Order Code 98-290 ENR
CRS Report for Congress
Received through the CRS Web
MTBE in Gasoline:
Clean Air and Drinking Water Issues
Updated May 15, 2001
James E. McCarthy and Mary Tiemann
Specialists in Environmental Policy
Resources, Science, and Industry Division
Congressional Research Service ˜ The Library of Congress

MTBE in Gasoline:
Clean Air and Drinking Water Issues
Summary
Concern over water contamination caused by the gasoline additive methyl
tertiary butyl ether (MTBE) has raised new questions concerning the desirability of
using the additive as a means of producing cleaner burning fuel. MTBE is used by
most refiners to produce the reformulated gasoline (RFG) required under the Clean
Air Act in portions of 17 states and the District of Columbia. It is credited with
producing marked reductions in carbon monoxide emissions; RFG has also reduced
the volatile organic compounds that react with other pollutants to form smog. Over
the last few years, however, incidents of drinking water contamination by MTBE,
particularly in California, have raised concerns and led to calls for restrictions on its
use. In March 1999, Governor Davis of California ordered a phase-out of MTBE use
in the state by December 31, 2002. Ten other states, including New York, have
subsequently enacted limits or phase-outs of the substance.
Until late 1998, EPA opposed measures to reduce use of the substance. Based
on available research, it concluded that MTBE posed some risk, although no greater
risk than that posed by other gasoline components. The Agency responded to initial
reports of ground water contamination by providing information, intensifying
research, and focusing on the need to minimize leaks from underground fuel tanks.
As reports of contamination spread in 1998 and 1999, however, EPA’s position
evolved. On March 20, 2000, the Agency announced it was beginning the process of
requiring a reduction or phase-out of MTBE use under Section 6 of the Toxic
Substances Control Act. Because regulatory action could take several years to
complete, EPA urged Congress to amend the Clean Air Act to provide specific
authority to reduce or eliminate use of the substance. On September 28, 2000, the
Senate Environment and Public Works Committee reported S. 2962, a bill to provide
such authority, but no further action was taken on the bill.
If MTBE were removed from gasoline without amending the Clean Air Act,
there would be a need for refiners to use alternative sources of oxygen in RFG. The
potential alternatives are other forms of ether, or alcohols such as ethanol. These
substitutes may pose adverse health and environmental impacts, but inadequate
research make conclusions difficult at this time. Although a study by the State of
California concluded that switching to ethanol would cause no significant adverse
impacts to public health or the environment, such a switch would not be without
problems. Ethanol costs more to produce than MTBE, poses challenges to the
gasoline distribution system, and, in the short term, is unlikely to be available in
sufficient quantity to replace MTBE nationwide. Gasoline that meets the performance
requirements for RFG without using oxygenates at all can be made, but current law
requires the use of oxygenates in such fuel.
The principal issues for Congress are whether MTBE use should be limited or
phased out and whether Clean Air Act provisions concerning reformulated gasoline
should be modified to allow refiners to discontinue or lessen their use of oxygenates.
Numerous bills have been introduced in Congress to address these and other issues.

Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Air Quality Benefits Resulting from MTBE Use . . . . . . . . . . . . . . . . . . . . . 4
Health-related Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Water Quality and Drinking Water Issues . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Occurrence of MTBE in Drinking Water . . . . . . . . . . . . . . . . . . . . . . 7
Occurrence of MTBE in Ambient Ground Water . . . . . . . . . . . . . . . . 8
EPA’s Responses to MTBE Occurrence in Water . . . . . . . . . . . . . . . . . . . 9
Safe Drinking Water Act Initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Underground Storage Tank Regulation . . . . . . . . . . . . . . . . . . . . . . 11
Blue Ribbon Panel on Oxygenates in Gasoline . . . . . . . . . . . . . . . . . . . . . 12
Findings and Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Alternatives to MTBE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Current Statutory Authority to Control the Use of MTBE . . . . . . . . . . . . 16
Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
California and Other State Initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
NAFTA Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

MTBE in Gasoline:
Clean Air and Drinking Water Issues
Introduction
This report provides background information concerning the gasoline additive
methyl tertiary butyl ether (MTBE), discusses air and water quality issues associated
with it, and reviews options available to congressional and other policy-makers
concerned about its continued use. It includes a discussion of legislation considered
in the 106th Congress, which may serve as a starting point for legislation in the 107th.
Under the Clean Air Act Amendments of 1990, numerous areas with poor air
quality are required to add chemicals called “oxygenates” to gasoline as a means of
improving combustion and reducing emissions. The Act has two programs that
require the use of oxygenates, but the more significant of the two is the reformulated
gasoline (RFG) program, which took effect January 1, 1995.1 Under the reformulated
gasoline program, areas with “severe” or “extreme” ozone pollution (82 counties with
a combined population of 55 million) must use reformulated gasoline; areas with less
severe ozone pollution may opt into the program as well, and many have. In all,
portions of 17 states and the District of Columbia use reformulated gasoline (see
Table 1 and Figure 1); a little more than 30% of the gasoline sold in the United States
is RFG.
The law requires that RFG contain at least 2% oxygen by weight. Refiners can
meet this requirement by adding a number of ethers or alcohols, any of which contain
oxygen and other elements. Because these substances are not pure oxygen, the
amount used to obtain a 2% oxygen level is greater than 2% of the gasoline blend.
For example, MTBE is only 19% oxygen and, thus, RFG made with MTBE must
contain 11% MTBE by volume to meet the 2% requirement.
By far the most commonly used oxygenate is MTBE. In 1999, 87% of RFG
contained MTBE. MTBE has also been used since the late 1970s in non-reformulated
1The requirements for reformulated gasoline (RFG), to reduce air toxics and the emissions that
contribute to smog formation, are found in Section 211(k) of the Clean Air Act. Separate
requirements for oxygenated fuel, to reduce carbon monoxide formation, are contained in
Section 211(m). Of the two programs, that for RFG has a much larger impact on the
composition of the nation’s gasoline, because RFG requirements are in effect year-round and
apply to a larger percentage of the country. The Section 211(m) requirements, by contrast are
in effect during winter months only and affect a small percentage of the nation’s gasoline.
Ethanol is the primary oxygenate used in winter oxygenated fuels and MTBE the primary
oxygenate used in RFG, although either can be used in both fuels.

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Table 1
Areas Using Reformulated Gasoline (as of August 2000)
Mandatory RFG Areas*
Baltimore, MD
Chicago, IL (and portions of Indiana and Wisconsin)**
Hartford, CT
Houston, TX
Los Angeles, CA
Milwaukee, WI**
New York, NY (and portions of CT and NJ)
Philadelphia, PA (and portions of DE, MD, and NJ)
Sacramento, CA
San Diego, CA
Opt-In RFG Areas***
Connecticut (entire state)
Dallas / Fort Worth, TX
Delaware (entire state)
District of Columbia
Kentucky portion of Cincinnati metropolitan area
Louisville, KY
Maryland (DC suburbs)
Massachusetts (entire state)
New Hampshire portion of Greater Boston
New Jersey (entire state)
New York (counties near New York City)
Rhode Island (entire state)
St. Louis, MO
Virginia (DC suburbs, Richmond, Norfolk - Virginia Beach - Newport News)
_______________
* RFG use required by the Clean Air Act.
** In the Chicago and Milwaukee areas, RFG is made with ethanol rather than
MTBE.
*** RFG use required by State Implementation Plan as a means of attaining the
ozone air quality standard. These “opt-in” areas may opt out of the program by
substituting other control measures achieving the necessary reductions in
emissions, but not before January 1, 2004.
Source: U.S. EPA


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gasoline, as an octane enhancer, at lower concentrations. As a result, gasoline with
MTBE has been used virtually everywhere in the United States, whether or not an
area has been subject to RFG requirements.
Air Quality Benefits Resulting from MTBE Use
State and local environmental agencies and EPA attribute marked improvements
in air quality to the use of fuels containing MTBE and other oxygenates, but the exact
role of oxygenates in achieving these improvements is subject to discussion. In Los
Angeles, which has had the worst air quality in the country, the use of reformulated
gasoline was credited with reducing ground-level ozone by 18% during the 1996
smog season, compared to weather-adjusted data for the same period in 1994 and
1995. Use of RFG also reduced the cancer risk associated with exposure to vehicle
emissions by 30 to 40%, according to the California EPA, largely because it uses less
benzene, a known human carcinogen.2
Whether the oxygenates themselves should be given credit for these
improvements has been the subject of debate, with the answer depending to some
extent on what one assumes would replace the oxygenates if they were removed.
Asked to look at the ozone-forming potential of different oxygenates used in
reformulated gasoline, a National Academy of Sciences panel concluded that “... the
addition of commonly available oxygenates to RFG is likely to have little air-quality
impact in terms of ozone reduction.”3 An EPA advisory panel, by contrast, concluded
that the use of oxygenates “appears to contribute to reduction of the use of aromatics
with related toxics and other air quality benefits.”4
Less controversy exists regarding oxygenates' role in reducing carbon monoxide
emissions. Both EPA and an interagency group chaired by the White House Office
of Science and Technology Policy (OSTP) have reported improvements in carbon
monoxide (CO) levels due to the use of oxygenates. According to the June 1997
OSTP report, “analyses of ambient CO measurements in some cities with winter
oxygenated gasoline programs find a reduction in ambient CO concentrations of about
10%.”5
2See “Reformulated Fuels Help Curb Peak Ozone Levels in California,” Daily Environment
Report
, November 6, 1996, pp. A-1 and A-2.
3Committee on Ozone-Forming Potential of Reformulated Gasoline, National Research
Council, Ozone-Forming Potential of Reformulated Gasoline, May 1999, p. 5. The NAS
study concluded that other characteristics of RFG, notably "lowering the Reid Vapor Pressure
(RVP) of the fuel, which helps depress evaporative emissions of VOC [volatile organic
compounds], and lowering the concentration of sulfur in the fuel, which prevents poisoning
of a vehicle's catalytic converter" result in a reduction of about 20% in VOC emissions.
4U.S. Environmental Protection Agency, Blue Ribbon Panel on Oxygenates in Gasoline,
Executive Summary and Recommendations, July 27, 1999, Appendix A. Available at Internet
website: [http://www.epa.gov/oms/consumer/fuels/oxypanel/blueribb.htm].
5Executive Office of the President, National Science and Technology Council, Interagency
Assessment of Oxygenated Fuels
, Washington, D.C., June 1997, p. iv. Referred to hereafter
(continued...)

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EPA also “believes that the reductions estimated in air quality studies are
significant and that these reductions help to protect the public from the adverse health
effects associated with high levels of CO in the air.”6 The Agency based its
conclusions on both its own analysis and on a report prepared for two industry
groups. The latter, using hourly data for more than 300 monitoring sites gathered
over a 9-year period, concluded that use of oxygenated fuels was associated with a
14% reduction in ambient CO concentrations.7
Health-related Questions
The improvements in measured air quality have not come without questions. In
several cities, residents have complained of a variety of health effects from exposure
to MTBE/gasoline exhaust: headaches, dizziness, nausea, sore eyes, and respiratory
irritation. Some complaints have centered around the use of MTBE in cold weather,
two of the principal areas noting complaints being Alaska and Milwaukee, Wisconsin.
The Interagency Task Force examined these complaints and concluded:
With regard to exposures ... experienced by the general population and motorists,
the limited epidemiological studies and controlled exposure studies conducted to
date do not support the contention that MTBE as used in the winter oxygenated
fuels program is causing significant increases over background in acute symptoms
or illnesses.8
Additional research is being conducted by EPA, universities, and others. Under the
authority of Section 211 of the Clean Air Act, EPA has requested that refiners
conduct a number of health effects studies on oxygenated, reformulated, and
conventional gasoline, which should provide additional information.
Much discussion has centered on whether MTBE has the potential to cause
cancer. Although there are no studies on the carcinogenicity of MTBE in humans,
several rodent studies have been done. Based on these animal studies (which looked
primarily at inhalation effects), EPA has concluded that MTBE poses a potential for
carcinogenicity to humans at high doses; however, because of uncertainties and
limitations in the data EPA has been unable to make a confident estimation of risk at
5(...continued)
as the OSTP Report.(Executive summary and recommendations are available at Internet
website [http://wwwsd.cr.usgs.gov/nawqa/pubs/abstracts/zogorski/ostp.exec.sum.html]) The
report expressed some hesitation about its conclusions, particularly regarding the impacts of
MTBE in colder weather. It also noted methodological difficulties in identifying statistically
significant reductions smaller than 10%, and recommended additional research.
6U.S. EPA Response to Interagency Assessment of Oxygenated Fuels, undated, p. 2.
7Systems Applications International, Inc., for the Renewable Fuels Association and the
Oxygenated Fuels Association, Regression Modeling of Oxyfuel Effects on Ambient CO
Concentrations
, Final Report, January 8, 1997, p. 1.
8OSTP Report, p. vi. The report did suggest that “greater attention should be given to the
potential for increased symptoms reporting among workers exposed to high concentrations of
oxygenated fuels containing MTBE,” however.

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low exposure levels.9 In 1998, the International Agency for Research on Cancer
(IARC), the U.S. National Toxicology Program, and California's Carcinogen
Identification Committee all determined not to list MTBE as a human carcinogen.
Regarding noncancer effects, another California advisory committee determined
that there was not clear scientific evidence to support listing MTBE as a toxic
substance affecting human development or reproduction. In reviewing available
research on both cancer and noncancer effects, these groups generally noted that
research gaps exist, and that the data were particularly limited on health effects
associated with MTBE ingestion.
For practical purposes, the interpretation of any health risks associated with the
addition of MTBE to gasoline requires a comparison to the health risks associated
with conventional gasoline. The Interagency Task Force, EPA, and some
environmental groups have all argued that current knowledge suggests that MTBE
is a less serious pollutant than the gasoline components it replaces. According to the
OSTP report, the cancer risk from exposure to MTBE is “substantially less than that
for benzene, a minor constituent of gasoline that is classified as a known human
carcinogen; and more than 100 times less than that for 1,3-butadiene, a carcinogenic
emission product of incomplete fuel combustion.”10
Water Quality and Drinking Water Issues
A major issue regarding the use of MTBE concerns its detection at low levels
in ground water in numerous locations nationwide and at elevated levels in some
municipal drinking water wells and reservoirs. MTBE is very soluble and, once
released, it moves through soil and into water more rapidly than other chemical
compounds present in gasoline. Once in ground water, it is slow to biodegrade and
is more persistent than other gasoline-related compounds. In surface water, it
dissipates more rapidly: studies show that most of it evaporates from the upper levels
of surface water in a few weeks, while it persists longer at greater depths.11
The available data indicate that the primary source of MTBE in ground water has
been petroleum releases from leaking underground storage tank (UST) systems. Other
significant sources include leaking above ground storage tanks, fuel pipelines,
refueling facilities, and accidental spills. The most significant source of MTBE in
9U.S. Environmental Protection Agency. Drinking Water Advisory: Consumer Acceptability
Advice and Health Effects Analysis on Methyl Tertiary-Butyl Ether (MTBE).
EPA-822-F-97-
009, December 1997. p. 1-2. This and other health effects information is available at Internet
website: [ http://www.epa.gov/OST/drinking/mtbe.html].
10Ibid., p. vii.
11Keller, Arturo, et al., Health and Environmental Assessment of MTBE, Report to the
Governor and Legislature of the State of California as Sponsored by SB 521, Volume I,
Summary and Recommendations, University of California, November 1998. p. 35.

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lakes and reservoirs appears to be exhaust from motorized watercraft, while smaller
sources include gasoline spills, runoff, and ground water flow.12
Occurrence of MTBE in Drinking Water. Available information on the
occurrence of MTBE in public drinking water supplies has increased substantially
over the past few years but has been somewhat limited geographically. Although a
number of serious contamination incidents have been reported, particularly in
California, the available data generally do not indicate a broad presence of MTBE in
drinking water supplies at levels of public health concern. However, as monitoring
has increased among the states, so has the number of public water systems and private
wells showing low-level detections of MTBE.
The most extensive MTBE monitoring data for drinking water are available for
California, where testing for MTBE was made mandatory for most public water
systems in February 1997. As of May 2001, 2,262 systems had tested 8,394 sources
of drinking water. MTBE was detected in 70 (0.8%) of these sources, including 45
(0.6%) of 7,835 ground water sources and 25 (4.5%) of 559 surface water sources.
Overall, 42 (1.9%) of the 2,262 public water systems reported detections of MTBE
in at least 1 of their drinking water sources, and 13 (0.6%) of the systems reported
that a total of 19 (0.2%) sources of water had MTBE concentrations exceeding
California’s MTBE drinking water standard of 13 micrograms per liter (:g/L).13
In 1998, the State of Maine tested nearly 800 public water supplies and 950
randomly selected private wells and found detectable levels of MTBE in 16% of the
public water supplies and 15.8% of the private wells. None of the public water supply
samples exceeded the state drinking water standard of 35 :g/L, while 1% of private
well samples contained MTBE concentrations above the standard. Roughly 94% of
public water supply samples showed MTBE levels that were either not detectable or
below 1 :g/L; the remaining 6% of samples were between 1 :g/L and 35 :g/L.14
Nationwide, the data on the presence of MTBE in drinking water have been
more limited. In July 1999, the EPA-appointed Blue Ribbon Panel on Oxygenates in
Gasoline reported that between 5% and 10% of drinking water supplies tested in high
oxygenate use areas show at least detectable amounts of MTBE, and that the vast
12Keller. p. 33-34.
13California Environmental Protection Agency. MTBE in California Drinking Water,
August 2, 2000, available at Internet website:
[http://www.dhs.cahwnet.gov/ps/ddwem/chemicals/MTBE/mtbeindex.htm].
(Micrograms per liter(:g/L) are equivalent to parts per billion (ppb) for fresh water.)
14Maine Department of Human Services, Department of Environmental Protection, and
Department of Conservation. The Presence of MTBE and Other Gasoline Compounds in
Maine’s Drinking Water
, A Preliminary Report. October 13, 1998. 24 p. Available at
Internet website: [http://janus.state.me.us/dep/blwq/gw.htm]. (Maine was not required to use
RFG but had done so voluntarily; the state opted out of the RFG program in October 1998
because of concerns over MTBE contamination of ground water and drinking water wells.)

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majority of these detections have been well below levels of public health concern, with
roughly 1% of detections exceeding 20 :g/L.15
More recent federal and state monitoring efforts have been advancing the
knowledge about the presence of MTBE in drinking water. Perhaps most notably, the
United States Geological Survey (USGS), in cooperation with EPA, recently assessed
the occurrence of MTBE and other volatile organic compounds (VOCs) in public
water supplies in 10 mid-Atlantic and Northeastern states where MTBE use is
common. The study analyzed water from 1,194 randomly selected community water
systems and is expected to be published soon.16 According to the report’s abstract,
MTBE was detected in 8.9% of the tested water systems and was strongly associated
with areas where reformulated and/or oxygenated (RFG/OXY) fuels are used. Fifteen
percent of systems in RFG/OXY areas reported detecting MTBE at concentrations
of 1 :g/L or more, while 3% of systems outside of RFG/OXY areas reported such
detections. Most MTBE concentrations ranged from 0.5 to 5 :g/L, and less than 1%
of the systems reported MTBE at levels equal to or exceeding 20 :g/L, the lower
limit of EPA’s drinking water advisory.17
Occurrence of MTBE in Ambient Ground Water. Looking at ground
water generally (not only drinking water wells), the data indicate that low-levels of
MTBE are found often. Nationally, the most comprehensive ground water research
has been conducted by the USGS through the National Water Quality Assessment
Program (NAWQA). USGS data for some 2,743 monitoring, observation, and water
supply wells in 42 states (from 1993-1998) showed MTBE present in about 5% (145)
of the wells, with MTBE levels exceeding 20 :g/L in 0.5% (12) of the wells. In all,
MTBE was detected in ground water in 22 of the 42 states. The USGS further
evaluated the occurrence data based on whether or not detections occurred in RFG
or winter oxyfuel program areas. The researchers reported that low concentrations
of MTBE were detected in 21% of ambient ground water samples in high MTBE-use
areas and in 2.3% of samples in low or no-MTBE use areas.18
MTBE has been detected most frequently in ground water associated with
leaking underground storage tank (UST) sites. The California Environmental
15The Blue Ribbon Panel on Oxygenates in Gasoline. Executive Summary and
Recommendations. July 27, 1999. Summary and full report are available at Internet website:
[http://www.epa.gov/oms/consumer/fuels/oxypanel/blueribb.htm].
16For further information on MTBE research at the USGS, see Internet website:
[http://wwwsd.cr.usgs.gov/nawqa/vocns/].
17Grady, Stephen J. and George D. Casey. MTBE and other VOCs in Drinking Water in the
Northeast and Mid-Atlantic Region
. Available at Internet website:
[http://sd.water.usgs.gov/nawqa/pubs/abstracts/grady/Grady_iccssw_abs.pdf ].
MTBE was the second most frequently detected VOC in drinking water, after
trihalomethanes (disinfection byproducts) which were detected in 45% of systems tested.
Chloroform, the most frequently detected trihalomethane, was found in 39% of systems.
18U.S. Geological Survey. Data summary submitted to the EPA Blue Ribbon Panel on the Use
of MTBE and Other Oxygenates in Gasoline. January 22, 1999. Available at Internet website:
[http://www.epa.gov/oms/consumer/fuels/oxypanel/blueribb.htm#Presentations].

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Protection Agency has estimated that, based on monitoring information available for
these sites, MTBE can be expected to be found in shallow, unused ground water at
thousands of UST sites in the state, and often at high concentrations (in the parts per
million range).19 Moreover, a 1998 report by the Lawrence Livermore National
Laboratory found that MTBE was not significantly degrading in the monitoring
networks for these leaking UST sites.20
The picture nationwide may be similar. As of late 2000, 42 states had begun to
require testing for MTBE in ground water at leaking UST sites. In a September 2000
survey of state leaking underground storage tank (LUST) programs, 31 states
reported that MTBE was found in ground water at 40% or more of gasoline-
contaminated sites in their states; 24 states reported MTBE at 60% to 100% of sites.21
EPA’s Responses to MTBE Occurrence in Water
Safe Drinking Water Act Initiatives. To address concerns raised by the
detection of MTBE in ground water and drinking water supplies, EPA has undertaken
a range of activities. In December 1997, the Agency issued a drinking water advisory
for MTBE based on consumer acceptability (for taste and smell). EPA issues drinking
water advisories to provide information on contaminants in drinking water that have
not been regulated under the Safe Drinking Water Act (SDWA).22 Advisories are not
enforceable, but provide guidance to water suppliers and other interested parties
regarding potential health effects or consumer acceptability. While the MTBE
advisory is not based on health effects, EPA notes that keeping MTBE levels in the
range of 20-40 :g/L or lower for consumer acceptability reasons would also provide
a large margin of safety from adverse health effects. Specifically, the advisory states
that,
[c]oncentrations in the range of 20 to 40 :g/L are about 20,000 to 100,000 (or
more) times lower than the range of exposure levels in which cancer or noncancer
effects were observed in rodent tests. This margin of exposure is in the range of
margins of exposure typically provided to protect against cancer effects by the
19California Environmental Protection Agency, MTBE Briefing Paper, p. 17.
20 Happel, Anne, E. H. Beckenbach, and R. U. Halden. An Evaluation of MTBE Impacts to
California Groundwater Resources
. Lawrence Livermore National Laboratory and the
University of California, Berkeley. June 11, 1998. p. iv.
21New England Interstate Water Pollution Control Commission (NEIWPCC). Survey of State
Experiences with MTBE Contamination at LUST Sites (August 2000)
. Available at Internet
website: [http://www.neiwpcc.org/mtbe1.html]. The survey shows that some states began
requiring testing at LUST sites in the 1980s (Maine in 1986 and Minnesota in 1987) while
others recently began to do so (Kentucky in 2000 and Washington in 2001).
22At least 7 states have set health-based drinking water standards for MTBE ranging from 13
parts per billion (ppb) to 240 ppb. (Parts per billion are equivalent to :g/L.) At least 5 states
have adopted a secondary standard (based on aesthetic qualities, i.e., taste and odor), ranging
from 5 ppb to 70 ppb. At least 32 states have adopted a very wide range of ground water
cleanup levels; some are guidelines, some are enforceable, and some vary depending on the
use of ground water; some states apply these levels to ground-water cleanup at leaking
underground storage tank sites where ground water is used for drinking water.

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National Primary Drinking Water Standards under the Federal Safe Drinking
Water Act. This margin is greater than such standards typically provided to
protect against noncancer effects. Thus, protection of the water source from
unpleasant taste and odor as recommended will also protect consumers from
potential health effects.23
EPA plans to propose a secondary drinking water standard for MTBE in 2001.
Secondary standards are based on public welfare (e.g., taste and smell), in contrast to
primary standards which are based on health effects. SDWA authorizes EPA to issue
secondary standards for contaminants that may affect the odor or appearance of water
and that cause a substantial number of people served by a water system to discontinue
its use. Such standards are not enforceable, but EPA encourages states to adopt
them.
Additionally, EPA is taking steps that could lead to the development of an
enforceable National Primary Drinking Water Standard for MTBE. In February 1998,
EPA included MTBE on a list of contaminants that are potential candidates for
regulation under the Safe Drinking Water Act. Every 5 years, EPA is required to
develop a list of contaminants that may require regulation. By August 2001, the
Agency was required to select at least five contaminants from the list and determine
whether each contaminant should be regulated.
Compounds on the contaminant candidate list are categorized as regulatory
determination priorities, research priorities, or occurrence priorities. Because of data
gaps on MTBE health effects and occurrence, EPA placed MTBE in the category of
contaminants for which further occurrence data collection and health effects research
are priorities. Thus, while EPA did not select MTBE for regulation in this 5-year
cycle, the Agency is pursuing research to fill the existing data gaps so that a
regulatory determination may be made.
The Safe Drinking Water Act also directed EPA to publish a rule by August
1999, requiring public water systems to conduct monitoring for a list of unregulated
contaminants that may require regulation. EPA included MTBE in this rule and
directed large public water systems to begin monitoring for MTBE in January 2001.24
The occurrence data generated under the Unregulated Contaminant Monitoring
Rule, combined with the results of ongoing health effects studies, are intended to
provide information needed by EPA to make a regulatory determination for MTBE.
Under SDWA, the next round of regulatory determinations will be made in 2006.
EPA typically requires roughly three and one-half years to promulgate a drinking
water regulation; thus, the earliest EPA would be expected to issue a regulation for
MTBE is 2010.25
23EPA Drinking Water Advisory, p. 2.
24 64 Federal Register 50555, September 17, 1999. The law requires monitoring by all large
public water systems (serving more than 10,000 people) and requires a representative
sampling of smaller systems.
25Conceivably, this schedule might be shortened. Since 1996, SDWA has authorized EPA to
(continued...)

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Underground Storage Tank Regulation. A key EPA and state
contamination prevention effort involves implementing the underground storage tank
program established by the 1984 amendments to the Resource Conservation and
Recovery Act (RCRA). Under this program, EPA has set operating requirements and
technical standards for tank design and installation, leak detection, spill and overfill
control, and tank closure. As of 1993, all tanks were required to comply with leak
detection regulations. Additionally, all tanks installed before December 1988 (when
standards for new tanks took effect) were required to be upgraded, replaced or closed
by December 22, 1998. Federal and state regulators anticipate that as tank owners
and operators comply with the new requirements, the number of petroleum and
related MTBE leaks from UST systems should decline significantly. Based on
reporting by states, EPA estimates that 86% of approximately 715,000 tanks were in
compliance with the December 1998 requirements by the end of fiscal year 2000.
However, MTBE has been detected at many leaking underground storage tank sites,
and this additive is proving more difficult and costly to remediate than conventional
gasoline. Moreover, many sites have not been tested for MTBE. As testing increases,
it is likely that the number and scope of corrective actions may increase as well.
In 1986, Congress created a federal response program for cleaning up releases
from leaking petroleum USTs through the Superfund Amendments and
Reauthorization Act, which amended RCRA Subtitle I. These provisions created the
Leaking Underground Storage Tank (LUST) Trust Fund and authorized EPA and
states to use the Fund to clean up tank spills and leaks in cases where tank owners or
operators do not clean up sites. EPA and states use the annual Trust Fund
appropriation primarily to oversee and enforce corrective actions performed by
responsible parties. EPA and states also use Fund monies to conduct corrective
actions where no responsible party has been identified, where a responsible party fails
to comply with a cleanup order, or in the event of an emergency, and to take cost
recovery actions against parties. For FY2000, Congress appropriated $70 million for
the LUST program, or about 31% of the $262 million earned by the fund during the
fiscal year. For FY2001, Congress has provided roughly $72 million, the amount
requested. The Administration has requested this amount again for FY2001.
In late 2000, EPA launched a new USTfields initiative to address abandoned or
idle industrial and commercial properties where redevelopment is hindered by
petroleum contamination from abandoned USTs. This program complements EPA’s
Superfund-related Brownfields program which generally does not cover petroleum
contamination. EPA estimates that out of 450,000 brownfields, roughly 100,000 to
200,000 contain abandoned tanks. Under the USTfields initiative, in November 2000,
EPA made grants of $100,000 to each of ten communities to clean up abandoned
UST sites, with special consideration being given to cities with problems caused by
MTBE contamination.26
25(...continued)
promulgate an interim health-based drinking water standard for any contaminant that the
Administrator determines presents an urgent threat to public health (§1412(b)(1)(D)).
26For information on Brownfields, see CRS Report 97-731, Superfund and the Brownfields
Issue
. 18 p.)

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Blue Ribbon Panel on Oxygenates in Gasoline
As part of its effort to gather information and focus research, in November 1998,
EPA established an independent Blue Ribbon Panel on Oxygenates in Gasoline to
review the broad range of issues posed by the use of MTBE and other oxygenates.
The panel was established under the auspices of the Clean Air Act Advisory
Committee, and its membership reflected a broad range of experts and stakeholders.27
The panel was directed to perform the following tasks:
! examine the role of oxygenates in meeting the nation’s goal of clean air,
! evaluate the efficiency of each of the available oxygenates in providing clean
air benefits and the existence of alternatives,
! assess the behavior of oxygenates in the environment,
! review any known health effects, and
! compare the cost of production and use, and each product’s availability.
The panel also was directed to study the causes of ground water and drinking water
contamination from motor vehicle fuels, to explore prevention and cleanup
technologies for water and soil, and to make recommendations to EPA “on how to
ensure public health protection and continued improvement in both air and water
quality.”
Findings and Recommendations. In releasing its recommendations July
27, 1999, the Blue Ribbon Panel stressed that “RFG 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 (benzene, 1,3-butadiene, and others), in most cases resulting
in emissions reductions that exceed those required by law.”28
However, the panel noted water quality problems associated with MTBE
releases and made a number of recommendations. Specifically, the panel:
! recommended that Congress act to remove the current Clean Air Act
requirement that 2% of RFG, by weight, consist of oxygen, in order to ensure
that adequate fuel supplies can be blended in a cost-effective manner while
reducing usage of MTBE;
! recommended that the winter oxygenated fuels program be continued;
27The MTBE Blue Ribbon Panel home page, which includes a list of panel members, can be
found at [http://www.epa.gov/oms/consumer/fuels/oxypanel/blueribb.htm].
28 Blue Ribbon Panel on Oxygenates in Gasoline, "Panel Calls for Action to Protect Water
Quality While Retaining Benefits from National Clean Burning Gas," press release, July 27,
1999, p. 2. Available at [http://www.epa.gov/oms/consumer/fuels/oxypanel/blueribb.htm].
Regarding dissenting views, one member endorsed the water protection reforms but disagreed
with the recommendation to limit the use of MTBE, noting that the panel had not identified
any increased public health risk associated with MTBE use in gasoline; another member
supported maintaining the existing oxygenate standard for the air quality benefits.

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! 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;
! recommended that EPA seek mechanisms to ensure that there is no loss of
current air quality benefits (i.e., no backsliding); and
! 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.29
The panel's numerous water protection recommendations addressed prevention,
treatment, and remediation. For example, the panel recommended that EPA work
with Congress to determine whether aboveground petroleum storage tanks (which
generally are not regulated) should be regulated; work to enhance state and local
efforts to protect lakes and reservoirs that serve as drinking water supplies by
restricting use of recreational water craft; and accelerate research for developing cost-
effective drinking water treatment and remediation technologies.
With regard to the recommendation to reduce substantially the use of MTBE,
the panel noted that accomplishing such a major change in gasoline supply without
disruptions to fuel supply and price would require up to 4 years lead time if the use
of MTBE were eliminated (or less if use was substantially reduced).
The panel also suggested that EPA and others should accelerate ongoing health
effects and environmental behavior research of other oxygenates and gasoline
components that would likely increase in use in the absence of MTBE.
Former EPA Administrator Carol Browner concurred with the recommendation
of the Blue Ribbon Panel calling for a significant reduction in the use of MTBE. She
also stated her commitment to work with Congress for “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.”30
On March 20, 2000, she announced that EPA would begin the process of issuing
regulations to reduce or phase out use of MTBE (discussed at greater length below
in the section on “Current Statutory Authority”). Recognizing that this process could
take several years to complete, she renewed her call for congressional action to
“amend the Clean Air Act to provide the authority to significantly reduce or eliminate
the use of MTBE,” to “ensure that air quality gains are not diminished,” and to
29Ibid.
30Statement by former EPA Administrator Carol Browner on Findings by the EPA's Blue
Ribbon MTBE Panel, July 26, 1999, available on the Blue Ribbon Panel home page,
previously cited.

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“replace the existing oxygen requirement contained in the Clean Air Act with a
renewable fuel standard for all gasoline.”31
Alternatives to MTBE
The major potential alternatives to MTBE are other oxygenates. This is so both
for practical and for regulatory reasons: at present, oxygenates are required by the
Clean Air Act, and, they possess several advantages, including high octane and the
ability to replace toxic components of conventional gasoline.
Oxygenates that could replace MTBE include ethers, such as ethyl tertiary butyl
ether (ETBE), and alcohols such as ethanol. These other oxygenates may pose health
and environmental impacts, but inadequate data make it difficult to reach definite
conclusions. EPA’s Blue Ribbon Panel concluded:
The other ethers (e.g., ETBE, TAME, and DIPE) have been less widely used and
less widely studied than MTBE. To the extent that they have been studied, they
appear to have similar, but not identical, chemical and hydrogeologic
characteristics. The Panel recommends accelerated study of the health effects and
groundwater characteristics of these compounds before they are allowed to be
placed in widespread use.32
Ethanol and other alcohols are considered relatively innocuous on their own;
they generally do not persist in ground water and are readily biodegraded. However,
research suggests that the presence of ethanol in a gasoline plume can extend the
spread of benzene and other toxic constituents of gasoline through ground water.33
This is largely because ethanol is likely to be degraded preferentially by
microorganisms that would otherwise feed on other chemical components of gasoline
including benzene, toluene, ethylbenzene, and xylene (BTEX).
In announcing the phase-out of MTBE in his state, March 25, 1999, California’s
Governor Davis required three state agencies to conduct additional research on the
health and environmental impacts of ethanol, the most likely substitute. In reports
approved in January 2000, the agencies concluded that if ethanol were substituted for
MTBE, there would be “some benefits in terms of water contamination” and “no
substantial effects on public-health impacts of air pollution.”34
31See “Clinton-Gore Administration Acts to Eliminate MTBE, Boost Ethanol,” EPA
Headquarters Press Release, March 20, 2000, pp. 7-8, available at web site
[http://www.epa.gov/]. (Click on EPA Headquarters Press Releases.)
32Blue Ribbon Panel Report, p. 8.
33See, for example, “Ethanol-Blended RFG May Cause Small Hike in Gasoline Plume Size,”
Mobile Source Report, December 2, 1999, p. 11, or “Experts Charge Cal/EPA Rushing
Approval of Ethanol in RFG,” Inside Cal/EPA, January 14, 2000, p. 1.
34California Air Resources Board, Water Resources Control Board, and Office of
Environmental Health Hazard Assessment. Health and Environmental Assessment of the Use
of Ethanol as a Fuel Oxygenate.
Report to the California Environmental Policy Council in
Response to Executive Order D-5.-99. Dec. 1999. Volume 1, Executive summary. P. 1-22.
(continued...)

CRS-15
A recent article, based on the California ethanol review, focused specifically on
the relative risks of ground-water contamination by spills of ethanol-blended gasoline,
MTBE-blended gasoline, and non-RFG gasoline. The authors concluded that,

relative to risks associated with standard formulation gasoline, there is an increase
in the risk that wells will be contaminated by RFG using either MTBE or ethanol
as an oxygenate
. (Emphasis added.) With ethanol, the risk of contaminating wells
decreases after approximately five years. However, the risk continues to grow for
MTBE because of the assumption that this chemical is not degraded in the
subsurface. The conservative approach used in this analysis, including the low
biodegradation rates and assumption that the gasoline source areas are not
remediated, results in an overstatement of the risks associated with these additives
to gasoline. Nevertheless, the relative trends do favor ethanol when considering
risk associated with RFG spills.35
The switch from MTBE to ethanol is not without problems, however. Ethanol
costs substantially more to produce than MTBE; it poses challenges to the gasoline
distribution system (it would separate from gasoline if transported long distances by
pipeline, so it must be mixed with non-oxygenated gasoline blendstock close to the
market in which it is to be sold); and, in the short term, it is unlikely to be available
in sufficient quantity to replace MTBE nationwide.36
Since late 1997, some refiners have discussed the possibility of making gasoline
that meets the performance requirements for RFG without using oxygenates. Tosco
and Chevron, two firms with large stakes in the California gasoline market, have
discussed this possibility, and asked for changes in the rules to allow the sale of RFG
not meeting the oxygenate requirement. In October 1997, Tosco expressed concern
about the growing evidence of the potential for extensive MTBE contamination in
asking the California Air Resources Board to “take decisive action” to “begin to move
away from MTBE.”37 Chevron, California’s largest refiner, followed suit, announcing
that it “may be possible to make a cleaner burning gasoline without oxygenates, and
still reduce emissions to the same extent achieved with current standards.”38 The
company has stated its support for legislation allowing it to stop or reduce its use of
oxygenates. These statements were supported by the Western States Petroleum
Association. The American Petroleum Institute now also supports legislation to
remove the RFG oxygenate requirement.
34(...continued)
Report is available at Internet website: [http://www-erd.llnl.gov/ethanol/]).
35Powers, Susan, et. al. Will Ethanol-Blended Gasoline Affect Groundwater Quality?
Environmental Science & Technology. American Chemical Society. January 1, 2001. p 28A.
36For additional information on ethanol, see CRS Report RL30369, Fuel Ethanol:
Background and Public Policy Issues
.
37Letter of Duane B. Bordvick, Vice President, Environmental and External Affairs, Tosco,
to John D. Dunlap III, Chairman, California Air Resources Board, October 17, 1997.
38“Chevron Seeks Changes to Reformulated Gasolines,” Press Release, Chevron Corporation
Public Affairs Department, December 1, 1997.

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Affected industries are not united in seeking authority to replace MTBE,
however. The major producers of MTBE, notably ARCO, have not joined the efforts
to promote alternatives, and ethanol producers and agricultural interests (most ethanol
is made from corn) are concerned that removing the oxygenate requirement would
negatively affect the sales of their products.
Current Statutory Authority to Control the Use of MTBE
Whether EPA has authority to take steps to regulate or ban MTBE use in the
absence of specific congressional authorization is a question many have raised as the
Agency and Congress consider their responses to MTBE contamination. In theory,
if the Agency determines that MTBE poses what it considers a significant threat to
air quality, water quality, or human health, it can take action to restrict or ban the
substance using existing authority under the Toxic Substances Control Act (TSCA).39
Until early 2000, based on its public statements, the Agency seemed unlikely to make
such a determination. In April 1998 testimony before a House Commerce
subcommittee, for example, EPA’s then Acting Assistant Administrator for Air and
Radiation stated: “One needs to be very cautious about initiating changes to the RFG
program that could upset the balance of previous agreements that have led to the
significant emissions reductions we are seeing today.”40 Instead, the Agency focused
attention on the need to prevent leaks from underground fuel storage tanks, which,
it argued, would address the major cause of drinking water contamination by MTBE.
On March 20, 2000, however, former EPA Administrator Browner announced
that the Agency would start a regulatory process “aimed at phasing out MTBE,”41
using Section 6 of TSCA. According to the Agency’s press release, the Agency
expected to issue a proposed rule to ban or phase down MTBE within 6 months. As
the Agency noted, however, a TSCA rulemaking is procedurally burdensome and may
take “several years” to complete. To use the authority, the Agency will have to
conclude that MTBE poses an unreasonable risk to health or the environment. In the
24 years since TSCA was enacted, the Agency has successfully invoked this authority
against fewer than half a dozen classes of chemicals.
The first step in the TSCA rule-making process was the issuance of an Advance
Notice of Proposed Rulemaking (ANPRM) on March 24, 2000.42 The ANPRM
solicited the input of interested parties regarding EPA’s course of action, including:
39Under the Clean Air Act, EPA has authority to waive the RFG oxygenate requirement if the
oxygenate interferes with the attainment of an air quality standard; however, EPA has no
authority to waive the requirement for water quality reasons.
40Statement of Richard D. Wilson, former Acting Assistant Administrator, Office of Air and
Radiation, U.S. EPA, in “Implementation of the Reformulated Gasoline Program in
California,” Hearing before the Subcommittee on Health and Environment, Committee on
Commerce, U.S. House of Representatives, April 22, 1998, Serial No. 105-94, p. 30.
41 See “Clinton-Gore Administration Acts to Eliminate MTBE, Boost Ethanol,” EPA
Headquarters Press Release, March 20, 2000, p. 2, available at web site
[http://www.epa.gov/epahome/press.htm]
4265 FR 16093, March 24, 2000.

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! whether some use of MTBE as a gasoline additive should be allowed
to continue,
! how much lead time would be necessary to allow refiners to eliminate
MTBE from RFG or from all fuels without unacceptable impacts on the
price or supply of fuel,
! whether EPA should eliminate or cap the use of any other gasoline
additives (e.g., other ethers) in addition to MTBE, and
! whether MTBE presents significantly greater risk to public health
and/or water quality than alternative gasoline additives.
The Agency also requested additional information regarding releases of gasoline
containing MTBE, the extent of contamination of water resources by the substance,
remediation technologies, alternatives to MTBE and their potential impacts on health
and the environment, and the cost of limiting or phasing out MTBE over various time
frames.43 As of May 2001, the Agency is still preparing a proposed rule, with
decisions as to its specifics and actual proposal unlikely before summer 2001.
In addition to TSCA authority, Section 303 of the Clean Air Act could possibly
have been invoked. Section 303 allows the Administrator to seek a restraining order
(and temporarily to issue such orders on her own authority) in cases where “a
pollution source or combination of sources ... is presenting an imminent and
substantial endangerment to public health or welfare, or the environment....” In
EPA’s assessment, however, studies to date suggest that MTBE is less toxic than
certain other gasoline components, such as benzene, so it might be difficult to justify
a finding of imminent and substantial endangerment.
Legislation
Legislation that could affect MTBE use has been introduced in every Congress
since the 104th. In the 106th Congress, S. 2962, a bill to ban the use of MTBE in
gasoline within 4 years, allow states to waive the RFG program’s oxygenate
requirement, stimulate the use of ethanol and clean vehicles, provide additional
funding for the cleanup of contaminated ground water, and provide additional
authority to EPA to regulate fuel additives and emissions, was reported by the
Environment and Public Works Committee September 28, 2000 (S. Rept. 106-426).
On August 4, 1999, the Senate also adopted an amendment to the FY2000
agricultural appropriations bill (S. 1233), offered by Senator Boxer, expressing the
sense of the Senate that use of MTBE should be phased out.
In addition to the reported bill, about 25 other bills related to MTBE were
introduced in the 106th Congress. About half would have repealed the RFG
program’s oxygenate requirement or allowed waivers. Most would have phased out
or limited the use of MTBE in gasoline. Other introduced bills addressed specific
43The specific request for information is found on pp. 16106-16107 of the March 24, 2000
Federal Register notice.

CRS-18
aspects of the MTBE issue: some, for example, would have required research and/or
monitoring of the substance; some would have accelerated the cleanup of MTBE from
leaking underground storage tanks and/or assisted communities with responding to
MTBE contamination that affects drinking water supplies or threatens public health;
one would have accelerated the schedule for new emission standards for marine
engines, in order to reduce the amount of fuel and MTBE emitted to surface waters.
As in previous years, one of the bills in the 107th Congress (H.R. 52) aims to
change the regulatory requirements for reformulated gasoline as they pertain to
California. California has unique status under Section 211(c)(4)(B) of the Clean Air
Act. Because its air pollution program predated the federal program and because air
quality in portions of the state has historically been worse than that anywhere else in
the country, California is allowed to have separate regulations for fuels. As a result
of this unique status, gasoline sold in portions of the state (Los Angeles, Sacramento,
and San Diego) must meet two separate sets of requirements — state and federal.
The federal requirements mandate that RFG contain at least 2% oxygen by weight (a
requirement now generally met by adding MTBE to the fuel). These standards apply
in areas containing about two-thirds of the state’s population. California’s standards,
which became effective a year later than the federal, include an oxygen content
specification “because of the oxygen requirements in the federal RFG program.”44
According to Cal EPA, however, “a key element of the California program is a
mathematical or ‘predictive’ model that allows refiners to vary the composition of
their gasoline as long as they achieve equivalent emission reductions. ... [F]or areas
not subject to federal RFG requirements, refiners can use the predictive model to
reduce or even eliminate the use of oxygenates,” except during the four winter
months, when they are subject to separate oxygenate requirements to reduce carbon
monoxide.45
The complicated regulatory requirements faced by California refiners and
marketers of gasoline led former Representative Brian Bilbray, of San Diego, to
introduce legislation to provide for more flexible federal requirements in California’s
case. (This year, the same bill has been introduced by Representative Gary Condit.)
Similar legislation was introduced in the Senate by Senator Dianne Feinstein. The
legislation would apply only to California, dispensing with the federal oxygen
requirement, provided that the fuel continues to achieve the required reductions in
emissions of toxic air pollutants and ozone-forming compounds specified elsewhere
in Section 211(k). This legislation has been supported by a number of oil companies,
the California Air Resources Board, and the Governor of California, and it was
cosponsored in the 106th Congress by 51 members of the California congressional
delegation.
The House Commerce Committee’s Subcommittee on Health and Environment
approved the 106th Congress version, H.R. 11, with an amendment, September 30,
1999. The discussion during markup, however, indicated an uncertain future for the
bill, a situation that may continue in the 107th Congress. Numerous amendments were
offered and withdrawn without a vote, with the promise of further negotiations before
44California Environmental Protection Agency, MTBE Briefing Paper, p. 6.
45Ibid.

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the bill was brought to the full committee. Amendments offered would have
broadened the bill's coverage to other states, phased out the use of MTBE, and
addressed international trade issues related to the MTBE phase-out. The full
committee did not act on the bill.
In part, the difficulties encountered by H.R. 11 reflected wider concerns over
MTBE use. Organizations initially opposed or indifferent to legislation affecting
California have come to favor action, but on a broader scale. These organizations
include the U.S. Environmental Protection Agency (which initially opposed
legislation), the American Petroleum Institute (API), and environmental interests such
as the Natural Resources Defense Council (NRDC) and American Lung Association
(ALA). API, NRDC, and ALA support a set of principles adopted by the Northeast
States for Coordinated Air Use Management (NESCAUM). NESCAUM represents
the air pollution program directors in New York, New Jersey, and the 6 New England
states. It has played a significant role in building consensus among the Northeastern
states required to use reformulated gasoline. In a report issued in August 1999,46 and
in subsequent principles adopted by a task force of state air and water officials,
NESCAUM has called for:
! repealing the two percent oxygen mandate for RFG in the Clean Air Act;
! phasing down and capping MTBE content in all gasoline;
! clarifying state and federal authority to regulate, and/or eliminate, MTBE or
other oxygenates if necessary to protect public health or the environment;
! maintaining the toxic emissions reductions benefits achieved to date by the
RFG program (Note: the reductions achieved are substantially higher than the
reductions required by the Clean Air Act);
! promoting consistency in fuel specifications through the timely implementation
of effective federal requirements; and
! providing adequate lead time for the petroleum infrastructure to insure
adequate fuel supply and price stability.
While support for waiving the oxygenate requirement is now widespread among
environmental groups, the petroleum industry, and states, a potential obstacle to
enacting legislation lies among agricultural interests. About 6% of the nation’s corn
crop is used to produce the competing oxygenate, ethanol. If MTBE use is reduced
or phased out, but the oxygenate requirement remains in effect, ethanol use would
likely soar, increasing demand for corn. Conversely, if the oxygenate requirement is
waived by EPA or by legislation, not only would MTBE use decline, but so, likely,
would demand for ethanol. As a result, Members, Senators, and Governors from
corn-growing states have taken a keen interest in MTBE legislation. Unless their
interests are addressed, they might pose a potent obstacle to its passage.
46See Summary of RFG/MTBE Findings and Program Recommendations, August 1999,
available at web site [http://www.nescaum.org/RFG/RFGPh2.shtml]

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Reflecting these dual concerns, former EPA Administrator Carol Browner and
Agriculture Secretary Dan Glickman called on Congress at a press conference, March
20, 2000, to amend the Clean Air Act to "significantly reduce or eliminate" the use
of MTBE and to require the use of ethanol in all gasoline. Legislation to mandate the
use of ethanol while allowing limits on MTBE use was subsequently introduced and
reported by the Environment and Public Works Committee with an amendment in the
nature of a substitute on September 28, 2000 (S. Rept. 106-426). As reported, the
bill would have given the EPA Administrator authority to phase down use of MTBE
in gasoline; whether or not the Administrator used this authority, the bill would have
banned MTBE use within 4 years of enactment. The bill would have allowed
Governors to waive the RFG program’s oxygenate requirement, and would have set
new standards for toxic substance and aromatic content of RFG in areas where the
waiver was exercised. It would have stimulated the use of ethanol and clean vehicles:
each fuel supplier would have had the option of using an increasing percentage of
renewable fuel (ethanol) in each year between 2002 and 2011, or could have used
credits generated by the manufacture and sale of zero emission or “super ultra low”
emission vehicles. The report noted that this requirement could nearly triple the
consumption of ethanol by 2011. The bill would have provided additional authority
to EPA to regulate fuel additives and emissions. It also would have authorized a one-
time appropriation of $200 million from the LUST Trust Fund to clean up MTBE
leaks from tanks, and authorized another $200 million over 6 years for states to use
to oversee and enforce tank leak prevention and detection regulations. S. 2962 is
considered a possible starting point for Senate Environment’s discussion of the issue
in the 107th Congress.
As the deadlines for state phaseout of MTBE move closer, investment decisions
involving hundreds of millions of dollars hang on the regulatory framework of the
post-MTBE gasoline market. Thus, pressure for congressional action on this issue
could be high in the 107th Congress. Whether this pressure will produce enacted
legislation is less clear.
California and Other State Initiatives
Among the states, California has arguably been the most active in addressing
MTBE issues. Actions taken by the State Legislature and the Governor helped propel
the issue to national prominence. Legislation, signed October 8, 1997, required the
state to set standards for MTBE in drinking water, and required the University of
California to conduct a study of the health effects of MTBE and other oxygenates and
risks associated with their use. The UC report, which was issued in November 1998,
recommended a gradual phase-out of MTBE from gasoline in California.47 Based on
the report and on public hearings, Governor Davis issued a finding that “on balance,
there is a significant risk to the environment from using MTBE in gasoline in
California,” and required the state’s Energy Commission to develop a timetable for
the removal of MTBE from gasoline at the earliest possible date, but not later than
47See Keller, Arturo, et al., Health & Environmental Assessment of MTBE, Report to the
Governor and Legislature of the State of California As Sponsored by SB 521, November
1998. Available on the web at [http://www.tsrtp.ucdavis.edu/mtberpt/homepage.html].

CRS-21
December 31, 2002.48 The Governor also required the California Air Resources
Board (CARB) to make a formal request to U.S. EPA for a waiver from the
requirement to use oxygenates in reformulated gasoline and required three state
agencies to conduct additional research on the health and environmental impacts of
ethanol, the most likely substitute for MTBE.
The waiver request resulted in months of negotiation between EPA and CARB,
with EPA initially expressing skepticism that it had authority to grant a waiver under
the circumstances.49 The Clean Air Act authorizes waiver of the RFG oxygenate
requirement only if the Administrator determines that oxygenates would prevent or
interfere with the attainment of a National Ambient Air Quality Standard.50 More
than 2 years later, a decision on the request is still awaited. Without a waiver, ozone
nonattainment areas in the state would be required to substitute another oxygenate
(most likely, ethanol) when the MTBE ban takes effect.
Following California’s decision to phase-out MTBE, at least 11 other states
(Arizona, Colorado, Connecticut, Iowa, Maine, Michigan, Minnesota, Nebraska, New
York, South Dakota, and Washington) have acted to limit or phase out its use. The
largest of these, New York, will ban it on January 1, 2004. Maine (which is not
required to use RFG, but had chosen to do so) also opted out of the RFG program
in October 1998 as a result of concerns over MTBE contamination of ground water,
and subsequently substituted a low-volatility gasoline to provide similar reductions in
emissions of ozone-forming compounds, without requiring the use of oxygenates.
NAFTA Arbitration
Another MTBE issue that emerged in the wake of California's decision to phase
out the use of MTBE in gasoline concerns the applicability of certain provisions in the
North American Free Trade Agreement (NAFTA). On June 15, 1999, the Methanex
Corporation, a Canadian company that produces methanol in the United States and
Canada, notified the U.S. Department of State of its intent to institute an arbitration
against the United States under the investor-state dispute provisions of the NAFTA,
claiming that the phase-out of MTBE ordered by the Governor of California March
25, 1999 breaches U.S. NAFTA obligations regarding fair and equitable treatment and
expropriation of investments, entitling the company to recover damages which it
estimated at $970 million.51
48Governor Gray Davis, Executive Order D-5-99. The Executive Order can be found on the
Governor’s Internet site at [http://www.governor.ca.gov/briefing/execorder/d599.html]. For
a news account, see “Davis Moves To Phase Out MTBE Additive: Oil Industry To Hear
Governor’s Plan Today,” San Francisco Chronicle, March 25, 1999, p. A1.
49See statements of Robert Perciasepe, former Assistant Administrator for Air and Radiation,
U.S. EPA, at the May 6, 1999 House Commerce subcommittee hearing, previously cited, pp.
47-52.
50The waiver language is found in Section 211(k)(2)(B).
51Methanol is a major component of MTBE and is Methanex's only product. The California
market for MTBE reportedly accounts for roughly 6% of global demand for methanol.

CRS-22
Chapter 11, Article 1110, of the NAFTA requires the United States, Canada, and
Mexico to treat each other’s investors and investments in accordance with the
principles set out in the Chapter. It also allows these investors to submit to arbitration
a claim that a NAFTA party has breached Chapter 11 obligations and to recover
damages from any such breach. The NAFTA requires the disputing investor to
deliver a written notice of its intent to the NAFTA country involved at least 90 days
before the claim is submitted to arbitration under the appropriate international arbitral
rules. NAFTA also requires 6 months to elapse “since the events giving rise to a
claim” before the investor may proceed with arbitration. Because no settlement was
reached within that timeframe, the matter has proceeded to arbitration.
Conclusion
Controversy continues to surround the use of MTBE in gasoline. Research
conducted to date suggests that the air quality benefits of its use are substantial.
However, increasing detections of MTBE in ground and surface water, and
particularly in municipal and private drinking water wells, have raised significant
concerns about the use of this oxygenate. Research on MTBE and other oxygenates
is ongoing and should provide additional information to help advance the current
understanding of MTBE-related health and environmental issues.
Legislation introduced in Congress initially focused on the limited issue of
MTBE use in California, where federal requirements have prevented refiners from
adopting a more flexible approach permitted by state regulations. Modifying the
federal requirements as they pertain to California has had substantial support among
the California congressional delegation. As MTBE has been detected in drinking
water wells in other parts of the country, and in surface waters in addition to
underground sources, broader legislation has been introduced. These bills emerge in
a context of ongoing activities aimed at reducing releases of petroleum, generally, or
MTBE, specifically. The effectiveness and sufficiency of these efforts (such as the
continued implementation of UST regulations and stricter emissions standards for
marine engines), combined with concerns and uncertainties about potential
replacements for MTBE, add complexity to the debate. Also, some lawmakers have
cautioned against acting precipitously to replace MTBE with other additives without
adequate research and consideration of potential adverse consequences.
Developments in the states, particularly California and the Northeast, are driving
a reconsideration of the petroleum industry’s reliance on MTBE as the principal
means of meeting RFG requirements. This reconsideration, by refiners and by policy-
makers at the state level, prompted congressional consideration of the issue in the past
Congress and will likely generate further action in 107th Congress.