Methyl Tertiary Butyl Ether (MTBE) is a gasoline additive used to boost octane and clean the air. It was introduced in 1979 as a replacement for lead. It was adopted as an oxygenate after the passage of the 1990 Clean Air Act Amendments to reduce carbon monoxide emissions. Refiners were asked to come up with a gasoline additive that would help cut air pollution. While the use of MTBE has been very effective in reducing the emissions of carbon monoxide and toxics, the incidence of MTBE contamination of groundwater increased significantly.

Unfortunately, MTBE dissolves easily in water and it moves faster and farther in the ground than other gasoline components. Where tanks have leaked, it has contaminated the groundwater making the water undrinkable. MTBE is made by blending methanol and a byproduct of gasoline refining. It has contaminated groundwater and has led California, New York and 15 other states to ban MTBE EPA has taken preliminary steps to ban it nationally. Corn-based ethanol is replacing MTBE in gasoline in those states that have enacted bans.

MTBE is a major issue in the 2005 energy bill. It is the reason the bill failed to pass in Congress in 2003. Regardless, Joe Barton (R-TX), Chairman of the House Energy and Commerce Committee, is determined to get a liability waiver for MTBE manufacturers. The liability waiver is part of the House version of the Energy Policy Act of 2005. It will be a big sticking point in the conference committee because the Senate is not dedicated to the waiver. Chairman Barton does not want MTBE to be defined as a 'defective product' because it would open up the refiners to significant liability.

Energy bill conference committee negotiators removed a proposal to give makers of the gasoline additive MTBE liability protection against environmental lawsuits. That decision neutralized the issue that had caused the failure of an energy bill two years ago. The industry faces scores of MTBE lawsuits arising from contamination of water supplies by the additive in at least 36 states.  A number of senators were prepared to filibuster any bill with such protection for the industry, and liability protectionsupporters probably did not have the 60 votes needed to end debate.

Communities and water agencies say they face billion-dollar cleanups because MTBE, a gasoline additive introduced in the mid-1990s to reduce air pollution, polluted drinking water. More than 150 lawsuits have been filed to get MTBE makers pay for cleanup.

Barton had hoped to defuse issue by proposing an $11.4 billion cleanup fund for MTBE, including $4.1 billion to be paid by MTBE manufacturers, refiners and gasoline station owners. Unfortunately, the oil industry felt that it was being asked to pay too much, water agencies believed there were too many loopholes and not enough money, and others felt that taxpayers should not have to pay at all.

According to the Environmental Working Group (EGW), MTBE has been detected in 1,861 water systems in 29 states, serving more than 45 million Americans. Courts sided against MTBE producers in two California settlements:

In 2002, seven companies, including ChevronTexaco and Lyondell, settled for $69 million to clean up MTBE in South Lake Tahoe, California.

In 2003, 18 companies, including ExxonMobil and Shell, settled a suit brought by Santa Monica, California, agreeing to spend at least $200 million on a filtration system to remove MTBE from the city's water.