July 14, 2005

House keeps MTBE protection in energy bill

By Chris Baltimore

WASHINGTON (Reuters) - The U.S. House of Representatives on
Thursday narrowly voted to keep intact language in a broad
energy bill that protects Exxon Mobil Corp. and other makers of
a water-fouling gasoline additive from lawsuits.

The proposed legal liability protection for makers of
methyl tertiary butyl ether, or MTBE, is one of several thorny
issues that House and Senate negotiators must resolve to
prepare a final bill that would boost U.S. energy supplies.

The non-binding motion by Democrat Lois Capps of California
would have instructed House negotiators to oppose legal
protection for MTBE makers. The chemical has leaked into water
supplies in all 50 states and is a suspected carcinogen.

The House voted 217-201 to reject the motion. But the close
vote shows how divided Congress is over immunizing big oil
companies from MTBE product liability lawsuits.

Some oil executives have said they fear that MTBE liability
could open the door to billions of dollars in huge liability
lawsuits, akin to those faced by the tobacco and asbestos

House Republicans including Majority Leader Tom DeLay and
Joe Barton of Texas have lobbied hard for the legal protection
for oil refiners and other MTBE makers. But moderate
Republicans in the Senate and many Democrats say the oil
industry is enjoying record-high profits and should not duck
liability and stick communities with the MTBE cleanup bill.

The vote portends an uphill battle for Barton in a
Senate-House bargaining session to reconcile both chambers'
energy bills that is scheduled to begin later on Thursday.

House leaders canceled all votes in the chamber on
Wednesday, fearing that Capps would have succeeded because many
Republicans were in Florida for the space shuttle launch, which
was later scrubbed.

Barton is backing an industry-funded pool of money that
states could use to clean up MTBE contamination.

Barton will have to sell his deal to skeptical members in
the Senate, especially those in the Northeast states like New
Hampshire and Maine which have the lion's share of
contamination. MTBE liability was the main reason that an
energy bill failed to pass the Senate last year.

"The liability protection was responsible for killing the
energy bill last time, and it could easily happen again," Capps

A spokeswoman for Republican Sen. Pete Domenici, the head
Senate negotiator on the energy legislation, said he and Barton
have not struck a deal on MTBE.

Barton has refused to estimate the size of the fund, but
Democrats say it could contain about $4 billion to $8 billion.

U.S. oil refiners began adding MTBE to gasoline in 1979 as
an anti-knock agent that replaced lead. But the chemical has
seeped into municipal water supplies across the nation through
leaky underground tanks, rendering the water undrinkable.

Municipal water utilities say the nationwide clean up bill
could be as high as $89 billion. But the American Petroleum
Institute, which represents the biggest U.S. oil companies,
says the costs will be below $1.5 billion.