Statement of Scott H. Segal

Bracewell & Patterson, L.L.P.

Counsel, Oxygenated Fuels Association

Before the Subcommittee on Clean Air, Climate Change and Nuclear Safety

Committee on Environment and Public Works

United States Senate

Hearing on Proposals Regarding Fuel Additives and Renewable Fuels

March 20, 2003

 

Chairman Voinovich, Senator Carper and Members of the Subcommittee, thank you for this opportunity to testify regarding national motor fuels policy and the Clean Air Act.  My name is Scott Segal, and I am a partner at the law firm of Bracewell & Patterson.  In that capacity, I have represented clients here in Washington on environmental policy matters for thirteen years.  Today, I am here in my capacity as counsel to the Oxygenated Fuels Association.  In addition, I serve on the adjunct faculty of the University of Maryland (University College) in the area of Science and Technology Management.

 

Founded in 1983, the Oxygenated Fuels Association (OFA) is an international trade association established to advance the use of oxygenated fuel additives to improve the combustion performance of gasoline, thereby significantly reducing automotive tailpipe pollution.

 

OFA gathers, develops and analyzes technical information on the blending, performance, handling, health benefits and environmental properties of oxygenates used in gasoline. OFA works with federal, state and local governments, national health organizations, environmental groups and major allied industries, such as automotive manufacturers, oil companies, and gasoline marketers and other interested parties. OFA sponsors numerous technical analyses and health science studies showing the automotive performance and health benefits of oxygenated fuels.

 

1.       General Considerations for U.S. Motor Fuels Policy

 

Mr. Chairman, the decision to examine the impact of energy policy on U.S. motor fuels issues could not be more timely.  As today’s hearing is underway, disturbing trends are emerging regarding the security, supply and price of motor fuels.  Despite the fact that the spring driving season is not yet upon us, gasoline prices at the pump are already elevated.  While much of the blame for gas prices rests squarely on crude oil prices stimulated by current international uncertainties in the Middle East and Venezuela, other self-imposed policy decisions are also playing a role.

 

Recently, one analyst at the Oil Price Information Service described current prices this way, “It's Ash Wednesday, and we're going to be asked to give up disposable income for Lent.”  The analyst noted that “high fuel prices rob consumers of money to pay for computers, cars, home improvements and other economy-boosting goods and services.” (“No Stopping Gas Prices,” USA Today, March 5, 2003, citing Tom Kloza).  The article in which he was cited went on to assess complicating factors.  And one of these was:

 

Conversion to ethanol instead of potential pollutant MTBE as an ingredient in summer-season gas. The change is cumbersome, and states such as California rely on distant states for corn-based ethanol. "Not a lot of folks can help them out if they get into trouble" with ethanol supplies, says Joanne Shore, senior analyst at DOE's Energy Information Administration.  (Id.)

 

In particular, problems in California are complicated by conversion from MTBE to ethanol fuels.  The noted oil analyst Trilby Lundberg put the California situation in a national context, stating in part that, “The increase of just over a nickel in the U.S. average is nearly entirely due to California refineries switching over to corn-based additives…Some refineries are changing over to a more expensive blend of gasoline and ethanol, which temporarily cut the state's gasoline supply by 10 percent.” (Gas Prices Up to Near-Record Level, Associated Press, March 10, 2003). Californians familiar with the State’s energy situation question whether moving away from MTBE makes sense right now, particularly in light of the international situation.  The Daily Bulletin of California’s Inland Valley reported:

 

Rising prices now are not due to a true shortage…but simply to uncertainty. "We've been living the good life for 22 years. We've had some of the cheapest gas in the world," said Bob van der Valk, bulk fuels manager for Cosby Oil in Santa Fe Springs. Market factors like the major oil companies' decision to start blending their summer gas a different way are playing a role as well, van der Valk said. Gas blended for summer usage has always required more refining than the winter variety, he said. But starting Monday, the major companies will mix their summer gas with ethanol additives instead of MTBE (methyl tertiary butyl-ether) for the first time - an added cost, and complication, at a time when a potential war in Iraq throws the reliability of Middle Eastern crude oil into question. "The last Persian Gulf War when hostilities broke out, we had an interruption in crude oil supply, and there was an instant spike in the price of gas on the street 25 to 30 cents. That hasn't even happened," van der Valk said. "That time we didn't have the MTBE-to-ethanol switch. Last time it was just strictly crude oil." (“Gas prices keep pumping up: No end in sight as a gallon climbs to $1.97,” March 3, 2003).

 

One problem associated with ethanol blends of gasoline is simply that such blends lessen volumes because ethanol contains comparatively greater amounts of oxygen than MTBE.  According to Jeremy Bulow, a Stanford University economist,  the transition to ethanol simply means California will be able to make less of its own gasoline and will have to increase the amount of supply it imports from elsewhere.  "It reduces the capacity of the refiners in California to produce gasoline," Bulow noted. (Alan Zibel, San Mateo County Times, Mar. 14, 2003).  Further, making gasoline with ethanol can be tricky and expensive, necessitating changes in blendstocks that are quite expensive.  David Hackett, president of Irvine-based consulting firm Stillwater Associates, said spot market prices for gasoline meant for blending with ethanol jumped up 10 cents last week and 17 cents amid a "dramatic shortfall" of that fuel in recent weeks. Ethanol-blended gasoline is "tough to make. It's trading at very high levels," Hackett said. "The correct kind of gasoline is in short supply."  (Id.)

 

A consensus of studies confirms the price-supply impact of switching from MTBE to ethanol.  Noted petroleum economist Phil Verleger puts it this way:  removal of MTBE from the California market could push the retail price of gasoline to levels previously unseen across the United States.  Research on price elasticity of gasoline -- confirmed in over 300 studies -- means that high prices in California will pull gasoline from the rest of the country, leaving everyone short of supply. Verleger is a principal at PKVerleger LLC and BP Senior Fellow at the Council on Foreign Relations.

 

As OFA has noted many times, the impact of MTBE on the national motor fuels pool is extraordinarily significant.  Today, many of America’s drivers use cleaner-burning gasoline designed to cost-effectively reduce harmful motor fuel emissions and improve the air we breathe. Introduced in 1995, Reformulated Gasoline (RFG) is used today in the most polluted urban areas in 17 states and the District of Columbia. RFG usage accounts for about 34 percent of the total U.S. gasoline market (i.e., 2.5 million barrels/day or 100 million gallons/day). 

 

While the undeniable environmental benefits of RFG will be discussed later in this statement, I want to keep our eyes on the impact of MTBE volumes on fuel supply.  DOE Under Secretary Bob Card testified before the U.S. Senate in 2001 that,

 

MTBE’s contribution to gasoline supplies nationally is equivalent to about 400,000 barrels a day of gasoline production capacity or the gasoline output of four to five large refineries. Additionally, a loss of ability to use MTBE may also affect the ability of the US gasoline market to draw gasoline supplies from Europe, the major source of our price-sensitive gasoline imports, since those refiners widely use MTBE, albeit typically at lower concentrations than in the U.S. (Statement before the Senate Energy and Natural Resources Committee, June 21, 2001).

 

Not only do policies designed to hasten MTBE’s exit from the marketplace, therefore, complicate the existing picture for gasoline price and supply; they also undermine our clear and present needs for national security.  It is no secret that as these hearings are occurring, hundreds of thousands of U.S. men and women are being mobilized in the Middle East.  What few recognize is that a robust supply of motor fuels is an essential prerequisite for a safe and effective mobilization.  The National Defense Council Foundation (NDCF) noted that five different Presidents— Eisenhower, Kennedy, Nixon, Ford and Carter—recognized that maintaining a healthy refining sector was essential to national security.  (National Defense Council Foundation, The Growing Refining Gap, A Threat to National Security vi - Apr. 29, 1994).

 

As mobilization continues, one would be hard pressed to think of a worse time to remove ten percent of the capacity of motors fuels capacity in the nation’s most populous cities.  The amount of refined products required to supply a modern military far exceeds the amount required in the past. For example, during the peak of Operation Desert Storm, the half million U.S. military personnel involved consumed more than 450,000 barrels of light refined products per day, nearly four times the amount used in World War II by the two million strong Allied Expeditionary Force that liberated Europe.

 

While ethanol currently has a significant and growing share of the fuel pool, some have suggested that mandating its further use could answer price and supply questions.  We believe that an ethanol mandate does not provide an acceptable answer to U.S. energy security needs, given ethanol’s heavy dependence on fossil fuel inputs and its net negative energy yield.  David Pimental of Cornell University further noted that, “Numerous studies have concluded that ethanol production does not enhance energy security, is not a renewable energy source, is not an economical fuel, and does not insure clean air. Further its production uses land suitable for crop production and causes environmental degradation.” (The Limits of Biomass Utilization, August 16, 2001 at 9).  In a new study, published in BioScience in December 2002, Pimental and his associates at Cornell analyzed 10 alternative energy sources.  Of the ten, two – ethanol and geothermal production – were found to be “not sustainable.”  The studies authors stated that, “Ethanol production requires more than 30 percent more fossil energy to produce a gallon of ethanol than the energy yield in a gallon of ethanol.” Also, the ethanol technology causes serious environmental problems, including air, water, biological and soil pollution, the study found (for a review, see Geotimes, Feb. 2003, at http://www.agiweb.org/geotimes/feb03/resources.html) John Krummel, a senior research analyst at the Argonne National Labs, funded by the U.S. Department of Energy, said that Pimental’s work on ethanol efficiency “shows the Achilles’ heel of renewable energy: large land areas are needed for full deployment.” Id.
 
 

2.       The Role of RFG in Environmental Protection

 

By every measure, clean-burning RFG blended with MTBE has exceeded all pollution reduction goals and substantially and cost-effectively improved the nation’s air quality. RFG has cut smog-forming pollutant emissions by over 17 percent, the equivalent of removing 64,000 tons of harmful pollution from the air we breathe or taking 10 million vehicles off our roads. RFG has reduced emissions of benzene, a known human carcinogen, by some 43 percent, while reducing total toxic air emissions by about 22 percent. Cleaner-burning MTBE accounts for a large part of the overall emission reductions from RFG. In 1998, the Northeast States for Coordinated Air Use Management found that RFG with MTBE substantially reduced "the relative cancer risk associated with gasoline vapors and automobile exhaust compared to conventional gasoline," concluding that today’s RFG reduces cancer risk by 20 percent over conventional gasoline. More recently, the California Bay Area Air Quality Management District (BAAQMD) concluded that a substantial reduction in cancer risk in the region is directly attributable to MTBE.

 

OFA has consistently taken the position that an essential prerequisite for substantive revision of the Clean Air Act is that the actual reductions in air emissions that result from use of oxygenated RFG be preserved in any subsequent formulation of fuel. 

 

3.       Issues Related to Water Quality

 

Opponents of the continued use of MTBE point to allegations regarding MTBE in certain water sources.  Is this fair commentary?  The answer is - no - providing gasoline is properly contained and accidental spills and leaks promptly cleaned up. In 1996, MTBE was discovered at low levels in groundwater sources in California. MTBE has also been detected at low concentrations in other parts of the country. MTBE has since received an inordinate amount of attention from US public officials who have attempted to ban MTBE in their jurisdictions. 

 

Initially, the US problem resulted almost entirely from a serious lapse in the regulation of underground gasoline storage tanks (UGSTs), which resulted in thousands of leaking UGSTs by the late 1980's. So widespread was the problem that the EPA established a program in 1988, the Leaking Underground Storage Tank (LUST) Trust Fund, to provide financial assistance to close down or bring these tanks up to standards. Yet by 1999, over ten years later, only 80% of leaking tanks had been closed down or repaired. By 1999, EPA also estimated that almost 400,000 releases from regulated USTs had been identified. In spite of these sobering statistics, however, US public debate has focused only on MTBE detected at some of these leak sites, and not on larger problems associated with gasoline.

 

Claims have been made that MTBE is more water-soluble than other gasoline components. What has been completely overlooked, or ignored is that MTBE can only be introduced into the environment mixed with much larger quantities of the gasoline in which it is blended, usually through gasoline leaks or spills. The much larger problem in fact, is that where you find MTBE, which is not toxic or hazardous to health and the environment, you also find gasoline, containing compounds that are. More information on toxicity is attached as an addendum to this statement.

This Committee itself has recently considered material improvements in the UST program, and OFA looks forward to working with you on such legislation.  Frankly, UST implementation, enforcement and recently-introduced legislation are the most direct and appropriate ways to deal with instances of gasoline components appearing in water.

 

Objective analysis points to MTBE having become a convenient scapegoat as the one entity to which blame for a collective failure to protect US groundwater resources can be conveniently transferred. An Australian fuels expert recently characterized this phenomenon as "shooting the messenger", a reference to the fact that some countries, such as Canada, actually use MTBE detections in water as an "early warning" of potentially significant gasoline leaks into the ground that need to be cleaned up as quickly as possible.

 

Citizens in the Americas are well aware that gasoline and water do not mix. Many countries around the world have safely and securely used MTBE extensively as an octane enhancer since the early 1970's, and ethanol enriched gasoline - another water soluble, but toxic oxygenate - since the 1980's. Where strict compliance with and strong enforcement of gasoline storage and handling regulations is observed, MTBE and other water-soluble additives have a statistically insignificant likelihood of ever contaminating water supplies.

 

Recent California experience also suggests that MTBE water quality issues have been overstated.  At a National Groundwater Association conference held June 6-7, 2002, Kevin Graves of the California Water Resources Control Board gave the address at lunchtime.  His question to the crowd:  “What are you doing at an MTBE Conference?  MTBE is not the big water quality problem in California.”  He told the story of a recent investigation done in their office to verify an environmentalist press statement that 4,000 drinking water wells had been abandoned in California due to contamination.  His investigators found that, in actuality, only 1,200 of those wells had ever experienced an exceedance of any contaminant.  They further found that the majority of the exceedances were from natural, not man-made contaminants – such as arsenic and metals.  They also found that of the wells closed due to synthetic contaminants, the vast majority were solvents from dry-cleaning, pesticides from agriculture, or nitrates, from either agricultural or other industrial use.  Only 10 of the closed wells had ever had exceedances  of gasoline constituents of concern constituents, and only 10 had had exceedances of the MCL for MTBE”

 

4.       Product Bans Set Dangerous Precedents

 

Mr. Chairman, it is our understanding that you do not support product bans, as a general rule, and that the case for a ban of MTBE is unacceptably weak.  Yet there are some who would urge the adoption of a ban as a matter of political expediency.  We urge the Subcommittee in the strongest terms not to ban MTBE.

 

While Congress has acted to ban certain toxic chemicals, it has never done so without an extensive scientific record of confirmed risks and, in some cases, with an opportunity for the appropriate administrative agency to revisit the prohibition based on additional factual information. Congress has enacted only one statutory prohibition on a toxic chemical, a ban on PCBs in the Toxic Substances Control Act, enacted in 1976. Even this prohibition allowed EPA to permit the use of PCBs where it could be shown that there was no unreasonable risk. Furthermore, while EPA has taken regulatory action before to take chemicals out of commerce or limit their use, such as asbestos, lead, and a few major pesticides, EPA only exercised its authority after substantial scientific analysis and an opportunity for public review and comment. None of the product bans thus far proposed allows EPA to make additional findings concerning the actual risk to human health nor allows EPA to exercise its regulatory expertise to provide for exceptions or changes based on changed circumstances. In fact, the data cited in the addendum below disproves toxicity claims.  In this respect, a ban of MTBE is both arbitrary and unprecedented.

 

A ban of MTBE is also objectionable because of the typically short phase-in periods for such actions (some to be implemented in four years or less). In other parts of the Clean Air Act, Congress has taken action to prohibit the sale of certain chemicals or change the design of certain products, but never according to such an abrupt schedule. In Title VI of the 1990 Clean Air Act Amendments, for example, Congress mandated a phase out of Class I chlorofluorocarbons (CFCs) over a ten-year period, and a phase out of Class II CFCs over a 30-year period. Likewise, in Title IV of the 1990 Clean Air Act Amendments, Congress ordered a reduction in emissions of sulfur dioxide over a ten-year period. Title II of the 1990 Clean Air Act Amendments provides for a tightening of standards for automobile emissions that extends in a two-step process over eleven years. Indeed, the investments required to make the Clean Air Act RFG work were substantial enough to warrant a five-year planning and implementation period alone.

 

Restrictions on MTBE not only harm MTBE manufacturers, but they also set a dangerous precedent that could inhibit the success of federally mandated environmental programs in the future. To encourage the development of environmentally protective products and processes in the future, Congress must ensure that the rules for participating in markets are clear and fair, and that the participant has a reasonable expectation to earn a return on an investment. Proposed bans on MTBE in four years or less send a disquieting message that Congress can arbitrarily change the rules at any time, with potentially ruinous consequences for those who have taken risks and made good faith investments.

 

5.       Liability Issues

 

Mr. Chairman, as you know, instances of alleged contamination of water sources by gasoline containing MTBE have recently been the source of a number of lawsuits.  These suits are now ongoing, and I am not in a position to comment on any particular lawsuit or settlement discussions.  However, I would like to address some of the underlying issues relevant to public policy on litigation.

 

By way of review, I would note that last year’s Senate energy proposal contained a safe-harbor provision applicable only to ethanol fuels.  That provision stood for the proposition that because the government would be mandating renewable fuels, no plaintiff’s attorney should be able to sustain the legal argument that merely complying with the law – that is, making gasoline that satisfies the requirement – could be the basis for strict products liability.  If the government tells you to make a particular fuel, it makes little sense to regard such a product as “unreasonably dangerous.”  If the purpose of products liability is to deter unwanted behavior, such liability cannot do so when the government mandates the product.

 

When the House entered into conference discussions with the Senate last year, House negotiators correctly realized that the same argument, as a matter of law, fairness and policy, was clearly applicable to MTBE and other ethers. 

 

First, it is important to recognize that MTBE usage in RFG derives from compliance with a federal mandate – the requirement that RFG contain two percent (by weight) oxygen in order to achieve the goals of the Act to clean the air.  An honest assessment of the conditions surrounding the adoption of the two-percent oxygen standard leaves little doubt but that Congress intended substantial use of MTBE.  For example, Senator Tom Daschle, the author of the floor amendment that established the two-percent standard, stated during debate, “The ethers, especially MTBE and ETBE, are expected to be major components of meeting a clean octane program.” (Clean Air Act Amendments of 1989, Cong. Rec., March 29, 1990 at S3511).  Under certain forms of an oxygenate mandate, Senator Daschle went as far as to note that, “EPA predicts that the amendment will be met almost exclusively by MTBE , a methanol derivative.” (RFG: Whose Recipe Is It Anyway, and Will It Work?, Cong. Rec., May 16, 1990 at S6383).

 

Senator Daschle recognized what we all know:  there are substantial benefits to using MTBE as far as environmental protection is concerned. In the floor debate on the two percent standard, Senator Daschle cited evidence that, “NOx, hydrocarbons, and carbon monoxide are dramatically reduced by adding the oxygenate MTBE to gasoline.” (Id.). 

 

Even opponents of MTBE concede that the federal mandate lies at the heart of MTBE use.  California Governor Gray Davis wrote to EPA, “The only reason such MTBE-free gasoline is not being made available today is U.S. EPA’s enforcement of the 2.0 percent oxygen requirements.” (Letter from Hon. Gray Davis, Governor of the State of California, to Hon. Carol M. Browner, Administrator of U.S. EPA, April 12, 1999).

 

Some argue that because the text of Clean Air Act is silent as to which oxygenate should be used, that somehow there was no intention to use MTBE.  However, the overwhelming consensus of those supporting the two-percent standard was that the provision was intended to be satisfied in a cost-effective manner that would not cause unacceptable price and supply disruptions.  Given the dynamics of ethanol price and supply, it is inconceivable that the two-percent standard was intended to be a de facto ethanol mandate.  In fact, farm-state proponents of the two-percent standard vigorously denied such an intention throughout the debates on the standard.

 

Given that the action of the Congress clearly underscored the requirement for MTBE use, it makes little sense to allow for the propagation of a legal theory that complying with Congress’ wishes is sufficient for products liability.  Of course, if gasoline containing MTBE is negligently spilled, liability may still be an issue.  Last year’s debate on liability did not extend to negligence theories, and every MTBE case thus filed contains in whole or in part such negligence theories.  The safe harbor provision in question here is narrowly tailored and does not interfere with the ability of plaintiffs to obtain relief for truly negligent behavior that results in diminished value of resources.

 

There are many examples of the Congress adopting such narrowly-tailored provisions dealing with liability in specific contexts.  We have included a short list of such examples as an addendum to this statement.  Perhaps the closest fact-pattern deals with a flame retardant, TRIS.  The Federal Government required its use in children’s sleepwear, only to learn that the retardant was carcinogenic, whereupon it was banned.  The Federal Government not only limited liability, but it set up a settlement fund to deal with claims made by companies that manufactured TRIS.

 

Some have argued that imposition of strict product liability is a prerequisite for appropriate remedial actions.  We respectfully disagree.  First, negligence theories more than suffice to address remedial questions.  Second, the use and improvement of the UST program, as discussed above, provides a far fairer and efficient mechanism to address the problems of alleged contamination.  Third, one can hardly think of a less efficient mechanism for addressing water quality concerns than imposition of inflexible strict liability theories.  A recent report from the Council of Economic Advisors found that using the tort system in this way “is extremely inefficient, returning only 20 cents of the tort cost dollar for that purpose.” (Council of Economic Advisors, Who Pays for Tort Liability Claims? An Economic Analysis of the U.S. Tort Liability System, April 2002, at 9).  Surely we can construct a policy that addresses UST leaks such that greater than 20 cents out of every dollar spent goes to actual clean up!

 

6.              A Look to the Future

 

The problems of tightness in supply and refining capacity are likely to be with us for the time being.  The need to maximize energy security will continue as well.  As new fuel choices present themselves, we should adopt public policies that do their best to minimize external costs associated with new fuels and fuel additives.  We must maintain a robust and competitive market in fuel additives, and not allow one particular approach to dominate.

 

One thing we can do is adopt responsible liability protections when fuel choices are or have been mandated.  Failure to do so undermines the introduction of new fuel additives that will be essential for a competitive marketplace.  The Council of Economic Advisors is clear on this point: “At higher levels of expected liability costs, however, firms will choose to forgo innovation or to withhold a product from market, resulting in a net negative effect of expected liability costs on innovation.” (Id. at 6).  Given the current dynamics of the fuel market, we can ill afford less alternatives.

 

Another approach to consider is support for transition assistance for additive manufacturers.  In the event that policies are adopted that make continued use of MTBE less likely, Congress should make clear that it will make adequate resources available on a timely basis to transition current additive manufacturers to new and different products capable of meeting America’s energy needs.

 

If Congress should choose to adopt some form of ethanol mandate, then policies must be put in place that facilitate such mandates on the most acceptable terms.  For example, mere splash blending of ethanol is likely to prove to be unacceptable on a number of fronts.  The volatility of splash-blended ethanol will cause unacceptable environmental and performance complications, particularly in certain regions of the country not currently using the product.  In addition, ethanol’s requirement for segregated pipeline transportation poses high hurdles to efficient movement and allocation of product to distant markets.  As both coasts are enforced to embrace ethanol, this problem will only get worse.

 

One way to address the problems with splash-blended ethanol is to incorporate ethanol into an ether, ETBE.  An ether with less affinity for water than MTBE, ETBE addresses both the volatility and pipeline transportation issues.  However, in order to facilitate greater ETBE use, ETBE must be placed on equal-footing with splash-blended ethanol.  This means that ETBE must be treated fairly in tax and regulatory contexts.  For more information, please see a separate statement submitted for the record in this hearing by the Lyondell Chemical Company.

 

* * * * *

 

Mr. Chairman, Senator Carper, and other Members of the Subcommittee, thank you for your careful attention to these matters.  OFA and its members look forward to working with you on a fair and effective national fuels policy – one that protects consumers, human health and the environment. 


Addendum One:  Summary of Critical Risk Assessments: MTBE Does NOT Pose Human Health Risks; January 2003

 

Statement by John Kneiss

Oxygenated Fuels Association

Methyl tertiary-butyl ether (MTBE) is an oxygenated compound blended in gasoline as: 1) an octane enhancer, and 2) a cleaner-burning fuel component used to reduce harmful air pollution from automotive emissions, particularly as part of the Reformulated Gasoline (RFG) program. RFG is used today in the most polluted urban areas of the U.S. Overall, RFG accounts for about 33 percent of the total U.S. gasoline market (about 105 million gallons per day). About 85 percent of the RFG program relies on MTBE blending to achieve the substantial reductions of vehicle emissions that lead to improved air quality and public health.

MTBE is one of the most widely studied chemicals in commerce. Numerous government and world- renowned independent health organizations have conducted assessments of MTBE - none found sufficiently compelling reasons to classify MTBE as a possible cancer-causing agent for humans. This brief summary of critical risk assessments and related studies (e.g., taste/odor characteristics and drinking water occurrence) help demonstrate that incidental exposure to MTBE due to its use in gasoline does not pose increased human health risks.

European Union Risk Assessment/Risk Reduction Strategy for MTBE

In 1997, methyl tertiary-butyl ether (MTBE) was included in the third Priority List of substances selected for risk assessment under the European Union (EU) Existing Substances Regulation. The EU risk assessment was conducted within the very well defined regulatory framework established by the EU's technical agencies. In this process, health and environmental data are evaluated, together with the potential for human exposure and environmental occurrence, to assess the over-all risk potential that MTBE may pose. This process leads to a formal decision on how MTBE should be classified, and whether or not regulatory action is needed in Europe.

The full EU risk assessment for MTBE was recently completed and findings published December 2001 Official Journal of the European Communities. The principle findings of the risk assessment and risk reduction strategy review are as follows:

·                  The human health risk assessment concludes that consumers are NOT expected to be at risk from exposures to MTBE, and that protective measures already being applied are considered sufficient.

·                  Regarding worker exposure, the findings indicate attention for repeated local skin exposures during maintenance operations and automotive repair - for which the use of skin protective equipment already used to guard against exposure to other gasoline components is deemed adequate as a risk reduction measure.

·                  The assessment recognized the need for specific measures to protect aesthetic quality of drinking water (primarily sourced from ground water); that is, avoidance of any taste or odor impacts. The risk protective measures address the construction and operation of underground gasoline storage tanks and delivery systems at service stations. The EU adopted recommendations on MTBE in connection with gasoline UST installation and maintenance in March 2001. In general, the EU concluded that measures being applied to prevent and minimize gasoline and MTBE releases aimed at protection of groundwater will contribute to preventing impacts to drinking water.

Based on the risk assessment and recognition of current risk reduction strategies, the EU is not expected to limit the use of MTBE in gasoline or proceed with additional regulatory actions.

IARC Hazard Assessment for MTBE

The International Agency for Research on Cancer (IARC), established in 1965 by the World Health Organization, coordinates and conducts research on the causes of human cancer, and to develop scientific strategies for cancer control. IARC conducts highly objective, scientific reviews of health and toxicological data on chemicals substances to evaluate the potential for human cancer hazards. IARC reviews are carried out by expert panels convened from around the world - scientists representing research centers, academic institutions, governmental agencies, environmental and industry groups. The results of these expert reviews are published as monographs and made available worldwide. (IARC use a classification system to rank cancer hazard to humans: Group 1 is known human carcinogen; Group 2A is probable; Group 2B is possible; Group 3 is not classifiable as to its carcinogenicity; and Group 4 is probably not carcinogenic to humans). The IARC monographs are valuable tools for scientific bodies and persons advising policy-makers addressing issues on human cancer risks.

The IARC Working Group met from 13-20 October 1998 to examine data on various chemicals, one of which was MTBE. The outcome of the IARC expert panel's deliberations on MTBE is contained in detail in the Volume 73 Monograph, published in 1999. Based on the extensive consideration made by the IARC expert panel of these data, the conclusions drawn are as follows:

·                  There is inadequate evidence in humans for the carcinogenicity of MTBE.

·                  There is limited evidence in experimental animals for the carcinogenicity of MTBE.

·                  MTBE is considered as Group 3 (not classifiable) as to its carcinogenicity to humans. This means that the expert panel concluded the available data did NOT warrant a more severe (higher) classification.

HHS National Toxicology Program

The National Toxicology Program (NTP), administered by the U.S. Department of Health & Human Services' National Institutes of Health, examined the MTBE data in 1998 and declined to list it as either known or "likely" to be carcinogenic to humans. The NTP is made up of various U.S. federal environmental and health agencies, with an independent advisory Board of Scientific Counselors. This findings by the NTP is contained in the HHS 9th Report on Carcinogens (1999) submitted to Congress.

 

California Science Advisory Board for Proposition 65

In December 1998, the California Science Advisory Board (Carcinogen Identification Committee), under the state's Proposition 65 law, did not list MTBE as "known to the state to cause cancer." Another committee of the Advisory Board separately determined that MTBE does not cause reproductive toxicity or birth defects.

Based on current understanding of the available health and toxicity information, MTBE does not represent a threat to human health from exposure at the extremely low levels reported in the environment as a result of MTBE's current use in gasoline.

MTBE Taste & Odor Characteristics

The U.S. EPA Health Advisory Program provides information and guidance to individuals or agencies concerned with potential impacts to drinking water supplies for substances for which no national regulations currently exist. Advisories are not mandatory standards for action; are used only for guidance in determining actions; and are not legally enforceable. In late 1997, the EPA examined available data on MTBE and developed a consumer acceptability guidance to avoid levels that could impact the taste and/or odor of drinking water.

The EPA advisory on MTBE recommends that "…keeping concentrations in the range of 20 to 40 micrograms per liter (µg/L) of water or below will likely avert unpleasant taste and odor effects…" (µg/L is equivalent to parts per billion or ppb). The advisory level will protect sensitive individuals of the population, although some may potentially detect taste and odor at lower levels. The EPA noted that occurrences of ground water contamination observed at or above this level generally resulted from leaks in gasoline storage tanks or pipelines, not from other sources. The EPA advisory level of 20 to 40 ppb as protection of the water source from unpleasant taste and/or odor will also protect consumers from potential health effects with a wide margin of safety.

 Drinking Water Sampling Data (Occurrence)

The U.S. Geological Survey (USGS) has conducted a new national survey of MTBE (and other volatile organic compounds - VOCs) in community drinking-water sources, as part of the National Water-Quality Assessment Program (NAWQA). This multi-year and widely geographic sampling and analytical survey has shown that MTBE was detected at any level in only 8.7 percent of samples. More significantly, the median level of detected concentration for MTBE was only 0.54 ug/L (ppb). The maximum concentration detected in drinking water sources did not exceed the EPA consumer acceptability guidance level of 20 to 40 ppb. The USGS has stated that these "…studies suggest that MTBE levels do not appear to be increasing over time and are almost always below levels of concern from aesthetic and public health standpoints."

The California Department of Health Services has the most comprehensive dataset on MTBE occurrence in drinking water sources. Monitoring began in early 1997. MTBE has been detected in less than 1 percent (0.9 %) of all sources tested - 88 of 10,010 total sources - providing supply to about 92 percent of the state's population (about 31.4 million people) from nearly 3,000 systems. Furthermore, the trend on sample analysis since 1997 indicates that detections and levels of MTBE have been declining in the state.

As more comprehensive data are acquired, MTBE detection frequency and levels appear to be declining (factually, they were never substantial to begin with), and this trend is expected to continue, especially as compliance and enforcement of underground gasoline storage tank rules progress.

######

References

Official J. of European Communities. 2001. Risk assessment and strategy for limiting risks. European Union, Brussels, Belgium. 7 November 2001.

International Agency for Research on Cancer. 1999. IARC Monograph Volume 73: Some chemicals that cause tumours of the kidney or urinary bladder in rodents and some other substances. World Health Organization, IARC, Lyon, France.

National Toxicology Program. 2000. 9th Report on Carcinogens. U.S. Department of Health and Human Services, Public Health Service, National Toxicology Program, Research Triangle Park, North Carolina.

California Environmental Protection Agency. 1998. Prop 65 scientific review panels conclude MTBE is neither a reproductive or developmental toxicant nor a carcinogen. www.calepa.ca.gov.

U.S. EPA. 1997. Drinking water advisory: consumer acceptability advice and health effects analysis on methyl tertiary-butyl ether (MTBE). U.S. EPA, Office of Water. EPA-822-F-97-009.

Stocking AJ, et al. 2001. Implications of an MTBE odor study for setting drinking water standards. J. Amer. Water Works Assn. March 2001 (95-105).

U.S. Geological Survey. 2001. National survey of MTBE, other ether compounds, and other VOCs in community drinking-water sources. U.S. Department of Interior, U.S.G.S. www.sd.water.gov/nawqa/vocns.

 
Addendum Two:  Examples of Narrow Liability Provisions Recently Adopted by Congress

a.         Section 162 of the Amtrak Reform and Accountability Act of 1997.  Pub. L. No. 105-134, § 111 Stat. 2570 (codified at 49 U.S.C.A. § 28103).

This section delimits the award of punitive damages in accidents resulting in loss of life or damage to property that result from rail projects or operations.  The language set a very high standard for punitive damages, even preempting state law and practice on the subject.  The legislation also capped total damages related to any one incident.

This provision seeks to vindicate the important federal interest in ensuring safe and cost-effective rail travel in the United States.  Like provision of adequate clean-fuel additives, one of the reasons that legislation encourages rail travel is to advance Clean Air Act compliance goals.  One of the specific criteria for providing federal assistance for rail construction is: "whether the work to be funded will aid the efforts of State and local governments to comply with the Clean Air Act (42 U.S.C. 7401 et seq.)." 49 U.S.C. § 26101(c)(6).

b.         Biomaterials Access Assurance Act of 1998.  Pub. L. No. 105-230, 112 Stat. 1519 (1998)(codified at 21 U.S.C. § 1601-06).

Here, Congress was concerned that liability potential would keep plastics manufacturers from producing the specialty plastics needed for the construction of biomechanical devices to be placed inside the human body.  Essentially, such biomaterial manufacturers were relieved of liability that may arise by simply being included in malpractice cases otherwise undertaken against doctors and device manufacturers.  Only if the alleged facts related to a failure to meet specifications or a breach of contract could the biomaterials manufacturer be brought into the case.

In this case, MTBE (like biomaterials) is simply a component part incorporate into another product (reformulated gasoline) designed to achieve a socially useful purpose (cleaning the air).  The analogy seems fairly compelling.

c.         General Aviation Revitalization Act of 1994.  Pub. L. No. 103-298, 108 Stat. 1552-54 (1994) (codified at 49 U.S.C. § 40101 note).

Another transportation example.  Here, Congress was concerned that the increasing liability burden  for personal aircraft was driving the industry out of the market for this mode of transportation.  As a result, Congress accepted an 18-year federal statute of repose for manufacturers of such aircraft.

d.         Good Samaritan Food Donation Act.  Pub. L. No. 104-210, 110 Stat. 3011 (codified at 42 U.S.C. § 1791).

This statute exempts persons who donate food and grocery products to non-profits for distribution to the needy from civil or criminal penalties for foods that were "apparently wholesome" in order to encourage certain forms of donation activities. 

e.         No Child Left Behind Act of 2001.  Pub. L. No: 107-110.  (not yet codified, signed into law by the President on Jan. 8, 2002).

This statute includes a title sets forth, as II-C-5, Teacher Liability Protection. Preempts State law, except where it provides additional protection of teachers from liability. Provides that no teacher in a school shall be liable for harm caused by an act or omission on behalf of the school if the teacher was acting within the scope of employment or responsibilities relating to providing educational services, subject to specified requirements and exceptions. Limits punitive damages and liability for non-economic loss.  Added in the House and agreed to by recorded vote: 239 - 189.

In short, there are numerous targeted examples of specialized liability relief, with a particular emphasis on punitive damage relief.  In none of the above reference cases were the issues related to a product utilized pursuant to a federal performance standard that in turn was banned.  The one example where this situation obtained, the children's sleepwear flame retardant TRIS, is discussed in the text of the statement.