WASHINGTON (AP) - The Bush administration quietly shelved a proposal to ban a gasoline additive that contaminates drinking water in many communities, helping an industry that has donated more than $1 million to Republicans.

The Environmental Protection Agency's decision had its origin in the early days of President Bush's tenure when his administration decided not to move ahead with a Clinton-era regulatory effort to ban the clean-air additive MTBE.

The proposed regulation said the environmental harm of the additive leaching into ground water overshadowed its beneficial effects to the air.

The Bush administration decided to leave the issue to Congress, where it has bogged down over a proposal to shield the industry from some lawsuits. That initiative is being led by House Majority Leader Tom DeLay, R-Texas.

The Associated Press obtained a draft of the proposed regulation that former President Clinton's EPA sent to the White House on its last full day in office in January 2001.

It said: "The use of MTBE as an additive in gasoline presents an unreasonable risk to the environment."

The EPA document went on to say that "low levels of MTBE can render drinking water supplies unpotable due to its offensive taste and odor," and the additive should be phased out over four years.

"Unlike other components of gasoline, MTBE dissolves and spreads readily in the ground water ... resists biodegradation and is more difficult and costly to remove."

People say MTBE-contaminated water tastes like turpentine.

In Santa Monica, Calif., the oil industry will pay hundreds of millions of dollars because the additive contaminated the city's water supply.

"We're the poster child for MTBE, and it could take decades to clean this up," said Joseph Lawrence, the assistant city attorney.

In 2000, the MTBE industry's lobbying group told the Clinton administration that limiting MTBE's use by regulation "would inflict grave economic harm on member companies."

Three MTBE producers account for half the additive's daily output.

The three contributed $338,000 to George W. Bush's presidential campaign, the Republican Party and Republican congressional candidates in 1999 and 2000, twice what they gave Democrats, according to the Center for Responsive Politics. Since then, the three producers have given just over $1 million to Republicans.

The producers are Texas-based Lyondell Chemical and Valero Energy and the Huntsman companies of Salt Lake City.

"This is a classic case of the Bush administration helping its campaign contributor friends at the expense of public health," said Frank O'Donnell, executive director of the Clean Air Trust, a Washington-based environmental group.

Huntsman spokesman Don Olsen, echoing comments by other MTBE producers, said, "We were not a huge campaign contributor and this has absolutely nothing to do with campaign donations. It has to do with good public policy."

The industry says it has become a victim in a Washington power struggle.

"Because of MTBE there has been a marked improvement in air quality and reduction in toxics in the air," Olsen said. "Because of leaking underground storage tanks in some relatively few instances, MTBE found its way into places it shouldn't be. But that has nothing to do with the product, which has done exactly what it was designed to do."

Said Valero Energy spokeswoman Mary Rose Brown: "It would have been impossible to fulfill the requirements of the Clean Air Act without MTBE."

A daily Washington newsletter disclosed the existence of the draft rule shortly after Bush's inauguration; outside the industry, few people noticed.

At the direction of White House chief of staff Andrew Card and Mitch Daniels, then the White House's budget director, all government agencies withdrew their pre-Inauguration Day draft regulations.

The EPA withdrew agency rules, including the MTBE one, in mid-February 2001, White House budget office spokesman Chad Kolton said.

In subsequent months, agencies rewrote many Clinton-era regulatory proposals and went public with them. The proposed MTBE regulation, however, never surfaced.

"As legislation looked more promising in 2002 and 2003, we focused our energies on supporting language in the Senate's energy bill," Jeffrey Holmstead, the EPA's assistant administrator for air quality, said in a statement Friday.

"We have not ruled out the possibility of seeking a solution" by regulation, Holmstead said.

The EPA favors a phaseout of MTBE through legislation. But the legislation has stalled and it no longer calls for a ban in four years.

Sen. John Kerry of Massachusetts, the front-runner for the Democratic presidential nomination, issued a statement Sunday calling the MTBE matter a case of the Bush administration "yet again putting special interests over America's interest." He pledged to "take on the big oil and gas companies and fight for clean water and a clean environment."

Rep. Henry Waxman, D-Calif., said, "If the White House had not rejected this regulation, MTBE would be virtually eliminated by now and our groundwater would be protected." Waxman is the ranking Democrat on the House Government Reform Committee.

On their own, 17 states banned the additive and dozens of communities are suing the oil industry.

"Nobody's talking about the trial lawyers campaign contributions to their supporters in Congress and its the trial lawyers who are the force behind these unjustified lawsuits," said Brown of Valero Energy.

To regulate MTBE, the EPA would have to use the Toxic Substances Control Act, which the agency considers cumbersome and unwieldy.

MTBE industry representative Scott Segal said, "It took EPA a decade to develop enough data to justify issuing a regulation for asbestos" under the law. "Even then, the courts still blocked it."

Bob Perciasepe, an EPA official during the Clinton administration, said a regulatory approach would have provided "a pressure point" to pass legislation.

Georgetown University law professor Lisa Heinzerling said regulating MTBE would be difficult, but "if we can't use the Toxic Substances Control Act to regulate MTBE, which has contaminated water supplies all over the country, then what can you use it for?"

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