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Saudis lobby to limit liability on additive

Gas agent found in N.E. water

WASHINGTON -- A company largely owned by the Saudi government has spent more than $1.5 million since 1998 lobbying Congress to shield the chemical industry from liability for damages caused by MTBE, a potentially cancer-causing gasoline additive that has seeped into water supplies across New England, according to federal documents.

The chemical additive is widely used, particularly in the Northeast, to help gasoline burn more efficiently and meet standards set by the Clean Air Act. But when it gets into drinking water, MTBE is suspected of causing cancer, according to the Environmental Protection Agency.

Many state and local governments -- including New Hampshire and 60 communities in Massachusetts -- have sued oil and chemical companies, claiming that they should have known the risks of using methyl tertiary butyl ether. The communities say the companies must pay to clean up groundwater that became contaminated when MTBE-treated gasoline seeped into the soil from leaking tanks.

But the industry -- helped by the House majority leader Tom DeLay of Texas -- has maintained that it should not be obliged to pay for damages caused by a product used to meet a federal requirement for cleaner-burning gasoline.

DeLay is the chief proponent of a provision in the sweeping federal energy bill to relieve the MTBE industry of most liability for cleanup; the item led most New England lawmakers to vote against the measure last year, preventing Senate passage of the bill. DeLay won a fight to include the provision in the new energy bill that passed the House last month, but the Senate has yet to act on it.

The Saudi company, SABIC, is a leading maker of MTBE. It faces loss of business and potentially heavy cleanup costs if Congress does not protect the industry from lawsuits. The company, which has a member of the Saudi royal family as its chairman, has an office in Houston and a research and technology center in Sugar Land, Texas, DeLay's hometown and political base.

SABIC executives did not respond to inquiries at the company's Houston office.

Several US companies that make or use MTBE have been lobbying heavily for a limit on their liability to clean up contaminated water. Environmentalists say the cleanup cost could total $29 billion, but industry and other officials say the cost is closer to $8 billion.

Federal lobbying disclosure reports show that SABIC is a major player in the battle. The firm, described on its own website as the biggest non-oil industrial company in the Middle East, produces MTBE abroad and sells it around the world. SABIC Americas, a wholly-owned subsidiary of the Riyadh-based SABIC, hired the firm of Miller & Chevalier to lobby on MTBE matters in Washington.

Lobbying by a foreign company is legal. But critics of the energy bill say a foreign company -- particularly one advantaged by ownership by the wealthy Saudi government -- should not be benefiting from federal legislation meant to make the nation less reliant on foreign energy markets.

''The standard sound bites we've been getting for the last five years is that [the sweeping energy bill] will reduce our dependence on foreign oil. Now it's about how to subsidize foreign oil regimes," said Keith Ashdown, vice president of policy for the nonpartisan Taxpayers for Common Sense, which advocates against government waste. ''It's a gift horse for SABIC."

A spokesman for DeLay said the House majority leader wants to limit MTBE lawsuits because it is not fair to force producers and users of MTBE to pay for cleanup because the federal government required them to put some kind of oxygenate in gasoline. The Clean Air Act amendments of 1990 mandate the use of additives to make gasoline burn more cleanly.

In many parts of the country, gasoline manufacturers use ethanol, an additive made by corn, to help gas burn more efficiently. But ethanol is less plentiful in the Northeast, and many gas makers use MTBE instead.

Delay has several companies that either make or use MTBE in his district. Those companies have contributed to his campaigns, although SABIC -- barred by law from contributing because it is foreign-owned -- has not done so, according to the Center for Responsive Politics.

The DeLay aide said no one in the office could recall a specific meeting between the majority leader and SABIC. But ''it's possible [a SABIC representative] could have been at a meeting within our district with energy companies" to discuss matters of local interest, said the aide, who asked not to be identified.

SABIC Americas reported in official disclosures to Congress that it has paid between $1.52 million and $1.53 million to Miller & Chevalier since 1998 to lobby on MTBE matters. Leonard Bickwit, Jr., the primary lobbyist for the account, said the company hired him to ''add some balance to the debate in Congress" over the issue of MTBE's liability and future use in the United States. He declined to discuss the matter further, citing client confidentiality.

Ownership by the Saudi government is tantamount to ownership by the Saudi royal family, said Bruce Everett, a former ExxonMobil executive and Middle East specialist who is now an adjunct professor at the Fletcher School at Tufts University.

''The issue the Saudis have here is they invested in equipment to make this stuff on the assumption it would be a salable product. Now, all of a sudden, they are subject to liability. I can understand their concern," Everett said.

The EPA says that drinking water contaminated with large amounts of MTBE has the potential to cause cancer. Some specialists believe the additive -- used in much of Europe -- is not dangerous, but all agree that MTBE makes water taste like turpentine.

A recent study in Massachusetts found that MTBE was in the water supply in 86 Bay State communities. A federal study in New Hampshire in 2003 found detectable levels of MTBE in 40 percent of the public water supply, according to Maureen Smith, New Hampshire senior assistant attorney general.

''We allege they knew, or had information, that it would pose a significant risk to the water supply, and they chose to use it anyway," Smith said. The New Hampshire suit seeks unspecified damages to clean the contaminated water supply. New Hampshire Governor John Lynch last week signed a law banning MTBE in gasoline in the Granite State after Jan. 1, 2007.

Communities in 16 states are now involved in lawsuits over MTBE. So far, SABIC has not been named as a defendant. Trial lawyers said it is more difficult to sue a foreign-owned company, and that such causes of action are generally moved to federal court. Energy specialists said SABIC would be damaged by any action in the United States that taints the safety of its product or limits its use.

Energy industry officials say they are being wrongly held responsible for something they were forced to do to make gasoline burn more cleanly. Forced to add oxygenates to fuel, companies basically had two choices -- MTBE and ethanol, said Scott Segal, an energy industry lobbyist. MTBE was the more economic choice for the Northeast, which is not close to corn-producing states where ethanol is made, he said.

Segal said a better way to clean up groundwater contamination is to create a fund municipalities and states could draw on. The House-passed energy bill includes $1.8 billion to seed such a fund, an amount environmentalists say is way too small to do the job.

''When you consider the fact that as much as 80 percent of resources spent on the tort system go to overhead and new Lear jets for trail lawyers, it seems to me that there ought to be a better way to get money to municipalities," Segal said.

The matter has become an enormous sticking point in the energy bill. DeLay succeeded in keeping protections for MTBE makers and users in the House bill. But in the Senate, the measure's fate is uncertain.

Senator Charles Schumer, Democrat of New York, said he will filibuster the energy bill if it contains protection for MTBE producers.

''There are a lot of powerful people backing [the energy bill]. Not just the oil companies, but the Saudis, too," Schumer said, when presented with the lobbying data. ''This is just one more reason to oppose it. MTBE's tentacles are everywhere."

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