Mr. Chairman, my name is A. Blakeman Early. I am pleased to appear today on behalf of the American Lung Association to discuss the use of MTBE in Reformulated Gasoline (RFG) and conventional gasoline. The American Lung Association has long been a supporter of the use of RFG as an important tool that many areas can and should use to reduce unhealthy levels of ozone.
As has been demonstrated in California, “clean” gasoline can be an effective tool in reducing car and truck emissions that contribute to smog. Based on separate cost effectiveness analyses conducted by both the U.S. EPA and the State of California, when compared to all available control options, reformulated gasoline (RFG) is a cost-effective approach to reducing the pollutants that contribute to smog.1 Compared to conventional gasoline, RFG has also been show to reduce toxic air emissions from vehicles by approximately 30 percent.2
The American Lung Association was a member of the Blue Ribbon Panel on Oxygenates in Gasoline. We endorsed the recommendations of the Panel in a report issued in 1999. And the American Lung Asociation engaged in extensive negotiations with the oil industry, ethanol industry, corn growers and many other stakeholders regarding needed legislative change to the RFG program. Throughout these discussions we maintained that three recommendations of the Blue Ribbon Panel were preeminent and must be included in legislation that modified the RFG provisions of the Clean Air Act. These were: 1) that MTBE must be eliminated from all gasoline, not just RFG 2) the mandatory oxygen requirement for RFG must be eliminated, and 3) “anti-backsliding” provisions must be added to the law to ensure that when refiners produced RFG without oxygen and without MTBE, the resulting fuel reduced toxic air emissions just as much as currently produced RFG. The American Lung Association endorsed legislation in the 106th Congress that contained these critical elements plus a Renewable Fuel Standard (RFS) designed to compensate the ethanol industry for its loss of market associated with the elimination of the oxygen requirement in RFG.
As negotiations continued, a large numbers of stakeholders(except the MTBE industry) supported the elimination of MTBE over four years, and anti-backsliding provisions for air toxics. Other elements of the Blue Ribbon Panel recommendations gained wide acceptance including: expanding EPA’s authority to address MTBE in groundwater under the Leaking Underground Storage Tank (LUST) program, and augmenting EPA’s authority to test and regulate gasoline constituents based on threats to public health or the environment from water contamination. But further progress on compromise legislation was thwarted over a disagreement between the ethanol industry which wanted an Renewable Fuel Standard that “grew” the industry by increasing over time and the API which opposed mandatory use of ethanol in volumes above those needed for octane in RFG and conventional gasoline.
When the energy bill in the Senate gained momentum last year, the ethanol industry and the API announced an agreement that introduced a completely new element to the discussion. While agreeing on a level of mandatory ethanol use through an RFS that would grow the ethanol industry, the API and the ethanol industry announced that a necessary element of any compromise legislation must include a “safe harbor” that shielded both industries from defective product liability under federal or state law for the use of either MTBE or renewable fuels including ethanol. The American Lung Association opposed this new concept. Ultimately, the Senate adopted many of the recommendations of the Blue Ribbon Panel as well as a “safe harbor” that applies only to renewable fuels. The American Lung Association endorsed the passage of the bill with the removal of the safe harbor provision.
Unfortunately, during the conference on the energy bill, the house conferees proposed changes to the Senate language highly favorable to the MTBE industry. This response killed the possibility for agreement. Not only did the House offer extend the safe harbor from defective product liability to MTBE contamination incidents, it eliminated the Senate ban of MTBE in fuel, preempted states from prohibiting MTBE in fuel after enactment, and it eliminated Senate language that authorized EPA to regulate fuel additives to prevent water contamination. (See Appendix A for details) For areas suffering from MTBE contamination, the House offer was the worst of both worlds. It eliminated the most important tools in the Senate compromise bill to stem MTBE contamination and obtain cleanup assistance from refiners, while still imposing the burden of a Renewable Fuels Standard nationwide.
As a member of the Blue Ribbon Panel on Oxygenates in Gasoline, the American Lung Association learned of the significant threat that MTBE poses to the nation’s water supplies. Subsequent data collected by the USGS and presented in testimony by Mr. Erik Olson from Natural Resources Defense Council which I submitted with my testimony, only heightens the concern over MTBE contamination. USGS found that about 15% of drinking water tested in the high MTBE use areas of the Northeast contained MTBE.3 It is estimated that over 18 million people are served by drinking water contaminated by MTBE. (See Attachment A) The struggle that Mr. Paul Granger provides in testimony presented to the Subcommittee today will likely be repeated in many areas, as the USGS estimates that about 35% of community water system wells are located within 1 km of a Leaking Underground Storage Tank (9000 wells)4 We also came to understand that the continued use of MTBE in RFG undermines public support for the RFG program. In addition, EPA found in its boutique fuels study that the antipathy toward MTBE has lead many states to adopt “boutique fuels” in lieu of federal RFG in order to avoid high amounts of MTBE dictated by the mandatory oxygen requirement.These factors provide compelling reasons to assure that any legislation requires MTBE be phased out of all gasoline, not just RFG. We believe there is a broad consensus in support of the MTBE phase out. In short, removing MTBE from our nation’s fuel supply is both a political and environmental imperative that must accompany any other fuel changes that Congress adopts. We believe the introduction of MTBE phase out authority in the Senate energy bill, along with “anti-backsliding” and other provisions that would implement recommendations of the Blue Ribbon Panel represents a unique opportunity to legislate constructive changes to RFG and conventional gasoline. This legislation has been introduced in the 108th Congress by Senators Daschle and Hagel as S. 385, The Fuels Security Act of 2003.
Providing a defective product liability shield to MTBE, as provided in the House offer last year is truly unsupportable. As explained in detail in Mr. Olson’s testimony, refiners and MTBE producers had extensive knowledge of MTBE’s hazards as a contaminant in groundwater. For instance in 1983, in response to an API survey, a Shell expert stated, “In our situation the MTBE was detectable (by drinking) in 7 to 15 part per billion so even if it were not a factor to health, it still had to be removed to below detectable amount in order to use the water.” They also knew that underground storage tanks of gasoline were leaking across the nation. By 1982, an Exxon annual testing program for underground gasoline storage tanks found that 38 percent were leaking. In 1981, Shell and ARCO estimated 20 percent of all U.S. underground storage tanks were leaking. Yet the neither the refiners nor the MTBE industry informed Congress of the dangers of adopting a clean fuels program that they were advocating and that they knew would vastly increase MTBE use. Indeed, the industry used MTBE extensively before the RFG program was enacted in 1990. While they now call for liability protection because Congress made them use MTBE by enacting the Clean Air Act Amendments of 1990. However, in 1991, the year before fuel requirements went into effect refiners were putting approximately 4.2 million gallons a day of MTBE into gasoline. This represents a level of usage that is only half the 9.8 million gallons used in 1998 when the RFG and oxyfuel programs were in full force.
Given the complicity of the industry in the creation of the MTBE contamination problem, we see absolutely no justification for the removal a legal tool that should be available to MTBE contamination victims to help address the clean up of widespread MTBE contamination. The predicament described by Mr. Granger illustrates well that every tool must be available to address MTBE cleanup. In addition, we see no impending tidal wave of adverse court decisions that compels Congress to provide the industry special legal protections. We also note that the language adopted in the House offer, protects the industry from defective product liability regardless of whether a MTBE leak may have occurred prior to enactment of the 1990 amendments and regardless of whether the leak came from RFG or conventional gasoline which would contain MTBE only because a refiners voluntarily chose to add it.
One frustrating aspect of this debate is that, essentially, history may be repeating itself. Refiners chose to use MTBE in gasoline in part to replace tetra-ethyl lead. You may recall that as a result of the lead refiners placed in gasoline and paint manufacturers placed in paint, 88 percent of children aged one to five had blood lead levels above the threshold believed to have the potential to impair cognitive development in the late 1970’s. It took ten years to get lead out of gasoline. Ironically, Congress banned the use of lead in gasoline in the 1990 Clean Air Act Amendments. Hopefully Congress can get rid of MTBE in gasoline more quickly than lead. Yet in testimony before the House Subcommittee on Energy and Air Quality, the Oxygenated Fuels Association called for regulatory and tax changes to facilitate greater use of ETBE because it has “less affinity for water than MTBE” and can address volatility and pipeline issues associated with ethanol use. What the OFA did not tell the committee is that while ETBE in gasoline is approximately 60 % less soluble in water than MTBE, it is still 30 times more soluble than benzene, is resistant to degradation, and most importantly has a an odor detectability in drinking water at one fourth the concentration of MTBE. (See Attachment B) We would hope after all this history that Congress would not allow itself to be hoodwinked once again by the oxygenated fuels industry by accepting OFA’s recommendation. Indeed, any sensible fuels policy would affirmatively prevent the use of ETBE in gasoline.
The American Lung Association Opposes a Liability “Safe Harbor” for Renewable Fuels
The Congress must not adopt the “safe harbor” provisions that were adopted in the Senate compromise that reduce the incentives to avoid renewable fuel additives to gasoline that replicate in any way the problems of lead or MTBE. Unfortunately, Section 819(e) of the Senate compromise bill (Section 101(e) of S. 385) provides that no renewable fuel can be deemed to be defective in design or manufacture “by virtue of the fact that it is, or contains such a renewable fuel”. The liability shield in this provision reduces the incentive renewable fuel producers and purveyors have to be vigilant and provide a safe renewable fuel product. Therefore, the provision increases the likelihood of another MTBE situation developing rather than decreasing it.
Since the oil refining industry is insisting on the “safe harbor” a question is clearly raised. What do they know about the dangers of renewable fuels that we do not? Are there dangers that they know about, as they did with MTBE in the 1980’s that they are not telling Congress as it contemplates mandating the use of renewable fuels? Why does the ethanol industry support the “safe harbor” for renewable fuels? Are there adverse consequences from ethanol use that they know about that prompt their support for the “safe harbor”?
Without the Senate Compromise bill, Massive Amounts of Ethanol Must be Used in California and the Northeast
The Senate compromise bill represents a significant compromise that the American Lung Association believes provides the best basis for achieving modifications to RFG that meets the needs of the oil industry, the ethanol industry, state air regulators, and air quality. With the removal of the safe harbor for renewable fuels, the Senate compromise should be able to be enacted and avoid an impending “train wreck” if existing state bans of MTBE go into effect beginning with Connecticut in October of this year.
In a world where 14 to 19 states individually ban MTBE but oxygen requirement is maintained in federal RFG, large amounts of ethanol will be needed. The difference between this scenario and implementing the Senate compromise is that the ethanol demand is inflexibly centered on California and the Northeast where ethanol is not currently produced or used in any significant volumes. According to the API, if MTBE bans in California and the Northeast take effect with no change to federal RFG requirements, California would need 843 million gallons of ethanol and the Northeast would need 713 million gallons.(See Tab 2 and 3) We believe the cost and price spike impact of such a scenario would be much more significant than under the Senate compromise. This is because ethanol must be transported and stored separately from the base gasoline it is mixed with until it reaches consumer distribution.
Under the Senate compromise, the RFS credit and banking provisions allow some refiners to use ethanol in the most economically efficient manner, most likely where it is already made and used. These refiners can sell RFS credits to those who cannot use ethanol economically. We expect that octane for RFG used in the Northeast and California will be met substantially by the use of iso-octane and alkylates. Refiners supplying these regions would then be obligated to purchase RFS credits from refiners using ethanol in mid-west markets where it has been traditionally sold. Such an approach is far more practical than the “forced” ethanol use under the status quo scenario.
The Congress has been deadlocked over legislation to eliminate MTBE and improve federal requirements for RFG and conventional gasoline for years. With the exception of the liability safe harbor, the provisions in the Senate compromise bill adopted last year represent a compromise that addresses widely varying concerns in a reasonable fashion. We urge you to grasp this opportunity, remove the safe harbor provisions from S. 385 and support this compromise.
1 U. S. Environmental Protection Agency, Regulatory Impact Analysis, 59 FR 7716, Docket No. A-92-12, 1993
2 Report of the Blue Ribbon Panel on Oxygenates in Gasoline, September 1999, pp. 28-29
3 Moran, Zogorski, Squillace, “Occurrence and Distribution of MTBE and Gasoine Hydrocarbons in Ground Water and Groundwater Used as Source Water in the United States and in Driniking Water in 12 Northeast and Mid-Atlantic States,1993-2002” (March,2003, in press) available online at http://sd.water.usgs.gove/public_naw/pubs/journal/GW.MTBE.moran.pdf.
 Study of Boutique Fuels & Issues Relating to Transition from Winter to Summer Gasoline, Office of Transportation and air Quality, U.S. Environmental Protection Agency, October 24, 2001, p. 10.