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[Senate Report 109-74]
[From the U.S. Government Publishing Office]

                                                       Calendar No. 116
109th Congress                                                   Report
                                 SENATE
 1st Session                                                     109-74
======================================================================

 
                           RELIABLE FUELS ACT

                                _______
                                

                  May 26, 2005.--Ordered to be printed

                                _______
                                

    Mr. Inhofe, from the Committee on Environment and Public Works, 
                        submitted the following

                              R E P O R T

                         [to accompany S. 606]

                             together with

                     MINORITY AND ADDITIONAL VIEWS

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Environment and Public Works, to which was 
referred the bill (S. 606) to amend the Clean Air Act to 
eliminate methyl tertiary butyl ether from the United States 
fuel supply, to increase production and use of renewable fuel, 
and to increase the Nation's energy independence, and for other 
purposes, having considered the same, reports favorably thereon 
with amendments and recommends that the bill, as amended, do 
pass.

                           General Statement

    In 1990, the Clean Air Act was amended to include the 
reformulated gasoline, or RFG, program. The program was 
designed to address persistent pollution from automobiles. 
While tailpipe standards for automobiles are effective for new 
vehicles, the RFG program added additional controls and was 
able to address emissions from vehicles of all ages within the 
current fleet. RFG program was required in metropolitan areas 
that have the most serious air pollution levels. Although not 
required to participate, some areas in the Northeast, in 
Kentucky, Texas and Missouri have elected to join, or `opt-in,' 
to the RFG program as a relatively cost-effective measure to 
help combat their air pollution problems. Today, roughly 35 
percent of this country's gasoline consumption is cleaner-
burning reformulated gasoline.
    One element of the RFG program was the requirement that RFG 
contain 2.0 percent minimum oxygen content by weight. This 
provision was of assistance in the goal of making gasoline burn 
cleaner, both in terms of criteria air pollutants and toxic air 
emissions. The addition of oxygen to gasoline resulted in 
greater supplies of fuel being available, given that the 
principal oxygenate additives are not derived from crude 
petroleum.
    RFG blended with oxygenates has exceeded all pollution 
reduction goals and substantially and cost-effectively improved 
the nation's air quality. According to EPA, RFG has cut smog-
forming pollutant emissions by over 25 percent, the equivalent 
of removing 94,000 tons of harmful pollution from the air we 
breathe or taking 15 million vehicles off our roads. The 
benzene content of RFG is some 60 percent lower than the 
benzene content of gasoline in 1990. Total toxic air emissions 
have been reduced about 27 percent from 1990 levels. Cleaner-
burning MTBE accounts for a large part of the overall emission 
reductions from RFG.
    The program set a variety of content and performance 
requirements, including a minimum content requirement for 
oxygen and maximum allowable benzene and heavy metal quantities 
in RFG. Through regulatory authority provided by the Act, EPA 
chose, in 1993, to adopt performance standards for toxic air 
pollutants and volatile organic compounds (VOCs) rather than 
the prescriptive fuels formula allowed under Section 
211(k)(3)(A). These performance standards required a 15 percent 
reduction in toxic air pollutants from baseline vehicles 
starting in 1995 and maintained through 1999, and required a 22 
percent reduction from baseline vehicles beginning in 2000, as 
part of Phase II. Phase II also requires reductions in NOx and 
VOCs.
    Motor vehicle emissions of carbon monoxide, volatile 
organic compounds, and, most notably, toxics have been reduced 
drastically in RFG areas. Refiners have produced RFG that 
exceeded the statutory requirements to reduce toxic emissions, 
including emissions of benzene. Recent data suggest that 
refiners have achieved a 27 percent or higher reduction in 
toxic air pollutants in RFG (where MTBE was used) from the 1990 
baseline. A 1998 study by the Northeast States for Coordinated 
Air Use Management (NESCAUM) concluded that Phase II RFG would 
reduce the public cancer risk by 20 percent.
    On March 29, 2001, EPA issued it's Mobile Source Air Toxics 
Rule (MSAT) to limit air toxics emissions from motor fuels, as 
required by Section 202(l) of the Act. It is intended to ensure 
that refiners continue over-compliance with RFG and anti-
dumping requirements by maintaining their average 1998-2000 
toxic emissions performance levels for RFG and conventional 
gasoline. The MSAT rule commits EPA to revisiting additional 
fuel and vehicle MSATs controls in a 2005 rulemaking. The 
deadline in the CAAA for issuance of these regulations was June 
1995. EPA is actively developing a proposal for a new mobile 
source air toxics rule. It is currently subject to a deadline 
suit, and a specific schedule has not yet been determined.
    The final MSATs rule was challenged by a number of parties. 
On May 24, 2001, the States of New York and Connecticut and the 
Sierra Club, Earth Justice, the Natural Resources Defense 
Council and the U.S. Public Interest Research Group filed suit 
against EPA, charging that the MSATs rule fails to achieve the 
pollution reductions mandated by the Clean Air Act. Other 
parties, including Hovensa LLC, and International Truck and 
Engine Corporation have filed petitions in the United States 
Court of Appeals challenging EPA's final rule on the grounds 
that it is inconsistent with section 202(l) of the Act, that 
EPA acted arbitrarily and capriciously in promulgating the rule 
and did not adequately follow required notice and comment 
rulemaking procedures. On April 25, 2003, the U.S. Court of 
Appeals for the D.C. Circuit issued its decision. It denied on 
the merits the claims of the environmental and State 
petitioners, except for remanding to EPA on the issue of 
explaining its decision not to require on-board diagnostic 
equipment for new heavy-duty vehicles over 14,000 pounds.
    There is no specific deadline in the Act for EPA to further 
reduce toxic air pollutants from mobile sources. Section 204, 
however, requires EPA to promulgate final regulations 
addressing hazardous air pollutants from vehicles and fuels by 
July 1, 2004, as per the MSAT rule. The Agency retains general 
authority to control emissions from motor vehicles of any air 
pollutant that causes or contributes to air pollution which may 
reasonably be anticipated to endanger public health or welfare. 
In a discussion focused on maintaining air toxics reductions 
from the RFG program, EPA's Blue Ribbon Panel on Oxygenates in 
Gasoline specifically recommended that EPA should explore and 
implement mechanisms to achieve equivalent or improved public 
results that focus on reducing those compounds that pose the 
greatest risk.
    The panel recognized that the current mass-based 
performance requirements in the RFG program may not adequately 
account for and consider that the different exhaust components 
pose differential levels of risk to public health due in large 
part to their variable potency.
    While the RFG program is considered a general success, 
experts acknowledge that there is some uncertainty in 
estimating the actual quantity of mobile source emissions. It 
is difficult to verify the emission reductions associated with 
the RFG program as distinct from other mobile source emission 
reduction programs. In May 2000, the National Research Council 
recommended that EPA make a number of improvements to the 
Mobile Source Emissions Factor model (MOBILE), including 
estimation of off-road vehicle emissions and incorporation of 
both mobile source toxic emissions and high-emitting vehicles.
    More regular revisions and updating of this model is 
important for air quality planners. S. 606 requires the EPA to 
expedite resolution of the current complex model which 
generates important fuels-related emissions information and 
provides input for the MOBILE model so that vehicle 
manufacturers, fuel makers, air quality planners, and Congress 
have accurate information.
Oxygenates
    The CAAA required that 2 percent by weight of RFG be 
oxygen. This requirement was not included in the Senate 
Environment and Public Works Committee's reported version of S. 
1630, the Clean Air Act Amendments of 1989. It was added on the 
Senate floor after vigorous debate and was the only successful 
floor amendment. Proponents of that requirement had expected 
ethanol to be the oxygenate of choice for fuel providers. It 
was not regarded as a mandate to use ethanol, however, even by 
its sponsors. During floor debate on the measure, Senator 
Daschle, a co-sponsor of the amendment, stated that the oxygen 
standard was fuel neutral. (congressional Record, March 29, 
1989, page S3513) Most refiners, blenders, and importers opted 
to use a cheaper and more easily used oxygenate, MTBE, in many 
nonattainment areas. MTBE currently is used in approximately 45 
percent of RFG, while ethanol is used in slightly less than 55 
percent of that fuel. Twenty States currently have statutory 
MTBE bans with 15 of those bans already in effect.
    In late 1993, EPA issued final regulations implementing the 
RFG program. In 1994, EPA issued another set of final rules 
that revised the RFG program. The revisions included a 
requirement that renewable oxygenates be used to meet 30 
percent of the 2 percent oxygen content requirement in RFG. The 
1994 rules were challenged by the American Petroleum Institute 
and the National Petroleum Refiners Association. The DC Circuit 
Court of Appeals decided that EPA lacked the authority to 
impose the renewable requirement and vacated the 1994 
rulemaking.
    The principal benefits of oxygenates were the reduction of 
carbon monoxide emissions through more complete fuel combustion 
and the reduction of toxic air pollution. The oxygen content 
requirement formally took effect in 1995 and is currently 
satisfied by refiner use of either MTBE or ethanol. Today, 
approximately two billion gallons of MTBE and 1.7 billion 
gallons of ethanol (EtOH) are consumed to meet this RFG 
requirement. Initially, most of the ethanol was produced and 
consumed in the Midwest region of the country, but substantial 
quantities are now used in the Northeast and in California as a 
result of statewide MTBE bans in New York, Connecticut and 
California. In addition to use in the RFG program, ethanol and 
MTBE are used to help reduce emissions in carbon monoxide (CO) 
nonattainment areas as part of the wintertime oxygenated fuels 
program, which began in 1992. Originally, 40 CO nonattainment 
areas were required to participate in this winter fuel program. 
Today 15 areas in ten States participate, with ethanol as the 
predominant oxygenate. Several hundred million gallons of 
ethanol are used each year to satisfy this requirement.
    Section 211(k)(2)(B) of the CAA provides EPA the authority 
to waive the oxygen content requirement for RFG, in whole or in 
part, for an ozone nonattainment area upon the determination by 
the Administrator that compliance with the requirement would 
prevent or interfere with the attainment of a National Ambient 
Air Quality Standard (NAAQS). On April 12, 1999, California 
submitted to EPA a petition requesting such a waiver. EPA 
subsequently denied California's request. In providing the 
States with access to this waiver authority on the condition of 
meeting a relatively stringent test, and under EPA's authority 
under Section 211(c)(4), Congress sought to balance the desire 
for uniformity in our nation's fuel supply with the obligation 
to empower States to adopt measures necessary to meet national 
air quality standards.

                     Objectives of the Legislation

    The Reliable Fuels Act, S. 606, is intended to address 
existing and potential MTBE contamination.
    In order to accomplish this objective, S. 606 achieves the 
following items:
         Authorizes $200 million from the Leaking 
Underground Storage Tank (LUST) Trust Fund for State grants to 
clean up MTBE and other ether gasoline additives. Also 
authorizes an additional $200 million from the LUST Trust Fund 
for State and Federal activities to prevent releases and 
increase compliance under the UST program.
         Requires EPA to phase down the use of MTBE 
within 4 years of enactment. However, individual States may 
authorize the use of MTBE within their borders if they so 
desire.
         Mandates the use of 6 billion gallons of 
renewable fuels introduced into commerce by the year 2012.
         Expands existing EPA authority to allow for 
regulation of fuel additives for protection of water quality 
(current law only allows for regulation to protect air 
quality).
         Repeals the Federal oxygen content requirement 
for RFG 270 days after date of enactment.
         Instructs EPA to require fuel and additive 
manufacturers to conduct tests on a regular basis to determine 
the health and environmental effects of new fuels and fuel 
additives.
         Requires EPA to study the health and 
environmental impacts of using other additives as a substitute 
for MTBE.
         Requires EPA to release a draft fuel study 
within 4 years of enactment. The study must contain an analysis 
of the changes in emissions of air pollutants and changes in 
overall air quality due to the use of fuels and fuel additives 
resulting from this bill. The final study must be published not 
later than 5 years from enactment.
         Allows States a more streamlined procedure for 
disallowing the waiver of the Reid Vapor Pressure limitation 
for ethanol-blended gasoline.
         Allows Governors to opt-in both classified and 
non-classified areas of the Ozone Transport Region States to 
the RFG program.
         Authorizes a total of $1 billion over four 
fiscal years for grants to merchant MTBE producers for 
assisting in the conversion to production of other fuel 
additives.

                  AREAS THAT USE REFORMULATED GASOLINE

                          as of April 14, 2005

    Mandatory areas:

        Los Angeles, CA
        San Diego, CA
        Hartford, CT
        New York City (NY-CT-NJ)
        Greater Philadelphia (PA-NJ-DE-MD)
        Chicago, IL (IL-WI-IN)
        Baltimore, MD
        Houston, TX
        Milwaukee, WI
        Sacramento, CA
        San Joaquin Valley, CA
        District of Columbia
        Maryland--the DC suburbs
        Virginia--the DC suburbs
        Atlanta, GA*
        Baton Rouge, LA*

    Opt-In Areas:

        State of Connecticut (that portion not adjacent to NYC 
        or Hartford)
        State of Delaware (that portion not part of 
        Philadelphia area)
        Kentucky portion of the Cincinnati Metropolitan Area
        Louisville, KY
        Maryland-Queen Anne and Kent counties
        State of Massachusetts
        St. Louis, MO
        New Hampshire portion of Greater Boston
        The State of New Jersey (that portion not adjacent to 
        NYC or Philadelphia area)
        New York--Dutchess County (near NYC) and part of Essex 
        County (upstate)
        State of Rhode Island
        Texas--Dallas/Fort Worth area
        Virginia--Richmond, Norfolk-Virginia Beach-Newport News

    * Applicability currently under litigation

                      Section-by-Section Analysis

Section 1. Short title; table of contents.
    The bill is entitled ``The Reliable Fuels Act''.

                      TITLE I--GENERAL PROVISIONS

Sec. 101. Renewable content of gasoline.
    Section 101 sets forth a comprehensive program to increase 
the use of renewable fuels, in the United States. There are 
several essential components of the program, which have been 
carefully designed to achieve the overall goals. Changing any 
of these essential components would undermine the objectives of 
the program.
    The first essential element is the overall size of the 
renewable fuels mandate, and the schedule for its 
implementation. To ensure that the Administrator of the 
Environmental Protection Agency has adequate time to promulgate 
regulations for implementation of the program, the program 
begins in 2006. The program starts at 3.8 billion gallons of 
renewable fuels in 2006, and escalates to 6.0 billion gallons 
in 2012. Thereafter, the relative percentage of renewable fuels 
required, as a percentage of gasoline in 2012, remains 
constant. This phase-in schedule is essential to the success of 
the program. The renewable fuels industry must be given an 
opportunity to ramp-up production capacity and the petroleum 
industry must be given an opportunity to make adjustments to 
the refining, supply and distribution system necessary to 
successfully implement the program.
    The second essential element is the credit trading program. 
The renewable fuels requirement is expected to be satisfied 
primarily with the addition of ethanol to gasoline. Ethanol 
blended gasoline cannot be transported in pipelines because of 
ethanol's affinity for water. This means that the ethanol will 
have to be transported separately to the terminals by rail, 
truck, or barge. As the distance from the location of ethanol 
manufacture to the terminal gets larger, so do the costs. In 
addition, adding ethanol to gasoline increases the gasoline's 
volatility. If the use of ethanol were required in low-
volatility gasoline the industry would be forced to incur the 
additional costs of offsetting ethanol's impact on volatility. 
The credit trading provisions allow the ethanol to be used 
where it makes the most economic and environmental sense while 
providing a mechanism to transfer those credits back to the 
point of gasoline production or importation so that refiners, 
blenders, and importers can demonstrate compliance with the 
renewable fuels obligation.
    The credit banking and trading provisions of the bill give 
the Administrator the flexibility to design a workable program. 
While refiners, blenders, and importers will ultimately be 
responsible for meeting the renewable fuels obligation, the 
fact is that most of the ethanol that is required under this 
program will be added to gasoline at the distribution 
terminals, because ethanol cannot generally be transported with 
gasoline in pipelines. Under the credit banking and trading 
provisions of the bill, the Administrator is required to 
provide for the `generation of an appropriate amount of credits 
by any person that refines, blends, distributes or imports 
gasoline that contains renewable fuels'. This would include the 
owners and operators of the distribution terminals.
    The program requires the use of renewable fuels in 
gasoline. The requirement can be met by adding ethanol to 
gasoline (i.e., gasohol), or through the use of alternative 
fuels like 70 and 85 percent ethanol fuels (i.e., E70, E85). In 
addition, ethanol made from cellulosic biomass is encouraged by 
counting each gallon of ethanol produced from cellulosic 
biomass as if it were 1.5 gallons of corn-based ethanol. This 
should encourage expansion in the cellulosic biomass ethanol 
industry, which makes ethanol from feedstocks like woodchips 
and switchgrass. In addition, the program allows for the 
generation of credits from the use of biodiesel.
    The renewable fuels obligation is an annual average 
obligation for the use of renewable fuels. It is believed that 
the use of ethanol to meet this requirement will be fairly 
uniform throughout the year. Nevertheless, to ensure this, the 
Administrator is required to assess the use of ethanol 
throughout the year and in the event that less than 35 percent 
is used in either the winter or summer periods, the 
Administrator is directed to promulgate regulations to ensure 
that at least 35 percent of the required amount is used in each 
period. If the Administrator promulgates such rules, the life 
of credits will be extended for an additional year.
    The bill provides for waivers from the program under 
certain circumstances. Upon petition by one or more States, the 
bill allows the Administrator to waive the program, in whole or 
in part, based on a determination that the renewable fuel 
requirement would severely harm the economy or environment of a 
State, region, or the U.S. in general, or based on a 
determination that there is an inadequate domestic supply or 
distribution capacity to meet the renewable fuel requirement. 
The bill requires the Secretary of Energy to assess whether the 
program requirements would likely result in significant adverse 
impacts on consumers in calendar year 2006 and if so, requires 
the program to be waived in calendar year 2006 to avoid any 
such adverse impacts on a national, regional or State basis.
    In addition, the bill exempts small refineries from 
participating in the program until 2011, and requires this 
exemption to be extended for not less than 2 years for any 
small refinery for which compliance with the program is found 
to impose a disproportionate economic hardship as determined by 
a study conducted by the Secretary of Energy. In the bill, 
small refineries are allowed to waive this exemption and opt-in 
to the program earlier than 2011, as well as petition for an 
extension of the exemption at any time.
    The bill also requires that a market concentration analysis 
of the ethanol production industry be performed annually by the 
Federal Trade Commission (FTC) to determine whether there is 
sufficient competition within the industry. There is concern 
among some that insufficient competition within the industry, 
particularly in combination with a federally mandated renewable 
fuel program, could lead to price-setting and other anti-
competitive behavior. The FTC is to use the Herfindahl-
Hirschman Index (HHI) to measure market concentration, which is 
a standard tool used by the FTC and the Department of Justice. 
Any industry with an HHI score above 1800 is considered to be 
highly concentrated. The committee recognizes that the HHI is 
one among many indicators of possible anti-competitive 
behavior.
    The bill contains a safe-harbor provision regarding the 
liability of manufacturers and distributors of renewable fuels 
that are subject to the bill's mandate. The principle behind 
this provision is simple. No one should be subject to tort 
liability simply for manufacturing or selling a product that 
was mandated by Congress. The provision applies only to claims 
that a renewable fuel mandated by the act constitutes a 
defective product in its design, manufacture or marketing.
    Some have argued that imposition of strict product 
liability is a prerequisite for appropriate remedial actions. 
This view is incorrect. First, negligence theories more than 
suffice to address possible remedial questions. Second, the use 
and improvement of the UST program in this legislation, 
provides a fair and efficient mechanism to address potential 
contamination problems. Third, strict liability theories are 
highly inefficient mechanisms for addressing water quality 
concerns. For example, a recent report from the Council of 
Economic Advisors found that using the tort system in this way 
`is extremely inefficient, returning only 20 cents of the tort 
cost dollar for that purpose.' (Council of Economic Advisors, 
Who Pays for Tort Liability Claims? An Economic Analysis of the 
U.S. Tort Liability System, April 2002, at 9).
    Congress has extended liability protections in a variety of 
settings, including medical care, firefighter assistance, 
educational institutions, firearms, nuclear energy, and many 
other areas when sound public policy or fairness demands such 
an extension.
    To address the uncertainty regarding the long-term health 
and environmental effects of renewable fuels the bill requires 
EPA to conduct studies of those effects. If those studies show 
that additional regulation is necessary, the Administrator has 
the authority to initiate a rulemaking. Liability protection 
under the bill would depend on compliance with applicable rules 
that the Administrator may adopt. This balanced approach will 
protect the public from adverse health and environmental 
impacts from renewable fuels while not exposing manufacturers 
and distributors to tort lawsuits for complying with the 
renewable fuels mandate of the bill.
    Some have contended that this provision would give 
`polluters . . . sweeping liability exemptions for damage to 
public health or the environment resulting from renewable fuels 
or their use in conventional gasoline.' Nothing could be 
further from the truth. In the first place, the safe harbor 
provision does not affect claims based on the wrongful release 
of a renewable fuel into the environment. Those responsible for 
releases to the environment receive no protection whatsoever. 
Moreover, the safe harbor only applies if the maker or seller 
of a renewable fuel complies with EPA regulations to protect 
the public health and environment. Under this bill, the 
Administrator has the authority to control or even prohibit the 
sale of renewable fuels that may adversely affect air or water 
quality or the public health. There is no safe harbor if the 
Administrator's rules are violated.
    Under existing section 211(h) of the Clean Air Act, the 
Administrator was required to promulgate regulations to reduce 
the volatility of conventional (i.e., non-reformulated) 
gasoline by limiting its Reid vapor pressure (RVP). Reid vapor 
pressure is a method for determining gasoline's volatility. 
Those regulations have long since been established and they 
require that during the summer high-ozone season the RVP of 
conventional gasoline not exceed 9.0 pounds per square inch 
(psi) in ozone attainment areas and northern ozone non-
attainment areas, and 7.8 psi in southern ozone nonattainment 
areas. Section 211(h) also recognizes, however, a 1.0 psi RVP 
waiver for gasoline containing 10 percent denatured anhydrous 
ethanol. This means that under the Agency's regulations 
gasoline containing ethanol can have an RVP of 10.0 psi in 
ozone attainment areas and northern ozone nonattainment areas, 
and 8.8 psi in southern ozone nonattainment areas. In addition 
to the Federal RVP regulations, the Agency has also approved 
numerous State RVP controls under section 211(c)(4)(C) of the 
Act, upon a demonstration by the State that the RVP controls 
were necessary to achieve a national ambient air quality 
standard and that there were no reasonable and practicable non-
fuel measures available that would bring about timely 
attainment.
    The one-pound RVP waiver for ethanol blends of conventional 
gasoline is important for supply reasons. Because of the 
waiver, ethanol can be splash blended into finished gasoline at 
the distribution terminals. In other words, because of the 
waiver, the gasoline can be sold either with ethanol or without 
it. In contrast, if the waiver were not allowed, special low 
volatility blendstocks would be required to compensate for 
ethanol's impact on gasoline volatility. This has implications 
for the supply and distribution of gasoline. Without the one-
pound waiver, gasoline could be stranded if there is not 
ethanol available to blend with it. Section 819(c) of the bill 
contains provisions to ensure that there is adequate lead-time 
and that supply considerations are taken into account.
    Section 101(c) of the bill retains the one-pound RVP waiver 
for ethanol blends of conventional gasoline. However, the bill 
also provides States an expedited process to eliminate the one-
pound waiver in any area of a State if the State demonstrates 
to the Administrator that the one-pound waiver will increase 
emissions that contribute to air pollution in any area in the 
State. It is the intent of this provision to require such a 
demonstration for any area of the State for which the one-pound 
waiver would be eliminated. In addition, while it is the intent 
of this provision to establish an expedited process by which 
the State can request the Administrator to eliminate the one-
pound RVP waiver, it is not the intent to expand the authority 
of the Governor of a State beyond what he or she may have under 
State law. Furthermore, it is expected that the supporting 
documentation submitted by the Governor in support of the 
notification to eliminate the one-pound waiver would include a 
detailed analysis, including urban/regional airshed modeling, 
of the impact of the one-pound waiver on air quality in any 
area of the State where the Governor seeks to have the one-
pound waiver eliminated.
Sec. 102. Renewable fuel.
    The bill requires the Administrator to conduct, with 
respect to each conventional gasoline use area and each 
reformulated gasoline use area in each State, a survey to 
determine the market shares of various types of fuels with 
ethanol or renewable fuels. The report is to be submitted to 
Congress.
    The bill provides limited Federal assistance for the 
development of ethanol production capabilities. It is the 
committee's intent that such assistance be targeted to those 
areas of the country that currently has low rates of ethanol 
production.
    For example, the bill requires the Secretary of Energy to 
establish a 10-year program to provide Federal loan guarantees 
for construction of facilities that convert municipal solid 
waste into fuel ethanol. The Secretary is directed to give 
preference to applicants located in markets with the greatest 
need for such a facility, either because of limited 
availability of land for waste disposal or because of a high 
level of demand for fuel ethanol due to low local production 
rates of fuel ethanol.
    The bill also requires the Administrator to provide grants 
for the research, development, and implementation of renewable 
fuel production technologies. Grant eligibility is limited to 
entities located in `RFG States,' or States containing one or 
more covered areas as defined in section 211(k)(10)(D) of the 
Clean Air Act (42 U.S.C. 7411(k)(10)(D)). Eligible entities 
must be academic institutions or consortia comprised of 
combinations of academic institutions, industry, and government 
in such States. The bill authorizes $25 million for each of 
fiscal years 2006 through 2010 for the grant program.
    The committee's bill authorizes loan guarantees for up to 4 
cellulosic ethanol commercial demonstration projects under the 
Federal Non-Nuclear Energy Research and Development Act of 
1974. These projects will produce cellulose ethanol from 
agricultural residue or municipal solid waste. The guarantees 
may be on a non-recourse basis. Loan guarantee fees may not 
exceed 1 percent of the outstanding indebtedness covered by the 
guarantee.
    In order to ensure that private sector applicants under 
this program bear an appropriate level of risk, the authority 
to guarantee loans is limited by the requirement that 
applicants provide financial and technical assurances. These 
requirements are designed to reflect commercial lending 
practices. The requirements also are designed to ensure that 
substantial private sector risk precedes any government risk. 
While any commercial technology demonstration carries inherent 
risk, placing a substantial portion of that risk on the private 
sector applicant should ensure that only the most robust 
projects with highest probabilities for commercial success are 
considered. To be funded, a project must meet the following 
criteria and conditions:
         Validation of Project Design: The project 
design must have been validated through the operation of a 
continuous process facility with a cumulative output of at 
least 50,000 gallons of ethanol, with a significant fraction 
being produced using the same protocols as incorporated into 
the design of the commercial facility.
         Technical Review: A project must undergo a 
full technical review. Full technical review shall consist of a 
due diligence review of the project design specifications.
         Economic Viability: The project must be 
economically viable. To meet this requirement, the project must 
have (1) long-term sales contracts for ethanol off-take, (2) 
data showing historical production levels of feedstock 
substantially in excess of project requirements, (3) multi-year 
contracts for feedstock acquisition, (4) minimum inventory 
levels sufficient to protect against disruptions in feedstock 
supply, and (5) strategies for protection against weather 
risks.
         Adequate Project Performance Guarantees: The 
project must have adequate project performance guarantees, 
including----
        -Construction completion guarantees under which the 
        project has binding commitments to complete the 
        construction of the project to the original design 
        specifications, backed by a performance bond with a 
        maximum completion price.
        -Project startup guarantees under which the project has 
        a binding commitment from the project sponsors to 
        contribute additional financial resources, up to a 
        level equal to 50 percent of their initial equity 
        investment, to correct shortfalls in technical 
        performance levels during the initial 2 years of 
        project operation. Such additional contributions shall 
        be triggered if the technical performance shortfall 
        poses significant risk to the projected debt repayment 
        schedule.
        -Sustained operation guarantees under which the Federal 
        Government has recourse to reimbursement from project 
        participants in the event that the project defaults on 
        the loan. Each project participant shall provide a 
        binding commitment to reimburse the Federal Government 
        for losses in the event of a default, capped at an 
        amount equal to the funds paid by the project to that 
        party for the supply of goods and services, less all 
        reasonable direct and indirect costs incurred by the 
        party for the provision of such goods and services, 
        over the 4-year period preceding the default. The 
        project participants subject to this guarantee shall 
        include the primary licensors of cellulose conversion 
        technology, the supplier of biocatalysts to the 
        project, and any equity participants providing design, 
        project management or other services.
    The extent of recourse by the Federal Government shall be 
limited to the performance guarantees described above.
         Reasonable Assurance of Repayment: There must 
be reasonable assurance of repayment of the loan. To meet this 
requirement:
        -The project must have been subjected to a 
        probabilistic risk analysis of project volatility that 
        demonstrates positive economic returns to the equity 
        investors and full repayment of the loan under median 
        conditions. The risk analysis shall (1) identify the 
        major elements of risk and volatility and the parties 
        bearing the risk, (2) estimate risk values for each 
        element, and (3) identify and evaluate mitigation 
        measures to reduce the level of volatility in the 
        estimates.
        -The project must have binding commitments from equity 
        investors to provide an initial equity contribution 
        equal to at least 20 percent of the total project cost, 
        as well as any additional financial contributions 
        needed to meet performance guarantees for construction 
        completion, startup and sustained operations.
        -The project equity investors must make their 
        contributions proportionally with disbursements of 
        loans backed by the Federal guarantee.
    The criteria and conditions set forth above for selecting 
projects and issuing loan guarantees should be strictly 
followed to ensure that the program is financially sound, while 
furthering the production of cellulose-based ethanol. At the 
same time, these criteria and conditions should in no way lead 
to lengthy technical or financial due diligence reviews by DOE, 
especially in light of the 90-day deadline for DOE to approve 
or reject project applications.
    If current appropriations are insufficient to cover all 
three projects, project applications will be acted on as they 
are received. Additional projects will be funded to the extent 
appropriations are available for subsequent fiscal years.
    If the Federal Financing Bank exercises its authority to 
make a direct loan to a project under the Federal Financing 
Bank Act of 1973, the rate of interest on such loan shall not 
exceed the yield on Treasury securities of comparable maturity.
    Additionally, this language incorporates by reference the 
limitations under existing law for the application of loan 
guarantees. These most significant of these are listed below.

Key Statutory Provisions of Sec.  19 to the Federal Non-Nuclear Energy 
         Research and Development Act of 1974 (Loan Guarantees)

    (1) Guaranteed obligations not subordinated to other debt.
    (2) Term of guarantee may not exceed 20 years (or if less 
90 percent of useful life).
    (3) DOE can require project to convert to conventional 
financing after 12--13 years (or pay additional fee of 1 
percent of remaining obligation).
    (4) DOE can make advance commitments to issue loan 
guarantees.
    (5) DOE may make advances to avoid default. Secretary is 
subrogated to rights of lender in the event of default.
    (6) Administrative fee of at least 1 percent of guarantee.
    (7) Applicant must be a U.S. citizen (see 46 CFR 802).
    (8) Intellectual property rights are governed by '19(g)(4).
    (9) Department of Treasury concurrence on each loan 
guarantee.
Sec. 103. Survey of renewable fuels consumption.
    The bill requires the Administrator to conduct and publish 
a survey of renewable fuels consumption in the motor vehicle 
fuels market on a monthly basis. In developing and conducting 
this survey, the Administrator shall protect the 
confidentiality of the responses to the survey and shall 
include the bill's specified elements of the survey.

                  TITLE II--FEDERAL REFORMULATED FUELS

Sec. 201. Short title.
    This subtitle may be cited as the ``Federal Reformulated 
Fuels Act of 2005''.
Sec. 202. Leaking underground storage tanks.

                                Summary

    The bill authorizes appropriations not to exceed $200 
million from the Leaking Underground Storage Tank (LUST) Trust 
Fund to be used for cleanup and treatment of MTBE. The bill 
authorizes an additional $200 million over 6 years from the 
LUST Trust Fund for EPA and States to conduct inspections, 
issue orders, and bring actions under Subtitle I of the Solid 
Waste Disposal Act.

                               Discussion

    In 1984, Congress enacted, as Subtitle I of the Solid Waste 
Disposal Act, a comprehensive program to address the problem of 
leaking underground storage tanks. Among other things, the 
program required EPA to develop leak detection and prevention 
standards for underground storage tanks (USTs). It authorized 
the Agency to compel tank owners and operators either to take 
corrective action to clean up leaking tanks and comply with 
standards for USTs or to close the tanks. States have largely 
taken the lead in implementing and enforcing the program 
requirements, including corrective action requirements.
    States receive Federal funds from the LUST Trust Fund. 
Revenue for this Fund comes from a one-tenth of one cent tax on 
all petroleum products. This tax generates approximately $170 
million per year. The interest on the principal in the fund 
generates approximately $70 million annually (roughly the 
amount of annual appropriations from the LUST Trust Fund).
    Amounts are appropriated each year from the Trust Fund for 
the States and EPA to implement and enforce the UST corrective 
action requirements; to conduct cleanups in certain limited 
situations where there is no financially viable responsible 
party or where a responsible party fails to undertake the 
appropriate corrective action; to take corrective action in 
cases of emergency; and to bring cost recovery actions against 
parties to seek reimbursement of costs expended from the Fund 
to clean up sites. The balance of the Trust Fund is 
approximately $2.25 billion. The annual appropriation from the 
Trust Fund for fiscal year 2005 was approximately $70 million. 
Congress has appropriated approximately $10 million per year 
from general revenues for State implementation of leak 
prevention and detection programs.
    In addition to the Federal LUST Trust Fund, many States 
have also established funds, capitalized through State gas 
taxes, fees, and other mechanisms, to pay for cleanups and to 
provide assistance to tank owners in complying with other 
requirements. States spend approximately $1 billion per year 
from their trust funds. In recent years, however, the claims 
against those funds have risen dramatically.
    More than a million leaking USTs have been closed under 
this program., EPA estimates that over 670,000 active USTs 
contain petroleum products. Some of these tanks have leaks, 
causing potential harm to human health and the environment. A 
number of recent, high profile contamination cases have 
highlighted this problem. MTBE has been detected at thousands 
of leaking UST sites. In some cases, drinking water wells have 
been closed due to these releases of MTBE. According to EPA, 
States have reported more than 450,000 confirmed releases from 
USTs. Cleanups have been initiated for more than 400,000 
releases and almost 320,000 cleanups have been completed. In 
spite of this progress, many thousands of cleanups remain to be 
completed. EPA, States, and the private sector have suggested 
that lack of resources, both for cleanup and for inspections 
and enforcement, have limited efforts to fully address MTBE 
contamination and leaking USTs. Title 2 of this bill addresses 
these concerns.
    Section 2 reconfirms the authority of the Administrator and 
the States to use funds from the LUST Trust Fund for the 
cleanup of sites contaminated by MTBE from leaking USTs. In 
addition, Section 2(a) authorizes the Administrator and the 
States to conduct such cleanup activities using specifically 
designated funds made available under new Section 9011(a) from 
the LUST Trust Fund. In order to undertake a corrective action 
under this subsection, the Administrator or a State must still 
comply with the requirements of Section 9003(h)(2) of the Solid 
Waste Disposal Act. States are to exercise this authority in 
accordance with their cooperative agreements.
    Relatively low levels of MTBE can be detected in 
groundwater. The detection of MTBE, by taste and smell, can 
make the water unpalatable, but not necessarily harmful. This 
section amends Section 9003 of the Solid Waste Disposal Act to 
clarify that the Administrator and the States may undertake 
corrective actions whenever the presence of MTBE in groundwater 
presents a threat to public welfare, even in situations where 
the level of MTBE is not so high as to present a threat to 
human health.
    Section 2 amends Subtitle I of the Solid Waste Disposal Act 
by creating a new Section 9010 giving States greater 
flexibility in their use of LUST funds. New Section 9010 
authorizes EPA and the States to use funds appropriated from 
the LUST Trust Fund to conduct inspections, issue orders, or 
bring actions under Subtitle I. Funding authorized under this 
section is for both formal enforcement actions, such as 
judicial actions and administrative orders, and related 
measures to secure compliance, such as notices of violation or 
warnings. This increased funding for inspections and 
enforcement related activities will enable States and EPA to 
secure greater compliance with UST standards. Increased 
compliance will avoid future releases and resulting cleanup 
costs. Funds authorized under this provision may be used for 
cost recovery.
    This section does not change current law on State authority 
under authorized programs or Federal authority to enforce the 
requirements of Subtitle I. Nor does this provision affect 
EPA's authority to use other funds to enforce the UST program. 
EPA receives funding from sources other than the LUST Trust 
Fund to undertake inspection and enforcement related activities 
for leak detection and other preventive requirements. Any LUST 
Trust Fund appropriations used for such enforcement activities 
by EPA are expected to supplement funds that the Agency has 
been receiving, and will continue to receive, from sources 
other than the LUST Trust Fund.
    In addition to authorizing funding for States and EPA for 
federally authorized programs, this section authorizes States 
to use funds to undertake inspection and enforcement related 
actions for State tank leak detection, prevention, and other 
requirements through State programs with requirements that are 
similar or identical to Subtitle I. State agencies currently 
receive funding from EPA from sources other than the LUST Trust 
Fund to undertake such activities for leak detection and other 
preventive requirements. It is expected that States will 
continue to receive funding from EPA from these other sources, 
as well as from the LUST Trust Fund, for these activities. Any 
LUST Trust Fund appropriations used for enforcement related 
activities by States should supplement funds that the States 
have been receiving, and will continue to receive, through 
grants authorized under Section 2007(f).
    Section 2 also creates a new Section 9011 to increase the 
levels of authorized funding for measures related to corrective 
actions and enforcement. This section authorizes appropriations 
for two major and equally important activities--funding an 
immediate need to address MTBE, which is currently coming from 
leaking underground tanks and is creating problems in numerous 
drinking water wells, and facilitating inspection and 
enforcement activities to avoid similar problems being created 
in the future. Section 9011(1) authorizes a one-time 
appropriation of $200 million for corrective actions with 
respect to MTBE. The bill authorizes substantial funding to 
clean up MTBE contamination in recognition of the fact that 
this problem has arisen, in part, as a result of increased use 
of MTBE by refiners in an effort to meet Federal oxygenate 
requirements. Section 9011(2) authorizes an additional $200 
million over the period between fiscal years 2005 through 2010 
to conduct inspections or issue orders or bring actions under 
Subtitle I. There is broad consensus that more resources are 
needed to conduct inspections to ensure that underground tanks 
comply with applicable regulations and to ensure early 
detection of leaks and other problems. EPA has estimated that 
it would cost approximately $93 million over what is currently 
appropriated for the first year, and $70 million each year 
thereafter, to inspect facilities on an annual basis. A 
biannual inspection schedule would cost approximately $63 
million over what is currently appropriated for the first 2 
years combined, and $20 million additional annually thereafter.
Sec. 203. Restrictions on the use of MTBE.

                                Summary

    Section 203 restricts the use of MTBE, but allows States to 
individually authorize the sale and use of MTBE within their 
own borders.

                               Discussion

    While the States can authorize the sale and use of MTBE, 
they cannot require its sale or use. Section 203 also clarifies 
the Administrator's authority to allow trace quantities of MTBE 
notwithstanding the prohibition on MTBE use. This provision 
recognizes that MTBE has been used in gasoline for over 20 
years, and as such will be present in trace quantities 
throughout the distribution system even after its use in motor 
fuels is prohibited. Recognition of such trace quantities is 
also appropriate because MTBE may be generated as a trace 
byproduct in the production of other gasoline components.
    The bill provides for transition assistance to merchant 
MTBE manufacturers. To be eligible for such assistance, the 
manufacturer must be making MTBE at time of enactment through 
the time that the prohibition on MTBE use takes effect. This 
provision recognizes that although Congress has reconsidered 
the relative value of MTBE, Congress also recognizes that MTBE 
is an integral part of the fuels system as a result of the 
reformulated gasoline oxygen content requirement and that lead-
time must be provided to allow the industry to transition to 
substitutes. Essentially, transition assistance is premised on 
the facts that: (1) MTBE is widely used because of a Federal 
mandate, the oxygen content requirement; (2) MTBE has been 
effective in addressing the energy and environmental concerns 
that lay at the heart of a larger Federal program requiring the 
use of RFG; (3) the government, as a result of the first two 
points, bears great responsibility for any attendant losses 
attributable to the change in legal status of MTBE; and (4) 
failure to address the consequences of this change in status 
may undermine any incentive for additive manufacturers to 
produce new generations of additives that will be needed to 
replace MTBE and to meet future energy and environmental goals.
Sec. 204. Elimination of oxygen content requirement for reformulated 
        gasoline.
    In addition to repealing the reformulated gasoline oxygen 
content requirement and ensuring that the air toxics benefits 
of the reformulated gasoline program are maintained, this 
provision requires EPA to simplify the existing reformulated 
gasoline regulations by replacing the less stringent VOC 
Control Region 2 requirements with the more stringent VOC 
Control Region 1 requirements. (204(d)) This change has no 
effect on the VOC adjustment that currently applies to ethanol 
blends of reformulated gasoline in Milwaukee and Chicago or on 
the Agency's authority to expand that adjustment to other 
reformulated gasoline areas.
    Section 204(b). The goal of this provision is to ensure 
that real world air toxic emission reduction benefits are 
maintained, as recommended by EPA's Blue Ribbon Panel on 
Oxygenates in Gasoline. The petroleum industry did much better 
than required by law when it came to reducing toxic air 
pollutant emissions from reformulated gasoline. In fact, the 
industry did better in Phase I (1995-1999) of the reformulated 
gasoline program than it was even required to do under the more 
stringent Phase II (2000 and beyond) requirements. Concerns 
were raised by the Blue Ribbon Panel that some of these real 
world benefits could be lost as a result of repeal of the 
reformulated gasoline oxygen mandate and phase-down in MTBE 
use. This provision ensures that those real world benefits are 
not lost.
    To ensure that the air toxics benefits of the reformulated 
gasoline program are maintained, the Administrator promulgated 
the Mobile Source Air Toxics Rule (MSAT Rule) on March 29, 
2001. That rule requires that refineries and importers continue 
to attain the same level of air toxics performance that they 
attained in 1998-2000. The more stringent standards imposed by 
the rule do not apply to incremental volumes of reformulated 
gasoline production, i.e., production in excess of what the 
particular refinery or importer produced in 1998-2000. Gasoline 
production above the baseline volumes is subject to the Phase 
II reformulated gasoline standards, which require a 21.5 
percent reduction in aggregate air toxics emissions reductions, 
relative to 1990 baseline levels. EPA excluded these 
incremental volumes from the more stringent standard because 
the Agency did not want to discourage the production of 
reformulated gasoline and because the incremental volume 
adjustment is `unlikely to have a material impact on air toxic 
emissions from gasoline.' 66 Fed. Reg. 17230, 17249 (March 29, 
2001).
    Section 204(b) of the bill improves EPA's existing rule in 
two ways. The provision requires EPA to promulgate a rule 
within 270 days of enactment to establish `for each refinery or 
importer (other than a refinery or importer in a State that has 
received a waiver under section 209(b) with regard to gasoline 
produced for use in that State), standards for toxic air 
pollutants from use of the reformulated gasoline produced or 
distributed by the refinery or importer that maintain the 
reduction of the average annual aggregate emissions of toxic 
air pollutants for reformulated gasoline produced or 
distributed by the refinery or importer during calendar year 
1999 and 2000 . . . . ' It is the intent of this provision that 
EPA expeditiously revise the mobile source air toxics rule 
promulgated on March 29, 2001, to change the baseline 
provisions from 1998-2000 as in the existing rule to 1999-2000.
    In addition, to ensure that the average annual aggregate 
air toxic emission reduction benefits are maintained on a 
regional basis, defined to be a PADD (Petroleum Administration 
for Defense District), the Administrator is required to 
continue to monitor average annual aggregate air toxics 
emissions to ensure that the performance achieved in 1999-2000 
is maintained into the future. If the Administrator determines 
that average annual aggregate air toxics emission reductions 
are not maintained in any PADD, relative to 1999-2000 
performance, the Administrator is required to expeditiously 
revise the mobile source air toxics rule to eliminate the 
incremental volume exclusion in MSAT for reformulated gasoline.
    Section 204(c) permits commingling at retail stations of 
Reformulated Gasoline (RFG) containing ethanol and RFG that 
does not contain ethanol. This provision is intended to 
increase retailer flexibility during times of tight RFG 
supplies by permitting them to switch between different types 
of RFGs without draining their underground storage tanks, while 
at the same time maintaining environmental protections inherent 
in the RFG program. This provision will be included in section 
211(k) of the Clean Air Act.
    As a practical matter, commingling is unlikely to occur on 
a regular basis. Most gasoline markets are not likely to be 
supplied with various gasoline formulations. In addition, it is 
undesirable for retailers to switch back and forth between 
ethanol-blended and other types of gasoline due to the effects 
that ethanol has on dispenser seals, and the need for more 
frequent filter change-outs. However, if faced with a tight 
market, a commingling allowance provides flexibility to 
retailers to supply gasoline to end-users.
    There is concern that widespread commingling of ethanol 
with non-RVP-adjusted gasolines could increase VOC emissions. 
This section requires that retailers certify that the 
commingled product meet all content and emissions performance 
standards for reformulated gasoline. In addition, emission 
control strategies already in place would limit the amount of 
VOCs that could actually escape into the environment. These 
include Stage I&II vapor recovery (in nonattainment areas), 
pressure/vacuum valves on tank vents, on-board refueling vapor 
recovery systems, and on-board vehicle vapor controls. This 
provision is not intended to authorize or allow the U.S. 
Environmental Protection Agency or any other State or Federal 
Government agency to require that gasoline be reformulated to 
provide an adjustment to offset any potential VOC emissions 
increase from retail commingling.
    In addition, any party other than the retailer shall not be 
subject to an enforcement action or penalties under section (d) 
solely arising from the commingling of compliant gasolines by 
the retailer, unless the other party caused commingling that 
was not intended by the retailer or unless the other party 
failed to complete the quality assurance and oversight measures 
specified under current gasoline regulations.
    Section 204(e) This provision expressly preserves baseline 
adjustments granted previously under 40 CFR 80.915(g) of the 
Mobile Source Air Toxic rule, but only to the extent they are 
based on the 1999-2000 base period adopted by this Section. It 
also allows the Administrator to make adjustments applicable to 
the refinery specific standards that a refiner must meet under 
clause (b)(2) of Section 204.
    The Administrator may, but is not required, to change a 
`clean gasoline producer' baseline adjustment to reflect the 
Federal MTBE ban, but may not lower a refiner's baseline to 
less than the average reduction in toxic air emissions in 
reformulated gasoline supplied to PADD I during the calendar 
years 1999-2000.
Sec. 205. Public health and environmental impacts of fuels and fuel 
        additives.

                                Summary

    The bill directs the Administrator to require tests to 
determine potential public health effects of fuels or fuel 
additives prior to registering fuels or fuel additives and 
during their use. Studies under this provision will be 
conducted on a regular basis. In addition, EPA is instructed to 
study the health and environmental impacts of using ETBE and 
other additives as a substitute for MTBE.

                               Discussion

    The existing law requires the Administrator to require fuel 
and additive manufacturers to conduct tests to determine the 
potential health and environmental effects of fuels and fuel 
additives.
    The Administrator should use this authority to identify and 
assess any adverse public health, welfare, or environmental 
effects from the use of motor vehicle fuels or fuel additives 
or the combustion products of such fuels or fuel additives. The 
Administrator should use the authority to assess threats to 
both air pollution and water pollution in order to effectively 
exercise the authority in Section 211(c) as amended by this 
legislation. This provision is intended to prevent situations 
such as the one presented by MTBE contamination of water 
supplies.
    To avoid such recurrences, the Blue Ribbon Panel on 
Oxygenates in Gasoline recommended that EPA and others 
accelerate ongoing research efforts into the inhalation and 
ingestion health effects, air emission transformation 
byproducts, and environmental behavior of all oxygenates and 
other components likely to increase in the absence of MTBE. 
This should include research on ethanol, alkylates, and 
aromatics, as well as on gasoline compositions containing those 
components.
Sec. 206. Analyses of motor vehicle fuel changes.

                                Summary

    Section 206 requires the Administrator to publish an 
analysis of the changes in emissions of air pollutants and air 
quality due to the implementation of the provisions in S. 606. 
The analysis is to examine changes in all motor vehicle fuels 
and fuel additives and must attempt to identify and quantify 
any increase in emissions or air pollution caused by 
implementing this bill. A draft analysis is to be published 
within 4 years of enactment, and a final analysis is to be 
published within 5 years of enactment. The Administrator should 
include in the analysis consideration of direct and evaporative 
emissions, as well as combustion by-products, from the use of 
these fuels and fuel additives in highway and non-road 
vehicles.
    Section 206 requires the Administrator to develop and 
finalize an emissions model that reasonably reflects the 
effects of characteristics or components of motor vehicle fuel 
or emissions from vehicles in the motor vehicle fleet during 
calendar year 2007. Further, this section requires the 
Administrator to conduct a study 1 year after enactment of the 
permeation effects of ethanol in gasoline and report its 
findings to Congress.

                               Discussion

    Section 211(c) of the CAA, as amended by this legislation, 
provides the Administrator with the authority to regulate, 
control, or prohibit the manufacture, introduction into 
commerce, offering for sale, or sale of any fuel or fuel 
additive, if, in the judgment of the Administrator, the fuel or 
fuel additive or emission product causes or contributes to air 
pollution or water pollution that may reasonably be anticipated 
to endanger the public health or welfare. The bill requires the 
Administrator to exercise this authority with respect to MTBE. 
The bill also adds water quality as an environmental protection 
criterion in Title II of the Act.
    Section 202(l) of the Act requires the Administrator to 
exercise the authorities in Sections 211(c) and 202(a) and to 
promulgate, and from time to time revise, regulations 
containing reasonable requirements to control hazardous air 
pollutants from motor vehicles and fuels. The regulations must 
reflect the greatest degree of reductions achievable, 
considering cost and projected available technology, and must 
focus on those categories of emissions that pose the greatest 
risk to human health or about which significant uncertainties 
remain.
    The emissions model currently used by EPA to determine 
compliance in both the RFG and conventional anti-dumping 
gasoline programs is called the complex model. It uses 1990 
average gasoline quality and 1990 model year motor vehicle 
technology as its baseline, and models how changes in gasoline 
qualities change emissions of these vehicles compared to 1990 
gasoline. For purposes of this provision, EPA is authorized to 
update its complex model to address changes in motor vehicle 
technology since 1990. The motor vehicle fleet in calendar year 
2005 will be different from model year 1990 vehicles. The 
updated model is expected to contain a mix of technologies 
with, for example, the newer Tier 2 technology entering the 
fleet.
    Developing an emissions model that reflects the actual mix 
of motor vehicle technologies in the fleet during calendar year 
2007 allows EPA to reasonably determine the change in emissions 
between 1999-2000 and 2006-2007 due to changes in gasoline, as 
the 2007 calendar year fleet should still contain the kinds of 
technologies found in the prior years, although with a 
different mix of technologies. EPA should work with a 
consortium of the automobile and oil industries and other 
interested and qualified parties to design and conduct the 
extensive vehicle and fuel combination testing that will be 
necessary to update the complex model, as was done in 
developing the current complex model.
    An updated complex model may be useful for other related 
applications, such as emissions modeling for State planning. 
EPA could use the updated model in the RFG and conventional 
gasoline programs, including future RFG rulemakings, where 
doing so would not be inconsistent with the provisions of 
Section 211(k).
Sec. 207. Additional opt-in areas under reformulated gasoline program.

                                Summary

    This section of the bill provides explicit State authority 
to allow non-classified areas in the Ozone Transport Region to 
opt-in to the RFG program.

                               Discussion

    Currently, 17 States and the District of Columbia rely on 
the RFG program as an emissions control strategy. Appendix II 
provides a complete list of all RFG areas. The CAAA mandated 
use of RFG in nine areas. Several States (13) have exercised 
the opt-in authority of Section 211(k)(6) to require the use of 
RFG. Areas that opted in to the RFG program prior to January 1, 
2000, are required to use RFG until December 31, 2003. The Act 
limits opt-in actions to areas that previously violated the 1-
hour ozone NAAQS and are classified according to their current 
status in relation to attainment of the NAAQS. States expend 
considerable resources in an effort to avoid violating the 
NAAQS because of the stringent requirements imposed on 
nonattainment areas by the CAA. This section allows use of the 
RFG program for those areas in the Ozone Transport Region that 
seek to use it as an emissions control technique in the State's 
strategy for avoiding new violations of the NAAQS. Under this 
provision, once the SIP revision is approved the area will be a 
covered area under the Federal program.
Sec. 208. Federal enforcement of State fuels requirements.

                                Summary

    This provision requires EPA to enforce State fuels controls 
and prohibitions approved by the Administrator under section 
211(c)(4)(C) of the Act, if the State so requests.

                               Discussion

    Under section 211(c)(4)(C), EPA may approve an otherwise 
preempted State fuel control or prohibition if the State 
submits a revised implementation plan to the Administrator and 
demonstrates that the State fuel controls or prohibitions are 
necessary to achieve the national ambient air quality standard 
that the State's plan implements and that there are no other 
reasonable and practicable non-fuel measures available that 
would bring about timely attainment. Because of the national 
character of the fuels industry and the way that fuels are 
distributed in fungible streams, State fuel controls and 
prohibitions have long been recognized as the control of last 
resort. The new provision does not change these basic 
principles. The States would still be required to submit a 
revised implementation plan that meets the requirements of 
section 110 of the Act, including the requirement that the 
controls be enforceable by the State as a practical matter. 
This means that States are still required to have their own 
enforcement programs if they want to impose fuel controls or 
prohibitions that differ from the controls and prohibitions 
imposed by EPA under section 211 of the Act. The only effect of 
the new provision is that if a State meets all of the existing 
requirements under section 110 and 211(c)(4), the State can 
request that the Administrator take a more active role in 
enforcement of those regulations.
Sec. 209. Fuel system requirements harmonization study.

                                Summary

    The Administrator of the Environmental Protection Agency 
and the Secretary of Energy shall jointly conduct a study of 
Federal, State, and local requirements concerning motor vehicle 
fuels.

                               Discussion

    In the last several years, multiple unique gasoline blends 
required in different parts of the country have led to reduced 
fungibility in gasoline distribution systems and exacerbated 
shortages when supply disruptions have occurred. Several 
studies of this `boutique fuels' problem have identified it as 
a contributing factor to increased price volatility and market 
tightness. This bill takes the first step in addressing 
boutique fuels by making major changes to Federal fuels 
requirements: a Federal phase-out of MTBE; repeal of the RFG 
oxygen content mandate; and a new Renewable Fuels Standard with 
a credit banking and trading program. Section 209 takes the 
next step by requiring DOE and EPA to conduct a comprehensive 
study on how the various fuels requirements affect several 
things, including (1) the supply of fuels available to 
consumers; (2) achievement of air quality goals; (3) the fuel 
distribution system; and (4) industry investment in new 
capacity. The EPA and DOE are to recommend to Congress 
potential changes to harmonize fuels requirements nationally 
and reduce the number of specialty fuels. The report 
recommendations are required to take into account the need to 
provide advance notice of required modifications to refinery 
and fuel distribution systems in order to ensure an adequate 
supply of motor vehicle fuel in all States.

                          Legislative History

    S. 606 was introduced by Senator Thune on March 11, 2005, 
and was referred to the Committee on Environment and Public 
Works. The committee met on March 16, 2005, to consider the 
bill. The bill, as amended, was ordered reported on March 16, 
2005.
    During the 108th Congress, the committee considered a 
similar bill, S. 791 introduced by Senator Inhofe. The 
committee favorably reported the bill, as amended in a business 
meeting on April 9, 2003. During the 107th Congress, the 
committee favorably reported a related bill, S. 950, the 
Reformulated Fuels Act, which did not pass the Senate.

                                Hearings

    There have been no hearings held on S. 606 during the 109th 
Congress.
    On March 20, 2003, the Subcommittee on Clean Air, Climate 
Change, and Nuclear Safety held a non-legislative hearing on 
alternative fuels and fuel additives. The witnesses providing 
testimony were Hon. Jeffrey R. Holmstead, Assistant 
Administrator for Air and Radiation, U.S. Environmental 
Protection Agency; Hon. David Garman, Assistant Secretary for 
Renewable Energy, U.S. Department of Energy; Mary Hutzler, 
Director, Office of Integrated Analysis and Forecasting, Energy 
Information Administration; Fred Yoder, President, National 
Corn Growers Association; Dr. Edward Murphy, Downstream General 
Manager, American Petroleum Institute; Robert Slaughter, 
President, National Petrochemical and Refiners Association; 
Scott Segal, Partner, Bracewell and Patterson, L.L.P.; Rich 
Wagman, First Vice Chairman of ARTBA, President of G.A. and 
F.C. Wagman, York, Pennsylvania, on behalf of the American Road 
and Transportation Builders Association; A. Blakeman Early, 
Consultant, American Lung Association; Paul J. Granger, P.E., 
Superintendent, Plainview Water District, Plainview, New York; 
and Craig Perkins, Director, Environment and Public Works 
Management, Santa Monica, California.
    During the 105th through the 107th Congresses, the 
committee held hearings on the use of oxygenated fuels under 
the requirements of the Clean Air Act.
    On December 9, 1997, the Committee on Environment and 
Public Works held a field hearing in Sacramento, CA on the 
presence of MTBE in the nation's water supply. Testimony was 
given by Nancy J. Balter, Principal, Center for Environmental 
Health and Human Toxicology, and former Associate Professor of 
pharmacology, Georgetown University Medical Center; Nachman 
Brautbar, Professor of clinical medicine, University of 
Southern California School of Medicine; Cynthia Dougherty, 
Director, Office of Groundwater and Drinking Water, 
Environmental Protection Agency; Stephen K. Hall, Executive 
Director, Association of California Water Agencies; The 
Honorable Tom Hayden, California State Senator; The Honorable 
Richard Mountjoy, California State Senator; Gary Patton, 
Counsel, The Planning and Conservation League; Craig Perkins, 
Director of Environment and Public Works Management, city of 
Santa Monica, California; Peter M. Rooney, Secretary, 
California State Environmental Protection Agency; David Spath, 
Chief, Drinking Water and Environmental Management Division, 
California State Environmental Protection Agency; and John 
Zogorski, Chief of National Synthesis on Volatile Organic 
Compounds and MTBE, U.S. Geological Survey.
    On September 16, 1998, the Committee on Environment and 
Public Works held a hearing on S. 1576, a bill to amend the 
Clean Air Act to permit the exclusive application of California 
State regulations regarding reformulated gasoline in certain 
areas within the State. Testimony was given by The Honorable 
Brian Bilbray, U.S. Representative from the State of 
California; John D. Dunlap, III, Chairman, California Air 
Resources Board; Douglas A. Durante, Executive Director, Clean 
Fuels Development Coalition; The Honorable Dianne Feinstein, 
U.S. Senator from the State of California; Daniel S. Greenbaum, 
President, Health Effects Institute; Al Jessel, Senior Fuels 
Specialist, Chevron Products Company; and Ned Sullivan, 
Commissioner, Maine Department of Environmental Conservation.
    On October 5, 1999, the Subcommittee on Clean Air, 
Wetlands, Private Property and Nuclear Safety of the Committee 
on Environment and Public Works held a hearing on the Blue 
Ribbon Panel findings on MTBE. Testimony was given by Robert H. 
Campbell, Chairman and Chief Executive Officer, Sunoco, Inc.; 
The Honorable Jake Garn, Vice Chairman, Huntsman Corporation; 
Daniel S. Greenbaum, President, Health Effects Institute; and 
Michael P. Kenny, Executive Officer, California Air Resources 
Board.
    On June 14, 2000, the Subcommittee on Clean Air, Wetlands, 
Private Property and Nuclear Safety of the Committee on 
Environment and Public Works held a hearing on the 
environmental benefits and impacts of ethanol under the Clean 
Air Act. Testimony was given by Dan Greenbaum, President, 
Health Effects Institute; Blake Early, Environmental 
Consultant, American Lung Association; Michael Graboski, 
Director, Colorado Institute for Fuels and High Altitude Engine 
Research, Colorado Department of Chemical Engineering, Colorado 
School of Mines; Bob Slaughter, Director, National 
Petrochemical & Refiners Association; Jack Huggins, Vice 
President, Williams Energy Services; Jason Grumet, Executive 
Director, Northeast States for Coordinated Air Use Management; 
Stephen Gatto, President and Chief Executive Officer, BC 
International; Gordon Proctor, Director, Ohio Department of 
Transportation; The Honorable Charles Grassley, United States 
Senator from the State of Iowa; The Honorable Tom Harkin, 
United States Senator from the State of Iowa; The Honorable 
Richard Durbin, United States Senator from the State of 
Illinois.
    On April 27, 2001, at the Media Center, Salem High School, 
Salem, NH, the committee received testimony on the use of the 
gasoline additive methyl tertiary butyl ether (MTBE), from 
Christina Miller, homeowner, Derry NH; Hon. Arthur Klemm, New 
Hampshire State Senator, Windham, NH; Robert Varney, 
Commissioner, New Hampshire Department of Environmental 
Services, Concord, NH; Nancy Kinner, Professor of Civil 
Engineering, University of New Hampshire, Durham, NH; William 
Holmberg, Biofuel Refiner, Bow, NH; Patty Aho, Executive 
Director, Maine Petroleum Association, Augusta, ME.

                             Rollcall Votes

    The Committee on Environment and Public Works met to 
consider S. 606 on March 16, 2005. During consideration of the 
bill, a manager's amendment offered by Senator Inhofe was 
agreed to by Unanimous Consent. The bill was ordered reported 
to the Senate, as amended, by voice vote. Senators Jeffords, 
Boxer, Clinton, Lautenberg, and Warner were recorded as voting 
no.

                      Regulatory Impact Statement

    In compliance with section 11(b) of rule XXVI of the 
Standing Rules of the Senate, the committee makes evaluation of 
the regulatory impact of the reported bill.
    The regulatory authority granted by this bill is structured 
to streamline and make flexible the imposition of any new 
requirements.
    Section 101 requires the Administrator of the EPA to issue 
regulations to establish a renewable fuel content requirement 
applicable to all refineries, blenders, distributors and 
importers of gasoline sold or introduced into commerce in the 
United States, except in Alaska or Hawaii.
    Under Section 203, no regulatory action is required to 
affect the phaseout of MTBE, though the Administrator will need 
to issue regulations to implement and enforce this phaseout. 
The Administrator's existing authority to limit the use of 
fuels or fuel additives is expanded by the bill to allow 
consideration of water pollution effects.
    Section 204 requires EPA to promulgate regulations to 
establish new performance standards for toxic emissions within 
270 days of enactment. In the event that refiners' toxics 
reduction performance does not achieve at least the 1999-2000 
average in a region, EPA must promulgate revised regulations to 
assure such performance. Compliance with the performance 
standards is managed through existing regulatory structures 
under Section 211(k) of the CAA.
    Also in section 204, EPA must revise the current RFG 
regulations to ensure that northern RFG gasoline will meet the 
more stringent VOC requirements of southern RFG.
    The provisions in Section 207 regarding additional opt-in 
areas rely entirely on existing authority and regulatory 
structures for revisions and approvals of SIPs.

                          Mandates Assessment

    In compliance with the Unfunded Mandates Reform Act of 1995 
(Public Law 104-4), the committee finds that S. 606 would 
impose no significant Federal intergovernmental unfunded 
mandates on State, local, or tribal governments.

                          Cost of Legislation

    Section 403 of the Congressional Budget and Impoundment 
Control Act requires that a statement of the cost of the 
reported bill, prepared by the Congressional Budget Office, be 
included in the report. That statement follows:
                              ----------                              

S. 606, Reliable Fuels Act, As ordered reported by the Senate Committee 
        on Environment and Public Works on March 16, 2005
Summary
    Under S. 606, methyl tertiary butyl ether (known as MTBE), 
a widely used motor fuel additive, would be banned 4 years 
after enactment of the bill--except individual States could 
choose to continue to allow the use of MTBE by notifying the 
administrator of the Environmental Protection Agency (EPA). The 
bill would eliminate a requirement under current law for motor 
fuel to contain oxygenates, but would require that all motor 
fuels sold by a refiner, blender, or importer contain specified 
amounts of renewable fuel. CBO expects that this renewable fuel 
standard would largely be met by adding ethanol to gasoline. S. 
606 also would authorize funding for several grant programs to 
support research and development of renewable fuels technology. 
The bill also would authorize funding for rulemaking, studies, 
and reports to the Congress related to the renewable fuels 
program.
    The bill's requirement to use renewable fuels would reduce 
spending on farm support programs and also would have an 
insignificant effect on motor fuels tax receipts. CBO estimates 
that enacting S. 606 would reduce direct spending by about $1.5 
billion over the 2011-2015 period by increasing the demand for 
certain agricultural commodities.
    Finally, we estimate that implementing S. 606 would cost 
about $340 million in 2006 and $1.5 billion over the 2006-2010 
period, subject to appropriation of the necessary amounts. Most 
of that spending would be for grants to producers of MTBE (to 
convert their facilities to produce other fuel additives), and 
to producers of biomass ethanol (derived from plants, grasses, 
fibers, and certain waste sources). The bill would authorize 
the appropriation of $1.15 billion for those grants, as well as 
authorizing funding for other related programs.
    S. 606 contains an intergovernmental mandate as defined in 
the Unfunded Mandates Reform Act (UMRA) because it would 
preempt State liability laws and prevent State and local 
governments from seeking damages from producers of gasoline 
that contains renewable fuel. CBO expects that the costs to 
comply with this mandate would not be significant over the next 
5 years; therefore, the threshold established in UMRA ($62 
million in 2005, adjusted annually for inflation) would not be 
exceeded.
    S. 606 contains several private-sector mandates as defined 
in UMRA. While CBO cannot estimate the aggregate cost of all 
the mandates contained in the bill, we anticipate that the 
costs would not be large. Therefore, CBO estimates that the 
total cost of the private-sector mandates would be below the 
annual threshold established in UMRA ($123 million in 2005, 
adjusted annually for inflation) for the first 5 years that the 
mandates are in effect.
Estimated Cost to the Federal Government
    The estimated budgetary impact of S. 606 is shown in Table 
1. The costs of this legislation fall within budget functions 
270 (energy), 300 (natural resources and environment), 350 
(agriculture), 370 (commerce and housing credit), and 950 
(undistributed offsetting receipts).
Basis of Estimate
    For this estimate, CBO assumes that the bill will be 
enacted by the end of fiscal year 2005, that the full amounts 
authorized will be appropriated for each fiscal year, and that 
spending will follow historical rates for ongoing or similar 
activities.

                   Spending Subject to Appropriation

    S. 606 contains several provisions that specify amounts 
authorized to be appropriated for researching methods to 
improve the production of renewable fuels and amounts to 
correct environmental contamination caused by MTBE. The bill 
also would authorize unspecified amounts to be appropriated for 
the promulgation of new rules, studies, and reports to the 
Congress associated with the new renewable fuels standard that 
would be established under the bill. Assuming appropriation of 
the specified and estimated amounts, CBO estimates that 
implementing these provisions would cost about $340 million in 
2006 and $1.5 billion over the 2006-2010 period. Major 
components of this estimate are described below.

                                  TABLE 1. ESTIMATED BUDGETARY IMPACT OF S. 606
                                     By Fiscal Year, in Millions of Dollars
----------------------------------------------------------------------------------------------------------------
                                                     2006         2007         2008         2009         2010
----------------------------------------------------------------------------------------------------------------
  CHANGES IN SPENDING SUBJECT TO APPROPRIATION
Grants to MTBE Producers.......................
    Authorization Level........................          250          250          250            0            0
    Estimated Outlays..........................          100          213          250          150           38
Grants to Producers of Cellulosic Biomass
 Ethanol.......................................
    Authorization Level........................          400            0            0            0            0
    Estimated Outlays..........................          180          140           60           20            0
Center for Biomass-Based Energy................
    Authorization Level........................            4            4            0            0            0
    Estimated Outlays..........................            3            4            1            0            0
Grants for Renewable Fuel Production...........
    Authorization Level........................           25           25           25           25           25
    Estimated Outlays..........................           11           20           24           25           25
LUST Program...................................
    Authorization Level........................           30           30           30           30            0
    Estimated Outlays..........................            8           18           26           29           23
Loan Guarantees................................
    Estimated Authorization Level..............           30            0           40            0           40
    Estimated Outlays..........................           30            0           40            0           40
Clean Air Act Provisions.......................
    Estimated Authorization Level..............           11           13           12           11           11
    Estimated Outlays..........................           11           13           12           11           11
    Total Proposed Changes.....................
        Estimated Authorization Level..........          750          322          357           66           76
        Estimate Outlays.......................          343          408          413          235          137
         CHANGES IN DIRECT SPENDING\1\
Estimated Budget Authority.....................            0            0            0            0            0
Estimated Outlays..............................            0            0            0            0            0
              CHANGES IN REVENUES
Estimated Revenues.............................            0            *            *            *            *
----------------------------------------------------------------------------------------------------------------
NOTES: LUST = Leaking Underground Storage Tanks; * = less than $500,000.
\1\CBO estimates that the bill would have no direct spending impact over the 2006-2010 period but would reduce
  direct spending by $1.5 billion over the 2011-2015 period (See table 2).

    Grants to MTBE Producers. S. 606 would authorize the 
appropriation of $750 million to the Department of Energy (DOE) 
over the 2006-2008 period for grants to assist producers of 
MTBE to convert facilities to produce alternative fuel 
additives instead of MTBE.
    Grants to Producers of Cellulosic Biomass Ethanol. S. 606 
would authorize the appropriation of $400 million to DOE in 
2006 for grants to producers of cellulosic biomass ethanol 
(ethanol derived from such materials as plants, grasses, 
fibers, municipal solid waste, and wood residues) to build 
production facilities.
    Center for Biomass-Based Energy. This legislation would 
authorize the appropriation of $8 million over the 2006-2007 
period to establish a resource center at the University of 
Mississippi and the University of Oklahoma for the purpose of 
developing new methods to produce ethanol.
    Research and Development Grants for Renewable Fuel 
Production. S. 606 would authorize the appropriation of $125 
million to EPA over the 2006-2010 period for grants to certain 
academic institutions and consortia (consisting of academic 
institutions, industry, State government agencies, or local 
government agencies) for research and development related to 
technologies for the production of renewable fuel.
    LUST Program. This legislation would authorize the 
appropriation of $120 million over the 2006-2009 period from 
EPA's Leaking Underground Storage Tank (LUST) Trust Fund. This 
funding would be used for grants to States to correct 
contamination caused by MTBE and for enforcement and inspection 
activities related to LUST sites.
    Loan Guarantees. S. 606 would authorize DOE to issue loan 
guarantees to help finance the construction of facilities to 
produce fuel ethanol from agricultural residue or municipal 
solid waste. The development of such facilities poses some risk 
mainly because the technology that would be used to process 
ethanol from such sources is new and is not well-proven.
    For this estimate, we expect that such facilities would be 
debt-financed and sponsors would recover costs through the sale 
of ethanol. Prices for ethanol have a history of fluctuating 
widely and the likelihood of future fluctuations could 
contribute additional credit risk for such a project. Moreover, 
the cash-flow for these projects also would rely heavily on the 
cost of purchasing feedstock or (for solid waste facilities) on 
revenues from ``tipping fees'' (i.e., those fees charged by the 
plant to accept municipal solid waste feedstock). According to 
DOE, a plant's reliance on feedstock from these sources would 
increase a project's credit risk because prices for feedstock 
can become competitive if demand for such products increases 
and tipping fee revenue may also fluctuate.
    Under credit reform procedures, funds must be appropriated 
in advance to cover the subsidy cost of loan guarantees, 
measured on a present-value basis. Because of the significant 
level of risk associated with these types of projects, the 
costs of subsidizing such loan guarantees could vary widely. At 
worst, the government could absorb all of the risk, effectively 
converting the loan guarantees into grants. S. 606 would 
authorize DOE to issue loan guarantees limited to $250 million 
per project for a total of four projects (i.e., up to $1 
billion worth of guarantees could be made). Under this 
legislation, an applicant for a loan guarantee would have to be 
currently operating an existing facility that produces at least 
50,000 gallons of ethanol per year.
    CBO estimates that, over the next 5 years, DOE would 
probably provide loan guarantees for three projects, each with 
a total construction cost of about $250 million. Because the 
bill also would require applicants to contribute at least 20 
percent of the project's total cost, CBO estimates that the 
value of each loan guarantee would be about $200 million. In 
addition, based on information from DOE, CBO assumes that the 
department would seek projects with a financial outlook similar 
to those of bonds rated B- or better by companies such as 
Standard and Poors and Moodys. Projects with this rating 
typically have a cumulative default risk of over 40 percent. 
Under those assumptions, CBO estimates that loans guaranteed 
under the bill would be likely to have a subsidy rate between 
15 percent and 20 percent and would cost $110 million over the 
2006-2010 period.
    Motor Fuels and Clean Air Act Provisions. This legislation 
would require EPA to promulgate new rules, prepare studies for 
the Congress, and implement new programs related to the 
renewable content of motor fuels and air pollution resulting 
from the use of motor fuels. CBO estimates that implementing 
these provisions in S. 606 would cost $10 million in 2006 and 
$58 million over the 2006-2010 period. Of the $58 million, more 
than half would be for EPA's costs to enforce motor fuel 
standards. Specifically, the bill would require that EPA 
promulgate rules that require motor fuels sold by a refiner, 
blender, or importer contain specified amounts of renewable 
fuels. Under the bill, by 2012, gasoline sold to U.S. consumers 
would be required to include, on an annual average basis, 6 
billion gallons of renewable fuel. (In 2004, 140 billion 
gallons of gasoline were sold in the United States.)
    Additionally, the bill would require the EPA to conduct 
annual surveys on market shares of various renewable fuels 
starting in December 2006. Such a survey could cost as much as 
$4 million annually if EPA were to undertake a survey of all 
retail gasoline sales. This legislation also would require EPA, 
at the request of a State, to enforce any State-adopted 
regulations concerning fuels requirements. State fuels programs 
can vary. Some programs are seasonal, while others are more 
complex where many fuel parameters are regulated. Specifically, 
EPA staff would be required to travel to the affected cities, 
take samples, review records, and conduct audits of refiners 
and importers. Based on information from EPA, CBO estimates 
that implementing this provision would require the equivalent 
of an additional 22 staff, funding for their travel expenses, 
and funding associated with laboratory sampling and technical 
analysis, resulting in a cost of $5 million annually and $25 
million over the next 5 years, subject to appropriation of the 
necessary funds.
    S. 606 also includes several other provisions that would 
require new studies, reports to the Congress, and activities 
related to banning the use of MTBE in motor fuels to be 
prepared by DOE and the Federal Trade Commission. CBO estimates 
that such activities would cost about $3 million over the 2006-
2010 period.

                      Direct Spending and Revenues

    CBO estimates that enacting S. 606 would lower direct 
spending by about $1.5 billion over the next 10 years and have 
an insignificant effect on revenues over the same period. The 
bill's impact on direct spending and revenues over the 2006-
2015 period is shown in Table 2.

                       TABLE 2. ESTIMATED IMPACT OF S. 606 ON DIRECT SPENDING AND REVENUES
                                     By Fiscal Year, in Millions of Dollars
----------------------------------------------------------------------------------------------------------------
                                   2006    2007    2008    2009    2010    2011    2012    2013    2014    2015
----------------------------------------------------------------------------------------------------------------
 CHANGES IN DIRECT SPENDING AND
            REVENUES
Estimated Budget Authority......       0       0       0       0       0    -115    -250    -340    -375    -385
Estimated Outlays...............       0       0       0       0       0    -115    -250    -340    -375    -385
Estimated Revenues..............       0       *       *       *       *       *       *       *       *       *
----------------------------------------------------------------------------------------------------------------
NOTE: * = less than $500,000.

    Renewable Fuels Requirement and Agriculture Support 
Programs. Section 101 of the bill would require that motor 
fuels sold by a refiner, blender, or importer contain specified 
amounts of renewable fuel. The required volume of renewable 
fuel would start at 3.8 billion gallons in 2006 and escalate to 
6 billion gallons for 2012 and increase at the growth in 
gasoline consumption. The bill also would amend the Clean Air 
Act to eliminate the requirement for gasoline that is sold in 
certain regions of the country to contain 2 percent oxygen by 
weight. This provision might lower demand for gasoline 
oxygenates (including ethanol), particularly in the first few 
years of the period because the mandated use of renewable fuels 
is below CBO's baseline for the use of ethanol.
    However, the bill also provides for the generation of 
credits toward meeting the renewable fuel requirement, which 
can be used to satisfy future years' requirements. Because of 
the ability of a refiner, blender, or importer to save ethanol-
use credits generated in 1 year to satisfy requirements in a 
future year, CBO does not expect that the use of renewable 
fuels would be significantly affected until 2011 when the 
bill's renewable fuel requirement would exceed the CBO baseline 
for such fuels (including accumulated credits).
    CBO expects that most of the fuel produced to meet the 
requirements under the act would be corn-based ethanol. Because 
ethanol is primarily derived from corn, demand for corn would 
rise with the requirement to use more ethanol. CBO expects that 
higher prices for corn during the 2011-2015 period would 
result. Accordingly, the costs of Federal programs to support 
farm prices and provide income support would fall over the 
2011-2015 period. CBO estimates that spending for farm price 
and income supports would decline by about $1.5 billion over 
the 2011-2015 period.
    Renewable Fuels Requirement and Revenues. Because ethanol-
blended fuels are taxed at a lower rate than gasoline, receipts 
from motor fuels would change when ethanol use changes. CBO 
estimates, however, that effects on revenues from this bill 
would be insignificant for two main reasons. First, effects on 
ethanol use would be insignificant before 2011 because the bill 
provides for the generation of credits toward meeting the 
renewable fuel requirement, which can be used to satisfy future 
years' requirements. Second, although ethanol use would 
increase significantly under the bill after 2010, the special 
tax treatment of ethanol fuels expires at the end of calendar 
year 2010, so changes in ethanol use would not significantly 
affect revenues after that point.
    Enacting this bill could also increase receipts from new 
civil penalties against violators of the renewable fuels 
program established under this legislation. CBO estimates that 
any such increase in civil penalties would not be significant.
Estimated Impact on State, Local, and Tribal Governments
    S. 606 would shield manufacturers of gasoline from 
liability claims based on the renewable content of their fuel. 
This provision would limit the application of State law and 
prohibit State and local governments from seeking damages from 
producers of gasoline that contains renewable fuel. That 
provision constitutes an intergovernmental mandate as defined 
in UMRA. Because there are currently no such lawsuits pending 
in the courts, CBO estimates that the mandate would impose no 
duty on State or local governments that would result in 
significant additional spending (or forgone collections) over 
the next 5 years. Therefore, the threshold established in UMRA 
($62 million in 2005, adjusted annually for inflation) would 
not be exceeded.
    Other provisions of the bill contain no intergovernmental 
mandates and would impose no direct costs on State, local, or 
tribal governments. States with EPA approval to enforce clean 
air standards for motor fuels would have to comply with several 
new requirements, but they would do so voluntarily. In general, 
the bill would benefit States by authorizing grants and amounts 
from the LUST Trust Fund for a variety of activities.
Estimated Impact on the Private Sector
    S. 606 contains several private-sector mandates as defined 
in the Unfunded Mandates Reform Act. While CBO cannot estimate 
the aggregate cost of all the mandates contained in the bill, 
we anticipate that such costs would not be large. Therefore, 
CBO estimates that the total cost of the private-sector 
mandates would be below the annual threshold established in 
UMRA ($123 million in 2005, adjusted annually for inflation) 
for the first 5 years that the mandates are in effect.

                         Renewable Fuel Program

    Renewable Fuel Standard. Section 101 would require domestic 
refiners, blenders, and importers of gasoline to ensure that 
gasoline sold or dispensed to consumers in the contiguous 
United States contains a minimum volume of renewable fuels. The 
required volume of renewable fuel would start at 3.8 billion 
gallons in 2006 and increase to 6.0 billion gallons by 2012. 
Section 101 also would allow refineries, blenders, and 
importers to accumulate and trade credits for quantities of 
renewable fuels. Individual refineries, blenders, or importers 
may experience cost increases, should they need to purchase 
credits to meet individual compliance provisions. In the first 
5 years that the renewable fuel standard would be in effect, 
the motor fuels industry would be able to meet the standard 
without increasing renewable fuel use. Thus, CBO expects the 
net cost for the industry as a whole to be zero in the first 5 
years the standard is in effect.
    Seasonal Variation in Renewable Fuel Use. Section 101 would 
direct the Energy Information Administration (EIA) to determine 
if there are excessive seasonal variations in the amount of 
renewable fuel blended into gasoline. Refiners might have an 
incentive to use more of the annual requirement for renewable 
fuel (mostly ethanol) in the winter months, when evaporative 
emissions from gasoline are less of a concern. Sharp seasonal 
changes in the demand for ethanol could lead to large swings in 
ethanol and gasoline prices. If EIA determines that there are 
excessive seasonal fluctuations, EPA would impose regulations 
requiring that at least 35 percent of the renewable fuel 
standard be blended into gasoline in summer months and another 
35 percent be blended in winter months. At this time EPA does 
not have any information on excessive seasonal variation in 
renewable fuel use, but expects that such requirements will not 
be likely. In the event that a determination by EIA triggers 
additional EPA regulations, the duty to comply with those 
regulations would constitute a private-sector mandate.
    Safe Harbor. The renewable fuel standard required by the 
bill would substantially increase the amount of renewable fuel 
that is blended into gasoline. Section 101 would shield motor 
fuel manufacturers and other persons from liability for a 
defect in design or manufacture of a motor vehicle fuel 
containing renewable fuel. That protection would be in effect 
as long as the fuel is in compliance with other applicable 
Federal requirements. The provision would impose a private-
sector mandate by limiting existing rights to seek compensation 
under current law, but CBO cannot determine the cost of this 
mandate. Effective on the date of enactment, the provision 
would have no impact on existing claims or court determinations 
or settlements. Currently, there are no lawsuits of this 
nature.
    Eliminate the Ethanol Waiver. Section 101 would authorize 
States to apply for an exclusion from a waiver that under 
current law allows gasoline blended with ethanol to have higher 
evaporative properties than gasoline blended with other fuel 
additives. Gasoline blends containing ethanol evaporate more 
readily at a given temperature, contributing to smog formation. 
To the extent that gasoline blended with ethanol is sold in a 
State requesting an exclusion, the exclusion would increase the 
cost of an existing private-sector mandate on refiners who sell 
in the State. According to industry sources, it is unlikely 
that States using ethanol would request an exclusion from the 
waiver. In the event that such a State did request an 
exclusion, CBO estimates the increased cost to refiners would 
be small.
    Recordkeeping and Reporting Requirements. Section 102 would 
require the EPA to collect data and issue a report on the 
amount of renewable fuel blending. The EPA may require 
refiners, blenders, and importers to keep records or make 
reports that are necessary for the EPA's survey of renewable 
fuel blending. In the event that the EPA does issue new 
recordkeeping or reporting requirements for refiners, blenders, 
and importers, that would constitute a new private-sector 
mandate. The bill, however, would require that any new 
recordkeeping or reporting requirements be folded into existing 
requirements. CBO expects that the cost for any new 
recordkeeping requirements would be small.

                                MTBE Ban

    Under the Clean Air Act Amendments of 1990, areas with poor 
air quality are required to add chemicals called ``oxygenates'' 
to gasoline as a means of reducing certain air pollution 
emissions. One of the most commonly used oxygenates is methyl 
tertiary butyl ether. Roughly one-third of the MTBE used in the 
United States is supplied to refiners by merchant producers and 
the rest is produced by the refiners themselves or imported. In 
recent years, concerns have been raised about the adverse 
effects on groundwater supplies from MTBE that leaks from 
underground tanks, and 19 States have passed laws to either ban 
or reduce the local use of MTBE.
    Section 203 would ban the use of MTBE in gasoline within 4 
years of the bill's enactment. At the same time, the provision 
would allow any State to authorize MTBE use by notifying the 
EPA. A nationwide ban with States opting to continue use of 
MTBE may not be fundamentally different from the current 
situation in which States impose their own local bans. 
Therefore, it is possible that MTBE use would not be 
significantly affected by the new ban. Moreover, CBO 
anticipates that the renewable fuels standard established in 
section 101 would, on its own, greatly reduce--if not 
eliminate--incentives to use MTBE.
    CBO cannot determine in which States, if any, the Federal 
MTBE ban would be more constraining than the renewable fuel 
standard and, therefore, cannot determine the cost of the 
mandate. In States where the Federal ban would be more 
constraining, the ban could impose costs on refiners and 
merchant producers. Gasoline refiners would need to replace 
MTBE with higher-cost blendstocks, and merchant producers would 
likely convert their operations to the production of less-
profitable blendstocks, such as alkylates or iso-octane. The 
bill would authorize Federal transition grants--amounting to 
$750 million over the 2006-2008 period--to merchant producers 
to convert their facilities.

                        Other Fuel Requirements

    Anti-Backsliding Baseline. Section 204 would direct the EPA 
to establish a more stringent baseline for toxic emissions from 
reformulated gasoline. The current baseline, which became 
effective in 2002, is refinery specific and is based on average 
1998 through 2000 reformulated gasoline parameter values. The 
bill would establish a baseline that averages parameter values 
only from calendar years 1999 and 2000, which would require 
reformulated gasoline to be slightly cleaner. According to 
industry sources, it is unclear that the more-stringent 
baseline would increase costs significantly. CBO expects that 
the cost of this mandate would be small.
    VOC Region Consolidation. Section 204 would consolidate the 
regional regulations that limit the emissions of volatile 
organic compounds (VOCs) from gasoline, by applying the more-
stringent standards for gasoline sold in the southern United 
States to gasoline sold in the northern United States. Meeting 
the more-stringent standards would impose a private-sector 
mandate. According to industry experts, the difference in the 
stringency of the two standards is small, and therefore, the 
mandate is not likely to increase industry costs.
    Increased Environmental and Public Health Testing. Section 
205 would require fuel and fuel additive manufacturers to test 
their products regularly for any environmental or public health 
effects, as part of the registration process with the EPA. 
Under current law, such testing occurs at the discretion of the 
EPA Administrator. The specific test items listed in the 
provision commonly are included in industry testing, and 
neither the EPA nor the industry expects the frequency of 
testing to change. CBO does not expect the mandate to impose 
any additional costs on manufacturers of fuels or fuel 
additives.
    State Opt-in to Reformulated Gasoline (RFG) Program. 
Section 207 would authorize States in the ozone transport 
region (several States in the Northeast) to ask EPA to apply 
the more-stringent air emissions standards of the RFG program 
in areas that are already in attainment of air quality 
standards. Industry experts indicate that few of the States in 
the ozone transport region currently using conventional 
gasoline would want to opt in to the RFG program under this 
provision. Furthermore, should a State in the region choose to 
opt in, the mandate would impose a very small cost on 
refineries.
Previous CBO Estimate
    On April 19, 2005, CBO transmitted a cost estimate for H.R. 
6, the Energy Policy Act of 2005, as introduced on April 18, 
2005. H.R. 6 also would require the use of renewable fuel in 
motor fuel; however, CBO estimated that requirement would not 
have a significant Federal budget impact because the required 
amount would be lower than the amount specified in S. 606. Both 
bills also contain an intergovernmental mandate as defined in 
UMRA by shielding manufacturers of gasoline from certain 
liability claims. Because the mandate in H.R. 6 is much broader 
and would shield them from liability claims (including many 
pending claims) for the manufacture of MTBE, CBO estimated that 
bill's mandate costs would be significantly higher than the 
mandate costs in S. 606.
    Estimate Prepared By: Federal Spending: Susanne S. Mehlman, 
EPA and Energy Provisions; David Hull, Agriculture Subsidies. 
Federal Revenues: Laura Hanlon. Impact on State, Local, and 
Tribal Governments: Theresa Gullo. Impact on the Private 
Sector: Selena Caldera.
    Estimate Approved By: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis and G. Thomas Woodward, Assistant 
Director for Tax Analysis.
  MINORITY VIEWS OF SENATORS JEFFORDS, BOXER, LAUTENBERG, AND CLINTON

    We write separately here on S. 606, the Reliable Fuels Act 
of 2005, to underscore the importance of ending methyl tertiary 
butyl ether (MTBE) use, to explain why the committee did not 
include liability exemptions for MTBE contamination, and to 
urge the full Senate to reject any measure that would force 
taxpayers to pay for MTBE cleanup rather than responsible 
parties.
    Further, we have grave concerns about the significant 
likelihood that S. 606 would permit refiners to backslide on 
their historical improvements in toxics emissions reduction 
performance. This legislation reported by the committee, with 
provisions on leaking underground storage tanks that have not 
been updated since 2001, also fails to reflect the important 
progress the committee has made more recently in dealing 
comprehensively with our nation's enormous problem of leaking 
underground storage tanks.

MTBE Ban and Manufacturers' Liability

    MTBE is classified as a possible human carcinogen, and when 
leaked into water even in small amounts causes water to take on 
the taste and smell of turpentine, rendering it undrinkable. 
MTBE leaking from underground storage tanks, recreational water 
craft and abandoned automobiles has lead to growing detections 
of MTBE in drinking water. In fact, the U.S. Geological Survey 
has estimated that MTBE may contaminate roughly one-third of 
drinking water supplies nationwide. MTBE poses a different 
threat to drinking water relative to the other harmful 
constituents of gasoline because MTBE is more soluble, more 
mobile and degrades slower than those other constituents.
    Oil companies began adding MTBE to gasoline at least as 
early as 1979, using 215,000 tons in that year alone. By 1986, 
oil companies were adding 54,000 barrels of MTBE to gasoline 
each day. By 1991, 1 year before the Clean Air Act (CAA) 
oxygenate requirement went into effect, oil companies were 
using more than 100,000 barrels of MTBE per day. By 1997, the 
volume of MTBE production was the second highest of any 
chemical in the United States. These basic facts underscore two 
extremely important points about the committee's consideration 
of solutions to the MTBE contamination problem.
    First, proposals that simply remove the CAA oxygenate 
requirement from the law without affirmatively banning MTBE 
will simply not end MTBE use. As noted above, MTBE was used for 
octane enhancement long before the CAA Amendments of 1990. 
There is no reason to believe that it would not continued to be 
used if the CAA oxygenate requirement were removed from the 
law, but no ban put in place. In another example, in May 1999, 
two oil companies in the San Francisco area were found to have 
been adding substantial volumes of MTBE to gasoline. At the 
time, that area complied with air standards and therefore the 
CAA didn't require the addition of an oxygenate. Again, 
companies were adding MTBE to gasoline for reasons wholly 
independent of the CAA.
    Second, these facts belie the oil companies' arguments that 
Congress made oil companies use MTBE, and that therefore 
lawsuits against oil companies should be terminated by Congress 
and taxpayers should pay to clean up MTBE contamination. MTBE 
was in use well before the passage of the CAA Amendments. The 
CAA does not mandate the use of MTBE. And the fact that there 
was any oxygenate requirement in those amendments at all was 
due, in part, to oil industry lobbying.
    For example, in 1989 testimony before the Senate Committee 
on Environment and Public Works, an ARCO official strongly 
recommended that the committee include a mandate for MTBE in 
the Clean Air Act Amendments of 1990, touting MTBE's benefits 
but not disclosing its devastating impact on drinking water. 
Hearings before the Subcommittee on Environmental Protection of 
the Committee on Environment and Public Works on S. 1630, S. 
Hrg. 101-331 at 458 (Sept. 28, 1989). Despite such lobbying, 
Congress did not adopt a MTBE mandate, but rather prescribed 
that reformulated gasoline contain an oxygenate without 
specifying a particular product. Courts have specifically ruled 
on the question of whether Congress mandated MTBE and have 
determined that MTBE was not mandated (Oxygenated Fuels 
Association Inc. v. Davis, 33 F.3d 655 (9th Cir. 2003)).
    At the time of such lobbying, oil companies knew they were 
recommending a product that would have a devastating impact on 
drinking water. Indeed, where courts have heard oil industry 
claims that they should not be held liable for MTBE 
contaminated drinking water supplies, they have not only 
rejected those claims but have found that companies acted with 
malice in not disclosing the risks of using MTBE. MTBE 
contamination is not like ordinary gasoline contamination. MTBE 
moves through water quickly and does not adhere to the soil. 
Very small amounts have been known to contaminate groundwater 
and migrate farther and faster than other hydrocarbons.
    In fact, over a dozen communities have sued oil companies 
for knowingly introducing a defective product into the 
marketplace. Several oil companies recently settled one such 
suit, South Tahoe Public Utility District v. Atlantic Richfield 
Company, et al., for $60 million. In South Tahoe, it was 
determined that oil companies were guilty of irresponsibly 
manufacturing and distributing MTBE because these companies 
knew it would contaminate drinking water.
    It was also found by clear and convincing evidence that two 
companies had acted with `malice' by failing to warn of the 
environmental dangers of MTBE.
    Together, documents and sworn testimony in South Tahoe 
demonstrated that several oil companies knew as early as 1980 
that MTBE posed a significant threat to the nation's drinking 
water, that they promoted MTBE to the State and Federal 
Governments without disclosing internal information 
demonstrating that threat, and that they attempted to discredit 
public scientific studies that began to demonstrate that 
threat.
    Documents and sworn testimony in South Tahoe also revealed 
that oil company officials, showing a callous disregard for our 
environment, even gave MTBE telling nicknames such as `Most 
Things Biodegrade Easier', `Menace Threatening our Environment' 
and `Major Threat to Better Earnings.' Further the case also 
revealed that Shell and ARCO, the first refiners to add MTBE to 
gasoline, estimated that 20 percent of all underground storage 
tanks--tanks likely containing MTBE--were leaking. Several oil 
companies were shown to have both developed and promoted the 
concept of using reformulated gasoline to reduce air emissions.
    For example, ARCO officials testified that `EPA did not 
initiate . . . reformulated gasoline' and that `[T]he oil 
industry brought [reformulated gasoline] forward as an 
alternative to what the EPA had initially proposed.' Documents 
and sworn testimony also revealed that in 1987 an ARCO 
representative testified before the Colorado Air Quality 
Control Commission that MTBE would aid in reducing air 
emissions but did not warn of the drinking water contamination 
threat. This representative testified that he also assisted 
Arizona and Nevada develop oxygenate programs that relied upon 
MTBE without disclosing the danger.
    In 1986, the Maine Department of Environmental Protection 
issued a scientific report describing the threat posed by MTBE. 
Documents and sworn testimony in South Tahoe revealed a 
concerted strategy by the oil industry to discredit the article 
at the same time that internal industry documents admitted the 
soundness of the Maine warning. When the Maine paper prompted 
EPA to issue a notice to oil companies for more information 
regarding MTBE, ARCO responded in 1987 that there was little 
information to suggest MTBE was a threat despite internal ARCO 
documents showing the contrary.
    As South Tahoe demonstrates, terminating the right of 
communities to seek legal redress against oil companies for 
MTBE contamination would be a grave injustice. It has not been 
embraced by the committee, it should not be embraced by the 
Senate and it should not become law.
    Just as it is important to clarify oil industry 
responsibility for MTBE contamination, it is also important to 
clarify a number of mischaracterizations that appear in the 
majority views on the MTBE transition program. S. 606 provides 
for limited transition assistance to producers of MTBE to 
mitigate fuel supply problems, such as shortages or 
disruptions, that might occur as a result of the elimination of 
the widespread use of that fuel additive by this legislation. 
The findings section of S. 606 (section 203) notes that it is 
appropriate for the Congress to provide limited transition 
assistance in this fashion. Those findings were arrived at 
after much discussion and debate among the various affected 
parties and were first incorporated into legislation as part of 
H.R. 4, as passed by the Senate in 2002, and reintroduced in 
the 108th Congress (S. 385).
    The majority views attempt to incorrectly convey that such 
assistance is premised on two additional factors that appear 
nowhere in the legislation, that cannot be logically inferred 
from the findings in S. 606, and that do not reflect a 
committee consensus. These incorrect inferences are that, 
first, the government bears `great' responsibility for losses 
the MTBE producers experience as a result of Congress' action 
to phaseout MTBE; and, second, that a failure to provide 
transition assistance in light of the ban will discourage 
manufacturers from supplying the market with additives that 
will meet energy and environmental goals.
    The findings state that the fuel industry responded to the 
fuel oxygenate standard established in the CAA of 1990 by 
investing in MTBE production capacity. As noted above, that 
standard did not require or mandate that MTBE be produced or 
that only MTBE could satisfy such a standard. Again, as noted 
above, the oil industry itself lobbied for the oxygenate 
requirement and wanted to use MTBE to meet it. Therefore, 
Congress cannot be held responsible for voluntary industry 
decisions to make or not to make investments in MTBE.
    Given that Congress did not mandate MTBE's use, there 
certainly is no compensation due to such manufacturers when 
Congress determines that this additive is detrimental to water 
quality protection and must be eliminated from widespread use 
in gasoline. Given the history of the CAA oxygenate requirement 
it is impossible to maintain otherwise. The majority views 
appears to seek to set a precedent that would require Congress 
to provide compensation for any parties that choose to invest 
in manufacturing a product based on their interpretation of 
congressional intent and its effect on their product. That is 
not supported by the text of S. 606.
    Finally, the majority views' inference that the transition 
program reflects the committee view that companies will not 
invest in fuel additives absent compensation is erroneous and 
not supported by S. 606. Additive manufacturers are free to 
enter the market for the production of additives to replace 
MTBE. The legislation indicates that Congress is concerned 
about the impact on the fuel supply of eliminating MTBE, as 
stated in section 203, and has provided the transition 
assistance to address that issue.
    Congress `failure' to compensate MTBE producers for 
manufacturing a product which many within the industry knew 
would pollute drinking water will not affect a business 
decision by additive manufacturers to supply the additive 
market. This is particularly true once the modifications in S. 
791 to the CAA are made to ensure future water quality 
protection by improving testing of fuels and fuel additives 
environmental and public health impacts. Oil companies and 
other additive manufacturers have their own responsibility to 
place products in commerce that do not have ill effects on the 
environment and public health.
    As noted above, several companies maliciously failed to 
discharge this responsibility when it came to MTBE.
    The first hearing of this committee on MTBE was chaired by 
Senator Boxer in December 1997, after Santa Monica lost the 
majority of its drinking water to contamination caused by a 
then little known fuel additive. Since Senator Boxer's first 
call to ban MTBE now over 5 years ago, this committee has 
conducted scores of hearings, considered alternate legislative 
approaches and ultimately approved various versions of 
legislation similar to S. 606.
    Such legislation approved by this committee has 
consistently called for MTBE's phase-out. It has also 
consistently rejected terminating the right of communities 
affected by MTBE to seek redress against oil companies in 
court. As consideration of S. 606 moves to the full Senate, 
these two principles that have guided committee consideration 
of the MTBE issue must remain in tact if the MTBE problem is to 
be truly and equitably solved.

Backsliding on Toxics Emissions Performance

    Since the implementation of fuels requirements of the 1990 
Amendments to the Clean Air Act, as noted in the committee's 
report, refiners have made significant progress in continually 
improving toxics emissions performance of fuels. However, the 
legislation approved by the committee does not adjust the anti-
backsliding provisions to maintain that record of improvement 
and to reflect the passage of time. As a result, mobile source 
toxics emissions could increase significantly if S. 606 were to 
be enacted.
    S. 606, the Reliable Fuels Act of 2005, includes a 1999-
2000 baseline against which to judge refiner and importer toxic 
emissions reductions performance and uses that baseline to 
ensure that the removal of MTBE via the ban included in the 
legislation does not result in dirtier, more toxic fuel and 
increase fuel-related toxic emissions. That baseline was first 
included in S. 950 reported by the committee during the 107th 
Congress in May 2001, approved by the Senate in early 2002 as 
part of H.R. 4, the Energy Policy Act of 2002, and included S. 
791 reported in June 2003. It reflected the baseline in the 
EPA's mobile source air toxics rule promulgated in 1999.
    However, over the last 4 years, refiners and importers 
performance has continued to improve, such that a more 
contemporaneous baseline is necessary to avoid backsliding on 
toxics. Conventional and reformulated gasoline are both cleaner 
now, using estimated national averages, than they were in 1999 
and 2000. If the baseline in S. 606 is used, rather than a more 
current baseline for which quality assured data is available, 
such as 2001-2002 or later, refiners and importers would be 
permitted to increase annual national emissions associated with 
reformulated gasoline by as much as 2,000 tons of hazardous air 
pollutants, such as xylene, toluene, benzene and many others. 
Given the elevated cancer and non-cancer risks associated with 
mobile sources of air toxics, especially in high-traffic urban 
corridors, such increases would be harmful to public health and 
welfare.
    Such an outcome is the opposite of the committee's intent 
when first approving this provision in identical form in 2001. 
At that time, the committee sought to ensure that gasoline 
producers or importers would not have the option of making 
their product more toxic due to the ban on MTBE and the 
renewable fuels mandate in the bill.

Leaking Underground Storage Tanks

    Leaking underground storage tanks represent a significant 
threat to drinking water supplies nationwide. Fifty percent of 
all Americans and nearly 100 percent of people living in rural 
areas rely on groundwater for their drinking water. Underground 
storage tanks hold toxic substances such as gasoline, diesel 
fuel, waste oil and other toxic materials that contain 
dangerous cancer-causing chemicals. These chemicals move 
quickly through the soil, getting into groundwater and causing 
dangerous vapors in buildings. These chemicals cause cancer, 
injure developing fetuses and harm human reproductive and 
nervous systems.
    In the 108th Congress, the Senate Environment and Public 
Works Committee unanimously adopted a bipartisan comprehensive 
underground storage tank legislation (S. 195, the Underground 
Storage Tank Compliance Act of 2003). The committee should 
build on this bipartisan approach to ensure that Americans are 
protected from leaking underground storage tanks. 
Unfortunately, S. 606 is not a comprehensive reform effort.
    The Leaking Underground Storage Tank provisions of section 
202 suffer from two significant problems. Most significantly, 
the provision raids the LUST Trust Fund and diverts dollars 
from their intended purpose--cleaning up contamination from 
leaking USTs. Instead, the provision expands the eligible uses 
of the LUST Trust Fund to pay for cleanup of contamination of 
ether fuel additives from other sources such as pipelines, 
cars, trucks, snowmobiles, boats, above ground storage tanks, 
and other potential sources of contamination. EPA Administrator 
Christine Todd Whitman sent a letter to Rep. W.J. ``Billy'' 
Tauzin on May 7, 2003 opposing this provision. She wrote:

        Section 5 allows the use of the Leaking Underground 
        Storage Tank (LUST) Trust Fund for releases from 
        sources other than USTs. This would change the 
        historical scope of the program, and could stress the 
        Agency's ability to adequately address releases from 
        USTs.

    Second, the provision specifically allows the use of LUST 
Trust Fund money for cleanup of MTBE, but not other ethers such 
as tertiary butyl alcohol (TBA), ethyl alcohol (ethanol) or any 
other new fuel additive that might be used in the future. TBA 
and ethanol are commonly found at LUST sites. LUST Trust Fund 
money should be available to address all contamination from 
USTs and should not be restricted to just MTBE, as is now 
currently the case.
    Finally, the bill lacks many of the essential elements of a 
comprehensive LUST reform bill. For example, the Government 
Accountability Office in March 2003 issued a report on the 
Underground Storage Tank Program recommending a number of 
improvements including the need to inspect UST facilities more 
frequently at least once every 3 years. Current inspection 
rates fall far short of this goal with many UST facilities 
having never been inspected. We should work together again in 
the 109th Congress to build on the success of last session's 
bill to enhance this program to better prevent and respond to 
contamination from LUSTs.
                   ADDITIONAL VIEWS OF SENATOR BOXER

    I write separately here to raise an additional concern and 
to strongly oppose the ``safe harbor'' provision in S. 606, The 
Reliable Fuels Act of 2005, which creates broad liability 
exemptions for renewable fuels. I have previously discussed at 
length my reasons for opposing these provisions in my 
additional views included in Senate Report 108-57. I urge my 
colleagues to review that extensive analysis.
    Under the renewable fuels mandate in S. 606, ethanol will 
be the most commonly used renewable fuel for the foreseeable 
future. Ethanol is a high-octane, water-free alcohol that has 
been used in gasoline in the United States since 1979 when it 
was introduced to enhance oxygen content in fuels.
    Section 101 (p) of S. 606 contains a broad ``safe harbor'' 
liability waiver for renewable fuels. This language waives all 
product liability design defect claims, including failure to 
warn. Any claim that has not been filed by the date of 
enactment of this section will be forever barred. Compliance 
with laws and regulations is not necessary for receiving the 
liability waiver, except for limited compliance with 
requirements under the Clean Air Act.
    This liability exemption is particularly dangerous because 
there are many unanswered questions about ethanol. It is true 
that ethanol does not have the same toxic chemicals in it as 
other fuels and fuel additives. It also helps reduce the 
production of carbon monoxide when fuel is burned. These are 
real benefits.
    However, ethanol also increases the formation of nitrogen 
oxides, which leads to increases in smog. According to EPA's 
1999 Blue Ribbon Panel Report on Oxygenates in Gasoline, 
ethanol is extremely soluble in water and would spread if 
leaked into the environment. It may further spread plumes of 
benzene, toluene, ethyl benzene, and xylene because ethanol may 
inhibit the breakdown of these toxic materials. In addition, 
there are several studies demonstrating that ethanol increases 
the size and migration of benzene plumes. Researchers say that 
more groundwater wells will experience contamination from 
methyl tertiary butyl ether (MTBE) and benzene, a known 
carcinogen, if ethanol leaks into water supplies. There are 
also questions about the impact of ethanol on sensitive 
populations, such as children.
    More study is needed. The Blue Ribbon Panel Report makes 
this point in the section entitled ``Recommendations for 
Evaluating and Learning from Experience:''

        The introduction of reformulated gasoline has had 
        substantial air quality benefits, but has at the same 
        time raised significant issues about questions that 
        should be asked before widespread introduction of a new 
        broadly used product. The unanticipated effects of 
        reformulated gasoline on groundwater highlight the 
        importance of exploring the potential for adverse 
        effects in all media (air, soil, and water), and on 
        human and ecosystem health.

    Questions surrounding ethanol's effects on public health 
and the environment should be answered before Congress grants a 
broad waiver from liability for its harmful effects. We should 
err on the side of caution, and we should err on the side on 
protecting taxpayers.
    If ethanol harms public health or the environment, the 
liability exemption in this bill would shift the burden to the 
taxpayer in the event of a contamination of drinking water 
supplies, which could leave many communities with cleanup costs 
beyond their ability to pay. Polluters, not taxpayers or 
victims of pollution, should pay for harm to pubic health and 
the environment.
    Supporters of this liability exemption argue that immunity 
from product liability design defect claims is not so broad, 
that it only protects polluters from one type of lawsuit. But, 
they are ignoring the fact that product defect claims are the 
clearest way to hold accountable those whose products cause 
injury to public health or the environment. Litigation in 
California involving drinking water contamination by MTBE, 
agricultural chemicals (i.e. DBCP), dry cleaning compounds 
(perc), and others all rest on claims that products were 
defective in design.
    Exempting polluters from a defective product claim is 
hardly a narrow exemption. It risks letting the polluters off 
the hook for their wrongdoing entirely and shifting the costs 
of pollution to the taxpayers. The taxpayers are not 
responsible for the pollution; the companies are. Taxpayers 
should not foot the bill; the polluters should.
    Supporters of this exemption also argue that negligence 
claims are an adequate substitute for product liability design 
defect claims. While negligence and design defect liability are 
related legal theories, they are different. And negligence 
alone is inadequate to protect a community from harm.
    Negligence liability focuses on the defendants' conduct. In 
other words, it focuses on the conduct of the individuals hired 
by the oil companies. Design defect liability focuses on the 
product.
    To establish negligence, a public water agency would have 
to show that each defendant knew (or reasonably should have 
known) of the risk posed by the product, and that the defendant 
acted unreasonably in failing to eliminate the risk. Customary 
practice in an industry--such as commonly using a fuel additive 
without any warning--and the reasonableness of that practice is 
relevant as a defense in a negligence action. This makes it 
difficult for an injured party to recover.
    In contrast, an injured public water agency can establish 
design defect liability in one of two ways. First, a product is 
defective where the jury finds that the risk of danger inherent 
in the challenged design outweighs the benefit of such design. 
Second, even if a product is flawlessly designed or produced, 
it may still be defective if the manufacturer provides 
inadequate warnings or use instructions. A failure to warn 
claim arises only for risks that the manufacturer either knew 
about or that were knowable in light of generally recognized 
and prevailing best scientific knowledge available at the time 
of the product's manufacture and distribution.
    Courts impose strict liability for design defects based on 
strong public policy considerations. The costs of injuries 
caused by defective products should be borne by the 
manufacturers of those products, rather than by innocent 
injured parties. This policy is especially strong where the 
injury occurs to innocent bystanders, like public water 
suppliers, who derive no economic benefit from the defective 
product.
    Supporters of the liability exemption also argue that it is 
necessary because the bill is mandating the use of ethanol. Yet 
Congress regularly mandates that manufacturers meet a variety 
of guidelines and requirements, but does not in so doing exempt 
all manufacturers from State and Federal product liability 
design defect laws. When gasoline leaks today, there is no 
loophole; the polluter pays, despite the fact that Congress 
regulates gasoline. Congress mandated the installation of air 
bags in automobiles, but did not say to those manufacturers 
that they would not be liable for damages should their products 
be defective. We should not give a free pass to ethanol.
    Finally, supporters of the liability loophole claim that 
ethanol is safe and no one needs to worry about the liability 
exemption. If they are not worried, they do not need an 
exemption and should not oppose striking it from the bill.
    The ``safe harbor'' liability waiver for renewable fuels is 
opposed by a wide variety of local and State governments, water 
utilities, and public health, consumer and environmental 
organizations representing millions of people potentially 
affected by this ill conceived safe harbor provision.
                        Changes in Existing Law

    In compliance with section 12 of rule XXVI of the Standing 
Rules of the Senate, changes in existing law made by the bill 
as reported are shown as follows: Existing law proposed to be 
omitted is enclosed in [black brackets], new matter is printed 
in italic, existing law in which no change is proposed is shown 
in roman:
                              ----------                              

                           THE CLEAN AIR ACT

              TITLE I--AIR POLLUTION PREVENTION AND CONTROL

              Part A--Air Quality and Emission Limitations

      * * * * * * *

             TITLE II--EMISSION STANDARDS FOR MOVING SOURCES

Sec. 201. Short title.

            Part A--Motor Vehicle Emission and Fuel Standards

Sec. 202. Establishment of standards.
Sec. 203. Prohibited acts.
Sec. 204. Injunction proceedings.
Sec. 205. Civil penalties.
Sec. 206. Motor vehicle and motor vehicle engine compliance testing and 
          certification.
Sec. 207. Compliance by vehicles and engines in actual use.
Sec. 208. Information collection.
Sec. 209. State standards.
Sec. 210. State grants.
Sec. 211. Regulation of fuels.
Sec. 212. Renewable fuels.
Sec. 213. Fuel economy improvement from new motor vehicles.
Sec. 214. Study of particulate emissions from motor vehicles.
Sec. 215. High altitude performance adjustments.
Sec. 216. Definitions for part A.
Sec. 217. Motor vehicle compliance program fees.
Sec. 218. Prohibition on production of engines requiring leaded 
          gasoline.
Sec. 219. Urban bus standards.

                   Part B--Aircraft Emission Standards

Sec. 231. Establishment of standards.
Sec. 232. Enforcement of standards.
Sec. 233. State standards and controls.
Sec. 234. Definitions.

                       Part C--Clean Fuel Vehicles

Sec. 241. Definitions.
Sec. 242. Requirements applicable to clean fuel vehicles.
Sec. 243. Standards for light-duty clean fuel vehicles.
Sec. 244. Administration and enforcement as per California standards.
Sec. 245. Standards for heavy-duty clean-fuel vehicles (gvwr above 8,500 
          up to 26,000 lbs).
Sec. 246. Centrally fueled fleets.
Sec. 247. Vehicle conversions.
Sec. 248. Federal agency fleets.
Sec. 249. California pilot test program.
Sec. 250. General provisions.
    Sec. 101. (a) * * *

           *       *       *       *       *       *       *

                          regulation of fuels

    Sec. 211. (a) * * *

           *       *       *       *       *       *       *

    (b)(1) For the purpose of registration of fuels and fuel 
additives, the Administrator shall require--
            (A) the manufacturer of any fuel to notify him as 
        to the commercial identifying name and manufacturer of 
        any additive contained in such fuel; the range of 
        concentration of any additive in the fuel; and the 
        purpose-in-use of any such additive; and
            (B) the manufacturer of any additive to notify him 
        as to the chemical composition of such additive.
    (2) For the purpose of registration of fuels and fuel 
additives, the Administrator [may also] shall, on a regular 
basis, require the manufacturer of any fuel or fuel additive--
            [(A) to conduct tests to determine potential public 
        health effects of such fuel or additive (including, but 
        not limited to, carcinogenic, teratogenic, or mutagenic 
        effects), and]
            (A) to conduct tests to determine potential public 
        health and environmental effects of the fuel or 
        additive (including carcinogenic, teratogenic, or 
        mutagenic effects); and
            (B) to furnish the description of any analytical 
        technique that can be used to detect and measure any 
        additive in such fuel, the recommended range of 
        concentration of such additive, and the recommended 
        purpose-in-use of such additive, and such other 
        information as is reasonable and necessary to determine 
        the emissions resulting from the use of the fuel or 
        additive contained in such fuel, the effect of such 
        fuel or additive on the emission control performance of 
        any vehicle, vehicle engine, nonroad engine or nonroad 
        vehicle, or the extent to which such emissions affect 
        the public health or welfare.
Tests under subparagraph (A) shall be conducted in conformity 
with test procedures and protocols established by the 
Administrator. The results of such tests shall not be 
considered confidential.
    (3) Upon compliance with the provisions of this subsection, 
including assurances that the Administrator will receive 
changes in the information required, the Administrator shall 
register such fuel or fuel additive.
    (4) Study on certain fuel additives and blendstocks.--
                    (A) In general.--Not later than 2 years 
                after the date of enactment of this paragraph, 
                the Administrator shall--
                            (i) conduct a study on the effects 
                        on public health (including the effects 
                        on children, pregnant women, minority 
                        or low-income communities, and other 
                        sensitive populations), air quality, 
                        and water resources of increased use 
                        of, and the feasibility of using as 
                        substitutes for methyl tertiary butyl 
                        ether in gasoline--
                                    (I) ethyl tertiary butyl 
                                ether;
                                    (II) tertiary amyl methyl 
                                ether;
                                    (III) di-isopropyl ether;
                                    (IV) tertiary butyl 
                                alcohol;
                                    (V) other ethers and heavy 
                                alcohols, as determined by then 
                                Administrator;
                                    (VI) ethanol;
                                    (VII) iso-octane; and
                                    (VIII) alkylates; and
                            (ii) conduct a study on the effects 
                        on public health (including the effects 
                        on children, pregnant women, minority 
                        or low-income communities, and other 
                        sensitive populations), air quality, 
                        and water resources of the adjustment 
                        for ethanol-blended reformulated 
                        gasoline to the volatile organic 
                        compounds performance requirements that 
                        are applicable under paragraphs (1) and 
                        (3) of section 211(k); and
                            (iii) submit to the Committee on 
                        Environment and Public Works of the 
                        Senate and the Committee on Energy and 
                        Commerce of the House of 
                        Representatives a report describing the 
                        results of the studies under clauses 
                        (i) and (ii).
                    (B) Contracts for study.--In carrying out 
                this paragraph, the Administrator may enter 
                into 1 or more contracts with nongovernmental 
                entities such as--
                            (i) the national energy 
                        laboratories; and
                            (ii) institutions of higher 
                        education (as defined in section 101 of 
                        the Higher Education Act of 1965 (20 
                        U.S.C. 1001)).

           *       *       *       *       *       *       *

    (c)(1) The Administrator may, from time to time on the 
basis of information obtained under subsection (b) of this 
section or other information available to him, by regulation, 
control or prohibit the manufacture, introduction into 
commerce, offering for sale, or sale of any fuel or fuel 
additive for use in a motor vehicle, motor vehicle engine, or 
nonroad engine or nonroad vehicle (A) if in the judgment of the 
Administrator any fuel or fuel additive or emission product of 
such fuel or fuel additive causes, or contributes, to [air 
pollution which] air pollution, or water pollution, that may 
reasonably be anticipated to endanger the public health or 
welfare, or (B) if emission products of such fuel or fuel 
additive will impair to a significant degree the performance of 
any emission control device or system which is in general use, 
or which the Administrator finds has been developed to a point 
where in a reasonable time it would be in general use were such 
regulation to be promulgated.
    (2)(A) No fuel, class of fuels, or fuel additive may be 
controlled or prohibited by the Administrator pursuant to 
clause (A) of paragraph (1) except after consideration of all 
relevant medical and scientific evidence available to him, 
including consideration of other technologically or 
economically feasible means of achieving emission standards 
under section 202.
    (B) No fuel or fuel additive may be controlled or 
prohibited by the Administrator pursuant to clause (B) of 
paragraph (1) except after consideration of available 
scientific and economic data, including a cost benefit analysis 
comparing emission control devices or systems which are or will 
be in general use and require the proposed control or 
prohibition with emission control devices or systems which are 
or will be in general use and do not require the proposed 
control or prohibition. On request of a manufacturer of motor 
vehicles, motor vehicle engines, fuels, or fuel additives 
submitted within 10 days of notice of proposed rulemaking, the 
Administrator shall hold a public hearing and publish findings 
with respect to any matter he is required to consider under 
this subparagraph. Such findings shall be published at the time 
of promulgation of final regulations.
    (C) No fuel or fuel additive may be prohibited by the 
Administrator under paragraph (1) unless he finds, and 
publishes such finding, that in his judgment such prohibition 
will not cause the use of any other fuel or fuel additive which 
will produce emissions which will endanger the public health or 
welfare to the same or greater degree than the use of the fuel 
or fuel additive proposed to be prohibited.
    (3)(A) For the purpose of obtaining evidence and data to 
carry out paragraph (2), the Administrator may require the 
manufacturer of any motor vehicle or motor vehicle engine to 
furnish any information which has been developed concerning the 
emissions from motor vehicles resulting from the use of any 
fuel or fuel additive, or the effect of such use on the 
performance of any emission control device or system.
    (B) In obtaining information under subparagraph (A), 
section 307 (a) (relating to subpenas) shall be applicable.
    (4)(A) Except as otherwise provided in subparagraph (B) or 
(C), no State (or political subdivision thereof) may prescribe 
or attempt to enforce, for the purposes of motor vehicle 
emission control, any control or prohibition respecting any 
characteristic or component of a fuel or fuel additive in a 
motor vehicle or motor vehicle engine--
            (i) if the Administrator has found that no control 
        or prohibition of the characteristic or component of a 
        fuel or fuel additive under paragraph (1) is necessary 
        and has published his finding in the Federal Register, 
        or
            (ii) if the Administrator has prescribed under 
        paragraph (1) a control or prohibition applicable to 
        such characteristic or component of a fuel or fuel 
        additive, unless State prohibition or control is 
        identical to the prohibition or control prescribed by 
        the Administrator.
    (B) Any State for which application of section 209(a) has 
at any time been waived under section 209(b) may at any time 
prescribe and enforce, for the purpose of motor vehicle 
emission control, or water quality protection, a control or 
prohibition respecting any fuel or fuel additive.
    [(C) A State]
    (C) Authority of State to control fuels and fuel additives 
for reasons of necessity.--
            (i) In general.--A State may prescribe and enforce, 
        for purposes of motor vehicle emission control, a 
        control or prohibition respecting the use of a fuel or 
        fuel additive in a motor vehicle or motor vehicle 
        engine if an applicable implementation plan for such 
        State under section 110 so provides. The Administrator 
        may approve such provision in an implementation plan, 
        or promulgate an implementation plan containing such a 
        provision, only if he finds that the State control or 
        prohibition is necessary to achieve the national 
        primary or secondary ambient air quality standard which 
        the plan implements. The Administrator may find that a 
        State control or prohibition is necessary to achieve 
        that standard if no other measures that would bring 
        about timely attainment exist, or if other measures 
        exist and are technically possible to implement, but 
        are unreasonable or impracticable. The Administrator 
        may make a finding of necessity under this subparagraph 
        even if the plan for the area does not contain an 
        approved demonstration of timely attainment.
            (ii) Enforcement by the Administrator.--In any case 
        in which a State prescribes and enforces a control or 
        prohibition under clause (i), the Administrator, at the 
        request of the State, shall enforce the control or 
        prohibition as if the control or prohibition had been 
        adopted under the other provisions of this section.
    (5) Restrictions on use of MTBE.--
            (A) In general.--Subject to subparagraph (E), not 
        later than 4 years after the date of enactment of this 
        paragraph, the use of methyl tertiary butyl ether in 
        motor vehicle fuel in any State other than a State 
        described in subparagraph (C) is prohibited.
            (B) Regulations.--The Administrator shall 
        promulgate regulations to effect the prohibition in 
        subparagraph (A).
            (C) States that authorize use.--A State described 
        in this subparagraph is a State that submits to the 
        Administrator a notice that the State authorizes use of 
        methyl tertiary butyl ether in motor vehicle fuel sold 
        or used in the State.
            (D) Publication of notice.--The Administrator shall 
        publish in the Federal Register each notice submitted 
        by a State under subparagraph (C).
            (E) Trace quantities.--In carrying out subparagraph 
        (A), the Administrator may allow trace quantities of 
        methyl tertiary butyl ether, not to exceed 0.5 percent 
        by volume, to be present in motor vehicle fuel in cases 
        that the Administrator determines to be appropriate.
    (6) MTBE merchant producer conversion assistance.--
            (A) In general.--
                    (i) Grants.--The Secretary of Energy, in 
                consultation with the Administrator, may make 
                grants to merchant producers of methyl tertiary 
                butyl ether in the United States to assist the 
                producers in the conversion of eligible 
                production facilities described in subparagraph 
                (C) to the production of--
                            (I) iso-octane or alkylates, unless 
                        the Administrator, in consultation with 
                        the Secretary of Energy, determines 
                        that transition assistance for the 
                        production of iso-octane or alkylates 
                        is inconsistent with the criteria 
                        specified in subparagraph (B); and
                            (II) any other fuel additive that 
                        meets the criteria specified in 
                        subparagraph (B).
            (B) Criteria.--The criteria referred to in 
        subparagraph (A) are that--
                    (i) use of the fuel additive is consistent 
                with this subsection;
                    (ii) the Administrator has not determined 
                that the fuel additive may reasonably be 
                anticipated to endanger public health or the 
                environment;
                    (iii) the fuel additive has been registered 
                and tested, or is being tested, in accordance 
                with the requirements of this section; and
                    (iv) the fuel additive will contribute to 
                replacing quantities of motor vehicle fuel 
                rendered unavailable as a result of paragraph 
                (5).
            (C) Eligible production facilities.--A production 
        facility shall be eligible to receive a grant under 
        this paragraph if the production facility--
                    (i) is located in the United States; and
                    (ii) produced methyl tertiary butyl ether 
                for consumption in nonattainment areas during 
                the period--
                            (I) beginning on the date of 
                        enactment of this paragraph; and
                            (II) ending on the effective date 
                        of the prohibition on the use of methyl 
                        tertiary butyl ether under paragraph 
                        (5).
            (D) Authorization of appropriations.--There is 
        authorized to be appropriated to carry out this 
        paragraph $250,000,000 for each of fiscal years 2005 
        through 2008.

           *       *       *       *       *       *       *

    (d) Penalties and Injunctions.--
            (1) Civil penalties.--Any person who violates 
        subsection (a), (f), (g), (k), (l), (m), [or (n)] (n), 
        or (o) of this section or the regulations prescribed 
        under subsection (c), (h), (i), (k), (l), (m), [or (n)] 
        (n), or (o) of this section or who fails to furnish any 
        information or conduct any tests required by the 
        Administrator under subsection (b) of this section 
        shall be liable to the United States for a civil 
        penalty of not more than the sum of $25,000 for every 
        day of such violation and the amount of economic 
        benefit or savings resulting from the violation. Any 
        violation with respect to a regulation prescribed under 
        subsection (c), (k), (l), [or (m)] (m), or (o) of this 
        section which establishes a regulatory standard based 
        upon a multiday averaging period shall constitute a 
        separate day of violation for each and every day in the 
        averaging period. Civil penalties shall be assessed in 
        accordance with subsections (b) and (c) of section 205.
            (2) Injunctive authority.--The district courts of 
        the United States shall have jurisdiction to restrain 
        violations of subsections (a), (f), (g), (k), (l), (m), 
        [and (n)] (n), and (o) of this section and of the 
        regulations prescribed under subsections (c), (h), (i), 
        (k), (l), (m), [and (n)] (n), and (o) of this section, 
        to award other appropriate relief, and to compel the 
        furnishing of information and the conduct of tests 
        required by the Administrator under subsection (b) of 
        this section. Actions to restrain such violations and 
        compel such actions shall be brought by and in the name 
        of the United States. In any such action, subpoenas for 
        witnesses who are required to attend a district court 
        in any district may run into any other district.

           *       *       *       *       *       *       *

    (h) Reid Vapor Pressure Requirements.--
            (1) Prohibition.--Not later than 6 months after the 
        date of the enactment of the Clean Air Act Amendments 
        of 1990, the Administrator shall promulgate regulations 
        making it unlawful for any person during the high ozone 
        season (as defined by the Administrator) to sell, offer 
        for sale, dispense, supply, offer for supply, 
        transport, or introduce into commerce gasoline with a 
        Reid Vapor Pressure in excess of 9.0 pounds per square 
        inch (psi). Such regulations shall also establish more 
        stringent Reid Vapor Pressure standards in a 
        nonattainment area as the Administrator finds necessary 
        to generally achieve comparable evaporative emissions 
        (on a per-vehicle basis) in nonattainment areas, taking 
        into consideration the enforceability of such 
        standards, the need of an area for emission control, 
        and economic factors.
            (2) Attainment areas.--The regulations under this 
        subsection shall not make it unlawful for any person to 
        sell, offer for supply, transport, or introduce into 
        commerce gasoline with a Reid Vapor Pressure of 9.0 
        pounds per square inch (psi) or lower in any area 
        designated under section 107 as an attainment area. 
        Notwithstanding the preceding sentence, the 
        Administrator may impose a Reid vapor pressure 
        requirement lower than 9.0 pounds per square inch (psi) 
        in any area, formerly an ozone nonattainment area, 
        which has been redesignated as an attainment area.
            (3) Effective date; enforcement.--The regulations 
        under this subsection shall provide that the 
        requirements of this subsection shall take effect not 
        later than the high ozone season for 1992, and shall 
        include such provisions as the Administrator determines 
        are necessary to implement and enforce the requirements 
        of this subsection.
            (4) Ethanol waiver.--For fuel blends containing 
        gasoline and 10 percent denatured anhydrous ethanol, 
        the Reid vapor pressure limitation under this 
        subsection shall be one pound per square inch (psi) 
        greater than the applicable Reid vapor pressure 
        limitations established under paragraph (1); Provided, 
        however, that a distributor, blender, marketer, 
        reseller, carrier, retailer, or wholesale purchaser-
        consumer shall be deemed to be in full compliance with 
        the provisions of this subsection and the regulations 
        promulgated thereunder if it can demonstrate (by 
        showing receipt of a certification or other evidence 
        acceptable to the Administrator) that--
                    (A) the gasoline portion of the blend 
                complies with the Reid vapor pressure 
                limitations promulgated pursuant to this 
                subsection;
                    (B) the ethanol portion of the blend does 
                not exceed its waiver condition under 
                subsection (f)(4); and
                    (C) no additional alcohol or other additive 
                has been added to increase the Reid Vapor 
                Pressure of the ethanol portion of the blend.
            (5) Exclusion from ethanol waiver.--
                    (A) Promulgation of regulations.--Upon 
                notification, accompanied by supporting 
                documentation, from the Governor of a State 
                that the Reid vapor pressure limitation 
                established by paragraph (4) will increase 
                emissions that contribute to air pollution in 
                any area in the State, the Administrator shall, 
                by regulation, apply, in lieu of the Reid vapor 
                pressure limitation established by paragraph 
                (4), the Reid vapor pressure limitation 
                established by paragraph (1) to all fuel blends 
                containing gasoline and 10 percent denatured 
                anhydrous ethanol that are sold, offered for 
                sale, dispensed, supplied, offered for supply, 
                transported, or introduced into commerce in the 
                area during the high ozone season.
                    (B) Deadline for promulgation.--The 
                Administrator shall promulgate regulations 
                under subparagraph (A) not later than 90 days 
                after the date of receipt of a notification 
                from a Governor under that subparagraph.
                    (C) Effective date.--
                            (i) In general.--With respect to an 
                        area in a State for which the Governor 
                        submits a notification under 
                        subparagraph (A), the regulations under 
                        that subparagraph shall take effect on 
                        the later of--
                                    (I) the first day of the 
                                first high ozone season for the 
                                area that begins after the date 
                                of receipt of the notification; 
                                or
                                    (II) 1 year after the date 
                                of receipt of the notification.
                            (ii) Extension of effective date 
                        Based on determination of insufficient 
                        supply.--
                                    (I) In general.--If, after 
                                receipt of a notification with 
                                respect to an area from a 
                                Governor of a State under 
                                subparagraph (A), the 
                                Administrator determines, on 
                                the Administrator's own motion 
                                or on petition of any person 
                                and after consultation with the 
                                Secretary of Energy, that the 
                                promulgation of regulations 
                                described in subparagraph (A) 
                                would result in an insufficient 
                                supply of gasoline in the 
                                State, the Administrator, by 
                                regulation--
                                            (aa) shall extend 
                                        the effective date of 
                                        the regulations under 
                                        clause (i) with respect 
                                        to the area for not 
                                        more than 1 year; and
                                            (bb) may renew the 
                                        extension under item 
                                        (aa) for 2 additional 
                                        periods, each of which 
                                        shall not exceed 1 
                                        year.
                                    (II) Deadline for action on 
                                petitions.--The Administrator 
                                shall act on any petition 
                                submitted under subclause (I) 
                                not later than 180 days after 
                                the date of receipt of the 
                                petition.
            [(5)] (6) Areas covered.--The provisions of this 
        subsection shall apply only to the 48 contiguous States 
        and the District of Columbia.

           *       *       *       *       *       *       *

    (k) Reformulated Gasoline for Conventional Vehicles.--
            (1)  EPA regulations.--[Within 1 year after the 
        enactment of the Clean Air Act Amendments of 1990,]
                    (A) In general.--Not later than November 
                15, 1991, the Administrator shall promulgate 
                regulations under this section establishing 
                requirements for reformulated gasoline to be 
                used in gasoline-fueled vehicles in specified 
                nonattainment areas. Such regulations shall 
                require the greatest reduction in emissions of 
                ozone forming volatile organic compounds 
                (during the high ozone season) and emissions of 
                toxic air pollutants (during the entire year) 
                achievable through the reformulation of 
                conventional gasoline, taking into 
                consideration the cost of achieving such 
                emission reductions, any nonair-quality and 
                other air-quality related health and 
                environmental impacts and energy requirements.
                    (B) Maintenance of toxic air pollutant 
                emissions reductions from reformulated 
                Gasoline.--
                            (i) Definition of PADD.--In this 
                        subparagraph the term `PADD' means a 
                        Petroleum Administration for Defense 
                        District.
                            (ii) Regulations concerning 
                        emissions of toxic air pollutants.--Not 
                        later than 270 days after the date of 
                        enactment of this subparagraph, the 
                        Administrator shall establish by 
                        regulation, for each refinery or 
                        importer (other than a refiner or 
                        importer in a State that has received a 
                        waiver under section 209(b) with 
                        respect to gasoline produced for use in 
                        that State), standards for toxic air 
                        pollutants from use of the reformulated 
                        gasoline produced or distributed by the 
                        refiner or importer that maintain the 
                        reduction of the average annual 
                        aggregate emissions of toxic air 
                        pollutants for reformulated gasoline 
                        produced or distributed by the refiner 
                        or importer during calendar years 1999 
                        and 2000 (as determined on the basis of 
                        data collected by the Administrator 
                        with respect to the refiner or 
                        importer).
                            (iii) Standards applicable to 
                        specific refineries or importers.--
                                    (I) Applicability of 
                                standards.--For any calendar 
                                year, the standards applicable 
                                to a refiner or importer under 
                                clause (ii) shall apply to the 
                                quantity of gasoline produced 
                                or distributed by the refiner 
                                or importer in the calendar 
                                year only to the extent that 
                                the quantity is less than or 
                                equal to the average annual 
                                quantity of reformulated 
                                gasoline produced or 
                                distributed by the refiner or 
                                importer during calendar years 
                                1999 and 2000.
                                    (II) Applicability of other 
                                standards.--For any calendar 
                                year, the quantity of gasoline 
                                produced or distributed by a 
                                refiner or importer that is in 
                                excess of the quantity subject 
                                to subclause (I) shall be 
                                subject to standards for 
                                emissions of toxic air 
                                pollutants promulgated under 
                                subparagraph (A) and paragraph 
                                (3)(B).
                            (iv) Credit program.--The 
                        Administrator shall provide for the 
                        granting and use of credits for 
                        emissions of toxic air pollutants in 
                        the same manner as provided in 
                        paragraph (7).
                            (v) Regional protection of toxics 
                        reduction baselines.--
                                    (I) In general.--Not later 
                                than 60 days after the date of 
                                enactment of this subparagraph, 
                                and not later than April 1 of 
                                each calendar year that begins 
                                after that date of enactment, 
                                the Administrator shall publish 
                                in the Federal Register a 
                                report that specifies, with 
                                respect to the previous 
                                calendar year--
                                            (aa) the quantity 
                                        of reformulated 
                                        gasoline produced that 
                                        is in excess of the 
                                        average annual quantity 
                                        of reformulated 
                                        gasoline produced in 
                                        1999 and 2000; and
                                            (bb) the reduction 
                                        of the average annual 
                                        aggregate emissions of 
                                        toxic air pollutants in 
                                        each PADD, based on 
                                        retail survey data or 
                                        data from other 
                                        appropriate sources.
                                    (II) Effect of failure to 
                                maintain aggregate toxics 
                                reductions.--If, in any 
                                calendar year, the reduction of 
                                the average annual aggregate 
                                emissions of toxic air 
                                pollutants in a PADD fails to 
                                meet or exceed the reduction of 
                                the average annual aggregate 
                                emissions of toxic air 
                                pollutants in the PADD in 
                                calendar years 1999 and 2000, 
                                the Administrator, not later 
                                than 90 days after the date of 
                                publication of the report for 
                                the calendar year under 
                                subclause (I), shall--
                                            (aa) identify, to 
                                        the maximum extent 
                                        practicable, the 
                                        reasons for the 
                                        failure, including the 
                                        sources, volumes, and 
                                        characteristics of 
                                        reformulated gasoline 
                                        that contributed to the 
                                        failure; and
                                            (bb) promulgate 
                                        revisions to the 
                                        regulations promulgated 
                                        under clause (ii), to 
                                        take effect not earlier 
                                        than 180 days but not 
                                        later than 270 days 
                                        after the date of 
                                        promulgation, to 
                                        provide that, 
                                        notwithstanding clause 
                                        (iii)(II), all 
                                        reformulated gasoline 
                                        produced or distributed 
                                        at each refiner or 
                                        importer shall meet the 
                                        standards applicable 
                                        under clause (iii)(I) 
                                        beginning not later 
                                        than April 1 of the 
                                        calendar year following 
                                        publication of the 
                                        report under subclause 
                                        (I) and in each 
                                        calendar year 
                                        thereafter.
                            (vi) Regulations to control 
                        hazardous air pollutants from motor 
                        vehicles and motor vehicle fuels.--Not 
                        later than July 1, 2005, the 
                        Administrator shall promulgate final 
                        regulations to control hazardous air 
                        pollutants from motor vehicles and 
                        motor vehicle fuels, as provided for in 
                        section 80.1045 of title 40, Code of 
                        Federal Regulations (as in effect on 
                        the date of enactment of this 
                        subparagraph).
            (2) General requirements.--The regulations referred 
        to in paragraph (1) shall require that reformulated 
        gasoline comply with paragraph (3) and with each of the 
        following requirements (subject to paragraph (7)):
                    (A)  NOx emissions.--The 
                emissions of oxides of nitrogen 
                (NOx) from baseline vehicles when 
                using the reformulated gasoline shall be no 
                greater than the level of such emissions from 
                such vehicles when using baseline gasoline. If 
                the Administrator determines that compliance 
                with the limitation on emissions of oxides of 
                nitrogen under the preceding sentence is 
                technically infeasible, considering the other 
                requirements applicable under this subsection 
                to such gasoline, the Administrator may, as 
                appropriate to ensure compliance with this 
                subparagraph, adjust (or waive entirely), any 
                other requirements of this paragraph 
                [(including the oxygen content requirement 
                contained in subparagraph (B))] or any 
                requirements applicable under paragraph (3)(A).
                    [(B) Oxygen content.--The oxygen content of 
                the gasoline shall equal or exceed 2.0 percent 
                by weight (subject to a testing tolerance 
                established by the Administrator) except as 
                otherwise required by this Act. The 
                Administrator may waive, in whole or in part, 
                the application of this subparagraph for any 
                ozone nonattainment area upon a determination 
                by the Administrator that compliance with such 
                requirement would prevent or interfere with the 
                attainment by the area of a national primary 
                ambient air quality standard.]
                    [(C)] (B) Benzene content.--The benzene 
                content of the gasoline shall not exceed 1.0 
                percent by volume.
                    [(D)] (C) Heavy metals.--The gasoline shall 
                have no heavy metals, including lead or 
                manganese. The Administrator may waive the 
                prohibition contained in this subparagraph for 
                a heavy metal (other than lead) if the 
                Administrator determines that addition of the 
                heavy metal to the gasoline will not increase, 
                on an aggregate mass or cancer-risk basis, 
                toxic air pollutant emissions from motor 
                vehicles.
            (3) More stringent of formula or performance 
        standards.--The regulations referred to in paragraph 
        (1) shall require compliance with the more stringent of 
        either the requirements set forth in subparagraph (A) 
        or the requirements of subparagraph (B) of this 
        paragraph. For purposes of determining the more 
        stringent provision, clause (i) and clause (ii) of 
        subparagraph (B) shall be considered independently.
                    (A) Formula.--
                            (i) Benzene.--The benzene content 
                        of the reformulated gasoline shall not 
                        exceed 1.0 percent by volume.
                            (ii) Aromatics.--The aromatic 
                        hydrocarbon content of the reformulated 
                        gasoline shall not exceed 25 percent by 
                        volume.
                            (iii) Lead.--The reformulated 
                        gasoline shall have no lead content.
                            (iv) Detergents.--The reformulated 
                        gasoline shall contain additives to 
                        prevent the accumulation of deposits in 
                        engines or vehicle fuel supply systems.
                            ](v) Oxygen content.--The oxygen 
                        content of the reformulated gasoline 
                        shall equal or exceed 2.0 percent by 
                        weight (subject to a testing tolerance 
                        established by the Administrator) 
                        except as otherwise required by this 
                        Act.]

           *       *       *       *       *       *       *

            [(6) Opt-in areas.--(A) Upon]
            (6) Opt-in areas.--
                    (A) Classified areas.--
                            (i) In general.--Upon the 
                        application of the Governor of a State, 
                        the Administrator shall apply the 
                        prohibition set forth in paragraph (5) 
                        in any area in the State classified 
                        under subpart 2 of part D of title I as 
                        a Marginal, Moderate, Serious, or 
                        Severe Area (without regard to whether 
                        or not the 1980 population of the area 
                        exceeds 250,000). In any such case, the 
                        Administrator shall establish an 
                        effective date for such prohibition as 
                        he deems appropriate, not later than 
                        January 1, 1995, or 1 year after such 
                        application is received, whichever is 
                        later. The Administrator shall publish 
                        such application in the Federal 
                        Register upon receipt.
            [(B) If]
                            (ii) Effect of insufficient 
                        domestic capacity to produce 
                        reformulated Gasoline.--If the 
                        Administrator determines, on the 
                        Administrator's own motion or on 
                        petition of any person, after 
                        consultation with the Secretary of 
                        Energy, that there is insufficient 
                        domestic capacity to produce gasoline 
                        certified under this subsection, the 
                        Administrator shall, by rule, extend 
                        the effective date of such prohibition 
                        in Marginal, Moderate, Serious, or 
                        Severe Areas referred to in 
                        [subparagraph (A)] clause (i) for one 
                        additional year, and may, by rule, 
                        renew such extension for 2 additional 
                        one-year periods. The Administrator 
                        shall act on any petition submitted 
                        under [this paragraph] this 
                        subparagraph within 6 months after 
                        receipt of the petition. The 
                        Administrator shall issue such 
                        extensions for areas with a lower ozone 
                        classification before issuing any such 
                        extension for areas with a higher 
                        classification.
                    (B) Ozone transport Region.--
                            (i) Application of prohibition.--
                                    (I) In general.--On 
                                application of the Governor of 
                                a State in the ozone transport 
                                region established by section 
                                184(a), the Administrator, not 
                                later than 180 days after the 
                                date of receipt of the 
                                application, shall apply the 
                                prohibition specified in 
                                paragraph (5) to any area in 
                                the State (other than an area 
                                classified as a marginal, 
                                moderate, serious, or severe 
                                ozone nonattainment area under 
                                subpart 2 of part D of title I) 
                                unless the Administrator 
                                determines under clause (iii) 
                                that there is insufficient 
                                capacity to supply reformulated 
                                gasoline.
                                    (II) Publication of 
                                application.--As soon as 
                                practicable after the date of 
                                receipt of an application under 
                                subclause (I), the 
                                Administrator shall publish the 
                                application in the Federal 
                                Register.
                            (ii) Period of applicability.--
                        Under clause (i), the prohibition 
                        specified in paragraph (5) shall apply 
                        in a State--
                                    (I) commencing as soon as 
                                practicable but not later than 
                                2 years after the date of 
                                approval by the Administrator 
                                of the application of the 
                                Governor of the State; and
                                    (II) ending not earlier 
                                than 4 years after the 
                                commencement date determined 
                                under subclause (I).
                            (iii) Extension of commencement 
                        date Based on insufficient capacity.--
                                    (I) In general.--If, after 
                                receipt of an application from 
                                a Governor of a State under 
                                clause (i), the Administrator 
                                determines, on the 
                                Administrator's own motion or 
                                on petition of any person, 
                                after consultation with the 
                                Secretary of Energy, that there 
                                is insufficient capacity to 
                                supply reformulated gasoline, 
                                the Administrator, by 
                                regulation--
                                            (aa) shall extend 
                                        the commencement date 
                                        with respect to the 
                                        State under clause 
                                        (ii)(I) for not more 
                                        than 1 year; and
                                            (bb) may renew the 
                                        extension under item 
                                        (aa) for 2 additional 
                                        periods, each of which 
                                        shall not exceed 1 
                                        year.
                                    (II) Deadline for action on 
                                petitions.--The Administrator 
                                shall act on any petition 
                                submitted under subclause (I) 
                                not later than 180 days after 
                                the date of receipt of the 
                                petition.
            (7) Credits.--(A) The regulations promulgated under 
        this subsection shall provide for the granting of an 
        appropriate amount of credits to a person who refines, 
        blends, or imports and certifies a gasoline or slate of 
        gasoline that--
                    [(i) has an oxygen content (by weight) that 
                exceeds the minimum oxygen content specified in 
                paragraph (2);]
                    [(ii)] (i) has an aromatic hydrocarbon 
                content (by volume) that is less than the 
                maximum aromatic hydrocarbon content required 
                to comply with paragraph (3); or
                    [(iii)] (ii) has a benzene content (by 
                volume) that is less than the maximum benzene 
                content specified in paragraph (2).
            (B) The regulations described in subparagraph (A) 
        shall also provide that a person who is granted credits 
        may use such credits, or transfer all or a portion of 
        such credits to another person for use within the same 
        nonattainment area, for the purpose of complying with 
        this subsection.
            (C) The regulations promulgated under subparagraphs 
        (A) and (B) shall ensure the enforcement of the 
        requirements for the issuance, application, and 
        transfer of the credits. Such regulations shall 
        prohibit the granting or transfer of such credits for 
        use with respect to any gasoline in a nonattainment 
        area, to the extent the use of such credits would 
        result in any of the following:
                    (i) An average gasoline aromatic 
                hydrocarbon content (by volume) for the 
                nonattainment (taking into account all gasoline 
                sold for use in conventional gasoline-fueled 
                vehicles in the nonattainment area) higher than 
                the average fuel aromatic hydrocarbon content 
                (by volume) that would occur in the absence of 
                using any such credits.
                    [(ii) An average gasoline oxygen content 
                (by weight) for the nonattainment area (taking 
                into account all gasoline sold for use in 
                conventional gasoline-fueled vehicles in the 
                nonattainment area) lower than the average 
                gasoline oxygen content (by weight) that would 
                occur in the absence of using any such 
                credits.]
                    [(iii)] (ii) An average benzene content (by 
                volume) for the nonattainment area (taking into 
                account all gasoline sold for use in 
                conventional gasoline-fueled vehicles in the 
                nonattainment area) higher than the average 
                benzene content (by volume) that would occur in 
                the absence of using any such credits.

           *       *       *       *       *       *       *

            (11) Commingling.--The regulations under paragraph 
        (1) shall permit the commingling at a retail station of 
        reformulated gasoline containing ethanol and 
        reformulated gasoline that does not contain ethanol if, 
        each time such commingling occurs--
                    (A) the retailer notifies the Administrator 
                before the commingling, identifying the exact 
                location of the retail station and the specific 
                tank in which the commingling will take place; 
                and
                    (B) the retailer certifies that the 
                reformulated gasoline resulting from the 
                commingling will meet all applicable 
                requirements for reformulated gasoline, 
                including content and emission performance 
                standards.

           *       *       *       *       *       *       *

    (n) Prohibition on Leaded Gasoline for Highway Use.--After 
December 31, 1995, it shall be unlawful for any person to sell, 
offer for sale, supply, offer for supply, dispense, transport, 
or introduce into commerce, for use as fuel in any motor 
vehicle (as defined in section 219(2)) any gasoline which 
contains lead or lead additives.
    (o) Renewable Fuel Program.--
            (1) Definitions.--In this section:
                    (A) Cellulosic biomass ethanol.--The term 
                `cellulosic biomass ethanol' means ethanol 
                derived from any lignocellulosic or 
                hemicellulosic matter that is available on a 
                renewable or recurring basis, including--
                            (i) dedicated energy crops and 
                        trees;
                            (ii) wood and wood residues;
                            (iii) plants;
                            (iv) grasses;
                            (v) agricultural residues;
                            (vi) fibers;
                            (vii) animal wastes and other waste 
                        materials; and
                            (viii) municipal solid waste.
                    (B) Renewable fuel.--
                            (i) In general.--The term 
                        `renewable fuel' means motor vehicle 
                        fuel that--
                                    (I)(aa) is produced from 
                                grain, starch, oilseeds, or 
                                other biomass; or
                                    (bb) is natural gas 
                                produced from a biogas source, 
                                including a landfill, sewage 
                                waste treatment plant, feedlot, 
                                or other place where decaying 
                                organic material is found; and
                                    (II) is used to replace or 
                                reduce the quantity of fossil 
                                fuel present in a fuel mixture 
                                used to operate a motor 
                                vehicle.
                            (ii) Inclusion.--The term 
                        `renewable fuel' includes--
                                    (I) cellulosic biomass 
                                ethanol; and
                                    (II) biodiesel (as defined 
                                in section 312(f) of the Energy 
                                Policy Act of 1992 (42 U.S.C. 
                                13220(f))).
                    (C) Small refinery.--The term `small 
                refinery' means a refinery for which the 
                average aggregate daily crude oil throughput 
                for a calendar year (as determined by dividing 
                the aggregate throughput for the calendar year 
                by the number of days in the calendar year) 
                does not exceed 75,000 barrels.
            (2) Renewable fuel program.--
                    (A) Regulations.--
                            (i) In general.--Not later than 1 
                        year after the date of enactment of 
                        this paragraph, the Administrator shall 
                        promulgate regulations to ensure that 
                        gasoline sold or introduced into 
                        commerce in the United States (except 
                        in Alaska and Hawaii), on an annual 
                        average basis, contains the applicable 
                        volume of renewable fuel determined in 
                        accordance with subparagraph (B).
                            (ii) Provisions of regulations.--
                        Regardless of the date of promulgation, 
                        the regulations promulgated under 
                        clause (i)--
                                    (I) shall contain 
                                compliance provisions 
                                applicable to refineries, 
                                blenders, distributors, and 
                                importers, as appropriate, to 
                                ensure that the requirements of 
                                this paragraph are met; but
                                    (II) shall not--
                                            (aa) restrict 
                                        geographic areas in 
                                        which renewable fuel 
                                        may be used; or
                                            (bb) impose any 
                                        per-gallon obligation 
                                        for the use of 
                                        renewable fuel.
                            (iii) Requirement in case of 
                        failure to promulgate regulations.--If 
                        the Administrator does not promulgate 
                        regulations under clause (i), the 
                        percentage of renewable fuel in 
                        gasoline sold or dispensed to consumers 
                        in the United States, on a volume 
                        basis, shall be 1.8 percent for 
                        calendar year 2006.
                    (B) Applicable volume.--
                            (i) Calendar years 2006 through 
                        2012.--For the purpose of subparagraph 
                        (A), the applicable volume for any of 
                        calendar years 2006 through 2012 shall 
                        be determined in accordance with the 
                        following table:

                                    Applicable volume of renewable fuel
Calendar year:                                (in billions of gallons):
    2006..........................................                 3.8 
    2007..........................................                 4.1 
    2008..........................................                 4.5 
    2009..........................................                 4.9 
    2010..........................................                 5.3 
    2011..........................................                 5.7 
    2012..........................................                 6.0.
                            (ii) Calendar year 2013 and 
                        thereafter.--For the purpose of 
                        subparagraph (A), the applicable volume 
                        for calendar year 2013 and each 
                        calendar year thereafter shall be equal 
                        to the product obtained by 
                        multiplying--
                                    (I) the number of gallons 
                                of gasoline that the 
                                Administrator estimates will be 
                                sold or introduced into 
                                commerce in the calendar year; 
                                and
                                    (II) the ratio that--
                                            (aa) 6,000,000,000 
                                        gallons of renewable 
                                        fuel; bears to
                                            (bb) the number of 
                                        gallons of gasoline 
                                        sold or introduced into 
                                        commerce in calendar 
                                        year 2012.
            (3) Applicable percentages.--
                    (A) Provision of estimate of volumes of 
                Gasoline sales.--Not later than October 31 of 
                each of calendar years 2005 through 2011, the 
                Administrator of the Energy Information 
                Administration shall provide to the 
                Administrator of the Environmental Protection 
                Agency an estimate, with respect to the 
                following calendar year, of the volumes of 
                gasoline projected to be sold or introduced 
                into commerce in the United States.
                    (B) Determination of applicable 
                percentages.--
                            (i) In general.--Not later than 
                        November 30 of each of calendar years 
                        2005 through 2012, based on the 
                        estimate provided under subparagraph 
                        (A), the Administrator of the 
                        Environmental Protection Agency shall 
                        determine and publish in the Federal 
                        Register, with respect to the following 
                        calendar year, the renewable fuel 
                        obligation that ensures that the 
                        requirements of paragraph (2) are met.
                            (ii) Required elements.--The 
                        renewable fuel obligation determined 
                        for a calendar year under clause (i) 
                        shall--
                                    (I) be applicable to 
                                refineries, blenders, and 
                                importers, as appropriate;
                                    (II) be expressed in terms 
                                of a volume percentage of 
                                gasoline sold or introduced 
                                into commerce in the United 
                                States; and
                                    (III) subject to 
                                subparagraph (C)(i), consist of 
                                a single applicable percentage 
                                that applies to all categories 
                                of persons specified in 
                                subclause (I).
                    (C) Adjustments.--In determining the 
                applicable percentage for a calendar year, the 
                Administrator shall make adjustments--
                            (i) to prevent the imposition of 
                        redundant obligations on any person 
                        specified in subparagraph (B)(ii)(I); 
                        and
                            (ii) to account for the use of 
                        renewable fuel during the previous 
                        calendar year by small refineries that 
                        are exempt under paragraph (9).
            (4) Cellulosic biomass ethanol.--For the purpose of 
        paragraph (2), 1 gallon of cellulosic biomass ethanol 
        shall be considered to be the equivalent of 1.5 gallons 
        of renewable fuel.
            (5) Credit program.--
                    (A) In general.--The regulations 
                promulgated under paragraph (2)(A) shall 
                provide--
                            (i) for the generation of an 
                        appropriate amount of credits by any 
                        person that refines, blends, or imports 
                        gasoline that contains a quantity of 
                        renewable fuel that is greater than the 
                        quantity required under paragraph (2);
                            (ii) for the generation of an 
                        appropriate amount of credits for 
                        biodiesel; and
                            (iii) for the generation of credits 
                        by small refineries in accordance with 
                        paragraph (9)(C).
                    (B) Use of credits.--A person that 
                generates credits under subparagraph (A) may 
                use the credits, or transfer all or a portion 
                of the credits to another person, for the 
                purpose of complying with paragraph (2).
                    (C) Duration of credits.--A credit 
                generated under this paragraph shall be valid 
                to show compliance--
                            (i) subject to clause (ii), for the 
                        calendar year in which the credit was 
                        generated or the following calendar 
                        year; or
                            (ii) if the Administrator 
                        promulgates regulations under paragraph 
                        (6), for the calendar year in which the 
                        credit was generated or any of the 
                        following 2 calendar years.
                    (D) Inability to generate or purchase 
                sufficient credits.--The regulations 
                promulgated under paragraph (2)(A) shall 
                include provisions allowing any person that is 
                unable to generate or purchase sufficient 
                credits to meet the requirements of paragraph 
                (2) to carry forward a renewable fuel deficit 
                on condition that the person, in the calendar 
                year following the year in which the renewable 
                fuel deficit is created--
                            (i) achieves compliance with the 
                        renewable fuel requirement under 
                        paragraph (2); and
                            (ii) generates or purchases 
                        additional renewable fuel credits to 
                        offset the renewable fuel deficit of 
                        the previous year.
            (6) Seasonal variations in renewable fuel use.--
                    (A) Study.--For each of calendar years 2006 
                through 2012, the Administrator of the Energy 
                Information Administration shall conduct a 
                study of renewable fuel blending to determine 
                whether there are excessive seasonal variations 
                in the use of renewable fuel.
                    (B) Regulation of excessive seasonal 
                variations.--If, for any calendar year, the 
                Administrator of the Energy Information 
                Administration, based on the study under 
                subparagraph (A), makes the determinations 
                specified in subparagraph (C), the 
                Administrator of the Environmental Protection 
                Agency shall promulgate regulations to ensure 
                that 35 percent or more of the quantity of 
                renewable fuel necessary to meet the 
                requirements of paragraph (2) is used during 
                each of the 2 periods specified in subparagraph 
                (D) of each subsequent calendar year.
                    (C) Determinations.--The determinations 
                referred to in subparagraph (B) are that--
                            (i) less than 35 percent of the 
                        quantity of renewable fuel necessary to 
                        meet the requirements of paragraph (2) 
                        has been used during 1 of the 2 periods 
                        specified in subparagraph (D) of the 
                        calendar year; and
                            (ii) a pattern of excessive 
                        seasonal variation described in clause 
                        (i) will continue in subsequent 
                        calendar years.
                    (D) Periods.--The 2 periods referred to in 
                this paragraph are--
                            (i) April through September; and
                            (ii) January through March and 
                        October through December.
                    (E) Exclusion.--Renewable fuel blended or 
                consumed in calendar year 2006 in a State that 
                has received a waiver under section 209(b) 
                shall not be included in the study under 
                subparagraph (A).
            (7) Waivers.--
                    (A) In general.--The Administrator, in 
                consultation with the Secretary of Agriculture 
                and the Secretary of Energy, may waive the 
                requirements of paragraph (2) in whole or in 
                part on petition by 1 or more States by 
                reducing the national quantity of renewable 
                fuel required under paragraph (2)--
                            (i) based on a determination by the 
                        Administrator, after public notice and 
                        opportunity for comment, that 
                        implementation of the requirement would 
                        severely harm the economy or 
                        environment of a State, a region, or 
                        the United States; or
                            (ii) based on a determination by 
                        the Administrator, after public notice 
                        and opportunity for comment, that there 
                        is an inadequate domestic supply or 
                        distribution capacity to meet the 
                        requirement.
                    (B) Petitions for waivers.--The 
                Administrator, in consultation with the 
                Secretary of Agriculture and the Secretary of 
                Energy, shall approve or disapprove a State 
                petition for a waiver of the requirements of 
                paragraph (2) within 90 days after the date on 
                which the petition is received by the 
                Administrator.
                    (C) Termination of waivers.--A waiver 
                granted under subparagraph (A) shall terminate 
                after 1 year, but may be renewed by the 
                Administrator after consultation with the 
                Secretary of Agriculture and the Secretary of 
                Energy.
            (8) Study and waiver for initial year of program.--
                    (A) In general.--Not later than 180 days 
                after the date of enactment of this paragraph, 
                the Secretary of Energy shall conduct for the 
                Administrator a study assessing whether the 
                renewable fuel requirement under paragraph (2) 
                will likely result in significant adverse 
                impacts on consumers in 2006, on a national, 
                regional, or State basis.
                    (B) Required evaluations.--The study shall 
                evaluate renewable fuel--
                            (i) supplies and prices;
                            (ii) blendstock supplies; and
                            (iii) supply and distribution 
                        system capabilities.
                    (C) Recommendations by the Secretary.--
                Based on the results of the study, the 
                Secretary of Energy shall make specific 
                recommendations to the Administrator concerning 
                waiver of the requirements of paragraph (2), in 
                whole or in part, to prevent any adverse 
                impacts described in subparagraph (A).
                    (D) Waiver.--
                            (i) In general.--Not later than 270 
                        days after the date of enactment of 
                        this paragraph, the Administrator 
                        shall, if and to the extent recommended 
                        by the Secretary of Energy under 
                        subparagraph (C), waive, in whole or in 
                        part, the renewable fuel requirement 
                        under paragraph (2) by reducing the 
                        national quantity of renewable fuel 
                        required under paragraph (2) in 
                        calendar year 2006.
                            (ii) No effect on waiver 
                        authority.--Clause (i) does not limit 
                        the authority of the Administrator to 
                        waive the requirements of paragraph (2) 
                        in whole, or in part, under paragraph 
                        (7).
            (9) Small refineries.--
                    (A) Temporary exemption.--
                            (i) In general.--The requirements 
                        of paragraph (2) shall not apply to 
                        small refineries until calendar year 
                        2011.
                            (ii) Extension of exemption.--
                                    (I) Study by Secretary of 
                                Energy.--Not later than 
                                December 31, 2008, the 
                                Secretary of Energy shall 
                                conduct for the Administrator a 
                                study to determine whether 
                                compliance with the 
                                requirements of paragraph (2) 
                                would impose a disproportionate 
                                economic hardship on small 
                                refineries.
                                    (II) Extension of 
                                exemption.--In the case of a 
                                small refinery that the 
                                Secretary of Energy determines 
                                under subclause (I) would be 
                                subject to a disproportionate 
                                economic hardship if required 
                                to comply with paragraph (2), 
                                the Administrator shall extend 
                                the exemption under clause (i) 
                                for the small refinery for a 
                                period of not less than 2 
                                additional years.
                    (B) Petitions based on disproportionate 
                economic hardship.--
                            (i) Extension of exemption.--A 
                        small refinery may at any time petition 
                        the Administrator for an extension of 
                        the exemption under subparagraph (A) 
                        for the reason of disproportionate 
                        economic hardship.
                            (ii) Evaluation of petitions.--In 
                        evaluating a petition under clause (i), 
                        the Administrator, in consultation with 
                        the Secretary of Energy, shall consider 
                        the findings of the study under 
                        subparagraph (A)(ii) and other economic 
                        factors.
                            (iii) Deadline for action on 
                        petitions.--The Administrator shall act 
                        on any petition submitted by a small 
                        refinery for a hardship exemption not 
                        later than 90 days after the date of 
                        receipt of the petition.
                    (C) Credit program.--If a small refinery 
                notifies the Administrator that the small 
                refinery waives the exemption under 
                subparagraph (A), the regulations promulgated 
                under paragraph (2)(A) shall provide for the 
                generation of credits by the small refinery 
                under paragraph (5) beginning in the calendar 
                year following the date of notification.
                    (D) Opt-in for small refineries.--A small 
                refinery shall be subject to the requirements 
                of paragraph (2) if the small refinery notifies 
                the Administrator that the small refinery 
                waives the exemption under subparagraph (A).
            (10) Ethanol market concentration analysis.--
                    (A) Analysis.--
                            (i) In general.--Not later than 180 
                        days after the date of enactment of 
                        this paragraph, and annually 
                        thereafter, the Federal Trade 
                        Commission shall perform a market 
                        concentration analysis of the ethanol 
                        production industry using the 
                        Herfindahl-Hirschman Index to determine 
                        whether there is sufficient competition 
                        among industry participants to avoid 
                        price-setting and other anticompetitive 
                        behavior.
                            (ii) Scoring.--For the purpose of 
                        scoring under clause (i) using the 
                        Herfindahl-Hirschman Index, all 
                        marketing arrangements among industry 
                        participants shall be considered.
                    (B) Report.--Not later than December 1, 
                2005, and annually thereafter, the Federal 
                Trade Commission shall submit to Congress and 
                the Administrator a report on the results of 
                the market concentration analysis performed 
                under subparagraph (A)(i).
    (p) Renewable Fuel Safe Harbor.--
            (1) In general.--
                    (A) Safe harbor.--Notwithstanding any other 
                provision of Federal or State law, no renewable 
                fuel (as defined in subsection (o)(1)) used or 
                intended to be used as a motor vehicle fuel, 
                nor any motor vehicle fuel containing renewable 
                fuel, shall be deemed to be defective in design 
                or manufacture by reason of the fact that the 
                fuel is, or contains, renewable fuel, if--
                            (i) the fuel does not violate a 
                        control or prohibition imposed by the 
                        Administrator under this section; and
                            (ii) the manufacturer of the fuel 
                        is in compliance with all requests for 
                        information under subsection (b).
                    (B) Safe harbor not applicable.--In any 
                case in which subparagraph (A) does not apply 
                to a quantity of fuel, the existence of a 
                design defect or manufacturing defect with 
                respect to the fuel shall be determined under 
                otherwise applicable law.
            (2) Exception.--This subsection does not apply to 
        ethers.
            (3) Applicability.--This subsection applies with 
        respect to all claims filed on or after the date of 
        enactment of this subsection.
    (q) Analyses of Motor Vehicle Fuel Changes and Emissions 
Model.--
            (1) Anti-backsliding analysis.--
                    (A) Draft analysis.--Not later than 4 years 
                after the date of enactment of this paragraph, 
                the Administrator shall publish for public 
                comment a draft analysis of the changes in 
                emissions of air pollutants and air quality due 
                to the use of motor vehicle fuel and fuel 
                additives resulting from implementation of the 
                amendments made by the Federal Reformulated 
                Fuels Act of 2005.
                    (B) Final analysis.--After providing a 
                reasonable opportunity for comment but not 
                later than 5 years after the date of enactment 
                of this paragraph, the Administrator shall 
                publish the analysis in final form.
            (2) Emissions model.--For the purposes of this 
        section, not later than 4 years after the date of 
        enactment of this paragraph, the Administrator shall 
        develop and finalize an emissions model that reflects, 
        to the maximum extent practicable, the effects of 
        gasoline characteristics or components on emissions 
        from vehicles in the motor vehicle fleet during 
        calendar year 2007.
            (3) Permeation effects study.--
                    (A) In general.--Not later than 1 year 
                after the date of enactment of this paragraph, 
                the Administrator shall conduct a study, and 
                report to Congress the results of the study, on 
                the effects of ethanol content in gasoline on 
                permeation, the process by which fuel molecules 
                migrate through the elastomeric materials 
                (rubber and plastic parts) that make up the 
                fuel and fuel vapor systems of a motor vehicle.
                    (B) Evaporative emissions.--The study shall 
                include estimates of the increase in total 
                evaporative emissions likely to result from the 
                use of gasoline with ethanol content in a motor 
                vehicle, and the fleet of motor vehicles, due 
                to permeation.
    [(o)] (r) Fuel and Fuel Additive Importers and 
Importation.--For the purposes of this section, the term 
``manufacturer'' includes an importer and the term 
``manufacture'' includes importation.

SEC. 212. RENEWABLE FUEL.

    (a) Definitions.--In this section:
            (1) Municipal solid waste.--The term `municipal 
        solid waste' has the meaning given the term `solid 
        waste' in section 1004 of the Solid Waste Disposal Act 
        (42 U.S.C. 6903).
            (2) RFG State.--The term `RFG State' means a State 
        in which is located 1 or more covered areas (as defined 
        in section 211(k)(10)(D)).
            (3) Secretary.--The term `Secretary' means the 
        Secretary of Energy.
    (b) Survey of Renewable Fuel Market.--
            (1) Survey and report.--Not later than December 1, 
        2006, and annually thereafter, the Administrator 
        shall--
                    (A) conduct, with respect to each 
                conventional gasoline use area and each 
                reformulated gasoline use area in each State, a 
                survey to determine the market shares of--
                            (i) conventional gasoline 
                        containing ethanol;
                            (ii) reformulated gasoline 
                        containing ethanol;
                            (iii) conventional gasoline 
                        containing renewable fuel; and
                            (iv) reformulated gasoline 
                        containing renewable fuel; and
                    (B) submit to Congress, and make publicly 
                available, a report on the results of the 
                survey under subparagraph (A).
            (2) Recordkeeping and reporting requirements.--
                    (A) In general.--The Administrator may 
                require any refiner, blender, or importer to 
                keep such records and make such reports as are 
                necessary to ensure that the survey conducted 
                under paragraph (1) is accurate.
                    (B) Reliance on existing requirements.--To 
                avoid duplicative requirements, in carrying out 
                subparagraph (A), the Administrator shall rely, 
                to the maximum extent practicable, on reporting 
                and recordkeeping requirements in effect on the 
                date of enactment of this section.
            (3) Confidentiality.--Activities carried out under 
        this subsection shall be conducted in a manner designed 
        to protect confidentiality of individual responses.
    (c) Cellulosic Biomass Ethanol And Municipal Solid Waste 
Loan Guarantee Program.--
            (1) In general.--Funds may be provided for the cost 
        (as defined in the Federal Credit Reform Act of 1990 (2 
        U.S.C. 661 et seq.)) of loan guarantees issued under 
        section 19 of the Federal Nonnuclear Energy Research 
        and Development Act of 1974 (42 U.S.C. 5919) to carry 
        out celluosic biomass commercial demonstration 
        projects.
            (2) Demonstration projects.--
                    (A) In general.--The Secretary shall issue 
                loan guarantees under this section to carry out 
                not more than 4 projects to commercially 
                demonstrate the feasibility and viability of 
                producing cellulosic biomass ethanol, including 
                at least 1 project that uses cereal straw as a 
                feedstock and 1 project that uses municipal 
                solid waste as a feedstock.
                    (B) Design capacity.--Each project shall 
                have a design capacity to produce at least 
                30,000,000 gallons of cellulosic biomass 
                ethanol each year.
            (3) Applicant assurances.--An applicant for a loan 
        guarantee under this section shall provide assurances, 
        satisfactory to the Secretary, that--
                    (A) the project design has been validated 
                through the operation of a continuous process 
                facility with a cumulative output of at least 
                50,000 gallons of ethanol;
                    (B) the project has been subject to a full 
                technical review;
                    (C) the project is covered by adequate 
                project performance guarantees;
                    (D) the project, with the loan guarantee, 
                is economically viable; and
                    (E) there is a reasonable assurance of 
                repayment of the guaranteed loan.
            (4) Limitations.--
                    (A) Maximum guarantee.--Except as provided 
                in subparagraph (B), notwithstanding section 
                19(c)(2)(A) of the Federal Nonnuclear Energy 
                Research and Development Act of 1974 (42 U.S.C. 
                5919(c)(2)(A)), a loan guarantee under this 
                section may be issued for up to 80 percent of 
                the estimated cost of a project, but may not 
                exceed $250,000,000 for a project.
                    (B) Additional guarantees.--
                            (i) In general.--The Secretary may 
                        issue additional loan guarantees for a 
                        project to cover up to 80 percent of 
                        the excess of actual project cost over 
                        estimated project cost but not to 
                        exceed 15 percent of the amount of the 
                        original guarantee.
                            (ii) Principal and interest.--
                        Subject to subparagraph (A), the 
                        Secretary shall guarantee 100 percent 
                        of the principal and interest of a loan 
                        made under subparagraph (A).
            (5) Equity contributions.--To be eligible for a 
        loan guarantee under this section, an applicant for the 
        loan guarantee shall have binding commitments from 
        equity investors to provide an initial equity 
        contribution of at least 20 percent of the total 
        project cost.
            (6) Effect of other laws.--The following provisions 
        are inapplicable to a loan guarantee made under this 
        section:
                    (A) Subsections (m) and (p) of section 19 
                of the Federal Nonnuclear Energy Research and 
                Development Act of 1974 (42 U.S.C. 5919).
                    (B) The first, third, and fourth sentences 
                of section 19(g)(4) of that Act.
            (7) Insufficient amounts.--If the amount made 
        available to carry out this section is insufficient to 
        allow the Secretary to make loan guarantees for 3 
        projects described in subsection (b), the Secretary 
        shall issue loan guarantees for 1 or more qualifying 
        projects under this section in the order in which the 
        applications for the projects are received by the 
        Secretary.
            (8) Approval.--An application for a loan guarantee 
        under this section shall be approved or disapproved by 
        the Secretary not later than 90 days after the 
        application is received by the Secretary.
    (d) Authorization of Appropriations for Resource Center.--
There is authorized to be appropriated, for a resource center 
to further develop bioconversion technology using low-cost 
biomass for the production of ethanol at the Center for 
Biomass-Based Energy at the University of Mississippi and the 
University of Oklahoma, $4,000,000 for each of fiscal years 
2005 through 2007.
    (e) Renewable Fuel Production Research and Development 
Grants.--
            (1) In general.--The Administrator shall provide 
        grants for the research into, and development and 
        implementation of, renewable fuel production 
        technologies in RFG States with low rates of ethanol 
        production, including low rates of production of 
        cellulosic biomass ethanol.
            (2) Eligibility.--
                    (A) In general.--The entities eligible to 
                receive a grant under this subsection are 
                academic institutions in RFG States, and 
                consortia made up of combinations of academic 
                institutions, industry, State government 
                agencies, or local government agencies in RFG 
                States, that have proven experience and 
                capabilities with relevant technologies.
                    (B) Application.--To be eligible to receive 
                a grant under this subsection, an eligible 
                entity shall submit to the Administrator an 
                application in such manner and form, and 
                accompanied by such information, as the 
                Administrator may specify.
            (3) Authorization of appropriations.--There is 
        authorized to be appropriated to carry out this 
        subsection $25,000,000 for each of fiscal years 2006 
        through 2010.
    (f) Cellulosic Biomass Ethanol Conversion Assistance.--
            (1) In general.--The Secretary may provide grants 
        to merchant producers of cellulosic biomass ethanol in 
        the United States to assist the producers in building 
        eligible production facilities described in paragraph 
        (2) for the production of cellulosic biomass ethanol.
            (2) Eligible production facilities.--A production 
        facility shall be eligible to receive a grant under 
        this subsection if the production facility--
                    (A) is located in the United States; and
                    (B) uses cellulosic biomass feedstocks 
                derived from agricultural residues or municipal 
                solid waste.
            (3) Authorization of appropriations.--There is 
        authorized to be appropriated to carry out this 
        subsection--
                    (A) $250,000,000 for fiscal year 2005; and
                    (B) $400,000,000 for fiscal year 2006.

           *       *       *       *       *       *       *

                              ----------                              

                 DEPARTMENT OF ENERGY ORGANIZATION ACT

    Sec. 205. (a)(1) * * *

           *       *       *       *       *       *       *

    (l) In order to improve the ability to evaluate the 
effectiveness of the Nation's energy efficiency policies and 
programs, the Administrator shall, in carrying out the data 
collection provisions of subsections (i) and (k), consider--
            (1) expanding the survey instruments to include 
        questions regarding participation in Government and 
        utility conservation programs;
            (2) expanding fuel-use surveys in order to provide 
        greater detail on energy use by user subgroups; and
            (3) expanding the scope of data collection on 
        energy efficiency and load-management programs, 
        including the effects of building construction 
        practices such as those designed to obtain peak load 
        shifting.
    (m) Survey of Renewable Fuels Consumption.--
            (1) In general.--In order to improve the ability to 
        evaluate the effectiveness of the Nation's renewable 
        fuels mandate, the Administrator shall conduct and 
        publish the results of a survey of renewable fuels 
        consumption in the motor vehicle fuels market in the 
        United States monthly, and in a manner designed to 
        protect the confidentiality of individual responses.
            (2) Elements of survey.--In conducting the survey, 
        the Administrator shall collect information 
        retrospectively to 1998, on a national basis and a 
        regional basis, including--
                    (A) the quantity of renewable fuels 
                produced;
                    (B) the cost of production;
                    (C) the cost of blending and marketing;
                    (D) the quantity of renewable fuels 
                blended;
                    (E) the quantity of renewable fuels 
                imported; and
                    (F) market price data.

           *       *       *       *       *       *       *

                              ----------                              

SOLID WASTE DISPOSAL ACT

           *       *       *       *       *       *       *

                   short title and table of contents

    Sec. 1001. This title (hereinafter in this title referred 
to as ``this Act''), together with the following table of 
contents, may be cited as the ``Solid Waste Disposal Act'':

                     Subtitle A--General Provisions

      * * * * * * *

           Subtitle I--Regulation of Underground Storage Tanks

Sec. 9001. Definitions.
Sec. 9002. Notification.
Sec. 9003. Release detection, prevention, and correction regulations.
Sec. 9004. Approval of State programs.
Sec. 9005. Inspections, monitoring, and testing.
Sec. 9006. Federal enforcement.
Sec. 9007. Federal facilities.
Sec. 9008. State authority.
Sec. 9009. Study of underground storage tanks.
[Sec. 9010. Authorization of appropriations.]
Sec. 9010. Release prevention and compliance.
Sec. 9011. Authorization of appropriations.

           *       *       *       *       *       *       *

          Subtitle I--Regulation of Underground Storage Tanks

                       definitions and exemptions

    Sec. 9001. For the purposes of this subtitle--
            (1) * * *

           *       *       *       *       *       *       *

            (3) The term ``owner'' means--
                    (A) in the case of an underground storage 
                tank in use on the date of enactment of the 
                Hazardous and Solid Waste Amendments of 1984, 
                or brought into use after that date, any person 
                who owns an underground storage tank used for 
                the storage, use, or dispensing of regulated 
                [sustances] substances, and

           *       *       *       *       *       *       *

       release detection, prevention, and correction regulations

    Sec. 9003. (a) * * *

           *       *       *       *       *       *       *

    (f) Effective Dates.--(1) Regulations issued pursuant to 
[subsection (c) and (d) of this section] subsections (c) and 
(d), and standards issued pursuant to subsection (e) of this 
section, for underground storage tanks containing regulated 
substances defined in section 9001(2)(B) (petroleum, including 
crude oil or any fraction thereof which is liquid at standard 
conditions of temperature and pressure) shall be effective not 
later than thirty months after the date of enactment of the 
Hazardous and Solid Waste Amendments of 1984.

           *       *       *       *       *       *       *

    (h) EPA Response Program for Petroleum.--
            (1) * * *

           *       *       *       *       *       *       *

            (7) State authorities.--
                    (A) General.--A State may exercise the 
                authorities in [paragraphs (1) and (2) of this 
                subsection] paragraphs (1), (2), and (12), 
                subject to the terms and conditions of 
                paragraphs (3), (5), (9), (10), and (11), and 
                including the authorities of paragraphs (4), 
                (6), and (8) of this subsection and section 
                9010 if--
                            (i) the Administrator determines 
                        that the State has the capabilities to 
                        carry out effective corrective actions 
                        and enforcement activities; and
                            (ii) the Administrator enters into 
                        a cooperative agreement with the State 
                        setting out the actions to be 
                        undertaken by the State.
                The Administrator may provide funds from the 
                Leaking Underground Storage Tank Trust Fund for 
                the reasonable costs of the State's actions 
                under the cooperative agreement.

           *       *       *       *       *       *       *

            (12) Remediation of contamination from ether fuel 
        additives.--
                    (A) In general.--The Administrator and the 
                States may use funds made available under 
                section 9013(1) to carry out corrective actions 
                with respect to a release of methyl tertiary 
                butyl ether or other ether fuel additive that 
                presents a threat to human health, welfare, or 
                the environment.
                    (B) Applicable authority.--Subparagraph (A) 
                shall be carried out--
                            (i) in accordance with paragraph 
                        (2), except that a release with respect 
                        to which a corrective action is carried 
                        out under subparagraph (A) shall not be 
                        required to be from an underground 
                        storage tank; and
                            (ii) in the case of a State, in 
                        accordance with a cooperative agreement 
                        entered into by the Administrator and 
                        the State under paragraph (7).

           *       *       *       *       *       *       *

                       approval of state programs

    Sec. 9004. (a) Elements of State Program.--Beginning 30 
months after the date of enactment of the Hazardous and Solid 
Waste Amendments of 1984, any State may, submit an underground 
storage tank release detection, prevention, and correction 
program for review and approval by the Administrator. The 
program may cover tanks used to store regulated substances 
[referred to in 9001(2) (A) or (B) or both.] referred to in 
subparagraph (A) or (B), or both, of section 9001(2). A State 
program may be approved by the Administrator under this section 
only if the State demonstrates that the State program includes 
the following requirements and standards and provides for 
adequate enforcement of compliance with such requirements and 
standards--

           *       *       *       *       *       *       *

        INSPECTIONS, MONITORING, TESTING, AND CORRECTIVE ACTION

    Sec. 9005. (a) Furnishing Information.--For the purposes of 
developing or assisting in the development of any regulation, 
conducting any [study taking] study, taking any corrective 
action, or enforcing the provisions of this subtitle, any owner 
or operator of an underground storage tank (or any tank subject 
to study under section 9009 that is used for storing regulated 
substances) shall, upon request of any officer, employee or 
representative of the Environmental Protection Agency, duly 
designated by the Administrator, or upon request of any duly 
designated officer, employee, or representative of a State 
acting parsuant to subsection (h)(7) of section 9003 or with an 
approved program, furnish information relating to such tanks, 
their associated equipment, their contents, conduct monitoring 
or testing, permit such officer at all reasonable times to have 
access to, and to copy all records relating to such tanks and 
permit such officer to have access for corrective action. For 
the purposes of developing or assisting in the development of 
any regulation, conducting any study, taking corrective action, 
or enforcing the provisions of this subtitle, such officers, 
employees, or representatives are authorized--

           *       *       *       *       *       *       *

    (b) Confidentiality.--(1) Any records, reports, or 
information obtained from any persons under this section shall 
be available to the public, except that upon a showing 
satisfactory to the Administrator (or the State, as the case 
may be) by any person that records, reports, or information, or 
a particular part thereof, to which the Administrator (or the 
State, as the case may be) or any officer, employee, or 
representative thereof has access under this section if made 
public, would divulge information entitled to protection under 
section 1905 of title 18 of the United States Code, such 
information or particular portion thereof shall be considered 
confidential in accordance with the purposes of that section, 
except that such record, report, document, or information may 
be disclosed to other officers, employees, or authorized 
representatives of the United States concerned with carrying 
out this Act, or when [relevent] relevant in any proceeding 
under this Act.
    (2) Any person not subject to the provisions of section 
1905 of title 18 of the United States Code who knowingly and 
willfully divulges or discloses any information entitled to 
protection under this subsection shall, upon conviction, be 
subject to a fine of not more than $5,000 or to imprisonment 
not to exceed one year, or both.
    (3) In submitting data under this subtitle, a person 
required to provide such data may--
            (A) designate the data which such person believes 
        is entitled to protection under this subsection, and
            (B) submit such designated data separately from 
        other data submitted under this subtitle.
A designation under this paragraph shall be made in writing and 
in such manner as the Administrator may prescribe.
    (4) Notwithstanding any limitation contained in this 
section or any other provision of law, all information reported 
to, or otherwise obtained, by the Administrator (or any 
representative of the Administrator) under this Act shall be 
made available, upon written request of any duly authorized 
committee of the Congress, to such committee (including 
records, reports, or information obtained by representatives of 
the [Evironmental] Environmental Protection Agency).

           *       *       *       *       *       *       *

                    authorization of appropriations

    [Sec. 9010. For authorization of appropriations to carry 
out this subtitle, see section 2007(g).]

SEC. 9010. RELEASE PREVENTION AND COMPLIANCE.

    Funds made available under section 9013(2) from the Leaking 
Underground Storage Tank Trust Fund may be used for conducting 
inspections, or for issuing orders or bringing actions under 
this subtitle--
            (1) by a State (pursuant to section 9003(h)(7)) 
        acting under--
                    (A) a program approved under section 9004; 
                or
                    (B) State requirements regulating 
                underground storage tanks that are similar or 
                identical to this subtitle, as determined by 
                the Administrator; and
            (2) by the Administrator, acting under this 
        subtitle or a State program approved under section 
        9004.

SEC. 9011. AUTHORIZATION OF APPROPRIATIONS.

    In addition to amounts made available under section 
2007(f), there are authorized to be appropriated from the 
Leaking Underground Storage Tank Trust Fund, notwithstanding 
section 9508(c)(1) of the Internal Revenue Code of 1986--
            (1) to carry out section 9003(h)(12), $200,000,000 
        for fiscal year 2005, to remain available until 
        expended; and
            (2) to carry out section 9010--
                    (A) $50,000,000 for fiscal year 2005; and
                    (B) $30,000,000 for fiscal years 2006 
                through 2010.

           *       *       *       *       *       *       *

                                  
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