U.S. GOVERNMENT PRINTING OFFICE

62–976CC WASHINGTON : 2000

NATIONAL IMPLEMENTATION OF THE

REFORMULATED GASOLINE PROGRAM

HEARING

BEFORE THE

SUBCOMMITTEE ON

HEALTH AND ENVIRONMENT

OF THE

COMMITTEE ON COMMERCE

HOUSE OF REPRESENTATIVES

ONE HUNDRED SIXTH CONGRESS

SECOND SESSION

MARCH 2, 2000

Serial No. 106–101

Printed for the use of the Committee on Commerce

(

COMMITTEE ON COMMERCE

TOM BLILEY, Virginia, Chairman

W.J. ‘‘BILLY’’ TAUZIN, Louisiana

MICHAEL G. OXLEY, Ohio

MICHAEL BILIRAKIS, Florida

JOE BARTON, Texas

FRED UPTON, Michigan

CLIFF STEARNS, Florida

PAUL E. GILLMOR, Ohio

Vice Chairman

JAMES C. GREENWOOD, Pennsylvania

CHRISTOPHER COX, California

NATHAN DEAL, Georgia

STEVE LARGENT, Oklahoma

RICHARD BURR, North Carolina

BRIAN P. BILBRAY, California

ED WHITFIELD, Kentucky

GREG GANSKE, Iowa

CHARLIE NORWOOD, Georgia

TOM A. COBURN, Oklahoma

RICK LAZIO, New York

BARBARA CUBIN, Wyoming

JAMES E. ROGAN, California

JOHN SHIMKUS, Illinois

HEATHER WILSON, New Mexico

JOHN B. SHADEGG, Arizona

CHARLES W. ‘‘CHIP’’ PICKERING,

Mississippi

VITO FOSSELLA, New York

ROY BLUNT, Missouri

ED BRYANT, Tennessee

ROBERT L. EHRLICH, Jr., Maryland

JOHN D. DINGELL, Michigan

HENRY A. WAXMAN, California

EDWARD J. MARKEY, Massachusetts

RALPH M. HALL, Texas

RICK BOUCHER, Virginia

EDOLPHUS TOWNS, New York

FRANK PALLONE, Jr., New Jersey

SHERROD BROWN, Ohio

BART GORDON, Tennessee

PETER DEUTSCH, Florida

BOBBY L. RUSH, Illinois

ANNA G. ESHOO, California

RON KLINK, Pennsylvania

BART STUPAK, Michigan

ELIOT L. ENGEL, New York

TOM SAWYER, Ohio

ALBERT R. WYNN, Maryland

GENE GREEN, Texas

KAREN MCCARTHY, Missouri

TED STRICKLAND, Ohio

DIANA DEGETTE, Colorado

THOMAS M. BARRETT, Wisconsin

BILL LUTHER, Minnesota

LOIS CAPPS, California

JAMES E. DERDERIAN, Chief of Staff

JAMES D. BARNETTE, General Counsel

REID P.F. STUNTZ, Minority Staff Director and Chief Counsel

SUBCOMMITTEE ON HEALTH AND ENVIRONMENT

MICHAEL BILIRAKIS, Florida, Chairman

FRED UPTON, Michigan

CLIFF STEARNS, Florida

JAMES C. GREENWOOD, Pennsylvania

NATHAN DEAL, Georgia

RICHARD BURR, North Carolina

BRIAN P. BILBRAY, California

ED WHITFIELD, Kentucky

GREG GANSKE, Iowa

CHARLIE NORWOOD, Georgia

TOM A. COBURN, Oklahoma

Vice Chairman

RICK LAZIO, New York

BARBARA CUBIN, Wyoming

JOHN B. SHADEGG, Arizona

CHARLES W. ‘‘CHIP’’ PICKERING,

Mississippi

ED BRYANT, Tennessee

TOM BLILEY, Virginia,

(Ex Officio)

SHERROD BROWN, Ohio

HENRY A. WAXMAN, California

FRANK PALLONE, Jr., New Jersey

PETER DEUTSCH, Florida

BART STUPAK, Michigan

GENE GREEN, Texas

TED STRICKLAND, Ohio

DIANA DEGETTE, Colorado

THOMAS M. BARRETT, Wisconsin

LOIS CAPPS, California

RALPH M. HALL, Texas

EDOLPHUS TOWNS, New York

ANNA G. ESHOO, California

JOHN D. DINGELL, Michigan,

(Ex Officio)

(II)

2

C O N T E N T S

Page

Testimony of:

Forbes, Hon. Michael, a Representative in Congress from the State of

New York ....................................................................................................... 35

Franks, Hon. Bob, a Representative in Congress from the State of New

Jersey ............................................................................................................. 31

Greenbaum, Daniel S., President, Health Effects Institute .......................... 52

Grumet, Jason S., Executive Director, Northeast States for Coordinated

Air Use Management .................................................................................... 77

LaHood, Hon. Ray, a Representative in Congress from the State of Illinois ................................................................................................................. 34

Mazur, Mark, Director, Office of Policy, U.S. Department of Energy .......... 48

Milazzo, John C., Attorney, Suffolk County Water Authority ...................... 81

Perciasepe, Hon. Robert, Assistant Administrator for Air and Radiation,

U.S. Environmental Protection Agency ....................................................... 41

Skinner, Thomas, Director, Illinois Environmental Protection Agency ....... 73

Additional material submitted for the record:

Air Resources Board, letter dated April 14, 2000, to Hon. Henry A.

Waxman ......................................................................................................... 202

Bliley, Hon. Tom, Chairman, Committee on Commerce, letter dated

March 28, 2000, to Hon. Carol M. Browner ................................................ 181

Eshoo, Hon. Anna G., and Hon. Brian P. Bilbray, letter dated March

1, 2000, to Robert Perciasepe ....................................................................... 177

Perciasepe, Hon. Robert, Assistant Administrator for Air and Radiation,

U.S. Environmental Protection Agency:

Letter dated June 6, 2000, to Hon. Thomas J. Bliley, enclosing response for the record ............................................................................. 183

Letter dated June 8, 2000, to Hon. Gene Green, enclosing response

for the record .......................................................................................... 198

(III)

(1)

NATIONAL IMPLEMENTATION OF THE

REFORMULATED GASOLINE PROGRAM

THURSDAY, MARCH 2, 2000

HOUSE OF REPRESENTATIVES, COMMITTEE ON COMMERCE, SUBCOMMITTEE ON HEALTH AND ENVIRONMENT, Washington, DC.

The subcommittee met, pursuant to notice, at 11:13 a.m., in room

2123, Rayburn House Office Building, Hon. Michael Bilirakis

(chairman) presiding.

Members present: Representatives Bilirakis, Upton, Greenwood,

Bilbray, Ganske, Lazio, Shadegg, Bliley (ex officio), Waxman,

Pallone, Stupak, Green, Strickland, and Barrett.

Also present: Representative Shimkus.

Staff present: Bob Meyers, majority counsel; Joe Stanko, majority

counsel; Clay Alspach, legislative clerk; and Alison Taylor, minority

counsel.

Mr. BILIRAKIS. The hearing will come to order by first thanking

the members involved in requesting and organizing today’s hearing. In a letter I received last fall, Messrs. Pallone, Barrett and

Markey asked the subcommittee to explore issues with respect to

the RFG Program nationally. I believe and trust that today’s hearing responds to their concerns and will provide valuable information for this subcommittee’s consideration.

The Chair will defer the remainder of his opening statement and

recognize the chairman of the full committee, Mr. Bliley, for an

opening statement at this time.

Chairman BLILEY. Thank you, Mr. Chairman, and thank you for

having this hearing and also thank you for taking me out of order.

I want to also thank Messrs. Pallone, Barrett and Markey, my

friends who requested this hearing in a letter last September and

who have recommended various witnesses to be here today.

I additionally want to thank Mr. Greenwood and Mr. Lazio, also

my good friends, who have supported this hearing and worked

closely with the subcommittee on this matter.

As one of the few members of this committee who labored

through the 1990 Clean Air Act amendments, I remember well the

original intent of the Reformulated Gasoline Program. The reformulated gasoline, or RFG, was designed to address persistent air

quality problems in major urban areas.

To date, the Environmental Protection Agency, EPA, and the Department of Energy, DOE, tell us that the RFG Program has

worked. It has been EPA’s and DOE’s prevailing assessment that

RFG has been able to achieve cleaner air at a relatively modest

2

cost. However, it is incumbent upon this committee to continually

review the implementation of all Clean Air Act programs to judge

both their health and environmental benefits as well as any associated costs or problems.

To this end, over the last 2 years, the Subcommittee on Health

and Environment held two hearings on the RFG Program in California and successfully reported legislation introduced by Mr.

Bilbray, H.R. 11, to waive the Federal oxygenate standard in California.

Today’s hearing extends the subcommittee’s focus to the implementation of the RFG Program outside California. In addition to

the three mandatory RFG areas in California, there are seven mandatory RFG areas in the Northeast, MidAtlantic, Midwest, and

Texas, plus additional areas that have voluntarily opted into the

RFG Program. Concerns have been raised in these areas which are

similar to concerns raised in California.

There are differences in the various areas that have implemented

the RFG Program. The subcommittee needs to explore such differences. To be more specific, it is no small matter that the Clean

Air Act treats California and the rest of the country differently

with respect to the regulation of fuels and fuel additives. This difference dates back over 30 years and was reflected in the provisions of the 1970 Clean Air Act. This difference has also led to

State-mandated fuels in California to an extent not found in other

parts of the country.

It is also clear that different areas of the country have relied on

different oxygenates in the RFG Program. While MTBE has captured the lion’s share of the RFG market, ethanol predominates in

Chicago and Midwestern areas. We need to hear from these areas.

The fuel supply and distribution system also varies in different

parts of the countries, as does the capability to produce different

fuel formulations.

Finally, it is not a trivial matter to look at the environmental

performance of various gasoline blends. The subcommittee mark-up

of H.R. 11 revealed the initial difficulty in attempting to legislate

any provision which seeks to do this.

In short, I believe the subcommittee has a lot of work to do.

Today is a good start, and I look forward to receiving today’s testimony. Again, Mr. Chairman, thank you very much.

Mr. BILIRAKIS. I thank the gentleman.

Mr. Waxman for an opening statement.

Mr. WAXMAN. Thank you very much, Mr. Chairman. I want to

commend you for holding this hearing and also to thank Representatives Pallone, Barrett and Markey for requesting this broader perspective on the MTBE issue.

MTBE use results in serious groundwater impacts in California,

and it is a growing risk in other parts of the Nation as well. My

city of Santa Monica has faced the most serious MTBE contamination of any community in the country. Now, after the contamination, the city imports more than 80 percent of its drinking water

from northern California and the Colorado River.

In short, MTBE leaking from underground storage tanks has

shut down our drinking water well fields, making the drinking

water taste and smell like turpentine.

3

We must be mindful that what happened in Santa Monica could

happen elsewhere, and that is why I am pleased we are looking at

this from a broader perspective.

This subcommittee has examined previously the Clean Air Act

requirement that Federal reformulated gasoline contain oxygen

that is amounting to 2 percent by weight. This provision was included in the Clean Air Act Amendments of 1990 after considerable

debate as a way to increase the use of renewable fuels.

The oil companies chose to meet this requirement with MTBE,

which is not only a nonrenewable but has characteristics that allow

it to migrate through groundwater quickly and make it particularly

difficult to clean up. The Blue Ribbon Panel on Oxygenates and

Gasoline has confirmed that we do not need MTBE to achieve the

air quality benefits of reformulated gasoline.

While the oxygenate requirement of the Clean Air Act has received the most attention in our consideration of the MTBE issue,

simply removing this requirement at a national level won’t solve

our contamination problems.

The oil companies began to move toward increased use of MTBE

long before there was any oxygenate requirement. For instance, in

1986, years before any Reformulated Gasoline Program was established, we had an MTBE production capacity of 4 billion pounds,

and MTBE was used in unleaded gasoline as an octane enhancer

at levels of 2 to 8 percent by volume.

I am interested to hear from our witnesses if the economics

which moved the oil companies toward MTBE in the 1980’s continue to exist. If so, removing the oxygenate requirement may be

meaningless in a national context without ensuring caps on the levels of MTBE use.

For the rest of the country, lifting the oxygenate requirement

could have little or no effect on the amount of MTBE actually used

in gasoline. That is why I think it is important that we seriously

consider the recommendations put forth in the Blue Ribbon Panel

and by the Northeast States.

I also believe we must hold responsible parties accountable. The

oil companies began to use MTBE early on, and they have responded in Santa Monica by paying millions of dollars to secure alternative water supplies. Now, however, the oil companies have

been inconsistent in their commitment to see the cleanup through

completion. This behavior throws the cleanup in doubt and potentially punishes the responsible parties who are willing to do their

share.

I think this is going to be a useful hearing, Mr. Chairman. I, unfortunately, am not going to be able to stay for most of it. But I

know that, at some point, you will have a unanimous consent that

will allow us to submit written questions for the record.

Mr. BILIRAKIS. Without objection, that will be the case. And, additionally, the opening statements of all members of the subcommittee here will be made a part of the record.

Mr. WAXMAN. In that case, I ask my full statement be made a

part of the record.

Mr. BILIRAKIS. Without objection.

[The prepared statement of Hon. Henry A. Waxman follows:]

4

PREPARED STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN CONGRESS

FROM THE STATE OF CALIFORNIA

For the last several years, this subcommittee has been examining the urgent

problem of groundwater contamination by the fuel additive methyl tertiary butyl

ether or ‘‘MTBE.’’ Until today we have largely focused on MTBE’s enormous impact

in California, even though MTBE is a growing concern throughout the nation.

Today’s hearing will focus on the national implications of MTBE use and has been

scheduled at the request of Representatives Pallone, Barrett, and Markey. I’d like

to recognize these members for their leadership and I also want to commend the

Chairman for agreeing to hold today’s hearing.

MTBE use has resulted in serious groundwater impacts in California and is a

growing risk in other parts of our nation. In my district, for example, the city of

Santa Monica has faced the most serious MTBE contamination of any community

in the country. Before MTBE contaminated Santa Monica’s drinking water, groundwater provided 70% of the city’s water supply. Now, after the contamination, the

city imports more than 80% of its drinking water from Northern California and the

Colorado River. In short, MTBE from leaking underground storage tanks has shut

down our drinking water well fields, making the drinking water taste and smell like

turpentine.

It is important to note that the contamination in Santa Monica did not occur due

to some catastrophic event. The contamination occurred as a result of leaking underground storage tanks at gas stations. These storage tanks were no worse than storage tanks found throughout the nation in the districts of every Member of this Subcommittee. We must be mindful that what happened in Santa Monica could happen

elsewhere, and that these tanks leak whether or not MTBE is in gasoline.

This Subcommittee has examined previously the Clean Air Act requirement that

federal reformulated gasoline (rfg) contain oxygenates amounting to 2% by weight.

This provision was included in the Clean Air Act Amendments of 1990, after considerable debate, as a way to increase the use of renewable fuels. The oil companies

chose to meet this requirement with MTBE, which not only is non-renewable, but

has characteristics that allow it to migrate to groundwater quickly and make it particularly difficult to clean up. The Blue Ribbon Panel on Oxygenates in Gasoline has

confirmed that we do not need MTBE to achieve the air quality benefits of reformulated gasoline.

While the oxygenate requirement of the Clean Air Act has received the most attention in our consideration of the MTBE issue, simply removing this requirement

at a national level won’t solve our contamination problems.

The oil companies began to move towards increased use of MTBE long before

there was any oxygenate requirement. For instance, in 1986—years before any reformulated gasoline program was established—we had a MTBE production capacity

of 4 billion pounds and MTBE was used in unleaded gasoline as an octane enhancer

at levels of 2-8% by volume. I am interested to hear from our witnesses if the economics which moved the oil companies toward MTBE in the 1980’s continue to exist.

If so, removing the oxygenate requirement may be meaningless in a national context

without ensuring caps on the levels of MTBE use.

I’ll give you a recent example of why I am concerned about this. The oxygenate

requirement doesn’t even apply in San Francisco, but it has recently been reported

that MTBE is being used at levels twice that which would be required under the

Clean Air Act.

In California, a combination of federal and state action should be able to address

this problem. On March 25, 1999, Governor Davis announced that the State of California would phase out MTBE use in gasoline by December 31, 2002 under state

law. The Governor’s action in combination with federal relief from the oxygenate requirement and guarantees that there will be no backsliding in the air quality benefits of rfg should ensure that there is no further MTBE contamination while air

quality benefits are maintained.

For the rest of the country lifting the oxygenate requirement could have little or

no effect on the amount of MTBE actually used in gasoline. That’s why I think it

is important that we seriously consider the recommendations put forth by the Blue

Ribbon Panel and by the northeast States.

I also believe that we must hold responsible parties accountable. The oil companies began to use MTBE long before there was any federal requirement to do so,

and their leaking underground storage tanks are responsible for the actual contamination. In Santa Monica, the oil companies have paid millions of dollars to secure

alternative water supplies. Now, however, the oil companies have been inconsistent

in their commitment to see the cleanup through completion. This kind of irresponVerDate 11-MAY-2000 11:14 Aug 31, 2000 Jkt 065685 PO 00000 Frm 00008 Fmt 6633 Sfmt 6621 E:\HEARINGS\62976 pfrm01 PsN: 62976
5

sible behavior throws the cleanup in doubt and potentially punishes the responsible

parties who are willing to do their share.

When the House Commerce Committee considered legislation to reauthorize

Superfund on October 13, 1999, I offered an amendment that would have prevented

oil companies from escaping responsibility for MTBE contamination. I am disappointed that this amendment was defeated, but I plan to offer it again when the

legislation is considered on the House floor. We must ensure that EPA has as many

tools as possible to ensure that remediation funding is obtained and that sites are

fully cleaned up.

Again, I thank the Chairman for convening this hearing, I welcome today’s witnesses and I look forward to hearing their testimony.

Mr. BILIRAKIS. Thank you, gentlemen.

The Chair will now continue with his opening statement.

During the subcommittee’s review of legislation pertaining to the

waiver of the Federal oxygenate standard in California, Messrs.

Greenwood and Lazio were deeply involved in raising concerns regarding implementation of the RFG Program and the use of those

oxygenates, particularly MTBE, in areas of the country outside

California. They have continued their constructive dialog with the

subcommittee.

Finally, I would note the early and hard work by Mr. Bilbray to

advance legislation through this subcommittee and to tackle the

many complex issues involved in the RFG Program. Mr. Bilbray

has been a tireless advocate for increasing flexibility in the current

program.

I am going to be blunt in my assessment of the Environmental

Protection Agency’s conduct with respect to the RFG Program and

their effort responding to the concerns of this subcommittee. I don’t

think I have a reputation or image or background of being combative, and I am not very comfortable with my comments, but, at

the same time, I think they have to be made.

In brief, I am appalled at the complete lack of candor and lack

of response that the EPA has demonstrated despite repeated requests by this subcommittee to obtain information relevant to its

legislative duties. The EPA has ignored written requests by the

subcommittee, substantially delayed providing verbal briefings, and

avoided, seemingly at all costs, giving direct and complete answers.

The testimony that EPA will present today, which was received

for the first time last night at 7:45 p.m., basically rehashes some

of the same general information provided to the subcommittee last

May. In fact, several paragraphs are lifted from Mr. Perciasepe’s

May 6, 1999, statement, either verbatim or with minor changes.

As it did last May, EPA again ignored specific requests for information from the subcommittee in its letter of invitation, including

defining differences and implementing—and I think this is just

foundational—and implementing of the RFG Program in various

areas of the country, describing how air quality benefits are accounted for in State implementation plans and explaining the extent of current statutory authority available to EPA to phaseout or

curtail the use of any specific oxygenate. No wonder its testimony

was delivered in the dark of night.

Second, EPA failed to comply with the document requests submitted to the agency 15 days ago with respect to its consideration

of the California waiver request. EPA indicated it will only provide

the documents several days after this hearing. Thus, EPA is denying members of this subcommittee the opportunity to conduct leVerDate 11-MAY-2000 11:14 Aug 31, 2000 Jkt 065685 PO 00000 Frm 00009 Fmt 6633 Sfmt 6602 E:\HEARINGS\62976 pfrm01 PsN: 62976
6

gitimate oversight of its implementation of laws and this subcommittee’s jurisdiction. To compound error, EPA did not indicate

its intent to not produce the documents until less than 2 days ago.

Included in this document request was a request for information

on EPA’s widely reported effort to ban or curtail the use of MTBE

through authorities contained in the Toxic Substances Control Act.

Third, despite assuring the subcommittee last May that EPA

would not waste the subcommittee’s time with respect to obtaining

information on California’s request for a waiver, EPA still refuses

to give any firm date by which it will decide matters concerning

this waiver.

Mr. Perciasepe’s statement indicates only that we hope that ‘‘We

hope to complete our assessment by early summer.’’

Administrator Perciasepe, this is difficult for me to say—you

know me I think over the years—but given your past performance

in providing information to this subcommittee, I guess I just don’t

have any faith that you will comply with this vague commitment.

The fact of the matter is the EPA has not devoted sufficient resources to the consideration of this waiver. For the first 5 months

it had the waiver under consideration, EPA devoted only 80 combined staff hours to its consideration, basically one person working

half a day per week. In the last 6 months, EPA has devoted more

effort, but not much more. Over the last 6 months, the combined

effort by all EPA personnel, as I understand it, to review all legal

and technical matters concerning the waiver request amounts to an

average of one person devoting less than half a normal workweek,

81⁄2 hours to the effort.

Finally, I find it regrettable that, even at this late date, EPA

cannot come clean with respect to what it has done or rather hasn’t

done and what it supports or doesn’t support with respect to RFG.

EPA today says it supports national legislation to address this matter. Yet it provides absolutely no detail on this very complicated

matter.

EPA cites the work of the Blue Ribbon Panel and yet does not

indicate what specific recommendations it supports or doesn’t support.

The EPA mentions administrative activity but provided only an

oral briefing after repeated requests and has not supplied one scrap

of paper to the committee detailing its activity.

In short, EPA has given no indication that it actually wants to

fix anything regarding the RFG Program within the conceivable future.

The first assessment of the California waiver request hopefully

will be done this summer, they tell you, but it is subject to public

comment period. Most informed sources believe any action under

the Toxic Substances Control Act will take years. Administrative

flexibility options under consideration are not available, apparently, to the public or to the Congress.

Last May, the administrator stated that, once the agency had the

recommendations from the Blue Ribbon Panel, ‘‘it is important that

we work with the States and coordinate with the Congress over the

next 3 to 4 months.’’

The recommendations of the Blue Ribbon Panel were published

last July. This fact, in addition to everything cited above, makes it

7

difficult for many of us to believe that EPA is at all sincere when

Mr. Perciasepe states we are committed to working with the Congress. To me, this rings just like another nice-sounding throwaway

line. And, of course, he will have the opportunity to prove me false

in that regard.

The Chair now recognizes Mr. Pallone for an opening statement.

Mr. PALLONE. Thank you, Mr. Chairman. And I want to thank

you and appreciate your following up on your commitment to myself and Representatives Barrett and Markey to hold the hearing

today on the national reformulated gasoline, RFG, issue. And I also

thank Chairman Bliley, who also agreed to hold the hearing.

I also appreciate your having invited Berry Grossman from

Oxybusters, which is headquartered in New Jersey, and Jason

Grumet from NSCAUM, which represents New Jersey, among

other States. I look forward to hearing from all of our witnesses;

and, of course, I am particularly pleased to see my colleague, Mr.

Franks from New Jersey.

What I want to hear, of course, is the analysis of the Nation’s

Reformulated Gasoline Program and related issues, including the

national security implications, ethanol issues, California’s waiver

status, and environmental protection and human health impacts.

Ultimately, I believe we need to pass national legislation. Several

Members in both Houses of Congress have introduced bills to address MTBE as recently as Tuesday of this week. I see my other

friend from New York, Mr. Forbes, introduced a bill that also

would help municipalities fund MTBE cleanups, which I think is

very important. So, clearly, this is an issue receiving a lot of bipartisan attention across the Nation, both in the House and in the

other body.

Last May, I introduced a comprehensive national bill in the

House that addresses the reformulated gasoline issue, that is H.R.

1705. My bill contains many of the provisions that are highlighted

in the Blue Ribbon Panel report and in the principles presented by

an unusual coalition which is represented by NSCAUM, the American Lung Association and the American Petroleum Institute. I look

forward to working with members on both side of the aisle, with

these groups, most of whom are represented here today, to pass national legislation in the near future.

I believe strongly that we have identified a problem, that we

should address it as quickly as possible. Even though we may not

have all the science, if we wait the problem will only become worse.

We have identified some reasonable and practical courses of action

that can be taken now.

As I have said and as my bill illustrates, I believe we ultimately

must address this program comprehensively. Just banning or reducing the use of MTBE without waiving the oxygenate requirement would create undue burdens on certain regions and would address only one aspect of the overall problem and issue before us.

Waiving the oxygenate requirement provides flexibility to use other

oxygenate or eliminate oxygenate where environmentally sound, to

do so without reeking havoc on the ethanol industry and our economy’s national security. I believe many of our witnesses will underscore these facts.

8

Mr. Chairman, many groups have stated any changes we make

must not result in compromises or losses in air quality protection

benefits that have been achieved. H.R. 1705 contains language to

ensure air quality protection at current levels.

EPA’s Blue Ribbon Panel recommends that the current Clean Air

Act requirement to require 2 percent oxygen by weight in RFG

must be removed in order to provide flexibility to blend adequate

fuel supplies in a cost-effective manner while quickly reducing

usage of MTBE and maintaining air quality benefits. So the panel’s

recommendations echo the provisions in H.R. 1705 quite closely.

The panel also recommends various studies, and H.R. 1705 asks

the NAS to study the effects of all oxygenates and their by-products.

The Northeast States for Coordinated Air Use Management,

NSCAUM, who we will hear from shortly, has repeatedly emphasized the importance of congressional action to lift the 2 percent oxygen standard for the whole country, because the one-size-fits-all

does not work. Tosco, which has testified before this subcommittee,

has informed me that the oxygenate requirement and a phasedown of the MTBE must be addressed simultaneously.

So, Mr. Chairman, I urge my colleagues to work together to be

proactive and pass bipartisan legislation soon. I will continue to

push to see that this happens, and I hope our witnesses will shed

some light as to the best way to accomplish this goal to the Nation

as a whole.

Thank you again for holding the hearing today, Mr. Chairman.

Mr. BILIRAKIS. I thank the gentleman.

Dr. Ganske.

Mr. GANSKE. Thank you, Mr. Chairman. I am happy you have

scheduled this hearing today. With 60 Minutes doing an episode on

MTBE water contamination, national newspapers giving attention

to MTBE contamination, several Members of Congress are taking

very vocal positions on this issue, and I am looking forward to their

testimony.

Mr. Chairman, reformulated gasoline does not contaminate

water. Reformulated gasoline cleans the air. MTBE contaminates

water. If you want clean air, use oxygenated gasoline. If you want

clean water, ban MTBE. We don’t have to choose between clean air

and clean water. If we switch from MTBE to ethanol, we can have

both.

I know I sound like a broken record to many of you, so now I

want to show you how bad MTBE is. You each have before you two

vials, one filled with MTBE, the other with ethanol. Go ahead and

smell each vial, if you can. MTBE smells worse than paint thinner.

It takes only a teaspoon of MTBE to make an olympic-size swimming pool smell and taste like paint thinner, and this contains several teaspoons.

Last month, the Iowa Department of National Resources issued

a report that showed 32 percent of Iowa groundwater samples had

MTBE levels of at least 15 micrograms per liter. What is worse is

29 percent of Iowa’s groundwater samples had MTBE concentration

levels above the level at which EPA issues a drinking water advisory. Think about this. There is no MTBE sold and used in Iowa

9

today. Yet, 29 percent of the groundwater samples qualify for a

Federal drinking water advisory due to MTBE contamination.

How is that? Well, probably because much MTBE comes out of

the tail pipes of cars just driving through Iowa. That shows how

contaminating this stuff really is. Think about the sample of MTBE

in front of you and its ability to contaminate several olympic-size

swimming pools. We need to address the issue now.

The RFG Program works. Whether one uses MTBE or ethanol as

an oxygenate, the emissions reductions are the same. But, with

ethanol, there is no groundwater contamination, not a single reported incident.

So, Mr. Chairman, I want to address some of the myths about

ethanol and clear them up.

Myth: Ethanol is a dirty fuel that harms the environment. Fact:

Ethanol is a clean, biodegradable fuel that achieves emissions reductions equal to other oxygenates.

Myth: Ethanol is not energy efficient to produce. Fact: Study

shows show that one gallon of ethanol generally provides 25 to 40

percent more energy than is required to grow corn and process it

into ethanol.

Myth: Ethanol cannot satisfy the oxygen demand of the RFG Program itself. Fact: To replace MTBE, the ethanol industry must

produce slightly more than 3 billion gallons each year. Recently,

several new facilities have come on board, so that pushes our capacity today beyond 2 billion gallons.

Myth: Ethanol is difficult and expensive to transport from the

Midwest to the coast. Fact: The Department of Agriculture report

says, given a period of 3 to 5 years, there appears to be no transportation impediment to the use of ethanol as a substitute for

MTBE. I must say, Mr. Chairman, I find it hard to believe that

transporting MTBE from Saudi Arabia is any more cost effective or

difficult than transporting ethanol from Iowa.

Myth: Ethanol will ruin modern vehicle engines. Fact: Studies

have shown that the use of ethanol does not result in any mechanical problems.

Myth: Blending ethanol is not practical from a refiner’s viewpoint. Fact: Mobile Corporation published a brochure in which it

says ethanol is safe to use in any type of engines and keeps fuel

injectors clean. Mobile also said using ethanol blended fuel is one

of the easiest ways you can help reduce air pollution and dependence on foreign oil.

This issue is very important, Mr. Chairman. Thank you for holding this hearing.

There is an alternative to this stuff, MTBE. It is ethanol, and I

think that we ought to use it.

Mr. BILIRAKIS. I am not surprised that is your position.

Mr. Green.

Mr. GREEN. Thank you, Mr. Chairman.

Before I get started, if Dr. Ganske can provide us a six-pack of

this ethanol down at this end of the table, we would appreciate it.

Mr. GANSKE. At the end of this hearing, you may need it.

Mr. GREEN. I don’t know. I don’t know. Before the hearing, we

might need more than a six-pack.

10

I appreciate, Mr. Chairman, you calling this hearing. And since

my colleagues Joe Barton and Ralph Hall are not here, March 2

is Texas Independence Day. And, in Texas, we are celebrating it

because Texas won independence against overwhelming odds

against the Republic of Mexico in 1836. I appreciate commemorating that, Mr. Chairman, today. Hopefully, any similarities between that and this hearing are not the case.

I appreciate the opportunity to hear the witnesses today and engage in what I hope will be a productive exchange on the Reformulated Gasoline Program. Looking at the witness list, I can see we

are going to have a lively debate, and our panelists and members

are not going to agree on too many things this morning.

First of all, there is nothing that makes my car or truck run that

I want to drink, whether it smells good or not. Yet I think there

is still one thing we can all agree on, that the RFG Program has

resulted in tremendous gains in our air quality and the health of

millions of Americans. In fact, following the implementation of

phase one of the RFG Program in 1995, the EPA reported a benzene reduction of 40 percent and an overall air toxins reduction of

30 percent, twice the minimum requirement. EPA has attributed

over two-thirds of this overcompliance to the use of oxygenates in

reformulated gasoline.

California’s Air Resources Board reported similar findings for the

State’s cleaner burning gasoline and concluded that the annual reductions in cancer incidence due to toxic air remissions are between 40 and 50 percent. Let me repeat that the incidence of new

cancer was reduced by 40 to 50 percent.

While this outcome is enhanced by the more stringent gasoline

formula used in California, 95 percent of the State’s gasoline contained MTBE in 1998.

Furthermore, the California Air Resources Board predicted the

RFG Program from 1995 to 2000 reduced the risk of developing

cancer from exposure to benzene and other toxic emissions by 20

to 30 percent. The use of Federal RFG after 2000 will reduce the

risk of developing cancer from exposure to benzene and other air

toxins by 30 to 40 percent.

Some have suggested that these tremendous gains in air quality

should be abandoned because MTBE has been found in drinking

water. Members of the subcommittee and others testifying today

have plans to dramatically alter the RFG Program. If we are going

to make the change in the RFG Program, we must maintain current air quality standards. Anything else shouldn’t be acceptable.

If we are going to make a change in the RFG Program, it must

be cost effective. Our witness today from the Department of Energy

will testify that eliminating MTBE will cost the refining industry

between $2 billion and $3 billion. This witness states that the production cost would increase by a minimum of 3 or 4 cents per gallon.

And I have a copy of an article in today’s Houston Chronicle that

talks about—and this is in Houston where our gas prices typically

are lower—that a gas price of $2 a gallon may not be too far down

the road.

This witness will go on to say, and I quote, phasing MTBE out

of the gasoline is equivalent to the impact to gasoline supplies of

11

losing, over whatever the phase-out period, some 400,000 barrels a

day of gasoline production capacity or closing four or five large refineries. A phase-out that ultimately leads to the ban on MTBE

may also affect the ability of the U.S. gasoline market to draw gasoline supplies from Europe, the major source of our price-sensitive

gasoline imports, since these refiners count on the use of MTBE to

some degree as well.

At a time when all consumers, particularly those in the Northeast, are suffering from the increase in gasoline costs, we must be

cautious in implementing policies that might increase this price of

gas even more than currently. Some are suggesting that the increase in cost to consumers could be high. For example, when California discussed phasing out MTBE, studies were done to determine how the phase-out would impact price and supply. The California Energy Commission study estimated the cost of phasing out

MTBE is between 5 and 7 cents a gallon.

If we are going to make a change in our RFG Program, we must

not ignore the problem of leaking fuel tanks. It would also be beneficial if our witnesses could share their thoughts on the fact that

gasoline contains some very dangerous carcinogens, although

MTBE is not one of them, even considering what 60 Minutes said.

Where MTBE is found, these are also found. So even if you limit

MTBE, if you don’t eliminate your leaky storage tanks, you will

still have parts of that gasoline without MTBE in your water, including the carcinogens that they carry with them.

As we think how to proceed, I urge my colleagues to approach

this with caution and with thorough and thoughtful debate. In our

rush to address the concerns about MTBE, we hopefully will not

create a bigger problem. The EPA’s Blue Ribbon Task Force and

its recently issued report highlights the needs to act with due diligence.

Mr. BILIRAKIS. Please summarize.

Mr. GREEN. Mr. Chairman, I will be glad to submit what I have

from the Blue Ribbon Task Force into the record because I have

some questions based on that today.

[The information referred to follows:]

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Mr. GREEN. Again, we need to make sure that these industries

have developed MTBE because Congress mandated the 2 percent

standard; that if we are going to replace it we should make sure

that they, as best as possible, can respond to whatever other additive we need.

Mr. BILIRAKIS. The gentleman certainly has a very big interest

in this issue, and I appreciate that. We have a very lengthy program here today, and we have got to stay within that 5-minute

rule.

Mr. GREEN. I understand, Mr. Chairman.

Mr. BILIRAKIS. Mr. Upton, opening statement.

Mr. UPTON. Thank you, Mr. Chairman. And I will not use much

of my time. I just want to thank you for having this hearing.

I want to state for the record that I support oxygenated fuel, but

I do not support the use of MTBEs. As I see it, this alleged cure

is worse than the disease, and we need to get this stuff out of every

gas tank.

I am glad to see Mr. Franks here. I am a cosponsor of his legislation which accomplishes this. I guess, just in commenting to my

friend from Texas, Mr. Green, EPA’s Alamo might be right here.

I yield back my time.

Mr. BILIRAKIS. I thank the gentleman.

Mr. Barrett.

Mr. BARRETT. Thank you, Mr. Chairman.

I want to personally thank you for agreeing to hold this hearing.

This is an issue that I have been involved with now for over 5

years, and this is basically the day I have been waiting for, a

chance to talk about the impact of MTBE. I was first exposed to

this issue back in January 1995.

I represent Milwaukee, Wisconsin, one of the communities that

is required to use reformulated gasoline. MTBE was the initial

mixture that was used in my community. But within weeks of the

start of the program, citizen complaints of the fuel causing headaches, dizziness and nausea began pouring into the United States

EPA, my office, and the offices of other Members of Congress in

southeastern Wisconsin.

We asked the EPA to come to the community, which it did, and

had a very, very long and contentious hearing in Milwaukee with

many, many complaints from the citizens about their health concerns.

Trying to give the most positive reading to the response of the

EPA, it was along the lines of, you don’t know what you are talking

about. There is nothing wrong with it.

As a result of that hearing and the public outcry, though, what

happened was ethanol was substituted for MTBE in my community

and the uproar died down. Obviously, we didn’t hear much about

it on the national level until several years later when we started

hearing about the groundwater contamination in California and

other States.

What concerns me greatly today is, having sat through that hearing and really in many ways the condescending attitude of, well,

it is just where this Midwestern town where this anomaly is occurring, so we can ignore it. But I look at the memorandum, the April

1987, memo on EPA letterhead prepared for a division director

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briefing on MTBE, and that the health effects of MTBE cited in

this memo are, ‘‘chronic inhalation toxidity including neurotoxic,

hematologic and oncogenetic effects.’’

This was never told to us at that meeting in Milwaukee. This

was the first time that I have learned of this. This memo is from

1987. And there were 600 people in that room, and no one from

EPA acknowledged that this memorandum was in existence. Again,

nothing was noted until several years later when the groundwater

problem occurred.

But this same memo, in the same memo, the author writes, ‘‘It

is possible that this problem could rapidly mushroom due to leaking underground storage tanks at service stations. The tendency for

MTBE to separate from the gasoline mixture into groundwater

could lead to widespread drinking water contamination.’’ Again,

this is from the April 1987, memo.

I am totally baffled as to why the EPA, the agency that is responsible for clean air and clean water, basically said for a decade

that there was no problem, and you have an April 1987, memo saying there could be a problem. Those of us in good conscience who,

frankly, trusted the EPA and were told don’t worry, there is not

a problem. There is something bizarre in your community. We are

getting no complaints from any other part of this country. To not

let the elected officials from that area know that this memo was

in existence to me is unconscionable.

I look forward to this hearing to get the answers from the EPA

as to why we were not told of this when we, the elected officials,

were standing in front of 600 angry constituents and we are told

to tell them there is no problem.

I yield back the balance of my time.

Mr. BILIRAKIS. Mr. Greenwood for an opening statement.

Mr. GREENWOOD. Thank you, Mr. Chairman.

I also want to thank you for holding this hearing today to discuss

the national implementation of the Reformulated Gasoline Program

and the impact of oxygenates required in RFG on human health

and the environment.

As you know, the Federal RFG Program established in the Clean

Air Act Amendments of 1990 and implemented in 1995 has provided substantial reduction in the emissions of a number of air pollutants for motor vehicles, most notably volatile organic compounds, which are precursors of ozone, carbon monoxide, and mobile source air toxics like benzene, in most cases resulting in emissions reductions that exceed those required by law.

Employed to achieve the reduced emission levels is RFG containing 2 percent oxygen by weight. Currently, more than 85 percent of RFG contains the controversial oxygenate methyl tertiary

butyl ether, MTBE, and approximately 8 percent contains ethanol,

a domestic fuel-blending stock made from grain.

As we all know, the unfortunate side effect of the use of MTBE

is its likelihood to contaminate ground and surface water because

of its persistence and its mobility in water. That has led to an increasing number of detections of MTBE in our drinking water, with

between 5 percent and 10 percent of drinking water supplies in

high oxygenate use areas showing at least detectable amounts of

MTBE.

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In my home State of Pennsylvania, our Secretary of Pennsylvania’s Department of Environmental Protection has indicated to me

that MTBE has undoubtedly made its way into the surface and

groundwaters of Pennsylvania and that there are several sites

where MTBE has contaminated private drinking water wells above

Pennsylvania’s clean-up standards.

This reality, combined with the results of the summer of 1999

United States Geological Survey study, which sampled a number of

sites randomly in my district, including Bucks and Montgomery

Counties, a small portion of Berks County and parts of New Jersey

where RFG has been sold since 1995, alarms me.

Of the 18 wells sampled, seven showed levels of MTBE around

detectable levels. The levels found were very low, less than one

part per billion, and not yet, and I emphasize yet, a health or environmental concern.

Regardless, the findings do indicate that MTBE could be making

its way into drinking water supplies from nonpoint sources such as

deposition from the air or residential gasoline spills. This is unacceptable.

In Pennsylvania, almost all RFG contains MTBE since ethanol is

not a cost-effective oxygenate in our area. It is for this reason that

I introduced legislation, H.R. 3449, permitting the States referred

to in section 184(a) of the Clean Air Compact, and those States are

Connecticut, Delaware, Maine, Maryland, Massachusetts, New

Hampshire, New Jersey, New York, Pennsylvania, Rhode Island

and Vermont, to petition the Environmental Protection Agency’s

administrator to waive or reduce the oxygenate requirement in

RFG.

Furthermore, my legislation attempts to ensure that the clean

air benefits achieved to date and attributed to the use of RFG will

not be eroded by the waiver of the 2 percent oxygenate requirement. Overall, my approach will provide States and refiners with

the necessary flexibility to cost effectively reduce MTBE from RFG.

Once again, Mr. Chairman, I thank you for holding today’s hearing. I look forward to working with the committee to craft a solution to this looming national crisis.

Mr. BILIRAKIS. I thank the gentleman.

Mr. Stupak.

Mr. STUPAK. I waive my opening, Mr. Chairman.

Mr. BILIRAKIS. I appreciate that.

Mr. Bilbray.

Mr. BILBRAY. Thank you, Mr. Chairman.

Mr. Chairman, I want to thank you for not only holding this

hearing but for your patience with my constant reminders that this

issue is still hanging out there and has been hanging out there

since I first introduced this piece of legislation in 1996.

Mr. Chairman, I want to commend my colleague from New Jersey, because I think he articulated quite clearly what the real issue

is here. While some of our colleagues go back and forth about this

product or this substance, and refer to the problem as just some

substance that is introduced into the gasoline, I think my colleague

from New Jersey has pointed out that the real problem is not ether

or ethanol. The real problem is a Federal mandate that is not reVerDate 11-MAY-2000 11:14 Aug 31, 2000 Jkt 065685 PO 00000 Frm 00029 Fmt 6633 Sfmt 6602 E:\HEARINGS\62976 pfrm01 PsN: 62976
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flected in the scientific data of the year 2000. I want to thank him

for that.

I think that what we need to point out, that in 1990—and I don’t

know if you were here in 1990—but I am sure the gentleman probably voted for this requirement because it was the best science we

had available. It was the best approach available in 1990.

Now, I wasn’t here. I was sitting on the State Air Resources

Board of the State of California, and we were developing strategies

and reviewing the Federal mandates. And because we had the

flexibility in California to look at the available technology by 1992,

it became obvious to scientists that the 2 percent mandate was obsolete, and was not only obsolete, it was also counterproductive.

It is not just an issue of groundwater. It is the fact that I would

ask my colleagues here, is the 2 percent mandate some magic number? What scientific data do we have to justify a 2 percent mandate, rather than a 3 percent or 1 percent by weight? The point is,

I think as the gentlemen from New Jersey pointed out, it is time

for us to review and update this mandate.

Now, we can blame the EPA, and we can blame the manufacturers of different substances. But we are working around the problem. We need to look to ourselves. There was a good effort made

here in Washington in 1990. It was the best we could do at that

time. Since 1994, I have been trying to get Washington to revisit

this thing and upgrade; and I thank the gentleman from New Jersey for pointing that out.

Mr. Chairman, when it comes down to this battle of where we

go with this, I just ask us to take a look at the fact that my bill

was first introduced long before the MTBE issue was brought up.

That bill was introduced because of air pollution concerns.

The right type of technology, the right results or outcome from

oxygenates is what we should be shooting for. And the best scientists around the world have come to the conclusion that there are

times that the 2 percent mandate is not only not productive, it is

destructive to the environment, not just the water but the air.

So I am asking us today to take a look at the challenge of doing

better. The biggest problem with this town is not that it tries new

things, and it is not that this town makes mistakes. The problem

with this town is that it doesn’t have the bravery or the intestinal

fortitude to go back and say we might have made a mistake, let’s

do it better.

Now, I am not saying you made a mistake in the year 1990. I

am saying it is a mistake that we have waited since 1994 to update

this regulation. The 2 percent mandate is an air pollution and

water pollution issue. The mandate is the problem, Mr. Chairman,

not ether or ethanol.

Now, I ask you to just consider, that we waited a long time for

this report from the EPA’s Blue Ribbon committee. This committee

report that we awaited so long before we took action made it clear

that, within California, lifting the oxygen requirement now would

result in greater flexibility to maintain and enhance the regulations, the emissions reductions, especially as California goes to its

phase 3 gasoline. Outside of California, though, it says we need to

make sure we have the protocols and that we have the standards

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and that we have the systems in place to make sure that the pulling off of the 2 percent doesn’t mean a drop-back.

I challenge our panels and the members here to take this finding

from the Blue Ribbon committee and talk about what we have to

do in the rest of the country to be able to give the air pollution and

water pollution safeguards for the rest of the Nation that the Blue

Ribbon committee and EPA has already identified for California.

I ask us not to be fighting back and forth between one industry

and another. Texas should not need to fight the Midwest. What we

should be talking about is how do we make sure that the air and

the environment gets cleaned up.

Let me remind you, this is the Clean Air Act. This isn’t the corporate subsidy act. This isn’t the corporate monopoly act. This is

the Clean Air Act. Can we talk about the air and the environment

first and talk about corporate profits afterwards?

Thank you, Mr. Chairman. I yield back.

Mr. BILIRAKIS. Mr. Shadegg for an opening statement.

I would point out that Mr. Shimkus was actually the first member in this room, but he is not on the subcommittee; and for that

reason, he has to wait his turn.

Mr. Shadegg.

Mr. SHADEGG. I am sure Mr. Shimkus will enlighten us when he

does get his turn.

Mr. Chairman, I will be brief, and I will submit my opening

statement. But let me simply join the others in commending you

for holding this hearing. It is extremely important that we proceed

on this topic and for having the courage and fortitude to get started

on this issue.

I also want to simply say in my statement itself that, like many

other States, my congressional district is under the mandate to use

oxygenated fuels, and MTBE in fact is the oxygenate that is being

used in my congressional district in Phoenix, Arizona.

Like many other areas where MTBE is currently in use, we have

begun to discover that MTBE is being found in our water supply,

and there is deep concern about that. Indeed, in the desert Southwest, in Arizona where I live, water is vital to our survival, and

we simply cannot afford to allow our water supply to be polluted.

With that, Mr. Chairman, let me simply say I want to associate

myself with the remarks of my colleague from California, Mr.

Bilbray. He has been a leader in this fight from the outset. I have

tried to support him at every turn. California is a neighboring

State. The reality is that California has discovered how to produce

cleaner fuel that reduces the air pollution more than the mandated

system that we have in place right now.

I think the remarks he just made illustrating that looking backward and pointing blame at the EPA or others is perhaps alluring

and may make for good political points, but the challenge for us is

to look forward and to look for how we solve this problem.

I think, importantly, in that area, it is important that we look

at what our limitations are. I would suggest that our limitations

are that it takes longer to pass legislation that specifies how specifically you are to clean the air than science moves. And in point

of fact, that is what we discovered.

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The RFG Program was well intended. But by specifying the particular way in which the air had to be cleaned and the particular

materials that had to be used to clean it, what we did is mandate

a single solution, and science has now proven that that was a bad

idea.

I think we need to recognize the limitation of the U.S. Congress

in moving legislation quickly enough. I think we ought to recognize

that science moves faster in this area than we do. I think what we

need to do is set standards but not prescribe solutions and not tell

the industry how to achieve these goals.

I think Mr. Bilbray has pointed out quite accurately where there

are circumstances where the 2 percent may be quite appropriate

and circumstances where 2 percent may be very inappropriate.

I think we need to make sure that, as we move forward, we recognize our limitations and we act responsibly and we recognize

that science can deal with these problems better than we can legislatively.

With that, Mr. Chairman, I yield back.

Mr. BILIRAKIS. Thank you.

[The prepared statement of Hon. John Shadegg follows:]

PREPARED STATEMENT OF HON. JOHN B. SHADEGG, A REPRESENTATIVE IN CONGRESS

FROM THE STATE OF ARIZONA

Thank you, Mr. Chairman. I commend you for scheduling today’s hearing.

My colleague Congressman Brian Bilbray (R-CA) has been a leader in bringing

the problems of methyl tertiary butyl ether (MTBE) in California to the attention

of the Congress and this committee. Now, with the recent 60 Minutes piece on

MTBE contamination in ground water, we see that the MTBE problem is not confined to California.

Indeed, my state of Arizona has experienced incidents of MTBE contamination in

both ground water and in lakes throughout the state. It is imperative that Arizona

and other states be given the power and flexibility to address this potential health

risk to their citizens. Unfortunately, federal regulations hamstring Arizona’s ability

to resolve this challenge in a manner which best suits her local needs and concerns.

I believe that Congress, through the Clean Air Act of 1990, erred in mandating

the manner in which states and localities must meet air standards instead of setting

the air quality goal to be achieved. By including a two-percent oxygenate requirement in the federal reformulated gasoline (RFG) standard, the federal government

has inhibited Arizona and other states from exercising the flexibility needed to solve

their own local air quality problems in ways which best meet their needs.

MTBE is a potentially dangerous pollutant which presents more health risks by

its presence in our drinking water than it offers in air quality improvements. Because of the federal oxygenate requirement, however, Arizona is left with only one

alternative to MTBE in its RFG program; ethanol. Although ethanol offers some air

quality benefits, its negative aspects outweigh its positive qualities in Arizona.

First, ethanol is considerably more expensive than alternative RFGs, and this cost

could rise if use of MTBE, its major competitor in the oxygenated fuels area, is reduced or eliminated. Second, because of ethanol’s extreme volatility in hot weather,

it is entirely unsuited to Arizona’s needs, particularly in the summer when temperatures regularly reach 120 degrees Fahrenheit.

Mr. Chairman, it is imperative that Congress remove the two-percent oxygenate

requirement and enable states to address the health concerns posed by MTBE in

a cost-effective manner commensurate with the differing conditions and needs of individuals states. I plan to introduce legislation to this effect.

Again, I thank you, Mr. Chairman, for holding this important hearing, and I look

forward to hearing the testimony of the panelists.

Mr. BILIRAKIS. Finally, Mr. Shimkus for an opening statement.

Mr. SHIMKUS. Thank you, Mr. Chairman. I thank you for letting

me join your committee today. I do serve on the Finance and HazVerDate 11-MAY-2000 11:14 Aug 31, 2000 Jkt 065685 PO 00000 Frm 00032 Fmt 6633 Sfmt 6602 E:\HEARINGS\62976 pfrm01 PsN: 62976
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ardous Material, so maybe the hazardous material aspect of my

work falls in line with this hearing.

I would ask unanimous consent that my full statement be submitted for the record.

Mr. BILIRAKIS. Without objection. And your name is not

Shewmake, it is Shimkus of course.

Mr. SHIMKUS. That is what my mom calls me, but I am called

a lot of things here in Washington, so I can respond.

But, again, I do appreciate it; and I will summarize.

I want to make sure that I welcome Director Skinner from the

Illinois EPA. He is a constituent of mine, and he has worked in the

Environmental Protection Agency and those issues around Illinois

for many, many years, and he is going to testify today. So I want

to welcome Director Skinner. I know he is somewhere around here.

And, also, I want to draw my colleagues’ attention to Dr.

Graboski, who is going to be in the fourth panel. If you want to listen to a scientist who has studied these issues, I think you will find

his testimony and his answers to the questions quite enlightening.

I am going to just end by saying what we have heard in the

opening statements so far is that MTBE pollutes groundwater. The

oxygenated program is good for clean air. And I will echo the comments of my colleague, Dr. Ganske, who has helped work with me

and helped me get on this committee or hearing. Especially with

the oil shortages, the high prices, with the renewable resource, you

know ethanol is a great answer. We still have to keep in the mix

of cleaner air, and we are going to fight to make sure that is part

of our clean air portfolio.

With that, Mr. Chairman, I yield back my time.

Mr. BILIRAKIS. I thank the gentleman. I know he is very interested in the subject, and it is good to have him here with us.

[Additional statements submitted for the record follow:]

PREPARED STATEMENT OF HON. CLIFF STEARNS, A REPRESENTATIVE IN CONGRESS

FROM THE STATE OF FLORIDA

Thank you, Mr. Chairman. I am pleased that we are moving forward on this important issue. We must address the problems that have resulted from the use of reformulated gasoline with oxygenates.

Problems with MTBE must be resolved. Clean air is a priority in our nation, but

we must also consider the consequences of adding oxygenates—like MTBE to gasoline. As we know, one such consequence has been groundwater contamination. Common sense tells us that the solution to one problem should not be the cause of another.

MTBE has raised important questions that must be answered; such as how useful

are oxygenates in gasoline? What methods if any are being developed for removing

MTBE from groundwater supplies? Are the studies there to prove that oxygenates

actually improve the air quality?

While I support environmental performance standards for states and industries,

I do not support coupling those performance standards with unreasonable mandates. An unreasonable mandate to me is a mandate that hasn’t been studied before

it is implemented. An ounce of prevention in this case could have prevented a pound

of cure. I do not believe that the figures are there to support using oxygenates in

gasoline.

My hope is that eventually all fifty states will be given the flexibility to meet

Clean Air requirements without the oxygenate mandate. From articles and studies

that I have reviewed, I have found very little if any evidence to show that the

oxygenates actually improve the air quality.

One question that I am particularly curious about is the safety of our gasoline

storage tanks. I hope that our panel members will be able to answer what role

faulty gasoline tanks have played in this situation. This issue, in my opinion, is inVerDate 11-MAY-2000 11:14 Aug 31, 2000 Jkt 065685 PO 00000 Frm 00033 Fmt 6633 Sfmt 6621 E:\HEARINGS\62976 pfrm01 PsN: 62976
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separable from the reformulated gasoline issue. We must insure that we are diagnosing the whole problem and not simply one of the symptoms of the whole problem.

Mr. Chairman, I am pleased that we are holding a hearing on this important

issue.

Thank you.

PREPARED STATEMENT OF HON. LOIS CAPPS, A REPRESENTATIVE IN CONGRESS FROM

THE STATE OF CALIFORNIA

Thank you, Mr. Chairman, for holding this hearing. As you know, this is an issue

of great importance to my constituents on California’s Central Coast.

While I understand the environmental benefits of the reformulated gasoline (RFG)

program, particularly the significant air quality improvements achieved as a result

of the program, I am very concerned over the continued use of a particular oxygenate used in the program, methyl tertiary butyl ether (MTBE).

MTBE poses a real and serious risk to public health. MTBE has been identified

by the federal Environmental Protection Agency (EPA) as a possible human carcinogen that has contaminated groundwater supplies nationwide. In my home state

of California this is particularly disconcerting, as a large portion of the state’s population relies on groundwater for its source of drinking water. Just today, my hometown paper reported on traces of MTBE contaminating groundwater in Cambria,

California.

As a result of the significant risk to the state’s water supply, Governor Davis

issued an executive order to phase out MTBE by the year 2002. To comply with the

Governor’s mandate, California has requested a waiver by EPA of the oxygenate

content requirement in the federal Clean Air Act.

California already leads the nation in air pollution control programs. We already

have the nation’s strongest ‘‘cleaner-burning’’ gasoline standards, which are stronger

than federal clean air standards. California has adopted a performance-based program that allows gasoline refiners to use innovative fuel formulas to meet clean air

requirements—without mandating potentially harmful additives such as MTBE.

I am especially interested to hear the testimony of Robert Perciasepe, Assistant

Administrator for Air and Radiation for the EPA. I am concerned about a recent

statement made by Mr. Perciasepe in response to California’s request for a waiver

from the oxygenate mandate. In a letter to the California Environmental Protection

Agency, Mr. Perciasepe indicated that it is the hope of EPA to complete an assessment of the request by early summer. This is very disappointing. I cannot emphasize enough how important it is for EPA to reach a final determination well before

this proposed time frame. Our state just cannot wait until summer. The state of

California originally submitted its waiver request in April, 1999. Gasoline refiners

need to make crucial business decisions very soon on the kinds of investments that

would be required to meet the oxygenate mandates. If they are not given enough

lead time to make these changes, there could be a serious disruption in gasoline

supply in California, which in turn would raise gas prices beyond their already astronomical level.

I look forward to hearing from our witnesses today. It is also my hope that EPA

will do everything in its power to expedite California’s oxygenate waiver request and

I am committed to working with the Agency to this end.

PREPARED STATEMENT OF HON. JOHN D. DINGELL, A REPRESENTATIVE IN CONGRESS

FROM THE STATE OF MICHIGAN

Mr. Chairman, I commend you for holding this hearing today. Several of my colleagues requested this hearing last Fall, and I thank you for working with them to

bring these witnesses before us.

It is somewhat curious that the title of this hearing is ‘‘The National Implementation of the Reformulated Gasoline Program.’’ This is a complex program, currently

entering Phase II as required by the Clean Air Act—and the composition of fuels

is equally as complex. This is a program about which we could have many informative hearings, and I would welcome those hearings. But the primary concern that

has brought us here today—the one that has focused our inquiry into this complex

program—is the presence of MTBE in drinking water supplies. I hope that we do

not leave the impression, as did a recent 60 Minutes piece on this issue, that the

Clean Air Act (or the reformulated gasoline program) mandates the use of MTBE.

Similarly, I hope that we do not reach hasty conclusions about the reformulated gasoline program itself as a result of a hurried effort to thwart a substance that has

moved through groundwater much faster than we have gained firm understanding

31

of its potential threat to health or the environment. As I am sure this phrase has

been used already in this debate, it bears repeating: we would not want to throw

the baby out with the bath water.

I expect that more than a few witnesses here today will confirm that the reformulated gasoline program has been a success. That success often has been attributed

to the use of oxygenates in reformulated gasoline. Although some studies indicate

that we can achieve environmental benefits without the use of oxygenates, I am not

aware of evidence of any notable down-side of oxygenate use, other than the spread

of MTBE—the most frequently used oxygenate—from leaking tanks through water.

As we consider any revision to the reformulated gasoline provisions, I hope that we

will be mindful of all of the environmental benefits of the current formulation and

that we will agree on a policy goal to maintain those benefits. In addition, we must

be mindful of the effect statutory and regulatory changes may have on gasoline supply, particularly during a time when gasoline prices are the highest we have witnessed during this decade.

I do not know whether MTBE merits more attention than we have given to other

constituents of gasoline. I will hear from the witnesses on that point. I note however, that EPA has known since 1987, perhaps earlier, that MTBE could migrate

into water supplies. Yet, to date, EPA has obtained little information about the

health effects of ingestion of MTBE. It was not until 1999 that EPA included MTBE

on a list of substances to be monitored by public water systems. That monitoring

will not begin until 2001. It was not until 1997 that the Agency issued a drinking

water advisory for MTBE based on consumer acceptability. It was not until last

month that EPA initiated a process to determine whether MTBE could be banned

under TSCA—a lengthy process most notably employed in the past (unsuccessfully)

to address asbestos. I question such delay if this substance, which has been added

to gasoline for many years, is a public health threat deemed so unacceptable as to

require immediate passage of federal law to remove the substance from public use.

I do not mean to diminish the significance of the expense and hardship that communities with drinking water supplies contaminated with MTBE currently face.

Rather, I recommend a well-informed approach to the measures we may adopt to

address this problem. First, in addition to careful consideration of the current oxygenate requirement, for example, this Committee should pay ample attention to the

implementation of preventative measures such as the underground storage tank

program, and I suspect that may have been laggard. The states by and large implement this program. The data that we, or the EPA, have been able to obtain about

tank compliance has been less-than-comprehensive. We know, for instance, that

some states inspect their tanks for compliance only once every five to seven years.

Second, we also know that neither the federal government, nor most states, have

the ability to regulate above-ground mechanisms for dispensing gasoline. These

mechanisms may also be the source of spills and leaks of gasoline.

It seems that this Committee has much to learn about this topic. I look forward

to receiving the testimony of these witnesses.

Mr. BILIRAKIS. Finally, the very patient colleagues of ours who

have been sitting there, I guess you are accustomed to that probably, ordinarily, because you are usually up here.

Mr. Franks from New Jersey, you have 5 minutes. Hopefully, you

won’t take all 5, but certainly don’t take any more than that.

Please proceed.

STATEMENT OF HON. BOB FRANKS, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF NEW JERSEY

Mr. FRANKS. Mr. Chairman, almost 10 months ago, on May 6,

1999, I testified before this subcommittee to lend my support to

H.R. 11, a bill that would allow the STATE OF California to opt

out of the 2 percent oxygenate requirement of the Clean Air Act.

My interest in today’s hearing stems from compelling evidence that

the same 2 percent oxygenate requirement for gasoline has led to

a serious threat to public health caused by the use of MTBE.

We have already heard that MTBE is highly soluble. It moves

quickly through soil and groundwater when gasoline leaks from underground storage tanks. Mr. Chairman, in my home State of New

32

Jersey, the Department of Environmental Protection has reported

that 400 public wells and 65 private wells have been tainted with

MTBE.

Last July, a Federal Blue Ribbon Panel study concluded that in

those areas that are required to use reformulated gasoline, MTBE

has contaminated 5 to 10 percent of those drinking water supplies.

Immediately after that study was released, EPA Administrator

Carol Browner echoed the conclusion that MTBE poses a risk to

water supplies. She indicated the need to reduce use of MTBE gasoline, ‘‘as quickly as possible.’’. However, 7 months later, EPA has

done nothing to regulate MTBE; and, consequently, it continues to

contaminate drinking water across the country.

Last spring, I sponsored legislation H.R. 1367 that would phaseout the use of MTBE as a fuel additive over a 3-year period. Mr.

Chairman, if the EPA will not accept responsibility and promptly

use its authority under the Toxic Substances Control Act to ban the

use of MTBE, then Congress must act.

I recently obtained an internal EPA memo that was referred to

earlier by Mr. Barrett, dated April 6, 1987. Let me just read an additional sentence that preceded the section that Mr. Barrett alluded to, and I quote: ‘‘Known cases of drinking water contamination have been reported in four States. These cases affect individual families, as well as towns of up to 20,000 people. It is possible that this problem could rapidly mushroom due to leaking underground storage tanks at service stations. The tendency for

MTBE to separate from the gasoline mixture into groundwater

could lead to widespread drinking water contamination.’’

Mr. Chairman, this memo clearly shows the EPA has known

about the dangers that MTBE poses for our drinking water supply.

It is important to note that this memo was issued fully 8 years before the EPA initiated the Reformulated Gasoline Program. They

issued it knowing full well that MTBE would be the oxygenate of

choice for oil refineries.

It is simply inexcusable that a Federal agency which is responsible for protecting the public health and safety would allow the

widespread use of a product that their own scientists had warned

could pose a serious threat to the Nation’s drinking water supply.

We still don’t know nearly enough about the health consequences

of consuming drinking water tainted with MTBE. However, this

chemical has been found to cause cancer in animals. For this reason, I introduced H.R. 3536 that would require the National Institutes of Health to finally conduct a comprehensive study on the

human health effects of ingesting or inhaling MTBE.

Mr. Chairman, if MTBE is allowed to continue to be the most

widely used oxygenate in gasoline, contamination problems can be

expected only to worsen. Existing water treatment systems have

proven relatively ineffective at removing even low concentrations of

MTBE.

My legislation would also further require that research be done

into the design of cost-effective methods of removing MTBE from

water supplies. To continue to threaten our clean water supply in

an effort to achieve our clean air goals is simply unconscionable.

It is time we admit that MTBE was a mistake and take immediate

33

action to remove it from our gasoline and, in turn, our drinking

water supplies.

It is the obligation of this government to seek better and safer

mechanisms through which to clean our air while we protect our

Nation’s precious supply of drinking water.

Mr. Chairman, again, I want to thank you. And I want to finally

refer to Mr. Green’s observations, and I concur with them, that no

one would be enthusiastic about the prospect of drinking a material

that was made merely to make our cars run better.

But I want to give to Mr. Green and to you, Mr. Chairman, a

product called drinking water from the Metropolitan Water District

of Southern California. And you see, Mr. Green, if you are in the

area where that water district services hundreds of thousands——

Mr. BILIRAKIS. Please finish up.

Mr. FRANKS. [continuing] of water consumers, you have to drink

a product that is made to make your car run better when you turn

on your tap. There is no choice.

Thank you, Mr. Chairman.

[The prepared statement of Hon. Bob Franks follows:]

PREPARED STATEMENT OF HON. BOB FRANKS, A REPRESENTATIVE IN CONGRESS FROM

THE STATE OF NEW JERSEY

I would like to thank Chairman Bilirakis for convening this hearing and allowing

me the opportunity to testify today.

Almost ten months ago, on May 6, 1999, I testified before this Subcommittee to

lend my support to H.R. 11, a bill that would allow the State of California to opt

out of the 2% oxygenate requirement of the Clean Air Act. Today, the discussion

is about the nationwide impact of the Reformulated Gasoline, or RFG, Program.

There is conflicting information on whether reformulated gasoline has significantly improved air quality. I commend the Subcommittee’s efforts to review the

merits of the RFG Program. My interest in this stems from compelling evidence that

the 2% oxygenate requirement for gasoline has led to a serious threat to public

health caused by Methyl Tertiary Butyl Ether, or MTBE.

MTBE is the preferred fuel additive because of its low cost, ease of production,

and favorable blending characteristics with gasoline. MTBE, a highly soluble compound, moves quickly through soil and groundwater when gasoline leaks from underground storage tanks or is spilled. For this reason, the additive has contaminated sources of drinking water, such as aquifers and lakes, across the country.

Mr. Chairman, in New Jersey, the Department of Environmental Protection has

reported that 400 public wells and 65 private wells are tainted with MTBE. Last

July, a federal Blue Ribbon Panel study concluded that MTBE has contaminated

five to ten percent of drinking water nationwide. Immediately after the study’s release, EPA Administrator Carol Browner recognized that MTBE poses a risk to

water supplies. She indicated the need to reduce the use of MTBE in gasoline ‘‘as

quickly as possible.’’ Seven months later, EPA has still done nothing to regulate its

use and, consequently, MTBE continues to contaminate drinking water across the

country.

Last spring, I sponsored legislation, H.R. 1367, that would phase out the use of

MTBE as a fuel additive over three years. If the EPA will not accept responsibility

and promptly use its authority under the Toxic Substances Control Act to ban the

use of MTBE, then Congress must act.

I recently obtained an internal EPA memo, dated April 6, 1987, on MTBE which

states and I quote: ‘‘Known cases of drinking water contamination have been reported in four states. These cases affect individual families, as well as towns of up

to 20,000 people. It is possible that this problem could rapidly mushroom due to

leaking underground storage tanks at service stations. The tendency for MTBE to

separate from the gasoline mixture into ground water could lead to widespread

drinking water contamination.’’ This clearly shows that EPA has known about water

contamination problems with MTBE and that toxicity information was lacking. That

was thirteen years ago and eight years before the EPA initiated the Reformulated

Gasoline Program, knowing very well that MTBE would be the oxygenate of choice

for oil refineries.

34

We still do not know about the health consequences of consuming drinking water

tainted with MTBE. However, the chemical has been found to cause cancer in animals. For this reason, I introduced H.R. 3536, legislation that requires a comprehensive study on the human health effects of ingesting and inhaling MTBE.

Mr. Chairman, if MTBE continues to be the most widely used oxygenate in gasoline, contamination problems can be expected to worsen. Existing water treatment

systems are relatively ineffective at removing even low concentrations of MTBE.

H.R. 3536 would also require further research into the design of cost-effective methods for removing MTBE from water supplies.

To continue sacrificing clean water for clean air is simply irresponsible. It is time

we admit that MTBE was a mistake and immediately remove it from our gasoline

and drinking water supplies. We must seek better, safer mechanisms with which

to clean the air while protecting our nation’s precious supply of drinking water.

Again, I would like to thank Chairman Bilirakis for holding this hearing on the

RFG Program and I encourage the Subcommittee to immediately ban the use of

MTBE as a gasoline additive nationwide.

Mr. BILIRAKIS. Thank you.

The gentleman from Illinois, Mr. LaHood.

STATEMENT OF HON. RAY LAHOOD, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF ILLINOIS

Mr. LAHOOD. Thank you, Mr. Chairman.

I will not read my statement. I would like to read a couple of

paragraphs from my statement.

I am here primarily—and I don’t want to repeat what has been

said. I have four ethanol-producing plants in my district. I think

my district perhaps produces as much or more ethanol than perhaps any district in the country. I am really here to promote the

use of ethanol as a clean-burning fuel.

If I may just read two paragraphs, and I will then have the rest

of the statement entered into the record.

Last year, the National Academy of Science completed a study

which addressed ethanol’s air quality benefits and the impact of

carbon monoxide on ozone formation. The study concluded that the

additional carbon monoxide benefits of ethanol blended gasoline

should be taken into account. Unfortunately, the EPA does not currently credit ethanol for these reductions under the RFG Program,

which will make it harder to use ethanol in the program when

phase 2 of that program is implemented. I would ask your committee to urge the EPA to allow these credits.

There are plenty of other things that I have said in my statement, some of which have already been stated and which the committee knows. I appreciate the chance to come and participate and

appreciate the work that this subcommittee is doing. Thank you.

[The prepared statement of Hon. Ray LaHood follows:]

PREPARED STATEMENT OF HON. RAY LAHOOD, A REPRESENTATIVE IN CONGRESS FROM

THE STATE OF ILLINOIS

Mr. Chairman, thank you for giving me the opportunity to appear before you

today. I wish to use this opportunity to express my support for the reformulated

gasoline program (RFG). I will let the other panelists address the technical aspects

of the RFG program, and limit my time to discuss the larger policy concerns the

program currently faces.

Since the implementation of the RFG program, the benefits to air quality have

been dramatic. The US Environmental Protection Agency (EPA) has estimated that

the environmental benefits under Phase 2 of RFG program is equal to taking 16

million cars off the road each year. In 1998, the American Lung Association of Metropolitan Chicago credited the RFG program with being the single largest source of

emissions reductions in the Chicago area.

35

As we begin to address the unintended side effects of the RFG program, most notably the reports of contamination of surface and ground water by MTBE, we need

to make sure we do not unintentionally weaken the protections of the Clean Air Act.

At first glance, the simple solution to the MTBE problem is to remove the oxygenate

requirement from the RFG program, which would remove the need to use MTBE

in reformulated gasoline. I believe that approach is misguided. The water contamination problem lies with the use of MTBE only, not with the oxygenate requirements in the RFG program. I believe that we can protect our water resources by

restricting the use of MTBE, and keep the oxygenate requirements in the RFG program by using ethanol as an oxygenate additive in reformulated gasoline.

Ethanol already has a proven track record as a reliable RFG oxygenate. Over 95

percent of the gasoline sold in the Chicago area uses ethanol, instead of MTBE, as

an oxygenate. Ethanol blended gasoline is also sold in Milwaukee, St. Louis, and

in some locations in California. Given the potential problems associated with MTBE,

I believe the US would be best served by focusing on ways to allow greater integration of ethanol into the RFG program.

The greatest stumbling blocks for integration of ethanol into the RFG program is

the regulatory structure of the EPA. Under the current guidelines, gasoline refiners

need to use specially tailored blend stocks when using ethanol, which increases the

cost to the refiner. Last year, the National Academy of Sciences completed a study

which addressed ethanol’s air quality benefits and the impact of carbon monoxide

on ozone formation. The study concluded that the additional carbon monoxide benefits of ethanol blended gasoline should be taken into account. Unfortunately, the

EPA does not currently credit ethanol for these reductions under the RFG program,

which will make it harder to use ethanol in the program when Phase 2 of the program is implemented this summer. I would ask your Committee to urge the EPA

to allow these credits.

Finally, I hope you will consider how the RFG program effects our domestic ethanol industry. Since the implementation of the RFG program in 1990, over 40 ethanol facilities have been built, which expanded production from 850 million gallons

to close to 1.5 billion gallons today. The industry also helps bolster the price of corn

(which is at a near historic low) by approximately $0.35/bushel because it utilizes

over 600 million bushels of corn annually.

If the oxygenate provisions are maintained in the RFG program, the growth potential for the ethanol industry is strong, but I’m afraid for what will happen if that

provision is removed.

I believe that we have the potential for a win-win situation here. We can continue

to promote clean air legislation in our urban areas by maintaining the oxygenation

requirements of the RFG program, protect our ground water by banning the use of

MTBE, support our beleaguered corn prices and the American farmer, and contribute to the growth of our domestic ethanol industry.

Thank you

Mr. BILIRAKIS. Thank you, Ray.

Mr. Forbes.

STATEMENT OF HON. MICHAEL P. FORBES, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW YORK

Mr. FORBES. Mr. Chairman, thank you very much, and I would

likewise ask that my full statement be admitted into the record.

Mr. BILIRAKIS. Without objection, that will be the case.

Mr. FORBES. I will make every effort to be brief, Mr. Chairman,

and I thank you for the opportunity to be here and for your leadership on this question.

It is unfortunate that it has taken us as a Nation almost a decade to come to this point where we are trying to deal with some

solutions. I would like to particularly thank my colleague from New

Jersey, Mr. Pallone, for his leadership on this issue over the last

7 years, and all of my colleagues, frankly, who have made some

very salient points about the problem of MTBE.

On Long Island, we have amongst the highest concentration of

MTBE intrusion into our groundwater supply. We are the Nation’s

largest sole source aquifer, which is where we get our drinking

36

water. We found that over 300 private wells have been contaminated and 30 public wells. I am also delighted, though, that the

Suffolk County Water Authority from Suffolk County, New York, is

here today to testify about their outspoken need to ban MTBE.

I would like to separate myself from the comments of those who

believe, however, that we might want to roll back the clock and

eliminate the requirement for oxygenates. I think that the 1990

Clean Air Act went a long way, and we can see the results of that

tremendous legislation across the country. When you drive across

this country, you can see a marked change in our air quality, and

I do not think we should be rolling back the clock. However, I think

that the choice of the petroleum companies to use MTBE as the

way to solve this problem with oxygenates is clearly wrong.

I would like to align myself with those who would like to see us

ban this over the next 3 or 4 years and move to ethanol. I think

that it is clear that we need to make that change as quickly as we

can. We need time in this Nation to increase the supplies of ethanol and their availability.

I would align myself with Dr. Ganske’s comments that the specious argument about the transportation cost is just that, that we

can accommodate I think this change to ethanol. I am not the

Forbes that spent any time in Iowa. So for that I would like to say

that we do need to make this change, though.

I think there are some very important concerns as well, though.

We do not know how to clean up MTBE. It is highly soluble. The

technology is still being reviewed as to how to clean up this highly

soluble reformulated gasoline that gets into our groundwater.

My legislation introduced earlier this week would put an emphasis on that. It would allow the Environmental Protection Agency to

do what so many of us are frustrated that they have not done and

that is to step up to the plate and take some very concerted and

direct action to deal with this problem. We need to hook up to public water, though, those who are continuing to frankly suffer because they have shallow groundwater wells and their drinking

water is being compromised.

Now, we don’t know what the health effects—the long-term

health effects of continued groundwater pollution by MTBE are.

And that again is something that NIH and the Agency for Toxic

Substances should be charged with the responsibility of understanding the long-term health consequences.

We all can remember that, many decades ago, the discovery of

DDT was thought to be tremendous in stemming disease in this

country, but we found out the solution was almost as bad as the

problem. We do not want to come to the point in this country

where we find out after several years or several decades that

MTBE is as bad as the pollution that it is trying to conquer.

So I would, again, align myself with those who believe that we

need to continue on the course that we have done with the 1990

Clean Air Act. We need to not roll back the safeguards, not eliminate the oxygenate.

We can have a great debate about what level of oxygenates are

appropriate, but we need to ban MTBE, give the agencies, particularly EPA and NIH, the tools to deal with this problem, find the

technology to clean up MTBE and, most of all, provide assistance

37

to those citizens, frankly, particularly those who don’t have the

means to hook up to public water, to do that.

In my own county of Suffolk in New York, we have over 50,000

people who are still dependent on private shallow wells in the sole

source aquifer. Many of them have been compromised by MTBE,

and I would urge that the leadership of this committee, which has

been demonstrated over the last several years, particularly on this

question, that we are able to move a bill to the floor. And I don’t

have any pride of authorship, but I just hope we can end the use

of MTBE, give the appropriate agencies the tools to deal with this

problem and, once and for all, restore some confidence that reformulated gasoline can help us clean up our air. But we don’t need

to go the route of continued use of MTBE.

Mr. Chairman, I thank you, the ranking member and members

of the committee for the opportunity to testify here this morning.

[The prepared statement of Hon. Michael P. Forbes follows:]

PREPARED STATEMENT OF HON. MICHAEL P. FORBES, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF NEW YORK

Mr. Chairman, thank you for holding a hearing on the critical topic of the reformulated gasoline program—which has done so much to help clean our air of toxic

contaminants like benzene. Mr. Pallone, I also wish to thank you and commend you

for all your hard work in this area, particularly regarding your proposal to phase

out MTBE.

I am pleased to be joined here today by my colleagues, Mr. Franks and Mr.

LaHood. Also, I am happy that my neighbors from the Suffolk County Water Authority are here to testify. I know that, based on their experience with MTBE in

our Suffolk County water wells, they too are outspoken about the need to ban

MTBE.

As you know, the gasoline additive MTBE (methyl tertiary butyl ether) is the result of the 1990 Clean Air Act, which mandated the use of oxygenates in gasoline.

Oxygenates are additives designed to dilute concentrations of cancer-causing elements like benzene. Presently, only two substances are used as oxygenates—ethanol

and MTBE.

Unfortunately, no studies were done on the potential health effects of MTBE prior

to its use. Now, the United States, and Long Island in particular, faces a growing

problem of water contaminated by MTBE. It is 30 times more soluble than any

other element in gasoline—so it contaminates the groundwater very quickly. MTBE

has now been detected in varying levels in groundwater in 49 states; 21 states have

had at least one well shut down.

Because of Long Island’s unique geology, MTBE has already had serious effects

there. So far, MTBE has been found in over 300 private wells and 32 public wells

in my county, Suffolk County, alone.

Furthermore, residents of Suffolk County are particularly vulnerable to MTBE

contamination because approximately 40,000-50,000 Suffolk County residents still

get their water from shallow backyard wells’ which are highly susceptible to groundwater contamination.

Finally, Long Island has the nation’s largest sole source water supply—if it gets

contaminated, there are no other alternatives.

Although we have been lucky that few water sources have been so contaminated

as to make the water undrinkable, even in small amounts MTBE fouls the water,

making it smell bad and taste awful.

But there are potentially grave health impacts as well. In 1993, the EPA indicated

that MTBE ‘‘supports a hazardous classification of possible human carcinogen.’’ In

high concentrations, it can result in damage to the nervous system when inhaled,

and harm to kidneys when ingested.

Mostly, MTBE gets into our water supply from leaking underground gas tanks.

But MTBE can also find its way into water from car exhaust by getting trapped by

rain and seeping into the ground. As a result, a ban is the only way to stop MTBE

from fully contaminating our water supplies.

I am proud of how my colleagues in New York State have moved to address this

problem. In November 1999, Governor Pataki proposed the strictest ground water

38

standard in the nation for MTBE (reducing the amount of MTBE permitted in the

surface and groundwater from 50 parts per billion to only 10 parts per billion).

Furthermore, earlier this month, the New York State Assembly voted unanimously for a bill to ban MTBE—introduced by a fellow Long Islander, State Assemblyman Thomas DiNapoli (D-Great Neck). The State Senate’s version of the bill, introduced by another Long Islander, State Sen. Carl Marcellino (R-Syosset), is ready

for a vote soon.

Despite the NY Legislature’s intent to ban MTBE, there is concern about whether,

in light of the Clean Air Act requirements regarding oxygenates, a State can act

alone in banning a particular oxygenate. John Cahill, Commissioner of the New

York Department of Environmental Conservation, supports phasing out MTBE, but

has repeatedly said he believes that only the federal government can do so.

California Governor Gray Davis has already ordered a phase out of MTBE by

2002. Maine, Alaska, Vermont, CT, NJ, and New Hampshire are all in the process

of legislating against MTBE.

To address this situation nationally, I have introduced comprehensive legislation

that does the following:

• Bans the use of MTBE by no later than January 1, 2004—the same as the recently passed State Assembly bill.

• Authorizes EPA to declare an emergency if MTBE is present in the water supply

and to provide expedited funds to communities to purchase bottled water and

to clean up their contaminated water supplies.

• Assists private citizens in hooking up to town water supplies in the event that

their water supply is contaminated by MTBE.

• Directs NIH to conduct a study of the long-term health effects of MTBE.

• Makes underground storage tanks that are leaking MTBE the highest priority

cleanups for EPA under the Leaking Underground Storage Tank program.

• Makes EPA accelerate the testing and reporting of MTBE in public drinking

water.

As a Member of the House Appropriations Committee, I will fight for funding to

assist local residents and communities in dealing with this growing problem. I will

fight to get the additional funds needed to fix these leaking tanks and prevent additional MTBE contamination.

I am hopeful that this bill will move quickly through the House with bi-partisan

support. I look forward to working with my colleagues to see this legislation enacted

so that our neighbors in Long Island and around the country can continue to depend

upon safe, clean drinking water.

Thank you, Mr. Chairman.

Mr. BILIRAKIS. Thank you, Michael.

Mr. Waxman requested and received unanimous consent to be

able to offer any questions to all three of you in writing, and I am

sure you are willing to respond to them. Thank you so very much

for your patience and for being here today.

Mr. PALLONE. Mr. Chairman, can I ask unanimous consent that

the statement of Mr. Dingell be submitted for the record?

Mr. BILIRAKIS. Yes. I have already given that unanimous consent

for all members of the subcommittee. By all means.

Mr. BARRETT. Mr. Chairman.

Mr. BILIRAKIS. Yes.

Mr. BARRETT. I would also ask unanimous consent to have submitted into the record the April 6, 1987, I believe, memorandum

written by Beth Anderson that I referred to in my opening statement.

Mr. BILIRAKIS. Yes. Without objection, that will be the case.

[The information referred to follows:]

39

40

41

Mr. BILIRAKIS. Panel No. 2, the Honorable Robert Perciasepe, Assistant Administrator for Air and Radiation, U.S. Environmental

Protection Agency; Mr. Mark Mazur, Director of Office of Policy,

U.S. Department of Energy; Mr. Dan Greenbaum, President of the

Health Effects Institute out of Cambridge, Massachusetts.

Gentlemen, you can see we have a very lengthy program here.

I am going to set the clock at 5 minutes, if I may. Obviously, if you

go over a minute or 2, no particular problem.

Bob, particularly, you have got an awful lot of things to respond

to, so we would afford you as much as I can, the opportunity to do

that.

That being the case, obviously your written statements are a part

of the record, so we would hope you would complement them and

supplement them.

Mr. Perciasepe.

STATEMENTS OF HON. ROBERT PERCIASEPE, ASSISTANT ADMINISTRATOR FOR AIR AND RADIATION, U.S. ENVIRONMENTAL PROTECTION AGENCY; MARK J. MAZUR, DIRECTOR,

OFFICE OF POLICY, U.S. DEPARTMENT OF ENERGY; AND

DANIEL S. GREENBAUM, PRESIDENT, HEALTH EFFECTS INSTITUTE

Mr. PERCIASEPE. Thank you, Mr. Chairman, and thanks for the

indulgence on the time. I will try to stay in the 5 minutes with my

42

introductory statement, and we can probably get into a lot of issues

during the question and answer period.

First of all, I want to thank you once again for inviting EPA to

this hearing to talk about the environmental benefits of the Reformulated Gasoline Program, which is the broad subject of the hearing; update the agency’s efforts regarding the Blue Ribbon Panel

that has been mentioned several times; and to talk a little bit

about the status of the California waiver that has already been discussed.

I wanted to emphasize three key points. The RFG Program

works and has provided significant air quality benefits to the

United States. There are growing concerns, and we have heard

many of those concerns as clearly as they can be articulated in the

opening comments, about the use of MTBE in the Nation’s gasoline. And, third, I want to talk a little bit about how we need to

work together to solve this problem. Because the solutions that are

available to us are imperfect, and the need for a mix of work that

we can do and that authority that you can bequeath upon us is the

right way to find the answer to this.

So, notwithstanding the history, although I am sure I will have

to deal with that in this hearing, I want to urge us all to think

about the fact that we are going to have to solve this problem together; and that is what our intention is.

In 1990—and we have heard this, but let me put a little bit of

specific point to it. The Reformulated Gasoline Program is part of

a broader clean air program that we have already heard in opening

statements that has been successful. Let me talk a little bit about

it.

The Reformulated Gasoline Program was introduced in the

United States in 1995. I do want to point out that when EPA put

that program together in 1995, based on the authority and the specific requirements that Congress put in the Clean Air Act, we did

try to increase the use of ethanol in that clean air program, and

we lost in court.

Again, I want to point out the imperfect tools we have to deal

with with this kind of problem as we are implementing a program

to solve one problem with imperfect tools, to look at broader environmental impacts. Over 30 areas are still today not in attainment

for the 1-hour ozone standard.

The Reformulated Gasoline Program has been very effective in

reducing precursors to smog as well as air toxics. The RFG component of the Clean Air Act requires 2 percent oxygen by weight in

the reformulated gasoline.

In the first phase of this program between 1995 and 1999, the

goal in the Act was a 17 percent reduction in volatile organic compounds and toxics. We have been doing better than that. We have

been averaging about a 27 percent reduction in toxics. And as

many members have said in their opening comments, oxygenates

have played a role, an important role in diluting other more toxic

components of gasoline.

The second phase of the program is being implemented this year.

The percentages will move up, as in the Clean Air Act, the 27 percent for VOC, 7 percent for nitrogen oxides, and we continue the

43

comparable toxics reductions. It is the equivalent of taking 17 million cars off the road.

The RFG program is required by law in 10 metropolitan areas

in the United States, the most serious and severe nonattainment

areas. It is also been opted in by several areas in the country, most

notably most of the Northeast States, Kentucky, Texas, Missouri.

And so at this particular moment, including the areas in California

there that are using this Federal gasoline, about 30 percent of the

Nation’s gasoline is this Federal reformulated gasoline.

We have further evidence of the success of the program when we

look at the ambient monitoring in these cities the year before and

the year after the implementation of the program. We are seeing

in the ambient area a 38 percent reduction on average across those

10 areas in benzene. Benzene is an extremely toxic chemical, and

it is used in gasoline and has been greatly reduced by the Reformulated Gasoline Program.

The Clean Air Act, I think, as has been pointed out, does not

specify which oxygenate to use, and there are numbers of them.

But predominantly in the United States, ethanol and MTBE are

the ones that are used, with the MTBE being up around 85 to 87

percent.

Despite these air quality gains of the reformulated gasoline program, there continues to be and there is significant concern about

contamination of drinking water by MTBE; and it has been pointed

out that this potential has been known for over a decade. And not

being a time traveller, I can’t put my head in what was going on

in 1988 in those previous EPA administrations.

But let me just say, you know, hindsight is 20/20. I think everybody did make decisions based on what everyone thought was either a manageable problem or one that the benefits would outweigh the cost. I think what we know today, and as envisioned by

the Blue Ribbon Panel that we put together over a year ago, that

this is not coming to fruition, that managing this problem for whatever approach we thought was going to work in the early part of

this decade is not coming to fruition.

We are very concerned about this widespread detection of MTBE,

and the current data indicate that there is a widespread problem

at low levels. Just to give you some example, we have been doing

some work with the United States Geological Survey. To give you

the sense of the relationship between RFG and contamination of

MTBE, when you go into areas that are using MTBE in the RFG

program, that is methyl tertiary butyl ether, in the reformulated

gasoline areas, we find, and the USGS has found in 21 percent of

the samples of ambient groundwater, you find a detection of

MTBE. And if you go into the nonRFG areas, you only find it 2 percent of the time. So it is clearly a relationship between the RFG

program and the level of contamination.

As has also been mentioned, we put a Blue Ribbon Panel together over a year ago to look at all of these issues. We have scientists, health professionals, water utilities, environmental groups,

industries, State and local governments, including California, represented on the committee, and they grappled with many of these

issues and an assessment to alternatives for the use of MTBE.

44

But they also wanted to make sure that we continue to maintain

the benefits the RFG program has delivered in air quality of the

United States, and therein lies one of the major challenges in

terms of how we can work together to make sure we don’t lose the

gains we have made in air quality but at the same time avoid the

downside of the potential groundwater contamination.

The panel’s recommendations were in several broad areas: Continue to improve leak protection, because under any circumstances,

with or without MTBE, gasoline is a toxic and potent mixture of

chemicals that we don’t want in our groundwater regardless; remediate existing contamination; amend the Clean Air Act to remove

the 2 percent oxygenate requirement; maintain the current air

quality benefits; reduce the use of MTBE, and they said significantly reduce the use of MTBE; and accelerate research on MTBE

and its substitutes.

The panel recommended that MTBE be significantly reduced.

The sources of the potential release into the environment are

many. It is not just the underground storage tanks. And clean up,

once it is released, is difficult, as has already been laid out, due to

solubility movement, slow degradation.

We are concerned about this, and we have concluded that a comprehensive approach must be considered that either significantly

reduces or eliminates MTBE from the use in the reformulated gasoline program. We believe there are alternatives such as ethanol.

But adequate lead time will be necessary.

We have also initiated a number of other activities along the

lines of the panel. I will just try to go through them quickly.

We are developing revised drinking water standards. We are developing water quality standards for ambient water. We have increased compliance with the underground storage tank program.

We have been funding research with the University of California

at Davis to evaluate new ways of leak detection. Because even if

we have perfect tanks, there are still going to be leaks. We are also

conducting a million dollar remediation technology review also in

California. I might also add, in 1998, we initiated a $15 million research program on all of the different additives to the gasoline.

While we pursue some of these—if I might digress for a minute,

Congressman LaHood brought up the issue of carbon monoxide and

the National Academy of Sciences. I want to say we do have—we

have analyzed that. We do have an interagency process under way

looking at the carbon monoxide, benefits of ethanol, and how that

relates to the VOC goals of the reformulated gasoline program. We

hope to have a proposal and to complete the interagency review

process very soon.

But while we pursue these, we still feel this is something we are

going to have work on together, and Congress needs to address

some of these issues with us.

Finally, let me say something very quickly about the California

situation; and I will try to be as straightforward as I can. And I

am sure you will have more questions.

As I mentioned in our testimony last year, this is the first time

anybody has tried to request the utilization of this part of the

Clean Air Act where we have to determine that using oxygenates

actually interferes with the attainment of a national ambient air

45

quality standard. It isn’t whether you are using the oxygenates or

a certain kind of oxygenate actually causing a problem in the

groundwater. We don’t have the authority to do that. But we do

have the authority to say using these oxygenates could interfere

with air quality.

I think you have heard testimony even amongst the opening

statements that the oxygenates have helped air quality. So trying

to prove that it doesn’t help air quality we have never done before.

In fact, our analysis and California’s analysis still do not coincide

with each other. In fact, we were trying to do this with California

during the same time they were actually changing their fuel, which

they finally did in December of last year.

So they changed their fuel. They changed their predictive models

on how they predict the reaction to their fuel and their motor vehicle fleet. And we are now in the process of verifying their model

changes, which are different than our models.

You might imagine, you can’t go around and check the emissions

from millions and millions of cars. You have to model and do the

best you can with those analytical tools. We have to determine, if

you changed the formula of gasoline, the recipe, what happens coming out of the tail pipe? And then, as that change is coming out of

the tail pipe, is that really affecting the attainment of a national

ambient air policy?

Mr. BILIRAKIS. Bob, you are already close to 12 minutes. But I

also don’t want to not give you the opportunity because you did

hear an awful lot of comments up here, and I am trying to be as

fair as I can.

Mr. PERCIASEPE. I will complete right now by simply saying, as

what you have already determined from what I started to say

about the California waiver, and we can probably talk from a couple questions in more detail about it, it is not easy. We want to do

it in a legally defensible way. The administrators talked to the

Governor about this. I am in constant contact with the State environmental agencies.

It won’t do any use to anybody for us to make a decision on incomplete information or incomplete analysis that just gets shot

down in the courts. Certainty is what is going to be needed for

those refiners, and we need to do this the right way.

Finally, let me just say in summary, it is clear that we need to

change the reformulated gasoline program. We are here today telling you that we agree with that, and we want to work with you

to do it. You may not have the full confidence, Mr. Chairman, and

I really am sorry about that, that I am sincere in telling you that.

But we can’t do it alone. We don’t have the legal authority or the

tools to do what needs to be done alone. We are going to have to

find a common ground between what we can do and what you need

to help us do in legislation to get this done.

We used to come here and say, no legislation. Don’t touch the

Clean Air Act. We are not saying that anymore. We want to work

with the members who are trying to move legislation forward. We

think it needs to be done. The real solution will be a mix of something we do and something you do, and I think we can do it this

year, and I think we need to do it this year. So I will stop there,

and I really appreciate your indulgence.

46

[The prepared statement of Hon. Robert Perciasepe follows:]

PREPARED STATEMENT OF ROBERT PERCIASEPE, ASSISTANT ADMINISTRATOR, OFFICE

OF AIR & RADIATION, U.S. ENVIRONMENTAL PROTECTION AGENCY

Thank you, Mr. Chairman and Members of the Subcommittee, for the invitation

to appear here today. I am pleased to have this opportunity to share information

with the Subcommittee on the environmental benefits of the reformulated gasoline

or RFG program, to provide an update regarding the Agency’s efforts to move forward on the recommendations of the Blue Ribbon Panel and future steps that

should be taken to address issues regarding the use of oxygenates in the program.

In addition, I would like to take a few moments to discuss the status of the request

by the state of California for a waiver of the statutory oxygen content requirement.

My testimony today will stress the following: first, the RFG program works and

has provided significant air quality improvements, second, growing concerns about

MTBE need to be addressed, and third, Congress must act.

An understanding of the history of the federal RFG program is important in order

to put the issues surrounding the use of the oxygenates methyl tertiary butyl ether

(MTBE) and ethanol in perspective. As you know, the Clean Air Act Amendments

of 1990 put in place a number of programs to achieve cleaner motor vehicles and

cleaner fuels. Over all, these programs have been highly successful. Congress struck

the balance between vehicle and fuel emissions control programs after extensive deliberation. The RFG requirements also emerged as a program designed to serve

Congressional goals, including air quality improvement, enhanced energy security

by extending the gasoline supply through the use of oxygenates, and encouraging

the use of renewable energy sources.

The federal reformulated gasoline program introduced cleaner gasoline in January

1995 primarily to help reduce ozone or smog levels. Unhealthy smog levels are still

of significant concern in this country, with over 30 areas still in nonattainment of

the current 1-hour ozone standard, and more areas are expected to exceed the new,

8-hour ozone standard, should it take effect.

Ozone has been linked to a number of health effects concerns. Repeated exposures

may increase susceptibility to respiratory infection, cause lung inflammation, and

aggravate pre-existing respiratory diseases such as asthma. Other health effects attributed to smog exposures include significant decreases in lung function and increased respiratory symptoms such as chest pain and coughing.

RFG is an effective way to reduce smog precursors such as volatile organic compounds (VOCs) and oxides of nitrogen (NOX). The Clean Air Act Amendments of

1990 required that RFG contain 2.0 percent minimum oxygen content by weight.

The first phase of the RFG program, from 1995 through 1999, required average reductions of smog-forming volatile organic compounds and toxics of 17% each, and

NOX by 1.5%. Phase I RFG, on average, exceeded these requirements for VOC, NOX

and toxics reductions. Most notably, overall toxics reductions were about 27% versus

a 17% requirement. This year, the second phase of the RFG program will achieve

even greater average benefits: a 27% reduction in VOCs, 7% reduction in oxides of

nitrogen emissions and a comparable toxics reduction. These reductions for RFG are

equivalent to taking more than 16 million vehicles off the road. States rely on the

air quality benefits of the RFG program to demonstrate in their State Implementation Plans (SIPs) that they can achieve the ozone standard. In fact, seventeen states

and the District of Columbia currently rely on reduction credits from the RFG program in their attainment SIPs.

The federal RFG program is required in ten metropolitan areas which have the

most serious smog 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 cost-effective measure to help combat their air pollution

problems. At this time, approximately 30% of this country’s gasoline consumption

is cleaner- burning reformulated gasoline.

Ambient monitoring data from the first year of the RFG program (1995) also

showed strong signs that RFG is working. RFG areas showed significant decreases

in vehicle-related VOC concentrations. One of the air toxics controlled by RFG is

benzene, a known human carcinogen. The benzene level at air monitors showed the

most dramatic declines with a median reduction of 38% from the previous year.

Neither the Clean Air Act nor EPA requires the use of specific oxygenates in RFG.

The statute and, subsequently, EPA’s regulations only specify the oxygen content by

weight; they do not specify which oxygenate to use. Both ethanol and MTBE are

used in the current RFG program, with fuel providers choosing to use MTBE in

about 87 percent of the RFG mainly because of cost and ease of transport reasons.

47

Despite the air quality aspects of oxygenates in RFG, there is significant concern

about contamination of drinking water by MTBE in many areas of the country including California, and Maine. EPA is very concerned about the widespread detection of MTBE in drinking water. Current data on MTBE levels in ground and surface waters indicate widespread and numerous detections of MTBE at low levels.

The United States Geological Survey has found that the occurrence of MTBE in

groundwater is strongly related to its use as a fuel additive in an area, finding detections at low levels of MTBE in 21% of ambient groundwater tested in areas

where MTBE is used in RFG compared to 2% of ambient groundwater in areas

using conventional gasoline.

In response to concerns associated with the use of oxygenates in gasoline, the Administrator established a blue ribbon panel of leading experts from public health

and scientific communities, water utilities, environmental groups, industry, and

local and state government, including California, to assess issues posed by the use

of oxygenates in gasoline in California and the rest of the nation. The panel held

monthly meetings beginning in January 1999, and presented its recommendations

to the Clean Air Act Advisory Committee in July. This panel grappled with a number of complex issues, including an assessment of alternatives to the use of MTBE

to ensure that current air quality benefits of RFG are continued and the additional

benefits of the second phase of the program are not endangered.

The panel’s recommendations to the Administrator fall under the following broad

categories:

• Prevent leaks through improvement of existing programs • Remediate existing contamination • Amend the Clean Air Act to remove the requirement that federal reformulated

gas contain 2% oxygen (by weight) • Maintain current air benefits (no environmental backsliding) • Reduce the use of MTBE • Accelerate research on MTBE and its substitutes

The panel recommended that MTBE be significantly reduced. Given the numerous

and diverse sources of potential release into the environment and the problems associated with cleaning it up once it is released (due to solubility, rapid movement, and

very slow degradation), EPA is very concerned that MTBE presents a significant

risk to the nation’s drinking water supply. Consequently, EPA believes that a comprehensive approach must include consideration of either reducing or eliminating

the use of MTBE as a gasoline additive in an expeditious and practicable time

frame. We believe there are alternatives, such as ethanol, but adequate lead time

is necessary.

EPA has initiated a number of actions in response to the panel’s recommendations. This will include developing a drinking water standard under the Safe Drinking Water Act and establishing a water quality standard under the Clean Water

Act, and enhancing underground storage tank program compliance to a 90% level

in 2000. The Agency is currently funding a grant with the University of CaliforniaDavis to evaluate the effectiveness of leak detection technologies. EPA is also conducting a $1 million technology demonstration project for the clean up of MTBE contaminated aquifers. In addition, where possible, we will work to provide more flexibility to states and refiners as they move to decrease the use of MTBE in gasoline.

For example, a proposed rulemaking that will account for the impact on ozone formation from CO emission reductions associated with ethanol use would provide

flexibility.

While we will pursue administrative remedies under our various authorities to

achieve this goal, we believe Congress needs to address the complex set of issues

surrounding the use of oxygenates in gasoline through national legislation.

Finally, Mr. Chairman, I want to discuss the status of the state of California’s

request for a waiver from the reformulated gasoline (RFG) program’s oxygen requirement. Before I discuss details of the California waiver, I will note that this request marks the first time in the history of the RFG program that a state has made

such a waiver request. In addition, while requesting a fuel waiver, California was

in the process of changing their fuel regulations which was completed in December

1999. In March last year, Governor Davis announced his intention to phase out the

use of MTBE in California. A month later, California sent a letter requesting a

waiver under Section 211 (k)(2)(B). As you know, under the Clean Air Act, EPA may

waive the oxygen mandate, in whole or in part, ‘‘. . . 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

[NAAQS].’’ This initial letter did not contain the technical analysis to demonstrate

how the oxygen requirement might actually prevent or interfere with the attainment of the NAAQS in California. In the course of the process, CARB has not only

48

changed their fuel but modified the modeling assumptions surrounding the program.

EPA and CARB have worked cooperatively to complete the submission. This process

was completed on February 9, 2000, when California submitted all the needed information necessary for EPA to begin its comprehensive review.

In order to act on the California request, the Agency must conduct an independent evaluation of the data and modeling, as well as the other information submitted by the state in support of its request for a waiver from the federal RFG oxygen requirement. This is not a simple task. It will require a review of the detailed

modeling assumptions associated with the waiver request. We hope to complete our

assessment by early summer. Based on our productive discussions with the California Air Resources Board up to this point, we fully expect that we will meet this

schedule.

If the statutory conditions to grant the waiver are met, EPA would be required

to provide public notice of our decision. Such procedures include a comment period

of at least thirty days.

Mr. Chairman, in closing, we will move forward to thoroughly review California’s

waiver request and arrive at a timely decision concerning this vital matter. We are

committed to working with the Congress, as well as the States and the regulated

community to address the Blue Ribbon Panel’s recommendations to the Administrator. We also are committed to working with Congress to provide a targeted legislative solution that maintains our air quality gains and allows for the reduction of

MTBE, while preserving the important role of renewable fuels like ethanol.

This concludes my prepared statement. I would be happy to answer any questions

that you may have.

Mr. BILIRAKIS. Bob, I have to be part of a veterans’ Medicare

subvention meeting at 1 o’clock over in the Capitol, and it is imperative that I leave. Mr. Greenwood is going to take over.

But I would just very quickly say that I am not aware of any

suggestions, any recommendations in changes in the Clean Air Act

and in giving you the flexibility you feel you may need and that

sort of thing. That has not been forthcoming. So we want to work

together. We want to work together. We want to work together. We

want to work together. But we don’t see anything coming from EPA

in that regard.

I would just merely ask you one question, with leave of the rest

of the committee. On February 16, Chairman Bliley and I wrote

you a letter regarding documents requested. Your February 29 letter to us indicated we can expect you to fully comply with that

within several days. What is the date?

Mr. PERCIASEPE. It will either be Tuesday or Wednesday.

Mr. BILIRAKIS. All right.

Mr. PERCIASEPE. The lawyers have just gone through to mark

things, which ones are delivered or not. We are not going to take

anything back. We are going to deliver it to you Tuesday or

Wednesday.

Mr. BILIRAKIS. Good.

Mr. PERCIASEPE. If anything changes on that, I will call your

staff and tell them personally.

Mr. BILIRAKIS. Please, don’t let them change.

Mr. PERCIASEPE. As far as I know, that is the schedule.

Mr. BILIRAKIS. I have given you flexibility, but not that much.

Mr. BILIRAKIS. Dr. Mazur, please proceed. I am sorry, sir. I appreciate your patience, you and Mr. Greenbaum.

STATEMENT OF MARK J. MAZUR

Mr. MAZUR. Mr. Chairman and members of the subcommittee,

thank you for inviting the Department of Energy to be here today

to give this testimony on the Federal reformulated gasoline proVerDate 11-MAY-2000 11:14 Aug 31, 2000 Jkt 065685 PO 00000 Frm 00052 Fmt 6633 Sfmt 6602 E:\HEARINGS\62976 pfrm01 PsN: 62976
49

gram. We are going to focus on gasoline markets and the role of

oxygenates like methyl tertiary butyl ether.

Mr. BILIRAKIS. I am not sure that you are speaking into the

mike. Is that on, sir? I can barely hear you.

Mr. MAZUR. I will use the one that works.

We want to focus our testimony today on the Federal reformulated gasoline program, gasoline markets, and the role of

oxygenates, like MTBE and ethanol, in this program and gasoline

supply more generally. Basically, that is what we figure our expertise is in this matter.

Over the last decade, DOE has worked with our colleagues at the

Environmental Protection Agency to develop and implement the

RFG program and subsequent clean fuel rulemakings, including

most recently the tier 2 low sulfer gasoline program.

The Department has done detailed analyses of the costs and refinery operational impacts of the various product quality regulations as well as looking at broader fuel supply and pricing issues.

More specific to this hearing, we spent considerable time over the

past year working with EPA and the Blue Ribbon Panel on

oxygenates to examine possible consequences of restricting the use

of MTBE and modifying oxygenate requirements for the RFG program.

As you have heard several times today, the reformulated gasoline

program has been an air quality success with very few negative impacts on gasoline markets. There are adequate supplies of RFG,

and the price is only slightly higher than conventional gasoline.

One very important reason for this is the fungible nature of the

gasoline used in this program, which allows gasolines produced at

different refineries to go to different States and to be mixed and

exchanged.

Our analysis indicates that the current level of oxygenate use is

not far from the level that refiners would choose to use even if

there was not a specific oxygenate mandate. This is largely because

oxygenates like MTBE and ethanol are valuable blendstocks for

producing clean, high- performing gasolines.

The availability of these oxygenates provides valuable gasoline

blending flexibilities to refiners who are trying to meet tight product specifications. The oxygenates are aromatic-free, high octane,

virtually sulfur-free blendstocks. They can be put in almost any

shipment of gasoline to offset the performance shortfalls in other

parts of the refinery.

The effect of being able to readily blend even small amounts of

MTBE into gasoline is to help assure product deliverability, reliable supplies, and affordable gasoline prices to consumers.

We share the concerns expressed by many over the impact of

MTBE and water quality. Reducing or eliminating the use of specific oxygenates like MTBE to help protect water may be necessary

but should be phased in over a period of time to minimize the impacts on gasoline production, gasoline supplies, and, most importantly, gasoline prices to consumers.

Predicting the impacts of an MTBE phase-down or phase-out of

gasoline supplies and market operations is difficult. Completely

phasing out the use of MTBE in gasoline would be the equivalent

50

to closing four or five refineries in the distribution system in terms

of the volumes that we need to be made up elsewhere.

Given enough time, the fuel industry can respond to the possible

loss of MTBE. Clearly, increased use of ethanol would play a role,

and there would be other steps taken by the industry as well.

We don’t know what the right answer is at this point. We are

willing to work with EPA, Congress, States, and the fuel supply industry to develop an approach that fully addresses water quality

problems and still ensures adequate supplies of gasoline at affordable prices.

Thank you for the opportunity to present this testimony. I would

be glad to answer any questions you might have.

[The prepared statement of Mark J. Mazur follows:]

PREPARED STATEMENT OF MARK J. MAZUR, DIRECTOR, OFFICE OF POLICY, U.S.

DEPARTMENT OF ENERGY

Mr. Chairman, members of the Subcommittee, I am pleased to be here and give

this testimony on the Federal reformulated gasoline program, gasoline markets, and

the role oxygenates like methyl tertiary butyl ether (MTBE) and ethanol, play in

this program and in gasoline supply more generally.

Over the last decade DOE has assisted the Environmental Protection Agency

(EPA) in the developing and implementing the RFG program and subsequent clean

fuel rulemakings including, most recently, the Tier II low sulfur gasoline program.

The Department has done detailed analyses of the costs and refinery operational impacts of the various product quality regulations as well as broader fuel supply and

pricing issues. More specific to this hearing, we have spent considerable time over

the last year working with EPA and the Blue Ribbon Panel on Oxygenates examining the possible consequences of restricting the use of MTBE and modifying the

oxygenate requirements for the RFG program.

In addition to these specific, focused analyses, the Department has the lead within

the Administration for gathering and disseminating energy markets data, as well

as producing analysis and forecasts of energy markets through our Energy Information Administration. As you are well aware, Secretary Richardson and the rest of

the Department, particularly the Energy Information Administration and the Office

of Policy, have been intensely involved in trying to help states, consumers and fuel

suppliers respond to the problems caused by the heating oil and diesel fuel price

spikes recently experienced in the Northeast. We are, at the same time, paying careful attention to the gasoline market and are concerned, as was explained in testimony by EIA last week, that we could experience very tight gasoline supplies this

year.

In addition to the work we do within the Department and the comments and analyses we have provided to EPA, we have asked the National Petroleum Council

(NPC), a federal advisory committee to the Secretary of Energy, to examine various

issues related to environmental regulations and petroleum product markets. For example, in 1991, we asked the NPC to look at the impacts of environmental regulations on the refining industry with specific attention to the RFG program that was

still being developed at that time. In 1997, the NPC examined the role that crude

oil and petroleum product inventories play in the supply system and in affecting

price volatility. The NPC is now finishing a third study in this area which addresses

the cumulative impacts of several product quality regulations, including changing

the role of oxygenates in reformulated gasoline, on refinery viability and product deliverability.

This brings me to the subject of this hearing which is the operation of the RFG

program, the role of oxygenates in RFG production, and the potential impact on gasoline markets of limitations on MTBE use. The reformulated gasoline program has

been an air quality success with very few negative impacts on gasoline markets.

Phase I of the program started in 1995 and provided important reductions in VOC

and toxic emissions. Phase II is underway now with the crucial start of production

of summer, ozone-control season gasoline (with lower VOC and NOx emission potential) beginning later this month at refineries around the country. Phase II gasoline

will be lower in sulfur and have a lower vapor pressure, providing additional VOC

reductions and significant NOx reductions. Toxic emissions are required to be lower

but most of the Phase I gasoline already met the Phase II toxic performance standards.

51

This program also has been a market success for consumers in that there were

adequate supplies of RFG and its price was only slightly higher than conventional

gasoline. There are several reasons for this. These include the relatively small fraction of gasoline production represented by RFG (about 25% of the total outside California) and the large number of refineries ( about half of east coast, gulf coast and

mid-west refineries) and importers participating in the production of RFG. Another

very important reason is the fungible nature of the gasoline, which allows the gasolines produced at the different refineries and going to different states to be mixed

and exchanged. Finally, refiners have significant flexibility to formulate the gasoline

in many different ways to match their refining capacity. While the mandate to use

certain amounts of oxygenate in RFG has been controversial, refiners have adapted

to this and integrated that oxygenate use into the economic production of their total

gasoline pool.

Our analysis, and that of others, indicates that the current level of oxygenate use

is not far from the level of use that refiners would choose, at today’s gasoline and

oxygenate prices, even if there were no specific oxygenate mandate. This is largely

because oxygenates like MTBE and ethanol are valuable blendstocks for producing

clean, high performing gasolines. Under these circumstances, simply removing the

oxygenate mandate would have little effect on oxygenate use other than allow some

additional flexibility in where, within a refiner’s total gasoline pool, these

oxygenates are used.

As refiners face additional requirements to meet even tighter environmental

standards for their gasoline, like the recently promulgated standards for Tier II low

sulfur gasoline or possible additional toxic emission control requirements for conventional gasoline, they will find oxygenates such as MTBE even more necessary and

valuable to make up for lost volume, octane and other property changes. The availability of oxygenates also provides valuable immediate gasoline blending flexibility

to refiners trying to meet tight product specifications; the oxygenates are aromaticfree, high octane, virtually sulfur-free blendstocks that can be put in almost any

shipment of gasoline to offset performance shortfalls in other parts of the refinery.

This is particularly true for MTBE which can be blended at the refinery, shipped

in pipelines and which has little negative impact on vapor pressure. The effect of

being able to readily blend even small amounts of MTBE into gasoline is to help

assure product deliverability, reliable supplies and affordable gasoline prices to consumers. We share the concerns expressed by many over the impact of MTBE on water

quality. Reducing or eliminating the use of specific oxygenates like MTBE, to help

protect water may prove to be necessary but will need to be phased in over a period

of time to minimize impacts on gasoline production, gasoline supplies and prices.

While the estimates vary somewhat, we believe there is general agreement that the

refining industry outside California will have to spend $1 to $2 billion in capital investments to continue producing acceptable quality gasoline at the same volumes if

MTBE use is eliminated. This is in addition to the more than $1 billion estimated

capital investments required in California refineries to make gasoline without

MTBE. The capital investments vary little whether or not the oxygenate mandate

for RFG is eliminated because of the need to replace MTBE’s volume, octane, and

other valuable properties. Recovering this investment will add to the cost of gasoline, as will various operating costs including the need for additional crude oil to

replace the lost gasoline volume and the purchase of other oxygenates like ethanol.

Overall federal reformulated gasoline production cost increases could be three to

four cents per gallon over the long term, with the lower end of the range reflecting

the costs without the oxygenate mandate. As I mentioned earlier, the Department

has done extensive analysis of these refinery impacts and gasoline costs changes

through our Oak Ridge National Laboratory, and I would like to submit this information for the record.

Predicting the impacts of a MTBE phase-down, or phase-out, on gasoline supplies

and on market operation is more difficult. Phasing MTBE out of gasoline is equivalent in its impact on gasoline supplies to losing, over whatever the phase-out period

is, some 400,000 barrels a day of gasoline production capacity or to closing four to

five large refineries. A phase-out that ultimately leads to a ban on MTBE may also

affect the ability of the US gasoline market to draw gasoline supplies from Europe,

the major source of our price-sensitive gasoline imports, since those refiners count

on the use of MTBE to some degree as well.

State-by-state restrictions on MTBE could have essentially the same volume impacts as a national ban if refiners were forced to take MTBE out of all gasoline to

protect the fungibility of the gasoline distribution system. Alternatively, gasolines

with and without MTBE could continue to be produced but with less flexibility and

exchange opportunities in the distribution system. If there were a regional refinery

52

or distribution supply problems, this could easily lead to regional gasoline shortfalls

and longer periods of price volatility as markets struggle to re-balance on a stateby-state basis, rather than a national basis.

Given enough time, the fuel supply industry can respond to the possible loss of

MTBE. Clearly, increased use of ethanol will play an important role. However, what

is not so clear is the speed and degree to which refiners can or will make up the

loss in volume and quality of gasoline given all the other demands for improved environmental quality of gasoline and diesel fuel, the uncertain market conditions, and

the continuing growing demand for all petroleum products.

Resolving the role of all oxygenates in gasoline will be important to the refinery

planning and construction process that is starting to take place as refiners prepare

for the Tier II low sulfur gasoline program, potential new gasoline toxic control requirements and other fuel quality changes for diesel fuel. However, if MTBE must

be reduced or eliminated in the same time frame, refiners will be faced with additional demands for capital and engineering resources that they may not be capable

of meeting. The outcome of this could be a significant further tightening of gasoline

supplies, price increases and price volatility that are not predicted in the cost analyses we and others have done.

Obviously, the serious problem of MTBE contamination of water supplies must be

addressed. Short of eliminating MTBE from gasoline, there may be other options for

dealing with this issue. In addition to doing our best to reduce the leaking of gasoline from underground storage tanks, the primary source of MTBE reaching water

supplies, and the spilling of gasoline containing MTBE, reducing the amount of

MTBE allowed in any given gallon of gasoline (i.e. its allowable concentration) and

increasing the flexibility of the oxygenate requirement in RFG are possible approaches for mitigating the problem, particularly in the short term. Our examination of these options, included in the refinery analyses performed by our Oak Ridge

National Laboratory that I am submitting for the record, indicates that the cost and

potential market impacts of a phase-down in allowable level of MTBE would be significantly less, about half the per gallon cost, than a phase-out of MTBE from the

entire national gasoline pool.We do not know what the right answer is at this point

but we are prepared to work with EPA, Congress, the States, and the fuel supply

industry to develop an approach that fully addresses thewater quality problems and

still assures adequate supplies of gasoline at reasonable prices.

Thank you for the opportunity to present this testimony. I will be glad to answer

any questions you may have.

Mr. GREENWOOD [presiding]. Thank you.

Mr. Greenbaum.

STATEMENT OF DANIEL S. GREENBAUM

Mr. GREENBAUM. Thank you. This microphone is working. Thank

you, Mr. Chairman and members of the subcommittee.

For the record, I am Dan Greenbaum. I come before you today

both as the Chair of the Blue Ribbon Panel as well as someone who

has nearly 10 years of experience with the RFG Program, first as

the Commissioner of Environmental Protection in Massachusetts,

where I ‘‘opted’’ the entire State into using the RFG program, and

then more recently in 1996 as president of an independent research

institute that reviewed the health effects of both MTBE and ethanol.

I would like to start by highlighting four points.

First, to echo what many have said already, that the RFG program has been an air quality success.

Second, to note that the availability of cost-effective oxygenates

such as MTBE played a role in the early air quality success of the

program. However, there are now alternative formulations using

both ethanol as well as other components of crude oil that do not

rely on MTBE and that can maintain the air benefits and relatively

low cost of the program so long as there is adequate lead time to

implement changes and assurance of no backsliding in air quality.

53

Third, as many have noted, there have been—and this is documented in our report—growing detections of MTBE in drinking

water, with MTBE detected in between 5 and 10 percent of both

public and private drinking water supplies in RFG areas. The great

majority of these detections, fortunately, have been below levels of

public health concern. However, approximately 1 percent have

risen to levels above 20 parts per billion and in some rare instances

levels are above 100 parts per billion. Detections at lower levels

have raised significant consumer taste and odor concerns that have

caused water suppliers to stop using some water supplies and incur

costs of treatment and remediation.

Fourth, the major source we found of groundwater contamination

appears to be releases from underground gasoline storage systems.

As you know, these systems have been upgraded over the last decade in response to rules adopted by EPA in 1998, and that has resulted in reduced risks. However, as of last year, approximately 20

percent of those storage systems had not yet been upgraded, and

there continue as well to be reports of releases in some upgraded

systems.

The other major sources of contamination appear to be small and

large gasoline spills and recreational water craft.

This issue of detection of MTBE in drinking water was why the

panel was formed in the first place. That panel consisted of experts

on air and water quality, as well as representatives of the oil, ethanol, and the MTBE industries and the environmental community.

Based on our investigation, six meetings held in 6 months in a

variety of parts of the country, the panel recommended that both

U.S. EPA as well as Congress working with the States implement

a four-part integrated package of reforms to ensure that water supplies are better protected while the benefits of RFG are maintained.

Specifically, one, the panel recommended a comprehensive set of

improvements to the Nation’s water protection programs.

Two, the panel agreed broadly that use of MTBE should be reduced substantially, with some members supporting its complete

phase-out, and that Congress should act to provide clear Federal

and State authority to regulate and/or eliminate the use of MTBE

and other gasoline additives that threaten drinking water supplies.

Three, the panel recommended that Congress remove the current

Clean Air Act requirement that 2 percent of RFG by weight consist

of oxygen, to ensure that adequate fuel supplies can be blended in

a cost-effective manner while reducing the use of MTBE.

Fourth, and finally, the panel recommended that EPA and Congress seek mechanisms to ensure that there is no loss of current

air quality benefits as the use of MTBE declines.

We also called for accelerated research into all compounds whose

use would likely increase as replacements for MTBE, including ethanol, aromatics, and alkylates. A copy of the report is available at

the panel’s homepage on the Internet.

Although we agreed broadly on our recommendations, two members, while agreeing with most of them, had concerns with specific

provisions, and their statements are also included in the panel’s report.

54

In sum, the panel found that we have a successful cleaner-burning gasoline program, but we need to take action today to ensure

that the detections of MTBE in drinking water that we have seen,

and which fortunately in the great majority of cases have not yet

been of public health concerns, do not continue to grow.

Thank you for this opportunity. I would be glad to answer questions.

[The prepared statement of Daniel S. Greenbaum follows:]

PREPARED STATEMENT OF DANIEL S. GREENBAUM, PRESIDENT, HEALTH EFFECTS

INSTITUTE AND CHAIR, BLUE RIBBON PANEL ON OXYGENATES IN GASOLINE

Mr. Chairman, and members of the Subcommittee, thank you for the opportunity

to appear before you today. For the record, my name is Daniel Greenbaum and my

comments today are based on nearly a decade’s experience with the RFG program:

first, as Commissioner of Environmental Protection in Massachusetts in the early

1990’s where I ‘‘opted’’ the state into RFG; second as President of HEI—an independent institute that reviewed the health effects of both MTBE and ethanol in

1996, and finally and most recently as Chair of the Blue Ribbon Panel on

Oxygenates in Gasoline, whose recommendations were published last July.

I would like to highlight four points:

1. The RFG program has been an air quality success. It has provided substantial

reductions in the emissions of a number of air pollutants from motor vehicles,

most notably volatile organic compounds (precursors of ozone), carbon monoxide,

and mobile-source air toxics (such as benzene, 1,3-butadiene, and others), in

most cases resulting in emissions reductions that exceed those required by law;

2. The availability of cost-effective oxygenates such as MTBE (Methyl Tertiary Butyl

Ether) likely played a role in the early air quality success of the program. However, there appear now to be alternative formulations, that do not rely on

MTBE, that can maintain the air quality benefits and relatively low cost of the

program, so long as there is adequate lead time, and assurance of no backsliding in air quality.

3. There have been growing detections of MTBE in drinking water, with MTBE detected in between 5% and 10% of both public and private drinking water supplies in RFG areas. The great majority of these detections have been below levels of public health concern, with approximately one percent rising to levels

above 20 ppb and some rare instances of levels above 100ppb. Detections at

lower levels have raised consumer taste and odor concerns that have caused

water suppliers to stop using some water supplies and to incur costs of treatment and remediation.

4. The major source of groundwater contamination appears to be releases from underground gasoline storage systems (UST). These systems have been upgraded

over the last decade, likely resulting in reduced risk of leaks. However, as of

last year approximately 20% of the storage systems had not yet been upgraded.

There continue, as well, to be reports of releases from some upgraded systems.

The other major sources of water contamination appear to be small and large

gasoline spills and recreational water craft.

This detection of MTBE in drinking water supplies led to the formation of the

Blue Ribbon Panel. The Panel consisted of experts on air and water quality, as well

as representatives of the oil, ethanol, and MTBE industries, and the environmental

community.

We began our work in January, 1999, and conducted an in-depth investigation of

the air quality, water quality, fuel supply, and price issues surrounding the use of

oxygenates in gasoline, holding six meetings in six months in Washington, New

England, and California, hearing from experts, and reviewing dozens of existing and

new studies of oxygenates in gasoline.

Based on its investigation, the Panel recommended that U.S. EPA work with Congress and the states to implement a 4-part integrated package of reforms to ensure

that water supplies are better protected while the substantial reductions in air pollution that have resulted from RFG are maintained. Specifically,:

• the Panel recommended a comprehensive set of improvements to the nation’s water

protection programs, including over 20 specific actions to enhance Underground

Storage Tank, Safe Drinking Water, and private well protection programs. The

panel considered these necessary, but not sufficient in and of themselves, to prevent future water contamination.

55

• the Panel agreed broadly that use of MTBE should be reduced substantially (with

some members supporting its complete phase out), and that Congress should act

to provide clear federal and state authority to regulate and/or eliminate the use

of MTBE and other gasoline additives that threaten drinking water supplies;

• the Panel recommended that Congress act to remove the current Clean Air Act requirement that 2% of RFG, by weight, consist of oxygen, to ensure that adequate

fuel supplies can be blended in a cost-effective manner while reducing usage of

MTBE; and

• the Panel recommended that EPA seek mechanisms to ensure that there is no loss

of current air quality benefits as the use of MTBE declines.

The Panel also called for accelerated research into all compounds whose use would

likely increase as replacements for MTBE, including aromatics, alkylates, and ethanol. A copy of the full report of the Panel, including the Executive Summary and

Recommendations which were issued on July 27, 1999, is available at the Panel’s

Home Page on the Internet: http://www.epa.gov/oms/consumer/fuels/ oxypanel/

blueribb.htm

Although the Panel agreed broadly on its recommendations, two members, while

agreeing with most recommendations, had concerns with specific provisions. Their

statements are included in the Panel’s report.

In sum, the Panel found that we have a successful cleaner-burning gasoline program but need to take action to ensure that the detections of MTBE in drinking

water that we have seen—and which fortunately in the great majority of cases have

not been of public health concern—do not continue to grow.

Thank you again for this opportunity to testify. I would be pleased to answer any

of the Committee’s questions.

Mr. GREENWOOD. I thank all three panelists for their testimony,

and the Chair will recognize himself for 5 minutes for inquiry.

I would like to direct my first question to Mr. Perciasepe.

Reading from your testimony on page 5, you list the panel’s recommendations, and one of them is very straightforward. It says,

‘‘Amend the Clean Air Act to remove the requirement that Federal

reformulated gas contain 2 percent oxygen (by weight).’’

The same page, you say, ‘‘EPA believes that a comprehensive approach must include consideration of either reducing or eliminating

the use of MTBE as a gasoline additive in an expeditious and practical timeframe.’’

At the end of your testimony, you said, ‘‘We also are committed

to working with Congress to provide a targeted legislative solution

that maintains our air quality gains and allows for the reduction

of MTBE, while preserving the important role of renewable fuels

like ethanol.’’

So I think it is time to get right down to it. The question I have

for you is: Does EPA agree that the Clean Air Act should be

amended to remove the reform requirement that the Federal reformulated gasoline contain 2 percent oxygenate?

Mr. PERCIASEPE. This issue is being looked at across the administration. The issue that the Chairman brought up and that you are

asking now is, do we have specific administration recommendations

to the Congress on this? And I am going to take that—take the

Chairman’s request back to the administration, and we will work

on that.

But let me just say, the administrator, in receiving the Blue Ribbon Panel’s report, said that EPA embraces these recommendations.

Now, I would add on the—I believe on the same page, and I

can’t—I have asked the chairman over here, but I can’t remember

for sure, but on the same page, I think, of that report, or in some

section of the report, it talked about the other policy goals that

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Congress had that are in the legislative record in 1990 in establishing the 2 percent oxygenate requirement.

So you hit on a very sensitive—it is going to be sensitive for us

and sensitive for you—parameter of solving this problem.

How do you provide more flexibility for refiners to deal with this

MTBE issue and, at the same time, meet the other objectives, both

air quality, and I might add, when the debate took place in 1990,

agricultural policy and energy policy in terms of the volume of the

Nation’s fuel and where does it come from? And they were specifically talking about renewable fuel.

So I believe that in the Blue Ribbon Panel’s report, when the

panel acted on that recommendation, it added a statement that

when Congress considers removing the 2 percent oxygenate requirement that the panel expects that Congress will also want to

consider those other policy objectives it had in establishing that requirement.

Now, that being said, a practical person without any administration position to carry in a briefcase here today would be, you know,

the obvious; and that is, the 2 percent oxygenate requirement can

be, and as my colleagues in California and the member from California will point out, somewhat constraining in terms of solving the

MTBE, not impossible, but somewhat constraining.

The flexibility provided by removing the oxygenate requirement

perhaps could make the MTBE reduction go more quickly, but then

you run the risk of losing perhaps other objectives Congress had

when they enacted the 2 percent option.

Mr. GREENWOOD. I think it goes without saying that whatever

we consider legislatively here will have a no-rollback provision. So

the assumption going in, I think, on the part of every member in

this panel is there is no rollback in air quality. But we do have to

fish or cut bait here. We do have to decide to get rid of the 2 percent or not.

Let me ask you another question—my time is running out—and

that is: What are your assumptions about what would be most likely substituted for MTBE? Do you agree with the assumption that

ethanol is not going to work in every geographic location in the

country for issues of transport and volatility? And what are the

most likely substitutes? And in 10 seconds, what are their potential

unintended consequences environmentally?

Mr. PERCIASEPE. Okay. Very quickly, removing the 2 percent oxygenate requirement will provide more flexibility for all of us to

solve the problem, but it will not answer all the other issues that

have to be brought to bear, both politically and substantively, to

solve this problem. I will leave the political to all of you.

Now, the substantive side is that oxygenates of some kind or another are always going to be needed in gasoline. They are good for

octane. They dilute the aromatics which are the toxic emitters,

things like benzene. And we won’t be able to achieve the same if

we have a no rollbacks on toxics and things like distillation characteristics of gasoline which relate to driveability of the car. All of

these are going to require some oxygenates.

So the matter, then, of just removing the oxygenate standard

won’t necessarily solve the bigger problem we have here, because

there is going to be a need to meet some of these other parameters.

57

So things that are likely to replace MTBE, if you couple the increased flexibility in making reformulated gas with the requirement to maintain all these same benefits, things that are likely to

replace it would be ethanol, and it could be other components.

There may be some aromatics that could be increased, depending

on how the constraints are placed on it; and there could be things

like alkylates, which also have a reasonable octane profile.

And now the characteristics of those things I just mentioned as

they relate to MTBE, ethanol, obviously, is soluble in water, but it

is much more quickly degraded and easily removed. It doesn’t have

those kinds of characteristics of MTBE.

Alkylates and some of the other parameters that might—other

components or constituents that might be added all to replace the

volume are more likely to act as the same as the rest of the—of

what the oil and gasoline people call the BTX complex—the benzene, toluene, and xylene—and other components of the gasoline is

likely to stay closer to that plume and not get out ahead.

Keeping in mind that gasoline in the ground or in the water is

bad, and we are going to have to get it, it is the delta badness or

problem that is presented by these highly soluble chemicals that

move more quickly, and the ethers generally fall into that category.

I tried to do that, not in 10 seconds, unfortunately.

Mr. GREENWOOD. You did a good job.

Mr. Pallone from New Jersey for 5 minutes.

Mr. PALLONE. Mr. Chairman, just procedurally, I was going to

ask if we could have Mr. Barrett next and after the next Republican if you would come back to me.

Mr. GREENWOOD. Without objection, the Chair recognizes Mr.

Barrett for 5 minutes.

Mr. BARRETT. Thank you, Mr. Chairman.

Mr. Perciasepe, you have a copy, I think, in front of you of the

April 6, 1987, memorandum, correct?

Mr. PERCIASEPE. Just placed here, correct.

Mr. BARRETT. And I don’t mean to blindside you with that, but

my understanding is the first time the committee received this document was yesterday afternoon. Is that correct?

Mr. PERCIASEPE. I don’t know when the committee received it.

Personally, I don’t know.

Mr. BARRETT. Let me just check and verify.

Mr. PERCIASEPE. Much of this was published in the Federal Register of 1980.

Mr. BARRETT. The memorandum I am referring to was first received by this committee yesterday morning, and this is a memorandum that makes reference to the mental health and groundwater effects of MTBE, isn’t it?

Mr. PERCIASEPE. Yes. Yes, it does refer to those potential issues.

Mr. GREENWOOD. If the gentleman will yield, the counsel advises

that this committee received the memorandum by fax from EPA

yesterday.

Mr. BARRETT. Yesterday. So this was the first time that this committee has ever received this memorandum.

This member, again, I made reference to in my opening statement, says that the health effects of MTBE cited in this memo are,

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quote, chronic inhalation toxidity, including neurotoxic, hematologic, and oncogenetic effects.

When EPA came to Milwaukee in 1995, there were complaints of

headaches, dizziness, and nausea, which I would think would be

compatible with that same finding. Would you agree with that?

Mr. PERCIASEPE. Yes.

Mr. BARRETT. And we were not told of this study at that time.

Is that correct?

Mr. PERCIASEPE. I don’t know—I have no personal knowledge. I

don’t have any reason to disagree with you. I would say it is likely

that that is the case, but I don’t know.

Mr. BARRETT. Why would EPA—and I realize you don’t have any

personal knowledge, but given the claims that were made at that

time, why would EPA not have acknowledged its own memorandum underscoring exactly what the complaints were?

Mr. PERCIASEPE. My understanding of this memorandum in

1988, it was generated inside the toxic substances section of the

agency, that is, you know, looking to see where changes are—where

things are changing. And they note there is going to be an increased use of this chemical, and in so seeing that, recommend a

research agenda to look into these issues.

I don’t think it is conclusionary about these issues. I believe that

the intent of the memo was to precipitate a research interaction

with the industry that was going to produce it, which I believe did

occur in the late 1980’s and early 1990’s, into the early 1990’s,

which resulted in research being conducted and an analysis made

in the inhalation impacts of MTBE and of gasoline in general. That

is my understanding of what the memo was for, that it was not

necessarily conclusionary at the time.

Mr. BARRETT. And I understand it. But, again, for the record,

when EPA came to Milwaukee in 1995, we were essentially told

there were no health concerns with MTBE. And this document certainly contradicts that or at least preliminarily contradicts that,

doesn’t it?

Mr. PERCIASEPE. Well, look, I—it is easy for me to say I didn’t

participate in Milwaukee and the early phases of this. But let me

just say that the purpose of the memo was to set forth a research

agenda. The context of inhalation of MTBE at a pump in conjunction with the inhalation of things like benzene and toluene and

olefins and paraffins and everything else that is in gasoline, it is

a toxic brew of very potent chemicals. I can understand why you

are trying to tease out what is any additional risk that may be provided. Inhaling gasoline is carcinogenic. So the question is——

Mr. BARRETT. I am not trying to tease out anything. I am angry

that when I was standing before 600 people that EPA didn’t say

there are some questions. I am angry about that, because I think

it was irresponsible. And now, 5 years later, to get this memorandum and to be told that there is some concern——

And I look at the Federal Register. You are right. The Federal

Register here and on page T2 here, it says, the agency has reviewed these studies and has determined that additional testing is

necessary to determine whether distribution of MTBE presents an

unreasonable risk of injury to health as discussed above. Producers

of MTBE represented by the MTBE task force have agreed to perVerDate 11-MAY-2000 11:14 Aug 31, 2000 Jkt 065685 PO 00000 Frm 00062 Fmt 6633 Sfmt 6602 E:\HEARINGS\62976 pfrm01 PsN: 62976
59

form the necessary tests to determine the effects, if any, associated

with the use and distribution of MTBE.

The people selling the product are the ones who are going to be

determining this. I am looking for some credibility here.

Mr. PERCIASEPE. Under the Toxic Substances Control Act, which

is the only place we have any authority to deal with this, that requires us—it provides the authority to require the manufacturers

to do the testing and do the studies which they did do.

Mr. BARRETT. But my request to you is never in your agency go

into a city again when you have a document like this and allow

elected officials to stand before the public and ask them to support

you and not give them a document like this. It is unconscionable

that those of us who believe in a clean environment and want to

have people have trust in your agency have to go back to the people

we represent and say, well, I am sorry, they didn’t give us all the

information.

I yield back the balance of my time.

Mr. GREENWOOD. The Chair recognizes the gentleman from Iowa,

Dr. Ganske, for 5 minutes.

Mr. GANSKE. Thanks, Mr. Chairman. I just have to say that I am

as troubled as Mr. Barrett is that a memo come—that was written

in 1987 was not made public during hearings.

I want to summarize what I took from your three testimonies.

No. 1, MTBE, bad stuff. No. 2, ethanol, okay stuff. No. 3, don’t

throw out the baby with the water. In other words, don’t throw out

RFG with MTBE.

Now, Mr. Perciasepe, knowing what you know now, what would

be the impact on air quality in cities like Los Angeles if oxygenates

were removed from gasoline and significantly reduced?

Mr. BILBRAY. Excuse me. Could I ask the gentlemen to clarify?

Is it oxygenates or the 2 percent mandate?

Mr. GANSKE. Oxygenates is my question.

Mr. BILBRAY. Okay.

Mr. PERCIASEPE. You know, based on what I know, and, believe

me, I am not the complete expert on that level of—I mean, there

is a lot of technical information that has to go into answering that

question. But based on my understanding, oxygenates enable reduction in toxic emissions from gasoline that is burned in motor vehicles. They have other characteristics in terms of the distillation

characteristics and octane characteristics of the gasoline. Can you

do it without oxygenates, meet the same kind of performance

standard? I believe, from what I know, that it is technically possible to do it. Whether it is possible to do it in a reasonable cost,

in a reasonable time and all those other parameters that always

have to be taken into consideration as we look at these things, I

am not competent to be able to give you a full answer.

Mr. GANSKE. If we removed oxygenates today, would it be a good

thing or a bad thing for Los Angeles?

Mr. PERCIASEPE. I think oxygenates have improved the air in Los

Angeles.

Mr. GANSKE. Okay. I have been told, and we are going to hear

later today, that in the absence of an oxygenate standard, an elimination of MTBE would lead refiners to increased production in

blending of aromatics and alkylates. In fact, I have been told Mr.

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Robert Campbell, CEO of Sunoco, who will get a chance to rebut,

has recommended toluene as a substitute for MTBE. Correct me if

I am wrong, but isn’t toluene an aromatic?

Mr. PERCIASEPE. Toluene is an aromatic. I think our view of this

would be that if you provide the flexibility of a reduced or eliminated oxygenate mandate, that you will have to have safeguards

put in place to keep the backsliding, keep the baby from being

thrown out with the bath water. And that will control, as the State

of California does, the content of aromatics. But if you have the

proper air quality performance standards, you will avoid that problem and provide flexibility on how you achieve it, which will include oxygenates.

Mr. GANSKE. If you increased production and blending of aromatics and alkylates, can you discuss for us the impact that that

would have on emissions and health-related matters associated

with those compounds? Would it be a good thing or a bad thing?

Mr. PERCIASEPE. I would say replacing oxygenates with alkylates

or aromatics will, depending on how much you use and what you

do to the other parts of the gasoline, olefins and paraffins and all

the other chemicals that are in there could increase toxic emissions.

Mr. GANSKE. Thank you.

Now, I want to just finish up. I have got MTBE right here. I

don’t think you want me to dump this down the drain, do you——

Mr. PERCIASEPE. No.

Mr. GANSKE [continuing]. Here in Washington.

Mr. PERCIASEPE. No, I wouldn’t want you to dump any part of

gasoline down the water.

Mr. GANSKE. Great. How do I get rid of this?

Mr. PERCIASEPE. Once it is in the water or——

Mr. GANSKE. Now. No, how do I get rid of it? What is the EPA’s

recommendation of getting rid of MTBE?

Mr. PERCIASEPE. There are probably five or six different ways

you can enact legislation that would provide for a path to get rid

of MTBE.

Mr. GANSKE. I am just asking how do you get rid of it physically.

Mr. PERCIASEPE. How do you get it out?

Mr. GREENWOOD. What is he supposed to do with that vial after

this hearing is over?

Mr. GANSKE. Am I supposed to dump it into an incinerator or

what?

Mr. PERCIASEPE. I apologize. You mean, when it is in the water

how do you remediate it?

Mr. GANSKE. No. I’ve got my little vial of MTBE. It is bad stuff.

I can’t dump it down the drain or I am going to contaminate Washington, DC’s water, oaky? So how do I get rid of it? What is the

EPA’s recommendation for disposing of MTBE?

Mr. GREEN. Mr. Chairman, maybe you can send it back to wherever you brought these vials from.

Mr. GANSKE. Should I give these all to Mr. Green to take back

to Texas?

Mr. PERCIASEPE. I will take it to my office and store it for you.

But the current method of getting rid of MTBE is burning it in gasoline.

61

Mr. GANSKE. So the emissions, as people drive through Iowa, can

get into our groundwater.

Mr. PERCIASEPE. I mean, I don’t think that that would be the result.

Mr. GANSKE. All right. Thank you very much, Mr. Chairman.

Mr. PERCIASEPE. We do have gasoline experts here, I want to

say, from the Department of Energy.

Mr. GREENWOOD. The procedural next step is to recognize the

gentleman from New Jersey.

Mr. Greenbaum, it looked like you were pregnant with comment

there.

Mr. GREENBAUM. It only took us 6 months, not 9 months, to complete the Blue Ribbon Panel’s report.

I just briefly want to note to Dr. Ganske, actually, the Blue Ribbon Panel considered and rejected a recommendation of any option

that would say don’t use oxygenates. We did not say that and

didn’t say that in our recommendations and would assume that

some form of oxygenated fuel would be a part of the solution, as

would some fuel formulations that had no oxygenates in them. We

were concerned that, if too much aromatics came into that mix, you

would lose some of the air quality benefits, which is why we called

for mechanisms to assure that the air quality standards stay just

as tight as they have been.

Mr. GANSKE. So you would be concerned about toluene also.

Mr. GREENBAUM. We would be concerned about any of the aromatics. We said that. That is why we constantly reject the idea

that you wouldn’t have any oxygenates in the mix because we understood they would be a useful part of the mix.

Mr. GANSKE. Thank you.

Mr. GREENWOOD. Mr. Pallone for 5 minutes.

Mr. PALLONE. Thank you, Mr. Chairman.

I wanted to ask Mr. Perciasepe, if we want to do so, how would

we go about waiving the oxygenate requirement? For example,

would you leave it solely to the States to do, to the EPA administrator? How would you actually do it if we were to legislate that?

Mr. PERCIASEPE. I think the preferred approach would be to provide a national approach to this to avoid a, you know, and this will

probably sound pejorative, but a patchwork quilt of different fuel

requirements. I mean, to the extent we can, and I will—I would

like to defer to at least a little bit of this to some of my colleagues

here, particularly from Energy. But to the extent that you have

many different kinds of gasoline recipes to be produced and delivered in the country, you are going to, in general, as you know, as

a proportion, potentially increase the price of gasoline and have a

hard time controlling the quality of what we are expecting these

recipes to do for us in terms of these other policy objectives like

clean air.

On the other hand, Congressman, I am not opposed to, nor is

EPA opposed to, providing the States with more flexibility. But I

think that the solution we would prefer would be a national approach to dealing with the problem.

Mr. PALLONE. In the Blue Ribbon Panel, they seem primarily

concerned about the potential increases in toxic air pollutants. And

again to Mr. Perciasepe, but, if you know, I just want to add in,

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in your view is there reason to be concerned about other pollutants

as well such as carbon monoxide or not?

Mr. PERCIASEPE. As I said in my opening comments, there are a

number of computer models that are around that you use to predict

the emissions characteristics from a—sort of average fleet of cars.

Remember, there are all these different cars as well as all these

different recipes of what the emissions would be, you know, in an

aggregate way. And it is based on real data from many hundreds

of cars that are incorporated into these models. So you can look at

different recipes. In general, if you increase aromatics, you are

going to increase toxics. If you decrease oxygenates, you could have,

if—depending on how the filling takes place, if you fill it with aromatics, you could have increased toxic emissions.

It should be pointed out that all the gasoline formulations we are

talking about have a substantial amount of aromatics in them. I

don’t know what the average is, but it is at least 18 to 22 percent,

something like that. So there are consequences of how you change

the formula.

And this is one of the central issues that we are trying to deal

with in California. If you decrease the oxygenate requirement,

what are you going to put into place? So California had to go

through a process of changing their phase 3 clean burning gasoline

last November and December so they can specify, you know, how

they would replace it and then run their version of this model I am

talking about to look at the, you know, if everything else is held

constant, what happens as you change the oxygenate requirement.

And generally what happens, as you change the oxygenate environment, things happen to nitrogen oxides, carbon monoxide, and

other various volatile organic compounds. Some go up; some go

down.

So in addition to just looking at increased nitrogen oxide potential, or decreased, you have to look at the other ones and then look

at the net effect of that on the ozone problem.

Mr. PALLONE. Well, if you could tell me, what are the potential

health or water quality or air quality effects of phasing down the

MTBE versus phasing it out? Because obviously we have talked

about one versus the other, phasing it out as opposed to phasing

it down.

Mr. PERCIASEPE. I think you have hit on one of the other difficult

points that are going to have to be decided between us as we move

to solve this problem. I mentioned data that is available, and I

think it is to some extent summarized in the blue ribbon panel report.

If you go to areas of the country that are using conventional gasoline, which may or may not have some MTBE in it as an octane

booster, you see very low occurrences of MTBE detections in the

groundwater—I think it is 2 percent—and you go to the RFG areas,

where you use a large volume of it, up to 10 to 11 percent of the

gasoline, you see more detections. So the relationship of the volume

of MTBE used in the gasoline to the frequency of detection in the

groundwater is clear, and it has been established by the U.S. Geologic Survey.

So that would lead you to believe that at some point there may

be a volume that would be a manageable level. I am not at that

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point. If you want to take the purely precautionary approach, you

are going to want to completely shift. But on the other hand, as

we get into this, there is going to be a technical aspect to this that

needs to be looked at to balance all these public purposes that we

are trying to achieve here, including air quality.

Mr. PALLONE. Thank you. Thank you, Mr. Chairman.

Mr. GREENWOOD. The Chair recognizes the gentleman from California, Mr. Bilbray, for inquiry.

Mr. PERCIASEPE. I just want to point out that my colleague from

the Department of Energy keeps pointing out that I am answering

these relatively correctly.

Mr. GREENWOOD. You have not noticed it, but sometimes he has

been shaking his head in dismay.

Mr. PERCIASEPE. If he starts doing this, let me know.

Mr. BILBRAY. Bob, let us try to clarify. There was an interesting

issue here with the questions about Los Angeles, and I was telling

my colleague that maybe Denver would have been a better example

because there is always the backup there. We need to clarify that

California already has a reformulated mandate in the rest of the

State where the Federal Government does not have a mandate. So

if L.A. dropped out of the Federal mandate, we have a state-ordered mandate already there; is that right?

Mr. PERCIASEPE. That is right.

Mr. BILBRAY. So that is why the world does not come to an end.

If it was some other nonattainment area or severe area, you do not

have those guarantees.

Mr. PERCIASEPE. Right. But the question about the oxygenate is

universal to both inside and outside L.A.

Mr. BILBRAY. What is interesting is that even to the extreme of

using no oxygenates at all, we are at a point we never thought we

would be at 10 years ago, and that is that there may be ways of

doing it as clean without any oxygenate. I think economically we

are going to maintain it, and I think that that has statistically

been proven.

What I want to clarify is that when you were talking about the

burden of proof regarding the California waiver, we need to clarify

what that is. Your burden of proof that you are trying to determine

is that you have to prove that the California formula is cleaner and

will fulfill the mandate quicker, as opposed to H.R. 11 that says it

is equal to or better. Is that the big difference we have between

H.R. 11 and your existing mandate right now, the burden of proof

of is it cleaner or is it equal to?

Mr. PERCIASEPE. In terms of the waiver request?

Mr. BILBRAY. Yes.

Mr. PERCIASEPE. Yes, the waiver request is pretty specific. Let

me try to explain that, and then we can make the comparisons.

The Congress put in the Clean Air Act in 1990 that the administrator could waive in part or in whole the oxygenate requirement

if the State can show that the inclusion of that oxygenate requirement is interfering with the attainment of a national ambient air

quality standard.

You can see the multilayers. And so we are trying to use that

provision to deal with a groundwater problem.

64

Mr. BILBRAY. Okay. So one thing I was concerned about is the

tailpipe emission issue. In California we discovered that we grossly

underestimated the evaporative emissions, so we have gone to the

bar in testing the modeling based on cold start, hot start, the total

emissions rather than tailpipe emissions. And I hope, when we talk

about this issue, we are trying to use the best-case modeling available.

We have disagreed back and forth between the EPA and California; and frankly, to pat California on the back, when we have

gone to court, we have done pretty darn well. Wouldn’t you agree?

Mr. PERCIASEPE. Yeah.

Mr. BILBRAY. I want to congratulate the chairman, Mr. Greenbaum, for this report. I think it gave us the blueprint of exactly

where we ought to go and what we need to move forward with. The

challenge I see, though, is trying to articulate to the rest of America why you could, in a report, say that dropping the mandate in

California will increase the ability for air quality to be able to be

addressed, and that this flexibility is a tool to help the environment, but at the same time saying outside of California this flexibility may constitute a threat.

Can you explain to the members here why you can say, basically,

move forward in California because it will help, but take a close

look at what you are doing nationally, because it may hurt? Can

you explain the difference?

Mr. GREENBAUM. I can certainly try, Congressman. First of all,

I think the key to understanding—and you certainly understand it

and I think others do, that California has for a long time had its

own set of air quality standards for fuels as well as car emissions.

And those, in some respects, actually have been more stringent

than the standards that the Federal Government has had, although there are differences in how they are done.

Nationally, we have had the Federal RFG program. We have a

program that had a first phase in January 1995 and a second

phase coming into effect this year, in January 2000. What we saw

is the first phase nationally actually exceeded our expectations. We

got lower reductions, more reductions of air toxics, of precursors to

ozone than what was even put in the act and what was required.

When we looked, however, at the next phase of RFG, what we

found was that for most of those, for nitrogen oxides and for volatile organic compounds that are precursors of ozone, the new standards would actually be even tighter than what we have achieved

in the first phase nationally.

The one area where that was not true was in air toxics, where

the requirement for air toxic reductions from clean air RFG phase

II was not as tough as what we actually achieved in phase I. And

so the concern was this might be the margin that absolutely requires oxygenates or, at a minimum, requires tougher standards

nationwide.

In California that was less of a problem, because California had

a different way of controlling the air toxic components. And so

what we had said was, in addition to any action to provide the

flexibility to blend the fuels, we also needed the assurance that

there was some tightening of the standards, particularly in the air

toxics area, so that you could be assured that no matter what was

65

used, whether it was ethanol being used, although the presumption

would be that ethanol would give you air toxic performance, or a

fuel that did not have oxygenates, which some of the companies

have said, but could meet all the other standards, that they would

also meet the air toxic standards.

Mr. BILBRAY. So the real challenge is to develop those air toxic

protection strategies nationally as they have done it back in Sacramento.

Mr. GREENBAUM. That is correct.

Mr. BILBRAY. A question to the EPA.

Mr. GREENWOOD. Does the gentleman request unanimous consent for an additional 2 minutes?

Mr. BILBRAY. Yes, I do, Mr. Chairman. I appreciate that.

Mr. GREENWOOD. Without objection.

Mr. BILBRAY. There was a discussion that there was a strategy

here, in the 1990 modifications of the Clean Air Act, of 2 percent

oxygen mandate, for energy independence. My question is, if that

was the overt intent, and if that was a major factor in the implementation of this law, why did it not apply universally in the

United States? Why would it only apply in those areas where there

are public health threats if you want to implement a national energy independence strategy?

Mr. PERCIASEPE. I really do not know—I mean, I just know the

general legislative history. I do not know why that was. I think

probably those things were discussed, and the solution or the conclusion of the debate was let us do it in these areas. Because, after

all, it does have, these oxygenates do have these beneficial effects.

They reduce toxics.

Let me be clear. Emissions from gasoline, vapors from gasoline

with oxygenates, are less toxic, whether it be ethanol or MTBE,

than without it. And the same thing with the emissions and the

combustion. So there was a convergence there that I can only speculate on.

Mr. BILBRAY. But we can speculate that because it was not applied universally it was an ancillary, not a major focus of the legislation.

Mark, there was a letter that your department sent to the Alcohol Fuel Caucus on November 1, 1999, in response to a question

about the potential impacts of H.R. 11 on the Midwest markets.

And in that letter you wrote that ‘‘a number of specific assumptions

would have to be made and many complicated market interreactions would have to be addressed to address your question specifically. H.R. 11 in and of itself will have little direct or predictable

effect on midwestern gasoline markets.’’

Now, the fourth paragraph there, I think, is pretty telling. Would

you mind reading that fourth paragraph of your letter?

Mr. MAZUR. Sure. The letter that I sent to the House Alcohol’s

caucus, fourth paragraph on page 2, says: ‘‘in trying to understand

all these possible effects, it is important to understand that California is a very large but relatively isolated gasoline market. Actions taken in California can and do impact other gasoline and gasoline blend stock markets. However, these impacts are limited or

mitigated by the lack of direct and low-cost logistical links between

California and these other gasoline supply centers. Other than the

66

effect on the demands for and the price of oxygenates like MTBE

and ethanol, impacts on the Midwest markets caused by California

actions are likely to be limited.’’

And that is all in the context of the discussion of H.R. 11.

Mr. GREENWOOD. The gentleman’s time has expired. The Chair

recognizes the gentleman from Texas, Mr. Green, for inquiry.

Mr. GREEN. Thank you, Mr. Chairman, and I am glad my colleague from California had an extension on his time, because we

talk a lot slower in Texas, and I might ask for that, too.

Mr. Mazur, in your testimony you suggested phase-in of a number of years, if we actually abolished MTBE. We have heard 3 or

4 years from Congressman Forbes. Does the department have any

suggestion: 3 or 4 years, 5, 7 years?

Mr. MAZUR. Well, we understand some people in the industry

have said 4 years would be a sufficient amount of time to allow the

refining distribution systems to adjust to a situation where MTBE

was not used in gasoline. We have an ongoing study by the National Petroleum Council, which is an advisory council made up of

industry members to the Secretary of Energy, and they advise on

oil and gas issues.

Looking at the total investment and construction costs facing the

refining industry, with a wide range of product changes that are

taking place, Tier 2 rules and so on, they conclude it would be difficult to address the low sulfur gasoline rules at the same time you

are faced with eliminating MTBE.

Mr. GREEN. That gets to my second question. Then you are talking about the Tier 2 standards?

Mr. MAZUR. The low sulfur gasoline and then the ultra low sulfur

diesel fuel.

Mr. GREEN. And the concern I have—and can the Department of

Energy assure me that the refiners will have the additional demands for capital engineering or resources to not only eliminate

MTBE at the same time they are preparing for Tier 2 potential

toxic control requirements?

Mr. MAZUR. That is exactly the question that the National Petroleum Council is looking at, and their report will be done sometime

this summer.

Mr. GREEN. But 4 years may be too short; is that correct?

Mr. MAZUR. At this point I don’t want to speculate if it is too

short or too long or whatever.

Mr. GREEN. So if we passed a bill that said 3 or 4 years, as Congressman Forbes mentioned, we wouldn’t know?

Mr. MAZUR. When you look at these costs and benefits, you will

be weighing costs and benefits on the refining industry, on the consumer and on water quality, and you will be pulling all those together. What we know is a faster phase-out or phase-down would

be more costly than a slower one. So you will have to make those

judgments.

Mr. GREEN. Mr. Bilbray is gone, but in an aside I know of the

statement from the Department about the lack of access to the

California market from the southern producers, but we have a

pipeline we are working on to go to El Paso and ultimately to California. So we will send lots of that out there so we can enter that

67

market from Texas. But that pipeline is going to be a few years

being built.

I have some questions of Mr.—could you pronounce your name

again?

Mr. PERCIASEPE. Just say Bob.

Mr. GREEN. Bob. Okay, Bob. I understand the EPA is getting

ready to propose a regulation that relaxes the standards for phase

II of RFG. Supposedly EPA is planning to increase the limits on

VOC emissions and allow refiners to take credit for certain carbon

monoxide reductions. Why is this relaxation necessary?

Mr. PERCIASEPE. We have a National Academy of Sciences report

that I think was alluded to in some of the opening comments that

looked at the relative reactivity for the creation of ozone of hydrocarbons under different uses of oxygenates. And one of the things

that the National Academy of Sciences’ report pointed out is that

ethanol does do a better job on carbon monoxide.

Mr. GREEN. So the relaxation of those would be to use ethanol;

is that correct?

Mr. PERCIASEPE. Well, it would be.

Mr. GREEN. I hate to interrupt, but I only have so much time.

Mr. PERCIASEPE. I understand.

Mr. GREEN. So the reason for that relaxation was so that refiners

could use more ethanol?

Mr. PERCIASEPE. Well, it would account for the increased carbon

monoxide reduction that you get from the use of ethanol. How it

is used by anybody will be up to them. And we have not made a

proposal yet; we are just in interagency discussions about the scientific facts of it.

Mr. GREEN. The concern I have—and again not only do I represent where the refineries are at but the people who live around

them—but it is my understanding that the proposal would result

in not only more emissions of VOCs but also more emissions of

toxic air pollutants. Is that correct?

Mr. PERCIASEPE. Well, those would be one of the things that

would have to be analyzed in the proposal process.

Mr. GREEN. In the EPA can you tell me, if you do approve those,

that that would not allow for any backsliding in the environmental

standards of the RFG program?

Mr. PERCIASEPE. The RFG statutory requirements will have to be

maintained. The issue of backsliding from current levels, which I

think we have heard from a couple of places we have been overachieving, and Dan brought this up—we have been overachieving

in many of these areas on toxics—will be a very important issue

that we would have to look at in the proposal process. We cannot

do what you are suggesting by any kind of fiat. We would have to

put a proposal out, there would have to be public comment, and we

would have to analyze it.

Mr. GREEN. And again, my concern is that the RFG program,

and MTBE is part of it because there are only two RFGs, MTBE

and ethanol—and by the way, Mr. Chairman, for the record, RFG

is 8 percent, alcohol is 8 percent, whereas MTBE is 85 percent of

the RFG. Is that correct?

Mr. PERCIASEPE. It is 85 to 87 percent is MTBE.

68

Mr. GREEN. So we are talking about something substantial to

RFG if we do remove MTBE.

I know RFG has done better than the modeling. It is a concern

of some of us on this panel that we do not want to backslide even

to the modeling amount. And I know the industry is split, but we

have benefited more from that cleaner air than the modeling expected; is that correct?

Mr. PERCIASEPE. I’m sorry?

Mr. GREEN. The modeling, when we first went into RFG, we expected so much, and that was why we went into the program; but

the actual use of RFG, MTBE, ethanol for its small percentage, actually produced better results than the modeling expected.

Mr. PERCIASEPE. That is correct, especially in the area of toxics.

Mr. GREEN. So the concern is that if you provide more use of ethanol, or if there is backsliding, I consider backsliding from actual

clean air now and not from the modeling. Does EPA still believe

that?

Mr. PERCIASEPE. I agree with that.

Mr. GREEN. Mr. Chairman, I know my red light is on, but if I

could have one more question, although it is pretty long.

Mr. GREENWOOD. Without objection, the Chair will grant an additional 1 minute to the gentleman from Texas.

Mr. GREEN. I might get the question in.

Bob, section 6 of the Toxic Substances Control Act, does that

allow the EPA to regulate or ban MTBE?

Mr. PERCIASEPE. I think it is either section or Title VI of the

Toxic Substances Control Act gives EPA some broad authority to

look at chemicals in commerce and whether they are posing an unreasonable risk to the environment or public health. There are

many, many tests that we would have to overcome to actually use

that provision of the Toxic Substances Control Act to regulate a

particular chemical in commerce.

And it is a risk-benefit, cost-benefit, looking at all other alternatives. And then the remedies that are available are reduced

use—it does not necessarily——

Mr. GREEN. Well, let me go on with the question. So obviously,

EPA can do it?

Mr. PERCIASEPE. That is correct.

Mr. GREEN. If you use it under title or section 6, do you also

weigh the problem of—for example, there are a lot of pesticides and

herbicides used in farming that can get into the groundwater, and

some of which have been proven to cause cancer, even though

MTBE has not. Do you balance that?

So if we have a choice of more ethanol to plant more corn, and

to make it productive we used more pesticides herbicides, what

have you, does EPA balance that using the section 6 or Title VI?

Mr. PERCIASEPE. Title VI is a pretty unbounded risk, risk-benefit

act. And if there is any significance or anything of significance to

what you are mentioning, it would have to be analyzed at the Department.

Mr. GREEN. I am not suggesting we should under title or section

6 talk about farm chemicals; I just want to make sure that EPA

looks at the whole gamut instead of just one particular problem.

Again, my last question, Mr. Chairman, to follow up was——

69

Mr. GREENWOOD. The Chair has granted the gentleman from

Texas even more time than he granted the gentleman from California, so the gentleman’s time has expired.

Mr. GREEN. Okay. I just talk a little slower, Mr. Chairman. If we

have a second round, and maybe we will not have anybody here

left——

Mr. GREENWOOD. The gentleman yields back his time. There will

not be a second round.

Does the gentleman from New York wish to inquire of this panel?

Mr. LAZIO. I do, Mr. Chairman.

Mr. GREENWOOD. The Chair grants 5 minutes to the gentleman

from New York.

Mr. LAZIO. I can understand, gentlemen, why, if you were from

Texas or Iowa, you would have some strong feelings about what

type of additive was being used, but I think we need to try and

move past that and deal with actual science. Let us get a sense of

ethanol and how volatile it is.

Now, I live in New York. We do not have any natural production

of either of those sources, so it means that there has got to be

transmission. What kind of difficulties does the ethanol production

or use entail if that was the only potential additive here?

Mr. PERCIASEPE. I will answer very quickly, and then my colleagues might want to fill in.

Ethanol does create an increased challenge when blended into

gasoline at the volumes we are talking about here. To achieve the

2 percent by weight for ethanol, it is about—and I am probably

going to get this wrong—it is about 5.5 percent by volume. When

you start to get to these kinds of volumes, between 5 and 10 percent by volume of ethanol, the vapor pressure of the gasoline blend

will go up. And as the vapor pressure goes up, the emissions potential goes up.

Now, that can be compensated for in the blend stock that you

blend the ethanol into. So the performance standards can be

achieved with ethanol. We are confident that that can happen; and

indeed, we expect it to happen, particularly in areas that are currently using ethanol for the reformulated gasoline program even as

the challenge increases with the second phase of reformulated gasoline. But it does require further work on the blend stock that you

would blend it into.

Mr. MAZUR. If I may, I would like to address the logistical side

of this.

In order to blend ethanol into gasoline, say in New York, you

would need to somehow get the ethanol to New York, and that

would generally be trucked or transported by rail to the New York

area. There would need to be some additional investment in terminals, blending facilities and so on. It would be a manageable

amount of investment, but it would be some additional amount of

investment.

Mr. LAZIO. Let me ask Mr. Perciasepe, if I can, about EPA investment in alternatives to either. Do we have grants that have

been let out? Do we have studies being done? Where are we overall

on alternative sources?

Mr. PERCIASEPE. We do have health effect studies under way on,

I think, probably all the reasonably anticipated oxygenates that

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might replace MTBE or be used in the oxygenate type of program,

and we do know a lot about some of them already.

Mr. LAZIO. Anything promising? Let me ask you: How much investment is being made in alternatives?

It is pretty clear, I think, if you listen to the growing drumbeat

and the concerns of the members, that both of these oxygenates

have serious problems that we are concerned about. Where is the

EPA investment? Where is the Federal investment to try to develop

some alternative oxygenates?

Mr. PERCIASEPE. I will let you mention this.

Mr. MAZUR. I can at least answer part of that. At the Department of Energy, we have been undertaking a fairly serious and

long-standing R&D program in cellulosic ethanol, not corn-based

ethanol, as a potential oxygenate. That is a program that is probably a few years away from having commercial scale of ethanol production. But if it does work out, you would have feedstocks that essentially are considered waste products today turning into ethanol

that could be used as an oxygenate in the future.

Mr. LAZIO. Give me a sense of scale, if you can, in terms of investment. What are we talking about in terms of DOE investment?

In development.

Mr. MAZUR. In the ethanol area, alternative fuel area?

Mr. LAZIO. Yes.

Mr. MAZUR. I do not have the exact figures. I would guess $100

million a year, somewhere around that. Maybe the high tens of millions of dollars.

Mr. LAZIO. And how much of a difference, in your opinion, would

that make in terms of when an ethanol derivative, if I can use that

term, might be in a position to be marketed?

Mr. MAZUR. Well, as Mr. Ganske knows quite well, we have a

large amount of ethanol produced today. Much of it from cornbased ethanol, but there are a few other sources.

Mr. LAZIO. You are talking noncorn right now?

Mr. MAZUR. Generally noncorn ethanol.

Mr. LAZIO. Right. So how much is money holding you back from

the development of a noncorn alternative?

Mr. MAZUR. Part of it I think is money, part of it is just the advancement of the technology. It is kind of hard to separate the two

out. I do not think anyone at the Department would turn down additional support for this.

Mr. LAZIO. But you would have to establish to us what we would

be buying with it, and I am not hearing that right now.

Mr. MAZUR. And that is partly because our office of renewable

energy is really the one that has the lead there. I could have the

assistant secretary get in touch with you on that.

Mr. LAZIO. I think that would be very helpful.

Mr. GREENWOOD. Time of the gentleman has expired. We thank

the panel for your testimony and for your responses.

Mr. GREEN. Mr. Chairman.

Mr. GREENWOOD. The Chair recognizes the gentleman from

Texas.

Mr. GREEN. Mr. Chairman, I just wanted to be sure we could

submit written questions, because I have a list of them, just like

other members.

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Mr. GREENWOOD. Certainly. I regret that we cannot offer a second round, but we have two more panels to go.

Mr. Shimkus has arrived for inquiry. The Chair recognizes the

gentleman for 5 minutes.

Mr. SHIMKUS. I apologize, Mr. Chairman. I have been in another

meeting, as I am sure other members have been. I will try to be

really brief.

Director Perciasepe—I hope I pronounced that fairly close.

Mr. PERCIASEPE. Bob is easier.

Mr. SHIMKUS. The chairman butchered mine.

You mentioned Congressman LaHood and the VOC standards.

Can you just reiterate that, for those members who may not have

been here, for that little brief statement, the role of carbon monoxide. And is that marrying what Director Skinner has presented

to you all from the Illinois EPA?

Mr. PERCIASEPE. Yes, and we did go through that again with Mr.

Barrett just a minute ago; but don’t worry, I will quickly summarize.

The National Academy of Sciences did a look at reactivity of different VOC compounds that are emitted with different oxygenates.

While they did not find a lot of fruitful ground there, they did note,

and specifically noted, that ethanol does an improved job of reducing carbon monoxide.

Carbon monoxide is also a precursor to ozone. It is not the same

as the volatile organic compounds. So the question then is, if you

are using ethanol in reformulated gasoline, and you are looking at

VOC emissions as opposed to carbon monoxide emissions, but you

get more carbon monoxide reductions, should you somehow be able

to equate the ozone-forming aspects of this, which is the goal of the

program?

And the things you have to balance there—and we discussed

this—is that if you say that the increased carbon monoxide performance should be taken into account, but you end up with some

increased VOCs and it balances out from an ozone perspective,

what does that do with a toxic perspective? Because the VOCs tend

to have toxic emissions in them.

So that is the kind of stuff, if we did a proposal on this, we would

have to look at all those aspects.

Mr. SHIMKUS. Great. And we are looking forward to the finalization of all of that.

Mr. Mazur, if we take 11 percent of the oxygenate program off

the market, what does that do to the cost ratio on the price of a

gallon of gasoline presently?

Mr. MAZUR. You are referring to if you were to take the MTBE

out of gasoline?

Mr. SHIMKUS. Or the ethanol component.

Mr. MAZUR. Right. We estimate that, in the long run, that making up that amount of volume would increase the cost of gasoline

by some 3 to 4 cents a gallon. The lower end of that range would

basically represent if the oxygenate mandate had been taken away

as well. The higher end, if you still had to meet the oxygenate

mandate.

Mr. SHIMKUS. And not a good statement to make in light of the

high gasoline prices today?

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Mr. MAZUR. As I said earlier, I think you need to weigh the cost

and benefits of all the things you are doing here, and part would

be increased cost for gasoline; part of it might be improved groundwater.

Mr. SHIMKUS. Have you all done an analysis of what the industry

might do in the absence of MTBE?

Mr. MAZUR. I think Bob Perciasepe said that there would be a

number of steps that the industry could take to make up that loss

of volume and the loss of octane and other attractive properties.

One would be increase the amount of ethanol that was used; second would be increase alkylates and other types of substances, and

also perhaps increase some of the use of toxics.

Mr. SHIMKUS. I just want to put on the record my concern—and

I know legislation that was drafted did not cause this to happen,

and in my opening statement I would also have said that we want

to make sure we do not throw the baby out with the bathwater—

in that to replace the oxygen issue that we go back to aromatics

and we have actually a dirtier fuel, which is a distinct possibility

based upon the capital investments that will probably be required

for alcoholates.

With that, Mr. Chairman, and trying to be brief, I yield back.

Mr. GREENWOOD. The gentleman’s time has expired, and I think

finally we thank this panel for your testimony and for your stamina and excuse you at this time.

I will call the third panel. Mr. Thomas Skinner, the director of

the Illinois Environmental Protection Agency; Mr. Jason Grumet,

executive director of the Northeast States for Coordinated Air Use

Management; and Mr. Milazzo, who will be introduced by the gentleman from New York, Mr. Lazio.

The Chair recognizes the gentleman from New York for an introduction of his guest.

Mr. LAZIO. Thank you, Mr. Chairman. I am pleased to be able

to welcome and introduce John Milazzo, who is an attorney with

the Suffolk County Water Authority. That is my home county, and

it also happens to be the largest groundwater supplier in America.

It serves in excess of a million residents of Suffolk County with

water developed from groundwater resources within the county, or

rather underneath the county.

Mr. Milazzo serves as a resource for water authority management in the daily operation of the water authority. He has worked

on a number of efforts critical to the environmental integrity of the

largest source of pure groundwater in New York, the largest aquifer actually as well.

And I just want to comment, if I can, that I have had the pleasure of working with the Suffolk County Water Authority for many

years. They have the highest level of professionalism. I know they,

together with the Suffolk County Department of Health, have been

out front and probably been doing more in terms of testing of tanks

and groundwater, because they are the largest groundwater supplier in the Nation than any other jurisdiction.

So they have had some interesting data that they have been

sharing with me, including—and I am not sure that Mr. Milazzo

will be testifying as to this, but the sense that there may be another source of contamination beyond just tank leakage.

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But I would like to welcome and thank Mr. Milazzo for being

here. Thank you, Mr. Chairman.

Mr. GREENWOOD. Thank the gentleman from New York for his

introduction, and now turn to Mr. Skinner and yield to him 5 minutes for his statement, please.

STATEMENT OF THOMAS SKINNER, DIRECTOR, ILLINOIS ENVIRONMENTAL PROTECTION AGENCY; JASON S. GRUMET, EXECUTIVE DIRECTOR, NORTHEAST STATES FOR COORDINATED AIR USE MANAGEMENT; AND JOHN C. MILAZZO, ATTORNEY, SUFFOLK COUNTY WATER AUTHORITY

Mr. SKINNER. Thank you, Mr. Chairman, and members of the

committee. It is a pleasure to be here and an honor to be here before you today.

You have heard this morning from a number of folks that the

RFG program has been successful since its implementation. I am

here to take that a step further, I guess. I represent the State of

Illinois. I am the environmental protection director there. I am

here because Illinois is proof that RFG, without MTBE, is a successful program; and it has worked extremely well for us in the

past years.

Over 95 percent of our RFG in Illinois contains ethanol, not

MTBE. We have had tremendous reductions of VOCs, carbon monoxide, and air toxics since implementing RFG. For example, 100

tons per day of VOCs are reduced, which is an essential part of our

State implementation plan, a point that Bob Perciasepe made in

passing a while ago, but it is terribly important.

Our overall State air quality plan, as well as reductions of toxics,

is well beyond what was anticipated when the program was first

put into place. In fact, I am not sure what the consultant to the

Lung Association on the next panel is going to say here today, but

I can tell you that the Illinois chapter of the Lung Association has

been very laudatory with regard to our ethanol RFG program and,

in fact, believes very strongly in its efficacy.

We are concerned—I guess Illinois is concerned that in reaction

to a very real problem, MTBE contamination, that, and I am trying

to search for another metaphor, but essentially that the baby will

be thrown out with the bathwater—I came up with a blank in trying to find an alternative there—the very beneficial oxygenate program might be eliminated as well. We believe such an action would

cause environmental backsliding, both in our State and elsewhere.

We have all kind of danced around the issue here this morning. Everyone says we want to eliminate MTBE, but we don’t want environmental backsliding. I am not sure anybody has come up with a

way to do that. We think the way to do that is ethanol.

We are also concerned—and this is a slightly different point—

with environmental backsliding as a result of the new Phase II

RFG program that went into effect January 1 of this year. If gas

formulations are switched, even in part, from ethanol to MTBE because the new Phase II RFG program makes MTBE use cheaper

for the refiners, then Illinois and others likely will suffer the same

fate as New York, California, the northeast States, and others:

widespread contamination of our water supplies.

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Already, even with 95 percent ethanol use in our State, we have

suffered three instances where we have had to shut down public

drinking water wells due to MTBE contamination, and we have

had MTBE hits slightly below the action level in literally hundreds

of other locations. This does not even take into account the private

water supplies where we do not do quite as much monitoring.

Already there is a rumor I heard last night—and it has been our

fear all along—that at least one of our oil producers will switch to

MTBE as a result of the Phase II regulations for the summer season. There has been a lot of discussion about this. USEPA has told

us repeatedly that will not be the case. It has been our fear that

will in fact happen, and we will have increased amounts of MTBE

in our State rather than less. This is not acceptable.

We agree a solution must be found for the MTBE problem, but

I emphasize it is important that the solution not create or exacerbate other problems in the process. We do not need more benzene

and toluene in gasoline in Illinois, nor do I think anybody else in

the United States desires that.

In summary, we urge this committee and Congress as a whole,

No. 1, to deal with MTBE, but recognize the improvements that

oxygenated fuels have brought and that the alternative of ethanol

does exist. And, No. 2, urge my counterparts at USEPA to recognize the role that oxygenates, and ethanol in particular, play in reduced carbon monoxide and thereby reduced levels of low level

ozone.

Thank you for your time this morning.

[The prepared statement of Thomas Skinner follows:]

PREPARED STATEMENT OF TOM SKINNER, ILLINOIS EPA DIRECTOR

It is an honor for me to appear before you today as you continue to evaluate implementation of the reformulated gasoline program. Depending on one’s perspective,

that program raises some concerns and/or a continued opportunity to improve the

quality of our air in Illinois and across the nation.

Our first concern, as many of you already know, is that the Chicago metropolitan

area could be forced to use reformulated gasoline that uses methyl tertiary butyl

ether (MTBE) as the oxygenate, unless U.S. EPA makes some fundamental policy

changes in the next few months on Phase II reformulated gasoline (RFG) regulations.

Our second concern is that the oxygenate requirement for RFG not be eliminated

entirely in overreaction to the growing awareness of the MTBE threat to the environment, particularly our groundwater and surface water. That would be one case,

where the old cliche ‘‘let’s not throw out the baby with the bathwater’’ (or in this

case groundwater) would certainly be true. The oxygenate requirement has helped

clean the air in our urban areas and there are environmentally beneficial oxygenate

blends, in particular those using ethanol, which have been a great success in the

Chicago and Milwaukee areas, and which I will discuss in more detail later.

The recent ‘‘60 Minutes’’ segment on MTBE described it as ‘‘already the second

most common water contaminant in the country,’’ noting that in New Jersey it has

turned up in 65 public drinking water supplies and in Long Island, New York in

more than 100 public water supplies. The New York Times recently reported state

environmental officials had catalogued 1,500 incidents of MTBE soil or water contamination for all of New York state.

Detection of high levels of MTBE in drinking water supplies in Santa Monica and

South Lake Tahoe, California has forced the closure of these resources.

You may be surprised that in Illinois, even though MTBE has not been a significant factor in RFG blends sold in-state, we have found detections of MTBE in 26

public water supplies out of more than 900 that participate in our state laboratory

program.

Three of our community water supplies, East Alton, Island Lake, and Oakdale

Acres, had to discontinue use of wells as a result of MTBE contamination. Oakdale

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Acres had to shut down the entire supply and hook-up to an alternate source of

water.

Illinois EPA is developing proposals to amend the state groundwater quality regulations to establish both a groundwater quality standard and preventive response

level for MTBE. Additionally, sampling at approximately 100 leaking underground

gasoline storage tanks sites has indicated MTBE in the soils at about three-quarters

of them. As a result, we are also establishing cleanup objective levels for leaking

tank cleanups and voluntary site remediation projects.

So you can understand why we are very alarmed about the prospect of being

forced to switch from ethanol to MTBE as a result of the new Phase II RFG regulations and the potential for additional MTBE contamination of Illinois= groundwater

supplies. Since the reformulated gasoline program was introduced in the Chicago

area in 1995, more than 95 percent of the area’s gasoline has contained ethanol as

its oxygenate. Ethanol-blended RFG has enjoyed the acceptance of millions of vehicle owners in that area since its introduction. In fact, refiners serving areas such

as Milwaukee, St. Louis and portions of California have chosen to use ethanol as

opposed to MTBE. In our neighboring state of Wisconsin, the implementation of the

RFG program in the Milwaukee area in January 1995 was initially met with public

outcry. Within weeks of the start of the program, citizen complaints of the fuel causing headaches, dizziness, and nausea began pouring into U.S. EPA. That outcry

quickly ended when refiners substituted ethanol in the RFG blend used in the Milwaukee area.

MTBE is an organic chemical which is highly soluble in water and travels faster

and further in soil and groundwater than other gasoline constituents. MTBE can be

detected in water by taste and smell at extremely low concentrations of 20 to 40

parts per billion. MTBE is also persistent in that it degrades very slowly by natural

chemical or biological processes within the soil or groundwater environment. It also

does not respond well to groundwater remediation options such as treatment

through the use of granular activated carbon or air stripping, processes typically

used to clean up organic chemical contamination.

Due to this increasing risk to our nation’s drinking water supplies, actions are

being considered and undertaken on several fronts. California Governor Gray Davis

issued an executive order to phase-out the use of MTBE in California, and the California Air Resources Board recently adopted requirements curtailing its use by the

end of 2002. In November 1998, the USEPA appointed a Blue Ribbon Panel to investigate issues regarding the use of oxygenates in RFG and in its July 1999 Final

Report recommended that the use of MTBE should be substantially reduced.

In Illinois, the Chicago City Council adopted a resolution demanding that state

and federal environmental agencies take appropriate action to prevent the use of

MTBE in gasoline in the Chicago area. Due to the environmental characteristics of

MTBE I discussed earlier, I believe the concerns expressed through the above actions are warranted. However, the appropriate legal means to limit or ban the use

of a gasoline component is not clear. Section 211(c) of the Clean Air Act (CAA) limits

the ability of state or local units of government to affect the characteristics of gasoline. We have heard that USEPA is considering seeking to prohibit or limit MTBE

under the Toxic Substances Control Act. If that is the case, because of the typical

length of time a TSCA process takesBmore than four monthsBwe also hope it will

not become another obstacle to the continued use of ethanol-blended RFG in Chicago

and other areas where it is now in use.

In attempting to address concerns about MTBE contamination of drinking water,

however, the overall role of oxygenates in reformulated gasoline has also been questioned. As I mentioned earlier, oxygen in gasoline provides a significant air quality

benefit by reducing emissions of VOCs, carbon monoxide, and toxic air pollutants

such as benzene, a known human carcinogen. In fact, due in large part to the role

of oxygenates, Phase I RFG has far exceeded the minimum emission reduction requirements. I understand that toxic air emissions have been reduced by approximately 27 percent compared to the 15 percent reduction requirement. Acknowledging these benefits, both the Blue Ribbon Panel and the North Eastern States for

Combined Air Use Management (NESCAUM) recommended that even while dropping the RFG oxygenate requirement, USEPA seek to ensure that there is no loss

of the current air quality benefits.

The Clean Air Act requires RFG to contain at least 2.0 percent oxygen by weight.

The presence of oxygen in fuels allows the blend to burn more completely, reducing

exhaust VOC and toxics emissions. The two primary ‘‘oxygenates’’ used in RFG are

ethanol and MTBE. Ethanol-blended RFG is used primarily in the Midwest and

makes up approximately 15 percent of the RFG supply. MTBE, which can be blended into RFG at the refinery and shipped throughout the country via pipelines,

makes up roughly 84 percent of the RFG oxygen market.

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Chicago is one of nine areas required by the Clean Air Act to market cleanerburning reformulated gasoline. Since the inception of this program in January 1995,

the Chicago area has benefitted through reduced vehicle emissions of volatile organic compounds (VOCs), carbon monoxide, and toxic air pollutants. The CAA requires all ozone nonattainment areas to reduce VOC emissions by 15 percent from

1990 levels by 1996. In Chicago, the 15 percent reduction requirement equated to

a total of approximately 250 tons per day. The federal RFG program was one of the

key elements in our State Implementation Plan strategy to achieve this reduction,

reducing VOC emissions by over 100 tons per day. The use of a cleaner burning gasoline provides an area with immediate emissions reductions, as opposed to improvements in vehicle engine technology which, although necessary and important, accrue

over the course of years as consumers purchase the new vehicles.

The CAA also requires ozone nonattainment areas to continue to reduce ozone

forming emissions by 3 percent per year until attaining the ozone national ambient

air quality standard (NAAQS). The use of RFG will continue to play a large role

in area’s like Chicago meeting this ‘‘Rate-of-Progress’’ requirement and ultimately

meeting the ozone NAAQS.

Phase II of the RFG program began in January. The use of Phase II RFG will

further reduce VOC and toxic air pollutant emissions, increasing the reduction requirement from 15 to 25 percent. Phase II RFG will also reduce emissions of oxides

of nitrogen (NOx), which also contributes to the formation of ozone. In Chicago, and

likely throughout the rest of the country, the use of RFG provides more emissions

reduction benefit than any other measure. Currently, approximately 30 percent of

all the gasoline sold nationwide is reformulated gasoline, with the State of Missouri

joining the program for the St. Louis area beginning last summer.

I believe that the RFG oxygenate requirement should be maintained, and that

ethanol should be allowed to play a larger role in improving our nation’s air quality.

The cleaner burning properties of ethanol also reduce emissions of carbon monoxide, a criteria pollutant. Ethanol use has proved highly successful in the

oxygenated fuels programs in carbon monoxide nonattainment areas such as Denver

and Phoenix. Carbon monoxide is also a precursor to ozone formation. In May 1999,

the National Research Council recognized this, stating that carbon monoxide in vehicle exhaust emissions contributes about 20 percent to the overall reactivity of

motor vehicle emissions. In addition, ethanol biodegrades quickly in the soil and

groundwater, therefore not providing a threat to our drinking water supplies.

The National Governors Association Center for Best Practices concluded last

month that ‘‘ethanol’s positive impact on air quality and fuel performance and minimal water quality risks and health effects make it the most viable replacement fuel

additive.’’

The California Environmental Policy Council, chaired by California EPA Director

Winston Hickox, also recently unanimously approved reports which found no air

quality, water quality or health problems associated with the use of ethanol as an

oxygenate in California’s cleaner burning gasoline program.

We hope and expect the Phase II RFG program to continue to provide air quality

benefits.

However, in their current form, the new RFG requirements may jeopardize the

benefits supplied by the use of ethanol. This is because the summertime VOC emission reduction requirements for Phase II RFG necessitate the use of a very low volatility fuel. Since the addition of ethanol slightly increases the volatility of the resulting blend, an even lower volatility (and therefore more expensive) base gasoline

must be supplied. Without such a base gasoline to accommodate the addition of ethanol, and refiners= willingness to produce such a base gasoline, ethanol-blended

RFG may be effectively excluded from the summertime program.

Many are citing this situation as another reason to drop the RFG oxygenate requirement completely. We believe that taking that step is unnecessary and unwarranted.

The Phase II RFG compliance program does not take the benefit of reduced carbon monoxide emissions into account. Dropping the oxygenate requirement would

result in an increase in these emissions and in ozone levels. In November 1999, the

Illinois EPA submitted an analysis to USEPA quantifying the carbon monoxide

emission reduction benefits, and proposing a means to incorporate these benefits

into the RFG program. I understand that the USEPA has, or will soon be, submitting a proposal to the Office of Management and Budget to propose changes to the

RFG program to take these benefits into consideration. I commend USEPA for taking this action and encourage them to provide the maximum benefit for the carbon

monoxide reductions, and design a program that offers sufficient flexibilities to petroleum refiners and ethanol blenders in order to encourage further and expanded

use of this clean fuel additive.

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In summation, the reformulated gasoline program has been an unqualified success in the Chicago area, and we are looking forward to the additional benefits

which will be provided by Phase II of the program. We believe that the use of

oxygenates in reformulated gasoline has also provided significant air quality benefits in our nation’s metropolitan areas, well beyond those required in the Clean Air

Act. Although we share the nation’s concerns about MTBE contamination of drinking water, and agree that the use of MTBE should be phased out as quickly as practicable, we believe that the reformulated gasoline oxygen requirement should be

maintained and that the proper benefit for the use of ethanol should be incorporated

into the RFG program.

Thank you for inviting me to join you today.

Mr. GREENWOOD. Thank you for your testimony.

And the Chair recognizes Mr. Grumet for his testimony.

STATEMENT OF JASON S. GRUMET

Mr. GRUMET. I would like to thank the Chair and members of the

committee for the opportunity to speak to you today. My name is

Jason Grumet, and I am the director of an organization called

NESCAUM, which represents the air quality agencies in the eight

northeast States. I am pleased to be here on their behalf.

I am also pleased to be here as a member of what, for me at

least, has been a truly unprecedented collaboration, a coalition between the northeast States, national environmental organizations,

and the American Petroleum Institute companies, Sun Oil Company, and other independent oil refiners and distributors to try to

bring together a set of consensus principles that we hope can form

the basis of timely action.

Now, the history of this problem has been long on discussions of

problem and short on discussions of solutions, so I will try in my

brief testimony to reverse that ratio and focus the bulk of my comments on these six principles for legislative action that we believe

are necessary to move this debate forward.

I would like to say a word or two about the problem. And based

on the desire for brevity, I will be so brief as to probably confuse

some and maybe even inflame others. And if that is the case, I suggest my full written comments and an earlier study that we have

provided to the committee might help.

To understand this problem, we have come to conclude that

MTBE has been good for public health. MTBE has also been bad

for environmental quality and, in certain situations, very bad for

the quality of life for the few members of our society who have been

unable to use their local drinking water. The challenge before this

committee is how do we mitigate the significance and unacceptable

environmental harms that MTBE poses without sacrificing the very

considerable public health benefits that it has provided.

The use of MTBE in gasoline has substantially reduced smogforming emissions and, even more importantly, we believe substantially reduced the emissions of known human carcinogens, like benzene. As we remove MTBE, if we do it precipitously and without

thought, more toxic substitutes will come into the gasoline supply

and we will have undermined public health.

That said, we must have a severe curtailment of the use of

MTBE, because at present levels MTBE is posing an unacceptable

risk to our natural resource water quality. At present the statute,

the Clean Air Act, for which we have great respect, and the authors of which, whom we have great respect for, prevents States

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and also prevents EPA from our fundamental obligation to manage

risk. We are not capable with the statutory authority we have right

now to manage this difficult problem.

So it is with great respect for that statute that I would like to

propose six different principles.

First and foremost, we must repeal the oxygen mandate. It is

simply not possible to maintain air quality benefits, to protect

water quality, and to maintain a stable price and supply of gasoline

in the Northeast while the oxygen mandate is in place.

As we severely curtail MTBE use, what we get is a de facto ethanol mandate in the Northeast. Due to the volatility of ethanol

used in the summertime, that could actually exacerbate our ozone

problem. That would be unacceptable. Moreover, we are ambivalent

about the distribution issues and fear that a single product mandate which is not mindful of market constraints could cause unacceptable price increases.

That said, ethanol has many lovely attributes. It does not have

the same type of risk in groundwater, and it has substantial benefits, we believe, to agriculture policy, to energy policy and to climate change policy. In the northeast, we embrace the goal of increasing the use of renewable resources; and in particular, we are

very optimistic about the role that biomass ethanol in our region’s

energy future.

That said, there are policy approaches to support those legitimate ends that are far preferable to forcing the use of ethanol in

the summertime, which is the worst opportunity, and in regions of

the country that are as far away as possible from its production.

Second, we have to phase down and cap the use of MTBE in all

gasoline. We believe that if we severely curtail MTBE to its historic

levels, and continue to improve our air quality programs, we can

adequately mitigate this risk while maintaining the air quality

benefits at an acceptable cost. While it is politically attractive, a

precipitous ban on MTBE we believe will undermine public policy,

and for that simple reason, we continue to not support that approach.

That said, we agree with the earlier sentiments that knowledge

does evolve. And if in fact a Federal reduction of MTBE we find

to be inadequate, States and EPA must be authorized to act and

take the next step to further reduce or, if necessary, ban MTBE.

We do not believe we have that authority in the States. While we

recognize EPA’s frustration about their inadequate authority and

appreciate their desire to leave no stone unturned, we are not confident an approach based on existing TSCA authority will be satisfactory.

Fourth, we must maintain the full air qualities benefits of this

program. In particular, the air toxic benefits using RFG with

MTBE have far exceeded the minimum statutory requirements. As

we work with our partners to provide the oil industry with the

flexibility that it needs to solve the MTBE problem, we must make

sure that flexibility is not used to undermine air quality. In particular, I am pleased that members of the American Petroleum Institute and the Sun Oil Company support this goal, and we have

language I hope we can bring to this committee in the near future

to achieve that end.

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Last, we should promote consistency through pushing for timely

and effective Federal action. That is the best way to avoid a patchwork of different State laws. And we have to ensure that the petroleum industry is granted adequate lead time to make a shift away

from MTBE that does not undermine environmental quality.

In closing, we recognize the challenge that the committee faces

to balance the intense and diverse interests before you. Until recently, everyone has been in a separate camp. States have been in

one place, the oil industry in another, the oxygen industry in a

third, and the environmental community in a fourth. I personally

am greatly encouraged that three of those four camps have now

come together around a set of what we hope to be prudent principles for action.

Thank you.

[The prepared statement of Jason S. Grumet follows:]

PREPARED STATEMENT OF JASON S. GRUMET, EXECUTIVE DIRECTOR, NORTHEAST

STATES FOR COORDINATED AIR USE MANAGEMENT

Thank you Mr. Chairman. My name is Jason Grumet and I am the Executive Director of the Northeast States for Coordinated Air Use Management (NESCAUM).

NESCAUM is an association of state air pollution control agencies representing

Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Rhode

Island and Vermont. The Association provides technical assistance and policy guidance to our member states on regional air pollution issues of concern to the Northeast. We appreciate this opportunity to address the Subcommittee regarding reformulated gasoline and MTBE.

As I hope you are already aware, the Northeast states have much at stake in the

debate over RFG and MTBE. RFG, with or without, MTBE is one of the most significant public health achievements of the 1990 Clean Air Act. The RFG program

has provided substantial reductions in smog forming emissions and has dramatically

reduced emissions of benzene and other known human carcinogens found in vehicle

exhaust. However, MTBE’s unique mobility and resistance to biodegradation pose

unacceptable risks to our region’s potable ground water. Testing conducted throughout the northeast has detected low levels of MTBE in roughly fifteen percent of the

drinking water sampled. MTBE’s unpleasant taste and odor at higher concentrations and the frequency of MTBE detections has convinced us that MTBE use must

be severely curtailed.

Fortunately, concentrations of MTBE detected in the vast majority of samples

(99%) are extremely low. Compared against other gasoline constituents, the relative

toxicity of MTBE is also low. These two factors lead public health experts in our

region to conclude that the health threat posed by MTBE is minimal when compared against the present risk posed by other drinking water contaminants or when

compared against public health benefits of the RFG program as a whole. The challenge facing us all is to mitigate the environmental and economic harms caused by

MTBE contamination without sacrificing the environmental and public health benefits provided by RFG using MTBE. Unfortunately, the law as currently written prevents both EPA and the states from effectively facing this challenge. For the nine

mandatory RFG areas, which in our region include parts of NY, NJ and all of CT,

the Clean Air Act provides literally no opportunity for states to limit MTBE use.

For areas that have joined the RFG program voluntarily, the only option available

under statute is to abandon the RFG program and the benefits it provides and hope

that refiners respond by reducing the MTBE content of the resulting conventional

gasoline. Even this inadequate option is constrained by an EPA rulemaking that

prevents states that currently participate in the RFG program from opting out until

2003.

Dissatisfied with these options, the eight Northeast states have joined together to

promote a unified strategy to address the MTBE problem. The centerpiece of this

strategy is a set of six legislative principles designed to protect water quality from

the threat posed by MTBE, maintains the full air quality and public health benefits

of the current RFG program, and ensure adequate fuel supply and price stability.

These principles were announced by NESCAUM in mid January and have since

been endorsed by the American Lung Association (ALA), the American Petroleum

Institute (API), the Natural Resources Defense Council (NRDC) and the Sun ComVerDate 11-MAY-2000 11:14 Aug 31, 2000 Jkt 065685 PO 00000 Frm 00083 Fmt 6633 Sfmt 6621 E:\HEARINGS\62976 pfrm01 PsN: 62976
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pany. Moreover, the eight NESCAUM states have joined to date with Pennsylvania,

and Delaware to form a state Task Force in support of these federal legislative principles as well as state actions to address MTBE. Allow me now to outline the principles that form the foundation of our unique alliance:

At the outset, I must note that the following principles are limited to changes that

we believe must be made under the Clean Air Act. There are a host of measures

to improve fuel storage, fuel handling and groundwater remediation that are under

active discussion in our state task force. Some of these measures may also require

changes in federal statute, however such changes are beyond the scope of what I

will present today.

I. Repeal the 2 percent oxygen mandate for RFG in the Clean Air Act—It is simply

not possible to protect air quality, water quality and ensure gasoline price stability

unless the oxygen mandate is lifted or at minimum modified to require EPA to

waive this requirement upon state request. Unless the oxygen requirement is lifted

or waived, a substantial reduction in MTBE use creates a de facto summertime ethanol mandate. While ethanol usage is far preferable to MTBE from a groundwater

perspective and promotion of ethanol can further a host of energy, aricultural, and

environmental goals, an ethanol mandate in the reformulated gasoline program is

not sound environmental or economic policy for our region. Due to its high volatility

and resulting increase in evaporative emissions, the use of ethanol during the summertime ozone season may actually exacerbate our urban and regional smog problems.

The recent experience with rising home heating oil prices serves as a reminder

of our region’s sensitivity to energy price increases. The economic impact of mandating the use of ethanol in the Northeast, California and the Gulf Coast is simply

unknown. Setting aside the wisdom of coupling mandates with subsidies, serious

questions remain about the cost of transporting and distributing ethanol throughout

regions of the country where it is not produced. There is no question that it is possible to dramatically increase ethanol production. Similarly there is no question that

it is possible to ship massive quantities of ethanol to the northeast by barge, rail

and truck. The question is at what cost. While our region embraces the goal of increasing renewable fuels nationally and sees great promise in the development of

a biomass ethanol industry in the Northeast, we are convinced that there are policy

approaches to achieve these legitimate ends that are far preferable to mandating

the use of ethanol in summertime RFG.

II. Phase down and Cap MTBE in all gasoline—MTBE use must be severely curtailed across the entire fuel supply. Consistent with the conclusions of the Blue Ribbon Panel, NESCAUM believes that, MTBE concentrations in gasoline should be returned to the levels commonly used prior to adoption of the oxygen standard in

1990. Coupled with the substantial and ongoing improvements in underground storage tank integrity and fuel handling, we are optimistic that a fifty to seventy-five

percent reduction in allowable per gallon MTBE concentrations will effectively mitigate the risk to groundwater while enabling refiners to preserve air quality gains

at an acceptable cost. However, our analysis indicates that a precipitous and complete phase-out of MTBE is likely to undermine public health in our region because

of the high toxicity of the economically viable alternatives to replace the volume and

octane MTBE presently provides in the fuel supply. While politically attractive, a

federal ban on MTBE is equally as inflexible and intrusive as the oxygen mandate.

It is time to get beyond the polemics of mandates and bans and empower federal

and state environmental regulators to effectively manage risk.

III. Maintain the toxic emission benefits achieved to date by the federal RFG program—The use of RFG with MTBE in the Northeast has produced dramatic air

quality gains. Most significant have been the reductions in airborne toxics which

have substantially surpassed the performance standards of both the first phase RFG

requirements and substantially exceed the performance requirements of the more

stringent second phase requiremens that take effect this year. We believe that a

substantial portion of these benefits have been provided by the high volume of

oxygenates currently mandated in RFG. As we seek to provide refiners with the

flexibility to reduce the use of MTBE, it is necessary to ensure that this flexibility

is not used to produce higher polluting gasoline. Importantly, the American Petroleum Institute, Sunoco and other independent refiners agree. The members of our

alliance are working diligently to craft legislative language that we believe accurately and equitably maintains the full air quality benefits of the present day RFG

program. We hope to provide this language for the Committee’s consideration within

a week.

Our focus on crafting legislative language to maintain RFG toxic benefits should

not be confused with a failure to appreciate the critical importance of also maintaining the full VOC and NOx reductions provided by the RFG program. However, the

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Phase 2 performance requirements for these two pollutants are more aggressive

than the performance of RFG to date. Hence, the EPA regulations and statute in

their current form ensure that emissions of these pollutants will not increase if the

oxygen standard is lifted or waived.

IV. Clarify state and federal authority to regulate, and/or eliminate, MTBE or

other oxygenates if necessary to protect public health and the environment—The evidence before our states has not convinced us that a federal ban on MTBE is in the

best interest of public health. However, we believe that it is critical that states and

the EPA are provided with measured but clear authority to regulate and if necessary phase-out MTBE if such action is found necessary to effectively protect public

health or environmental quality. At present, we fear that any prescriptive state efforts to limit MTBE use would be tied up for years in costly and counterproductive

litigation. Recent suggestions that the Administration is exploring its authority to

limit MTBE use under the Toxic Substances Control Act (TOSCA), does not allay

our concern about the inadequacy of existing Agency authority. A cursory review of

the language under TOSCA suggests that its application to the question at hand

will be arduous, inelegant and almost certainly tangled in years of litigation.

The northeast states share EPA’s frustration over the inadequacy of our mutual

authority and applaud the Agency’s efforts to leave no stone unturned. However, the

issues at hand are too important to rest their outcome on a courageous interpretation of existing authority. Moreover, this approach does not empower our states to

adopt more protective requirements if federal action is demonstrated inadequate to

address state concerns. Balancing the desire for regional and national consistency

in fuel specifications with the autonomous obligation of each state to protect its citizens and environment is not a new challenge for the Clean Air Act. We believe that

the approach suggested by Congressman Greenwod in HR 3449 is consistent with

the Clean Air Act’s historic balancing of these competing desires and provides a

sound foundation for this Committee’s deliberations

V. Promote consistency in fuel specifications through the timely implementation of

effective federal requirements—As indicated previously, the Northeast states share

the goal of providing fuel refiners and suppliers with a uniform set of regulatory

requirements. The most effective means of achieving this consistency is to authorize

and require timely action on the part of EPA. Our states are committed to working

with other regions and EPAto develop a federal regulation that meets our collective

needs.

VI. Provide adequate lead time for the petroleum infrastructure to adjust in order

to ensure adequate fuel supply and price stability—At present, the gasoline system

in the Northeast and much of the nation is dependent upon the presence of high

volumes of MTBE. Much as we want immediate action to reinvigorate the RFG program, we recognize that the substantial reductions in MTBE that must occur can

not be completed overnight. Depending on the ultimate extent of required reductions, our states anticipate that two to four years will be necessary to complete the

phase down of MTBE in the northeast. We are committed to working with our partners in the refining industry to ensure that fuel quality, supply and price are protected as we shift from our current dependence on MTBE.

In closing, the northeast states and our partners in the refining and environmental community recognize that reconciling the diversity and intensity of interests

around the table poses a considerable challenge for this Committee. Until recently,

agreement among the states refining industry, environmental community and oxygenate industry have generally been limited to concurrence over the table’s shape.

I am greatly encouraged that three corners have joined together around a common

set of principles that I believe form a sound basis for legislative action. I look forward to hearing from our partners from the Lung Association and Sunoco later

today and thank the Committee for the opportunity to appear before you today.

Mr. GREENWOOD. Thank you very much, Mr. Grumet.

Mr. Milazzo, 5 minutes for your testimony.

STATEMENT OF JOHN C. MILAZZO

Mr. MILAZZO. Thank you. It is an honor to be here today; and on

behalf of the Suffolk County Water Authority, I want to thank Congressman Lazio for inviting us down.

The Suffolk County Water Authority is the Nation’s largest

water supplier based entirely on groundwater. We serve more than

a million county residents with pure, safe, constantly tested water

while maintaining approximately 340,000 customer accounts. We

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operate the Nation’s largest and most technologically advanced

groundwater testing laboratory, which was built at a cost of $6 million and has an annual operating budget of more than $3 million.

Our laboratory is staffed by 35 chemists, microbiologists, and technicians who conducted more than 60,000 tests last year measuring

more than 200 chemical constituents.

Twice per year the laboratory performs proficiency tests and submits the results to the New York State Department of Health. Only

after we pass these tests are we certified by the State. We have always maintained our certification. In addition, the Department of

Health reviews our quality assurance and quality control data as

part of the New York State Environmental Laboratory Approval

program. Furthermore, we have developed testing policies at our

laboratory that have been adopted by and published by the United

States EPA for use by other labs.

In our 48-year history, we have never failed to meet every water

quality standard established by Federal regulation or by New York

State. And New York State are among the strictest in the Nation.

We will do all that is necessary to ensure that we, like the majority

of public water suppliers, continue to supply water that is pure,

safe and constantly tested. This is an obligation that infuses every

water authority action.

Mr. Chairman, I have made mention of our laboratory, our testing, and the quality of the water that we serve because I want to

assure our customers, who include our neighbors, our friends, and

our own families, that the water we serve is safe. However, there

is a significant cost involved in ensuring that the water we serve

meets our own demanding standards. In addition to the expenses

incurred in building our laboratory and the testing performed by

our lab staff, there are costs associated with treating water which

does not meet Federal and State drinking water standards in its

raw pretreated form.

The water authority operates 479 wells across Suffolk County,

drawing water from aquifers deep below the surface of Long Island.

Approximately 10 percent of the wells that we operate have filtration systems which remove harmful contaminants from the raw

water before it enters our system. The types of contaminants that

we find in the unfiltered water of these wells includes herbicides

and volatile organic compounds such as degreasers, solvents and

dry cleaning fluids. Filtration systems are also used to purify water

affected by the aftermath of leaking gas tanks or gasoline spills.

As the largest water supply based entirely on groundwater, we

are keenly aware of the issues which affect groundwater resources.

The water authority appears before this subcommittee in an effort

to provide information to you as you wrestle with the difficult issue

of the reformulated gasoline requirements of the Clean Air Act

Amendments of 1990. Suffolk County is a non-attainment area for

purposes of the 1990 amendments. Consequently, gasoline supplied

in Suffolk County must meet the reformulated gasoline requirements.

To date, many gasoline suppliers have met the requirements

with the use of MTBE. MTBE is problematic for the water authority because it is a highly aggressive and soluble compound that

moves with relative ease through the supersaturated sands of our

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federally designated sole-source aquifer system. As a testament to

our commitment to serve pure, safe, and constantly tested water,

the water authority began testing for MTBE more than 10 years

ago, long before such testing was required by the State or Federal

Government.

Unfortunately, MTBE has been detected in 105 of our drinking

water wells. The maximum allowable limit of MTBE in drinking

water is 50 parts per billion under New York State drinking water

standards. There is currently no Federal standard. Several States,

including New York, are expected to drop their drinking water

standard to 10 parts per billion in the near future.

It should be pointed out that many of our detections of MTBE

are extremely low levels, as low as 5 parts per billion, which is

really at the border of the detection capability of the equipment we

use in our lab. And these detects at that low level are seen once

and not seen again. The types of these low-level detections can

often be attributed to sampling anomalies and may not actually be

indicative of the presence of MTBE.

Just to put things in perspective, one part per billion is equivalent to 1 second in the life of one 32-year-old. I have not had a one

part per billion yet. So when we talk about zero parts per billion,

we are talking about an infinitesimally small level of detection.

Laboratory data from 1999 indicates that we have detected MTBE

in 61 of our operational wells at levels between 0.5 and 2.5 parts

per billion. Of these 61 wells, 30 had MTBE levels that were consistent between 0.5 and 2.5. The remaining detections were only

once and extremely low levels as I talked about.

In addition to these 61 wells, we do have two MTBE detections

at two facilities that are consistently between 6 parts per billion

and 10 parts per billion. One of the sites, we suspect, is from a gasoline spill, and the other we are not quite sure of the source. The

raw water from these sites is being treated with GAC filters to remove the MTBE.

MTBE presents several probables for the water authority. As

previously mentioned, it is an aggressive compound. It breaks

through the activated carbon of our filter systems at a rate three

to four times greater than contaminants. Once breakthrough occurs, the carbon in the vessel can no longer remove MTBE, and depending on the detection level, may need changing. However, it

costs almost $40,000 to replace a carbon in one of our filters. If we

have to install a GAC filter at a well, the cost would approach

$500,000.

As an organization with total annual revenues in excess of $100

million and net assets exceeding three-quarters of a billion dollars,

we can continue to filter water; and if necessary, we will expand

our filtration system. Unfortunately, we have to pass those additional costs associated with the filtration on to our customers. In

those instances where the source of a pollutant requiring mediation

can be identified, we will, as we have successfully done in the past,

aggressively pursue the polluter of our water resource through litigation.

A significant concern for the water authority, and the reason we

are here today, is if the low level of detections that have been discovered represent the proverbial tip of the iceberg. If MTBE conVerDate 11-MAY-2000 11:14 Aug 31, 2000 Jkt 065685 PO 00000 Frm 00087 Fmt 6633 Sfmt 6602 E:\HEARINGS\62976 pfrm01 PsN: 62976
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tamination becomes more pervasive, and the concentrations of

MTBE increase, the water authority will be forced to dedicate appreciable resources at combating the MTBE contamination at great

expense to our customers. Absent a prohibition on MTBE use in

Suffolk County, the potential will always exist that MTBE will continue to degrade our groundwater resources.

Given the questionable benefits to air quality of MTBE, as my

colleague has spoken to, we believe and have called for the complete ban of MTBE. This position recognizes that the water served

to our customers must be pure and safe. We further believe that

we are at a critical crossroads. Limited contamination exists. However, we believe you have the ability to be proactive rather than

reactive when dealing with the MTBE issue. Action now can limit

and curtail more costly future damage. While the reformulated gasoline goals are laudable, air and water quality should not be mutually exclusive.

I want to thank you for inviting us and look forward to answering your questions.

[The prepared statement of John C. Milazzo follows:]

PREPARED STATEMENT OF JOHN C. MILAZZO, SUFFOLK COUNTY WATER AUTHORITY

The Suffolk County Water Authority is the nation’s largest water supplier based

entirely on groundwater. We serve more than a 1 million county residents with

pure, safe, and constantly tested water while maintaining approximately 340,000

customer accounts. We operate the nation’s largest and most technologically advanced groundwater testing laboratory which was built at a cost of $6 million and

has an annual operating budget of more than $3 million. Our laboratory is staffed

by 35 chemists, microbiologists, and technicians who conducted more than 60,000

tests last year, measuring more than 200 chemical constituents. Twice per year, the

laboratory performs Proficiency Tests and submits the results to New York State

Department of Health. Only after we pass these tests are we ‘‘certified’’ by the state.

We have always maintained our certification. In addition, the Department of Health

reviews our Quality Assurance/Quality Control Data as part of the New York State

Environmental Laboratory Approval Program. Furthermore, we have developed testing methodologies at our laboratory that have been adopted by and published by the

United States Environmental Protection Agency for use by other laboratories.

In our 48 year history, we have never failed to meet every water quality standard

established by federal regulation or by New York State, and New York’s standards

are among the strictest water quality standards in the nation. We will do all that

is necessary to ensure that we, like the majority of public water suppliers, continue

to supply water that is pure, safe, and constantly tested. This is an obligation that

infuses every Water Authority action.

Mr. Chairman, I’ve made mention of our laboratory, our testing, and the quality

of the water we serve because I want to assure our customers, who include our

neighbors, friends, and our own families that the water we serve is safe!

However, there is a significant cost involved in ensuring that the water we serve

meets our demanding standards. In addition to the expenses incurred in building

our laboratory and the testing performed by our laboratory staff, there are the costs

associated with treating water which does not meet federal and state drinking water

standards in its raw, pre-treated, form. The Water Authority operates 479 wells

across Suffolk County, drawing water from aquifers deep below the surface of Long

Island. Approximately 10 percent of the wells that we operate have filtration systems which remove harmful contaminants from the raw water before it enters our

system. The types of contaminants that we find in the unfiltered water of these

wells include herbicides and volatile organic compounds such as degreasers, solvents, and dry cleaning fluids. Filtration systems are also used to purify water affected by the aftermath of leaking gasoline tanks or gasoline spills.

As the largest water supplier based entirely on groundwater, we are keenly aware

of the issues which affect groundwater resources. The Water Authority appears before this Committee in an effort to provide information to the Committee members

as you wrestle with the difficult issue of the reformulated gasoline requirements of

the Clean Air Act Amendments of 1990. Suffolk County is a nonattainment area for

85

purposes of the Clean Air Act and its 1990 Amendments. Consequently, gasoline

supplied in Suffolk County must meet the reformulated gasoline requirements of the

Clean Air Act as amended. To date, many gasoline suppliers have met the requirements with the use of the oxygenate methyl tertiary butyl ether (MTBE).

MTBE is problematic for the Water Authority because it is a highly aggressive

and soluble compound that moves with relative ease through the super saturated

sands of our federally designated Sole Source Aquifer system. Testament to our commitment to serve pure and safe water, the Water Authority began testing for MTBE

more than 10 years ago, long before such testing was required. Unfortunately,

MTBE has been detected in 105 of our wells since we began testing.

The maximum allowable limit of MTBE in drinking water is 50 parts per billion

under New York State drinking water standards. There is currently no federal

standard for MTBE. Several states, including New York, are expected to drop their

respective drinking water standards to 10 parts per billion in the near future.

It should be pointed out that many of our detections of MTBE at extremely low

levels (as low as 0.5 parts per billion) were seen once and were not seen again.

These types of low level detections can often be attributed to sampling anomalies

and may not actually be indicative of the presence of MTBE. Just to put things in

perspective, Mr. Chairman, one part per billion is equivalent to one second in the

life of a thirty-two (32) year old individual. So when we talk about 0.5 parts per

billion, we are talking about an infinitesimal level of detection.

Laboratory data from 1999 indicates that we detected MTBE in 61 of our 425

operational wells at levels between 0.5 and 2.5 parts per billion. Of these 61 wells,

30 wells had MTBE that showed consistent levels at 0.5 to 2.5 parts per billion. The

remaining wells had detections only once, at extremely low levels of 0.5 parts per

billion. In addition to these 61 wells, we did have ongoing MTBE detections at our

Edgemere pump station at Montauk Point, at levels between 6 and 10 parts per billion. It is suspected that the source of this contamination was from a nearby firehouse. Another continuous detection in 1999 was at a well at our Wheeler Road facility, located in the Hauppauge area, where readings of MTBE were between 5 and

10 parts per billion. The raw water at these sites is being treated with granular

activated carbon filtration (GAC) systems.

MTBE presents several problems for the Water Authority. As previously mentioned, MTBE is an aggressive compound. It breaks through the activated charcoal

medium in our filtration systems at a rate three to four times greater than other

contaminants. Once breakthrough occurs, the carbon in the vessel can no longer remove MTBE and thus depending on the detection level may require changing. However, it costs approximately $40,000 to refill a GAC vessel. The cost of installing a

GAC vessel for a single well approaches $500,000. As an organization with total annual revenues in excess of $100 million and with net assets exceeding three quarters of a billion dollars, the Water Authority has the resources to continue filtering

water, and, if necessary, to expand its filtration systems. But, as we are a not-forprofit, public benefit corporation, any additional costs associated with the filtration

must be borne by our customers. In those instances where the source of a pollutant

requiring remediation can be identified, we will, as we have successfully done in the

past, aggressively pursue the polluter of our water resource through litigation.

A significant concern for the Water Authority is if the low level detections that

have been discovered represent the proverbial ‘‘tip of the iceberg.’’ If MTBE contamination becomes more pervasive and the concentrations of MTBE increase, the Water

Authority will be forced to dedicate appreciable resources to combating MTBE contamination at a great expense to our customers. Absent a prohibition on the use of

MTBE in Suffolk County, the potential will always exist that MTBE will continue

to degrade our water resources. Given the questionable benefits to air quality of

MTBE, we believe in and have called for the ban of MTBE. This position recognizes

that the water served to our customers must be pure and safe. We further believe

that we are at a critical crossroads; while limited contamination exists, we believe

you have the ability to be pro-active rather than reactive in dealing with the MTBE

issue. Action now, can limit and curtail more costly future damage. While the reformulated gasoline goals are laudable, air quality and water quality should not be

mutually exclusive!

In closing, I want to thank the Chairman of the Subcommittee for inviting the

Water Authority to provide our perspective of the MTBE issue.

Mr. GREENWOOD. Thank you, Mr. Milazzo.

I will recognize myself for 5 minutes of questioning and turn my

first question to Mr. Grumet.

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In your testimony you raised the issue of uniformity fuel specifications. Uniformity of fuel specifications would prevent suppliers

from having to make many different types of fuels for different

States.

The question is do you think that fuel consistency should occur

at the regional or national level?

Mr. GRUMET. In this area more consistency is always a good

thing. But at the same time we have to recognize the regional differences and the autonomous obligation of each State to protect

their environment and their public health.

The Clean Air Act has tried to balance that and I think has done

a decent job of requiring a reasonable high hurdle for States to

have to surpass in order to come up with the unique regulatory approaches. On this issue in particular, I think regional approaches

make a lot of sense.

As a regional organization, we are committed in the Northeast

to ensuring, to the greatest extent possible, a consistent approach

with fuel regulation. There is only one area where I could see the

need for anything that was not uniform across the Nation, and that

is with regard to maintaining the full air quality benefits of the

program, because the air quality benefits of the program have been

different in different parts of the country.

In the northeast, we have achieved the most substantial air toxic

reductions. And if we are going to maintain those reductions, we

will need to bring the air toxic benefits of the program up in the

rest of the country. That will cost some money. If we are not willing to do that, we may need to have some kind of regional bifurcation that recognizes the substantial air quality and toxic reductions.

Mr. GREENWOOD. I know this is a question that is not easy to answer, but what is your sense of the size of a region? When we try

to balance the desire for regional flexibility with uniformity we

have to have some sense of how many pieces to cut.

Mr. GRUMET. It strikes me there are two or three pieces on two

issues. You have a choice, in my mind, to either proactively lift the

oxygen mandate across the entire Nation or you have the choice of

requiring EPA to grant States waivers of the oxygen mandate. If

you took the latter approach, I imagine we would see two regions.

We would see a region of the Midwest, represented by my colleague

to the right, who is very confident that the current situation works,

and would probably not seek, I imagine, to act on that waiver. And

you would see a region of everybody else that I expect would very

quickly seek to act.

On the area of air quality, I also see two regions, because the

Midwest, for a host of reasons I will not get into, has not had as

substantial toxic benefits under this program as the rest of the

country. So you may need to carve out a different standard for the

Midwest than for everybody else.

Mr. GREENWOOD. Thank you. Let me ask Mr. Skinner a question.

Your statement indicates that Chicago may be ‘‘forced’’ to start

using MTBE as an oxygenate. Your statement also later explains

that phase II of the RFG program will require a more expensive

gasoline blend stock due to low volatility limits in phase II. Is this

the only factor that you believe will force the use of MTBE?

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Mr. SKINNER. Yes. As of right now we believe it is the only factor.

And when I say Chicago is going to be forced to see more MTBE,

forced may be the wrong word. We are being forced, the producers

are not being forced to use MTBE. They are choosing to use MTBE

because of the lower cost of mixing it with a higher blend stock,

higher volatility gasoline. It is a choice not to go to the more expensive lower volatility route.

Mr. GREENWOOD. It is economically driven phenomena?

Mr. SKINNER. Yes.

Mr. GREENWOOD. Let me ask you this question. We are informed

that the Department of Energy estimates that the cost impact of

utilizing ethanol phase II of the RFG program is about 1 cent per

gallon of RFG under current regulations. Do you believe this 1 cent

per gallon differential is in fact substantial enough to force the introduction of MTBEs? Is that the order of magnitude we are talking about here?

Mr. SKINNER. Well, I think the estimates have varied. I have

heard 1 cent, I have heard 2 to 4 cents. But, at any rate, when you

calculate it over hundreds, millions, billions of gallons of gasoline,

it does add up. So it is a significant economic factor, I think.

Mr. GREENWOOD. You mentioned Illinois has found detections of

MTBE in 26 public water supplies. Can you tell us the extent of

this contamination and what steps the Illinois EPA or the water

systems themselves have taken to address this contamination?

Mr. SKINNER. Well, the local water systems are probably not in

the best position to do much about these sort of hits. They try to

trace it to the source. A lot of time it is leaking underground storage tanks. Sometimes it is a source that cannot be traced, whether

it is vehicles, boats, whatever.

We are formulating currently in Illinois drinking water standards for MTBE. We have the regulations proposed and hopefully

within the next few months it will make it through the process so

that we have some mechanism for enforcing on our public water

supply standards and taking the wells out of service whenever necessary. But we are bound somewhat in terms of an overall MTBE

solution by what I would refer to as Federal preemption. Its role

in the Federal air program limits what we can do unilaterally as

a State.

Now, it may come to the point where Illinois, as other States

have, chooses to proceed and essentially risk a legal battle because

the MTBE problem has become so serious. We have not quite gotten there yet.

Mr. GREENWOOD. Without objection, I would like to at this time

submit for the record a Department of Energy study of June 14,

1999 on the impact of phase II gasoline reformulation requirements

and the cost of using ethanol in PADD II. Without objection, it will

be entered into the record.

[The information referred to follows:]

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Mr. GREENWOOD. The Chair recognizes for 5 minutes of inquiry

the gentleman from Texas, Mr. Green.

Mr. GREEN. Thank you, Mr. Chairman.

Mr. Milazzo, in your testimony you mention, and you boldface:

‘‘Given the questionable benefits to air quality of MTBE we believe

in and have called for the ban on MTBE.’’

‘‘Questionable benefits of air quality.’’ Did you hear the last

panel?

Mr. MILAZZO. Yes, I did.

Mr. GREEN. None of those, the EPA, Energy, none of them questioned—in fact, your testimony is the first on this panel that I have

heard say that MTBE does not help our air quality.

Mr. MILAZZO. I think when you look at it on the whole basis of

the air quality benefits versus the impacts of groundwater, that is

what we are talking about.

Mr. GREEN. No, we are talking air quality, not groundwater. I

will get to that on my next question.

Why is this statement in here? Like I say, I have not heard that;

and we have had three hearings so far on this, that MTBE is not

beneficial to air quality. In fact, we have heard it has done better

than they even modeled it back in the late 1980’s.

Mr. MILAZZO. Well, I have a November 20, 1998, Water Week

Publication, which is something that is given out to water utilities

and water companies, which says, ‘‘A study from the University of

California at Davis concluded there is no significant additional air

quality benefit through the use of oxygenates such as MTBE in a

reformulated gasoline.’’

Now, that is a study from 1998.

Mr. GREEN. Well, obviously, it is from a water authority; and I

would not quote them for air quality.

Mr. BILBRAY. If the gentleman would yield.

Mr. GREEN. I yield.

Mr. BILBRAY. I would like to reinforce the gentleman’s point.

Mr. GREEN. Okay. It’s just that I run out of time so quick.

Mr. BILBRAY. I just want to point out that was U.C. Davis talking about the reformulated fuel in comparison to California. I think

it is unfair, because you are using a reference to a gasoline standard that is not used in the rest of the country.

So Mr. Green’s point was MTBE as opposed to the other Federal

formulas, not in comparison to the California formula.

Mr. GREEN. Let me follow up. What is the parts per billion of

MTBE in the Suffolk County Water Authority?

Mr. MILAZZO. In the water?

Mr. GREEN. Yes.

Mr. MILAZZO. As I mentioned, we have some detections at .5

parts per billion to 10, with a couple of wells having consistent levels in the six to 10 range. There have been historically some sites

that were higher.

Mr. GREEN. Higher than 20, for example?

Mr. MILAZZO. Yes, sir.

Mr. GREEN. In the testimony we heard from the last panel, the

majority of the detections are below levels of public health concern,

with approximately 1 percent rising to the levels of 20 parts per

billion, with some rare instances above 100 parts per billion.

111

Let me for the record, Mr. Chairman, say that Mr. Franks from

New Jersey gave me some MTBE that is 600 parts per billion. It

does not identify where it is from, so I would hope that we would

find out if there is some water authority in New Jersey that has

water with 600 parts per billion. Because if only 1 percent is above

20 parts per billion, I would be concerned about 600 parts per billion.

But to continue the testimony from Mr. Greenbaum, the major

source of groundwater contamination appears to be releases from

underground storage tank systems. Have you found that to be correct?

Mr. MILAZZO. Well, again, it is never simple. What we find is

that the higher level detections in that six to 10 range and higher

levels are attributable to a source. There is a USGS study that I

was just looking at, updated in 1998, which indicated the lower levels may be point or nonpoint sources, and small concentrations that

are detected in groundwater, the source contamination may be a

point source but more likely is nonpoint source, such as atmospheric wash-off.

Mr. GREEN. You said atmospheric. Again, Mr. Chairman, I have

sat through these and read as much as I could. Is it your belief

that by the cars burning MTBE, that that then gets into the

groundwater?

Mr. Grumet, can you?

Mr. GRUMET. If I might, yes, it is.

Mr. GREEN. Can you quote any studies showing that?

Mr. GRUMET. I can quote my own.

Mr. GREEN. Well, I have not seen your own studies, so I am not

prepared to ask questions on it. But I would like to see it, and we

will submit questions on it.

Mr. GRUMET. Very quick, though, and you are making this point,

the vast majority of detections are at very low levels. We believe

the dominant mechanism leading to the vast majority of those detections is atmospheric deposition. The good news is it cannot get

much worse than it already is.

Mr. GREEN. Okay, I will send some questions to follow up, if you

could submit that. And, Mr. Chairman, if we have that study, I

would like to look at it.

Is New Jersey part of the group you represent?

Mr. GRUMET. Proudly, they are.

Mr. GREENWOOD. Let me quote Robert Shinn, who is Commissioner of the Department of Environmental Quality, that was published in the letter to the press of Atlantic City on February 24 of

this year.

After reading an article on gas additives, I wanted to give some

facts, and this is quoting Mr. Shinn, ‘‘A 1997 survey conducted by

the New Jersey Department of Environmental Quality found traces

of MTBE contamination in untreated water at 46 noncommunity

water systems and 29, only one noncommunity water system and

one community water system in Fair Lawn exceeding New Jersey’s

70 parts per billion.’’

So, again, to follow up, I don’t know where 600 parts per billion

came from.

112

But to continue to quote him. ‘‘the ‘60 Minutes’ show left the erroneous impression that MTBE cannot be removed from water. In

the example of the Fair Lawn Water Department, untreated water

sampled 37 to 73 parts per billion, but treated water was only one

part per billion. MTBE is just one facet of the historic problem of

leaking underground storage tanks. That problem is being solved.’’

Again, I would look forward to any information, scientific, that

by me burning MTBE in my truck it will get into the groundwater,

because that has not been the testimony that I have heard, up

until your testimony.

Mr. Chairman, I have some other questions.

Mr. GREENWOOD. The gentleman from Texas needs to know that

we could not get the timer started, so you got an extra minute already.

Mr. GREEN. Okay. Well, let me just say that I was intrigued by

the different standards for different parts of the country. Are you

suggesting we have a different standard for the East Coast, the

Midwest, the West Coast, or the Gulf Coast?

Mr. GRUMET. I am suggesting that the status quo of the performance of the RFG program is that the air toxics benefits in the

Northeast and the Gulf Coast have been greater than in the Midwest. Our commitment is to make sure that there is no deterioration of benefits as we change this program.

Mr. GREEN. We agree.

Mr. GRUMET. So if you want to try to maintain the status quo,

we need to decide whether to do it uniformly or whether to come

up with some regional scheme.

Mr. GREEN. Again, I have some concern about regional issues,

because I would not want one city to have to comply with different

standards that another city may not have to.

Mr. GREENWOOD. Mr. Ganske for 5 minutes of inquiry.

Mr. GANSKE. Thank you, Mr. Chairman. When I was talking earlier in the day about MTBE showing up in Iowa’s water, I said I

thought some of it could come from emissions from cars. But I

think also, because in the past MTBE, as used in Iowa, we also,

I am sure, have an underground water storage problem too. So that

is probably part of it.

I got the sense from all three panelists that you are concerned

about increased aromatic and olefin content in gasoline. So I just

have one question, Mr. Chairman, in the interest of moving on; and

I would like all three members to just address this question: Would

you support a cap on aromatic content as a part of an anti-backsliding provision if we do some legislation in this area? Mr. Skinner.

Mr. SKINNER. I think that would have to be an important component. There is no question. I do not know how else you get around

the backsliding issue.

Mr. GANSKE. Mr. Grumet.

Mr. GRUMET. I think there are multiple ways to address the

backsliding issue. I think that is one viable option.

Mr. GANSKE. Mr. Milazzo.

Mr. MILAZZO. I think the water authority will not take a progression on that. We are a water purveyor, and we just want to make

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sure the water we serve is safe and meets our customers’ requirements.

Mr. GANSKE. I appreciate that. Thank you, Mr. Chairman.

The GREENWOOD. The gentleman from Iowa yields the balance of

his time. The gentleman from California is recognized for 5 minutes.

Mr. BILBRAY. I am sorry that the gentleman from Texas left because he was saying he did not want one city to have one standard

and another city to have a different one. The fact is right now the

Clean Air Act specifically discriminates one city against another

with this mandate. Not all cities have this. And, in fact, you can

have cities a few miles away from each other that will have a totally different fuel mixture because of the way the act is applied.

Maybe we ought to talk about a national standard. Maybe we

ought to talk about that, if this is for fuel independence, that we

need to have a national standard. But that is not what we thought

in the past.

Mr. Skinner, in your testimony you state that Illinois, at least

three separate communities, have discontinued the use of drinking

water due to MTBE contamination. Your neighborhoods and also

your neighboring State of Wisconsin have addressed this. My question is, with all the considerable public outcry and complaints

about headaches, dizziness, nausea and everything else, was that

due to the presence of MTBE in the reformulated gasoline?

Mr. SKINNER. Well, there are two separate situations. The one

you are referring to, and the one Mr. Barrett referred to, was the

Milwaukee implementation of RFG probably 5 years ago now. I not

only had a professional interest in that, but my sister strayed to

the dark side, and she is a TV reporter, or was a TV reporter in

Milwaukee and happened to be doing this story at that time, so we

actually talked about it at that point.

USEPA will tell you it was not conclusive. The result was not

conclusive. They claimed it was not the MTBE. At one point I think

they probably thought it was a figment of Milwaukee’s imagination. The fact of the matter is when the fuel was switched from

MTBE to ethanol, the complaints ceased. They disappeared. So I

think you could probably extrapolate a cause and effect there.

Mr. BILBRAY. Didn’t have anything to do with their beer?

Mr. SKINNER. I still drink Milwaukee beer, so I do not think it

did.

Mr. BILBRAY. So now is ethanol the oxygen of choice for this region?

Mr. SKINNER. Yes.

Mr. BILBRAY. Is it reasonable then for the subcommittee to assume that the people in those areas would not welcome MTBE

back into the gasoline?

Mr. SKINNER. I think that is our belief, yes. I think there would

be an outcry if we, and I use ‘‘we’’ loosely, tried to substitute MTBE

for ethanol.

Mr. BILBRAY. One other question that was brought up was specifically about the division between and the implementation of the

mandate. It was a reference to the Davis study. I wanted to clarify

that. That study was not comparing the use of MTBE or ethanol

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and an unoxygenated Federal fuel. It was comparing it to a California reformulated standard.

Now, there was a comment by the gentleman about content regulations, and I just asked our witness from the air districts about

this. Isn’t one of the biggest problems we have run into with the

oxygenated mandate that it is one of the few times in the Clean

Air Act where process takes precedence over outcome; that when

we talk about content, about what goes in and not necessarily what

comes out, it eliminates the flexibility?

My background working on the air issue is—isn’t this true—that

one of the great successes we have had is with the Clean Air Act,

which is probably one of the most outcome-based environmental

strategies that we have ever implemented; as opposed to the Clean

Water Act, which is obsessed with process? You want to articulate

the flexibility of setting standards and allowing the local people to

fulfill those standards?

Mr. GRUMET. I think the basic wisdom of the Clean Air Act is

that it sets national requirements and, to the greatest extent possible, empowers local officials to design plans to meet those requirements. And when local officials are so empowered, we tend, to

the greatest extent possible, to defer the actual specifications of

things like the way a car is built or the way a gasoline is refined

to the experts who actually undertake those processes.

So I think that general notion of deference to those who have expertise is one that we would like to try to maintain in our approach

to this problem.

Mr. BILBRAY. That is the frustration, is trying to mandate it out

of here in Washington. By the time we make a law, the concept is

5 years old. And you can imagine what would happen in the private sector if they tried to compete in the open market with that

attitude, and I think the environment has reflected that.

The question really comes down to this issue of, when you have

an outcry about a product like MTBE, and people, your constituents, are asking you why aren’t you doing something about that,

you have a mandate that says you have to have 2 percent no matter what. Can you explain to me the frustration you have run into

in trying to address the water quality issues at the same time you

have the Federal Government placing this mandate on your back?

Mr. GRUMET. I can tell you that there is no experience we have

had of late more frustrating than trying to deal with the public outcry over this. I would add that I think the outcry and, to some extent hysteria, is amplified by our impotence to respond. Because we

are incapable of pursuing the kind of prudent principles that we

have set before you today, that leads people to think government

doesn’t care, that government is callous, there are all kinds of conspiracy theories.

So I would suggest we can both not only solve the problem but

increase public confidence in government if we move away from

mandates, if we do not fall into the simple trap of bans and we give

environmental regulators the authority we need to manage risk.

Mr. BILBRAY. I appreciate that. A ban is easy to talk about; it

looks good in a sound bite, but it does not get it done.

Mr. GANSKE. [presiding] The gentleman’s time has expired.

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Mr. BILBRAY. I would ask for unanimous consent on one last

question, Mr. Chairman.

Mr. GANSKE. One additional minute.

Mr. BILBRAY. Thank you. This issue of flexibility. You talked

about the different impacts it would have on different regions

based on toxic emissions. One of the frustrations I have had sitting

at this panel, after sitting where you have, is the lack of understanding of the unique challenges not only geographically but also

based on seasons. A clean fuel that is great in the summer may not

be great in the winter. Standards that really work in the winter

may be disastrous in the summer. Standards that are great at sea

level may be disastrous at places at high altitudes.

Can you articulate about that, trying to develop those outcomebased strategies in implementation?

Mr. GRUMET. Sir, you are absolutely right. The natural state of

nature is chaos. So coming up with a one-size-fits-all approach to

that has proven different. On this particular issue, I think it is possible to balance the needs for that autonomy at the State level and

the need for having consistent specifications at the refinery level

with some basic approaches that bound and measure State authority to act in our own interests. And I would suggest to you the principles we have put together with environmental organizations and

the oil companies does just that.

Mr. BILBRAY. Thank you, Mr. Chairman.

Mr. GANSKE. The gentleman from New York, Mr. Lazio, is recognized for 5 minutes.

Mr. LAZIO. Thank you very much, Mr. Chairman. Let me thank

all the witnesses. I have a couple of questions for Mr. Milazzo, and

I would like to sort of follow up on my previous line of questions

with the previous panel.

Having to do with trying to achieve a reasonable balance between air quality and water quality—and this may take some

time—give me a sense based on the testing that has been done by

the Water Authority—and I am happy to hear from the other panelists, as well—what is your assessment of whether or not we

would have the time to develop an alternative? And I know it is

a difficult question because how much time is that, but does this

look like it is an immediate health issue, or is it something that

is likely to evolve into a more serious health issue?

Mr. MILAZZO. I would submit it is the latter.

What we are finding is we have detects—and I talked about

those—and we have a few significant detects where 10 parts per

billion, but we are treating that water with filtration systems.

But we talked to our lab director yesterday, and we are finding

that the detections are increasing and that low-level detects, those

less than 2.5 parts per billion, are becoming widespread. We can

address those. We can handle that. And we can make sure that the

water we are providing is safe. But if those levels start to increase

up and if the State reduces its limit to 10 parts per billion, that

will be a problem for us.

So, as the condition exists today, we can handle it; and the water

we provide is safe. If the detections become more pervasive and the

concentrations are higher, it will be a problem, and it will be someVerDate 11-MAY-2000 11:14 Aug 31, 2000 Jkt 065685 PO 00000 Frm 00119 Fmt 6633 Sfmt 6602 E:\HEARINGS\62976 pfrm01 PsN: 62976
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thing that we will address and make sure the water is safe, but

it will be something that will add additional costs and expense.

Mr. LAZIO. Is there a trajectory that you can identify from the

earliest testings that you have been testing for 10 years based on

the earliest testings to where we are right now?

Mr. MILAZZO. I would submit that what we are seeing is just a

general trend up in the number of detections. Lower-level detections are becoming more widespread, and occasionally we will get

that one significant detection, but again that is attributable usually

to a source.

Mr. LAZIO. Has there been any change in the detection methodology that would explain part of the increase in detection?

Mr. MILAZZO. Not that I am aware of. I think we are using the

same methods.

Mr. LAZIO. How about the depth of the wells that are being tested here? Is there evidence that it actually is in the aquifer, or is

it somewhere else in the well system do you think is the primary

contamination?

Mr. MILAZZO. That is a good question, and it allows me to illustrate one thing. In my testimony, I talked about 480-odd wells. We

have more wells than we use right now. We have 425 operational

wells for 1999. Those are wells that were in service and providing

water to our customers. They draw from three aquifers.

The first is the Upper Glacial, which is, and I am not a

hydrogeologist, I will say on the order of hundreds of feet below.

And then we have the Magothy, which is much deeper. And then

underneath that is the Lloyd. That is the deepest of our aquifers.

We draw most of our water from the two upper aquifers, the

Magothy and the Upper Glacial. The well depths range from 30

feet to, I would guess, on the order of 500 or 350 feet or somewhere

in there. I can get you the exact figures.

One of the characteristics or features of the MTBE is that it

moves awfully quick through our sands and awfully fast once it

gets into the aquifer. The USGS study indicated it moves almost

as fast as water in the aquifer. It spreads along the top of the

water, so if we have a well and it gets in contact with our well

screen, we are going to pull it up.

Mr. LAZIO. I want to ask you this question, because the Department of Health was in the other day in my office, and they were

talking about the fact that they thought that tank leakage could

not account for all the MTBE that they felt was turning up.

Do you have an opinion about that?

Mr. MILAZZO. I would tend to agree.

Again, when you have a tank, you would find the higher levels

of the detection; and what we are finding is that .5 to 2.5 levels,

again, the USGS is indicating that may be a nonpoint source.

Tanks can usually point to it. You can say, look at the levels, it

is increasing, it is high.

Mr. LAZIO. Mr. Chairman, I would make a unanimous consent

request to put in my opening statement because I was late getting

in here.

The identification of the source of MTBE contamination is an important issue for a study, and a think the good partnership approach would be for us to think through how we can help facilitate

117

that, especially with some of the localities that are on the cutting

edge of testing.

With that, I yield back. I want to thank again the panel.

[The prepared statement of Hon. Rick Lazio follows:]

PREPARED STATEMENT OF HON. RICK LAZIO, A REPRESENTATIVE IN CONGRESS FROM

THE STATE OF NEW YORK

Mr. Chairman, I thank you for holding this hearing on the reformulated gasoline

requirement of the Clean Air Act. As you are aware, this is a critically important

issue in my home state of New York and in particular, in my own Suffolk County,

Long Island district. I thank you for allowing us to explore the complexities of this

issue for the nation as a whole.

Many around the country are looking to this body to resolve this complex issue,

which pits one environmental program over another. Many members see an outright

ban on MTBE as the only needed action. Others would have us do nothing. Unfortunately, for the State and local officials who have the awesome responsibility of managing our health-related environmental programs, for ensuring that our citizens

have both healthy air to breathe and water to drink, the best solution may be more

complex. We, in this subcommittee, have the unenviable task of untangling the web

of requirements in a manner that reaps positive environmental benefits for both our

air and water resources. I appreciate your foresight in holding this hearing and for

inviting these distinguished panels of experts to help us before we start solving this

difficult problem.

We, in Long Island, have seen the complexities of the reformulated gas issue from

both the air quality and water quality perspective. As you are aware, my New York

district is one of the non-attainment areas that relies upon the reformulated gasoline requirement to meet our air quality standards. New York State officials believe

that we must make full use of all available tools if we are to make our air healthy

for our people. They feel strongly that the reformulated gasoline requirement has

played a significant role in those plans and has helped us with our air quality successes that we have achieved thus far.

Long Island, however, also has seen the adverse impacts of this requirement.

Long Island relies heavily on groundwater for its drinking water. Unfortunately,

with its sandy soils, the island’s groundwater is very vulnerable to contamination

from spills. In a heavily suburbanized district as mine, tank leaks and spills associated with everyday life are only too common. The Suffolk County Department of

Health Services has been analyzing for MTBE in their samples since they first detected it in 1991. With over 49,000 samples since then, they have built up a sizable

database on MTBE. It has been detected in about 13% of the community water supply wells, generally at very low levels. It has also been detected in a higher percentage of private wells in the major towns of my district.

Today, we will be fortunate to be hearing from individuals representing both the

air and water management perspectives of my Long Island, New York constituents.

New York is one of eight states participating in the Northeast States for Coordinated Air Use Management, NESCAUM. That organization has been studying the

reformulated gas issue and has developed a set of principles that my state supports.

I am pleased that this committee has invited the Executive Director of that organization to testify today.

In that same panel, we will be hearing from a representative the local water authority in my district. The Suffolk County Water Authority is the nation’s largest

supplier of drinking water from groundwater. This group has been collecting data

on MTBE in the ground water since the requirement first came on the books. They

have been looking closely at the cost of removing the MTBE from the water they

supply to my constituents. Since these costs are passed along to my constituents,

their observations should prove useful to understanding the urgency I attach to this

issue.

I would also like to submit for the record, written testimony from the Suffolk

County Department of Health Services. They have an extensive database on this

contaminant. It would be useful if we could arrange for localities like this to be able

to communicate with each other about their experiences and findings. This interchange of ideas and information would be very useful to our local officials who have

to manage this very difficult issue.

Finally, I hope to learn today from our panels that our experts in EPA and elsewhere are looking at the multimedia implications of future environmental solutions

so that we do not find ourselves in a similar situation again. We should have foreseen the impacts on our groundwater of this Clean Air requirement.

118

PREPARED STATEMENT OF CLARE B. BRADLEY, M.D., M.P.H., COMMISSIONER,

SUFFOLK COUNTY DEPARTMENT OF HEALTH SERVICES

Background

As Commissioner of the Suffolk County, New York, Department of Health Services (SDHS), I am pleased to have the opportunity to outline our experiences and

concerns with MTBE as a groundwater contaminant.

The department is responsible for ensuring that the drinking water supplies of

Suffolk County, which comprises the eastern two-thirds of Long Island, New York,

are safe now and for future generations.

For a county-level water supply enforcement agency, my department expends extensive resources in its commitment to water supply and groundwater resource

monitoring. However, the importance of our resource deserve nothing less. The Long

Island groundwater aquifer system is one of the most closely monitored and painstakingly researched in the United States. In 1978 it became one of the first Sole

Source Aquifer Systems established pursuant to Section 1424(e) of the Federal Safe

Drinking Water Act (SDWA). The significance of this designation was an assurance

that federal funds could not be committed to any project that may contaminate the

aquifer through a recharge zone so as to create a significant hazard to public health.

With our guidance and technical support, municipalities on Long Island have

joined together to create a comprehensive planning structure to ensure the safety

of our water resources for all time. I am proud of our department’s role in furthering

this effort.

SDHS—Environmental Division

Our Division of Environmental Quality has water supply and water resource protection as a major area of focus. Its Office of Water Resources is charged with datagathering responsibilities and acts as the designated enforcement arm of the State

Department of Health, which was granted Primacy under the SDWA.

Another unit of the Environmental Division, the Office of Pollution Control acts

to enforce a comprehensive battery of county sanitary code requirements that limit

and control the storage of toxic and hazardous materials, some of which are still

quite unique. The office has been charged with the enforcement of Article 12 of the

Suffolk County Sanitary Code, which has succeeded in the removal of old gasoline

tanks, and which began an aggressive program of tank testing and replacement in

1980. Under this Article 6,724 gasoline tanks have been removed and 2,133 tanks

installed in conformance with these regulations. This regulation, which I believe

was the first of its kind in the nation, requires the replacement of steel tanks with

double-wall fiberglass tanks. Article 12 anticipated the federal EPA underground

storage tank requirements that became effective at the end of last year.

The Office of Wastewater Management is responsible for the enforcement of regulations which control sanitary sewage disposal practices, limiting density or requiring sewers in deep recharge areas of the county, in conformance with the recommendations of the 1978 Long Island Wastewater Management Plan, prepared

under the auspices of Section 208 of the Federal Water Pollution Control Act of

1972.

Our Environmental Division has also acted as project managers for a series of

groundwater planning activities, including the aforementioned 208 Study and the

Suffolk County Comprehensive Groundwater Resources Management Plan in 1987.

Very shortly we expect to begin the Long Island component of the New York State

Source Water Assessment Program (SWAP), mandated by congress under the 1998

SDWA amendments. The Long Island SWAP, one of the most ambitious in the country, will examine the areas contributing to the sources of public drinking water and

assess the potential for drinking water supply contamination. The Division also has

an important role in coordination of efforts of the County Pine Barrens Commission

to preserve critical portions of the county deep recharge areas by acquisition and

innovative development rights transfers, as well as providing technical assistance in

other watershed management and acquisition activities.

Finally, the Division’s water resource protection structure is supported by our

Public and Environmental Health Laboratory (PEHL), which provides the Division

with analytical services. The PEHL has allowed my department to investigate and

uncover many water supply contamination problems years before they were recognized to be nationally significant issues. Our MTBE findings are one such example.

MTBE

In Suffolk County, MTBE is a groundwater contaminant of significant concern at

this point, primarily due to the frequency of its detection in public water supply well

sources and groundwater test wells. The ability of MTBE to contaminate water supVerDate 11-MAY-2000 11:14 Aug 31, 2000 Jkt 065685 PO 00000 Frm 00122 Fmt 6633 Sfmt 6621 E:\HEARINGS\62976 pfrm01 PsN: 62976
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plies was evident since its detection in 1991, when our laboratory extended its analytical capabilities to include it in our volatile organic chemical analyses. Since that

time over 49,000 samples have been analyzed by our PEHL. Using our authority

under the County Sanitary Code in 1994, we required that large community water

suppliers (CWS) incorporate MTBE into their self-monitoring of wells. Nationally,

monitoring under the Unregulated Contaminant Monitoring Rule update will not be

required by EPA until the 2001-2003 monitoring cycle.

I wish to also point out that our larger suppliers often voluntarily go well beyond

our minimum monitoring frequency requirements, and the evaluation of MTBE occurrence is no exception. Most notably the Suffolk County Water Authority (SCWA),

the largest supplier in the county and the largest (by population) groundwater

source—CWS in the United States, voluntarily samples some of their wells as often

as weekly during their operation. This not only illustrates the depth of the commitment of our water suppliers to the safety of the product they provide, but underscores the point that routine comprehensive monitoring of Suffolk’s over 530 community wells costs several million dollars each year. Each new contaminant incrementally increases this cost, which ultimately is borne by the water supply customer.

I can say with some confidence that our total base of data on MTBE is extensive.

However, our findings are not unique. MTBE detections were reported elsewhere,

predating Federal EPA policy decisions that led to its use in Reformulated Gasoline.

For example, the USGS National Water Quality Assessment Program reported detectable MTBE in 27% of shallow urban wells in 1993-1994 sampling.

As you probably have heard from other participants in these proceedings, MTBE

chemistry makes it a significant groundwater contaminant. The high vapor pressure

of MTBE allows it to volatilize rapidly from liquid gasoline into the air; its high solubility allows the vapor to be removed from an equilibrium condition by dissolving

into rainwater, moving it into the water cycle. In groundwater it is a very mobile

contaminant, approaching conservative groundwater tracers in mobility and nonbiodegradability.

Our experience in the early 1990’s was that MTBE was encountered at a relatively lower frequency and usually in conjunction with other gasoline fractions—

benzene, xylend, toluene, and ethyibenzene. Beginning in 1979 its use as an octane

enhancer replacing lead meant initially that it was present in gasoline in relatively

lower concentrations (2-7%). Those rare occurrences in which MTBE was found,

without the presence of BTEX compounds, were thought to reflect the inefficient removal of MTBE in some earlier gasoline spill site cleanups.

By 1992 MTBE emerged as the clear choice as an oxygenate in many parts of the

country. In more recent years, detection patterns have changed significantly, almost

certainly due to MTBE’s usage in much higher percentages in RFG (typically 11-

15%). Frequency of detection in both private and public wells subsequently increased, but rarely in co-occurrence with BTEX. The frequency of MTBE detection

in Suffolk’s community wells has held at the 10 to 13%. On the order of 80% of

these detections are in the .5-2.0 ppb range. A review of SCWA data generated last

year indicated only 4 CWS wells had levels between 5 and 10 ppb. Even so, frequency of detection should be recognized as being different from frequency of exposure. That is primarily because a fair percentage of these wells (on the order of 40%

of the SCWA wells with MTBE) already provide granular activated carbon treatment for other volatile organic chemical contaminants. This observation is something that will bear further consideration during the previously mentioned comprehensive investigation of the SWAP.

MTBE is now almost always the basis for any nominations that we make to the

NYSDEC Spill Program and MTBE detection is the most common non-pesticide contaminant driving our private well surveys.

I enclose with a copy of my testimony a table indicating MTBE detection in private wells in Suffolk. Although about 90% of Suffolk’s population (approximately 1.3

million people) are served by one of 43 community water systems, the balance of

our residents (approximately 200,000 people) are served by one-site relatively shallow private wells. We estimate on the basis of the 1990 census that there are approximately 60,000 private wells serving year round and seasonal homes. Although

concentrated primarily in eastern Suffolk, there are private wells in each of the ten

towns in Suffolk. In a review of 1997-1999 data, MTBE detection in tested private

wells ranged from 0.5- to approximately 1300 ppb. Frequency of MTBE detection in

private wells for the period was 7.5% (325 of 4,312 records).

Because of the presence of a ‘‘generic’’ MCL for individual Unspecified Organics

in the New York State Sanitary Code since 1989, we have from the time of the first

MTBE detection enforced a 5-ppb standard. New York is developing a new regulation in no small part in response to the frequency of MTBE detection, public conVerDate 11-MAY-2000 11:14 Aug 31, 2000 Jkt 065685 PO 00000 Frm 00123 Fmt 6633 Sfmt 6621 E:\HEARINGS\62976 pfrm01 PsN: 62976
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cerns, and some health effects studies nearing completion. Based on the recent State

Department of Health request for information for a Regulatory Impact Statement

currently under development, we believe that the likely new state MCL will be 10

ppb. This would be in line with MTBE standards in some other states.

The short-term impact of a lower state standard to currently operating community

wells (based largely on review of recent data) is low. However, the short-term impact to non-community public supplies and private well is expected to be more significant.

In the absence of an MTBE ban, we assume the frequency of low level detection

in all groundwater sources will increase, and that the economic burden of treating

water supplies or seeking alternative sources will continue to increase over time.

While the state and federal review process will concentrate on health effects,

MTBE’s ability to degrade the aesthetic character of water should be given serious

consideration. MTBE is often described as having a turpentine-like taste and smell,

even at very low concentrations. Some reports indicate that consumers can detect

it in drinking water at concentrations as low as 2.5 parts per billion (ppb). With

such a low taste and odor threshold, it is possible that consumers would notice

MTBE contamination at much lower levels than are likely to cause health effects.

Accordingly, the California Department of Health Services has finalized a secondary

standard at 5 ppb, based on taste and odor, and a primary drinking water standard

of 13 ppb was under reviews at last report. This concern of public water suppliers

is completely legitimate in my view. Aesthetic characteristics have historically been

criteria for rejection of water sources in the water supply industry. From the perspective of the water supplies, they have not brought on this problem and should

not be left to deal with it alone.

Environmental health professionals are awaiting the evaluation of health effect

studies regarding MTBE. There is relatively little further information that my office

can bring to you on this issue. However, from the standpoint of exposure to MTBE,

the most significant contact with MTBE for the average resident of Suffolk is not

drinking water, but breathing air. This exposure should be better documented in the

light of overall health concerns. I have concluded that the anticipated increase frequency of MTBE detections warrant action to remove it from gasoline formulations.

However, my department must continue to determine the extent of problems that

have already occurred, understand the mechanisms under which contamination can

occur, and pursue remediation of the problems that exist. Other MTBE contamination mechanisms besides direct fuel storage leaks should be reviewed: gas transfer

operations, volatilization from storage or incompletely combusted gasoline exhaust

return in precipitation and recharged, and homeowner misuse. I am hopeful that

the national importance of these steps will be recognized and that federal assistance

in this effort would be extended to us.

Finally, I wish to continue to offer whatever technical assistance our department

can provide to you as this national dialogue continues.

MTBE Private Well Detections

Suffolk County—1997-99

Town Samples Detects % detect Lowest Highest

Babylon .......................................................................................... 21 8 38 0.5 34

Brookhaven .................................................................................... 907 65 7 0.5 140

East Hampton ............................................................................... 544 24 4 0.5 790

Huntington ..................................................................................... 71 3 4 1 360

Islip ............................................................................................... 24 7 29 0.6 3

Riverhead ...................................................................................... 289 13 4 0.5 9

Shelter Island ................................................................................ 47 3 6 0.5 2

Smithtown ..................................................................................... 516 31 6 0.5 1300

Southampton ................................................................................. 676 56 8 0.5 430

Southold ........................................................................................ 1217 115 9 0.5 750

County ........................................................................................... 4312 325 7.50 ppb ppb

Source: SCDHS Bureau of Drinking Water.

Mr. BILIRAKIS. [presiding] Without objection, the opening statement of the gentleman from New York will be entered into the

record. And without objection, if the gentleman, Mr. Milazzo, would

supply the staff with a copy of his report, we would like to have

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that entered into the record, as well. If the staff would pick that

up from Mr. Milazzo, that would be useful.

[The information referred to follows:]

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Mr. BILIRAKIS. Mr. Shimkus, do you wish to inquire?

Mr. SHIMKUS. Yes, I do.

Mr. BILIRAKIS. The gentleman is recognized for 5 minutes.

Mr. SHIMKUS. A simple question first. The RFG program, has it

proven to clean the air? And let’s go from Director Skinner on

down.

Mr. SKINNER. Yes.

Mr. GRUMET. I will say more than one word. It has been one of

the most effective air quality programs that were adopted in the

1990 amendments.

Mr. SHIMKUS. Thank you.

Mr. MILAZZO. From what I am hearing today, I will concur.

Mr. SHIMKUS. It would be safe to say yes.

Second question: Is there any recorded instance of ethanol contributing to pollution of groundwater?

Mr. SKINNER. No.

Mr. GRUMET. Yes. I mean, we want our groundwater to be absolutely pure. It never will be.

Mr. SHIMKUS. Do you have a specific case?

Mr. GRUMET. Certainly. We are aware that ethanol, like any gasoline, is spilled into groundwater.

Mr. SHIMKUS. Do you have a specific location? I mean, Director

Skinner has how many locations of groundwater contamination in

Illinois?

Mr. SKINNER. Twenty-six MTBE hits, anyway.

Mr. SHIMKUS. How many contributed to ethanol? I am directing

my question to Director Skinner now.

Mr. SKINNER. None to ethanol.

Mr. SHIMKUS. Director Skinner, the head of the EPA from Illinois, can answer that question. So my question to you is, name the

location of the site that has groundwater pollution on ethanol.

Mr. GRUMET. Sir, I do not have that off the top of my head, but

I would be happy to provide you with the sites of ethanol occurring

in groundwater. It has occurred in the course of human history. I

am agreeing with you.

Mr. SHIMKUS. We will expect a response to this committee based

upon your answer.

Mr. Milazzo, based upon your experience, did you notice any?

Mr. MILAZZO. I do not think the Water Authority has. And it is

my understanding there is not that much ethanol being used in

Long Island in the gasoline. I can find out for sure.

Mr. SHIMKUS. Director Skinner, would you characterize the ethanol program in Chicago a success?

Mr. SKINNER. Yes.

Mr. SHIMKUS. Has there been any incidence of water contamination in Chicago from RFG?

Mr. SKINNER. No, not to my knowledge.

Mr. SHIMKUS. Can you give us a perspective of the groundwater

debate, since Illinois is a predominantly ethanol oxygen State? The

issue I want to address here is we have got two environmental

issues, groundwater contamination, that is MTBE, and air quality,

which is a positive oxygenate program with an ethanol mix. Can

you tell us how, in Illinois, from your experience as the director of

the EPA, proportionally how we fare.

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Mr. SKINNER. Well, I think that Mr. Grumet is making a point

that, if fully elaborated on, I would not disagree with, which is, if

there is a gasoline spill of gasoline containing ethanol, then there

would be ethanol showing up in the results.

The difference between MTBE and ethanol, though, is that

MTBE is much more soluble, it is much more pervasive, and it

lasts much longer in the water supply. Therefore, it is much harder

to clean.

So you will always have gasoline spills, but it is much worse if

you have a gasoline spill with MTBE.

Mr. SHIMKUS. You meant to say gasoline with MTBE.

Mr. SKINNER. If you have a gasoline spill with MTBE in it, it is

much worse than a gasoline spill with ethanol in it because it lasts

much longer and it is much more expensive to resolve.

The answer to your immediate question is, no, in the Chicago

RFG area, while there have been gasoline spills I am sure, we have

not had a particular problem with remediation because it contains

ethanol rather than MTBE.

Mr. SHIMKUS. Let me go back to Mr. Grumet. I do not want to

really get into an argument.

What about the question of remediation versus gasoline with an

ethanol additive?

Mr. GRUMET. I would like to thank Director Skinner and say I

entirely agree with the thrust of your question. In groundwater,

hands down, ethanol is the winner. In air quality it is not so clear;

and, in fact, in air quality we think there are liabilities.

Mr. SHIMKUS. I am not trying to debate the benefits of MTBE

and ethanol and air quality.

The reality is they both create significant benefits for air quality.

MTBE is disadvantageous to the groundwater supply if spilled.

Mr. GRUMET. If you are trying to raise the comprehensive question, which is obviously all of our goal is to protect both air quality

and groundwater simultaneously, ethanol has actual liabilities in

the summertime use because of volatility. So ethanol can actually,

while it has other benefits, create liabilities to air quality.

Mr. SHIMKUS. I would request that you stick around for the next

panel because I think that Dr. Graboski can answer some of those

questions, being a qualified scientist in that area.

Let me just ask the final question, and it is kind of the same

question I asked at the end of the last panel. And it was asked by

Dr. Ganske, the backsliding issue.

Are you concerned about the aromatics being the new inclusive

ingredient to raise the standards, which, in essence, would create

a dirtier environment for air?

Mr. GRUMET. Absolutely. That is probably one of our most significant concerns. If we do not enhance the toxic standards in RFG

and do nothing with the oxygen mandate, we expect that that will

happen, that highly toxic aromatics, because they are the most economical and available source, will come into the fuel supply.

There are two approaches we suggest you use to address that.

You can cap aromatics, which would be very effective but not very

flexible, or you can enhance the toxic standard to make certain that

it is not possible to use any compound that would make gasoline

more toxic. Either approach I think is viable.

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Mr. SKINNER. We think that the solution exists out there. I do

not know whether that approach is feasible or not. It is not something that I have particularly looked at. I may be able to get you

an answer from our staff on that.

But the fact of the matter is we think ethanol is a perfect substitute. The question becomes, if you are not going to allow the aromatics in there, you are not going to require oxygenates in there,

what is it that is going to be placed into the gasoline? And I do

not think we know the answer to that question.

Mr. SHIMKUS. Thank you, Mr. Chairman. I yield back my time.

Mr. BILIRAKIS. I thank each of the panelists for your very excellent contribution to our hearing today. You are excused.

We call, at long last, the fourth panel, beginning with Mr. Robert

H. Campbell, chairman and chief executive officer of Sunoco, Inc.;

Dr. Michael S. Graboski, director of CIFER Institute, Department

of Chemical Engineering, Colorado School of Mines; Mr. A.

Blakeman Early, environmental consultant, American Lung Association; Mr. Dale O. Young, director, Oxygenated Fuels Business,

Lyondell Chemical; Mr. Eric Vaughn, president and chief executive

officer of Renewable Fuels Association; and Mr. Barry Grossman,

founder of Oxybusters.

Gentleman, we welcome all of you. We apologize for keeping you

waiting for 31⁄2 hours for your opportunity to testify, and we are

glad that you all were able to stay with us.

We turn first to Mr. Campbell for your 5 minutes of statement,

please.

STATEMENTS OF ROBERT H. CAMPBELL, CHAIRMAN AND

CHIEF EXECUTIVE OFFICER, SUNOCO, INC.; MICHAEL S.

GRABOSKI, DIRECTOR, CIFER INSTITUTE, DEPARTMENT OF

CHEMICAL ENGINEERING, COLORADO SCHOOL OF MINES,

ALDERSON HALL; A. BLAKEMAN EARLY, ENVIRONMENTAL

CONSULTANT, AMERICAN LUNG ASSOCIATION; DALE O.

YOUNG, DIRECTOR, OXYGENATED FUELS BUSINESS,

LYONDELL CHEMICAL; ERIC VAUGHN, PRESIDENT AND

CHIEF EXECUTIVE OFFICER, RENEWABLE FUELS ASSOCIATION; AND BARRY GROSSMAN, FOUNDER, OXYBUSTERS

Mr. CAMPBELL. Mr. Chairman, I, first of all, want to thank the

committee for inviting me to be with you today.

Rather than read my prepared statements, which I think you already have on file, what I would like to do is take the time available to me to address three points.

The first point: What is the best path out of the current dilemma? My answer to that question is to reiterate my support of

the recommendations of the blue ribbon panel.

David Greenbaum and Bob Perciasepe did a great job, in my

opinion, in crafting a reasonable approach from very diverse interests.

As you know, the recommendations increase public awareness of

handling gasoline; eliminate the 2-percent mandate; preserve the

existing air toxic improvements; phase down and cap MTBE use,

but do it in a timeframe that assures adequate fuel supply.

I also believe that the bill filed last year by Congressman Greenwood captures very well the key elements that the panel raised.

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And that bill also supports the principals being promoted by

NESCAUM, various environmental groups, and the petroleum refining industry. It is certainly my hope that this committee will be

able to support Congressman Greenwood’s bill.

My second point: when you are addressing the gasoline composition issue, also keep in mind the need to reduce the instance of

leaking underground storage tanks, the main remaining source, I

believe.

As we know, there has been an EPA program begun in 1988 to

upgrade, replace, or close the approximately 2 million underground

fuel storage tanks. The vast majority of petroleum companies, including my own, completed the program ahead of schedule at a cost

of billions of dollars.

Today, the 2 million tanks have been reduced to approximately

825,000. Unfortunately, EPA estimates that between 80,000 and

150,000 tanks have not been upgraded, removed, or replaced even

though the deadline has passed.

Simple logic demands that noncompliant tanks be replaced in an

expedited manner, beginning with tanks in the RFG areas where

MTBEs are most prevalent.

I know some of those tanks and the businesses that own them

are small. But I will tell you, from extensive personal experience,

that the size of the tank is of little consequence when a leak occurs.

A small leak over a long period of time from even a very small tank

in continuous service can adversely impact a large area of real estate.

Frankly, I personally believe that anyone that cannot afford to

upgrade the tanks and put in place an inventory control and monitoring program should not be in the business.

My third and final point: I believe that most people agree that

MTBE in gasoline needs to be drastically reduced. The critical

question is, how do you go about doing it constructively?

Let me reiterate that I believe that we can produce low-oxygencontent gasoline or even oxygen-free gasoline and still achieve or

exceed the air toxics emissions standards in existence. But if the

transition is not done constructively, I believe that it will have very

serious supply and/or gasoline price issues.

It took us 10 years to get to our current condition, and it cannot

be corrected overnight. But I believe that if the mandate is removed and refiners are given flexibility that they have been asking

for, the competitive free-market system will drive down MTBE out

of gasoline faster than most people now consider likely.

I believe that most refiners will ultimately want to advertise

that, ‘‘our gasoline is MTBE free.’’ There is nothing to be gained

by saying, ‘‘our gasoline has less MTBE this area than it did last

year.’’

Currently, with the mandate in place, most manufacturers of

RFG are required, as a practical matter, to continue blending

MTBE into the gasoline. We have no practical alternative. But with

the mandate gone, I believe that most refiners will want to expedite its removal, if for no other reason but to minimize liability.

But please make no mistake about it, replacing 250,000 barrels

a day of MTBE with anything, anything, is going to take time and

investment on the part of the industry. This is not a trivial issue.

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My greatest concern is that the result of all this national debate

will be to leave the mandate in place and simply ban MTBE, which

is effective, of course, a mandate for ethanol in RFG gasoline. I personally believe that to eliminate one mandate that has turned out

to be problematic and replace it with another or try to legislate

some complex, phased-down schedule will simply result in a situation that will need to be corrected again in the future.

What I am, basically, asking you to do is tell us the goal you

want achieved, tell us the environmental standard you believe is

necessary, and let this very competitive industry that I am involved in achieve it in the most cost-effective manner. I truly believe we have proven our ability do that over the years in the past.

Once again, Mr. Chairman, I thank you for the opportunity to

speak to you today.

[The prepared statement of Robert H. Campbell follows:]

PREPARED STATEMENT OF ROBERT H. CAMPBELL, CHAIRMAN AND CEO OF SUNOCO,

INC.

Good morning Mr. Chairman and members of the committee. My name is Bob

Campbell and I am chairman and ceo of SUNOCO Inc.—a company that is one of

the largest refiners and marketers of gasoline on the east coast of the U.S.

As you may know, last year I served on the EPA’s blue ribbon panel on

oxygenates and gasoline, I testified before the U.S. Senate Environment and Public

Works Subcommittee on clean air, and I have had several opportunities to speak

publicly on what steps I felt needed to be taken to address the growing public concern about the use of MTBE in gasoline. At every opportunity, I have strongly endorsed the recommendations of the EPA panel, and I urge you today to take whatever steps are necessary to implement those recommendations.

The continued use of MTBE in gasoline is a technically and politically complex

issue with much at stake. The EPA panel formed to address the problem had representatives from all of the major constituencies involved, and after much discussion

and debate, that panel published a set of recommendations that addresses both the

long and short term steps required to solve the problem.

It is probably safe to say that no one on that diverse panel was 100% satisfied

with the finished product. But the vast majority of the members felt that a workable

solution had been derived and were in support of the recommendations. The fact

that we could reach any semblance of agreement on such a complex and contentious

issue is a tribute to Dr. Dan Greenbaum of the health effects institute who chaired

the blue ribbon panel and guided our deliberations.

One of the most critical elements in the series of panel recommendations involves

the repeal of the 2% oxygen mandate imposed by Congress in 1990 for reformulated

gasoline. As long as that mandate is in place, most of the refining industry is required as a practical matter to continue blending MTBE into gasoline and distribute

it in many of the large populated areas of this country.

Today (10 years after the mandate was first imposed) the combination of new fuel

formulation and evolving automotive technology enables us in the refining industry

to produce cleaner burning fuels without oxygenates at the mandated level. In fact

we believe in the north eastern United States we can commit to producing gasoline

which will achieve an even greater level of toxics reduction than is currently mandated by EPA for the year 2000 RFG.

As I said, I realize that there are powerful forces that want the mandate retained,

but the key to no longer adding to the existing environmental problem is to give

our industry the flexibility to meet the performance standards we originally asked

for 10 years ago. The EPA panel published their recommendations on July 27, 1999.

Since that point in time, our industry has blended 2.5 billion gallons of MTBE to

produce almost 25 billion gallons of oxygenated gasoline. Every day the mandate remains in place and the problem goes unaddressed, we blend another 11.5 million

gallons of MTBE to produce 115 million gallons of oxygenated gasoline. It is small

wonder that the general population is upset, and the individual states are starting

to take unilateral action. We need your help to address this issue on a coordinated,

national basis.

I believe the bill filed last fall by Congressman Jim Greenwood captures very well

the elements of the blue ribbon panel’s recommendations:

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• Eliminate the 2% oxygen mandate

• Preserve existing air toxics improvements

• Phase down and cap MTBE use

• But do it in a time frame that assures adequate fuel supply (an immediate ban

will absolutely have gasoline supply implications)

Let me add that Mr. Greenwood’s bill also addresses most of the legislative principles being promoted by NESCAUM, environmental groups and the refining industry. It is certainly my hope that this committee will be able to support Congressman

Greenwood’s bill.

But the use of MTBE in gasoline is only a part of the problem. The second, and

in my opinion equally serious issue is the continued existence of leaking underground storage tanks. In 1988 EPA announced a 10-year program to upgrade, replace, or close the approximately 2 million underground fuel storage tanks. To not

comply with this program meant the imposition of very serious penalties, and the

vast majority of petroleum companies (including my own) completed the program

ahead of schedule. Today the 2 million tanks have been reduced to 825,000 regulated tanks. Unfortunately epa estimates that of those 825,000 regulated tanks

there are between 80,000 and 150,000 tanks that have not been upgraded, removed

or replaced even though the deadline has passed. It’s a pretty safe bet that many

of those tanks are adding to this growing national groundwater problem. Most of

the non-compliant tanks are owned by state or federal governments, small independent service stations, farmers and other small businesses. Simple logic demands

that non-compliant tanks be replaced in an expedited manner beginning with the

gasoline tanks in rfg areas where MTBE is most prevalent.

I realize that many of these tanks and businesses are small. But I will tell you

from extensive personal experience that the size of the tank is of little consequence

when a leak occurs. A very small leak over a long period of time from a tank in

continuous service can adversely impact a large area of real estate.

Ladies and gentlemen it is my firm belief that today we have a growing national

problem, that is an unintended consequence of people trying to do the right thing

10 years ago. I urge you to support the legislation being proposed by congressman

greenwood and in addition address the problem of non-compliant and exempt underground storage tanks.

Thank you for the opportunity to testify.

Mr. BILIRAKIS. Thank you, Mr. Campbell, for your testimony.

We turn now to Dr. Graboski for his testimony.

STATEMENT OF MICHAEL S. GRABOSKI

Mr. GRABOSKI. Mr. Chairman, I am Mike Graboski from the Colorado School of Mines. I have provided some detailed written material in my statement for today; and so, as Mr. Campbell has done,

what I would like to do is just try to briefly summarize what I have

to say and leave you to study the details.

We have heard a great deal of discussion about the value of

oxygenates in gasoline and the ability to make gasoline that is nonoxygenated. My interest in talking to you today is that, in any legislative change you might make to the RFG program, that we preserve the public health benefits that the current program provides.

In my mind, protecting public health means that we cannot have

any backsliding in terms of future emissions from RFG compared

to those today.

Now, RFG currently is certified in terms of certain mass-base

standard. We add up all the toxics, we add up all the VOCs, and

we say, are these emissions comparable or better than the required

standards? But when we talk about anti-backsliding, we need to

consider some other issues; and these issues are, will the new fuel

produce the same amount of ozone when the emissions are admitted to the atmosphere or more or less? And anti-backsliding would

mean the same or less.

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How about potency-weighted toxics? Potency means the tendency

of these things to cause cancer after long-term exposure. All of

these materials are not the same. Benzene is far worse as a toxic

than, for example, acid aldehyde or formaldehyde; but in the Clean

Air Act, for gasoline purposes, they are counted the same.

How about carbon monoxide? Carbon monoxide is a pollutant

that is named as a criteria pollutant. And finally, how about the

emissions of fine particulate matter from vehicles? We are learning

more and more that today, in terms of studies, that as you get

oxygenates into gasoline, particulate matter goes down and that, as

you add things like aromatics into gasoline, particulate matter goes

up.

So my interest is trying to make sure that when you do what you

have to do, you create a situation that is environmentally neutral

compared to today, however that standard is crafted, and not rely

on the performance standards of the Clean Air Act, but rely on a

combination of the general requirements of the Clean Air Act and

the performance standards.

The general requirements talk about using oxygenation, permissible benzene levels, taking lead and metals out of gasoline; and

the performance standards talk about hydrocarbons and toxics and

NOX.

When I read the Clean Air Act, I read these things together and

I say, the Clean Air Act is providing performance standards and de

facto performance standards. The de facto performance standards

are the things that these general requirements give me.

Even if the Congress did not know what oxygenates were going

to do, we found from science since 1990 that there are quantifiable

benefits from oxygenates. Now that we have them, let’s make sure

that if we recraft the Clean Air Act section that has to do with reformulated gasoline, we make sure that we get the benefits of these

general requirements built into the regulation, into the law. And

that is really what we are talking about in terms of anti-backsliding.

When one puts oxygenates in gasoline—and I am not here to talk

about ethanol or MTBE separately, I am talking about oxygenates,

I am not a water person—the things that we find are that, in general, there are fewer aromatics in gasoline; we get a lower potencyweighted toxics emissions and, thus, a lower long-term cancer risk;

we reduce emissions of carbon dioxide; we reduce ozone at least

due to carbon monoxide and partly due to fuel reformulation; and

we get less fine particulate in-exhaust emissions.

People have talked today a little bit about aromatics. There is a

lot of experience in the past in terms of aromatics. At the time we

phased down lead, the first thing that happened in gasoline is the

aromatic content went up and the national average content reached

about 34 percent. Since we have put oxygenates in, the national average aromatic contents fall into about 26 percent. This tradeoff,

which is almost volume for volume, is logical because the octane

contents of these things are very, very similar. The refiners are trying to produce a gasoline that meets an octane specification. If he

takes something out with high octane, he has to put something else

in.

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Aromatics scare me, for a couple of reasons. First of all, they are

highly toxic and, like benzene, they are known to be human carcinogens. Increasing aromatics themselves in fuels increases benzene in the exhaust. That is known.

The EPA complex model also suggests that increasing the hydrocarbon portion of the fuel, taking oxygenates out, will increase

things called polynuclear aromatic hydrocarbons, which are very,

very carcinogenic relative even to benzene. And there is a lot of research around now that shows that adding oxygenates in will reduce PNAs, putting aromatics in fuels will increase PNAs. So this

is a danger, I believe.

Mr. BILIRAKIS. Mr. Graboski, if you could summarize.

Mr. GRABOSKI. Absolutely.

Refiners are going to replace oxygenates with aromatics and

whether they do that that is going to make a more toxic gasoline.

I could talk about some of these other issues, but one I would

just summarize on is particulate matter. I would like to point out

that 80 percent of the Clean Air Act benefits attributable since the

beginning of the Clean Air Act are due to reductions in particulates.

I think that changing a rule that would increase aromatics and

decrease oxygenates will increase particulate matter, and that

would be negative as far as public health is concerned.

If the panel is interested in the future, I would be very, very glad

to work with the panel and others here in order to provide more

in detail scientific input into these issues. And so, with that, I will

pass.

[The prepared statement of Michael S. Graboski follows:]

PREPARED STATEMENT OF MICHAEL S. GRABOSKI, DIRECTOR, COLORADO INSTITUTE

FOR FUELS AND HIGH ALTITUDE ENGINE RESEARCH, COLORADO SCHOOL OF MINES

ON BEHALF OF THE NATIONAL CORN GROWERS ASSOCIATION

Mr. Chairman, my name is Michael Graboski, I am Director of the Colorado Institute for Fuels and High Altitude Engine Research and a Professor of Chemical Engineering in the Department of Chemical Engineering and Petroleum Refining at the

Colorado School of Mines. I am testifying here today on behalf of the National Corn

Growers Association as an expert in the effects of adding oxygenates to gasoline. I

have submitted a technical paper to the Committee that documents the arguments

I have been making on the efficacy of the oxygen standard in the federal reformulated gasoline (RFG) program. I will summarize my arguments for you and the

Members of the Subcommittee, but ask that the full text of my paper be included

in the hearing record.

Mr. Chairman, you have heard a great deal of discussion about the value of

oxygenates in gasoline from many points of view. I have analyzed this problem by

looking at actual fuels that are being sold today using the certification tools that

refiners and regulators use. That is, I have looked at fuels that are being sold as

certified RFG or conventional gasoline, and I am using EPA’s complex model to determine the effects of changes in fuel oxygen content on fuel quality and emissions.

The Benefits of Oxygen in Fuel

The Clean Air Act sets forth both general requirements and performance standards for RFG. Theses are provided in section 211(k)(2) and section 211(k)(3) respectively. The general requirements include provisions for limiting nitrogen oxide emissions from vehicles using RFG, require the use of oxygenate, specify permissible

benzene content, and they prohibit heavy metal additives in RFG. The performance

standards require specified minimum mass-based reductions of hydrocarbon (VOC)

and air toxic emissions. This means that refiners must make specific reductions in

the tons of VOC and toxic emissions without regard to their ozone-forming potential

or cancer potency.

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1 NRC, ‘‘Ozone Forming potential of reformulated Gasoline’’, National Academy Press, Wash

DC, 1999. 2 NRC, ‘‘Toxicological and Performance Aspects of Oxygenated Motor Vehicle Fuels,’’ 1996.

Both 211(k)(2) and 211 (k)(3) define fuel performance standards. There are air

quality and public health benefits that are implicit in the general requirements in

addition to those that are explicit in the performance requirements. Specifically with

respect to the oxygen requirement, the implicit environmental performance is related to the benefits accruing directly from the use of oxygenates and those that result from the effect oxygenates have on the composition of gasoline. In quantifying

the full environmental benefits of the RFG program, the effects of both the general

requirements and performance standards of Section 211(k) of the Clean Air Act must

be considered.

The following long-term environmental and public health benefits result from the

use of oxygenates, both ethanol and MTBE, in RFG when compared with gasoline

that meets the mass-based RFG performance standards but is produced without

oxygenates:

• Fewer aromatics in gasoline

• Lower Potency weighted toxic emissions and thus lower long term cancer risk

• Reduced emissions of carbon monoxide

• Reduced ozone due to carbon monoxide

• Fewer fine particles in exhaust emissions

I would like to use the remainder of my presentation to discuss some of these benefits.

The Impact of Oxygenates on the Refining Processes:

Oxygenates add octane to gasoline, something essential for the smooth operation

of spark-ignition engines. Aromatics also provide octane in gasoline, though not as

much per unit as oxygenates. When refiners put oxygenates into gasoline they reduce the aromatic content of the fuel so that they produce a fuel with the proper

octane specification. Therefore, oxygenates are good substitutes for aromatics. The

tradeoff between aromatics and oxygenates is well documented in historical gasoline

surveys.

In my paper, I discuss the sources of aromatics within the refinery and how refiners may wish to use these sources. However, there are two important things to note

from this discussion. First, aromatic compounds are highly toxic and many like benzene are known human carcinogens. The toxic potency of aromatics and their combustion byproducts are, in many cases, orders of magnitude greater than the potency of oxygenates or their combustion byproducts. Second, refiners will replace

oxygenates with aromatics if they can and this will result in more toxic gasoline on

a potency-weighted basis. All toxics are not created equal, but the mass-based

standard of the Clean Air Act treats them as equal. Mr. Chairman, let me be clear,

the oxygen requirement in RFG has a real and substantial benefit because cleanburning oxygenates are substitutes for highly toxic aromatics.

Reducing Carbon Monoxide Emissions

Most ambient CO is generated by mobile sources. Carbon monoxide is a criteria

pollutant. EPA is currently reviewing the CO standard to determine its adequacy

to protect public health. CO also is an important summer ozone precursor. Recently

the National Research Council 1 has suggested that CO emissions be treated as an

important factor in assessing the impact of fuel formulation on ozone. CO reductions

are another implicit benefit of oxygenates in RFG because they are not accounted

for in the calculations used to certify RFG.

The National Research Council 2 also reported that oxygenates could be responsible for a 10% reduction in ambient CO a Clean Air Act criteria pollutant. In addition, CO emissions are highly correlated with other products of combustion, particularly VOC (hydrocarbon) emissions and fine particulate matter (PM2.5). Including oxygen in gasoline reduces both summer and winter CO emissions. The reduction in

CO is 15% or more for 3.5% oxygen. Increasing aromatics in gasoline to offset loss

of octane from oxygenates may increase CO emissions and eliminate the direct and

indirect benefits of these reductions.

Carbon monoxide affects ozone formation during the summer. I have used the

EPA Complex Model to calculate potential ozone effects that could occur if

oxygenates were removed from gasoline and replaced with aromatics. Based on my

analysis, the potential to form ozone is higher for non-oxygenated fuels. Considering

CO effects only, the ozone reduction benefit of using a 3.5% oxygen provided by an

ethanol blend with 26%aromatics compared to a non-oxygenated fuel with 34% aroVerDate 11-MAY-2000 11:14 Aug 31, 2000 Jkt 065685 PO 00000 Frm 00139 Fmt 6633 Sfmt 6621 E:\HEARINGS\62976 pfrm01 PsN: 62976
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matics is nearly 5%. This represents about 50% of the incremental benefits of phase

2 RFG compared to phase 1 RFG.

Particulate Matter Emissions:

Particulate matter, especially fine particles (PM2.5) is emitted directly in automotive exhaust. In addition, other exhaust products react in the atmosphere to

produce secondary particulate. More than 80% of the cumulative Clean Air Act benefits have been found to be associated with the reduction of fine particulate.

Oxygenates are known to reduce primary particulate emissions. Because there are

explicit regulations in RFG that control emissions that contribute to the formation

of secondary particulate, adding oxygenates to gasoline has little or no demonstrated

effect on secondary particulate. Thus, removing oxygenates will increase primary

PM. there is a risk that overall PM will increase with a reduction in the use of

oxygenates in gasoline.

Summary

Based on the available data, it is my conclusion that the benefits of using

oxygenates in gasoline are clear. The oxygen requirement has provided implicit benefits in the RFG program that are not currently accounted for in the RFG certification process. Aromatics in gasoline are reduced leading to significant reductions

in the toxic potency of emissions. Carbon monoxide emissions that contribute to

ozone formation are reduced significantly. Particulate matter emissions are reduced.

Eliminating the RFG oxygen requirement will lead to greater use of aromatics in

gasoline reducing public health and welfare.

I recognize that today’s concern with MTBE is posing serious policy questions for

the Committee. In my opinion, the benefits of adding oxygenates to gasoline are

clear. I would be willing to work with you and Members of the Committee on any

technical matters as you wrestle with the policy implications of addressing the

groundwater pollution problem associated with MTBE. What is most important in

my view is that we continue to achieve the objectives of the Clean Air Act.

Mr. BILIRAKIS. Thank you very much for that offer. We appreciate that.

Mr. Early.

STATEMENT OF A. BLAKEMAN EARLY

Mr. EARLY. Good afternoon, Mr. Chairman. My name is

Blakeman Early. I am here on behalf of the American Lung Association and am very happy to be here. And I, too, will try not to

take up too much of the committee’s time and summarize my testimony.

I am here principally for one reason, and it is to emphasize to

you how important it is for this committee to join with a very disparate group of organizations in support of the Blue Ribbon Panel

principles for legislation.

You have already heard Mr. Campbell talk about it, but I ask

you, when was the last time you had an opportunity to adopt legislation and incorporated principles supported by State air regulators, the Natural Resources Defense Council, the American Lung

Association, and the American Petroleum Institute? This does not

happen very often.

We believe that the Blue Ribbon Panel recommendations are a

moderate, very practical way to solve some very significant problems in terms of threats to our groundwater while maintaining actual air quality benefits in reformulated gasoline.

We believe those principles are very important. I want to emphasize that repealing the 2-percent oxygen requirement we think is

a very important element of those principles. It allows us to drastically reduce MTBE in reformulated gasoline. It allows refiners to

actually produce a gasoline that is cleaner than the gasoline being

produced today, which is one of the things that the California Air

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Resources Board is mandating and trying to get done in California,

and the 2-percent oxygen mandate they believe is preventing them

from doing that.

Keeping the 2-percent mandate and banning MTBE we think

from an air quality perspective—and we urge the committee to look

at this question from an air quality perspective—is not the best

way to maintain and enhance the air quality benefits from reformulated gasoline.

Refiners should be allowed to use as much or as little ethanol as

they may want to use, but keeping the 2-percent mandate and banning MTBE is essentially an ethanol mandate; and we do not believe that that is in the best interest of air quality.

We believe also that Congress must phase down and cap MTBE

in all gasoline and also provide the authority to regulate MTBE out

of existence in all gasoline, not just reformulated gasoline.

And we do support the call Mr. Campbell has just made for adequate lead time to the refiners to make changes, taking MTBE

down, and finding a way to continue to provide air quality benefits

in reformulated gasoline.

At the back of my testimony are a couple of examples of new

technologies that are already being offered for sale to refiners to

allow them to convert their MTBE facilities to produce alcoholates.

Alcoholates are one of the substitutes for MTBE that the Blue Ribbon Panel heard testimony and evidence on that hold a lot of promise, although, I have to say, alcoholates, like many other components of gasoline, have not been well tested in terms of their total

public health impacts. And one of the important elements of the

Blue Ribbon Panel’s recommendations is to get this testing and research on all different components of gasoline, the substitutes for

oxygenates and oxygenates themselves, get this underway so that

we do not make the same mistake again.

One of the major benefits of removing the oxygen mandate, in

our opinion, is it allows California to once again show the clean air

road map for the future. California’s reformulated gasoline is already cleaner than Federal reformulated gasoline. California, of

course, has a very serious air pollution problem; and they are seeking to make it even cleaner by producing another generation of reformulated gasoline that is even cleaner than the generation they

are using today. The evidence that they have presented convinces

us that the oxygen mandate gets in the way of them doing that.

With respect to the waiver that was discussed earlier today, one

of the things that we want to emphasize is that, both by State law

and by the Clean Air Act, California has an obligation of meeting

the national air quality standards as expeditiously as practicable.

If they cannot produce as clean a gasoline as they require, that

gets in the way of meeting that requirement. So we believe that the

waiver should be granted. But, really, the simple solution is to

waive the oxygen mandate.

I think that pretty much concludes my major remarks. We see

a way of fixing these problems in reformulated gasoline while being

able to deliver on the air quality benefits, and we urge this committee to take the principles as that way and move forward as soon

as you can.

Thank you.

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[The prepared statement of A. Blakeman Early follows:]

PREPARED STATEMENT OF A. BLAKEMAN EARLY, ENVIRONMENTAL CONSULTANT, AMERICAN LUNG ASSOCIATION

Mr. Chairman and members of the Sub-committee. Thank you for the opportunity

to discuss with you the federal reformulated gasoline (RFG) program. You have already received testimony from other witnesses substantiating the significant air

quality benefits being provided by this program. I will not review those issues but

observe that these benefits have too often been ignored by the media as they focus

on almost exclusively on water contamination issues. The American Lung Association has long supported the RFG program as one of the most effective programs implemented to date that were adopted in the Clean Air Act Amendments of 1990. We

do, however, share the concern of all Americans that the nation’s water quality be

protected. It is important to realize that few of the other air pollution reduction efforts emanating from the 1990 Amendments have contributed more to the emissions

reduction than the RFG program.

The RFG and the oxy-fuels program have been plagued with controversy about

effectiveness, cost, and the growing problem of MTBE contamination of surface and

ground water. The American Lung Association believes it is time to modernize the

RFG program, and make necessary changes. These changes must be made based on

what is needed to maintain and enhance the air quality benefits of the RFG program while reducing the environmental and health threats posed by constituents of

gasoline leaking into surface and groundwater. A secondary goal should be to reduce

the level of controversy surrounding this program so that it can contribute more to

the protection of public health. We believe the recommendations of the Blue Ribbon

Panel represent the best way of achieving those goals. The American Lung Association was a member of the Blue Ribbon Panel and we support all of the Panel recommendations, not just those relating to the Clean Air Act. Many of these measures

focus on protecting groundwater from leaking gasoline and increasing protections for

public and private drinking water sources. Another important component focuses on

conducting additional research on the health and environmental impacts of constituents of gasoline, including oxygenates and chemical compounds that might be substituted for oxygenates. The testimony of Dr. Greenbaum, Chairman of the Blue

Ribbon Panel, provides an excellent explanation of the recommendations and how

they were arrived at. We urge Congress to take appropriate action in support of the

other recommendations of the Blue Ribbon Panel. Let me turn to changes the American Lung Association believes are needed to the Clean Air Act that are based on

what is necessary to preserve and enhance actual air quality benefits achieved by

the RFG program.

The American Lung Association and the Natural Resources Defense Council have

endorsed the legislative principles presented by Mr. Grumet on the previous panel.

These principles have also been endorsed by Mr. Campbell and the American Petroleum Institute. These disparate interests have come together around these principles for legislative change after extensive examination of the problem and identifying achievable changes that will improve the RFG program. These recommendations make sense. It is rare that members of this committee get an opportunity to

embrace a legislative proposal supported by many members of the oil industry,

health and environmental organizations, and a group that represents the bulk of

state air regulators who actually implement the RFG program. We urge you to embrace them, as well.

Congress must increase the minimum reduction in air toxics required for RFG to

reflect the actual reductions achieved by RFG fuels in 1998 and 1999. A major

weakness in the current law is that faced with a regulatory or congressional mandate to reduce or eliminate MTBE, refiners are likely to produce a fuel that will

produce more air toxics emissions than the fuel produced today. Using EPA’s updated complex model, I understand refiners are achieving a 26-27 percent reduction

in air toxics when Phase 2 of the law only requires a 22 percent reduction from the

1990 baseline gasoline. Given the growing body of evidence demonstrating mobile

source emissions to be a major contributor to air toxics exposure, Congress must act

to make sure we do not slip backwards in the effort to reduce air toxic emissions

from cars and trucks through the use of cleaner fuels. It is important that I reiterate that the API shares our support of this principal.

Congress must repeal the two percent oxygen mandate for RFG in the Clean Air

Act. It is clear that the oxygen mandate is driving the extensive use of MTBE and

that this use represents a growing and unacceptable threat to water resources, particularly those relied on for drinking water. We have learned much more about making cleaner gasoline than we knew when the RFG program was enacted in 1990.

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1 See Report of the Blue Ribbon Panel on Oxygenates in Gasoline, September, 1999, p. 69. 2See Proposed Determination Pursuant to Health and Safety Code Section 43830(g)of the

Ozone Forming Potential of Elevated RVPGasoline Containing 10 Percent Ethanol

While adding oxygen can help refiners meet air pollution reduction goals, it is by

no means the only way, or even among the most important ways, to achieve such

results.

Some people are advocating the banning of MTBE in RFG to protect water while

maintaining the oxygen mandate. The American Lung Association does not believe

that this approach would provide the best assurance that the RFG program would

maintain air quality benefits. Such an approach would lock refiners into using between 5.7% and 10% ethanol in all RFG across the nation. We believe refiners can

best maintain or enhance air quality benefits by being allowed to use as much or

as little ethanol as they choose. This flexibility will best enable them to transition

to new RFG formulas that are not dependent on MTBE and meet air quality goals

with a minimum disruption to supply and price. The American Lung Association

finds no compelling air quality related basis that would justify the daunting effort

needed to produce, transport, store, and splash blend between 7.8 and 13 million

gallons per day of ethanol in the nation’s entire national RFG supply.1 This represents an increase of between 55 percent and 160 percent of the national ethanol

production, assuming every drop was devoted to use in RFG. Indeed, as discussed

below, the California Air Resources Board has provided evidence that requiring ethanol in RFG actually impedes the ability of refiners to produce a new generation

of cleaner fuel that would increase emissions reductions and air quality benefits.

The American Lung Association supports phasing down and capping MTBE in all

gasoline, not just RFG. We also support Congress providing clear authority to enable EPA and the States to further regulate or eliminate MTBE in gasoline if necessary to protect public health or the environment. Evidence provided to the Blue

Ribbon Panel convinced us that at a minimum, a dramatic reduction in MTBE use,

back to pre-RFG levels, is needed as a first step to protect water resources from further MTBE contamination. We would support elimination of MTBE in fuel if further

research demonstrates the need. Allowing use of MTBE for octane in the short term

in smaller quantities appears to be prudent step as refiners transition to new RFG

formulas.

Finally, as I have already discussed, the American Lung Association support the

concept of providing adequate lead time to the petroleum industry to make the necessary changes consistent with the other changes we recommend. We fear that precipitous change could lead to supply disruptions or price spikes in various RFG program areas. This may lead to more air pollution and it also would continue to embroil the RFG program in continuing controversy which erodes public support for

an overall meritorious air quality program. The question of how long the industry

needs for a smooth transition needs some examination. We note that two companies

have already announced the introduction of new technologies that can be used to

modify MTBE production facilities to produce alkylates at relatively low cost. The

Blue Ribbon Panel identified alkylates, which are already an existing component of

gasoline, as a potential substitute for MTBE. Alkylates are low in volatility and are

not soluble in groundwater like MTBE. But alkylates are just as poisonous as many

other components of gasoline. The American Lung Association cautions that Congress must take the Blue Ribbon Panel recommendation for significant new research

on MTBE substitutes seriously so that we can avoid creating new unanticipated

health or environmental problems as the refining industry transitions to MTBE-free

RFG formulas. I have appended two press articles regarding the conversion technologies for modifying MTBE facilities.

In conclusion, we know that RFG can be made that maintains the air quality benefits of currently produced fuels, while dramatically reducing the potential threat

to water resources. It is being produced today in California. As you know, California

has lead the nation in requiring cleaner fuels for many years. Both oxygen-free and

MTBE-free fuels are being produced in California today that meet or exceed the current air quality goals of the federal RFG program. But the governor of California

has asked for a waiver of the federal oxygen requirement so that he can require refiners to produce fuels that achieve even more reduction of air pollution than today’s

fuels. CARB asserts that a CalRFG3 without mandatory oxygen provided by ethanol

can achieve greater reductions of Nox and air toxics, and VOCs than a fuel meeting

2 percent oxygen using ethanol. CARB tested a fuel composed of CalRFG with 10

percent ethanol and waiving the volatility limit that would normally apply in a

dozen automobiles. It found Nox increased 10-12percent, total hydrocarbon increased 10 to 15 percent and total toxics increased by 9 percent.2 Of course this fuel

could never be sold in California. Refiners would be required to adjust their refining

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process to compensate for these increases which they can and are doing in some

cases. The point is that if all refiners were required to make these adjustments because they have to use ethanol in their RFG, they can not be additionally be required to actually improve the fuel and make it even cleaner. There is little doubt

that in California, to the extent CARB can obtain additional reductions from an

even cleaner fuel, they clearly need to do so in order to achieve the national ambient

air quality standards. This is why CARB in December 1999 in fact adopted tighter

fuel parameters referred to as CalRFG3.

The American Lung Association believes that the experts at CARB know more

about producing clean fuels than any other governmental entity, bar none. If Congress to removes the oxygen mandate and adopts the other principals I have discussed, cleaner fuels can be produced in California helping to clean the air and also

providing a model we can look to for future improvements in the Federal RFG program.

Mr. BILIRAKIS. Thank you, Mr. Early.

I recognize Mr. Young for your testimony, sir.

STATEMENT OF DALE O. YOUNG

Mr. YOUNG. I would first like to say, if anyone has a problem

with my last name, my first name is Dale.

I work for Lyondell Chemical Company as the business director

for Oxygenated Fuels. Lyondell Chemical Company is based in

Houston, Texas. We represent the largest manufacturer of MTBE.

We have assets totaling $17 billion. We operate in nine States and

14 countries. We have a total employee population of approximately

11,000 individuals.

We at Lyondell are proud of our contribution that we have been

able to make toward improving air quality in the United States,

and that associates directly with our manufacture of MTBE.

We are also proud of the fact that MTBE extends the gasoline

pool itself. And, of course, the issue of improving air quality and

reducing the U.S. dependence on imported oil are two key principles associated with the development of the RFG program.

I am going to limit my discussion today two key points. Those

areas involve environmental benefits associated with oxygenates

and directly with MTBE, as well as talking about the gasoline pool,

which we have heard a lot about today and the impact of any ban

or caps on MTBE related to the oxygenate pool.

With regard to MTBE and oxygenates, let me point out three, to

me, key areas where oxygenates provide substantial benefits from

the air quality standpoint. The first we have heard a lot about

today is that it displaces aromatics in the gasoline pool. And, of

course, aromatics, again as we have heard, when you burn aromatics, result in higher toxic formations, as well as particulate

matter, in comparison to oxygenates in general.

MTBE and oxygenates also improve the vaporization of gasoline.

The reason that is important is, when you start your car, your

catalytic converter is not heated up so it is not destroying any of

the VOCs or toxics that are admitted from the combustion process.

In approximately a 3- to 5-minute period of time, any production

is actually just coming right out of the tailpipe because that catalytic converter is not started up.

Because of increasing the vaporization, you are able to increase

the combustion of the gasoline and, therefore, minimize the amount

of toxics, as well as VOCs, that are generated during that cold

startup time.

141

One area that has been talked a lot about is that we ensure that

there is no backsliding from an air quality standpoint. We have

talked a lot about automobiles and burning gasoline in automobiles; but one area, as an example, that oxygenates provide a

particularly valuable role is in items such as off-road vehicles. An

example of an off-road vehicle would be a lawn mower where you

have no catalytic converter.

To give you an example of the impact of those off-road vehicles,

on a national basis, approximately 25 percent of the pollutants resulting from combustion in sources comes from those particular

sources. So it is key to address that issue as it comes to backsliding. Clearly, MTBE and oxygenates reduce VOC, reduce CO, reduce toxic production in those particular vehicles.

Regarding the gasoline pool in general, we have heard a lot today

about MTBE blending in the United States alone. Approximately

300,000 barrels a day of MTBE is blended into gasoline. That represents just shy of 4 percent of the gasoline pool. But, again, the

other thing we have heard is that the octane component of MTBE

is very high. And, as a result, you can view that MTBE represents

probably closer to 5 percent of the octane pool.

In the end, if you ban MTBE, if you phase it out in a precipitous

way, it is going to have a direct impact on the price of gasoline.

And at today’s $32 barrel crude, I do not think anybody looks forward to higher gasoline prices.

The last thing I would like to talk about just very briefly relates

to the water contamination associated with MTBE. We have obviously clearly heard today that the primarily source for what I will

call actionable levels associated with MTBE relates to leaking underground storage tanks. It is a point-source location.

We think the best approach toward resolving this issue is to ensure that there are no underground leaking storage tanks. You first

ensure that they do not. But when they do, you monitor them so

that if a leak occurs, you catch it quickly and you are allowed to

clean it up.

So, again, we support certainly no air quality backsliding. We

think you have to take a hard look associated with the impacts on

the price of gasoline associated with MTBE. And certainly you need

to improve and fix underground leaks in storage tanks.

Thank you.

[The prepared statement of Dale O. Young follows:]

PREPARED STATEMENT OF DALE O. YOUNG, DIRECTOR, OXYGENATED FUELS

BUSINESS, LYONDELL CHEMICAL CORPORATION

Mr. Chairman and members of the Subcommittee, I appreciate very much the opportunity to appear before you today on the important topic of the national implementation of the reformulated gasoline program. My name is Dale Young, and I am

director of the MTBE business unit at Lyondell Chemical Company. Lyondell is

based in Houston, Texas, and is an MTBE producer. In total, the Lyondell enterprise consists of businesses with more than $17 billion in assets, operations in 9

states and 15 countries, with approximately 11,000 employees worldwide. Products

made from Lyondell materials fill the supermarket shelves and go into automobiles,

housing, clothing and other necessities that improve the quality of people’s lives by

making these products safer, healthier and more convenient.

I am proud to say that Lyondell has an enviable record for occupational safety

and community relations throughout the United States and abroad. Facilities owned

or operated by Lyondell subscribe to the Responsible Care principles of the ChemVerDate 11-MAY-2000 11:14 Aug 31, 2000 Jkt 065685 PO 00000 Frm 00145 Fmt 6633 Sfmt 6621 E:\HEARINGS\62976 pfrm01 PsN: 62976
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ical Manufacturers Association and have received awards for environmental excellence and leadership by state regulators in Texas and Louisiana.

I am testifying this morning on behalf of Lyondell and the Oxygenated Fuels Association (OFA), of which Lyondell is a member. OFA is an international trade association of manufacturers of fuel oxygenates.

The Environmental Benefits of MTBE

To begin with, it is important to review the accomplishments of the RFG program,

and the role that MTBE has played in those accomplishments. As you know, RFG

is required to be sold in the ten large urban areas of the United States with the

worst ozone (smog) problems. In addition, all or parts of 17 states with ozone problems have ‘‘opted in’’ to the RFG program. As a result, about one third of the gasoline consumed in the United States is RFG.

The Clean Air Act requires that all RFG must contain 2 percent, by weight, of

oxygenates. There are effectively only two oxygenates being used in the RFG gasoline pool today: MTBE and ethanol. MTBE is a product that is made by combining

methanol and isobutylene. It is manufactured both by refineries and by chemical

companies. For a variety of environmental, commercial, and performance-related

reasons, MTBE has become the oxygenate-of-choice for making RFG. MTBE is used

in 80-85 percent of RFG produced today, while ethanol is used in the remaining 15-

20 percent of RFG produced.

As you know, the Congressionally-mandated RFG program consists of two phases:

Phase I covers the period from 1995 through 1999. Phase II started at the beginning

of this year. The following chart summarizes the minimum air quality improvements mandated for each phase of the RFG program:

VOCs NOx Toxics Benzene Oxygen

RFG Phase I (1995-99) ..................................................................... 15% no increase 17% 1% 2.0 wt%

RFG Phase II (2000) ......................................................................... 27% 6.8% 22% 1% 2.0 wt%

EPA has compiled data showing that Phase I RFG has surpassed the requirements of the Clean Air Act. An analysis of the Phase I RFG produced by refiners

shows that the fuel reduces ozone-forming compounds, such as VOCs, by over 28

percent—that’s 44 percent above the 15 percent requirement of the law. Emissions

of air toxics pollutants are reduced by approximately 30 percent—that’s almost

twice as much as required by law. Even emissions of oxides of nitrogen (NOx) are

reduced by 2-3 percent with Phase I RFG, even though the law does not require

any specific reduction in NOx emissions in Phase I RFG.

Ambient air monitoring confirms that the RFG program is working. Testing shows

that benzene levels have declined by 31 percent between 1994 and 1997; levels of

ethyl benzene, another toxic component of gasoline, have declined 52 percent during

the same period. RFG areas also showed significant decreases in other vehicle-related VOC concentrations. EPA has testified that the emissions reductions mandated for Phase I RFG—which have been met and exceeded—and the emissions reductions of Phase II RFG—which are already nearly met—are equivalent to taking

more than 16 million vehicles off the road.

As a key component of RFG, MTBE contributes to the environmental benefits of

RFG in several ways. First, by adding MTBE to gasoline, refiners dilute or displace

gasoline components such as aromatics (benzene, toluene and xylene) which contribute to the formation of ozone. These compounds are hazardous air pollutants,

themselves. EPA has acknowledged that if oxygenates were not used to produce

RFG, levels of aromatics or olefins may have to be increased to provide the necessary octane. Second, by adding MTBE to RFG, refiners improve the combustion

of the gasoline, resulting in fewer emissions of smog-forming pollutants, such as

VOCs, NOx, particulate matter, and carbon monoxide. Third, by adding MTBE, refiners reduce the overall vapor pressure of gasoline-the rate at which it evaporates—

thus reducing evaporative emissions of VOCs.

These environmental benefits are not likely to be duplicated by formulations of

clean fuels without MTBE. Consider that changes suggested by refiners will only

likely be successful when used in conjunction with a catalytic converter. However,

virtually no off-road engines have such converters, meaning that the loss of

oxygenates would result in fuels doing nothing for between 25 and 30 percent of the

emissions inventory. No matter how you slice it, an ill-considered move to take

oxygenates out of fuel will result in environmental backsliding from current levels

of achievement.

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Impact on Water Quality

While MTBE quietly labored as the workhorse of the Clean Air Act, few in the

public took notice until MTBE was detected in certain drinking water supplies, principally in California. Lyondell shares the concerns of most Americans for clean

water, having made substantial investments itself in waste minimization and pollution prevention that protects our water resources. In fact, the Oxygenated Fuels Association joined with the Western States Petroleum Association (WSPA), and the Association of California Water Agencies (ACWA) in October 1997 to form the California MTBE Research Partnership. The purpose of the partnership is to develop

a statewide research program concerned with MTBE treatment technology and

source-protection issues. The mission of the partnership is to identify, plan, and

sponsor practical research projects to protect, treat or remove MTBE contamination

from drinking water supplies. The partnership has begun to identify the best means

and technologies for removing MTBE from drinking water supplies, and from preventing such contamination in the first place.

The source of the MTBE contamination of drinking water supplies in California,

and in most other cases of MTBE found in drinking water supplies, is leaking underground gasoline storage tanks. For example, the South Lake Tahoe area is

served by seven local gas stations. According to testimony given during the California public hearings, all of these stations were leaking gasoline into the ground

water; not surprisingly, this gasoline eventually found its way into the water supply

for South Lake Tahoe, California. Violations of existing regulations included evidence of disabled dispenser sensors, poor installation, disabled leak detection, and

inadequate documentation of annual inspections.

As the Subcommittee is aware, in March 1999, California Governor Gray Davis

issued an executive order calling for an end to the use of MTBE in reformulated

gasoline. It is important to note that Governor Davis’s executive order identifies

leaking underground storage tanks as the source of the problem:

[W]hile MTBE has provided California with clean air benefits, because of leaking underground fuel storage tanks MTBE poses an environmental threat to

groundwater and drinking water...[emphasis added]

In fact, there are more than 750,000 active underground fuel storage tanks, and

another 1.3 million tanks which have been closed. In California alone, there are

nearly 50,000 active underground petroleum storage tanks. In 1984, Congress recognized the threat posed by leaking underground storage tanks and amended the Resource Conservation and Recovery Act (RCRA) to require owners of these tanks to

comply with new design and monitoring standards, or close the tanks permanently.

EPA gave the owners of such tanks ten years, until December 1998, to meet the

requirements of the new law. The most recent data, from September 1999, shows

that approximately 91 percent of the active underground storage tanks in California

have approved leak detection systems, and 87 percent of active underground storage

tanks have met the California upgrade requirements. This is a marked improvement from December 1998, when the compliance rate was just 60 percent, according

to the Petroleum Equipment Institute. Thus, California, like other states, is moving

toward full and complete compliance with the new underground storage tank requirements.

Of course, what these statistics do not tell us is whether the leak detection systems on new and upgraded tanks are being maintained. Unfortunately, although

leak detection requirements were to be in place by 1993, we understand that the

compliance rate is only at about 50 percent. The California Bureau of State Audits

said in 1998 that more than 25 percent of the surveyed leaking underground storage

tanks sites that contaminated groundwater resulted from tanks that were not permitted and otherwise not monitored for leaks. The bottom line: We must have proper leak detection of new and upgraded underground storage tanks.

In testimony before the Senate Appropriations Committee last year, Senator

Diane Feinstein noted that MTBE is ‘‘the oxygenate of choice . . . in areas that need

clean-burning gasoline to meet or maintain clean air standards. The major way

MTBE gets into groundwater is from defective underground tanks storing petroleum

products.’’ As a result, Senator Feinstein introduced S.267, a bill to direct the EPA

Administrator to give highest priority to petroleum contaminants in drinking water

in issuing corrective action orders under the tank program. We believe that this, or

similar initiatives, reflects a common-sense and direct approach to solving the problem. And better yet—an approach which neither endangers air quality or energy

price and supply.

There is evidence to indicate that detections of MTBE in drinking water supplies

have decreased as underground petroleum storage tanks have been upgraded to

comply with the new requirements. The State of California has had a program for

monitoring MTBE in drinking water supplies since the mid-1990s. According to inVerDate 11-MAY-2000 11:14 Aug 31, 2000 Jkt 065685 PO 00000 Frm 00147 Fmt 6633 Sfmt 6621 E:\HEARINGS\62976 pfrm01 PsN: 62976
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formation made available by the California Department of Health Services, 56 percent of sources of drinking water in California have been tested for MTBE. MTBE

has been detected in less than one percent (0.8 percent) of the sources tested. (54

detects in 6,684 sources). In May 1997, only 16 percent of drinking water sources

were tested, and MTBE was detected in 1.3 percent of those tests (24 detects of

1868 sources). This represents an approximately 54 percent decline in the rate of

MTBE detections from May 1997 through February 2000.

It is important to have some context in evaluating the frequencies, and levels, of

MTBE detections in drinking water supplies. There is currently no enforceable Federal standard for MTBE in drinking water, although EPA has recently required

public water systems to monitor for MTBE in their drinking water supplies and report that information to EPA. (This information is expected to be available in the

next several months, and EPA could use that information to decide whether a Federal standard for MTBE in drinking water is warranted.)

In December 1997, EPA issued what it called an ‘‘advisory’’ on MTBE levels in

drinking water. EPA’s Advisory provided as follows:

This Advisory recommends that keeping levels of [MTBE] contamination in the

range of 20 to 40 ug/l [micrograms per liter] or below to protect consumer acceptance of the water resource would also provide a large margin of exposure

(safety) from toxic effects.

Thus, while the basis of the recommendation was to protect the ‘‘acceptance’’ of the

drinking water, the Advisory acknowledged that the recommended level provided ‘‘a

large margin’’ of safety from exposure to potential toxic effects.

The State of Maine has done extensive testing for MTBE in drinking water supplies. In a report issued in October 1998, it reported that MTBE had been detected

in about 15.8 percent of private wells tested, and in 16 percent of public water supplies tested. In private wells tested, 92.3 percent of the detections were less than

1 part per billion. Only 1.1 percent of detections were greater than 35 parts per billion. In public water supplies, 93.9 percent of detections were below 1 part per billion. None of the detections were greater than 35 ppb.

Recently reported data from Massachusetts shows similar results. Of 662 wells

tested, MTBE was detected in 45 (6.8 percent). However, there were only 3 detections above 10 ppb, and no detections above 15 ppb. In short, gasoline is stored and

consumed in every state. And while some detections of gasoline components have

in the past been made in drinking water supplies, the levels at which such detections are found are well below levels of public health concern. In addition, the presence of a well-implemented and enforced tank program appears to reduce the instances of releases of gasoline product into the environment.

In New Jersey, Robert C. Shinn, Commissioner of the Department of Environmental Quality, responded to a news report concerning MTBE contamination with

the following letter to the editor of The Press of Atlantic City on February 24, 2000:

After reading your recent article on the gas additive MTBE, I want to bring

a few facts to the discussion.

A 1997 survey, conducted by the New Jersey Department of Environmental

Protection, found traces of MTBE contamination in the untreated water at 46

non-community water systems, such as diners or office complexes supplied by

a well, and 29 community water systems. Only one noncommunity water system

and one community system, in Fairlawn, exceeded New Jersey’s 70 parts per

billion health standard for MTBE. Most of the wells on the list had MTBE levels of no more than 2 parts per billion.

The ‘‘60 Minutes’’ show left the erroneous impression that MTBE cannot be

removed from water. In the example of the Fairlawn Water Department, untreated water sampled ranged from 37 to 73 parts per billion of MTBE, but

treated water had only 1 part per billion.

MTBE contamination is just one facet of the historic problem of leaking underground storage tanks, and that problem is being solved. Since December

1998, 10,308 substandard or leaking underground storage tanks have been removed. More than 3,000 underground storage tank sites are under active remediation.

MTBE contamination of groundwater is a problem but certainly not a crisis

in New Jersey.

Experience in New Hampshire has been similar. Governor Jeanne Shaheen of

New Hampshire wrote EPA Administrator Carol Browner on September 14, 1999

and referred to her state’s Source Water Protection program as ‘‘a national leader

in protecting sources of public and private drinking water.’’ The Governor concluded:

‘‘As a result, MTBE levels detected in surface water supplies are extremely low,

ranging from 1 to 5 ppb.’’ By way of comparison, the NHDES has established an

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extremely conservative action level for MTBE at 15 ppb, still well above the levels

of MTBE being detected.

Health Effects of MTBE

The detections of MTBE in drinking water supplies have prompted questions concerning the health effects of MTBE in drinking water supplies. Those with a desire

to see MTBE removed from the marketplace have gone further to suggest that little

is known about the health effects of MTBE. In fact, nothing could be further from

the truth.

MTBE’s first contribution to the health of Americans was as a replacement for

lead in gasoline in the late 1970s. MTBE was added to maintain octane in the fuel.

Under the Clean Air Act, the refiners’ ability to use MTBE in fuel was subject to

EPA approval. The refiners made the appropriate demonstrations, including providing information on the known health effects of MTBE, and EPA approved the use

of MTBE at concentrations of up to seven percent, by volume. In 1981, EPA approved a blending of MTBE in unleaded gasoline to a maximum of 11 percent. In

the early 1980s, refiners created an industry study group, managed by the American

Petroleum Institute. The industry group sponsored a toxicology testing program and

submitted the results to EPA.

In 1986, a Federal Interagency Testing Committee, acting under authority of the

Toxic Substances Control Act, recommended additional testing of MTBE based on

expected increased production levels, potential exposure as gasoline component, and

need to complete data sets. The industry agreed to conduct such testing and established a program under EPA oversight and guidelines. From 1988 until 1992, the

industry testing group sponsored and/or conducted all of the tests required by EPA.

Progress reports on these tests were submitted to EPA for inclusion in the public

docket. In 1988, EPA approved the blending of MTBE in unleaded gasoline to a

maximum of 15 percent by volume.

In addition to the industry-sponsored tests, toxicologists at EPA’s laboratory in

Cincinnati, Ohio, conducted the first examination of the risks of exposure to MTBE

by ingestion. The peer-reviewed study, reported in the Journal of the American College of Toxicology, did not identify any adverse long-term effects associated with exposure to MTBE.

Nonetheless, MTBE is repeatedly referred to in the popular media as a ‘‘probable’’

or ‘‘possible’’ carcinogen. These assertions apparently are based on the study conducted in 1995 by Italian researchers in which laboratory rats were exposed to very

large doses of MTBE over a two-year period. The author of this study found that

these rats contracted leukemia and lymphoma. However, this study has been repudiated on the grounds that it lacked independent peer-review, it used unconventional laboratory procedures, and its results have not been replicated.

In 1999, the International Agency for Research on Cancer (IARC), part of the

World Health Organization, conducted a review of the Italian study and the broad

range of other research on the chronic (long-term) effects of exposure to MTBE.

IARC can classify a substance into one of five categories: Group 1—carcinogenic to

humans; Group 2A—probably carcinogenic to humans; Group 2B—possibly carcinogenic to humans; Group 3—unclassifiable as to carcinogenic risk to humans; and

Group 4—probably not carcinogenic to humans. The IARC review put MTBE in

Group 3, concluding that there is ‘‘inadequate evidence in humans for the carcinogenicity’’ of MTBE. Such a finding places MTBE in the same category as caffeine,

tea, and fluorescent lighting.

In fact, a case could be made that MTBE actually reduces the risk of cancer. According to the California Environmental Protection Agency, the cancer risk from

emissions of gasoline-powered vehicles throughout the state has been reduced by approximately 40 percent since the reformulated gasoline program began, in large part

because MTBE displaces known carcinogens in gasoline. In October 1998, the

Northeast States for Coordinated Air Use Management (NESCAUM) completed a

study of the relative risks of conventional gasoline compared to Federal RFG with

MTBE. The report found that Phase I RFG reduced cancer risk over conventional

gasoline by 12 percent. It predicted that Phase II RFG would reduce cancer risk

over conventional gasoline by 20 percent.

Energy Implications of Changing the RFG Program

In addition to the environmental benefits described above, MTBE provides another important benefit: its helps to extend the gasoline supply and moderate supply

disruptions. The Department of Energy has testified that, ‘‘From an energy security

perspective, oxygenates provide a way to extend gasoline supplies. The transportation sector is almost totally dependent on oil. One of the few near-term options

for reducing oil dependency is to expand our use of oxygenates.’’ EPA’s own Blue

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Ribbon Panel further noted that, ‘‘MTBE is currently an integral component of the

U.S. gasoline supply both in terms of volume and octane.’’

MTBE makes up a significant percentage of the volume of every gallon of RFG.

The Clean Air Act requires each gallon of RFG to contain two percent, by weight,

of oxygen. To achieve this level, refiners must add enough MTBE by volume equal

to approximately ten percent of the volume of each gallon of gasoline. As described

above, MTBE is the oxygenate-of-choice in 80-85 percent of RFG. Thus, the total

consumption of MTBE in the United States gasoline pool is approximately 286,000

barrels per day. Domestic production supplies approximately 202,000 barrels per

day. Approximately 18,000 barrels per day enter the U.S. as part of imported reformulated gasoline. And another 89,000 barrels per day is imported ‘‘neat,’’ or not yet

mixed with gasoline.

Assuming that the total U.S. gasoline pool is 8.2 million barrels per day, MTBE

represents about 3.5 percent of the total volume of gasoline consumed. It is important to note, however, that MTBE is of higher octane than gasoline, and thereby

allows refiners to use components of the refining process that are of lesser quality

(i.e., lesser octane). Therefore, if you remove MTBE from the gasoline supply, you

would lose between five and seven percent of the total volume of gasoline. The Department of Energy has estimated that this is equivalent to removing four or five

refineries producing 100,000 barrels a day.

We can hardly envision a less auspicious time to announce a frontal assault on

between 11 and 15 percent of gasoline supply in RFG areas, and as much as 5 to

7 percent of the overall supply. Recent months have seen substantial increases in

the price of both gasoline and home heating oil. Many have blamed the price of imported oil for this result, and they are partially correct. However, even phasing

down the use of MTBE in the near future could have a devastating effect. A cap

could send an unfortunate market signal that MTBE is not a favored additive. As

a result, obtaining additional capitalization for expansion and maintenance would

be difficult, thus endangering the industrial base of production.

Let us not forget that California first felt substantial price increases and short

supply of gasoline when two West Coast refineries were down intermittently. If Congress should effectively eliminate the use of MTBE, it would create a market effect

similar to the complete loss of 4 to 5 100,000 barrel per day refineries. American

consumers—and particularly those nearest the poverty level with the least disposable income—would surely find such a result intolerable.

Alternative Oxygenates

Much has been made of ethanol as a potential substitute for MTBE as a fuel oxygenate. In those areas of the country where reliance on ethanol makes some economic sense, it is already the oxygenate of choice and federal law itself is, of course,

neutral as to which oxygenate may be used. However, greatly expanded use of ethanol makes little sense.

First, expanding ethanol use will come at the expense of air quality. Use of ethanol is not as effective at combating air toxics and even increases levels of certain

toxics called aldehydes and peroxyacyl nitrates (PAN). Ethanol is less effective at

controlling criteria air pollutants as well. NESCAUM has previously commented

that, ‘‘Greater emissions of volatile organic compounds (VOCs) would occur during

the early and late portions of the [Northeast] region’s ozone season since gasoline

blended with ethanol is more volatile than similar gasoline without ethanol.’’ In addition, the higher volatility ethanol-blended gasoline can contribute to an overloading of an automobiles evaporative canister and subsequently lead to higher CO

emissions. EPA has acknowledged that the increased use of ethanol will result in

increased NOx emissions.

Oxygenates like MTBE go to work in an engine at the point where most pollution

is produced: the cold cycle. For the first three to four minutes after you start your

ignition, your car’s engine produces the majority of its emissions. Because

oxygenates combust at low temperatures with MTBE combusting at far lower temperatures than ethanol—fuel chemistry clearly demonstrates that MTBE is the most

effective component of pollution control when the car is still relatively cold. In addition, to meet the other federal specifications, RFG without oxygenates would have

to change its ratio of aromatics. The result of this change is two-fold: first, there

will be a certain increase in air toxics from automobiles; and second, more byproducts from the use of aromatics may be created. In fact, if ethanol is used to replace

MTBE, it is more volatile than MTBE and therefore would increase evaporative

emissions.

Second, the ethanol production process itself is not without significant environmental consequences. Modern agriculture is reliant upon pesticides and fertilizers,

and has become a substantial source of non-point source water pollution. The most

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noted contamination of water bodies such as the Chesapeake Bay and the Everglades have come at the hands of agricultural production. In a study of the environmental impacts of energy crops, the Office of Technology Assessment essentially dismissed the expanded use of annual crops such as corn as a source of energy because

of the environment damage associated with its cultivation. Of course, the greenhouse gases released during the ethanol fuel cycle contain relatively more nitrous

oxide and other potent greenhouse gases as compared to the clean natural gas at

the heart of the MTBE process.

Third, it is not at all clear that greater reliance on ethanol will help resolve any

problems with water quality. Gasoline contains a range of aromatics, such as benzene, toluene, and xylene, that are among its most toxic components. In subsurface

conditions, it appears that ethanol may interfere with the biodegradability of these

aromatics, thus potentiating a significant source of toxic water emissions. And, of

course, IARC has classified ethanol as a known carcinogen.

Last, even if expanded ethanol production were a good idea, ethanol cannot be

produced in sufficient quantities economically to satisfy America’s needs within the

RFG program. Indeed, it is unlikely that ethanol can meet its current demands in

the Midwest while cost-effectively supplying any new markets on either coast. Ethanol has logistical problems, including its inability to be carried in gasoline blends

through pipelines—the most efficient way to transport fuels. Further, ethanol costs

the American taxpayer 54 cents for every gallon consumed. As CBS News described

ethanol, it is ‘‘probably the most economically inefficient, unwarranted form of corporate welfare in our entire federal budget.’’ (Eye on America segment, 3/26/96)

Conclusion

In summary, it is clear that the Federal RFG program has contributed to significant improvements in air quality in many of the most polluted regions of the United

States. It is also clear that MTBE—the oxygenate-of-choice in 85 percent of RFG

produced—has contributed in a large way to the air quality improvements attributed to RFG.

It is also clear that there is no credible evidence that MTBE presents a significant

risk to human health, either from short-term exposures or over a longer term. What

is clear is that MTBE has resulted in reduced cancer risk by reducing hazardous

air pollutants.

The pressure to address the groundwater contamination problems created by leaking underground storage tanks puts several questions in stark relief. First, is there

a need to replace MTBE? The answer is no. The detection data indicates that as

underground storage tank compliance improves, detections of MTBE in drinking

water supplies decrease.

Second, is there a viable replacement for MTBE? Again, the answer is no. Alternatives to MTBE, including ethanol, are more expensive and more difficult to transport. Industry experts estimate that even under ideal circumstances, replacing

MTBE with ethanol will raise prices at the pump a minimum of seven cents a gallon. But prices could rise much higher than that if shortages of ethanol and, as a

result, of gasoline develop. Currently, refiners use about 286,000 barrels a day of

MTBE; total ethanol capacity is far less than that.

Can refiners make gasoline without MTBE—or any other oxygenate—that still

meets the requirements of the Clean Air Act? Some refiners say they can, but it

is incumbent on members of this Subcommittee to examine those assertions carefully. If MTBE constitutes 10-11 percent of the volume of a gallon of gasoline, and

you remove that volume, you must replace it or have less gasoline. If you replace

MTBE with more refined petroleum product, you have more of the cancer-causing

contaminants that cause urban smog. It is hard to see how taking MTBE out of the

gasoline supply will not both create more pollution and less gasoline, and therefore

higher gasoline prices.

Refinements in regulations for underground storage tanks will go a long way toward solving the problem of gasoline constituents in groundwater. If you restrict or

prohibit the use of MTBE, can you be certain that you will not increase the risks

of adverse health effects. Some refiners claim that they can make RFG without

oxygenates that meets the Federal Phase II requirements, but is there any thirdparty independent confirmation? EPA has such a question pending before it in the

form of request from California, but it seems very reluctant to say yes or no. And

possibilities do not always equate to practice. Oxygenates in Phase I RFG allowed

for over-achievement. Eliminating oxygenates from Phase II requirements may effectively limit the possibility of similar results.

Finally, what are the other consequences of taking MTBE out of the gasoline supply? As described above, MTBE constitutes a significant percentage of the gasoline

pool. If you take away that volume (between 5-7 percent) what are the supply and

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price ramifications? And if you do as some have suggested, that is, give States the

right to establish their own formulae for RFG, do you threaten the ability of regional and even national refiners to provide the necessary gasoline supplies at the

best available price?

We thank you again for the opportunity to testify on this important issue. We

stand ready to assist the Subcommittee in its efforts to identify effective and commonsense solutions to the problem of gasoline constituents in drinking water supplies. However, we strongly encourage the Subcommittee not to sacrifice the environmental and energy advantages created by the use of oxygenates—and particularly MTBE—in reformulated gasoline.

Mr. BILIRAKIS. Thank you, Mr. Young.

Mr. Vaughn.

STATEMENT OF ERIC VAUGHN

Mr. VAUGHN. Thank you, Mr. Chairman. I want to thank the

subcommittee for the opportunity to be here.

My name is Eric Vaughn. I am the president and chief executive

officer of the National Trade Association for the ethanol industry.

It is called the Renewable Fuels Association. We have about 275

member companies representing just over 60 ethanol production facilities in 27 states.

Maybe to correct one item earlier, while the bulk of the ethanol

today is made from the starch component of corn, we are manufacturing ethanol today from 27 different feed stocks; and we expect

that will grow in the years to come.

I want to congratulate the chairman—I know that is not necessarily pandering at this late date and time of the day, but for

your efforts of trying to put together a package to bring this to a

resolution. But lest the pandering go too far, I would like to suggest a couple of modifications.

First and maybe foremost, this problem, if indeed it is serious

enough at this stage to open the Clean Air Act for amendments,

and by ‘‘this problem’’ I mean MTBE-associated water contamination, it is a problem that requires a national, not a regional solution or subregional solution. For anyone to suggest that we ought

to have an East Coast plan, a Midwest plan, a West Coast plan,

the reality is that is what sparked much of the ethanol industry’s

anger, concern, frustration; and it extends even to today, that if

you simply eliminate the requirement or the use of MTBE, let’s say

in California, for example, what will happen to 1.5 billion gallons

of MTBE gallons in California? Will Saudi Arabia or Bahrein or

somebody else just take it back, or will it continue to find markets

elsewhere? It is a reasonable concern. It is a reasonable issue. So

a national solution, if in fact this needs a solution, is something

that is incredibly important.

Second, if MTBE is such a serious contaminant, and I honestly

do not have any scientific studies, if you had them, you would probably share them with us, that would document or demonstrate to

you serious long-term health effects with MTBE. We do not have

those studies. This is a resource degradation issue.

I could smell the little vials of MTBEs that various members

were opening in the back of the room. It is a vile smell. It is an

unpleasant odor. And if it is contaminating water to the point

where people will not use it, they will not drink it, it is causing serious disruption, not just casual disruption that makes your hair

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smell bad for half a day. No. It is shutting down expensive water

supply systems and it is needless.

But the process of how we move from where we are to where we

are going to need to be is going to have to address a number of critical issues, not the least of which is backsliding.

I am not going to go anywhere near as deep into this as Mr.

Graboski did, but I will add this: a previous statement was just

made that the blueprint may very well be, once again, California.

I ask the committee, Mr. Chairman, I implore you, look at this

blueprint before you adopt it.

One of the critical components of the 1999 Clean Air program,

CARB-3, is a 10 percent increase in aromatics. This is not necessary. The ability to provide flexibility is critical to the refining industry. The objective of producing clean air should not be parsed

against increases in aromatic content in gasoline. Flexibility is not

needed to be met that way.

Last, we have worked long and hard and very closely with our

refining industry friends, and we have many of them. I think we

are starting in a very effective path we are trying to find a reasonable, cost-effective solution to this problem. I would point to this:

the refining industry has invested hundreds of millions, billions of

dollars, to get us to the point that we are today: cleaner burning,

reformulating gasoline fuels in many markets around the country.

They have a serious problem.

Ultimately, this problem will affect their customers and our customers, as well. We want to work with them to solve that problem.

They need time and flexibility, absolutely critically important, especially when you juxtapose that the other requirements put on

them from sulfur reduction and a range of other initiatives coming

down, they need that time and that flexibility.

We honestly believe both can be met, and we honestly feel, very

strongly obviously, that our fuel oxygenate, our clean source of octane can be helpful in achieving those objectives.

I would remind the committee that, when this amendment was

adopted in the Clean Air Act of 1990, it was called the Clean Octane Amendment and it was intended to try to find ways to reduce

and replace toxic aromatic components with cleaner alternative

sources of octane. And if we are going to have the courage to look

at this Clean Air Act in 2000 and make some adjustments, let’s

take the time to make serious adjustments, aggressive and effective

air quality adjustments.

I was looking at sulfur, looking at the aromatic content fraction.

I think Mr. Graboski’s point on weighted toxicity is absolutely on

the mark. And of course we should be looking at the oxygen content issue. But that is a full, comprehensive assessment of where

we are in the year 2000, not a piecemeal approach. And that is an

approach worthy of this committee; and our industry stands firmly

committed to working with you, Mr. Chairman, to try to come up

with a solution. We want to be part of the solution to this problem

and work with you aggressively on it.

Thank you for the time.

[The prepared statement of Eric Vaughn follows:]

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PREPARED STATEMENT OF ERIC VAUGHN, PRESIDENT, RENEWABLE FUELS

ASSOCIATION

Good morning Mr. Chairman and Members of the Committee. I am very pleased

to be here to discuss the national environmental and public health affects of the reformulated gasoline (RFG) program generally, and the RFG oxygen content requirement specifically. These are important issues with far-reaching consequences for

both consumers and air quality, and I appreciate the opportunity to provide comments on behalf of the domestic ethanol industry.

The Renewable Fuels Association (RFA) is the national trade association for the

domestic ethanol industry. Our membership includes a broad cross-section of ethanol producers, marketers, agricultural organizations and state agencies interested

in the increased development and use of fuel ethanol. There are more than 50 ethanol producing facilities in 21 states in operation today, including a growing number

of farmer-owned cooperatives that have begun production in just the past five years.

The industry currently produces approximately 100,000 barrels of ethanol per day

(1.5 billion gallons annually), and utilizes more than 600 million bushels of grain

per year. The RFA membership represents more than 95% of all ethanol produced

and sold in the United States today.

Background:

Before turning to the RFG program, I would like to provide some perspective as

to why ethanol is so critically important to the nation’s economic, energy and environmental policies. One need only look at today’s headlines to appreciate the need

for increased production and use of fuel ethanol. With overall conditions in the farm

economy in 2000 expected to be similar to last year and the nation facing record

oil prices due to OPEC production cutbacks, ethanol production and use will play

a pivotal role in providing value-added processing for grain while helping to constrain gasoline prices and promote competition.

At a recent USDA Agricultural Outlook Forum, USDA Chief Economist Keith Collins stated that the price for corn this year is ‘‘expected to average only $1.90 a

bushel, slightly below the 1998 crop.’’ With total supplies predicted to be near 1999

levels and little change in ending stocks, Collins noted that ‘‘corn prices are expected to show only modest improvement next season.’’ Collins also predicted that

in light of weak markets, substantial government payments will be made under current programs in 2000. The use of corn for ethanol production not only adds to the

price of a bushel of corn, it also helps to reduce government payments.

At the same time, the Energy Department reports oil prices are at the highest

levels since the Gulf War, and gasoline prices are expected to top $1.60/gallon this

summer. Blending ethanol with gasoline provides an economically competitive

source of octane, helping to constrain gasoline prices. As the Congress considers

policies to moderate gasoline prices and assure fuel supplies, providing increased

market opportunities for domestically-produced renewable energy, such as ethanol,

should be a top priority. In fact, the farm income and energy security benefits of

ethanol were principle factors leading to congressional approval of the RFG program

and the oxygen content requirement in the Clean Air Act Amendments of 1990. Today’s headlines merely reinforce the efficacy of that decision.

The Reformulated Gasoline Program:

First, I think it is important to underscore that the RFG program, with its oxygen

content requirement, has worked quite effectively. Air quality has improved. Indeed,

about 75 million people are breathing cleaner air because of RFG. EPA reports that

RFG is reducing ozone-forming hydrocarbon emissions by 41,000 tons and toxic pollutants such as benzene by 24,000 tons annually. That’s the equivalent of taking

16 million vehicles off the road each year. A study by the Northeast States for Coordinated Air Use Management (NESCAUM) shows that today’s RFG reduces the

cancer risk from gasoline by about 20 percent. It is critically important to recognize

that these benefits are significantly greater than required by the Clean Air Act’s

performance standards for hydrocarbons and toxics, at least in part because of the

federal oxygen requirement.

At the same time, the decision by refiners to use MTBE in most RFG has had

a devastating impact on water quality. The U.S. Geological Survey reports that

MTBE has been detected in 27 percent of urban wells nationwide. In RFG areas,

where MTBE is more commonly used, the problem is more severe. MTBE is four

to six times more likely to be detected in RFG areas than in conventional gasoline

areas. USGS reports that 79% of the wells tested in Denver and 37% of the wells

tested in New England had detectable levels of MTBE. Indeed, MTBE is now the

second most commonly found chemical in groundwater, behind only chloroform.

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Leaking underground storage tanks and spills at the land surface are important

point sources for MTBE in the environment. But there are many other sources of

MTBE water contamination. Potential non-point sources of MTBE include precipitation, urban runoff, and motor water craft. Once MTBE is in water it is expected to

move between surface and ground water with the natural movement of water. Indeed, MTBE is very water soluble compared to the BTEX compounds and other components in gasoline; the solubility of MTBE is about 50,000 mg/L (milligrams per

liter) whereas the next most soluble component of gasoline is benzene, which has

a solubility of 1,780 mg/L. Therein lies the problem; if MTBE is in gasoline it will

find its way to water where it is extremely soluble and will eventually contaminate

drinking water supplies.

As a consequence of the growing concerns regarding MTBE water contamination,

there is interest in amending the Clean Air Act and the RFG program to allow refiners to reduce or eliminate their MTBE use. Refiners claim they cannot eliminate

their use of MTBE without the ‘‘flexibility’’ of producing non-oxygenated fuel and

have sought the elimination of the oxygen requirement. The domestic ethanol industry has steadfastly opposed efforts which seek only to eliminate the federal RFG oxygen requirement or address the issue for particular states or regions. However, we

do not want to hinder legislative efforts to address this serious public health and environmental issue. We want to be part of the solution, not part of the problem. Toward that end, we have developed the following principles which we believe should

guide congressional action on this issue.

• Develop a national solution;

• Address the cause of the problem;

• Protect the environment; and,

• Provide the necessary time and ‘‘flexibility’’ to allow refiners to make a rational

transition to increased ethanol utilization.

Develop a national solution. Regional or state-specific actions will create a patchwork of fuel regulations resulting in increased consumer costs and will encourage MTBE use in areas not using MTBE today—expanding potential MTBE

water contamination.

Approximately 4 billion gallons of MTBE are consumed in the United States

today, with the vast majority of it used in RFG markets. Approximately one-third

of the MTBE used is imported, either as a fuel blendstock or in finished gasoline.

In the absence of a national MTBE control program, states will continue to take action phasing out MTBE. Already, California, Iowa and South Dakota have enacted

MTBE controls. Missouri, Colorado, Wisconsin and several northeast states have

MTBE ban bills pending. In the Congress, H.R. 11 and various other legislative proposals attempt to address this issue regionally. But unless a national control is imposed, MTBE will flow unfettered into areas where MTBE is currently not being

used. Saudi Arabia is not going to take its MTBE back. MTBE producers will find

other markets. The first place MTBE will flow is Midwest oxygenate markets where

MTBE is currently not used. It is logical to assume that MTBE will also flow into

conventional gasoline octane markets. In addition to displacing ethanol from these

critical markets, this will merely expand potential MTBE water contamination and

jeopardize precious water supplies. Only a national control of MTBE will protect everyone’s water supplies and not disrupt existing oxygen and octane markets for ethanol.

Address the cause of the problem—MTBE. The use of MTBE in the nation’s

motor fuel should be reduced or eliminated as expeditiously as possible.

The domestic ethanol industry should not be advising the Congress on how to control the use of its competition in the marketplace. However, we can state with conviction that if the problems associated with the use of MTBE are so serious as to

warrant legislative action, Congress ought to be sure to fix them. The problem is

not oxygen in gasoline, it is MTBE in water. Congress should determine what controls on MTBE are necessary to protect water supplies and take them. But simply

eliminating the RFG oxygen requirement will NOT assure that MTBE use is reduced and WILL undermine the ‘‘real world’’ environmental benefits of the current

RFG program with oxygen.

EPA’s Blue Ribbon Panel concluded that MTBE use should be ‘‘reduced or eliminated.’’ EPA staff recently went further, stating that MTBE should be removed from

gasoline as quickly as possible. The Department of Energy has stated a 3% volume

cap on MTBE is appropriate. Because MTBE is bio-accumulative and persistent in

the environment, many believe the only sure means of protecting drinking water

supplies is to prevent MTBE from getting into gasoline in the first place. In any

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case, Congress needs to take whatever action it deems appropriate to protect public

health and water resources.

We would only suggest that as Congress debates this issue, and if an MTBE

phase-out or other control is imposed, that consumers be made aware whether

MTBE is being used in the gasoline they purchase. Pump labeling of MTBE is something that can be done quickly and effectively. We would strongly encourage EPA

to act expeditiously so that consumers are aware when MTBE is being used. Consumers have a right to know.

Protect the Environment. The air quality gains provided by RFG with oxygenates

should not be sacrificed as MTBE use is reduced, i.e., the toxic and carbon monoxide emissions benefits of oxygen should be preserved.

The RFG program assures air quality benefits through the combined application

of emissions performance standards and an oxygen requirement. As a result, the

RFG program has provided toxic reductions in excess of those required by the performance standards alone. The oxygen standard has also provided reductions in carbon monoxide for which there is no performance standard at all. Congress should

not reward the disastrous decision of the oil industry to utilize MTBE as the oxygenate of choice in RFG by allowing them to increase pollution.

Industry analysts have concluded that given the opportunity to produce nonoxygenated RFG, refiners will dramatically increase their use of aromatics and

other petroleum-derived octane such as alkylate. The environmental consequences

of alkylates is not known. The environmental impacts of aromatics certainly is

known, and it is troubling. Increased aromatics will lead to higher toxic emissions

and increased ozone pollution.

It is ironic that the RFG program was initiated largely in response to environmental concerns about the rising levels of aromatics in gasoline. Increased aromatics, including benzene, toluene and xylene (BTEX), resulted from the congressionally-mandated lead phase-down of the late 70’s. To replace the lost octane associated with lead, refiners dramatically increased aromatic levels. By the mid-80’s,

some premium gasolines had BTEX levels as high as 50 percent. Seeing this, Congress created the RFG program in the Clean Air Act Amendments of 1990, including

a specific cap on aromatic levels. That cap was forfeited by EPA in the regulations

implementing the RFG program in favor of a complex model, with the understanding that the use of oxygenates in RFG would supply the octane and volume

provided by aromatics. Congress should assure that as MTBE use is reduced, the

cap on aromatics originally included as an RFG specification is re-established.

In addition, EPA should conduct a rigorous analysis of the ‘‘real world’’ emissions

benefits of oxygen, including the impact on higher emitting vehicles, off-road and

off-cycle driving (areas where the impact of oxygen is more critical) to assure there

is no backsliding from these effects. EPA should also compare the potency-weighted

toxic affects of oxygenated and non-oxygenated RFG.

Finally, it is critical that the carbon monoxide (CO) benefits of oxygenates not be

ignored. The oxyfuel program worked and CO has been dramatically reduced nationwide. Several CO non-attainment areas have been reclassified into attainment

based in part on maintenance plans which include the oxygen content benefits of

RFG. If the RFG oxygen requirement is repealed, the CO attainment status of these

areas will be jeopardized. In addition, the National Academy of Sciences concluded

last year that as much as 20% of the ozone coming from automobiles was attributable to carbon monoxide. EPA should assess this beneficial impact and either 1)

incorporate a CO performance standard into the program or 2) promulgate a CO offset so that refiners can balance CO reductions with VOC increases.

Provide Flexibility to Refiners. The expeditious removal of MTBE should not result in dramatically increased gasoline prices or supply shortages. Refiners and

gasoline marketers should be given some flexibility in meeting this challenge.

Refiners claim the only way to eliminate MTBE without increasing consumer gasoline costs is to eliminate the oxygen standard itself. Indeed, some see the two as

synonymous. At a time when gasoline prices across the country are soaring, Congress must consider the economic implications of reducing MTBE use. MTBE currently represents about 3% of the nation’s transportation fuel supply. If it is precipitously eliminated without providing for a replacement of that supply, gasoline prices

will clearly rise. Indeed, this fact has been established by both the Department of

Energy and the California Energy Commission, which concluded a non-oxygenated

fuel scenario in California (with no ethanol used) was the most expensive option

available to the state in addressing MTBE. It is therefore critical that if MTBE volume is to be reduced, it is replaced with safe alternatives such as ethanol. Following

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the oil companies’ ‘‘flexibility’’ agenda of no oxygen requirement and an all-hydrocarbon fuel supply will increase consumer gasoline costs.

But we believe there are ways to provide increased flexibility in meeting the oxygenate standard such that replacing MTBE with ethanol will not result in price

spikes or supply shortages. Certainly, a gradual phase-out is the best way to protect

against potential consumer impacts. The U.S. Department of Agriculture has completed a comprehensive analysis demonstrating that ethanol can effectively replace

MTBE by 2004 without price spikes or supply shortages. The Department’s analysis

shows that total ethanol production capacity will have to increase roughly 50%, to

approximately 3 billion gallons by 2004, in order to supply the oxygenate demands

of RFG while maintaining the existing ethanol octane markets in conventional gasoline.

USDA also analyzed the transportation affects of increased ethanol RFG. The Department concluded that ethanol would be shipped by barge or rail cost-competitively, and that ‘‘there appear to be no transportation impediment to the use of ethanol as a replacement for MTBE.’’

The Ethanol Solution

The primary concern with maintaining the oxygen standard appears to be the industry’s ability to supply the increased demand for ethanol. But such concerns are

unfounded. It is important to understand that because ethanol has twice the oxygen

content of MTBE, it will only take half as much ethanol to satisfy the oxygen requirements of RFG. Current MTBE use in RFG is approximately 257 bb/d (thousand

barrels per day). That level of oxygen can be met by only 128 bb/d of ethanol. Current ethanol production is 100 bb/d. But added to that is about 300 million gallons

of idle ethanol production capacity, 85 million gallons under construction and expected to be on stream shortly, and more than 440 million gallons of production capacity which has been proposed and is seeking financing. Thus, the industry’s actual

production capacity will soon exceed 2.3 billion gallons annually, or 150 bb/d. In addition, industry sources indicate that such expansions could easily add another 39

bb/d (600 million gallons) of ethanol production capacity within 12 to 18 months.

Ethanol Supply/Demand in RFG

Ethanol

Demand

Ethanol

Supply

RFG Ethanol Demand ...................................................................................................................... 128 bb/d

Current Ethanol Use in RFG and Oxyfuels ...................................................................................... 45 bb/d

Current Ethanol Production ............................................................................................................. 100 bb/d

Existing Idle Capacity ...................................................................................................................... 17 bb/d

Ethanol Production Capacity Under Construction ........................................................................... 7 bb/d

Planned Ethanol Capacity ............................................................................................................... 28 bb/d

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Ethanol Supply/Demand in RFG—Continued

Ethanol

Demand

Ethanol

Supply

Proposed Expansions to Existing Plants ......................................................................................... 39 bb/d

Total ................................................................................................................................................. 173 bb/d 191 bb/d

It is important to understand that ethanol production facilities are largely modular. Expansions can be done very quickly by simply adding new equipment to existing production streams. New production from green fields is also now done quite efficiently. Since 1990, most new ethanol production has been by farmer-owned cooperatives. These highly efficient dry mill plants typically go from drawing board

to production within two years, at an approximate cost of $1.00-$1.50 per gallon of

capacity.

The next generation of ethanol production facilities will also include production

from cellulose and biomass feedstocks. In just the past two weeks, a new ethanol

production plant in Jennings, Louisiana was awarded a $120 billion bond and is expected to begin construction this spring. When completed, this plant will produce

ethanol from rice hulls and bagasse. Three other plants are currently planned in

California that will produce ethanol from rice straw. Another facility is planned in

upstate New York producing ethanol from municipal waste. Already, ethanol is

being produced from wood and paper waste by Georgia Pacific in Washington state,

and production from forest residue is not far behind. None of this will happen, however, without the assurance of increased market opportunities for ethanol in RFG.

If the oxygenate requirement itself is repealed, there will be little increased ethanol

production in the coming years. On the other hand, maintaining the oxygen requirement as MTBE use is phased out will stimulate tremendous new economic development across the country.

Plants Under Construction

Company Location Feedstock MMPY

Adkins Energy* ................................................................. Lena, IL ................................... Corn 30

Golden Triangle* ............................................................... St. Joseph, MO ........................ Corn 25

Nebraska Nutrients ........................................................... Sutherland, NE ........................ Corn 15

NE Missouri Grain Processors* ......................................... Macon, MO .............................. Corn 15

Subtotal Under Construction Capacity (by 2000) 85

Proposed Plants

Company Location Feedstock MMPY

American Agri-Technology Corporation ............................. Great Falls, MT ....................... Wheat/Barley 30

Lower Caskaskia Economic Devp. Board .......................... Lower Caskaskia, IL ................ Corn 100

BC International ................................................................ Jennings, LA ............................ Bagasse/rice hulls 20

Quincy Library Group ........................................................ NE Region, CA ......................... Forest Residues 15

BC International (Sacramento Valley) .............................. Gridley, CA .............................. Rice Straw 30

Arkenol* ............................................................................ Mission Viejo, CA .................... Rice Straw 8

MASADA ............................................................................. Middletown, NY ....................... Municipal Solid Waste 6.6

New Jersey Project ............................................................ Burlington, NJ ......................... corn 15

Sustainable Energy Devp. ................................................. Central Region, OR ................. Wood Waste 30

Pacific Rim Ethanol Corp. ................................................ Moses Lake, WA ...................... Grain 40

Pacific Rim Ethanol Corp. ................................................ Longview, WA .......................... Grain 40

Schmidt Brewery ............................................................... St. Paul, MN ............................ Beer waste 5

GreenLeaf .......................................................................... Platte, SD ................................ Corn 15

Pratte Project .................................................................... Pratte, KS ................................ Corn/milo 15

Iowa #1 ............................................................................. Central Iowa, IA ...................... Corn 15

Iowa #2 ............................................................................. Central Iowa, IA ...................... Corn 15

SIRS ................................................................................... Central Missouri, MO .............. Corn 30

N/a .................................................................................... Black Hills, SD ........................ Forest Residues 12

Subtotal Proposed Capacity (by 2001) 442

Current Production Capacity 1,800

TOTAL CURRENT AND PROJECTED ETHANOL PRODUCTION CAPACITY 2,327

MMPY = million gallons per year

*Cooperatives

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Source: Bryan & Bryan Inc.

Ethanol RFG will provide a tremendous economic stimulus to rural America by

creating value-added demand for 500 million bushels of grain. According to USDA,

replacing MTBE with ethanol in RFG nationwide would:

• increase net farm income $1 billion annually; • create 13,000 new jobs; • enhance our balance of trade $12 billion by 2010; and, • reduce farm program costs more than $1 billion for each $0.10 increase in corn

price.

Thus, replacing MTBE with domestically-produced renewable ethanol will provide

a tremendous economic stimulus to rural America while protecting air quality, preserving water resources and maintaining stable consumer gasoline prices and supply.

Conclusion:

The members of the Renewable Fuels Association understand that the Congress

is faced with a daunting challenge, i.e, how to protect water supplies by reducing

the use of MTBE without sacrificing air quality or increasing fuel prices. We see

ethanol as a solution. Increasing ethanol use in this program will allow MTBE to

be phased out cost-effectively while protecting precious water resources and air

quality. Stimulating rural economies by increasing the demand for grain used in

ethanol production will help farmers left behind by our booming economy. Encouraging new ethanol production from biomass feedstocks will provide additional environmental benefits and take a positive step toward a sustainable energy future and

global climate change. The bottom line is that we need to protect both air quality

and water quality. With ethanol, we can.

Thank you.

Mr. BILIRAKIS. Thank you for your testimony.

Mr. Grossman.

STATEMENT OF BARRY GROSSMAN

Mr. GROSSMAN. Mr. Chairman, I want to thank the chairman

and the subcommittee for giving me the opportunity to speak on

behalf of Oxybusters across the Nation.

First of all, I would like to say, we are not environmentalists, we

are not politicians, and we are not beholden to any special interest

groups, and we are certainly funded out of our own pockets.

Let me tell you, everybody, what prompted the formation of

Oxybusters to begin with. In November 1992, that was the time

oxygenated gasoline with MTBE was snuck into the gasoline supply. I say ‘‘snuck in’’ because there was no publicity about it. Well,

during that month sometime, I personally started to get a headache that simply would not disappear. I visited a couple of different

doctors, and they could find nothing seriously wrong with me.

A few weeks had passed by and my wife, who was in journalism,

read some obscure publication, and I emphasize ‘‘obscure,’’ where,

in the State of Alaska, some 25,000 people were experiencing headaches and other symptoms because of oxygenated gasoline.

So that prompted me to call the editor of the Anchorage Times,

and he put me in touch with at least 30 people from both Fairbanks and Anchorage, Alaska, who were experiencing the exact

same thing I was.

I talked to housewives, taxi drivers, school teachers, medical doctors, every walk of life; and they were all experiencing the same

awful thing. They were getting these severe type of headaches that

would not disappear.

Again, we are just citizens trying to deal with a serious health

problem. Finally, people started calling into this Oxybuster hotline

that we created. And when I told them that there was a possibility

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that this new gasoline was making them sick, at first they were relieved because at least now they knew why they were feeling this

way, but soon the relief turned to anger when they realized that

their own government was poisoning them.

I also note that the vast majority of the people that called into

the Oxybuster hotline had never suffered from any type of chemical

sensitivity before November 1992. And it was affecting again a

wide variety of people and a host of health problems. It affected

people from the children to the elderly. And they all had similar

symptoms: severe headache, sinus problems, breathing difficulties,

and skin rashes.

Finally, within the course of a short year, Oxybusters documented over 1,000 cases from people from New Jersey alone who

all suffered what they felt was severe effects of MTBE poisoning.

By 1995, we collected 15,000 signatures that we presented to

Governor Whitman in New Jersey. This led to the funding of the

Rutger’s University study, which last week, by the way, it took

many years, concluded that MTBE was in fact the cause of these

problems that people were experiencing.

One thing that Rutger’s University did not test for—and it was

briefly touched upon here—were the combustion by-products of

MTBE. From what we could tell, the EPA never really seriously

tested for the combustion by-products of MTBE; or if they had, it

had not become common knowledge. And we learned from the auto

and oil industry, not to mention the EPA themselves, yes, there

was an increase in formaldehyde associated with MTBE. When you

put MTBE in gasoline, even according to the California Air Resources Board, there is a 26-percent increase in formaldehyde coming out of that tailpipe.

Now, this is years before the water problem came into play.

In our opinion, MTBE is not a cleaner burning fuel. If anything,

we think it is a dirtier burning fuel. It is documented. There is, according to these studies, an increase in formaldehyde, nitrogen oxides, formic acid, and others.

If it were really cleaning the air, as I have heard some people

say here today, wouldn’t people start experiencing a health improvement? But, no, exactly the opposite is happening. Is it any coincidence that somehow thousands of people in Alaska were getting

sick at the exact same time thousands of people from New Jersey

and Connecticut and other parts of the country were? Is that just

a coincidence?

Take Dr. Peter Joseph, professor of radiologic physics at the University of Pennsylvania Hospital, who is also on the Philadelphia

Task Force, a Harvard grad, mind you. He has conducted several

studies and he has concluded that the dramatic increase in asthma

in this nation is directly linked to the dramatic increase in MTBE

in our gasoline supply.

Now, again, it sickens me to hear people saying it is cleaning the

air. If you sit here with a bunch of people suffering from asthma

and you tell them that this is good for you, I hate to see what the

reaction would be.

People with asthma are worse. People who never had asthma are

developing it for the first time. Again, note, the vast majority of

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people who have been sickened by MTBE had never suffered from

any chemical sensitivity in the past.

In Liberty, New York, I got a call from somebody called Diane

Atkins back in 1993 when Oxybusters started. She said, ‘‘Art, there

is MTBE in my water.’’ I didn’t follow what she was talking about.

This was 1993.

It was not until early 1995, when we learned from the United

States Geological Survey in Denver, Colorado, that, yes indeed,

MTBE had the potential to contaminate groundwater, not just from

underground leaking tanks. But it did get into the exhaust. It did

get into the environment. It got into the snow-peaked mountains

and it dripped down, getting into the lakes and streams and, boom,

into your water.

We brought our concerns to the Department of Environmental

Protection in New Jersey, to the Federal EPA. They ignored us.

What was that, 5 years ago?

Spillage is another way that MTBE gets into the water, as has

been clearly indicated here today.

Let me summarize by saying there are other ways, a variety of

ways, MTBE gets into the water. It can get into there by spilling

and other ways. But I just want to close by saying, our group supports Congressman Frank Pallone’s bill, H.R. 1705, to eliminate

the oxygen requirement from RFG and phaseout what we feel is an

idiotic fuel additive at the speed of light, not in 3 years. We have

been doing this for 7 years. We do not want to wait another 3

years.

I would like to close again by saying that it is sad that it has

come to this that this issue has proven to be far more than just

whether MTBE is or is not cleaning the air. It is a shame that profits and politics have been given more importance than people’s

health. And I urge you to do what is best for the American people,

not what is best for individual business interests, and please stop

playing politics with people’s health.

Thank you.

[The prepared statement of Barry Grossman follows:]

PREPARED STATEMENT OF BARRY GROSSMAN, OXYBUSTER FOUNDER

Mr. Chairman and members of the Committee: My name is Barry Grossman and

I live in Plainsboro, New Jersey. I am the founder of Oxybusters, a grass-roots organization made up of thousands of people throughout the country who oppose the use

of MTBE and all other oxygenates in gasoline. I am here to tell you that the federal

requirement to use these additives has been a grave mistake.

In November of 1992, when the oxygenated fuel program first began in New Jersey, I started experiencing severe headaches that doctors could not explain, and that

medications could not relieve. When I read about thousands of people in Alaska getting sick from MTBE, the main ingredient in oxygenated fuel, I made the connection. After announcing on a New Jersey radio station the formation of ‘‘Oxybusters’’

to protest the new fuel, I received literally 30 calls a day from people experiencing

similar symptoms. These symptoms include headaches, nausea, chest pains, eye irritation, respiratory problems and heart palpitations.

We collected more than 15,000 signatures on a petition to ban oxygenated fuel in

New Jersey, which led to the funding of an MTBE health study at Rutgers University. Just last week the results of that study were released, and they confirmed

what we have known for the past seven years—that MTBE can in fact cause headaches, nausea, eye irritation and fatigue, among other ailments.

In 1997, Oxybusters in California collected more than 100,000 signatures on a petition to ban MTBE, because of health complaints and widespread water contamination, which led to a study of MTBE by the University of California. That study conVerDate 11-MAY-2000 11:14 Aug 31, 2000 Jkt 065685 PO 00000 Frm 00161 Fmt 6633 Sfmt 6621 E:\HEARINGS\62976 pfrm01 PsN: 62976
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cluded that MTBE was a threat to the environment and was not a necessary component of cleaner burning gasoline. Based on the study, Governor Gray Davis issued

an Executive Order to phase out MTBE.

According to the Interagency Assessment of Oxygenated Fuels, prepared by the

National Science and Technology Council, all ether-based additives, including

MTBE, ETBE, TAME and DIPE are highly water soluble and difficult to biodegrade.

Consequently, they pose a significant threat to our water supplies. A series of studies done by the Auto & Oil industries found that oxygenates increase certain harmful emissions. MTBE increases formaldehyde, and ETBE and ethanol increase acetaldehyde. In low aromatic fuels, oxygenates also increase nitrogen oxides, which

contribute to smog. Last year the National Research Council concluded that

oxygenates do little to reduce smog.

MTBE is currently classified by the EPA as a possible human carcinogen. A study

published last October by the University of Southern California Cancer Research

Laboratory found MTBE to be a mutagen.

Those of you who think the Clean Air Act has been a success should consider the

statistics on asthma. Since 1990, incidents of asthma have skyrocketed

unexplainably. But we believe this increase can be explained by the increased use

of MTBE, and Dr. Peter Joseph, professor of Radiologic Physics at the University

of Pennsylvania Hospital, has evidence dating back to 1980 which supports this theory.

I would like to speak for a moment about what really matters most—people. Liberty, New York has had low levels of MTBE in its water supply since 1990. This

pristine town in the Catskill Mountains now has some of the highest cancer rates

in the state of New York. Diane Atkins, a 48 year old Liberty resident who heads

Oxybusters of New York, lost her husband, brother-in-law and pet dog to cancer in

the past 3 years.

Gina Wall, of Washington Township, New Jersey, was a healthy 30 year-old mother of two before moving into a house with MTBE in its well eight years ago. Since

then she has undergone 19 operations for multiple tumors, bladder cancer and kidney disease.

Gary Franklin of Scarborough, Maine, had to give up his lawn & garden equipment business five years ago at age 48. Working around gasoline-powered equipment with high levels of MTBE left him disabled.

I could go on for hours, as these are just a few of the thousands of people whose

lives have been devastated one way or another by MTBE. And the problems are not

limited to MTBE. We have Oxybuster groups in Colorado, Arizona and Oregon

where ethanol has predominately been the oxygenate of choice.

It’s time to put an end to this failed process of replacing one harmful additive

with another, as was done when benzene replaced lead and MTBE replaced benzene. The studies done by the Auto & Oil industries, the University of California

and the National Research Council all support the elimination of the oxygen mandate. Refiners have said they can meet the emission standards of the Clean Air Act

without oxygenates. Let’s give them that opportunity. Our group supports bill H.R.

1705, sponsored by Congressman Frank Pallone, Jr., to eliminate the oxygen requirement for reformulated gasoline, and phase out the use of MTBE as quickly as

possible, so that we can finally end this federally mandated poisoning of America.

Thank you Mr. Chairman.

Mr. BILIRAKIS. Thank you, Mr. Grossman.

I am going to turn now and go out of order at the request of Dr.

Ganske that we recognize him for 5 minutes.

Mr. GANSKE. Mr. Grossman, you certainly increased the oxygen

in my blood level with your presentation.

Mr. GROSSMAN. We are very passionate, as you can tell, about

this issue.

Mr. GANSKE. Very passionate.

Mr. Early, the American Lung Association of Metropolitan Chicago released a report last year citing the air quality benefits of its

ethanol reformulated fuel program.

More recently, the American Lung Association of Minnesota released a paper clearly endorsing the air quality benefits of ethanol

stating, ‘‘The American Lung Association of Minnesota began its

fight against multiple-source pollution in the 1960’s; and today we

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continue our support of oxygenated gasoline as a cause-effective

tool for reducing tailpipe emissions.’’

My question to you, then, is, why is there a discrepancy between

State organizations and the national American Lung Association?

Mr. EARLY. Well, we are talking about different programs. The

Minnesota program was part of the so-called Oxy-fuel program

aimed at reducing carbon monoxide in the wintertime. That program has been expanded by State law. It is not required to be expanded by Federal law.

And the Lung Association fully supports the winter time Oxyfuels program. There is no question that, in the winter time, the

ability of oxygen to reduce carbon monoxide is a very important

tool in achieving emission and air quality standards for CO.

The question to this committee is, is the mandating of oxygen in

reformulated gasoline utilized in the summer time when carbon

monoxide is much less of a problem?

So that is the difference, the Minnesota Lung Association is expressing its support for Minnesota’s program; and the benefits of

that program are primarily releasing CO in the winter time.

Mr. GANSKE. Are all of the State Lung Associations in concordance with the national policy?

Mr. EARLY. To the best of my knowledge, yeah.

Mr. GANSKE. Now, let me ask you: Mr. Early, you are a consultant to the American Lung Association.

Is that a paid position?

Mr. EARLY . Yes, it is.

Mr. GANSKE. Do you have any other paid consulting relationships?

Mr. EARLY. Not at this time.

Mr. GANSKE. Are you now or have you ever been funded by the

MTBE industry or their representatives?

Mr. EARLY. Have I been a consultant for the MTBE industry? No.

Mr. GANSKE. Have you ever received compensation or worked for

Arco?

Mr. EARLY. No.

Mr. GANSKE. Who funds your current contract with the American

Lung Association?

Mr. EARLY. Well, the Lung Association.

Mr. GANSKE. The Lung Association.

Does the Lung Association receive funds for that contract?

Mr. EARLY. Well, the Lung Association receives funds for activities that I perform from the Energy Foundation.

Mr. GANSKE. And in the Energy Foundation, are some of the Energy Foundation members MTBE producers?

Mr. EARLY. Not to my knowledge.

Mr. GANSKE. Who is the Energy Foundation?

Mr. EARLY. The Energy Foundation is headquartered in San

Francisco. It is a 501(c)(3) foundation that focuses a lot of its attention on environmental and energy issues.

Mr. GANSKE. Are any of the members members of the petroleum

industry?

Mr. EARLY. Not to my knowledge.

Mr. GANSKE. I thank you.

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Mr. Campbell, I want to give you a chance to respond because

I mentioned you earlier. If the oxygen requirement was waived and

MTBE was phased out, what would you use in your gasoline to ensure emissions reductions do not rise?

Mr. CAMPBELL. I assume you are talking about our company.

Mr. GANSKE. Yes.

Mr. CAMPBELL. And the reason I preempt it that way is because

the solution for one company might be quite different than others.

But for us the hydrocarbon of choice would probably be

alcoholate. Alcoholate has been in gasoline for decades. It has been

in there for an extended period of time. Actually, because of MTBE

going into the gasoline in the amount we do, we have shut down

an alcoholate plant in Philadelphia and are running an MTBE

plant.

I would expect that the first hydrocarbon that would go in would

be potentially some toluene. But it is going to depend on the type

of goal or emissions standards that we are trying to match at that

point in time.

Mr. GANSKE. So toluene is a possibility?

Mr. CAMPBELL. Absolutely.

Mr. GANSKE. Are you concerned about comments that Mr.

Perciasepe made about the use of toluene?

Mr. CAMPBELL. I was not here for Mr. Perciasepe’s comments.

We had a board of directors meeting today. But I hear people referring to aromatics as though it is one compound.

Actually, aromatics is a whole potpourri of compounds, going

from benzene to toluene, orthometeparazylene and right on down

the chain. So it is a broad mixture that has been in gasoline almost

since the very beginning of time.

Just one more time I would like to go back to what I referred

to in my testimony; and that is, if you think of the variability of

refineries, if you think of the variability of blend stocks that are

out there, trying to specify or mandate a formula I think is a

flawed approach.

That is why what I was asking for in my testimony was tell us

the standard you are trying to achieve, tell us the goal that you

want, whether it is an air-toxic emission, or whatever, and then

allow each of us to achieve it in the way we can.

Mr. GANSKE. That last question, Dr. Graboski, can you make a

comment on increasing the use of toluene as an oxygenate?

Mr. GRABOSKI. As a replacement for oxygenates?

Mr. GANSKE. Yes.

Mr. GRABOSKI. Well, from a point of view of the gasoline you are

producing, it would be fine from a performance point of view because you would get the octane back that you would lose from the

oxygenates.

But I think the issue is that raising that aromatic content in the

gasoline is going to have negative public health effects. Toluene

will de-alcoholate to make benzene in the exhaust. And benzene is

a very, very potent toxic. Toluene, like the other aromatics in the

fuel, tend to increase fine particulate emissions out the exhaust,

while oxygenates will reduce the fine particulate emissions out of

the exhaust.

161

Toluene and other aromatics are precursors for much more toxic

aromatic and nitro aromatic compounds that are found in the particulate matter and in the VOC exhaust. And so, even though you

might be able to make the fuel that meets the mass base requirements of the Clean Air Act, my concern would be that going back

to where we were in 1985, which is really what we are talking

about, let us go back to now low-sulfur, low-RVP conventional gasoline as opposed to reformulated gasoline, that that is going to have

public health impact.

Mr. BILIRAKIS. The gentleman from Texas, Mr. Green, for 5 minutes.

Mr. GREEN. Thank you, Mr. Chairman.

I think it is appropriate both the American Lung Association and

Mr. Campbell talk about alcoholates would be the substitute and

the preferred substitute.

Are we where we were with MTBE 10 years ago? I do not really

want to drink alcoholates either, as well as MTBE. If we use that

as a substitute that will have the same octane ability that MTBE

would have, what would that do to groundwater or all the other

problems that we see?

Mr. CAMPBELL. That is absolutely not the case. First of all, it is

alcoholate. And it has been in gasoline, it has been a fundamental

part of our processing ever since certainly I have been in the business 40 years, and it was there before I came in. We have it in all

of our refineries. It is almost as pure hydrocarbon as we put in gasoline. It is a high octane component, and it is a preferred component over certainly aromatics or certainly oxygenates in gasoline.

Now, to the point that somebody raised earlier that there probably has not been enough studies looking at all the variety, dozens

and dozens, of compounds that happen to be in gasoline, I would

imagine that would be the case. But I would think that of all the

hydrocarbons that you can think of to replace MTBE, there is not

one more purer or more simple than alcoholate. And it is already

there.

Mr. GREEN. Again, not being here in the late 1980’s when MTBE

was being discussed and I was concerned, and my colleague from

Wisconsin, Mr. Barrett, you know, there was a 1987 memo and of

course the industry participated. You wanted to follow up?

Mr. EARLY. It is certainly a legitimate question to say, let’s say

if we doubled the amount of alcoholates in fuel, what are the public

health impacts of doing that. And that is why one of the Blue Ribbon Panel recommendations was to do much more research in this

area so we do not.

I mean, MTBE was already in gasoline, and then it got dramatically increased. And then we found out that that was a problem.

So we do need to have the research on alcoholates and other components of gasoline so that we do not make the same mistake

again. I mean, we should learn from our mistakes, there is no question.

Mr. GREEN. Mr. Vaughn, I understand that numerous health organizations said that boosting the amount of ethanol in reformulated gas increases the VOCs, CO, and NOX.

Is it your testimony that ethanol does not cause such increases

in comparison to MTBE?

162

Mr. VAUGHN. Congressman Green, it is my testimony that, by

law and Federal regulation, we are not allowed to.

In Chicago, in Milwaukee, in northern Illinois and northern Indiana, two of the reformulated gasoline requirement areas, approximately 420 million gallons of ethanol is sold in the Federal Reformulated Gasoline area, and it is not allowed by law to do that.

Can it theoretically increase and does it increase? It can. It is not

allowed to in reformulate gasoline. And the gasoline needs to be

manufactured in such a way as Mr. Perciasepe said that would accommodate that, meaning a sub-vapor pressure fuel is necessary to

accommodate ethanol in the reformulated gasoline program.

Mr. GREEN. The Sierra Club testified in the Senate Environmental Committee in 1994 and said that they saw expanding ethanol uses as potentially increasing global warming, increasing

smog, increasing air toxics, increasing water pollution, and damaging the sensitive habitat areas. And that was, again, in August

1994.

How can this committee be assured that, knowing that testimony

that was recorded then, that increased use of ethanol would not

cause environmental backsliding from current levels as achieved by

MTBE? Or is the Sierra Club wrong?

Mr. VAUGHN. I think I remember their testimony back 6 or 7

years ago from the Sierra Club on this issue. But there are certainly a range of recent studies, in fact, one just released 21⁄2 weeks

ago commissioned by the Department of Agriculture on the very

issue of global warming and a range of biofuel plants, ethanol

plants being among them. And what they documented is there is

a modestly efficient plant, a modestly efficient farmer producing

ethanol with fairly good but not exemplary techniques and can

produce a tremendous reduction in CO2 emissions on an energyper-content basis.

Mr. GREEN. Let me follow up since you mentioned that average

farmer. Let us turn to water quality, then, since that is why we

are here today.

Obviously, expanding ethanol production is not without its water

quality implications, particularly downstream for corn production;

and those of us who live and work along the Gulf Coast know only

too well what happens when nonpoint pollution in the Mississippi

increases.

The Environmental Defense Fund told the EPA that with a poor

environmental record of modern-day agriculture, environmental

harm that can be caused by greatly expanding corn ethanol production would far outweigh the marginal air quality benefits that use

of ethanol may have on reformulated gasoline. Again, that is from

the Congressional Record of 1994.

How can we be certain that the water quality, if we increased

ethanol, like my colleagues from the Midwest or Illinois like to do,

that we would not see a continued problem or even greater problem

with water pollution particularly in the Mississippi Basin?

Mr. VAUGHN. Yes, sir. I think that there are a couple of answers.

But among them, we probably are not talking about a tremendous

amount of increase in corn production. We are talking about the increased utilization of the corn crop. We are using the starch compoVerDate 11-MAY-2000 11:14 Aug 31, 2000 Jkt 065685 PO 00000 Frm 00166 Fmt 6633 Sfmt 6602 E:\HEARINGS\62976 pfrm01 PsN: 62976
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nent of that corn, about 600 million bushels of it today. We produce

about 9 billion bushels.

We are also going to be moving into crop areas such as sugar

beets, a range of bio-mass feed stocks in your part of the country,

some cane, some bagasse being developed down in Louisiana.

But the point about ethanol is that you—if you get stuck back

in 1994-1995 studies, those are based on an analysis done 4 or 5

years earlier. All of the recent analysis from the Department of Agriculture, Department of Energy, and virtually every State organization, including the Texas National Resources Commission, points

to a far more energy efficient, far more environmentally efficient

utilization of resources to produce high-quality, high-impact, highvalue, low-polluting ethanol.

Mr. GREEN. Let me follow up, Mr. Chairman, in closing and just

say I don’t know if the environmental groups have changed, but

maybe we could with 54 percent subsidy; and that is again an issue

that another committee has to deal with. But we might be able to

produce something else that might be cleaner if we would—as a

government would subsidize it like we do ethanol.

Mr. GREENWOOD. Thank you.

The Chair recognizes himself for 5 minutes. Let me direct a question, if I may, to Mr. Campbell. Your written testimony indicates

that the refining industry can make cleaner burning fuels without

oxygenates at the mandated level. Given that the oxygenates currently displace a significant volume of the other more toxic components of gasoline, how would refiners maintain the toxic emission

benefits of the current RFG Program?

Mr. CAMPBELL. Mr. Chairman, again, I have to say that that is

going to differ from one refinery to the other. But what we would

be doing, if in fact we are given the flexibility, would be reducing

MTBE. As I indicated, we would be replacing compounds, at least

with—certainly within our own company, initially alkylate, which

we would believe is a less toxic substance; probably more reformate; and potentially some of the other aromatics, certainly not

benzene.

But the important point is, we are convinced that we can be able

to manufacture that low-oxygenate or even a nonoxygenate gasoline and have an air toxics reduction that is in excess of what the

EPA is requiring for the year 2000. We take the formulation, we

put it into the model, and that is the results we came out with, sir.

Mr. GREENWOOD. Why can’t the refining industry simply switch

to ethanol and still meet the oxygenate requirement of the Clean

Air Act?

Mr. CAMPBELL. First of all, let me indicate that we, as a company, are probably one of the largest manufacturers in the United

States of ethanol and gasoline, so we have extensive experience in

the Midwest. In fact, as we speak, we are expanding into the Pittsburgh area. So it is a compound that we use a great amount of.

It has several problems. One is manufacturing. If you just try to

instantly do it, you would have a supply problem. Logistics, it has

to be distributed separately. But those can be overcome. I mean,

with a lot of time and a lot of money, you can overcome that.

The key problem with ethanol in gasoline and the reason that we

don’t use it in the Northeast United States, but we do use it in the

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Midwest, is because of the environmental characteristics, as Mr.

Grumet testified. And the problem with ethanol, it has a very high

RVP or vapor pressure, which causes VOCs or volatile organic compounds, which in turn bring about smog formation. The only way

that can be overcome—that is why it has a 1 pound RVP waiver,

because when you put it into gasoline, it requires a 1 pound waiver

from the specification.

If, in fact, you took ethanol and eventually put it into the Northeastern system, got the distribution, had the plants there and got

it into the system, and mandated that the RVP remain the same,

or the total blend, as it did before. That would mean the blendstock

that we put the ethanol in would have to have even a much, much

lower RVP, around 5.8 pounds. I will tell you that is extraordinarily expensive to accomplish, and to do that means you also remove more barrels out of the gasoline blendstock.

So it is because of that characteristic that the companies have

not chosen to put ethanol in gasoline in the reformulated gasoline

areas or out in California in the CARB area. But it is very popular

and used elsewhere.

Mr. GREENWOOD. I am going to yield the balance of my time, and

I am also going to yield the chair to the gentleman from California.

I am desperately trying to catch a 4 o’clock train. I promised my

daughters I would be home tonight for dinner. So thank you.

Mr. GROSSMAN. I have a 4 o’clock train to catch, too. Would that

be okay?

Mr. BILBRAY [presiding]. Sure. I think you articulated your position quite clearly and distinctly.

Mr. SHIMKUS. Mr. Chairman, he needs to change the name to

MTBE Busters instead of Oxybusters.

Mr. BILBRAY. I guess we will take a look at the mandate again.

And again, let me say sincerely as somebody who has been a little

involved in this process over the last decade that, Mr. Early, I appreciate your intestinal fortitude for being willing to stand up and

point something out. It was sort of interesting that Mr. Vaughn

was articulating that the attack on ethanol was based on science

that was 5, 6, 10 years old. And in 1995, the data available then

was not what is available now.

The issue is that the Lung Association is taking a look at the information you have today and have come to a conclusion as a result.

Mr. GRABOSKI. I would observe that the testimony that Mr.

Green was quoting from the Sierra Club was delivered by myself.

I would also agree with Mr. Vaughn that we know more about the

global warming impacts of ethanol in light of changed agricultural

practices, And we need to make the decisions on modern information. That is why we are emphasizing the change in our position,

which, you know, the Lung Association supported the 2 percent

mandate in 1990. We know a lot more know than we did then.

Mr. BILBRAY. That’s what I appreciate. I know there are those

in this city that want to defend the status quo, that will attack the

Lung Association because they have taken a position that a lot of

people in Washington don’t appreciate. But I was very, very impressed with your testimony, as you pointed out, that we have

learned much more about cleaner gasoline, as stated, and that the

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Lung Association believes that the experts at the California Air Resources Board know more about producing clean fuels than any

other government entity, bar none.

Do you want to expand on that statement to some degree?

Mr. GRABOSKI. Well, as you well know, they have been at it a lot

longer. And they have more people looking at the issue. They have

more data available to them. They generated more data. They

have, as you know, been struggling very much in the last couple

of years with regard to the MTBE problem, and a tremendous

amount of money and research has gone into trying to solve that

problem. They are asking for a waiver because they have come to

the conclusion that a 2 percent oxygen requirement gets in the way

of being able to produce cleaner gasoline while, of course, phasing

down—phasing completely out MTBE in California by the Governor’s executive order.

Mr. BILBRAY. But as your testimony said, CARB has provided the

evidence that the 2 percent requirement actually impedes the ability of the refiners to produce a new generation, which will be an

evolutionary step beyond. And you want to see that step made, so

the initial step to even cleaner gasoline is the elimination of the

2 percent mandate on the State of California?

Mr. GRABOSKI. Absolutely.

Mr. BILBRAY. Okay.

Mr. Strickland.

Mr. STRICKLAND. Thank you. And my good friend from Texas has

asked for any time that I may have left over. So I would like to

ask one question, if each of you would please respond; and then I

will yield the rest of my time to Mr. Green.

The question I would like for you to respond to is: Can you estimate how the removal of the mandate would affect the current

usage of the two primary oxygenates, MTBE and ethanol? Would

each of you please respond to that briefly, if you could?

Mr. BILBRAY. Point of clarification, the mandate totally or a mandate with a backsliding clause included?

Mr. STRICKLAND. No backsliding clause.

Mr. BILBRAY. With?

Mr. STRICKLAND. No, without.

Mr. BILBRAY. Without the backsliding clause.

Mr. CAMPBELL. Assuming you want to go from left to right——

Mr. STRICKLAND. If you would, Mr. Campbell.

Mr. CAMPBELL [continuing]. I will be glad to give it a try.

I believe that if, in fact, we eliminate the oxygenate mandate and

give the flexibility to refiners, then what will happen is, MTBE

usage will drop considerably; and as I indicated in my testimony,

I think it will happen ultimately faster and probably further than

people thought when we met as a panel. The reason is because the

heightened awareness of the MTBE issues. And I think companies

in general would—many of them are going to want to be able to

advertise, ‘‘Our gasoline is MTBE free.’’ And I think that will ultimately happen.

As far as ethanol is concerned, I believe that almost regardless

of what you do, the amount of ethanol in gasoline is going to increase. And the reason that I say that is, if you look at all the

things that are going to happen to the gasoline pool in the United

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States—lower sulfur gasoline, the new gasoline is coming out right

now, RFG 2—every one of those things tends to lower the octane

of the pool, and refiners need to replenish that. I think in many

ways they will be replenishing that with ethanol.

So I really fundamentally believe the amount of ethanol is going

to go up even if no mandate is set on that. As I indicated, we are

increasing our usage of it and expanding it to western Pennsylvania today.

Mr. GRABOSKI. Were we banning MTBE as a part of your question?

Mr. STRICKLAND. I’m sorry, sir?

Mr. GRABOSKI. Were we banning MTBE as a part of your question?

Mr. STRICKLAND. Assuming we are not.

Mr. GRABOSKI. We are not. So the market is going to be exactly

the same, but what we are going to do is get rid of the oxygen mandate.

I think the issue is what refiners will choose to do. I agree with

Bob Campbell that ethanol consumption is going to stay the same,

or it is going to increase. I mean, I think that is going to happen.

What happens with MTBE, I am really not sure about. About a

third of the MTBE is produced by the refiners, a third is produced

by the merchants like Lyondell. And I think about a third is imported from Saudi Arabia. And I think maybe the refiners, some

of them who produce MTBE, now want to get out of the MTBE

business. But that still leaves two-thirds of the MTBE around.

My guess would be that without some kind of a push on oil refiners, together to get rid of it, that what you are going to find is that

some will want to use it. And when some want to use it, they will

all want to use it. I think we will have status quo, maybe slightly

reduced MTBE, but I really don’t see it going away. I mean, I think

if you want it to go away, you have got to ban it. If you say, we

are going to get rid of the oxy rule, I really don’t see the situation

changing very much.

Mr. EARLY. Based on the evidence that was presented to the Blue

Ribbon Panel, I would conclude that if you just got rid of the oxygen mandate, MTBE usage will go down, ethanol usage will go up,

but toxics will also go up. In other words, we will see some backsliding, which is why you need the other pieces that we are advocating.

Mr. STRICKLAND. Okay. Thanks.

Mr. YOUNG. It is important what I have heard to this point. Actually, I haven’t at any point given any thought to elimination of

oxygen standard without any backsliding, but clearly I think we

would see a substantial reduction in MTBE.

Now, when you do that, you obviously have to ask yourself what

replaces it. I think you could possibly see ethanol move up, because

ethanol has particular good characteristics from an octane standpoint. But, clearly, I think you have to point back to the backsliding issue. As far as I am concerned from air quality standpoint,

we would degrade as a nation as a result.

Mr. VAUGHN. Congressman, the ethanol perspective would be

that the ethanol expansion or development would probably be

stalled. We would probably see some reduction in the use of ethVerDate 11-MAY-2000 11:14 Aug 31, 2000 Jkt 065685 PO 00000 Frm 00170 Fmt 6633 Sfmt 6602 E:\HEARINGS\62976 pfrm01 PsN: 62976
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anol, certainly reformulated gasoline areas where we are currently

seeing a modest, but important amount of ethanol being used.

But I think if you don’t take action to deal with this problem—

for example, the way Governor Gray Davis has in California—to

set a timeframe and to actually eliminate the use of this product,

a ban will create—excuse me, a phaseout or elimination requirement will create the exact situation that Mr. Graboski pointed out.

A third of the product will go away, but we will see more of this

product used in more markets, maybe attainment markets. But the

problem, if it is water contamination you are concerned about, will

spread.

I think Mr. Early is actually on the mark, excuse me, that toxics

will go up.

Mr. GREEN. I think you yielded to me.

Mr. STRICKLAND. Yes.

Mr. GREEN. Mr. Chairman, I couldn’t help but hear outside that

your concern about quoting 1994—and let me quote Mr. Grumet’s

testimony today where he talks about repeal of 2 percent on page

3: ‘‘while ethanol usage is far preferable to MTBE from groundwater perspective and promotion of ethanol can further a host of

energy, agriculture, environmental goals as ethanol mandate is not

sound environmental economic policy for our region. Due to its high

volatility and resulting increase in evaporative emissions, the use

of ethanol during the summertime ozone season may actually exacerbate our urban and regional smog problems.’’

So that is not from 1994. That is from testimony that we heard

just a few minutes ago.

Let me, if we have more time for—a question, Mr. Chairman, for

Mr. Campbell.

Mr. Campbell, you have been involved in the refining industry,

you said, for 40 years. You testified that your company used MTBE

in its gasoline in the early 1980’s for oxygen—I guess for increased

performance. Would you agree with the characterization put forward by the ‘‘60 Minutes’’ program and others, that we did not

know anything about the health effects of MTBE when we started

to use it in the late 1970’s and early 1980’s?

Mr. CAMPBELL. Congressman, what I would like to say here is

that I am here today to talk about where we are and how we go

forward from here. And the reason I draw that distinction is because, in the intervening timeframe, very rapidly, there have been

a number of suits filed, class action suits against refiners, manufacturers and everybody, talking about how we got to where we are

and what was known back when.

So I would respectfully have to decline to answer that question.

Mr. GREEN. Okay.

Mr. Barrett then talked about the memo that was from 1987.

And I have the resulting study, that was EPA released, that was

December 1997. I guess it was that follow-up, the EPA fact sheet

on drinking water consumer acceptability and advice on MTBE. So

I admit it kind of worries me that it took EPA from 1987 to 1997

to do something. But some of the reports in that study again had

been testified about today, you know, the concern about groundwater resources.

168

But let me ask one last question of the panel, because it came

up in our last panel. The water pollution problem we have with

MTBE, have any of you had any experience you can testify to,

whether it is from the burning of MTBE in a car or truck, or is

it from leaky source tanks, people spilling it when they fill their

tanks?

Is there any evidence that MTBE is getting in our water supply

from being burned as a fuel?

Mr. VAUGHN. Mr. Congressman, there is an enormous amount of

data coming out of California from both the Energy Commission

and a study that has been conducted throughout 11 months of the

State of California to review MTBE sources. And there is a tremendous amount of data that indicates that both the range of leaks

from tanks, shipping points, car accidents, and air or emissions

deposition. And all that documentation, if nobody else has made it

available to you, I certainly will.

But the California has completed a thorough fate analysis on

these issues, which is the most updated analysis on both ethanol

and other oxygenate alternatives. That is also to be part of the

committee’s deliberations or part of the record.

Mr. GREEN. I appreciate that response. But again, I have heard

or seen most of the effort was that the pollution problems in water,

groundwater, was because of spills; and again, nobody has quantified it to say 5 percent, 10 percent, 20 percent or whatever it

could be that would come out of burning fuel in a vehicle. Any

other response?

Mr. EARLY. Well, evidence presented to the Blue Ribbon Panel,

some of which is the evidence that Mr. Vaughn referred to, indicated that air deposition from MTBE was a source of contamination of water resources. These would primarily be, obviously, lakes

and streams, some of which are hydrologically connected with

groundwater. But I think the evidence also showed that that was,

you know, not the most important source of contamination; that

leaking, spilling, and other sources were far more important.

Mr. GREEN. Okay.

Mr. CAMPBELL. Congressman, all I can say is, all of our experience in cleanup has been in a result of spills or leaks.

Mr. GREEN. Thank you, Mr. Chairman.

Mr. BILBRAY. The Chair will yield himself 5 minutes as indicated

by the previous Chair. I would like to remind the panel and the

Members of the Congress that, as Mr. Vaughn pointed out, California has done an extensive study on this. And Lake Tahoe, which

was identified as one of the cleanest lakes in the world, has had

a problem with this material because of 20 percent of the blowby

of two-cycle engines. And I guess it could fall under Mr. Green’s

presumption that this is unburned fuel, but it still——

Mr. GREEN. It spills out of the tank.

Mr. BILBRAY. It is not the spilling out of the tank. It is actually

the fact that, during the combustion process, the blowby is—during

the compression process, a two-cycle is not a sealed system. It is

an open system, and that the fuel blows right past the cylinder and

right back out the exhaust and drips out into the water. That is

why two-cycle is being outlawed in Tahoe, and why the California

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Air Resources Board right now is requiring a whole new redesign

of two-cycles for the State of California.

That said, I think that we need, and I appreciate you bringing

up just how much we are working on this stuff. It still comes

down—Mr. Early, you live back here on the East Coast?

Mr. EARLY. I live in the Washington, DC, area.

Mr. BILBRAY. Thank you. Let me just tell you, and I know the

members are sick and tired of hearing it, I am glad to see that

somebody on the East Coast appreciates what we are trying to do

back West. And I am glad somebody back here reads our reports

every once in a while.

Mr. EARLY. Well, I would just observe the Lung Association just

got through a vigorous campaign supporting EPA’s regulations socalled tier 2 regulations to crank down on tail pipe emissions for

new automobiles and to lower the sulfur in gasoline. And there is

no question that California’s program, which preceded it, was essentially the clean air road map for that program. And so, obviously, we pay a lot of attention to what is happening in terms of

air quality efforts in California.

Mr. BILBRAY. Well, then, can I ask us all to remember to use new

jargon—EPA uses it, you just used it—′′tail pipe emissions’’ is

something we need to avoid. ‘‘total auto emissions’’ is our new

slang, seeing that we have found that evaporative emissions are a

major problem that we have underestimated grossly. And maybe

when we are talking between EPA and CARB, one of the problems

is we are using barn testing there and using total emission as a

standard where they are still working off of the tail pipe issue.

But, Mr. Early, the Lung Association was really pointing out a

point that I would like you to expand on. The California fuel system has actually preempted the Federal. In fact, Senator Kennedy

once said that he didn’t want the Federal fuel to stand in the way

of California, but more to follow its lead. That aside, the air laws

in this whole country, the regs and the rules and everything else,

are pretty well based on one assumption; and that the goal is to

attain the national ambient air quality standards, right?

Mr. EARLY. As expeditiously as practicable.

Mr. BILBRAY. As practicable. So if that is the overriding—you

know, golden rule of the implementation of our clean air strategies,

how do we reconcile that with your testimony that points out that

the 2 percent content may create a barrier to California attaining

that golden rule?

Mr. EARLY. That is why we—it is a problem, which is why we

support waiving the 2 percent requirement for California. But if it

makes sense for California, one might argue that it makes sense

for Federal RFG as well.

Mr. BILBRAY. So the point is that the Lung Association has recognized what CARB has recognized, which is that the content specific

standard, although it may be appreciated by the ethanol industry,

may be a barrier to local jurisdictions from acquiring their mandates under the Clean Air Act.

Mr. EARLY. Well, as an example of why the content requirement

may not make a lot of sense, evidence presented to the Blue Ribbon

Panel showed that benzene levels in the Chicago/Milwaukee market are among the highest of any RFG area in the country. Now,

170

this is also the market you just heard testimony on, that is using

10 percent ethanol in their RFG. So, you know, I think it illustrates more than anything else that making gasoline is very complicated, and that it is best to tell refiners what you want in the

way of clean air results rather than mandating specific—inclusion

of specific things in the fuel.

Mr. BILBRAY. More like what we are doing with the auto industry where we are starting to require tail pipe—total emission

standards, and not necessarily telling them the technology that

they have to use to clean it up.

Mr. EARLY. Correct.

Mr. GRABOSKI. I have to object. Benzene levels and ethanol levels

in Chicago are not related, and it is a separate economic issue as

far as refining is concerned, compared to other places. There is no

petrochemical market for benzene in the Midwest and so it is not

extracted. And that is the reason why the benzene levels are higher. It is not because of using ethanol.

Mr. EARLY. I don’t disagree with you. My point is that just adding ethanol doesn’t necessarily guarantee you that you are going to

have low levels of benzene.

Mr. GRABOSKI. No. The thing that guarantees that you all have

benzene levels below 1 percent is the standards of the Clean Air

Act, which represents the cap.

Mr. EARLY. Absolutely. I am with you all the way.

Mr. BILBRAY. And I think that we have seen that in California

the caps are pretty stringent.

But, Mr. Young, do you want to—everybody is getting their little

piece of this question. Do you guys want to—the fact is that there

are those that are saying—let’s go back to the good old Washington

way of doing things, and let’s not say what we want to see; let’s

just outlaw what we say we don’t want to see. There is a big outcry

right now that the answer to all our problems is to outlaw your

product nationally.

Mr. YOUNG. I would contend that you have to go to the source

of the problem, which is underground leaking storage tanks. A lot

of people, I think, we have heard today say that the primary source

for any actionable level associated with MTBE contamination of

groundwater is clearly underground storage tanks. Being in the refining industry and the petrochemical industry, I don’t accept the

fact that tanks will always leak. But I accept the fact that they can

leak, which, to me, requires monitoring of all tanks to ensure that

when they do leak, it can be fixed before they contaminate groundwater.

Mr. BILBRAY. In all fairness, Mr. Young, I would challenge you

to find a State that has had as aggressive an underground tank

surveillance and replacement system as the State of California, and

we still are running into this problem.

But I guess, Mr. Early, your comment is, while this 2 percent

mandate exists, it is not practical for a State like California or

whatever to be able to implement a ban if we want to do it. I know

some people are supporting a Federal ban, but right now, would

the 2 percent oxygen be almost tying the hands of local jurisdictions to be able to implement a ban if they want to implement it?

Mr. EARLY. That goes a little further than I am comfortable with.

171

Mr. BILBRAY. Okay.

Mr. EARLY. What California is wanting to do right now is to

make a gasoline that is even cleaner than the gasoline that they

have been requiring. And they are saying that the 2 percent requirement makes that much, much more difficult. In other words,

you could have a cleaner fuel if you didn’t have to meet the 2 percent mandate than if you do. They are not saying—they have not

said that you can’t meet the mandate. In fact, you know—I mean,

the California Resources Board has said, you know, refiners will

meet the 2 percent requirement if it remains in the Federal law,

and they will meet clean gasoline—California’s cleaner gasoline

standards.

But they have also asked for a waiver because they said we

could—we could get an even cleaner gasoline and make even more

progress toward meeting ambient air quality standards if we didn’t

have the 2 percent requirement. It is mostly for the reasons Mr.

Campbell explained; you have got to crank down on the refining

process in order to compensate for the volatility of ethanol and

some of the other increases in air pollution caused by the presence

of ethanol, which is the only commercially available oxygenate in

California.

So the question is, rather than doing that, why don’t we get rid

of the 2 percent mandate and crank down on those pollutants and

make a cleaner gasoline, rather than going through all this effort

just to accommodate the 2 percent oxygen requirement.

Mr. BILBRAY. I appreciate your testimony because you bring us

back to where we should be, not talking about ethanol or methanol,

but talking about the fact that the 2 percent was put in there for

clean air strategies, and the 2 percent was supposed to be a quality

control. And, at least in California, we are recognizing that the 2

percent has now become an obstruction to quality control rather

than an aid.

I appreciate your getting us back to the fact that it is air pollution we are talking about, not one substance or another.

Let me yield to our colleague, Mr. Shimkus.

Mr. SHIMKUS. Thank you, Mr. Chairman. I know Mr. Graboski

wanted to respond to the 2 percent debate. You have time now, sir,

to respond.

Mr. GRABOSKI. I would contend that the gasoline without oxygenate in California is not going to be cleaner than gasoline with oxygenate in California. I would further contend that while I think

that California RFG 2 is a great fuel, I think that California RFG

3 provides the refiner with the flexibility to produce fuels that are

not cleaner, but fuels that are dirtier than fuels that are in the

marketplace now in California. And I am willing to debate that

point.

Mr. BILBRAY. The question——

Mr. SHIMKUS. Mr. Chairman.

Mr. BILBRAY. Go ahead.

Mr. SHIMKUS. It is my time. Thank you.

Mr. BILBRAY. Go ahead.

Mr. SHIMKUS. I could yield to you if you would ask.

Did you want to finish, Mr. Graboski?

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Mr. GRABOSKI. Yes. California RFG 2 has a tail pipe specification, and it has a vapor pressure cap. California RFG 3 doesn’t

have a tail pipe specification anymore. One can do like an EPA

complex model, and that is, tradeoff evaporative emissions for tail

pipe emissions.

Under California RFG 2, the tail pipe emission cap basically limited the refiners ability to increase aromatics in gasoline and increase the T-90 of gasoline. But under the new regulation, the refiner is provided flexibility to both increase aromatics and increase

T-90.

While ARB and CEC did an economic study that showed that

putting alkylates in gasoline would produce a cleaner gasoline, the

problem was that the study was predicated on the fact that refiners

would use the base formulation of California RFG 2 in trying to

meet the California RFG 3 rules. And that is basically not what is

going to happen, because a constraint has been lifted; the refiner

has been given flexibility. And he will increase the aromatic content of his gasoline, and he will lower his vapor pressure, and that

is how he will meet the rule; and that will be not as clean a gasoline as the gasoline that is being sold now.

Mr. BILBRAY. Will the gentleman yield?

Mr. SHIMKUS. As long as the chairman is very generous in making sure that I can get my final questions in.

Mr. BILBRAY. First of all, the assumption that all oxygenates

would be taken out in the California market, I don’t think you or

I have ever seen any suggestion that that was going to happen,

right?

Mr. GRABOSKI. No. But the point is that, in trying to justify the

fact that the only—that the waiver should go—the waiver should

be awarded because air is guaranteed to be improved. ARB has

said that the gasoline formulation that they propose is going to be

the one that is in the marketplace.

And I grant you that if oxygenates are in the marketplace—if

they are in the marketplace, the gasoline will probably be different

than what ARB proposed it would be. But then we would get the

environmental benefits. And so, therefore, we have oxygenates. We

don’t have these environmental benefits that CARB is asking for.

So why are we even debating this?

The only way that we should reduce the waiver—award the

waiver is if we are convinced that that is the gasoline that is going

to be made, and those environmental benefits will exist. And the

refiners are not going to make that gasoline, and the reason they

are not going to make it is, they have to buy 10 percent of their

gasoline from Texas and other places as alkylate, and they have

got to buy another 10 percent of their supply from Texas and other

places as California RFG 3, because under the scenario that is proposed, they can’t make it all. And I don’t think the refiners are

going to operate that way.

Mr. BILBRAY. So your assumption is, the California regulatory

system is too lenient to be able to implement a program like this.

Mr. GRABOSKI. No. What I am saying is that the California regulatory system, as it was under California RFG 2, effectively capped

what the refiners could do by saying that you—that you had to

meet both separate exhaust and evaporative emissions standards.

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And I think that is very good. That is better than the Federal program, which said you can add them together.

Mr. BILBRAY. I appreciate that. I was the one who made the motion to do that.

Mr. GRABOSKI. But what has happened with California RFG 3,

is you are now allowed, like in the Federal program, to tradeoff exhaust emissions for evaporative emissions; and when you do that,

that opens up the game to be very, very flexible and make gasolines very, very far different than what ARB thinks the gasolines

will be.

And if you examine the economics of where a refiner is likely to

go in the real world, he is going to go toward cranking up his reformer the way he used to run it. He will try and buy some alkylate, but he is not going to find a lot because it is not generally

available in the marketplace. But he will go buy natural gasoline

to control his T-50 problems. And that fuel that comes out is not

going to offer any NOX benefits, which is what California wants.

Mr. BILBRAY. In all fairness, Doctor, in 35 years in its administration, I would be very, very questionable of, first of all, that California has ever retreated from its air quality standards, that California has ever looked the other way when the pollution index went

up, and the fact that California has not only continued the pressure, but it is proven it has got the administrative ability to respond to the glitches when they do show up.

I think that we have been litigated in court. We have been sued

by people around this table to try to force us toward going other

ways. And both the scientists in the general field and the courts

in the general field have substantiated the fact that California usually is very, very substantial in addressing that thing. And to be

frank with you, I sit there and look the stuff that we are still doing

and we have to live with in California. And then to see somebody

in Washington say, somehow California is going to backslide, I

challenge you on consumer products, on emission issues, on design—unique design.

Mr. SHIMKUS. Mr. Chairman, can I reclaim my time?

Mr. BILBRAY. I just challenge saying what State has done better,

who has done better, and the EPA has done better.

Mr. GRABOSKI. I don’t know that the EPA has done better. I

would respond by saying that I am glad that California could respond in the case that there is environmental backsliding. And I

will look forward to seeing that happen in the future.

Mr. BILBRAY. Thank you.

Mr. SHIMKUS. Dr. Graboski, you are from Colorado; is that correct?

Mr. GRABOSKI. Now or originally? Originally, I was from New

York and New Jersey. I don’t like to talk about that too much, but

I live in Denver, Colorado now, yes, for 22 years.

Mr. SHIMKUS. Mr. Campbell, I will go back, but I have got to ask

a question first, and I have got to make sure I have got this covered.

Because the debate has been asked—the question has been

asked, if MTBE is banned, how can ethanol expand to meet the

market? The chairman has asked me that numerous times.

Mr. Vaughn, could you address the expansion of the supply?

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Mr. VAUGHN. Thank you, Congressman.

Mr. SHIMKUS. And then follow up on—the other question that

has been asked today is how—the increased costs or inability to get

ethanol from point A to point B throughout the country.

Mr. CAMPBELL. Excuse me, before Mr. Vaughn answers that

question, I’m not sure of the protocols, okay, but I have a guaranteed, cannot-miss flight that I have to leave right now for unless

somebody has a question.

If I can be excused, Mr. Chairman, I would very much appreciate

that.

Mr. SHIMKUS. I am sure you can, Mr. Campbell.

Mr. BILBRAY. Go ahead, Mr. Campbell.

Mr. CAMPBELL. What I was saying is I have a guaranteed, cannot-miss flight that I have to leave for. If there are any questions.

Mr. SHIMKUS. I understand. I think many of us are in the same

position. In other words, you can go.

Mr. BILBRAY. Thank you, Mr. Campbell. I appreciate your testimony. It is not every day we see the Lung Association and an oil

company agreeing on anything.

Mr. GREEN. You can follow the Oxybusters.

Mr. SHIMKUS. MTBE Busters, I think that is what we are going

to name them.

Mr. VAUGHN. I will also try to be brief, Mr. Shimkus, as Mr.

Campbell is leaving the room.

One of the expansion opportunities we are seeing right now is in

the Pennsylvania area, a tremendous amount of activity going on.

Carol Browner just 2 days ago, a meeting with 11 Governors, put

a challenge to them. Could ethanol—if we don’t grant the California waiver, could ethanol expand? How? How could you do it?

How quickly could you do it?

Today our industry released an analysis that documents exactly

how that can be done. You start out with the point that there is

twice as much oxygen in ethanol as there is in MTBE. Therefore,

you need half as much volume. Right now, today, the current ethanol industry supply of the surplus capacity documented by the Energy Information Agency is 275 million gallons of surplus production—much of it in the Rocky Mountain West. This, by the way—

is more than sufficient to meet the minimum oxygenate requirement right now, today, for the State of California. All of this is

going to be taken from Governors in the Midwest and in the Southeast and given to the Federal EPA, along as with an expansion

plan that complements Secretary Glickman’s plan, Secretary Richardson’s commitment, and Secretary Daley’s new and strong enthusiasm for expanding the production and use of this product.

Again, it is all in the context that we are very confident, given

Governor Gray Davis’ leadership in California, having completed

an 11-month fate analysis on ethanol, that there is going to a very

strong role for ethanol as a renewable oxygenate, meeting—and I

think Mr. Graboski is absolutely right, exceeding clean air standards now being implemented and improved in California, with ethanol.

Thank you for the question.

Mr. BILBRAY. I might point out that is without the mandate or

with the mandate. In fact, with the mandate, it is a 7 percent inVerDate 11-MAY-2000 11:14 Aug 31, 2000 Jkt 065685 PO 00000 Frm 00178 Fmt 6633 Sfmt 6602 E:\HEARINGS\62976 pfrm01 PsN: 62976
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crease. Without the mandate, as Mr. Early has pointed out, it is

a 1-cent reduction. But the ethanol expansion is going to be there

regardless.

Go ahead, Mr. Green.

Mr. GREEN. Thank you, Mr. Chairman.

Mr. Graboski, I appreciate your pointing out that California,

even though there be may some sensitivity to the backsliding

amendment to an earlier bill, that their fuels could be dirtier without an oxygenate requirement.

But let me, first of all, Mr. Vaughn, let me ask you one—that information about the California non—you know, if it is nonpoints

pollution by MTBE, I would appreciate it. And maybe Mr. Bilbray

has it. If you have that report, if you could provide it to the committee, I would like to see it.

Mr. VAUGHN. Yes, sir.

Mr. GREEN. Let me ask you one last question. Page 85 of the

Blue Ribbon Panel report talks about ethanol and the health effects

of it. Obviously there is some ethanol in all of our bodies, although

some more than others, maybe. Health effect questions have been

raised, however, about potentially sensitive subpopulations. In addition, increased use of ethanol may result in an increase of certain

atmospheric trends, formation products such as PAN and acetaldehyde, although the extent of such increases are unknown. PAN,

which has been shown to be mutagenic in cellular research, is

known as a toxin to plant life and respiratory air to humans. Combustion, by-products of ethanol may also cause adverse health effects.

So could you comment on that part of that report?

Mr. VAUGHN. Congressman, I certainly want to tell you how

much I appreciate the fact that every report that you are bringing

up is getting closer and closer to this precise moment. And I did

in no way to disparage you that you were suggesting 1994 data

earlier. My trusty staff aides handed me something that I could

probably read from.

Let me just tell you that these issues have been brought up. And,

again, I will make certain that I will get to your staff directly.

The California complete analysis, the fate analysis, 11 separate

technical documentations, PAN was absolutely debated, discussed,

and thoroughly reviewed. And all of these pollutant issues, upper

atmospheric, mutagenic issues have all been debated and discussed. And ethanol was given by the Governor of California and

the State of California a clean bill of health and an A on the report

card. We are looking forward to being in the market.

I think Chairman Bilbray points out, as Governor Davis told the

President on Monday, they fully expect to have a great growth of

ethanol use in California, something they would not allow to happen if they weren’t entirely, completely confident of its environmental and economic impacts in the great State of California. We

are confident about that.

Mr. GREEN. Then the Blue Ribbon Panel was wrong in their

study?

Mr. VAUGHN. No, sir. I didn’t mean to suggest that either. I

think what they were suggesting at page 84, as I recall, was that

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there are issues, there are concerns, and they ought to be addressed. We fully agree with that.

But since that report was completed, the California ethanol fate

analysis has been submitted. It was a peer-reviewed analysis by

some of the finest institutions of higher education in the great

State of California and have been approved now by the California

Energy and Environmental officials, and signed off on by the Governor.

So I am just saying that, as the data is coming out, the questions

are being raised. We are attempting—in this case, California responded and answered some of those questions in a very efficient,

highly technically proficient fashion. But I will make sure I get

that entire record to you, sir.

Mr. BILBRAY. Any more questions?

I want to thank you. It is nice to hear somebody congratulate

California when they agree with their data.

Let me say I think we have all come to a conclusion. As a Californian, I realize why the original law kept California’s air quality,

gasoline program separate from the rest of the country. I regret

that the 1990 act tied us hip to hip with the rest of the country.

I think this hearing was about what we are going to do outside of

California. I just hope that we are able to work together.

I don’t think there are any exclusive agenda here. I think change

sometimes scares everybody. But the fact is that we have got to

learn how to do things better. Just as a 1990 car is not going to

be the most environmentally friendly, so we need to make sure that

we have a 2000 model for our clean air strategies.

Thank you very much. Three days for each member to introduce

written statements and testimony. This meeting stands adjourned.

[Whereupon, at 4:06 p.m., the subcommittee was adjourned, subject to the call of the Chair.]

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