Most Recent Action Last Congress Background
Update on Reformulated Gasoline and MTBE (4-3-02)

The 1990 Clean Air Act (CAA) amendments require areas that do not meet certain air quality standards to incorporate oxygenates such as methyl tertiary butyl ether (MTBE) or ethanol into gasoline to reduce emissions of carbon monoxide (CO) and volatile organic compounds (VOC). Although MTBE is widely credited with significantly improving the nation's air quality, it has been found to be a major contributor to groundwater pollution. Publicity about the leaking of MTBE from gasoline storage tanks into aquifers has prompted legislators from the Midwest to push for a federal endorsement of corn-derived ethanol as a substitute oxygenate. Many lawmakers feel that the oxygenates rule should be dropped all together, while others note that more scientific data are needed before a solution can be found. A wealth of background information is available on the U.S. Geological Survey's (USGS) National Water Quality Assessment Program (NAWQA) website, the USGS National Assessment of Volatile Organic Chemicals in Major Aquifer Systems and Rivers website, the Environmental Protection Agency's (EPA) MTBE webpage, and in the National Research Council report Fuel Ethanol: Background and Public Policy Issues. The Congressional Research Service report MTBE in Gasoline: Clean Air and Drinking Water Issues is also helpful.

Most Recent Action
The Senate is currently working on the Senate Democrat's comprehensive energy bill, S.517, which includes a provision regarding legal waivers for the reformulated gasoline (RFG) industry.  Introduced by Senate Majority Leader Tom Daschle (D-SD), the RFG amendment has bipartisan and industry support. The legal waiver would provide a liability exemption to RFG industries of any public or environmental health damage caused by the implementation of RFG.  Many environmental organizations oppose this legal waiver, and future amendments are expected on the Senate floor as the debate progresses. Oil refineries in the state of California will be required to phase out MTBE, replaced by ethanol, by the year 2004.  (4/3/02)

On November 1st, 2001, the House Energy and Commerce Subcommittee on Oversight and Investigations held a hearing to receive testimony on "Issues Concerning the Use of MTBE in Reformulated Gasoline: An Update."  Subcommittee Chairman Jim Greenwood (R-PA) described the MTBE problem and his legislation, H.R. 20, an amendment to the Clean Air Act that would allow states to waive the 2 percent oxygen mandate in reformulated gasoline (RFG).  A total of eleven witnesses reported to the subcommittee.  Many represented government agencies, such as the Environmental Protection Agency (EPA) and the Department of Energy, while others spoke on behalf of public and private organizations, such as the Renewable Fuels Association (RFA) and the American Petroleum Institute (API).  The two panels discussed whether or not MTBE should be reduced or eliminated and whether ethanol should be used in its place.  Another major theme of the hearing was the problem with leaking underground storage tanks and the Underground Storage Tank (UST) program emplaced to protect the public from harmful releases of fuel and fuel additives including MTBE.  The UST program was painted by some as ineffective.  For more detail on this hearing, see the hearing summary below(11/7/01)

During the markup of the Federal Reformulated Fuels Act of 2001 (S.950) held on September 25th, the Senate Environment and Public Works Committee (EPW) voted to approve the controversial legislation, which calls for a phase out of MTBE in reformulated gasoline (RFG) by 2004.  MTBE is an oxygenate added to gasoline to make it burn cleaner, but has been found to cause cancer and pollute groundwater.  States have used MTBE to satisfy the Clean Air Act's requirement that gasoline contain a 2 percent oxygen additive.  S.950, introduced by Sen. Bob Smith (R-NH), would give power to each governor to exempt his state from the 2 percent requirement.  Farm state senators see this as a threat to Midwest ethanol manufacturers because it would also allow states to opt out of using corn-based ethanol, the only other fuel oxygenate available.  Environmental groups support S.950 for its clean water benefits and its air quality backsliding provision, which prevents a petroleum company from replacing MTBE with a substance that may cause more air pollution than the banned oxygenate.  Smith's bill also allocates $400 million to the Environmental Protection Agency's Leaking Underground Storage Tank Trust Fund (LUST) for monitoring and cleanup of MTBE contamination.  Twelve states, including California and New York have partially or totally banned the use of MTBE.  (9/26/01)

In March, responding to anticipated tight fuel supplies this summer, California legislators requested EPA to waive the 2% oxygenate fuel requirement mandated under the CAA. The waiver request is opposed by those that produce ethanol and MTBE, because they would lose the California market for their goods. Monte Shaw of the Renewable Fuels Association, which favors the use of ethanol, pointed out that removing the oxygenate requirement would have the effect of actually reducing fuel supply, which he says will only benefit oil companies, not California consumers. It remains unclear how the Administration will respond to the waiver request.

Representative Greg Ganske (R-IA) and Rep. John Shimkus (R-IL) introduced a bill, H.R. 608, on February 14th to phase out the use of MTBE as a gasoline additive within three years. The bill is identical to one they introduced in the last Congress that never passed out of committee. Two other bills to reduce or eliminate the use of MTBE have also been introduced this Congress: S.265and H.R. 454. Ganske would like to keep the MTBE debate on the forefront as Congress and the President attempt to draft a comprehensive national energy policy.

Background
MTBE has been used in the U.S. since 1979, initially as a replacement for lead in gasoline. In 1990, when several Clean Air Act (CAA) amendments were passed and the Federal Reformulated Gasoline (RFG) Program was established, MTBE became a standard addition to reformulated gasoline in areas that did not meet air quality standards. MTBE has been credited with drastically increasing the nation's air quality by reducing emissions of volatile organic compounds, CO, and other mobile-source air toxics. Under the CAA, RFG is required to contain 2% oxygen by weight. Most RFG contains MTBE because it is readily mixed with gasoline and provides the best emissions reductions.

The presence of MTBE in groundwater around the country has raised questions as to how the goal of clean air can be balanced with the goal of clean water. Water containing MTBE tastes and smells different from uncontaminated water and is therefore unacceptable to consumers. The health affects of MTBE ingestion at the low levels found in contaminated drinking water are not well known, although it has been found to be carcinogenic when inhaled at high doses. The EPA does not regulate the levels of MTBE in drinking water but large public water utilities are required to monitor for the compound. Some states have set individual standards for acceptable MTBE levels in public drinking water. In general, MTBE in groundwater comes from leaking underground storage tanks. Because it is highly water soluble and breaks down very slowly, it is more likely to contaminate groundwater than many other components of gasoline.

In November of 1998, the EPA appointed a blue ribbon panel to study the effects of MTBE and other gasoline oxygenates on air quality, water quality, and the stability of fuel supply and cost. In July 1999, the panel recommended the removal of the current congressional Clean Air Act requirement of 2% oxygen by weight in RFG, improving drinking water protection programs nationwide, reducing the use of MTBE while maintaining air quality standards, and continuing research on MTBE and other fuel oxygenates. The EPA has used the recommendations to update its regulations on MTBE contamination, but until adverse health effects of low levels of MTBE in water are proven, the federal government will have trouble mandating federal standards for MTBE in drinking water, or reducing MTBE use by refineries that have established plants that use the MTBE oxygenate.

Congress and the EPA are constantly trying to update CAA, Clean Water Act (CWA), and associated regulations to more effectively protect public health without placing a burden on utility generators and providers of fuel. During the 106th Congress, several bills to amend CAA were proposed to remove the fuel oxygenate requirement, to ban MTBE or to give state governors the authority to do so, to allow refineries to formulate gasoline in the manner that they wish if emissions standards are maintained, and other proposals to clean up sites contaminated by MTBE.

Much debate surrounded these proposals and prevented any reform measures from passing into law. A few issues that continue to be debated are determining what science must be done in order for good decisions to be made, whether or not the cost of groundwater contamination outweighs the benefit of emissions reductions from the use of MTBE, and if there is a viable alternative oxygenate to replace MTBE. Some congressmen from Midwestern states insist that ethanol stands poised to replace MTBE as a fuel additive. Others argue that ethanol would be expensive to the federal government because farmers growing corn for ethanol would need subsidies to commence production at a high level. According to refining industry representatives, less ethanol than MTBE can be mixed with gasoline, so total gasoline supply would be reduced if refineries were forced to switch fuel formulation. Those on the gasoline supply side would like more regulatory consistency through time, or emissions regulations that depend on fuel performance, not any particular gasoline additive.

Further information about MTBE in the subsurface can be found on the EPA MTBE website and through their Office of Underground Storage Tanks, the USGS websites for the National Water Quality Assessment Program and the National Assessment of Volatile Organic Chemicals in Major Aquifer Systems and Rivers, and the NRC report Fuel Ethanol: Background and Public Policy Issues. Also see the AGI MTBE and Reformulated Gasoline Update from the 106th Congress for more information.


Hearing on Issues Concerning the Use of MTBE in Reformulated Gasoline: An Update
House Committee on Energy and Commerce
November 1, 2001

Hearing Summary
The House Energy and Commerce Subcommittee on Oversight and Investigations held a hearing on November 1st concerning the use of MTBE in reformulated gasoline.  The hearing was opened by Subcommittee Chairman Jim Greenwood (R-PA) who introduced the MTBE dilemma.  According to Greenwood, reformulated gasoline (RFG) makes up about 30 percent of the nation's gasoline supply today and has helped address the ground-level ozone (smog) problem.  However, since RFG must contain 2 percent oxygen, an oxygen additive must be added to it such as MTBE or ethanol.  The problem is that MTBE travels through ground and surface water, sometimes rendering it undrinkable.  Before introducing the witnesses and giving over the floor, Greenwood expressed support for H.R. 20, which he introduced as an amendment to the Clean Air Act allowing states to wave the 2 percent oxygen mandate.

The first panel contained witnesses representing four government agencies that have investigated different aspects of the MTBE issue.  Jeffrey Holmstead, Assistant Administrator for Air and Radiation at the Environmental Protection Agency (EPA) described the history and benefits of RFG and the use of MTBE in gasoline, but focused his testimony on what he called "boutique fuels," the many different grades and compositions of gasoline required by various federal, state, and local jurisdictions. Holmstead identified two major issues associated with federal, state, and local clean fuel programs: the need for greater flexibility in the process by which fuel marketers make the transition from winter to summer grade reformulated gasoline and the challenges facing the gasoline distribution system due to the increasing number of state and local boutique fuels programs.  He also reported that EPA is preparing a white paper to address boutique fuels and lay the groundwork for needed future study.

Robert S. Kripowicz, Acting Assistant Secretary for Fossil Energy at the Department of Energy (DOE), and Robert M. Hirsch, Associate Director for Water at the U.S. Geological Survey (USGS), highlighted similar themes in their testimonies.  They were both against the near-term elimination of MTBE as a gasoline blending component, agreeing that the primary problem is not the MTBE itself, but the leaking underground gasoline storage tanks where it is contained.  Hirsch reported that MTBE contamination is primarily an aesthetic (taste and odor) problem, and that the "health threat to water supplies is small compared to other water-related issues."  Kripowicz was worried that banning MTBE would severely hinder refiners' ability to produce clean gasoline because the availability of substitute gasoline blending components with similar quality is very limited.

Another first panel witness centered his testimony on EPA's Underground Storage Tank (UST) program and addressed the problems associated with it.  John Stephenson, Director of the Natural Resources and Environment branch of the U.S. General Accounting Office, reported that the UST program was established to protect the public from potential leaks of hazardous substances such as MTBE from tanks across the nation.  A survey was done by Stephenson's agency to evaluate how the program is working and whether upgraded tanks still leak.  It found that although most tanks have been upgraded, many are not properly operated or maintained.  Also, most states do not meet the EPA's recommendation to inspect all tanks every three years or have the enforcement tools needed to identify and correct problems.  Finally, some tanks continue to leak even after they have been upgraded.  Stephenson urged Congress to help provide EPA and the states the additional inspection and enforcement authority and resources they need to improve tank compliance and safety.

The seven witnesses on the second panel represented a variety of backgrounds including: Denise Chamberlain from the Pennsylvania Department of Environmental Protection; Tom Adams, President of the Oxygenated Fuels Association; Bob Dineen, President and CEO of the Renewable Fuels Association; David Kahlenberg, homeowner; A. Blakeman Early, environmental consultant for the American Lung Association; Michael Ports, speaking on behalf of the National Association of Convenient Stores and Society of Independent Gasoline Marketers of America; and Edward H. Murphy, Downstream General Manager of the American Petroleum Institute.  Their varying backgrounds led to equally varying points of view reflected in the testimony of these witnesses.

Ports and Adams expressed opposition to the phase-out of MTBE, reasoning that it would tighten supplies and substantially impact gasoline prices for consumers.  According to Adams, "banning or reducing the use of MTBE is equivalent to shutting down five U.S. refineries."  In his testimony, Ports recommended that Congress create stand-alone UST legislation to assist EPA and the states in stopping gas leaks and to provide funding for the states to address high-priority MTBE releases.

The rest of the panel supported MTBE elimination, but for different reasons and with different objectives.  Dinneen's speech centered on increasing ethanol use to allow MTBE to be reduced cost-effectively while protecting water resources and air quality.  The testimony of Early, however, called for the elimination of the 2% oxygen mandate in RFG to accompany a MTBE ban, so that ethanol would not be mandated.  According to Early, it is the firm belief of the American Lung Association that "mandating ethanol in summertime gasoline will contribute to increases in smog regardless of whether the fuel is RFG or conventional gasoline."

Full text of written testimony can be found on the subcommittee's website.

-CAM


Sources: E&E News, Greenwire, Congressional Greensheets, Thomas, Washington Post, Hearing Testimony and notes

Please send any comments or requests for information to the AGI Government Affairs Program.

Contributed by Spring 2002 AGI/AAPG Intern Heather R. Golding, Fall 2001 AGI/AAPG Intern Catherine Macris, Spring 2001 AGI/AAPG Intern Mary H. Patterson and Margaret A. Baker, Government Affairs Program

Posted May 12, 2001; Updated April 4, 2002


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