In 2000, EPA drafted plans to phase out the use of MTBE nationwide over four years. Some states enacted MTBE prohibitions without waiting for federal restrictions. California banned MTBE as a gasoline additive in 2002. The State of New York banned the use of MTBE as a "fuel additive", effective in 2004. However, MTBE is still legal in the state for other industrial uses.
The Energy Policy Act of 2005, as approved by the U.S. House of Representatives, did not include a provision for shielding MTBE manufacturers from water contamination lawsuits. This provision was first proposed in 2003 and had been thought by some to be a priority of Tom DeLay and Rep. Joe Barton, then chairman of the Energy and Commerce Committee. This bill did include a provision that gave MTBE makers, including some major oil companies, $2 billion in transition assistance while MTBE was phased out over the following nine years. Due to opposition in the Senate, the conference report dropped all MTBE provisions. The final bill was signed into law by President George W. Bush. The lack of MTBE liability protection is resulting in a switchover to the use of ethanol as a gasoline additive.