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A Pragmatic Approach for Addressing the Issue of Odorant Fade

By Mark Gottlieb

Despite being thrust into the limelight in recent years due to high-profile explosions and increased litigation arising out of odorant fade, the loss of odorant in natural gas is neither a new or recently discovered condition.  Recent events have created a heightened focus and concern within the natural gas industry regarding odor fade.  The causes and remediation of odor fade are not the only critical issues; the natural gas industry is also wrestling with the legal ramifications of its historical knowledge of the condition, and the question of whether to warn consumers and building trades about odor fade in a manner that limits liability on the issue of odorant fade without expanding liability “downstream of the meter.”

History of Odorant And Odorant Fade

In its natural state, natural gas is odorless and undetectable to the human sense of smell.  The dangers of this odorless state came to a head domestically on the March 18, 1937, when a gas explosion occurred at a New London , Texas school resulted in the death of nearly 300 schoolchildren and teachers.  The Bureau of Mines found the New London school tragedy was caused by a natural gas leak that went undetected due to the lack of smell inherent in the gas.1  In response to this tragedy, the State of Texas enacted the first state law requiring that mercaptans be added to natural gas so that humans could detect the presence of natural gas in the event of a leak.2

Today, Federal and state laws mandate the odorization of natural gas so consumers can detect gas leaks via sense of smell.3  The United States Department of Transportation Specifically requires that:

A combustible gas in a distribution line must contain a natural odorant or be odorized so that at a concentration in air of one-fifth of the lower explosive limit, the gas is readily detectable by a person with a normal sense of smell.4

Since 1970 this Federal Regulation has set forth the standard for odorization of natural gas; some states, however, require even stricter standards for odorization.  For example, the Federal Government requires that natural gas be detectable at one-fifth or 20 percent of the lower explosive limit, Massachusetts law requires that the odor be detectable at a 15 percent of the lower explosive limits.

The addition of odorant provides a layer of safety in the form of detection by smell.  It is axiomatic that, should the added odorant change or somehow lose its aromatic properties, then the original danger accompanying odorless natural gas re-emerges.  That is the problem of odor fade, which occurs when the mercaptans and odorants added to natural gas are absorbed by new steel pipe.  The most common odorant used with natural gas is tertiary butyl mercaptan (TBM).5  The interior walls of steel pipe will chemically react with TBM to produce a disulfide product that is either less pungent than the original odorant or which lacks any odorant at all.6  When a TBM molecule adheres to a pipe surface, the process is known as adsorption, and the adherence of the TBM to the surface prevents the odor from traveling downstream with the natural gas to which the molecule was previously attached.7  Until adsorption equilibrium is reached, the mercaptan concentration will continue to be reduced and odorized gas will lose the odor added to it.

Odor fade, particularly with regard to liquid propane, has been known and analyzed for over two decades.  For example, the United States Consumer Product Safety Commission addressed the issue of odor fade in propane in a 1985 study as well as in an October 1987 Memorandum.8  The Memorandum noted in detail the propensity of mercaptan to react with rust on the inside of propane storage tanks, resulting in fade and situations where “the odorant may not be detected during a gas leak.”9  As a result of this propensity for fade, propane tanks and other literature accompanying propane routinely contain consumer warnings regarding the potential for odor fade in older or rusted propane tanks.

Additionally, internal documentation within the natural gas industry demonstrates that, at least as long ago as the early 1990′s, some natural gas companies warned their own workers regarding odor fade in their own distribution lines.  In fact, gas companies have not only addressed odor fade in safety and training materials, they have also engaged in conditioning or “pickling” their distribution lines in order to minimize or prevent odor fade.  However, unlike propane, until very recently the natural gas industry did not provide consumer warnings regarding the propensity for odor fade in natural gas.  This disparity between the warnings provided for propane and the absence of consumer warnings for natural gas provides a significant challenge for natural gas companies defending claims alleging a failure to warn about odor fade.

Risks Associated With Odorant Fade

Because the chemical process which creates odor fade is dependent upon the available surface area for adsorption to occur, it stands to reason that the larger the pipe used in the natural gas system, the greater the propensity for odor fade as there is more surface area available to create fade.  Moreover, the flow rate of the natural gas through a pipe is another critical factor in when odor fade is ripe to occur.  The slower or more sporadic the flow rate, the greater the risk for adsorption and odor fade.  Thus, the size of pipe and the flow rate create a greater likelihood for odor fade to occur in large industrial projects that feature larger diameter new steel pipes, large volumes of natural gas within the system and longer runs of gas piping than is traditionally found in a standard residential gas system.

Regardless of whether odor fade occurs during the construction phase of such industrial projects or after project completion when the facility is operating, there are sure to be a large number of persons in the area exposed to the risks of odor fade.  Thus, odor fade is most likely to occur when the potential for loss of life or injury is greatest.  In fact, several recent natural explosions cited by the United States Chemical Safety and Hazard Investigation Board demonstrate the catastrophic risks involved with odor fade including: the June 9, 2009 ConAgra Slim Jim Plant explosion in Garner, North Carolina; the May 19, 2008, San Diego Hilton explosion; the August 7, 2007, Cheyenne, Wyoming hotel explosion; the November 2005 Porterville School explosion; and the October 12, 2005, Triumph Foods explosion in St. Joseph, Missouri.10  In each of these explosions there were numerous workers on site that were exposed to the risks of odor fade.

Consequently, in assessing the propriety and need for warnings about odorant fade, the natural gas company must not simply analyze the issue in a vacuum, but rather, it must take into consideration the catastrophic risks that are inherent to conditions where odor fade is likely to occur.

Warning About Odorant Fade: Decreasing Or Increasing The Scope Of Your Liability?

In the past five years there have been five major industrial explosions in which the odor of natural gas was called into question.  As expected, with the increasing number of catastrophes has come increased litigation.  The Natural Gas Industry is facing an increased number of claims alleging that Natural Gas Companies have failed to properly warn consumers of the phenomenon and dangers of odorant fade.  Of significant concern is whether providing consumer warnings regarding odorant fade that occurs downstream of the meter expands a company’s liability beyond that which is provided under state and federal laws.

One of the first questions naturally raised is whether a natural gas company that supplies odorized natural gas even has a duty to warn customers about odor fade.  Case law strongly suggests that such a duty will be found if the natural gas company knew or should have known of the dangers involved with odor fade.  At least one court has held that an odorant’s susceptibility to odor fade imposes a duty to provide adequate warning and instructions regarding odor fade upon the odorant manufacturer.11  In Natural Gas Odorizing, Inc. v. Downs, the Court further held that this susceptibility to odor fade renders the odorant ” defective and unreasonably dangerous” if adequate warnings are not provided by the manufacturer.12  Although Downs did not address whether warnings are required from a supplier of odorized natural gas, the case makes it quite clear that its susceptibility to odorant fade renders a product unreasonably and inherently dangerous.

Moreover, the Supreme Court of Iowa has held that because a natural gas company knew of a dangerous condition in its gas, it had a duty to warn its customers of that dangerous condition.13  Specifically, in Estate of Pearson v. Interstate Power & Light Co., the Court held that the defendant gas company had duty to warn its customers that an inherent danger existed when its odorized gas was used with certain “cobra connectors” used in gas piping.14  Central to the Court’s holding was the gas company’s historical knowledge that sulfur compounds in its gas, as well as the ethyl mercaptan added to its gas, had a corrosive effect on the cobra connectors and that such corrosion caused leaks in the piping.15  The Court also found that the residential consumer plaintiffs had no knowledge of the corrosive effects of the gas and mercaptan.16  The gas company’s knowledge of the corrosive danger and the consumer’s lack thereof were of critical importance as the Court based its holding of a duty to warn on the Restatement (Second) of Torts, which states:

One who supplies directly . . . a chattel for another to use is subject to liability to those whom the supplier should expect to use the chattel with the consent of the other or to be endangered by its probable use, for physical harm caused by the use of the chattel in the manner for which and by a person for whose use it is supplied, if the supplier

(a) knows or has reason to know that the chattel is or is likely to be dangerous for the use for which it is supplied, and

(b) has no reason to believe that those for whose use the chattel is supplied will realize its dangerous condition, and

(c) fails to exercise reasonable care to inform them of its dangerous condition or of the facts which make it likely to be dangerous.17

Thus, the knowledge of the consumer as well as the knowledge of the supplier are both of critical importance in determining the duty to warn.

Moreover, the Court in Pearson, held that the “filed-tariff” doctrine – a legal doctrine that precludes causes of action that attempt to alter the terms and conditions contained in a public tariff – did not bar claims sounding in a common-law duty of failure to warn.  While recognizing that the defendant gas company had no duty to inspect the piping and equipment “downstream of the meter,” the Court held that such limitation did not preclude or obviate the gas company’s duty to “exercise reasonable care to minimize any hazard inherent in its gas services.”18  The court held that the corrosive tendency of the mercaptan was in fact such an “inherent hazard” and that the natural gas company had a duty to warn of this hazard notwithstanding the fact that the customer had responsibility for the pipes downstream of the meter.

Taken together, Downs and Pearson suggest that a natural gas company does in fact have a duty to warn about the dangers of odor fade in odorized natural gas.  The Downs Court held that susceptibility to odor fade renders a product unreasonably dangerous, while the Pearson Court held that the “inherently dangerous” reactive capabilities of odorized gas required warnings even if the potential danger occurred only on the customer’s side of the meter.  Therefore, natural gas company defendants should not expect to be absolved from liability of a failure to warn even if it can establish hat odorant fade will only manifest itself on the customer’s side of the meter.

Conversely, the rationale and analysis applied in Pearson also supports a conclusion that any warning regarding odor fade does not expand a natural gas company’s liability beyond what the applicable laws provide or, more specifically, beyond the meter and into the piping.  The Pearson decision was clear inasmuch as it viewed and treated the odorized natural gas as a product that had inherently dangerous properties and, therefore, required warning.  The location where the inherent danger would manifest itself – in that case when the odorized gas would come into contact with the cobra connectors – was of no significance to the Court and squarely rejected that argument when it was raised in an attempt to defeat the common-law duty to warn.  Consequently, simply warning consumers and tradesmen about the inherent danger or properties of odor fade is unlikely to expand liability past the meter to the customer piping but, instead, would merely satisfy the obligation to warn of this specific inherent danger in odorized gas.

Defending Odorant Fade Claims

Historical knowledge of odorant fade within the natural gas industry and the lack of such knowledge among customers, as well as within the plumbing profession, are critical factors in “failure to warn” claims pertaining to odor fade.  What, then, is a pragmatic approach to defending against such claims sounding in a failure to warn?

The best defense against a failure to warn claim is to preclude such claims altogether by providing a warning regarding the dangers of odor fade.  Although any warning could arguably be subject to scrutiny regarding its sufficiency, the warnings that have accompanied propane provide guidance as to crafting an effective odor fade warning for natural gas.  For example:

Odor fade can occur when there is an underground propane leak. The movement of gas through the soil can filter out the odorant.

Oxidation chemical reaction involving internal rust in the tank or cylinder also causes odor fade. New and reconditioned tanks and cylinders that sit too long before being filled are prone to internal rust when moisture and air get inside.

Adsorption is another cause of odor fade. The odorant in leaking gas can adsorb (stick) on new or old building materials such as unpainted or untreated masonry, rough wall surfaces and on furniture fabrics and drapes, thus reducing the intensity of the odor. Adsorption of odorant can also occur on the inside walls of gas piping and static or periodically used propane storage containers and distribution systems.19

At the very least, by issuing a similar warning tailored to natural gas, a defendant can eliminate the argument that no warning whatsoever was provided and limit warning-based claims to sufficiency challenges.  Moreover, providing warnings or other information to the plumbing community in addition to end users of natural gas will help to diminish the “lack of knowledge”outside of the gas industry.

If, however, you are faced with litigation, there are a number of strategy points to adhere to as you prepare the defense to such claims.  First, in advance of any catastrophic explosion, it is important to be familiar with your company’s internal correspondence, literature, documentation, training programs and other activities which touch upon odor fade and the particular level of knowledge possessed regarding the condition.  This type of information is pertinent in establishing the historical knowledge of odor fade and will be seized upon in any failure to warn claim.  Therefore, isolating the universe of information and managing its impact should be undertaken as soon as practicable.

Second, any information or activities that were undertaken to educate or inform customers, building trades or the public at large about odor fade should also be gathered and analyzed early on.  This information will be equally critical in dealing with the suggestion that odor fade was not known by the public and was known predominantly within the natural gas industry.  Although this type of information will not necessarily eliminate the duty to warn, it may be of great help in dealing with the likely suggestion that the natural gas industry was in exclusive control of the information regarding odor fade.

Moreover, your defenses should be thoroughly analyzed and assessed at the outset of any litigation or threatened litigation that could even only suggest odor fade.  This requires  early collection of as many facts as possible, as close in time to the incident as possible.  Finding the proper experts and testing of piping should be organized as soon as possible.  All potentially relevant evidence should be preserved to the greatest extent possible. Witness names and contact information should be gathered and stored preemptively.  Internally, you should determine who will be the voice of your company for corporate responses and communications regarding the incident, particularly in terms of responding to media and public relations inquiries.

In addition to factual and evidentiary preparation, your legal defenses should be assessed at this time, necessitating early  involvement of counsel.  The viability of legal defenses will often dictate litigation strategy including whether to settle early or how discovery and factual themes will be developed during litigation.  Consequently, these defenses need to be considered at the outset so that opportunities are not lost during the course of any litigation.

Although litigation arising out of any catastrophic event can be lengthy, costly and may present significant exposure risks to the named defendants, the sooner a defendant looks toward defending any claims related to odorant fade, the greater the likelihood of success.

About the Author:

Mark E. Gottlieb is a Principal in Offit Kurman’s Philadelphia office and focuses his national practice in the areas of insurance recovery, construction litigation, white-collar crime and complex litigation. He has represented multiple individuals in high-profile criminal matters and represented public and private companies in multimillion-dollar disputes. He can reached by phone at 267-338-1318 or by e-mail at mgottlieb@offitkurman.com.

REFERENCES

  1. Odorization: Simply A Matter of Safety, at 46, Pipeline & Gas Journal, November 2006.
  2. Id.
  3. 49 C.F.R§192.625
  4. Id
  5. John Jacobus, Arthur G. Yeager, Odorant Loss In New Gas Distribution Steel Pipelines, Pipeline & Gas Journal, April 2008.
  6. Id.; Isabelle Ivanov, Juraj Stremn and Les Jones, Pre-Odorization Or “Pickling”Of New Natural gas Pipe, Pipeline & Gas Journal. Vol. 236, No. 11 (Nov. 2009).
  7. Id.
  8. U.S. Consumer Product Safety Commission Memorandum, October 23, 1987.
  9. Id.
  10. CSB Recommendation dated February 4, 2010.
  11. Natural gas Odorizing, Inc. v. Downs, 685 N.E.2d 155, 162 (Ind. Ct. App.  1997).
  12. Id.
  13. Estate of Pearson v. Interstate Power & Light Co., 700 N.W. 2d 333 (Iowa 2005).
  14. Id. at 342.
  15. Id.
  16. Id.
  17. Id. at 341.
  18. Id. at 344.
  19. http://www.easternpropane.com/PropaneSafety/detecting.htm.