Order Code RL32787
CRS Report for Congress
Received through the CRS Web
MTBE in Gasoline:
Clean Air and Drinking Water Issues
Updated May 6, 2005
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
The 109th Congress continues efforts to address fuel policy and health and
environmental issues related to the use of the gasoline additive methyl tertiary butyl
ether (MTBE). Concern over water contamination caused by MTBE has raised
questions concerning the desirability of using the additive as a means of producing
cleaner-burning fuel. MTBE has been 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 emissions of toxic substances
and the volatile organic compounds that react with other pollutants to form smog.
However, incidents of drinking water contamination by MTBE have raised concerns
and led to calls for restrictions on its use. In 1999, Governor Davis of California
ordered a phaseout of MTBE use by December 31, 2002 (later amended to December
31, 2003). Eighteen other states, including New York and Connecticut, now have
enacted limits or phaseouts of the substance.
EPA responded to initial reports of water contamination in the mid-1990s by
intensifying research and focusing on the need to minimize leaks from underground
fuel tanks. However, contamination incidents increased, and in March 2000, EPA
began the process of requiring a reduction or phaseout of MTBE use under the Toxic
Substances Control Act. Because regulatory action could take years to complete, EPA
urged Congress to amend the Clean Air Act to provide specific authority to reduce
or eliminate use of MTBE. In the 109th Congress, the House has included such
authority in H.R. 6, the comprehensive energy bill. The bill would ban the use of
MTBE by December 31, 2014, with some exceptions, and would provide extensive
assistance for MTBE producers, including a controversial “safe harbor” from product
liability lawsuits. The Congressional Budget Office identified the latter provision as
an intergovernmental mandate under the Unfunded Mandates Relief Act, thus making
the provision subject to a point of order; however, the House voted to retain the safe
harbor provision on a separate vote. In the Senate, the Environment and Public
Works Committee has approved S. 606, which would ban MTBE within four years
of enactment, and would not provide a safe harbor for MTBE producers.
If MTBE were removed from gasoline without amending the Clean Air Act,
refiners would need to use alternative sources of oxygen in RFG. The potential
alternatives are other forms of ether, or alcohols such as ethanol. Ethanol is the most
likely substitute, but it costs more to produce than MTBE, it poses challenges to the
gasoline distribution system, and some studies suggest that it increases the risk of
water contamination compared to non-oxygenated gasoline. 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 RFG.
The principal issues for Congress are whether MTBE use should be limited or
phased out, and whether there should be a “safe harbor” from product liability
lawsuits for gasoline refiners and marketers who have used MTBE. This report
reviews MTBE issues and will be updated.

---

Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Air Quality Benefits Resulting from MTBE Use . . . . . . . . . . . . . . . . . . . . . . 4
Health-Related Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Water Quality and Drinking Water Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Occurrence of MTBE in Drinking Water . . . . . . . . . . . . . . . . . . . . . . . 8
Occurrence of MTBE in Ambient Ground Water . . . . . . . . . . . . . . . . 10
EPA’s Responses to MTBE Occurrence in Water . . . . . . . . . . . . . . . . . . . . 11
Safe Drinking Water Act Initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Underground Storage Tank Regulation . . . . . . . . . . . . . . . . . . . . . . . . 12
Blue Ribbon Panel on Oxygenates in Gasoline . . . . . . . . . . . . . . . . . . . . . . 13
Alternatives to MTBE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Current Statutory Authority to Control the Use of MTBE . . . . . . . . . . . . . 17
Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
MTBE Transition and Renewable Fuels Standard . . . . . . . . . . . . . . . . 19
Safe Harbor Provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Leaking Underground Storage Tank Issues . . . . . . . . . . . . . . . . . . . . . 21
State Initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
NAFTA Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
List of Figures
Figure 1. Federal RFG and Winter OXY/RFG Programs . . . . . . . . . . . . . . . . . . 3
List of Tables
Table 1. Areas Using Reformulated Gasoline, as of February 2005 . . . . . . . . . . . 2
Table 2. State Actions Banning MTBE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

---

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 in the 109th
Congress.
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 (124 counties
with a combined population of 73.6 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); about 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 has been MTBE. In 1999, 87% of
RFG contained MTBE. As restrictions on MTBE use took effect in California, New
York, and Connecticut at the end of 2003, this number was reduced, but even with
these state bans, 46% of RFG nationally contained MTBE in 2004.
1 The 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 has been the primary oxygenate used in winter oxygenated fuels
and MTBE the primary oxygenate used in RFG, although either can be used in both fuels.

---

CRS-2
Table 1. Areas Using Reformulated Gasoline,
as of February 2005
Mandatory RFG Areas*
Baltimore, MD
Chicago, IL (and portions of Indiana and Wisconsin)**
District of Columbia (and suburbs in MD and VA)
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
San Joaquin Valley, CA
Southeast Desert, CA
Ventura County, CA
Opt-In RFG Areas***
Connecticut (entire state)
Dallas / Fort Worth, TX
Delaware (entire state)
Kentucky portion of Cincinnati metropolitan area
Louisville, KY
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 (Richmond, Norfolk - Virginia Beach - Newport News)
Source: U.S. EPA.
Notes:
* RFG use required by the Clean Air Act. In addition to these areas, Atlanta, GA, and Baton Rouge,
LA, are now also required to use RFG because they have been reclassified as severe ozone
nonattainment areas; but implementation of the RFG requirement has been stayed in both areas
pending the resolution of court challenges.
** In the Chicago and Milwaukee areas, RFG has been made with ethanol rather than MTBE since
1995.
*** 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.

---

CRS-3
Figure 1.

---

CRS-4
Also, MTBE has been used since the late 1970s in gasoline as an octane
enhancer. MTBE use grew rapidly in the 1980s, as it replaced lead in gasoline and
was used in premium fuels. 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 debate. 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
2 See “Reformulated Fuels Help Curb Peak Ozone Levels in California,” Daily Environment
Report, November 6, 1996, pp. A-1 and A-2.
3 Committee 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.
4 U.S. Environmental Protection Agency, Blue Ribbon Panel on Oxygenates in Gasoline,
Executive Summary and Recommendations, July 27, 1999, Appendix A. Available at
[http://www.epa.gov/otaq/consumer/fuels/oxypanel/blueribb.htm].

---

CRS-5
oxygenated gasoline programs find a reduction in ambient CO concentrations of
about 10%.”5
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 both on 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 nine-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.
After oxygenated fuels containing MTBE were introduced, residents in several cities
complained of a variety of health effects from exposure to MTBE/RFG exhaust:
headaches, dizziness, nausea, sore eyes, and respiratory irritation. Some complaints
centered around the use of MTBE in cold weather; two of the principal areas noting
complaints were 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 health effects research is being conducted by EPA, universities, and
others. Under the authority of Section 211 of the Clean Air Act, EPA has requested
refiners to conduct health effects studies on conventional, reformulated, and
oxygenated (particularly MTBE-oxygenated) gasoline. Several of these studies,
which look at health effects associated with the inhalation of evaporative emissions,
should be completed this year. Very little research has been done to assess the
potential health risks associated specifically with drinking water exposure to MTBE.
5 Executive Office of the President, National Science and Technology Council, Interagency
Assessment of Oxygenated Fuels, Washington, D.C., June 1997, p. iv. Referred to hereafter
as the OSTP Report. (The executive summary, recommendations, and full report are
available at [http://www.ostp.gov/NSTC/html/MTBE/mtbe-top.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.
6 U.S. EPA Response to Interagency Assessment of Oxygenated Fuels, undated, p. 2.
7 Systems 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.
8 OSTP 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.

---

CRS-6
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,
EPA’s Office of Research and Development (ORD) reported in 1994 that:
inhalation carcinogenicity studies in mice and rats show evidence of three types
of animal tumors [testicular, liver, and kidney]. These particular studies are
difficult to interpret because of some high-dose general toxicity. Nevertheless,
ORD believes the inhalation carcinogenicity evident would support placing
MTBE in Group C as a “possible human carcinogen.”9
Also, one metabolite of MTBE (formaldehyde) is considered a probable human
carcinogen, and another metabolite (tertiary butyl alcohol (TBA)) induces male rat
kidney tumors.10
Based on animal studies, 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 low exposure levels.11 The Interagency Task Force assessing oxygenated fuels
concluded that the weight of the evidence supports regarding MTBE as having a
carcinogenic hazard potential for humans.12 In 1998, the International Agency for
Research on Cancer (IARC) and the U.S. National Toxicology Program determined
not to list MTBE as a known human carcinogen. The IARC noted that MTBE was
“not classifiable as to its carcinogenicity in humans,” based on inadequate evidence
in humans and limited evidence in experimental animals.13 In 1999, California’s
Environmental Protection Agency determined that the MTBE carcinogenicity studies
were of similar quality to studies on many other carcinogens, and established a public
health goal for MTBE in drinking water based on cancer risk.14
Regarding noncancer effects, another California advisory committee determined
that there was not clear scientific evidence to support listing MTBE as a toxic
9 U.S. Environmental Protection Agency, Health Risk Perspectives on Fuel Oxygenates.
Office of Research and Development, EPA 600/R-94/217, December 1994, p. 8. Detailed
information is available in ORD’s 1993 MTBE risk assessment, Assessment of Potential
Health Risks of Gasoline Oxygenated with Methyl Tertiary Butyl Ether (MTBE),
EPA/600/R-93/206, at [http://www.epa.gov/ncea/pdfs/mtbe/gasmtbe.pdf].
10 U.S. Environmental Protection Agency, Assessment of Potential Health Risks of Gasoline
Oxygenated with Methyl Tertiary Butyl Ether (MTBE), EPA/600/R-93/206, p. 30.
11 U.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, pp. 1-2, 9-10. This and other health effects information
is available at [http://www.epa.gov/OST/drinking/mtbe.html].
12 OSTP Report, pp. 4-26.
13 International Agency for Research on Cancer, IARC Monographs on the Evaluation of
Carcinogenic Risks to Humans and Their Supplements: Methyl tert-Butyl Ether (Group 3),
World Health Organization, v. 73, 1999, pp. 339-340.
14 California Environmental Protection Agency, Public Health Goal for Methyl Tertiary
Butyl Ether (MTBE) in Drinking Water, Office of Environmental Health Hazard
Assessment, March 1999, pp. 1-2.

---

CRS-7
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.
In response to the need for research to evaluate the potential health risks from
exposure to MTBE and other oxygenates in drinking water, EPA in 1998 published
a document that identified the most critical and immediate research needs. The
document was intended to serve as a guide to planning future research; however,
EPA has not pursued research to address the needs identified in this document.15
For practical purposes, the interpretation of any health risks associated with the
addition of MTBE to gasoline could benefit from 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 replaced. 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.”16 Such a comparison might be of
limited usefulness, however, given the data gaps regarding MTBE’s health effects
and MTBE’s ability to reach water supplies more readily than conventional gasoline.
Water Quality and Drinking Water Issues
A major issue regarding the use of MTBE concerns its detection in ground water
at thousands of locations nationwide, and, usually at low levels, in various municipal
drinking water supplies, private wells, and reservoirs. Although MTBE provides air
quality benefits, the inclusion of MTBE in gasoline has been a growing concern as
an environmental risk since the 1980s, for several reasons. Specifically, compared
to other gasoline components, MTBE (1) is much more soluble in water, (2) has a
lower taste and odor threshold, (3) has a higher transport rate, and (4) often requires
more time to be remediated and must be treated by more complicated and expensive
treatment technologies.17 MTBE is extremely 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.
15 U.S. Environmental Protection Agency, Oxygenates in Water: Critical Information and
Research Needs, Office of Research and Development, EPA/600/R-98/048, 1988.
16 OSTP Report, p. vii.
17 See, e.g., U.S. Environmental Protection Agency Memorandum from Beth Anderson, Test
Rule Development Branch, re. Division Director Briefing for Methyl tert-Butyl Ether
(MTBE), April 1987, which notes that “[t]he tendency for MTBE to separate from the
gasoline mixture into ground water could lead to widespread drinking water contamination.”

---

CRS-8
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.18
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 lakes and reservoirs appears to be
exhaust from motorized watercraft, while smaller sources include gasoline spills,
runoff, and ground water flow.19
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. Through April 2002, some 2,957 systems had tested
9,905 sources of drinking water. MTBE was detected in 85 (0.9%) of these sources,
including 54 (0.6%) of 9,234 ground water sources and 31 (4.6%) of 671 surface
water sources. Overall, 53 (1.8%) of the 2,957 public water systems reported
detections of MTBE in at least one of their drinking water sources, and 13 (0.4%) of
the systems reported that a total of 21 (0.2%) sources of water had MTBE
concentrations exceeding California’s MTBE drinking water standard of 13
micrograms per liter (:g/L). As of May 2, 2005, monitoring results had been reported
for 13,300 sources, and nearly all of the results were nondetections.20
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
18 Arturo Keller 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.
19 Keller, pp. 33-34.
20 California Environmental Protection Agency, MTBE in California Drinking Water, April
3, 2002. For more information, see [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.)

---

CRS-9
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.21
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 majority of these detections have been well below levels of public health
concern, with roughly 1% of detections exceeding 20 :g/L.22
Further monitoring efforts have advanced the knowledge about the presence of
MTBE in drinking water. The United States Geological Survey (USGS), in
cooperation with EPA, 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.23 The study analyzed water from 1,194
randomly selected community water systems. The USGS reported that 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.24
A 2003 nationwide survey conducted by the American Water Works
Association Research Foundation (AWWARF) reported similar results. This survey
monitored sources of drinking water for 954 randomly selected community water
systems (including 579 samples from groundwater-supplied systems and 375 samples
from surface-water-supplied systems). MTBE was found in 8.7% of the community
21 Maine 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, preliminary report, October 1998, 24 pp. (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.)
22 The Blue Ribbon Panel on Oxygenates in Gasoline, Executive Summary and
Recommendations, July 27, 1999. Summary and full report are available at [http://www.
epa.gov/otaq/consumer/fuels/oxypanel/blueribb.htm].
23 For information on this 2001 study and other MTBE research at the USGS, see
[http://sd.water.usgs.gov/nawqa/vocns/mtbe.html].
24 Stephen J. Grady and George D. Casey, MTBE and Other VOCs in Drinking Water in the
Northeast and Mid-Atlantic Region. Available at [http://sd.water.usgs.gov/nawqa/vocns/
dw_12state.html]. 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.

---

CRS-10
water system source waters, at concentrations ranging from 0.2 to 20 :g/L.25
AWWARF also conducted a focused survey, including 451 samples collected from
134 community water systems source waters (including ground water, reservoirs,
lakes, rivers, and streams) that were suspected or known to contain MTBE. The
researchers found MTBE in 55.5% of the water systems.26
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 to 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.27
MTBE has been detected most frequently in ground water associated with
leaking underground storage tank (UST) sites. The California Environmental
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).28 Moreover, a report by the Lawrence Livermore National Laboratory
found that MTBE was not significantly degrading in the monitoring networks for
these leaking UST sites.29 The situation in other states may be similar. 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.30
25 American Water Works Association Research Foundation, Occurrence of MTBE and
VOCs in Drinking Water Sources of the United States, 2003, p. xxiii, p. 101.
26 Ibid., p. 120.
27 U.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
[http://www.epa.gov/otaq/consumer/fuels/oxypanel/blueribb.htm#Presentations].
28 California Environmental Protection Agency, MTBE Briefing Paper, p. 17.
29 Anne Happel, 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.
30 New England Interstate Water Pollution Control Commission (NEIWPCC), Survey of
State Experiences with MTBE Contamination at LUST Sites (August 2000). Available at
[http://www.neiwpcc.org]. The survey shows that some states began requiring testing at
LUST sites in the 1980s (Maine in 1986 and Minnesota in 1987).

---

CRS-11
A 2003 update to that survey found that, averaged among the states, MTBE was
found in groundwater at 60% of gasoline-contaminated sites.31
EPA’s Responses to MTBE Occurrence in Water
Safe Drinking Water Act Initiatives. MTBE has not been regulated under
the Safe Drinking Water Act (SDWA), but to address concerns raised by the
detection of MTBE in ground water and drinking water supplies, EPA has pursued
several initiatives. 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 SDWA.32 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 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.33
In addition, EPA has taken steps that could lead to the development of an
enforceable 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. 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 has not selected MTBE
31 New England Interstate Water Pollution Control Commission (NEIWPCC), Survey of
State Experiences with MTBE and Other Oxygenate Contamination at LUST Sites (August
2003). Available at [http://www.neiwpcc.org/Index.htm?MTBE.htm~mainFrame].
32 At least seven 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
five states have adopted a secondary standard (based on aesthetic qualities, i.e., taste and
odor), ranging from 5 ppb to 70 ppb. At least 10 states have adopted drinking water advisory
levels. 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.
33 EPA Drinking Water Advisory, p. 2.

---

CRS-12
for regulation to date, 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 2001.34
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 drinking water
regulation for MTBE is 2010.
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, corrective action, 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 these requirements, the number of petroleum and related MTBE leaks from UST
systems should decline significantly. However, MTBE has been detected at
thousands of leaking tank sites, and this additive is proving more difficult and costly
to remediate than conventional gasoline. A key concern for states is that, as testing
increases, it is likely that the number and scope of needed cleanups may increase as
well. A 2003 state survey found that many sites have not been tested for MTBE, and
most states do not plan to reopen previously closed Leaking Underground Storage
Tank (LUST) sites to look for MTBE, although 32 states reported that MTBE plumes
are often or sometimes longer than plumes from conventional gasoline leaks.35 A key
concern for community water suppliers and well owners is that fewer than half of the
states are taking steps to ensure that MTBE and other oxygenates are not migrating
beyond standard monitoring boundaries for LUST cleanup,36 thus leaving an
unknown number of MTBE plumes unremediated and ground water supplies at risk
for future contamination.
34 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.
35 New England Interstate Water Pollution Control Commission (NEIWPCC), Survey of
State Experiences with MTBE and Other Oxygenate Contamination at LUST Sites (August
2003), Executive Summary, pp. 1-2.
36 Ibid.

---

CRS-13
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
LUST Trust Fund and authorized EPA and states to use the fund to clean up
underground storage 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.
The FY2005 omnibus appropriations act, P.L. 108-447, provided nearly $70 million
from the LUST Trust Fund for states and EPA to administer the LUST remediation
program. EPA allocates approximately 80% of the appropriated amount to the
states.37
Since the federal underground storage tank program began, nearly 1.6 million
of the roughly 2.2 million petroleum tanks subject to regulation have been closed,
and, overall, the frequency of leaks from UST systems has been reduced. As of
September 30, 2004, some 672,297 tanks subject to UST regulations remained in
service, 447,233 releases had been confirmed, 412,657 cleanups had been initiated,
and 317,405 cleanups had been completed.38 During FY2004, 7,850 new releases
were confirmed, compared to 12,000 in FY2003.
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.39
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;
! agreed broadly that use of MTBE should be reduced substantially
(with some members supporting its complete phaseout), and that
37 For more information on the LUST program and related legislation, see CRS Report
RS21201, Leaking Underground Storage Tanks: Program Status and Issues.
38 For state-by-state information, see [http://www.epa.gov/oust/cat/camarchv.htm].
39 A list of Blue Ribbon Panel members is provided, along with the panel report and related
materials, at [http://www.epa.gov/oar/caaac/mtbe.html].

---

CRS-14
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.
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 above-ground 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 watercraft; and accelerate research for developing cost-
effective drinking water treatment and remediation technologies.
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.
Then-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.”40
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
“replace the existing oxygen requirement contained in the Clean Air Act with a
renewable fuel standard for all gasoline.”41
In its few public statements on MTBE, the Bush Administration has not
indicated any change in the Clinton Administration’s policy, although EPA’s effort
to regulate MTBE using its existing authority has slowed noticeably. Five years after
EPA began the development of regulations to reduce or phase out MTBE, regulations
40 Statement 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.
41 U.S. Environmental Protection Agency, “Clinton-Gore Administration Acts to Eliminate
MTBE, Boost Ethanol,” EPA Headquarters Press Release, March 20, 2000, pp. 7-8.

---

CRS-15
have still not been proposed, much less promulgated. This Administration, like the
previous one, appears to many to be happy to defer to a legislative solution. As one
EPA official described it, “If the ethanol and oil industries can come to an agreement,
we’ll support it.”
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.42
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.43
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 phaseout of MTBE in his state on 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.”44
42 Blue Ribbon Panel Report, p. 8.
43 See, 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.
44 California 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, vol. 1, Executive summary, pp. 1-22.
(continued...)

---

CRS-16
A more 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.45
The switch from MTBE to ethanol is not without technical problems, as well.
Ethanol costs substantially more to produce than MTBE; and 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).46
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, asked for
changes in the rules to allow the sale of RFG not meeting the oxygenate requirement
in late 1997. 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.”47
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.”48 The company 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, which was a key recommendation of the Blue Ribbon Panel.
44 (...continued)
Report is available at [http://www-erd.llnl.gov/ethanol/]).
45 Susan Powers et al., “Will Ethanol-Blended Gasoline Affect Groundwater Quality?”
Environmental Science & Technology, American Chemical Society, January 1, 2001, p.
28A.
46 For additional information on ethanol, see CRS Report RL30369, Fuel Ethanol:
Background and Public Policy Issues.
47 Letter of Duane B. Bordvick, Vice President, Environmental and External Affairs, Tosco,
to John D. Dunlap III, Chairman, California Air Resources Board, October 17, 1997.
48 “Chevron Seeks Changes to Reformulated Gasolines,” press release, Chevron Corporation
Public Affairs Department, December 1, 1997.

---

CRS-17
Affected industries have not been united in seeking authority to replace MTBE,
however. The major producers of MTBE 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. Nearly 13% of the nation’s corn crop is used to
produce ethanol. If MTBE use is phased out, and the oxygenate requirement remains
in effect, ethanol use will likely soar, increasing demand for corn. Conversely, if the
oxygenate requirement were removed 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
would pose a potent obstacle to its passage. Reflecting these concerns, both the
House and Senate versions of MTBE legislation in the 108th Congress eliminated the
oxygen requirement, but mandated a more than doubling of the use of renewable
fuels such as ethanol by 2012 or 2015. Similar provisions are included in H.R. 6 and
S. 606.
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).49
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.”50 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,”51
using Section 6 of TSCA. According to the agency’s press release, EPA expected to
issue a proposed rule to ban or phase down MTBE within six months. As the agency
49 Under 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.
50 Statement 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.
51 U.S. Environmental Protection Agency, “Clinton-Gore Administration Acts to Eliminate
MTBE, Boost Ethanol,” EPA Headquarters press release, March 20, 2000, p. 2.

---

CRS-18
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 27 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, 2000.52 The ANPRM
solicited the input of interested parties regarding EPA’s course of action, including:
! 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.53 As of February 2005, the agency had still not completed a proposed rule.
The agency’s latest Semiannual Regulatory Agenda as of that date indicated that a
rule would be proposed in November 2005, but it listed the activity under Clean Air
Act rather than TSCA rules.54 Agency staff familiar with the rulemaking process
have described it as “basically on hold,”55 with the Administration deferring to what
they think will be congressional action.
52 65 FR 16093, March 24, 2000.
53 The specific request for information is found on pp. 16106-16107 of the March 24, 2000
Federal Register notice.
54 Fall 2004 Regulatory Agenda, Federal Register, December 13, 2004, available at
[http://ciir.cs.umass.edu/cgi-bin/ua/web_fetch_doc?dataset=ua&db=agendaFall2004&
query=and&doc_id=3208], visited February 20, 2005. The rule, listed at Sequence Number
3208, is listed under Clean Air Act, but for Legal Authority, the entry says “not yet
determined.” In addition to TSCA authority, Section 303 of the Clean Air Act could
possibly be invoked. Section 303 allows the Administrator to seek a restraining order (and
temporarily to issue such orders on his 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.
55 Personal communication, U.S. EPA, Office of Transportation and Air Quality, January
6, 2003. Confirmed March 1, 2005.

---

CRS-19
Legislation
Building on the work of earlier Congresses, legislation to address MTBE issues
(Title XV of H.R. 6) passed the House April 21, 2005.56 In the Senate, a bill
addressing MTBE, renewable fuels, and reformulated gasoline (S. 606) was ordered
reported by the Environment and Public Works Committee on March 16, 2005. The
MTBE-related provisions of the two bills are reviewed below.
MTBE Transition and Renewable Fuels Standard. As in the 108th
Congress, H.R. 6 contains a separate title (Title XV) that addresses MTBE, RFG,
ethanol, and related issues. The title would amend the Clean Air Act to eliminate the
requirement that RFG contain 2% oxygen, and to establish a new requirement that
an increasing amount of gasoline contain renewable fuels such as ethanol. The bill
would require that 3.1 billion gallons of renewable fuel be used in 2005, increasing
to 5.0 billion gallons by 2012. (This compares to 2.1 billion gallons used in 2002 —
the latest data available when the bill was first drafted. Ethanol use has since
increased to 3.4 billion gallons in 2004.)
The bill would ban the use of MTBE in motor vehicle fuel, except in states that
specifically authorize its use, not later than December 31, 2014. The ban includes
two possible exceptions. First, EPA could allow MTBE in motor fuel up to 0.5
percent by volume, in cases that the Administrator determined to be appropriate; and
second, the President would be able to make a determination, not later than June 30,
2014, that the restrictions on the use of MTBE shall not take place.
The bill would also authorize $2.0 billion to assist the conversion of merchant
MTBE production facilities to the production of other fuel additives, and preserves
the reductions in emissions of toxic substances achieved by the RFG program.
As approved in committee, S. 606 contains similar provisions. It also would
repeal the oxygenate requirement, require the use of renewable fuel, ban MTBE use
in fuels, and provide conversion assistance, although the specifics are different. The
renewable fuel requirement would increase to 6.0 billion gallons in 2012. The ban
on MTBE would take effect four years after the date of enactment, rather than at the
end of 2014, and would have fewer possible exceptions. And conversion assistance
would be limited to $1 billion and could only be used to produce two types of
additive.
Safe Harbor Provision. Perhaps the most controversial element of H.R. 6
is its inclusion of a “safe harbor” provision protecting manufacturers and distributors
of renewable fuels and fuels containing MTBE from product liability claims. S. 606
contains a safe harbor for renewable fuels, but not MTBE.
56 Legislation that could affect MTBE use has been introduced in every Congress since the
104th. In the 108th Congress, both the House and Senate passed comprehensive energy bills
(H.R. 6) that addressed MTBE. A conference report on the legislation (H.Rept. 108-375)
was adopted by the House, November 18, 2003, on a vote of 246-180. In the Senate,
however, a cloture vote on the conference report, November 21, 2003, failed to achieve the
60 votes necessary to limit debate.

---

CRS-20
The effect of this provision would be to protect anyone in the product chain,
from manufacturers to retailers, from liability for damages for contamination related
to MTBE and renewable fuels, or for personal injury or property damage based on
the nature of the product. The safe harbor provision would apply retroactively to
September 5, 2003, potentially barring lawsuits filed on or after that date, including
those filed by the State of New Hampshire and various cities, towns, counties,
municipal water suppliers, and schools. Prior to that date, five lawsuits had been
filed. After that date, roughly 150 suits were filed on behalf of 210 communities in
15 different states. This provision is highly controversial and contributed to the
failure of the conference report in the Senate in the 108th Congress.
The safe harbor provision states that the defective products liability shield
would not affect the liability of a person for environmental cleanup costs, drinking
water contamination, negligence for spills, or other liabilities other than liability
based upon a claim of defective product. However, MTBE manufacturers and those
who blend fuels would likely be more difficult to reach under these other bases of
liability.57 State attorneys general, local governments, and drinking water suppliers
note that providing a products liability shield would effectively leave only gas station
owners liable for cleanup, and because these businesses often have very limited
resources, the effect of the safe harbor provision is that the burden for cleanup would
fall to local communities, drinking water utilities, and the states. In light of this, the
Congressional Budget Office identified the safe harbor provision an
intergovernmental and private-sector mandate in its review of H.R. 6.58 The
Attorneys General for at least 14 states, including states where RFG is heavily used,
strongly oppose the MTBE safe harbor provision. Others have questioned the
fairness of placing the liability burden primarily on gas station owners, who were not
made aware of MTBE’s exceptional contamination potential.
57 For a more detailed discussion, see CRS Report RS21676, The Safe-Harbor Provision for
Methyl Tertiary Butyl Ether (MTBE).
58 Congressional Budget Office, “Cost Estimate for H.R. 6, the Energy Policy Act of 2005,
as Introduced in the House of Representatives.” Addressed to Honorable David Dreier,
Chairman of the Committee on Rules, U.S. House of Representatives, April 19, 2005, 4 pp.
This document is available at [http://www.cbo.gov]. The CBO determined that the MTBE
and renewable fuels liability safe harbor “would impose both an intergovernmental and
private-sector mandate as it would limit existing rights to seek compensation under current
law.... Under current law, plaintiffs in existing and future cases may stand to receive
significant amounts in damage awards, based, at least in part, on claims of defective product.
Because section 1502 would apply to all such claims filed on or after September 5, 2003,
it would affect more than 100 existing claims filed by local communities, states, and some
private companies against oil companies. Individual judgments and settlements for similar
lawsuits over the past several years have ranged from several million dollars to well over
$100 million. Based on the size of damages already awarded and on information from
industry experts, CBO anticipates that precluding existing and future claims based on
defective product would reduce the size of judgments in favor of state and local
governments over the next five years. CBO estimates that those reductions would exceed
the threshold established in UMRA (Unfunded Mandates Relief Act) [$62 million] in at
least one of those years.”

---

CRS-21
Oil companies and other proponents of the provision argue that a safe harbor
provision is reasonable, given that the fuels have been used to meet the 1990 federal
oxygenated fuels mandate, and that the key problem lies not with MTBE, but with
leaking underground storage tanks, which are the primary source of MTBE
contamination. Even so, MTBE producers appear to remain concerned about
potential liability exposure. MTBE production and use grew rapidly during the
1980s, and several oil companies experienced some incidents of MTBE
contamination of groundwater and drinking water wells. In 1984, oil company
engineers estimated that, if MTBE use in gasoline became widespread, the number
of well contamination incidents would triple, and treatment costs would increase by
a factor of five compared to conventional gasoline incidents.59 In 1985, Exxon
engineers “recommend[ed] that from an environmental risk point of view MTBE not
be considered as an additive to Exxon gasolines on a blanket basis throughout the
United States.60 The total costs of treating MTBE contaminated drinking water are
unknown but are expected to be in the billions. This provision and its potential
consequences continue to be the subject of intense debate.
Leaking Underground Storage Tank Issues. H.R. 6 also addresses the
issue of MTBE and other fuel leaks from underground storage tanks (USTs). Title
XV, Subtitle B, would make extensive amendments to Subtitle I of the Solid Waste
Disposal Act to enhance the leak prevention and enforcement provisions of the
federal UST regulatory program and broaden the allowable uses of the Leaking
Underground Storage Tank (LUST) Trust Fund. Among other things, H.R. 6 would
require EPA or the state to conduct compliance inspections of USTs every three
years; prohibit fuel delivery to ineligible tanks; and require EPA, with Indian tribes,
to develop a strategy to address releases on tribal lands. It also would direct states to
develop training requirements for persons responsible for operating and maintaining
tanks and responding to spills. Further, it would require that, when determining the
portion of cleanup costs to recover from a tank owner or operator, EPA or a state
must consider the owner or operator’s ability to pay for cleanup and still maintain
basic business operations. Also, states would have to do one of the following: (1)
require that new tanks are secondarily contained if located within 1,000 feet of a
community water system or potable well; or (2) require that UST manufacturers and
installers maintain evidence of financial responsibility to pay for corrective actions;
and require persons installing USTs to be certified or licensed, or the installation to
be certified by an engineer or approved by the state, or compliant with a code of
practice or other method that is no less protective of health and the environment.
Both H.R. 6 and S. 606 authorize appropriations from the trust fund for EPA
and states to use for remediation of MTBE and enforcement of the tank program.
59 Memorandum from B. J. Mickelson to V. M. Dugan, MTBE Contamination of Ground
Water, Exxon Oil Company, August 23, 1985, presented in South Tahoe Public Utility
District v. Atlantic Richfield Co., Case No. 999128 (San Fran. Super. Ct. Aug. 5, 2002).
60 Memorandum from B. J. Mickelson to Mr. J. M. E. Mixtar, Introduction of Methyl
Tertiary Butyl Ether (MTBE) in the Texas Eastern Transmission, Jacksonville, Florida;
Charlston, South Carolina; and Wilmington, North Carolina Areas, Exxon Oil Company,
April 19, 1985, presented in South Tahoe Public Utility District v. Atlantic Richfield Co.,
Case No. 999128 (San Fran. Super. Ct. Aug. 5, 2002).

---

CRS-22
H.R. 6 would authorize annually, from the LUST Trust Fund for FY2005 through
FY2009, the appropriation of $200 million for the LUST clean-up program for
petroleum tanks, and another $200 million specifically for responding to tank leaks
involving MTBE or other oxygenated fuel additives (e.g., ethanol). S. 606 would
authorize a one-time appropriation of $200 million for the cleanup of MTBE and
other ether fuels (but not ethanol) from USTs and other sources. (For a detailed
discussion of the MTBE and ethanol provisions of the two bills, see CRS Report
RL32865, Renewable Fuels and MTBE: A Comparison of Selected Legislative
Initiatives.)
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 phaseout of MTBE from gasoline in California.61 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
December 31, 2002. (This date was amended, in March 2002, to December 31,
2003.) 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 expressing skepticism that it had authority to grant a waiver under the
circumstances.62 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.63 The law
does not address other impacts, such as drinking water contamination. More than
two years later, on June 12, 2001, the agency finally denied California’s request.
Without a waiver, gasoline sold in ozone nonattainment areas in the state has been
required to contain another oxygenate since the MTBE ban took effect. During 2003,
California’s motor fuels gradually phased out MTBE in favor of ethanol.
61 See Arturo Keller 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 at [http://www.tsrtp.ucdavis.edu/mtberpt/homepage.html].
62 See 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.
63 The waiver language is found in Section 211(k)(2)(B).

---

CRS-23
In January 2004, Governor Schwarzenegger again requested EPA to grant
California a waiver from the oxygenate requirement. The governor noted that EPA’s
Blue Ribbon Panel concluded that a minimum oxygen content is not needed in
California, and that CARB had demonstrated that the oxygen requirement is
detrimental to the state’s efforts to improve air quality. Governor Schwarzenegger
further stated that the oxygenate requirement greatly increases fuel costs and “is no
longer required to ensure substantial and sustained ethanol use in California.”64 As
of April 2005, EPA had not yet responded to this request.
Following California’s decision to phase out MTBE, at least 18 other states
(Colorado, Connecticut, Illinois, Indiana, Iowa, Kansas, Kentucky, Maine, Michigan,
Minnesota, Missouri, Nebraska, New Hampshire, New York, Ohio, South Dakota,
Washington, and Wisconsin) have acted to limit or phase out its use. The largest of
these, New York, set a date of January 1, 2004, to ban MTBE. (Table 2, below,
summarizes state actions to ban MTBE.)
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). 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.
In June 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 phaseout of MTBE ordered by
the governor of California on 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. (Methanol is a
major component of MTBE and is Methanex’s only product. The California market
for MTBE reportedly accounted for roughly 6% of global demand for methanol.)
The 1999 Methanex claim asserted that California’s phaseout was motivated by a
desire to favor an MTBE competitor, ethanol, which is produced in the United States.
In August 2002, an arbitration panel ordered Methanex to file a fresh claim more
specifically relating the actions of California to the company’s manufacture of
methanol. Methanex filed a new claim in November 2002, and a hearing was held in
June 2004. A ruling is pending.65
64 See [http://www.governor.ca.gov/state/govsite/gov_homepage.jsp] (search “MTBE”).
65 See also CRS Report RL31638, International Investor Protection: “Indirect
Expropriation” Claims under NAFTA Chapter 11.

---

CRS-24
Table 2. State Actions Banning MTBE
State
Phaseout date
Complete or partial ban?
IA
7/1/00
Partial: no more than trace amounts (0.5% by vol.) MTBE in motor
vehicle fuel
MN
7/2/00 (partial)
Partial/then complete: no more than 1/3 of 1% oxygenate as of
7/2/05 (full)
7/2/00; complete ban as of 7/2/05. Ban also applies to ethyl tertiary
butyl ether (ETBE) and tertiary amly methyl ether (TAME)
NE
7/13/00
Partial: no more than 1% (vol.) MTBE in any petroleum product
SD
7/1/01
Partial: no more than trace amounts (less than 0.5% vol.) resulting
from commingling during storage or transfer
CO
4/30/02
Complete ban by 4/30/02
CA
12/31/03
Complete ban by 12/31/02, an Exec. Order on 3/15/02 required
Cal. Air Resources Board (CARB) to implement by 7/31/02, a 1
year delay in ban. On 7/25/02, CARB delayed ban by 1 year
MI
6/1/03
Complete ban by 6/1/03; can be extended if determined by 6/1/02
that phaseout date is not achievable
CT
1/1/04
Complete ban by 1/1/04, coordinated with NESCAUM (North East
States for Coordinated Air Use Management) regional fuels task
force
NY
1/104
Complete ban as of 1/1/04
WA
1/1/04
Partial: may not be intentionally added to fuel, or knowingly mixed
in gasoline above 0.6% (vol.)
KS
7/1/04
Partial: may not sell or deliver any motor vehicle fuel containing
more than 0.5% (vol.) MTBE
IL
7/24/04
Partial: may not use, sell or manufacture MTBE as a fuel additive;
may sell motor fuel containing no more than 0.5% (vol.) MTBE
IN
7/24/04
Partial: no more than 0.5% (vol.) MTBE in gasoline
WI
8/1/04
Partial: no more than 0.5% (vol.) MTBE in gasoline
OH
7/1/05
Partial: no more than 0.5% (vol.) MTBE in motor vehicle fuels
MO
7/31/05
Partial: no more than 0.5% (vol.) MTBE in gasoline sold or stored
KY
1/1/06
Partial: no more than trace amounts of MTBE in fuel
ME
1/1/07
Partial: no more than 0.5% (vol.) MTBE in gasoline sold
NH
Latter of 1/1/07
Partial: no more than 0.5% (vol.) MTBE in gasoline sold or stored.
or 6 months
Ban also applies to other gasoline ethers, and tertiary butyl alcohol
after EPA
(TBA).
approval to opt
out of RFG
program
Source: Environmental Protection Agency, EPA 420-B-04-009, June 2004.
Note: Arizona adopted legislation on 4/28/00 calling for a complete phaseout of MTBE as soon as
feasible but no later than six months after California’s phaseout. This legislation expired on June 30,
2001. Although, it is no longer official state policy, the state still encourages phaseout of MTBE.

---

CRS-25
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, numerous 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 is expected to provide additional information to help advance the
current understanding of MTBE-related health and environmental issues and those
of its potential alternatives. However, because small amounts of MTBE in water can
make it noxious to consumers, many states have imposed limits on its use.
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 emerged
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. Others view
the debate over MTBE as an opportunity to encourage the greater use of ethanol, a
competing oxygenate generally made from corn.
Developments in the states, particularly California and several northeastern
ones, have driven reconsideration of the petroleum industry’s reliance on MTBE as
the principal means of meeting the Clean Air Act’s reformulated gasoline
requirements. These developments have generated continued congressional interest
in the issue. Differences remain over whether to ban MTBE, whether to provide a
product liability safe harbor for MTBE (or renewable fuels) producers, and other
issues that may delay or prevent enactment of legislation.

---