conflict preemption" occurs "where it is impossible for a private party to comply with both state and federal requirements."

⁴¹ Though defendants have failed to identify a single case where this doctrine was applied,⁴² it is a potentially powerful doctrine that has been consistently referred to in the Supreme Court's preemption cases.⁴³ The doctrine focuses on whether the federal requirement, on its face, precludes the possibility of the state requirement and is derived from the Court's Commerce Clause cases.⁴⁴ Thus, where one standard precludes the other there is no need to question whether Congress intended to preempt state law. As the court in Florida Lime explained, a situation of impossible dual compliance would be presented if, for example, a federal law "forbade the picking and marketing of any avocado testing more than 7% oil" while a state law "excluded from the

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State any avocado measuring less than 8% oil content."⁴⁵

Though the "categories of preemption are not `rigidly distinct'"⁴⁶ the question of whether it is impossible to comply with two...