House Republicans on Friday proposed an $11.4 billion fund, about a third of the money coming from the oil industry, to pay for cleanup of water systems contaminated by the gasoline additive MTBE, hoping to clear the way for passage of a broad energy bill (search).

The proposal would give makers of MTBE (search), which has been found to contaminate drinking water supplies in at least 36 states, protection against product liability lawsuits brought by communities facing billions of dollars in cleanup costs.

Rep. Joe Barton, R-Texas, presented the proposal to Senate leaders involved in energy bill negotiations. They reserved comment on the plan, saying it needed closer examination.

"We've not passed judgment. We're trying to understand it," said Sen. Jeff Bingaman, D-N.M., the leading Democrat on the Senate group negotiating with the House on final energy legislation.

Barton, who is chairman of the energy conference, said the proposal is "not set in concrete" and that it could change.

The MTBE issue has been seen as the most difficult and most contentious issue to overcome as lawmakers try to approve an energy bill. A number of senators have pledged to block legislation that would shield the MTBE manufacturers from liability lawsuits.

More than 150 lawsuits seek damages because of MTBE water contamination. The cost of cleanup has ranged from several billion dollars to more than $30 billion.

MTBE, or methyl tertiary-butyl ether, is an additive that in the 1990s became used widely in gasoline as an oxygenate to help reduce air pollution (search). It since has been found to contaminate drinking water across much of the country when gasoline leaks from underground storage tanks.

While its health impact is uncertain, MTBE even at low concentrations causes a foul smell and taste in drinking water. Unlike other, even more toxic, components of gasoline, MTBE flows easily through water because of its chemical composition and is not biodegradable, causing particularly difficult cleanup problems.

Barton's proposal calls for industry — from MTBE makers to retail gasoline outlets — to pay $4.1 billion into the fund over 12 years. The government would come up with another $4.5 billion and states are expected to contribute about $2.8 billion in matching funds.

The legislation, if approved, would nullify any lawsuits — at least as they apply to product defect liability — that have been filed since Sept. 5, 2003, with one significant exception: a lawsuit filed by the state of New Hampshire.

The provision exempts from the liability shield any lawsuit filed by a state attorney general. Only New Hampshire has taken such legal action.

Rep. Charles Bass, R-N.H., who has been involved in the negotiations, said the exemption was made because states are sovereign entities, unlike communities or water agencies — which have filed most of the legal cases on MTBE.

Bass dismissed suggestions that there may also have been a political reason for carving out New Hampshire. The state's two senators are among those who have been strongly opposed to a liability shield for MTBE manufacturers and have vowed to block legislation through filibuster and other procedural means.

It takes 60 votes to overcome a filibuster in the Senate. Two years ago an energy bill fell two votes shy of getting the 60 votes that were needed to thwart a filibuster over MTBE.