July 24, 2005

MTBE protection dropped from energy bill draft

By Chris Baltimore

WASHINGTON (Reuters) - A House Republican-written proposal
to protect makers of a water-fouling gasoline additive from
lawsuits will not be included in draft bill that a House-Senate
bargaining panel will debate on Monday, dimming prospects that
the controversial plan will survive.

The House proposal to protect makers of methyl tertiary
butyl ether -- or MTBE -- from liability lawsuits was a key
factor that sank efforts to pass wide-sweeping energy
legislation in the Senate last year.

A plan to create an $11.4 billion cleanup fund to clean up
water contaminated by MTBE in exchange for liability protection
for refiners "has not been accepted by the Senate and its
unlikely -- in fact very unlikely -- that it would be,"
Republican Rep. Joe Barton of Texas told reporters on Sunday.

The decision made by key energy bill negotiators on Sunday
removes a key sticking point from the crucial consensus text
that House and Senate energy negotiators will discuss on

However, lawmakers still must debate billions of dollars in
incentives for oil and natural gas companies, as well as how
many gallons of corn-blended ethanol the government should

A House-written bill calls for 5 billion gallons of ethanol
to be mixed with U.S. gasoline supplies by 2012, but the
Senate's version calls for 8 billion gallons.

The panel is also expected to vote on an amendment that
would require the U.S. Energy Department to review China's bid
to buy American oil producer Unocal Corp.

With the key MTBE obstacle removed, congressional
negotiators could agree to a compromise energy bill on Monday,
which could be passed by the House and Senate by week's end.

Barton said he could still seek to amend a draft energy
bill with his plan that would ban liability lawsuits against
MTBE makers filed after Sept. 5, 2003, but affirmed that the
going would be tough.

"I'm not going to lie to you folks and say anybody thinks
it's going to pass, so I may not offer it. But I reserve the
right to offer it," Barton said.

Barton's proposed cleanup fund would total up to $11.4
billion, with $4 billion in federal money, $4 billion from MTBE
makers and distributors, and the rest from states.

The oil industry and municipal water systems roundly
criticized Barton's proposal when it was unveiled on Friday.

New Hampshire's two Republican senators also declined to
support the plan, even though it would have allowed a lawsuit
filed by New Hampshire's attorney general to proceed.

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

U.S. oil refiners began adding MTBE to gasoline in 1979 as
an anti-knock agent that replaced lead. It has a turpentine
smell that renders water undrinkable even at low
concentrations, and is a possible carcinogen.