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McGarity 2004 MTBE: A Precautionary Tale

In the 1980s and 1990s, methyl tertiary-butyl ether (“MTBE”) became the petroleum industry’s gasoline additive of choice to replace tetra-ethyl lead. MTBE fuel blends were viewed as an environmental boon; MTBE significantly reduces emissions of smog-producing air pollutants and can be produced relatively cheaply. Yet by the end of the 1990s, MTBE had leaked from tens of thousands of underground storage tanks across the country, polluting groundwater and precipitating a large-scale environmental crisis. This Article explores the spectacular rise and fall of MTBE as a case study in regulatory failure. The Article reviews five critical decision points at which EPA or Congress could have either prevented the MTBE crisis or greatly reduced its severity. Drawing on this history, the Article then explores the explanatory power of eight prominent theories of regulation and regulatory failure and the lessons that can be learned from the MTBE crisis. Similar environmental regulatory disasters may be averted if environmental regulation takes a more multi-media approach, involves broader participation by affected interests, is less deferential to the narrow economic concerns of regulated parties, and generally adopts a more precautionary approach to critical decisions.