Good morning Senator Boxer. My name is Craig Perkins and I am the Director of Environmental and Public Works Management for the City of Santa Monica. In this capacity, one of my major areas of responsibility is management of the City's water production and distribution system. Over the past two years, this job has been made very difficult due to the impacts of MTBE contamination. You are probably well aware of the MTBE crisis that Santa Monica has faced over the past two years, so I will briefly summarize what happened and what remains to be done.

In late 1995 and early 1996, we first became aware that a new contaminant might be impacting the City's drinking water wells. In early February, 1996 we indeed confirmed that several of our wells had been contaminated with MTBE. Between February and October of 1996, we shut down seven of the City's eleven water wells at two separate well fields because of the contamination. These wells had represented 71% of our local water well production and supplied about one half of Santa Monica's total daily water demand. At the time one of the first wells was shut down, the MTBE contamination had soared to 610 parts per billion (ug/l), nearly 20 times the state action level. Clearly, the present situation represents an environmental crisis that has been a staggering blow to the City of Santa Monica both in financial terms and from the standpoint of an almost total loss of our reliable local water supply which has been of critical importance during natural disasters such as the 1994 Northridge earthquake and other emergencies.

As a result of the MTBE contamination, in June of 1996 the Santa Monica City Council approved a 25% emergency MTBE surcharge on every water customer to pay for the additional $3.25 million in annual costs for the purchase of outside water to replace the lost well production. These surcharge revenues have not, however, covered the City's considerable legal and technical analysis costs.

Santa Monica's major wellfield which is impacted, the Charnock wellfield, presents a classic example of a multiple party groundwater contamination problem. The City and the Regional Water Quality Control Board have identified 26 "priority" sites in the vicinity of the Charnock wellfield, including two gasoline product pipelines, which may be sources for the MTBE contamination. Considerable technical assessment and evaluation will therefore be required before actual cleanup can commence. The Arcadia wellfield is the other location which has been impacted by MTBE, and at this site there is only one party, Mobil Oil, who has caused the contamination.

What was particularly difficult to deal with during the early stages of this unfortunate episode were the significant gaps in information about the potential public health and environmental impacts from MTBE as a water contaminant, and the distressing absence of technical and regulatory assistance from those state and federal agencies entrusted with oversight of water quality and groundwater protection issues. As local government officials, we were forced to arrive at our own conclusions about whether MTBE contaminated water should be delivered to our citizens. No enforceable water quality standards for MTBE existed in early 1996. In the face of this regulatory vacuum, we made the decision to shut down the wells and take no chances with the health and safety of our community.

Following many months of negotiations with the two oil companies who exercised good corporate responsibility and stepped forward to discuss the City's MTBE problem, Santa Monica entered into an interim agreement with Shell and Chevron in July, 1997 which reimbursed us for 75% of the MTBE costs associated with the Charnock wellfield. This interim agreement enabled the City Council to reduce the emergency MTBE water surcharge by one-half. The agreement will expire in January, 1998 unless renewed by these and/or other oil companies at a 100% reimbursement rate. At Arcadia, ironically, where the culpability of Mobil Oil is clear, negotiations between the City and Mobil broke down approximately one year ago resulting in a lawsuit filed by Santa Monica against Mobil in February, 1997. This lawsuit is being pursued by the City in the face of continued recalcitrance on the part of Mobil to admit to their responsibility for the problem.

It has become clear to Santa Monica that MTBE is a potent and pernicious threat to drinking water in California as well as other parts of the United States. Although MTBE has only been in widespread use since the early 1990s, and even though testing for MTBE has not been required until very recently, MTBE has now been found in almost 4% of California drinking water systems sampled. We believe that these findings represent just the tip of the iceberg in terms of the MTBE that may be on its way. It is important to note that Benzene which has been a constituent in gasoline for several decades is rarely detected in wells, yet MTBE in a few short years has already managed to knock out 71% of Santa Monica's wells.

With hard work and perseverance, Santa Monica will eventually overcome this crisis, but actions can be taken at the federal and state level which could greatly facilitate our progress on the path towards restoration of our drinking water supply. At the federal level, we believe that the action agenda should include the following:

1. Adoption of clear and enforceable drinking water standards for MTBE by the earliest possible date;

2. Strengthening of installation, monitoring and testing requirements for underground gasoline storage tanks and pipelines to respond to MTBE's more alarming fate and transport characteristics;

3. Adoption of strict liability standards for those responsible for MTBE contamination to ensure that the polluter, not the victim, pays for damages and cleanup costs;

4. Implementation of testing requirements for MTBE at all leaking underground storage tanks and in all public drinking water supplies throughout the United States so that we know as soon as possible how big a national problem MTBE has become and can better prevent the replication of Santa Monica's experience: and

5. Evaluation of whether performance-based clean air standards for auto fuel would be more appropriate than the current mandate for the use of oxygenates.

On behalf of the City of Santa Monica, I thank you Senator Boxer for the tremendous past support which you have given us in dealing with the MTBE problem. I look forward to further collaboration with you and your staff as we move forward toward comprehensive solutions.