Oil companies reach MTBE deal

The gasoline addative MTBE was supposed to save California from pollution and help gas mileage. Instead, leaking gas station tanks let the chemical into our water supply. Now the oil companies are, rightly, taking responsibility and paying up.

The oil industry has agreed to contribute $2 billion to help clean up spills of a gasoline additive that is fouling groundwater in exchange for immunity protection against dozens of lawsuits, people close to the negotiations said.

But the industry's proposed contribution, which would go into a new fund set up to deal with claims of contamination by the fuel additive, methyl tertiary-butyl ether, or MTBE, falls far short of some estimates of what it would take to pay for the cleanups.

Republican leaders in the House are brokering the deal in an effort to push comprehensive energy legislation through the Senate and avoid a painful repeat of two years ago, when the gasoline additive issue ultimately helped sink the bill.

The issue is also important to oil and chemical companies, which have been pushing to shield themselves from lawsuits claiming that the chemical's manufacturers should be held responsible for cleanup costs. Municipalities have estimated the total cleanup will cost more than $20 billion. The American Petroleum Institute, an oil industry trade group, has estimated the cost at closer to $1.5 billion.

"The industry needs closure on this issue, they need certainty," said Lawrence J. Goldstein, president of the Petroleum Industry Research Foundation, an industry-financed group. "They don't want to leave this open-ended, because they know at the end of the day big pockets could be required to pay for the cleanups."