- The Washington Times - Thursday, September 28, 2000

Major corporations are falling all over themselves these days to embrace environmentally friendly policies. It is after all, the right thing to do and with public opinion solidly in favor of a cleaner planet, it's also good business.

There are of course a few renegades out there companies willing to cut corners in the fight against pollution just to add a few million extra bucks to the bottom line. But how about a company that has managed to create for itself what amounts to a 5.75 cents per gallon ransom via manipulation of the regulatory process?

That's what California Attorney General Bill Lockyer and 33 other state attorneys general charge Unocal Corp. did when it filed a "stealth" patent on a gasoline formula that met a clean-air standard it developed with the state of California and six other oil firms.

The 34 attorneys general, worried that Unocal's demand for royalties on the patent could raise gasoline prices by more than a nickel a gallon, filed a brief with the U.S. Supreme Court Sept. 14 urging it to review a lower court ruling in favor of Unocal's patent claims.

Unocal, based in El Segundo, Calif., already has won a $91 million settlement from five major refiners for patent infringement on 1.2 billion gallons of gasoline produced in California during a five-month period in 1996.

Mr. Lockyer contends the patent payment already has resulted in price spikes in California and could cause similar disruptions in other states as they adopt rules requiring cleaner-burning reformulated gasoline.

Unocal developed the patent in secret while sitting in on discussions with rival oil companies and the California Air Resources Board (CARB) to determine gasoline production standards that would improve the state's air quality.

Ironically, Unocal, the nation's ninth-largest oil company, no longer refines gasoline in the United States having moved production offshore to take advantage of lower wage rates in other countries.

While consumers may gripe about soaring prices at the pump, they have to admire Unocal's chutzpah.

Unocal scientists met with other oil companies and California air quality officials to forge specifications that would meet reformulated gasoline to meet California and EPA standards. As the new specification emerged, Unocal lawyers moved quickly to patent the gasoline blend that could meet it.

Unocal's Machiavellian ploy paid off. When the EPA issued the new rules, Unocal held the patent for the gasoline blend that met them and was able to demand royalties from anyone who used that blend.

Unocal officials were almost gleeful when the other oil companies, who thought they were cooperating with Unocal for the greater good, found they had been snookered.

At least part of the alarming rise in per gallon prices as well as the spot shortages in the Midwest this summer resulted from refiner's decisions not to infringe upon Unocal's patent and be subject to royalty payment demands.

Oil industry analysts are warning that Unocal's current 5.75 cent a gallon royalty could rise dramatically in the near future since the California company has secured four additional patents involving low emissions gasoline since obtaining its initial patent.

Earlier this year, new federal regulations similar to California's went into effect in New York, Houston and other pollution-prone areas across the country.

About a third of the United States now is covered by the tougher standards. And industry analysts estimate Unocal's royalties could rise to as much as 17 cents a gallon a development that could brake the nation's full-throttle economy to a screeching halt.

Jokes about state attorneys general are almost as rife as jokes about personal injury lawyers these days. We have all heard the one about AG being an abbreviation for "aspiring governors."

But California's Mr. Lockyer certainly deserves a round of applause from the nation's 180 million motorists for his attempt to short-circuit Unocal's brash consumer rip-off.

Unocal's legalistic claims to the patents may well be upheld by the Supreme Court later this fall, but its questionable ethics in profiteering from a common effort to clean up the air we breathe likely will receive a thumbs down in the court of public opinion.

It is too bad that consumer champion Ralph Nader is spending so much time on the campaign trail in his Quixotic quest for the presidency this fall. Unocal certainly deserves a Nader-style "jeer of the year" for cynical corporate callousness.

Eric Peters is an editorial writer for The Washington Times and a nationally syndicated automotive writer.

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