[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]



 
      NATIONAL IMPLEMENTATION OF THE REFORMULATED GASOLINE PROGRAM

=======================================================================

                                HEARING

                               before the

                            SUBCOMMITTEE ON
                         HEALTH AND ENVIRONMENT

                                 of the

                         COMMITTEE ON COMMERCE
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS

                             SECOND SESSION

                               __________

                             MARCH 2, 2000

                               __________

                           Serial No. 106-101

                               __________

            Printed for the use of the Committee on Commerce

                    ------------------------------  



                     U.S. GOVERNMENT PRINTING OFFICE
62-976 CC                    WASHINGTON : 2000



                         COMMITTEE ON COMMERCE

                     TOM BLILEY, Virginia, Chairman

W.J. ``BILLY'' TAUZIN, Louisiana     JOHN D. DINGELL, Michigan
MICHAEL G. OXLEY, Ohio               HENRY A. WAXMAN, California
MICHAEL BILIRAKIS, Florida           EDWARD J. MARKEY, Massachusetts
JOE BARTON, Texas                    RALPH M. HALL, Texas
FRED UPTON, Michigan                 RICK BOUCHER, Virginia
CLIFF STEARNS, Florida               EDOLPHUS TOWNS, New York
PAUL E. GILLMOR, Ohio                FRANK PALLONE, Jr., New Jersey
  Vice Chairman                      SHERROD BROWN, Ohio
JAMES C. GREENWOOD, Pennsylvania     BART GORDON, Tennessee
CHRISTOPHER COX, California          PETER DEUTSCH, Florida
NATHAN DEAL, Georgia                 BOBBY L. RUSH, Illinois
STEVE LARGENT, Oklahoma              ANNA G. ESHOO, California
RICHARD BURR, North Carolina         RON KLINK, Pennsylvania
BRIAN P. BILBRAY, California         BART STUPAK, Michigan
ED WHITFIELD, Kentucky               ELIOT L. ENGEL, New York
GREG GANSKE, Iowa                    TOM SAWYER, Ohio
CHARLIE NORWOOD, Georgia             ALBERT R. WYNN, Maryland
TOM A. COBURN, Oklahoma              GENE GREEN, Texas
RICK LAZIO, New York                 KAREN McCARTHY, Missouri
BARBARA CUBIN, Wyoming               TED STRICKLAND, Ohio
JAMES E. ROGAN, California           DIANA DeGETTE, Colorado
JOHN SHIMKUS, Illinois               THOMAS M. BARRETT, Wisconsin
HEATHER WILSON, New Mexico           BILL LUTHER, Minnesota
JOHN B. SHADEGG, Arizona             LOIS CAPPS, California
CHARLES W. ``CHIP'' PICKERING, 
Mississippi
VITO FOSSELLA, New York
ROY BLUNT, Missouri
ED BRYANT, Tennessee
ROBERT L. EHRLICH, Jr., Maryland

                   James E. Derderian, Chief of Staff

                   James D. Barnette, General Counsel

      Reid P.F. Stuntz, Minority Staff Director and Chief Counsel

                                 ______

                 Subcommittee on Health and Environment

                  MICHAEL BILIRAKIS, Florida, Chairman

FRED UPTON, Michigan                 SHERROD BROWN, Ohio
CLIFF STEARNS, Florida               HENRY A. WAXMAN, California
JAMES C. GREENWOOD, Pennsylvania     FRANK PALLONE, Jr., New Jersey
NATHAN DEAL, Georgia                 PETER DEUTSCH, Florida
RICHARD BURR, North Carolina         BART STUPAK, Michigan
BRIAN P. BILBRAY, California         GENE GREEN, Texas
ED WHITFIELD, Kentucky               TED STRICKLAND, Ohio
GREG GANSKE, Iowa                    DIANA DeGETTE, Colorado
CHARLIE NORWOOD, Georgia             THOMAS M. BARRETT, Wisconsin
TOM A. COBURN, Oklahoma              LOIS CAPPS, California
  Vice Chairman                      RALPH M. HALL, Texas
RICK LAZIO, New York                 EDOLPHUS TOWNS, New York
BARBARA CUBIN, Wyoming               ANNA G. ESHOO, California
JOHN B. SHADEGG, Arizona             JOHN D. DINGELL, Michigan,
CHARLES W. ``CHIP'' PICKERING,         (Ex Officio)
Mississippi
ED BRYANT, Tennessee
TOM BLILEY, Virginia,
  (Ex Officio)

                                  (ii)


                            C O N T E N T S

                               __________
                                                                   Page

Testimony of:
    Forbes, Hon. Michael, a Representative in Congress from the 
      State of New York..........................................    35
    Franks, Hon. Bob, a Representative in Congress from the State 
      of New Jersey..............................................    31
    Greenbaum, Daniel S., President, Health Effects Institute....    52
    Grumet, Jason S., Executive Director, Northeast States for 
      Coordinated Air Use Management.............................    77
    LaHood, Hon. Ray, a Representative in Congress from the State 
      of Illinois................................................    34
    Mazur, Mark, Director, Office of Policy, U.S. Department of 
      Energy.....................................................    48
    Milazzo, John C., Attorney, Suffolk County Water Authority...    81
    Perciasepe, Hon. Robert, Assistant Administrator for Air and 
      Radiation, U.S. Environmental Protection Agency............    41
    Skinner, Thomas, Director, Illinois Environmental Protection 
      Agency.....................................................    73
Additional material submitted for the record:
    Air Resources Board, letter dated April 14, 2000, to Hon. 
      Henry A. Waxman............................................   202
    Bliley, Hon. Tom, Chairman, Committee on Commerce, letter 
      dated March 28, 2000, to Hon. Carol M. Browner.............   181
    Eshoo, Hon. Anna G., and Hon. Brian P. Bilbray, letter dated 
      March 1, 2000, to Robert Perciasepe........................   177
    Perciasepe, Hon. Robert, Assistant Administrator for Air and 
      Radiation, U.S. Environmental Protection Agency:
        Letter dated June 6, 2000, to Hon. Thomas J. Bliley, 
          enclosing response for the record......................   183
        Letter dated June 8, 2000, to Hon. Gene Green, enclosing 
          response for the record................................   198

                                 (iii)

  


      NATIONAL IMPLEMENTATION OF THE REFORMULATED GASOLINE PROGRAM

                              ----------                              


                        THURSDAY, MARCH 2, 2000

                  House of Representatives,
                             Committee on Commerce,
                    Subcommittee on Health and Environment,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 11:13 a.m., in 
room 2123, Rayburn House Office Building, Hon. Michael 
Bilirakis (chairman) presiding.
    Members present: Representatives Bilirakis, Upton, 
Greenwood, Bilbray, Ganske, Lazio, Shadegg, Bliley (ex 
officio), Waxman, Pallone, Stupak, Green, Strickland, and 
Barrett.
    Also present: Representative Shimkus.
    Staff present: Bob Meyers, majority counsel; Joe Stanko, 
majority counsel; Clay Alspach, legislative clerk; and Alison 
Taylor, minority counsel.
    Mr. Bilirakis. The hearing will come to order by first 
thanking the members involved in requesting and organizing 
today's hearing. In a letter I received last fall, Messrs. 
Pallone, Barrett and Markey asked the subcommittee to explore 
issues with respect to the RFG Program nationally. I believe 
and trust that today's hearing responds to their concerns and 
will provide valuable information for this subcommittee's 
consideration.
    The Chair will defer the remainder of his opening statement 
and recognize the chairman of the full committee, Mr. Bliley, 
for an opening statement at this time.
    Chairman Bliley. Thank you, Mr. Chairman, and thank you for 
having this hearing and also thank you for taking me out of 
order.
    I want to also thank Messrs. Pallone, Barrett and Markey, 
my friends who requested this hearing in a letter last 
September and who have recommended various witnesses to be here 
today.
    I additionally want to thank Mr. Greenwood and Mr. Lazio, 
also my good friends, who have supported this hearing and 
worked closely with the subcommittee on this matter.
    As one of the few members of this committee who labored 
through the 1990 Clean Air Act amendments, I remember well the 
original intent of the Reformulated Gasoline Program. The 
reformulated gasoline, or RFG, was designed to address 
persistent air quality problems in major urban areas.
    To date, the Environmental Protection Agency, EPA, and the 
Department of Energy, DOE, tell us that the RFG Program has 
worked. It has been EPA's and DOE's prevailing assessment that 
RFG has been able to achieve cleaner air at a relatively modest 
cost. However, it is incumbent upon this committee to 
continually review the implementation of all Clean Air Act 
programs to judge both their health and environmental benefits 
as well as any associated costs or problems.
    To this end, over the last 2 years, the Subcommittee on 
Health and Environment held two hearings on the RFG Program in 
California and successfully reported legislation introduced by 
Mr. Bilbray, H.R. 11, to waive the Federal oxygenate standard 
in California.
    Today's hearing extends the subcommittee's focus to the 
implementation of the RFG Program outside California. In 
addition to the three mandatory RFG areas in California, there 
are seven mandatory RFG areas in the Northeast, MidAtlantic, 
Midwest, and Texas, plus additional areas that have voluntarily 
opted into the RFG Program. Concerns have been raised in these 
areas which are similar to concerns raised in California.
    There are differences in the various areas that have 
implemented the RFG Program. The subcommittee needs to explore 
such differences. To be more specific, it is no small matter 
that the Clean Air Act treats California and the rest of the 
country differently with respect to the regulation of fuels and 
fuel additives. This difference dates back over 30 years and 
was reflected in the provisions of the 1970 Clean Air Act. This 
difference has also led to State-mandated fuels in California 
to an extent not found in other parts of the country.
    It is also clear that different areas of the country have 
relied on different oxygenates in the RFG Program. While MTBE 
has captured the lion's share of the RFG market, ethanol 
predominates in Chicago and Midwestern areas. We need to hear 
from these areas. The fuel supply and distribution system also 
varies in different parts of the countries, as does the 
capability to produce different fuel formulations.
    Finally, it is not a trivial matter to look at the 
environmental performance of various gasoline blends. The 
subcommittee mark-up of H.R. 11 revealed the initial difficulty 
in attempting to legislate any provision which seeks to do 
this.
    In short, I believe the subcommittee has a lot of work to 
do. Today is a good start, and I look forward to receiving 
today's testimony. Again, Mr. Chairman, thank you very much.
    Mr. Bilirakis. I thank the gentleman.
    Mr. Waxman for an opening statement.
    Mr. Waxman. Thank you very much, Mr. Chairman. I want to 
commend you for holding this hearing and also to thank 
Representatives Pallone, Barrett and Markey for requesting this 
broader perspective on the MTBE issue.
    MTBE use results in serious groundwater impacts in 
California, and it is a growing risk in other parts of the 
Nation as well. My city of Santa Monica has faced the most 
serious MTBE contamination of any community in the country. 
Now, after the contamination, the city imports more than 80 
percent of its drinking water from northern California and the 
Colorado River.
    In short, MTBE leaking from underground storage tanks has 
shut down our drinking water well fields, making the drinking 
water taste and smell like turpentine.
    We must be mindful that what happened in Santa Monica could 
happen elsewhere, and that is why I am pleased we are looking 
at this from a broader perspective.
    This subcommittee has examined previously the Clean Air Act 
requirement that Federal reformulated gasoline contain oxygen 
that is amounting to 2 percent by weight. This provision was 
included in the Clean Air Act Amendments of 1990 after 
considerable debate as a way to increase the use of renewable 
fuels.
    The oil companies chose to meet this requirement with MTBE, 
which is not only a nonrenewable but has characteristics that 
allow it to migrate through groundwater quickly and make it 
particularly difficult to clean up. The Blue Ribbon Panel on 
Oxygenates and Gasoline has confirmed that we do not need MTBE 
to achieve the air quality benefits of reformulated gasoline.
    While the oxygenate requirement of the Clean Air Act has 
received the most attention in our consideration of the MTBE 
issue, simply removing this requirement at a national level 
won't solve our contamination problems.
    The oil companies began to move toward increased use of 
MTBE long before there was any oxygenate requirement. For 
instance, in 1986, years before any Reformulated Gasoline 
Program was established, we had an MTBE production capacity of 
4 billion pounds, and MTBE was used in unleaded gasoline as an 
octane enhancer at levels of 2 to 8 percent by volume.
    I am interested to hear from our witnesses if the economics 
which moved the oil companies toward MTBE in the 1980's 
continue to exist. If so, removing the oxygenate requirement 
may be meaningless in a national context without ensuring caps 
on the levels of MTBE use.
    For the rest of the country, lifting the oxygenate 
requirement could have little or no effect on the amount of 
MTBE actually used in gasoline. That is why I think it is 
important that we seriously consider the recommendations put 
forth in the Blue Ribbon Panel and by the Northeast States.
    I also believe we must hold responsible parties 
accountable. The oil companies began to use MTBE early on, and 
they have responded in Santa Monica by paying millions of 
dollars to secure alternative water supplies. Now, however, the 
oil companies have been inconsistent in their commitment to see 
the cleanup through completion. This behavior throws the 
cleanup in doubt and potentially punishes the responsible 
parties who are willing to do their share.
    I think this is going to be a useful hearing, Mr. Chairman. 
I, unfortunately, am not going to be able to stay for most of 
it. But I know that, at some point, you will have a unanimous 
consent that will allow us to submit written questions for the 
record.
    Mr. Bilirakis. Without objection, that will be the case. 
And, additionally, the opening statements of all members of the 
subcommittee here will be made a part of the record.
    Mr. Waxman. In that case, I ask my full statement be made a 
part of the record.
    Mr. Bilirakis. Without objection.
    [The prepared statement of Hon. Henry A. Waxman follows:]
    Prepared Statement of Hon. Henry A. Waxman, a Representative in 
                 Congress from the State of California
    For the last several years, this subcommittee has been examining 
the urgent problem of groundwater contamination by the fuel additive 
methyl tertiary butyl ether or ``MTBE.'' Until today we have largely 
focused on MTBE's enormous impact in California, even though MTBE is a 
growing concern throughout the nation.
    Today's hearing will focus on the national implications of MTBE use 
and has been scheduled at the request of Representatives Pallone, 
Barrett, and Markey. I'd like to recognize these members for their 
leadership and I also want to commend the Chairman for agreeing to hold 
today's hearing.
    MTBE use has resulted in serious groundwater impacts in California 
and is a growing risk in other parts of our nation. In my district, for 
example, the city of Santa Monica has faced the most serious MTBE 
contamination of any community in the country. Before MTBE contaminated 
Santa Monica's drinking water, groundwater provided 70% of the city's 
water supply. Now, after the contamination, the city imports more than 
80% of its drinking water from Northern California and the Colorado 
River. In short, MTBE from leaking underground storage tanks has shut 
down our drinking water well fields, making the drinking water taste 
and smell like turpentine.
    It is important to note that the contamination in Santa Monica did 
not occur due to some catastrophic event. The contamination occurred as 
a result of leaking underground storage tanks at gas stations. These 
storage tanks were no worse than storage tanks found throughout the 
nation in the districts of every Member of this Subcommittee. We must 
be mindful that what happened in Santa Monica could happen elsewhere, 
and that these tanks leak whether or not MTBE is in gasoline.
    This Subcommittee has examined previously the Clean Air Act 
requirement that federal reformulated gasoline (rfg) contain oxygenates 
amounting to 2% by weight. This provision was included in the Clean Air 
Act Amendments of 1990, after considerable debate, as a way to increase 
the use of renewable fuels. The oil companies chose to meet this 
requirement with MTBE, which not only is non-renewable, but has 
characteristics that allow it to migrate to groundwater quickly and 
make it particularly difficult to clean up. The Blue Ribbon Panel on 
Oxygenates in Gasoline has confirmed that we do not need MTBE to 
achieve the air quality benefits of reformulated gasoline.
    While the oxygenate requirement of the Clean Air Act has received 
the most attention in our consideration of the MTBE issue, simply 
removing this requirement at a national level won't solve our 
contamination problems.
    The oil companies began to move towards increased use of MTBE long 
before there was any oxygenate requirement. For instance, in 1986--
years before any reformulated gasoline program was established--we had 
a MTBE production capacity of 4 billion pounds and MTBE was used in 
unleaded gasoline as an octane enhancer at levels of 2-8% by volume. I 
am interested to hear from our witnesses if the economics which moved 
the oil companies toward MTBE in the 1980's continue to exist. If so, 
removing the oxygenate requirement may be meaningless in a national 
context without ensuring caps on the levels of MTBE use.
    I'll give you a recent example of why I am concerned about this. 
The oxygenate requirement doesn't even apply in San Francisco, but it 
has recently been reported that MTBE is being used at levels twice that 
which would be required under the Clean Air Act.
    In California, a combination of federal and state action should be 
able to address this problem. On March 25, 1999, Governor Davis 
announced that the State of California would phase out MTBE use in 
gasoline by December 31, 2002 under state law. The Governor's action in 
combination with federal relief from the oxygenate requirement and 
guarantees that there will be no backsliding in the air quality 
benefits of rfg should ensure that there is no further MTBE 
contamination while air quality benefits are maintained.
    For the rest of the country lifting the oxygenate requirement could 
have little or no effect on the amount of MTBE actually used in 
gasoline. That's why I think it is important that we seriously consider 
the recommendations put forth by the Blue Ribbon Panel and by the 
northeast States.
    I also believe that we must hold responsible parties accountable. 
The oil companies began to use MTBE long before there was any federal 
requirement to do so, and their leaking underground storage tanks are 
responsible for the actual contamination. In Santa Monica, the oil 
companies have paid millions of dollars to secure alternative water 
supplies. Now, however, the oil companies have been inconsistent in 
their commitment to see the cleanup through completion. This kind of 
irresponsible behavior throws the cleanup in doubt and potentially 
punishes the responsible parties who are willing to do their share.
    When the House Commerce Committee considered legislation to 
reauthorize Superfund on October 13, 1999, I offered an amendment that 
would have prevented oil companies from escaping responsibility for 
MTBE contamination. I am disappointed that this amendment was defeated, 
but I plan to offer it again when the legislation is considered on the 
House floor. We must ensure that EPA has as many tools as possible to 
ensure that remediation funding is obtained and that sites are fully 
cleaned up.
    Again, I thank the Chairman for convening this hearing, I welcome 
today's witnesses and I look forward to hearing their testimony.

    Mr. Bilirakis. Thank you, gentlemen.
    The Chair will now continue with his opening statement.
    During the subcommittee's review of legislation pertaining 
to the waiver of the Federal oxygenate standard in California, 
Messrs. Greenwood and Lazio were deeply involved in raising 
concerns regarding implementation of the RFG Program and the 
use of those oxygenates, particularly MTBE, in areas of the 
country outside California. They have continued their 
constructive dialog with the subcommittee.
    Finally, I would note the early and hard work by Mr. 
Bilbray to advance legislation through this subcommittee and to 
tackle the many complex issues involved in the RFG Program. Mr. 
Bilbray has been a tireless advocate for increasing flexibility 
in the current program.
    I am going to be blunt in my assessment of the 
Environmental Protection Agency's conduct with respect to the 
RFG Program and their effort responding to the concerns of this 
subcommittee. I don't think I have a reputation or image or 
background of being combative, and I am not very comfortable 
with my comments, but, at the same time, I think they have to 
be made.
    In brief, I am appalled at the complete lack of candor and 
lack of response that the EPA has demonstrated despite repeated 
requests by this subcommittee to obtain information relevant to 
its legislative duties. The EPA has ignored written requests by 
the subcommittee, substantially delayed providing verbal 
briefings, and avoided, seemingly at all costs, giving direct 
and complete answers.
    The testimony that EPA will present today, which was 
received for the first time last night at 7:45 p.m., basically 
rehashes some of the same general information provided to the 
subcommittee last May. In fact, several paragraphs are lifted 
from Mr. Perciasepe's May 6, 1999, statement, either verbatim 
or with minor changes.
    As it did last May, EPA again ignored specific requests for 
information from the subcommittee in its letter of invitation, 
including defining differences and implementing--and I think 
this is just foundational--and implementing of the RFG Program 
in various areas of the country, describing how air quality 
benefits are accounted for in State implementation plans and 
explaining the extent of current statutory authority available 
to EPA to phaseout or curtail the use of any specific 
oxygenate. No wonder its testimony was delivered in the dark of 
night.
    Second, EPA failed to comply with the document requests 
submitted to the agency 15 days ago with respect to its 
consideration of the California waiver request. EPA indicated 
it will only provide the documents several days after this 
hearing. Thus, EPA is denying members of this subcommittee the 
opportunity to conduct legitimate oversight of its 
implementation of laws and this subcommittee's jurisdiction. To 
compound error, EPA did not indicate its intent to not produce 
the documents until less than 2 days ago.
    Included in this document request was a request for 
information on EPA's widely reported effort to ban or curtail 
the use of MTBE through authorities contained in the Toxic 
Substances Control Act.
    Third, despite assuring the subcommittee last May that EPA 
would not waste the subcommittee's time with respect to 
obtaining information on California's request for a waiver, EPA 
still refuses to give any firm date by which it will decide 
matters concerning this waiver.
    Mr. Perciasepe's statement indicates only that we hope that 
``We hope to complete our assessment by early summer.''
    Administrator Perciasepe, this is difficult for me to say--
you know me I think over the years--but given your past 
performance in providing information to this subcommittee, I 
guess I just don't have any faith that you will comply with 
this vague commitment.
    The fact of the matter is the EPA has not devoted 
sufficient resources to the consideration of this waiver. For 
the first 5 months it had the waiver under consideration, EPA 
devoted only 80 combined staff hours to its consideration, 
basically one person working half a day per week. In the last 6 
months, EPA has devoted more effort, but not much more. Over 
the last 6 months, the combined effort by all EPA personnel, as 
I understand it, to review all legal and technical matters 
concerning the waiver request amounts to an average of one 
person devoting less than half a normal workweek, 8\1/2\ hours 
to the effort.
    Finally, I find it regrettable that, even at this late 
date, EPA cannot come clean with respect to what it has done or 
rather hasn't done and what it supports or doesn't support with 
respect to RFG. EPA today says it supports national legislation 
to address this matter. Yet it provides absolutely no detail on 
this very complicated matter.
    EPA cites the work of the Blue Ribbon Panel and yet does 
not indicate what specific recommendations it supports or 
doesn't support.
    The EPA mentions administrative activity but provided only 
an oral briefing after repeated requests and has not supplied 
one scrap of paper to the committee detailing its activity.
    In short, EPA has given no indication that it actually 
wants to fix anything regarding the RFG Program within the 
conceivable future.
    The first assessment of the California waiver request 
hopefully will be done this summer, they tell you, but it is 
subject to public comment period. Most informed sources believe 
any action under the Toxic Substances Control Act will take 
years. Administrative flexibility options under consideration 
are not available, apparently, to the public or to the 
Congress.
    Last May, the administrator stated that, once the agency 
had the recommendations from the Blue Ribbon Panel, ``it is 
important that we work with the States and coordinate with the 
Congress over the next 3 to 4 months.''
    The recommendations of the Blue Ribbon Panel were published 
last July. This fact, in addition to everything cited above, 
makes it difficult for many of us to believe that EPA is at all 
sincere when Mr. Perciasepe states we are committed to working 
with the Congress. To me, this rings just like another nice-
sounding throwaway line. And, of course, he will have the 
opportunity to prove me false in that regard.
    The Chair now recognizes Mr. Pallone for an opening 
statement.
    Mr. Pallone. Thank you, Mr. Chairman. And I want to thank 
you and appreciate your following up on your commitment to 
myself and Representatives Barrett and Markey to hold the 
hearing today on the national reformulated gasoline, RFG, 
issue. And I also thank Chairman Bliley, who also agreed to 
hold the hearing.
    I also appreciate your having invited Berry Grossman from 
Oxybusters, which is headquartered in New Jersey, and Jason 
Grumet from NSCAUM, which represents New Jersey, among other 
States. I look forward to hearing from all of our witnesses; 
and, of course, I am particularly pleased to see my colleague, 
Mr. Franks from New Jersey.
    What I want to hear, of course, is the analysis of the 
Nation's Reformulated Gasoline Program and related issues, 
including the national security implications, ethanol issues, 
California's waiver status, and environmental protection and 
human health impacts.
    Ultimately, I believe we need to pass national legislation. 
Several Members in both Houses of Congress have introduced 
bills to address MTBE as recently as Tuesday of this week. I 
see my other friend from New York, Mr. Forbes, introduced a 
bill that also would help municipalities fund MTBE cleanups, 
which I think is very important. So, clearly, this is an issue 
receiving a lot of bipartisan attention across the Nation, both 
in the House and in the other body.
    Last May, I introduced a comprehensive national bill in the 
House that addresses the reformulated gasoline issue, that is 
H.R. 1705. My bill contains many of the provisions that are 
highlighted in the Blue Ribbon Panel report and in the 
principles presented by an unusual coalition which is 
represented by NSCAUM, the American Lung Association and the 
American Petroleum Institute. I look forward to working with 
members on both side of the aisle, with these groups, most of 
whom are represented here today, to pass national legislation 
in the near future.
    I believe strongly that we have identified a problem, that 
we should address it as quickly as possible. Even though we may 
not have all the science, if we wait the problem will only 
become worse. We have identified some reasonable and practical 
courses of action that can be taken now.
    As I have said and as my bill illustrates, I believe we 
ultimately must address this program comprehensively. Just 
banning or reducing the use of MTBE without waiving the 
oxygenate requirement would create undue burdens on certain 
regions and would address only one aspect of the overall 
problem and issue before us. Waiving the oxygenate requirement 
provides flexibility to use other oxygenate or eliminate 
oxygenate where environmentally sound, to do so without reeking 
havoc on the ethanol industry and our economy's national 
security. I believe many of our witnesses will underscore these 
facts.
    Mr. Chairman, many groups have stated any changes we make 
must not result in compromises or losses in air quality 
protection benefits that have been achieved. H.R. 1705 contains 
language to ensure air quality protection at current levels.
    EPA's Blue Ribbon Panel recommends that the current Clean 
Air Act requirement to require 2 percent oxygen by weight in 
RFG must be removed in order to provide flexibility to blend 
adequate fuel supplies in a cost-effective manner while quickly 
reducing usage of MTBE and maintaining air quality benefits. So 
the panel's recommendations echo the provisions in H.R. 1705 
quite closely.
    The panel also recommends various studies, and H.R. 1705 
asks the NAS to study the effects of all oxygenates and their 
by-products.
    The Northeast States for Coordinated Air Use Management, 
NSCAUM, who we will hear from shortly, has repeatedly 
emphasized the importance of congressional action to lift the 2 
percent oxygen standard for the whole country, because the one-
size-fits-all does not work. Tosco, which has testified before 
this subcommittee, has informed me that the oxygenate 
requirement and a phase-down of the MTBE must be addressed 
simultaneously.
    So, Mr. Chairman, I urge my colleagues to work together to 
be proactive and pass bipartisan legislation soon. I will 
continue to push to see that this happens, and I hope our 
witnesses will shed some light as to the best way to accomplish 
this goal to the Nation as a whole.
    Thank you again for holding the hearing today, Mr. 
Chairman.
    Mr. Bilirakis. I thank the gentleman.
    Dr. Ganske.
    Mr. Ganske. Thank you, Mr. Chairman. I am happy you have 
scheduled this hearing today. With 60 Minutes doing an episode 
on MTBE water contamination, national newspapers giving 
attention to MTBE contamination, several Members of Congress 
are taking very vocal positions on this issue, and I am looking 
forward to their testimony.
    Mr. Chairman, reformulated gasoline does not contaminate 
water. Reformulated gasoline cleans the air. MTBE contaminates 
water. If you want clean air, use oxygenated gasoline. If you 
want clean water, ban MTBE. We don't have to choose between 
clean air and clean water. If we switch from MTBE to ethanol, 
we can have both.
    I know I sound like a broken record to many of you, so now 
I want to show you how bad MTBE is. You each have before you 
two vials, one filled with MTBE, the other with ethanol. Go 
ahead and smell each vial, if you can. MTBE smells worse than 
paint thinner. It takes only a teaspoon of MTBE to make an 
olympic-size swimming pool smell and taste like paint thinner, 
and this contains several teaspoons.
    Last month, the Iowa Department of National Resources 
issued a report that showed 32 percent of Iowa groundwater 
samples had MTBE levels of at least 15 micrograms per liter. 
What is worse is 29 percent of Iowa's groundwater samples had 
MTBE concentration levels above the level at which EPA issues a 
drinking water advisory. Think about this. There is no MTBE 
sold and used in Iowa today. Yet, 29 percent of the groundwater 
samples qualify for a Federal drinking water advisory due to 
MTBE contamination.
    How is that? Well, probably because much MTBE comes out of 
the tail pipes of cars just driving through Iowa. That shows 
how contaminating this stuff really is. Think about the sample 
of MTBE in front of you and its ability to contaminate several 
olympic-size swimming pools. We need to address the issue now.
    The RFG Program works. Whether one uses MTBE or ethanol as 
an oxygenate, the emissions reductions are the same. But, with 
ethanol, there is no groundwater contamination, not a single 
reported incident.
    So, Mr. Chairman, I want to address some of the myths about 
ethanol and clear them up.
    Myth: Ethanol is a dirty fuel that harms the environment. 
Fact: Ethanol is a clean, biodegradable fuel that achieves 
emissions reductions equal to other oxygenates.
    Myth: Ethanol is not energy efficient to produce. Fact: 
Study shows show that one gallon of ethanol generally provides 
25 to 40 percent more energy than is required to grow corn and 
process it into ethanol.
    Myth: Ethanol cannot satisfy the oxygen demand of the RFG 
Program itself. Fact: To replace MTBE, the ethanol industry 
must produce slightly more than 3 billion gallons each year. 
Recently, several new facilities have come on board, so that 
pushes our capacity today beyond 2 billion gallons.
    Myth: Ethanol is difficult and expensive to transport from 
the Midwest to the coast. Fact: The Department of Agriculture 
report says, given a period of 3 to 5 years, there appears to 
be no transportation impediment to the use of ethanol as a 
substitute for MTBE. I must say, Mr. Chairman, I find it hard 
to believe that transporting MTBE from Saudi Arabia is any more 
cost effective or difficult than transporting ethanol from 
Iowa.
    Myth: Ethanol will ruin modern vehicle engines. Fact: 
Studies have shown that the use of ethanol does not result in 
any mechanical problems.
    Myth: Blending ethanol is not practical from a refiner's 
viewpoint. Fact: Mobile Corporation published a brochure in 
which it says ethanol is safe to use in any type of engines and 
keeps fuel injectors clean. Mobile also said using ethanol 
blended fuel is one of the easiest ways you can help reduce air 
pollution and dependence on foreign oil.
    This issue is very important, Mr. Chairman. Thank you for 
holding this hearing.
    There is an alternative to this stuff, MTBE. It is ethanol, 
and I think that we ought to use it.
    Mr. Bilirakis. I am not surprised that is your position.
    Mr. Green.
    Mr. Green. Thank you, Mr. Chairman.
    Before I get started, if Dr. Ganske can provide us a six-
pack of this ethanol down at this end of the table, we would 
appreciate it.
    Mr. Ganske. At the end of this hearing, you may need it.
    Mr. Green. I don't know. I don't know. Before the hearing, 
we might need more than a six-pack.
    I appreciate, Mr. Chairman, you calling this hearing. And 
since my colleagues Joe Barton and Ralph Hall are not here, 
March 2 is Texas Independence Day. And, in Texas, we are 
celebrating it because Texas won independence against 
overwhelming odds against the Republic of Mexico in 1836. I 
appreciate commemorating that, Mr. Chairman, today. Hopefully, 
any similarities between that and this hearing are not the 
case.
    I appreciate the opportunity to hear the witnesses today 
and engage in what I hope will be a productive exchange on the 
Reformulated Gasoline Program. Looking at the witness list, I 
can see we are going to have a lively debate, and our panelists 
and members are not going to agree on too many things this 
morning.
    First of all, there is nothing that makes my car or truck 
run that I want to drink, whether it smells good or not. Yet I 
think there is still one thing we can all agree on, that the 
RFG Program has resulted in tremendous gains in our air quality 
and the health of millions of Americans. In fact, following the 
implementation of phase one of the RFG Program in 1995, the EPA 
reported a benzene reduction of 40 percent and an overall air 
toxins reduction of 30 percent, twice the minimum requirement. 
EPA has attributed over two-thirds of this overcompliance to 
the use of oxygenates in reformulated gasoline.
    California's Air Resources Board reported similar findings 
for the State's cleaner burning gasoline and concluded that the 
annual reductions in cancer incidence due to toxic air 
remissions are between 40 and 50 percent. Let me repeat that 
the incidence of new cancer was reduced by 40 to 50 percent.
    While this outcome is enhanced by the more stringent 
gasoline formula used in California, 95 percent of the State's 
gasoline contained MTBE in 1998.
    Furthermore, the California Air Resources Board predicted 
the RFG Program from 1995 to 2000 reduced the risk of 
developing cancer from exposure to benzene and other toxic 
emissions by 20 to 30 percent. The use of Federal RFG after 
2000 will reduce the risk of developing cancer from exposure to 
benzene and other air toxins by 30 to 40 percent.
    Some have suggested that these tremendous gains in air 
quality should be abandoned because MTBE has been found in 
drinking water. Members of the subcommittee and others 
testifying today have plans to dramatically alter the RFG 
Program. If we are going to make the change in the RFG Program, 
we must maintain current air quality standards. Anything else 
shouldn't be acceptable.
    If we are going to make a change in the RFG Program, it 
must be cost effective. Our witness today from the Department 
of Energy will testify that eliminating MTBE will cost the 
refining industry between $2 billion and $3 billion. This 
witness states that the production cost would increase by a 
minimum of 3 or 4 cents per gallon.
    And I have a copy of an article in today's Houston 
Chronicle that talks about--and this is in Houston where our 
gas prices typically are lower--that a gas price of $2 a gallon 
may not be too far down the road.
    This witness will go on to say, and I quote, phasing MTBE 
out of the gasoline is equivalent to the impact to gasoline 
supplies of losing, over whatever the phase-out period, some 
400,000 barrels a day of gasoline production capacity or 
closing four or five large refineries. A phase-out that 
ultimately leads to the ban on MTBE may also affect the ability 
of the U.S. gasoline market to draw gasoline supplies from 
Europe, the major source of our price-sensitive gasoline 
imports, since these refiners count on the use of MTBE to some 
degree as well.
    At a time when all consumers, particularly those in the 
Northeast, are suffering from the increase in gasoline costs, 
we must be cautious in implementing policies that might 
increase this price of gas even more than currently. Some are 
suggesting that the increase in cost to consumers could be 
high. For example, when California discussed phasing out MTBE, 
studies were done to determine how the phase-out would impact 
price and supply. The California Energy Commission study 
estimated the cost of phasing out MTBE is between 5 and 7 cents 
a gallon.
    If we are going to make a change in our RFG Program, we 
must not ignore the problem of leaking fuel tanks. It would 
also be beneficial if our witnesses could share their thoughts 
on the fact that gasoline contains some very dangerous 
carcinogens, although MTBE is not one of them, even considering 
what 60 Minutes said. Where MTBE is found, these are also 
found. So even if you limit MTBE, if you don't eliminate your 
leaky storage tanks, you will still have parts of that gasoline 
without MTBE in your water, including the carcinogens that they 
carry with them.
    As we think how to proceed, I urge my colleagues to 
approach this with caution and with thorough and thoughtful 
debate. In our rush to address the concerns about MTBE, we 
hopefully will not create a bigger problem. The EPA's Blue 
Ribbon Task Force and its recently issued report highlights the 
needs to act with due diligence.
    Mr. Bilirakis. Please summarize.
    Mr. Green. Mr. Chairman, I will be glad to submit what I 
have from the Blue Ribbon Task Force into the record because I 
have some questions based on that today.
    [The information referred to follows:]


    [GRAPHIC] [TIFF OMITTED]62976.001
    
    [GRAPHIC] [TIFF OMITTED]62976.002
    
    [GRAPHIC] [TIFF OMITTED]62976.003
    
    [GRAPHIC] [TIFF OMITTED]62976.004
    
    [GRAPHIC] [TIFF OMITTED]62976.005
    
    [GRAPHIC] [TIFF OMITTED]62976.006
    
    [GRAPHIC] [TIFF OMITTED]62976.007
    
    [GRAPHIC] [TIFF OMITTED]62976.008
    
    [GRAPHIC] [TIFF OMITTED]62976.009
    
    [GRAPHIC] [TIFF OMITTED]62976.010
    
    [GRAPHIC] [TIFF OMITTED]62976.011
    
    Mr. Green. Again, we need to make sure that these 
industries have developed MTBE because Congress mandated the 2 
percent standard; that if we are going to replace it we should 
make sure that they, as best as possible, can respond to 
whatever other additive we need.
    Mr. Bilirakis. The gentleman certainly has a very big 
interest in this issue, and I appreciate that. We have a very 
lengthy program here today, and we have got to stay within that 
5-minute rule.
    Mr. Green. I understand, Mr. Chairman.
    Mr. Bilirakis. Mr. Upton, opening statement.
    Mr. Upton. Thank you, Mr. Chairman. And I will not use much 
of my time. I just want to thank you for having this hearing.
    I want to state for the record that I support oxygenated 
fuel, but I do not support the use of MTBEs. As I see it, this 
alleged cure is worse than the disease, and we need to get this 
stuff out of every gas tank.
    I am glad to see Mr. Franks here. I am a cosponsor of his 
legislation which accomplishes this. I guess, just in 
commenting to my friend from Texas, Mr. Green, EPA's Alamo 
might be right here.
    I yield back my time.
    Mr. Bilirakis. I thank the gentleman.
    Mr. Barrett.
    Mr. Barrett. Thank you, Mr. Chairman.
    I want to personally thank you for agreeing to hold this 
hearing. This is an issue that I have been involved with now 
for over 5 years, and this is basically the day I have been 
waiting for, a chance to talk about the impact of MTBE. I was 
first exposed to this issue back in January 1995.
    I represent Milwaukee, Wisconsin, one of the communities 
that is required to use reformulated gasoline. MTBE was the 
initial mixture that was used in my community. But within weeks 
of the start of the program, citizen complaints of the fuel 
causing headaches, dizziness and nausea began pouring into the 
United States EPA, my office, and the offices of other Members 
of Congress in southeastern Wisconsin.
    We asked the EPA to come to the community, which it did, 
and had a very, very long and contentious hearing in Milwaukee 
with many, many complaints from the citizens about their health 
concerns.
    Trying to give the most positive reading to the response of 
the EPA, it was along the lines of, you don't know what you are 
talking about. There is nothing wrong with it.
    As a result of that hearing and the public outcry, though, 
what happened was ethanol was substituted for MTBE in my 
community and the uproar died down. Obviously, we didn't hear 
much about it on the national level until several years later 
when we started hearing about the groundwater contamination in 
California and other States.
    What concerns me greatly today is, having sat through that 
hearing and really in many ways the condescending attitude of, 
well, it is just where this Midwestern town where this anomaly 
is occurring, so we can ignore it. But I look at the 
memorandum, the April 1987, memo on EPA letterhead prepared for 
a division director briefing on MTBE, and that the health 
effects of MTBE cited in this memo are, ``chronic inhalation 
toxidity including neurotoxic, hematologic and oncogenetic 
effects.''
    This was never told to us at that meeting in Milwaukee. 
This was the first time that I have learned of this. This memo 
is from 1987. And there were 600 people in that room, and no 
one from EPA acknowledged that this memorandum was in 
existence. Again, nothing was noted until several years later 
when the groundwater problem occurred.
    But this same memo, in the same memo, the author writes, 
``It is possible that this problem could rapidly mushroom due 
to leaking underground storage tanks at service stations. The 
tendency for MTBE to separate from the gasoline mixture into 
groundwater could lead to widespread drinking water 
contamination.'' Again, this is from the April 1987, memo.
    I am totally baffled as to why the EPA, the agency that is 
responsible for clean air and clean water, basically said for a 
decade that there was no problem, and you have an April 1987, 
memo saying there could be a problem. Those of us in good 
conscience who, frankly, trusted the EPA and were told don't 
worry, there is not a problem. There is something bizarre in 
your community. We are getting no complaints from any other 
part of this country. To not let the elected officials from 
that area know that this memo was in existence to me is 
unconscionable.
    I look forward to this hearing to get the answers from the 
EPA as to why we were not told of this when we, the elected 
officials, were standing in front of 600 angry constituents and 
we are told to tell them there is no problem.
    I yield back the balance of my time.
    Mr. Bilirakis. Mr. Greenwood for an opening statement.
    Mr. Greenwood. Thank you, Mr. Chairman.
    I also want to thank you for holding this hearing today to 
discuss the national implementation of the Reformulated 
Gasoline Program and the impact of oxygenates required in RFG 
on human health and the environment.
    As you know, the Federal RFG Program established in the 
Clean Air Act Amendments of 1990 and implemented in 1995 has 
provided substantial reduction in the emissions of a number of 
air pollutants for motor vehicles, most notably volatile 
organic compounds, which are precursors of ozone, carbon 
monoxide, and mobile source air toxics like benzene, in most 
cases resulting in emissions reductions that exceed those 
required by law.
    Employed to achieve the reduced emission levels is RFG 
containing 2 percent oxygen by weight. Currently, more than 85 
percent of RFG contains the controversial oxygenate methyl 
tertiary butyl ether, MTBE, and approximately 8 percent 
contains ethanol, a domestic fuel-blending stock made from 
grain.
    As we all know, the unfortunate side effect of the use of 
MTBE is its likelihood to contaminate ground and surface water 
because of its persistence and its mobility in water. That has 
led to an increasing number of detections of MTBE in our 
drinking water, with between 5 percent and 10 percent of 
drinking water supplies in high oxygenate use areas showing at 
least detectable amounts of MTBE.
    In my home State of Pennsylvania, our Secretary of 
Pennsylvania's Department of Environmental Protection has 
indicated to me that MTBE has undoubtedly made its way into the 
surface and groundwaters of Pennsylvania and that there are 
several sites where MTBE has contaminated private drinking 
water wells above Pennsylvania's clean-up standards.
    This reality, combined with the results of the summer of 
1999 United States Geological Survey study, which sampled a 
number of sites randomly in my district, including Bucks and 
Montgomery Counties, a small portion of Berks County and parts 
of New Jersey where RFG has been sold since 1995, alarms me.
    Of the 18 wells sampled, seven showed levels of MTBE around 
detectable levels. The levels found were very low, less than 
one part per billion, and not yet, and I emphasize yet, a 
health or environmental concern.
    Regardless, the findings do indicate that MTBE could be 
making its way into drinking water supplies from nonpoint 
sources such as deposition from the air or residential gasoline 
spills. This is unacceptable.
    In Pennsylvania, almost all RFG contains MTBE since ethanol 
is not a cost-effective oxygenate in our area. It is for this 
reason that I introduced legislation, H.R. 3449, permitting the 
States referred to in section 184(a) of the Clean Air Compact, 
and those States are Connecticut, Delaware, Maine, Maryland, 
Massachusetts, New Hampshire, New Jersey, New York, 
Pennsylvania, Rhode Island and Vermont, to petition the 
Environmental Protection Agency's administrator to waive or 
reduce the oxygenate requirement in RFG.
    Furthermore, my legislation attempts to ensure that the 
clean air benefits achieved to date and attributed to the use 
of RFG will not be eroded by the waiver of the 2 percent 
oxygenate requirement. Overall, my approach will provide States 
and refiners with the necessary flexibility to cost effectively 
reduce MTBE from RFG.
    Once again, Mr. Chairman, I thank you for holding today's 
hearing. I look forward to working with the committee to craft 
a solution to this looming national crisis.
    Mr. Bilirakis. I thank the gentleman.
    Mr. Stupak.
    Mr. Stupak. I waive my opening, Mr. Chairman.
    Mr. Bilirakis. I appreciate that.
    Mr. Bilbray.
    Mr. Bilbray. Thank you, Mr. Chairman.
    Mr. Chairman, I want to thank you for not only holding this 
hearing but for your patience with my constant reminders that 
this issue is still hanging out there and has been hanging out 
there since I first introduced this piece of legislation in 
1996.
    Mr. Chairman, I want to commend my colleague from New 
Jersey, because I think he articulated quite clearly what the 
real issue is here. While some of our colleagues go back and 
forth about this product or this substance, and refer to the 
problem as just some substance that is introduced into the 
gasoline, I think my colleague from New Jersey has pointed out 
that the real problem is not ether or ethanol. The real problem 
is a Federal mandate that is not reflected in the scientific 
data of the year 2000. I want to thank him for that.
    I think that what we need to point out, that in 1990--and I 
don't know if you were here in 1990--but I am sure the 
gentleman probably voted for this requirement because it was 
the best science we had available. It was the best approach 
available in 1990.
    Now, I wasn't here. I was sitting on the State Air 
Resources Board of the State of California, and we were 
developing strategies and reviewing the Federal mandates. And 
because we had the flexibility in California to look at the 
available technology by 1992, it became obvious to scientists 
that the 2 percent mandate was obsolete, and was not only 
obsolete, it was also counterproductive.
    It is not just an issue of groundwater. It is the fact that 
I would ask my colleagues here, is the 2 percent mandate some 
magic number? What scientific data do we have to justify a 2 
percent mandate, rather than a 3 percent or 1 percent by 
weight? The point is, I think as the gentlemen from New Jersey 
pointed out, it is time for us to review and update this 
mandate.
    Now, we can blame the EPA, and we can blame the 
manufacturers of different substances. But we are working 
around the problem. We need to look to ourselves. There was a 
good effort made here in Washington in 1990. It was the best we 
could do at that time. Since 1994, I have been trying to get 
Washington to revisit this thing and upgrade; and I thank the 
gentleman from New Jersey for pointing that out.
    Mr. Chairman, when it comes down to this battle of where we 
go with this, I just ask us to take a look at the fact that my 
bill was first introduced long before the MTBE issue was 
brought up. That bill was introduced because of air pollution 
concerns.
    The right type of technology, the right results or outcome 
from oxygenates is what we should be shooting for. And the best 
scientists around the world have come to the conclusion that 
there are times that the 2 percent mandate is not only not 
productive, it is destructive to the environment, not just the 
water but the air.
    So I am asking us today to take a look at the challenge of 
doing better. The biggest problem with this town is not that it 
tries new things, and it is not that this town makes mistakes. 
The problem with this town is that it doesn't have the bravery 
or the intestinal fortitude to go back and say we might have 
made a mistake, let's do it better.
    Now, I am not saying you made a mistake in the year 1990. I 
am saying it is a mistake that we have waited since 1994 to 
update this regulation. The 2 percent mandate is an air 
pollution and water pollution issue. The mandate is the 
problem, Mr. Chairman, not ether or ethanol.
    Now, I ask you to just consider, that we waited a long time 
for this report from the EPA's Blue Ribbon committee. This 
committee report that we awaited so long before we took action 
made it clear that, within California, lifting the oxygen 
requirement now would result in greater flexibility to maintain 
and enhance the regulations, the emissions reductions, 
especially as California goes to its phase 3 gasoline. Outside 
of California, though, it says we need to make sure we have the 
protocols and that we have the standards and that we have the 
systems in place to make sure that the pulling off of the 2 
percent doesn't mean a drop-back.
    I challenge our panels and the members here to take this 
finding from the Blue Ribbon committee and talk about what we 
have to do in the rest of the country to be able to give the 
air pollution and water pollution safeguards for the rest of 
the Nation that the Blue Ribbon committee and EPA has already 
identified for California.
    I ask us not to be fighting back and forth between one 
industry and another. Texas should not need to fight the 
Midwest. What we should be talking about is how do we make sure 
that the air and the environment gets cleaned up.
    Let me remind you, this is the Clean Air Act. This isn't 
the corporate subsidy act. This isn't the corporate monopoly 
act. This is the Clean Air Act. Can we talk about the air and 
the environment first and talk about corporate profits 
afterwards?
    Thank you, Mr. Chairman. I yield back.
    Mr. Bilirakis. Mr. Shadegg for an opening statement.
    I would point out that Mr. Shimkus was actually the first 
member in this room, but he is not on the subcommittee; and for 
that reason, he has to wait his turn.
    Mr. Shadegg.
    Mr. Shadegg. I am sure Mr. Shimkus will enlighten us when 
he does get his turn.
    Mr. Chairman, I will be brief, and I will submit my opening 
statement. But let me simply join the others in commending you 
for holding this hearing. It is extremely important that we 
proceed on this topic and for having the courage and fortitude 
to get started on this issue.
    I also want to simply say in my statement itself that, like 
many other States, my congressional district is under the 
mandate to use oxygenated fuels, and MTBE in fact is the 
oxygenate that is being used in my congressional district in 
Phoenix, Arizona.
    Like many other areas where MTBE is currently in use, we 
have begun to discover that MTBE is being found in our water 
supply, and there is deep concern about that. Indeed, in the 
desert Southwest, in Arizona where I live, water is vital to 
our survival, and we simply cannot afford to allow our water 
supply to be polluted.
    With that, Mr. Chairman, let me simply say I want to 
associate myself with the remarks of my colleague from 
California, Mr. Bilbray. He has been a leader in this fight 
from the outset. I have tried to support him at every turn. 
California is a neighboring State. The reality is that 
California has discovered how to produce cleaner fuel that 
reduces the air pollution more than the mandated system that we 
have in place right now.
    I think the remarks he just made illustrating that looking 
backward and pointing blame at the EPA or others is perhaps 
alluring and may make for good political points, but the 
challenge for us is to look forward and to look for how we 
solve this problem.
    I think, importantly, in that area, it is important that we 
look at what our limitations are. I would suggest that our 
limitations are that it takes longer to pass legislation that 
specifies how specifically you are to clean the air than 
science moves. And in point of fact, that is what we 
discovered.
    The RFG Program was well intended. But by specifying the 
particular way in which the air had to be cleaned and the 
particular materials that had to be used to clean it, what we 
did is mandate a single solution, and science has now proven 
that that was a bad idea.
    I think we need to recognize the limitation of the U.S. 
Congress in moving legislation quickly enough. I think we ought 
to recognize that science moves faster in this area than we do. 
I think what we need to do is set standards but not prescribe 
solutions and not tell the industry how to achieve these goals.
    I think Mr. Bilbray has pointed out quite accurately where 
there are circumstances where the 2 percent may be quite 
appropriate and circumstances where 2 percent may be very 
inappropriate.
    I think we need to make sure that, as we move forward, we 
recognize our limitations and we act responsibly and we 
recognize that science can deal with these problems better than 
we can legislatively.
    With that, Mr. Chairman, I yield back.
    Mr. Bilirakis. Thank you.
    [The prepared statement of Hon. John Shadegg follows:]
    Prepared Statement of Hon. John B. Shadegg, a Representative in 
                   Congress from the State of Arizona
    Thank you, Mr. Chairman. I commend you for scheduling today's 
hearing.
    My colleague Congressman Brian Bilbray (R-CA) has been a leader in 
bringing the problems of methyl tertiary butyl ether (MTBE) in 
California to the attention of the Congress and this committee. Now, 
with the recent 60 Minutes piece on MTBE contamination in ground water, 
we see that the MTBE problem is not confined to California.
    Indeed, my state of Arizona has experienced incidents of MTBE 
contamination in both ground water and in lakes throughout the state. 
It is imperative that Arizona and other states be given the power and 
flexibility to address this potential health risk to their citizens. 
Unfortunately, federal regulations hamstring Arizona's ability to 
resolve this challenge in a manner which best suits her local needs and 
concerns.
    I believe that Congress, through the Clean Air Act of 1990, erred 
in mandating the manner in which states and localities must meet air 
standards instead of setting the air quality goal to be achieved. By 
including a two-percent oxygenate requirement in the federal 
reformulated gasoline (RFG) standard, the federal government has 
inhibited Arizona and other states from exercising the flexibility 
needed to solve their own local air quality problems in ways which best 
meet their needs.
    MTBE is a potentially dangerous pollutant which presents more 
health risks by its presence in our drinking water than it offers in 
air quality improvements. Because of the federal oxygenate requirement, 
however, Arizona is left with only one alternative to MTBE in its RFG 
program; ethanol. Although ethanol offers some air quality benefits, 
its negative aspects outweigh its positive qualities in Arizona. First, 
ethanol is considerably more expensive than alternative RFGs, and this 
cost could rise if use of MTBE, its major competitor in the oxygenated 
fuels area, is reduced or eliminated. Second, because of ethanol's 
extreme volatility in hot weather, it is entirely unsuited to Arizona's 
needs, particularly in the summer when temperatures regularly reach 120 
degrees Fahrenheit.
    Mr. Chairman, it is imperative that Congress remove the two-percent 
oxygenate requirement and enable states to address the health concerns 
posed by MTBE in a cost-effective manner commensurate with the 
differing conditions and needs of individuals states. I plan to 
introduce legislation to this effect.
    Again, I thank you, Mr. Chairman, for holding this important 
hearing, and I look forward to hearing the testimony of the panelists.

    Mr. Bilirakis. Finally, Mr. Shimkus for an opening 
statement.
    Mr. Shimkus. Thank you, Mr. Chairman. I thank you for 
letting me join your committee today. I do serve on the Finance 
and Hazardous Material, so maybe the hazardous material aspect 
of my work falls in line with this hearing.
    I would ask unanimous consent that my full statement be 
submitted for the record.
    Mr. Bilirakis. Without objection. And your name is not 
Shewmake, it is Shimkus of course.
    Mr. Shimkus. That is what my mom calls me, but I am called 
a lot of things here in Washington, so I can respond.
    But, again, I do appreciate it; and I will summarize.
    I want to make sure that I welcome Director Skinner from 
the Illinois EPA. He is a constituent of mine, and he has 
worked in the Environmental Protection Agency and those issues 
around Illinois for many, many years, and he is going to 
testify today. So I want to welcome Director Skinner. I know he 
is somewhere around here.
    And, also, I want to draw my colleagues' attention to Dr. 
Graboski, who is going to be in the fourth panel. If you want 
to listen to a scientist who has studied these issues, I think 
you will find his testimony and his answers to the questions 
quite enlightening.
    I am going to just end by saying what we have heard in the 
opening statements so far is that MTBE pollutes groundwater. 
The oxygenated program is good for clean air. And I will echo 
the comments of my colleague, Dr. Ganske, who has helped work 
with me and helped me get on this committee or hearing. 
Especially with the oil shortages, the high prices, with the 
renewable resource, you know ethanol is a great answer. We 
still have to keep in the mix of cleaner air, and we are going 
to fight to make sure that is part of our clean air portfolio.
    With that, Mr. Chairman, I yield back my time.
    Mr. Bilirakis. I thank the gentleman. I know he is very 
interested in the subject, and it is good to have him here with 
us.
    [Additional statements submitted for the record follow:]
Prepared Statement of Hon. Cliff Stearns, a Representative in Congress 
                       from the State of Florida
    Thank you, Mr. Chairman. I am pleased that we are moving forward on 
this important issue. We must address the problems that have resulted 
from the use of reformulated gasoline with oxygenates.
    Problems with MTBE must be resolved. Clean air is a priority in our 
nation, but we must also consider the consequences of adding 
oxygenates--like MTBE to gasoline. As we know, one such consequence has 
been groundwater contamination. Common sense tells us that the solution 
to one problem should not be the cause of another.
    MTBE has raised important questions that must be answered; such as 
how useful are oxygenates in gasoline? What methods if any are being 
developed for removing MTBE from groundwater supplies? Are the studies 
there to prove that oxygenates actually improve the air quality?
    While I support environmental performance standards for states and 
industries, I do not support coupling those performance standards with 
unreasonable mandates. An unreasonable mandate to me is a mandate that 
hasn't been studied before it is implemented. An ounce of prevention in 
this case could have prevented a pound of cure. I do not believe that 
the figures are there to support using oxygenates in gasoline.
    My hope is that eventually all fifty states will be given the 
flexibility to meet Clean Air requirements without the oxygenate 
mandate. From articles and studies that I have reviewed, I have found 
very little if any evidence to show that the oxygenates actually 
improve the air quality.
    One question that I am particularly curious about is the safety of 
our gasoline storage tanks. I hope that our panel members will be able 
to answer what role faulty gasoline tanks have played in this 
situation. This issue, in my opinion, is inseparable from the 
reformulated gasoline issue. We must insure that we are diagnosing the 
whole problem and not simply one of the symptoms of the whole problem.
    Mr. Chairman, I am pleased that we are holding a hearing on this 
important issue.
    Thank you.
                                 ______
                                 
  Prepared Statement of Hon. Lois Capps, a Representative in Congress 
                      from the State of California
    Thank you, Mr. Chairman, for holding this hearing. As you know, 
this is an issue of great importance to my constituents on California's 
Central Coast.
    While I understand the environmental benefits of the reformulated 
gasoline (RFG) program, particularly the significant air quality 
improvements achieved as a result of the program, I am very concerned 
over the continued use of a particular oxygenate used in the program, 
methyl tertiary butyl ether (MTBE).
    MTBE poses a real and serious risk to public health. MTBE has been 
identified by the federal Environmental Protection Agency (EPA) as a 
possible human carcinogen that has contaminated groundwater supplies 
nationwide. In my home state of California this is particularly 
disconcerting, as a large portion of the state's population relies on 
groundwater for its source of drinking water. Just today, my hometown 
paper reported on traces of MTBE contaminating groundwater in Cambria, 
California.
    As a result of the significant risk to the state's water supply, 
Governor Davis issued an executive order to phase out MTBE by the year 
2002. To comply with the Governor's mandate, California has requested a 
waiver by EPA of the oxygenate content requirement in the federal Clean 
Air Act.
    California already leads the nation in air pollution control 
programs. We already have the nation's strongest ``cleaner-burning'' 
gasoline standards, which are stronger than federal clean air 
standards. California has adopted a performance-based program that 
allows gasoline refiners to use innovative fuel formulas to meet clean 
air requirements--without mandating potentially harmful additives such 
as MTBE.
    I am especially interested to hear the testimony of Robert 
Perciasepe, Assistant Administrator for Air and Radiation for the EPA. 
I am concerned about a recent statement made by Mr. Perciasepe in 
response to California's request for a waiver from the oxygenate 
mandate. In a letter to the California Environmental Protection Agency, 
Mr. Perciasepe indicated that it is the hope of EPA to complete an 
assessment of the request by early summer. This is very disappointing. 
I cannot emphasize enough how important it is for EPA to reach a final 
determination well before this proposed time frame. Our state just 
cannot wait until summer. The state of California originally submitted 
its waiver request in April, 1999. Gasoline refiners need to make 
crucial business decisions very soon on the kinds of investments that 
would be required to meet the oxygenate mandates. If they are not given 
enough lead time to make these changes, there could be a serious 
disruption in gasoline supply in California, which in turn would raise 
gas prices beyond their already astronomical level.
    I look forward to hearing from our witnesses today. It is also my 
hope that EPA will do everything in its power to expedite California's 
oxygenate waiver request and I am committed to working with the Agency 
to this end.
                                 ______
                                 
    Prepared Statement of Hon. John D. Dingell, a Representative in 
                  Congress from the State of Michigan
    Mr. Chairman, I commend you for holding this hearing today. Several 
of my colleagues requested this hearing last Fall, and I thank you for 
working with them to bring these witnesses before us.
    It is somewhat curious that the title of this hearing is ``The 
National Implementation of the Reformulated Gasoline Program.'' This is 
a complex program, currently entering Phase II as required by the Clean 
Air Act--and the composition of fuels is equally as complex. This is a 
program about which we could have many informative hearings, and I 
would welcome those hearings. But the primary concern that has brought 
us here today--the one that has focused our inquiry into this complex 
program--is the presence of MTBE in drinking water supplies. I hope 
that we do not leave the impression, as did a recent 60 Minutes piece 
on this issue, that the Clean Air Act (or the reformulated gasoline 
program) mandates the use of MTBE. Similarly, I hope that we do not 
reach hasty conclusions about the reformulated gasoline program itself 
as a result of a hurried effort to thwart a substance that has moved 
through groundwater much faster than we have gained firm understanding 
of its potential threat to health or the environment. As I am sure this 
phrase has been used already in this debate, it bears repeating: we 
would not want to throw the baby out with the bath water.
    I expect that more than a few witnesses here today will confirm 
that the reformulated gasoline program has been a success. That success 
often has been attributed to the use of oxygenates in reformulated 
gasoline. Although some studies indicate that we can achieve 
environmental benefits without the use of oxygenates, I am not aware of 
evidence of any notable down-side of oxygenate use, other than the 
spread of MTBE--the most frequently used oxygenate--from leaking tanks 
through water. As we consider any revision to the reformulated gasoline 
provisions, I hope that we will be mindful of all of the environmental 
benefits of the current formulation and that we will agree on a policy 
goal to maintain those benefits. In addition, we must be mindful of the 
effect statutory and regulatory changes may have on gasoline supply, 
particularly during a time when gasoline prices are the highest we have 
witnessed during this decade.
    I do not know whether MTBE merits more attention than we have given 
to other constituents of gasoline. I will hear from the witnesses on 
that point. I note however, that EPA has known since 1987, perhaps 
earlier, that MTBE could migrate into water supplies. Yet, to date, EPA 
has obtained little information about the health effects of ingestion 
of MTBE. It was not until 1999 that EPA included MTBE on a list of 
substances to be monitored by public water systems. That monitoring 
will not begin until 2001. It was not until 1997 that the Agency issued 
a drinking water advisory for MTBE based on consumer acceptability. It 
was not until last month that EPA initiated a process to determine 
whether MTBE could be banned under TSCA--a lengthy process most notably 
employed in the past (unsuccessfully) to address asbestos. I question 
such delay if this substance, which has been added to gasoline for many 
years, is a public health threat deemed so unacceptable as to require 
immediate passage of federal law to remove the substance from public 
use.
    I do not mean to diminish the significance of the expense and 
hardship that communities with drinking water supplies contaminated 
with MTBE currently face. Rather, I recommend a well-informed approach 
to the measures we may adopt to address this problem. First, in 
addition to careful consideration of the current oxygenate requirement, 
for example, this Committee should pay ample attention to the 
implementation of preventative measures such as the underground storage 
tank program, and I suspect that may have been laggard. The states by 
and large implement this program. The data that we, or the EPA, have 
been able to obtain about tank compliance has been less-than-
comprehensive. We know, for instance, that some states inspect their 
tanks for compliance only once every five to seven years. Second, we 
also know that neither the federal government, nor most states, have 
the ability to regulate above-ground mechanisms for dispensing 
gasoline. These mechanisms may also be the source of spills and leaks 
of gasoline.
    It seems that this Committee has much to learn about this topic. I 
look forward to receiving the testimony of these witnesses.

    Mr. Bilirakis. Finally, the very patient colleagues of ours 
who have been sitting there, I guess you are accustomed to that 
probably, ordinarily, because you are usually up here.
    Mr. Franks from New Jersey, you have 5 minutes. Hopefully, 
you won't take all 5, but certainly don't take any more than 
that. Please proceed.

STATEMENT OF HON. BOB FRANKS, A REPRESENTATIVE IN CONGRESS FROM 
                    THE STATE OF NEW JERSEY

    Mr. Franks. Mr. Chairman, almost 10 months ago, on May 6, 
1999, I testified before this subcommittee to lend my support 
to H.R. 11, a bill that would allow the STATE OF California to 
opt out of the 2 percent oxygenate requirement of the Clean Air 
Act. My interest in today's hearing stems from compelling 
evidence that the same 2 percent oxygenate requirement for 
gasoline has led to a serious threat to public health caused by 
the use of MTBE.
    We have already heard that MTBE is highly soluble. It moves 
quickly through soil and groundwater when gasoline leaks from 
underground storage tanks. Mr. Chairman, in my home State of 
New Jersey, the Department of Environmental Protection has 
reported that 400 public wells and 65 private wells have been 
tainted with MTBE.
    Last July, a Federal Blue Ribbon Panel study concluded that 
in those areas that are required to use reformulated gasoline, 
MTBE has contaminated 5 to 10 percent of those drinking water 
supplies. Immediately after that study was released, EPA 
Administrator Carol Browner echoed the conclusion that MTBE 
poses a risk to water supplies. She indicated the need to 
reduce use of MTBE gasoline, ``as quickly as possible.''. 
However, 7 months later, EPA has done nothing to regulate MTBE; 
and, consequently, it continues to contaminate drinking water 
across the country.
    Last spring, I sponsored legislation H.R. 1367 that would 
phaseout the use of MTBE as a fuel additive over a 3-year 
period. Mr. Chairman, if the EPA will not accept responsibility 
and promptly use its authority under the Toxic Substances 
Control Act to ban the use of MTBE, then Congress must act.
    I recently obtained an internal EPA memo that was referred 
to earlier by Mr. Barrett, dated April 6, 1987. Let me just 
read an additional sentence that preceded the section that Mr. 
Barrett alluded to, and I quote: ``Known cases of drinking 
water contamination have been reported in four States. These 
cases affect individual families, as well as towns of up to 
20,000 people. It is possible that this problem could rapidly 
mushroom due to leaking underground storage tanks at service 
stations. The tendency for MTBE to separate from the gasoline 
mixture into groundwater could lead to widespread drinking 
water contamination.''
    Mr. Chairman, this memo clearly shows the EPA has known 
about the dangers that MTBE poses for our drinking water 
supply. It is important to note that this memo was issued fully 
8 years before the EPA initiated the Reformulated Gasoline 
Program. They issued it knowing full well that MTBE would be 
the oxygenate of choice for oil refineries.
    It is simply inexcusable that a Federal agency which is 
responsible for protecting the public health and safety would 
allow the widespread use of a product that their own scientists 
had warned could pose a serious threat to the Nation's drinking 
water supply.
    We still don't know nearly enough about the health 
consequences of consuming drinking water tainted with MTBE. 
However, this chemical has been found to cause cancer in 
animals. For this reason, I introduced H.R. 3536 that would 
require the National Institutes of Health to finally conduct a 
comprehensive study on the human health effects of ingesting or 
inhaling MTBE.
    Mr. Chairman, if MTBE is allowed to continue to be the most 
widely used oxygenate in gasoline, contamination problems can 
be expected only to worsen. Existing water treatment systems 
have proven relatively ineffective at removing even low 
concentrations of MTBE.
    My legislation would also further require that research be 
done into the design of cost-effective methods of removing MTBE 
from water supplies. To continue to threaten our clean water 
supply in an effort to achieve our clean air goals is simply 
unconscionable. It is time we admit that MTBE was a mistake and 
take immediate action to remove it from our gasoline and, in 
turn, our drinking water supplies.
    It is the obligation of this government to seek better and 
safer mechanisms through which to clean our air while we 
protect our Nation's precious supply of drinking water.
    Mr. Chairman, again, I want to thank you. And I want to 
finally refer to Mr. Green's observations, and I concur with 
them, that no one would be enthusiastic about the prospect of 
drinking a material that was made merely to make our cars run 
better.
    But I want to give to Mr. Green and to you, Mr. Chairman, a 
product called drinking water from the Metropolitan Water 
District of Southern California. And you see, Mr. Green, if you 
are in the area where that water district services hundreds of 
thousands----
    Mr. Bilirakis. Please finish up.
    Mr. Franks. [continuing] of water consumers, you have to 
drink a product that is made to make your car run better when 
you turn on your tap. There is no choice.
    Thank you, Mr. Chairman.
    [The prepared statement of Hon. Bob Franks follows:]
  Prepared Statement of Hon. Bob Franks, a Representative in Congress 
                      from the State of New Jersey
    I would like to thank Chairman Bilirakis for convening this hearing 
and allowing me the opportunity to testify today.
    Almost ten months ago, on May 6, 1999, I testified before this 
Subcommittee to lend my support to H.R. 11, a bill that would allow the 
State of California to opt out of the 2% oxygenate requirement of the 
Clean Air Act. Today, the discussion is about the nationwide impact of 
the Reformulated Gasoline, or RFG, Program.
    There is conflicting information on whether reformulated gasoline 
has significantly improved air quality. I commend the Subcommittee's 
efforts to review the merits of the RFG Program. My interest in this 
stems from compelling evidence that the 2% oxygenate requirement for 
gasoline has led to a serious threat to public health caused by Methyl 
Tertiary Butyl Ether, or MTBE.
    MTBE is the preferred fuel additive because of its low cost, ease 
of production, and favorable blending characteristics with gasoline. 
MTBE, a highly soluble compound, moves quickly through soil and 
groundwater when gasoline leaks from underground storage tanks or is 
spilled. For this reason, the additive has contaminated sources of 
drinking water, such as aquifers and lakes, across the country.
    Mr. Chairman, in New Jersey, the Department of Environmental 
Protection has reported that 400 public wells and 65 private wells are 
tainted with MTBE. Last July, a federal Blue Ribbon Panel study 
concluded that MTBE has contaminated five to ten percent of drinking 
water nationwide. Immediately after the study's release, EPA 
Administrator Carol Browner recognized that MTBE poses a risk to water 
supplies. She indicated the need to reduce the use of MTBE in gasoline 
``as quickly as possible.'' Seven months later, EPA has still done 
nothing to regulate its use and, consequently, MTBE continues to 
contaminate drinking water across the country.
    Last spring, I sponsored legislation, H.R. 1367, that would phase 
out the use of MTBE as a fuel additive over three years. If the EPA 
will not accept responsibility and promptly use its authority under the 
Toxic Substances Control Act to ban the use of MTBE, then Congress must 
act.
    I recently obtained an internal EPA memo, dated April 6, 1987, on 
MTBE which states and I quote: ``Known cases of drinking water 
contamination have been reported in four states. These cases affect 
individual families, as well as towns of up to 20,000 people. It is 
possible that this problem could rapidly mushroom due to leaking 
underground storage tanks at service stations. The tendency for MTBE to 
separate from the gasoline mixture into ground water could lead to 
widespread drinking water contamination.'' This clearly shows that EPA 
has known about water contamination problems with MTBE and that 
toxicity information was lacking. That was thirteen years ago and eight 
years before the EPA initiated the Reformulated Gasoline Program, 
knowing very well that MTBE would be the oxygenate of choice for oil 
refineries.
    We still do not know about the health consequences of consuming 
drinking water tainted with MTBE. However, the chemical has been found 
to cause cancer in animals. For this reason, I introduced H.R. 3536, 
legislation that requires a comprehensive study on the human health 
effects of ingesting and inhaling MTBE.
    Mr. Chairman, if MTBE continues to be the most widely used 
oxygenate in gasoline, contamination problems can be expected to 
worsen. Existing water treatment systems are relatively ineffective at 
removing even low concentrations of MTBE. H.R. 3536 would also require 
further research into the design of cost-effective methods for removing 
MTBE from water supplies.
    To continue sacrificing clean water for clean air is simply 
irresponsible. It is time we admit that MTBE was a mistake and 
immediately remove it from our gasoline and drinking water supplies. We 
must seek better, safer mechanisms with which to clean the air while 
protecting our nation's precious supply of drinking water.
    Again, I would like to thank Chairman Bilirakis for holding this 
hearing on the RFG Program and I encourage the Subcommittee to 
immediately ban the use of MTBE as a gasoline additive nationwide.

    Mr. Bilirakis. Thank you.
    The gentleman from Illinois, Mr. LaHood.

STATEMENT OF HON. RAY LAHOOD, A REPRESENTATIVE IN CONGRESS FROM 
                     THE STATE OF ILLINOIS

    Mr. LaHood. Thank you, Mr. Chairman.
    I will not read my statement. I would like to read a couple 
of paragraphs from my statement.
    I am here primarily--and I don't want to repeat what has 
been said. I have four ethanol-producing plants in my district. 
I think my district perhaps produces as much or more ethanol 
than perhaps any district in the country. I am really here to 
promote the use of ethanol as a clean-burning fuel.
    If I may just read two paragraphs, and I will then have the 
rest of the statement entered into the record.
    Last year, the National Academy of Science completed a 
study which addressed ethanol's air quality benefits and the 
impact of carbon monoxide on ozone formation. The study 
concluded that the additional carbon monoxide benefits of 
ethanol blended gasoline should be taken into account. 
Unfortunately, the EPA does not currently credit ethanol for 
these reductions under the RFG Program, which will make it 
harder to use ethanol in the program when phase 2 of that 
program is implemented. I would ask your committee to urge the 
EPA to allow these credits.
    There are plenty of other things that I have said in my 
statement, some of which have already been stated and which the 
committee knows. I appreciate the chance to come and 
participate and appreciate the work that this subcommittee is 
doing. Thank you.
    [The prepared statement of Hon. Ray LaHood follows:]
  Prepared Statement of Hon. Ray LaHood, a Representative in Congress 
                       from the State of Illinois
    Mr. Chairman, thank you for giving me the opportunity to appear 
before you today. I wish to use this opportunity to express my support 
for the reformulated gasoline program (RFG). I will let the other 
panelists address the technical aspects of the RFG program, and limit 
my time to discuss the larger policy concerns the program currently 
faces.
    Since the implementation of the RFG program, the benefits to air 
quality have been dramatic. The US Environmental Protection Agency 
(EPA) has estimated that the environmental benefits under Phase 2 of 
RFG program is equal to taking 16 million cars off the road each year. 
In 1998, the American Lung Association of Metropolitan Chicago credited 
the RFG program with being the single largest source of emissions 
reductions in the Chicago area.
    As we begin to address the unintended side effects of the RFG 
program, most notably the reports of contamination of surface and 
ground water by MTBE, we need to make sure we do not unintentionally 
weaken the protections of the Clean Air Act. At first glance, the 
simple solution to the MTBE problem is to remove the oxygenate 
requirement from the RFG program, which would remove the need to use 
MTBE in reformulated gasoline. I believe that approach is misguided. 
The water contamination problem lies with the use of MTBE only, not 
with the oxygenate requirements in the RFG program. I believe that we 
can protect our water resources by restricting the use of MTBE, and 
keep the oxygenate requirements in the RFG program by using ethanol as 
an oxygenate additive in reformulated gasoline.
    Ethanol already has a proven track record as a reliable RFG 
oxygenate. Over 95 percent of the gasoline sold in the Chicago area 
uses ethanol, instead of MTBE, as an oxygenate. Ethanol blended 
gasoline is also sold in Milwaukee, St. Louis, and in some locations in 
California. Given the potential problems associated with MTBE, I 
believe the US would be best served by focusing on ways to allow 
greater integration of ethanol into the RFG program.
    The greatest stumbling blocks for integration of ethanol into the 
RFG program is the regulatory structure of the EPA. Under the current 
guidelines, gasoline refiners need to use specially tailored blend 
stocks when using ethanol, which increases the cost to the refiner. 
Last year, the National Academy of Sciences completed a study which 
addressed ethanol's air quality benefits and the impact of carbon 
monoxide on ozone formation. The study concluded that the additional 
carbon monoxide benefits of ethanol blended gasoline should be taken 
into account. Unfortunately, the EPA does not currently credit ethanol 
for these reductions under the RFG program, which will make it harder 
to use ethanol in the program when Phase 2 of the program is 
implemented this summer. I would ask your Committee to urge the EPA to 
allow these credits.
    Finally, I hope you will consider how the RFG program effects our 
domestic ethanol industry. Since the implementation of the RFG program 
in 1990, over 40 ethanol facilities have been built, which expanded 
production from 850 million gallons to close to 1.5 billion gallons 
today. The industry also helps bolster the price of corn (which is at a 
near historic low) by approximately $0.35/bushel because it utilizes 
over 600 million bushels of corn annually.
    If the oxygenate provisions are maintained in the RFG program, the 
growth potential for the ethanol industry is strong, but I'm afraid for 
what will happen if that provision is removed.
    I believe that we have the potential for a win-win situation here. 
We can continue to promote clean air legislation in our urban areas by 
maintaining the oxygenation requirements of the RFG program, protect 
our ground water by banning the use of MTBE, support our beleaguered 
corn prices and the American farmer, and contribute to the growth of 
our domestic ethanol industry.
    Thank you

    Mr. Bilirakis. Thank you, Ray.
    Mr. Forbes.

   STATEMENT OF HON. MICHAEL P. FORBES, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF NEW YORK

    Mr. Forbes. Mr. Chairman, thank you very much, and I would 
likewise ask that my full statement be admitted into the 
record.
    Mr. Bilirakis. Without objection, that will be the case.
    Mr. Forbes. I will make every effort to be brief, Mr. 
Chairman, and I thank you for the opportunity to be here and 
for your leadership on this question.
    It is unfortunate that it has taken us as a Nation almost a 
decade to come to this point where we are trying to deal with 
some solutions. I would like to particularly thank my colleague 
from New Jersey, Mr. Pallone, for his leadership on this issue 
over the last 7 years, and all of my colleagues, frankly, who 
have made some very salient points about the problem of MTBE.
    On Long Island, we have amongst the highest concentration 
of MTBE intrusion into our groundwater supply. We are the 
Nation's largest sole source aquifer, which is where we get our 
drinking water. We found that over 300 private wells have been 
contaminated and 30 public wells. I am also delighted, though, 
that the Suffolk County Water Authority from Suffolk County, 
New York, is here today to testify about their outspoken need 
to ban MTBE.
    I would like to separate myself from the comments of those 
who believe, however, that we might want to roll back the clock 
and eliminate the requirement for oxygenates. I think that the 
1990 Clean Air Act went a long way, and we can see the results 
of that tremendous legislation across the country. When you 
drive across this country, you can see a marked change in our 
air quality, and I do not think we should be rolling back the 
clock. However, I think that the choice of the petroleum 
companies to use MTBE as the way to solve this problem with 
oxygenates is clearly wrong.
    I would like to align myself with those who would like to 
see us ban this over the next 3 or 4 years and move to ethanol. 
I think that it is clear that we need to make that change as 
quickly as we can. We need time in this Nation to increase the 
supplies of ethanol and their availability.
    I would align myself with Dr. Ganske's comments that the 
specious argument about the transportation cost is just that, 
that we can accommodate I think this change to ethanol. I am 
not the Forbes that spent any time in Iowa. So for that I would 
like to say that we do need to make this change, though.
    I think there are some very important concerns as well, 
though. We do not know how to clean up MTBE. It is highly 
soluble. The technology is still being reviewed as to how to 
clean up this highly soluble reformulated gasoline that gets 
into our groundwater.
    My legislation introduced earlier this week would put an 
emphasis on that. It would allow the Environmental Protection 
Agency to do what so many of us are frustrated that they have 
not done and that is to step up to the plate and take some very 
concerted and direct action to deal with this problem. We need 
to hook up to public water, though, those who are continuing to 
frankly suffer because they have shallow groundwater wells and 
their drinking water is being compromised.
    Now, we don't know what the health effects--the long-term 
health effects of continued groundwater pollution by MTBE are. 
And that again is something that NIH and the Agency for Toxic 
Substances should be charged with the responsibility of 
understanding the long-term health consequences.
    We all can remember that, many decades ago, the discovery 
of DDT was thought to be tremendous in stemming disease in this 
country, but we found out the solution was almost as bad as the 
problem. We do not want to come to the point in this country 
where we find out after several years or several decades that 
MTBE is as bad as the pollution that it is trying to conquer.
    So I would, again, align myself with those who believe that 
we need to continue on the course that we have done with the 
1990 Clean Air Act. We need to not roll back the safeguards, 
not eliminate the oxygenate.
    We can have a great debate about what level of oxygenates 
are appropriate, but we need to ban MTBE, give the agencies, 
particularly EPA and NIH, the tools to deal with this problem, 
find the technology to clean up MTBE and, most of all, provide 
assistance to those citizens, frankly, particularly those who 
don't have the means to hook up to public water, to do that.
    In my own county of Suffolk in New York, we have over 
50,000 people who are still dependent on private shallow wells 
in the sole source aquifer. Many of them have been compromised 
by MTBE, and I would urge that the leadership of this 
committee, which has been demonstrated over the last several 
years, particularly on this question, that we are able to move 
a bill to the floor. And I don't have any pride of authorship, 
but I just hope we can end the use of MTBE, give the 
appropriate agencies the tools to deal with this problem and, 
once and for all, restore some confidence that reformulated 
gasoline can help us clean up our air. But we don't need to go 
the route of continued use of MTBE.
    Mr. Chairman, I thank you, the ranking member and members 
of the committee for the opportunity to testify here this 
morning.
    [The prepared statement of Hon. Michael P. Forbes follows:]
   Prepared Statement of Hon. Michael P. Forbes, a Representative in 
                  Congress from the State of New York
    Mr. Chairman, thank you for holding a hearing on the critical topic 
of the reformulated gasoline program--which has done so much to help 
clean our air of toxic contaminants like benzene. Mr. Pallone, I also 
wish to thank you and commend you for all your hard work in this area, 
particularly regarding your proposal to phase out MTBE.
    I am pleased to be joined here today by my colleagues, Mr. Franks 
and Mr. LaHood. Also, I am happy that my neighbors from the Suffolk 
County Water Authority are here to testify. I know that, based on their 
experience with MTBE in our Suffolk County water wells, they too are 
outspoken about the need to ban MTBE.
    As you know, the gasoline additive MTBE (methyl tertiary butyl 
ether) is the result of the 1990 Clean Air Act, which mandated the use 
of oxygenates in gasoline. Oxygenates are additives designed to dilute 
concentrations of cancer-causing elements like benzene. Presently, only 
two substances are used as oxygenates--ethanol and MTBE.
    Unfortunately, no studies were done on the potential health effects 
of MTBE prior to its use. Now, the United States, and Long Island in 
particular, faces a growing problem of water contaminated by MTBE. It 
is 30 times more soluble than any other element in gasoline--so it 
contaminates the groundwater very quickly. MTBE has now been detected 
in varying levels in groundwater in 49 states; 21 states have had at 
least one well shut down.
    Because of Long Island's unique geology, MTBE has already had 
serious effects there. So far, MTBE has been found in over 300 private 
wells and 32 public wells in my county, Suffolk County, alone.
    Furthermore, residents of Suffolk County are particularly 
vulnerable to MTBE contamination because approximately 40,000-50,000 
Suffolk County residents still get their water from shallow backyard 
wells' which are highly susceptible to groundwater contamination.
    Finally, Long Island has the nation's largest sole source water 
supply--if it gets contaminated, there are no other alternatives.
    Although we have been lucky that few water sources have been so 
contaminated as to make the water undrinkable, even in small amounts 
MTBE fouls the water, making it smell bad and taste awful.
    But there are potentially grave health impacts as well. In 1993, 
the EPA indicated that MTBE ``supports a hazardous classification of 
possible human carcinogen.'' In high concentrations, it can result in 
damage to the nervous system when inhaled, and harm to kidneys when 
ingested.
    Mostly, MTBE gets into our water supply from leaking underground 
gas tanks. But MTBE can also find its way into water from car exhaust 
by getting trapped by rain and seeping into the ground. As a result, a 
ban is the only way to stop MTBE from fully contaminating our water 
supplies.
    I am proud of how my colleagues in New York State have moved to 
address this problem. In November 1999, Governor Pataki proposed the 
strictest ground water standard in the nation for MTBE (reducing the 
amount of MTBE permitted in the surface and groundwater from 50 parts 
per billion to only 10 parts per billion).
    Furthermore, earlier this month, the New York State Assembly voted 
unanimously for a bill to ban MTBE--introduced by a fellow Long 
Islander, State Assemblyman Thomas DiNapoli (D-Great Neck). The State 
Senate's version of the bill, introduced by another Long Islander, 
State Sen. Carl Marcellino (R-Syosset), is ready for a vote soon.
    Despite the NY Legislature's intent to ban MTBE, there is concern 
about whether, in light of the Clean Air Act requirements regarding 
oxygenates, a State can act alone in banning a particular oxygenate. 
John Cahill, Commissioner of the New York Department of Environmental 
Conservation, supports phasing out MTBE, but has repeatedly said he 
believes that only the federal government can do so.
    California Governor Gray Davis has already ordered a phase out of 
MTBE by 2002. Maine, Alaska, Vermont, CT, NJ, and New Hampshire are all 
in the process of legislating against MTBE.
    To address this situation nationally, I have introduced 
comprehensive legislation that does the following:

 Bans the use of MTBE by no later than January 1, 2004--the 
        same as the recently passed State Assembly bill.
 Authorizes EPA to declare an emergency if MTBE is present in 
        the water supply and to provide expedited funds to communities 
        to purchase bottled water and to clean up their contaminated 
        water supplies.
 Assists private citizens in hooking up to town water supplies 
        in the event that their water supply is contaminated by MTBE.
 Directs NIH to conduct a study of the long-term health effects 
        of MTBE.
 Makes underground storage tanks that are leaking MTBE the 
        highest priority cleanups for EPA under the Leaking Underground 
        Storage Tank program.
 Makes EPA accelerate the testing and reporting of MTBE in 
        public drinking water.
    As a Member of the House Appropriations Committee, I will fight for 
funding to assist local residents and communities in dealing with this 
growing problem. I will fight to get the additional funds needed to fix 
these leaking tanks and prevent additional MTBE contamination.
    I am hopeful that this bill will move quickly through the House 
with bi-partisan support. I look forward to working with my colleagues 
to see this legislation enacted so that our neighbors in Long Island 
and around the country can continue to depend upon safe, clean drinking 
water.
    Thank you, Mr. Chairman.

    Mr. Bilirakis. Thank you, Michael.
    Mr. Waxman requested and received unanimous consent to be 
able to offer any questions to all three of you in writing, and 
I am sure you are willing to respond to them. Thank you so very 
much for your patience and for being here today.
    Mr. Pallone. Mr. Chairman, can I ask unanimous consent that 
the statement of Mr. Dingell be submitted for the record?
    Mr. Bilirakis. Yes. I have already given that unanimous 
consent for all members of the subcommittee. By all means.
    Mr. Barrett. Mr. Chairman.
    Mr. Bilirakis. Yes.
    Mr. Barrett. I would also ask unanimous consent to have 
submitted into the record the April 6, 1987, I believe, 
memorandum written by Beth Anderson that I referred to in my 
opening statement.
    Mr. Bilirakis. Yes. Without objection, that will be the 
case.
    [The information referred to follows:]
    [GRAPHIC] [TIFF OMITTED]62976.012
    
    [GRAPHIC] [TIFF OMITTED]62976.013
    
    [GRAPHIC] [TIFF OMITTED]62976.014
    
    Mr. Bilirakis. Panel No. 2, the Honorable Robert 
Perciasepe, Assistant Administrator for Air and Radiation, U.S. 
Environmental Protection Agency; Mr. Mark Mazur, Director of 
Office of Policy, U.S. Department of Energy; Mr. Dan Greenbaum, 
President of the Health Effects Institute out of Cambridge, 
Massachusetts.
    Gentlemen, you can see we have a very lengthy program here. 
I am going to set the clock at 5 minutes, if I may. Obviously, 
if you go over a minute or 2, no particular problem.
    Bob, particularly, you have got an awful lot of things to 
respond to, so we would afford you as much as I can, the 
opportunity to do that.
    That being the case, obviously your written statements are 
a part of the record, so we would hope you would complement 
them and supplement them.
    Mr. Perciasepe.

 STATEMENTS OF HON. ROBERT PERCIASEPE, ASSISTANT ADMINISTRATOR 
 FOR AIR AND RADIATION, U.S. ENVIRONMENTAL PROTECTION AGENCY; 
 MARK J. MAZUR, DIRECTOR, OFFICE OF POLICY, U.S. DEPARTMENT OF 
  ENERGY; AND DANIEL S. GREENBAUM, PRESIDENT, HEALTH EFFECTS 
                           INSTITUTE

    Mr. Perciasepe. Thank you, Mr. Chairman, and thanks for the 
indulgence on the time. I will try to stay in the 5 minutes 
with my

introductory statement, and we can probably get into a lot of 
issues during the question and answer period.
    First of all, I want to thank you once again for inviting 
EPA to this hearing to talk about the environmental benefits of 
the Reformulated Gasoline Program, which is the broad subject 
of the hearing; update the agency's efforts regarding the Blue 
Ribbon Panel that has been mentioned several times; and to talk 
a little bit about the status of the California waiver that has 
already been discussed.
    I wanted to emphasize three key points. The RFG Program 
works and has provided significant air quality benefits to the 
United States. There are growing concerns, and we have heard 
many of those concerns as clearly as they can be articulated in 
the opening comments, about the use of MTBE in the Nation's 
gasoline. And, third, I want to talk a little bit about how we 
need to work together to solve this problem. Because the 
solutions that are available to us are imperfect, and the need 
for a mix of work that we can do and that authority that you 
can bequeath upon us is the right way to find the answer to 
this.
    So, notwithstanding the history, although I am sure I will 
have to deal with that in this hearing, I want to urge us all 
to think about the fact that we are going to have to solve this 
problem together; and that is what our intention is.
    In 1990--and we have heard this, but let me put a little 
bit of specific point to it. The Reformulated Gasoline Program 
is part of a broader clean air program that we have already 
heard in opening statements that has been successful. Let me 
talk a little bit about it.
    The Reformulated Gasoline Program was introduced in the 
United States in 1995. I do want to point out that when EPA put 
that program together in 1995, based on the authority and the 
specific requirements that Congress put in the Clean Air Act, 
we did try to increase the use of ethanol in that clean air 
program, and we lost in court.
    Again, I want to point out the imperfect tools we have to 
deal with with this kind of problem as we are implementing a 
program to solve one problem with imperfect tools, to look at 
broader environmental impacts. Over 30 areas are still today 
not in attainment for the 1-hour ozone standard.
    The Reformulated Gasoline Program has been very effective 
in reducing precursors to smog as well as air toxics. The RFG 
component of the Clean Air Act requires 2 percent oxygen by 
weight in the reformulated gasoline.
    In the first phase of this program between 1995 and 1999, 
the goal in the Act was a 17 percent reduction in volatile 
organic compounds and toxics. We have been doing better than 
that. We have been averaging about a 27 percent reduction in 
toxics. And as many members have said in their opening 
comments, oxygenates have played a role, an important role in 
diluting other more toxic components of gasoline.
    The second phase of the program is being implemented this 
year. The percentages will move up, as in the Clean Air Act, 
the 27 percent for VOC, 7 percent for nitrogen oxides, and we 
continue the comparable toxics reductions. It is the equivalent 
of taking 17 million cars off the road.
    The RFG program is required by law in 10 metropolitan areas 
in the United States, the most serious and severe nonattainment 
areas. It is also been opted in by several areas in the 
country, most notably most of the Northeast States, Kentucky, 
Texas, Missouri. And so at this particular moment, including 
the areas in California there that are using this Federal 
gasoline, about 30 percent of the Nation's gasoline is this 
Federal reformulated gasoline.
    We have further evidence of the success of the program when 
we look at the ambient monitoring in these cities the year 
before and the year after the implementation of the program. We 
are seeing in the ambient area a 38 percent reduction on 
average across those 10 areas in benzene. Benzene is an 
extremely toxic chemical, and it is used in gasoline and has 
been greatly reduced by the Reformulated Gasoline Program.
    The Clean Air Act, I think, as has been pointed out, does 
not specify which oxygenate to use, and there are numbers of 
them. But predominantly in the United States, ethanol and MTBE 
are the ones that are used, with the MTBE being up around 85 to 
87 percent.
    Despite these air quality gains of the reformulated 
gasoline program, there continues to be and there is 
significant concern about contamination of drinking water by 
MTBE; and it has been pointed out that this potential has been 
known for over a decade. And not being a time traveller, I 
can't put my head in what was going on in 1988 in those 
previous EPA administrations.
    But let me just say, you know, hindsight is 20/20. I think 
everybody did make decisions based on what everyone thought was 
either a manageable problem or one that the benefits would 
outweigh the cost. I think what we know today, and as 
envisioned by the Blue Ribbon Panel that we put together over a 
year ago, that this is not coming to fruition, that managing 
this problem for whatever approach we thought was going to work 
in the early part of this decade is not coming to fruition.
    We are very concerned about this widespread detection of 
MTBE, and the current data indicate that there is a widespread 
problem at low levels. Just to give you some example, we have 
been doing some work with the United States Geological Survey. 
To give you the sense of the relationship between RFG and 
contamination of MTBE, when you go into areas that are using 
MTBE in the RFG program, that is methyl tertiary butyl ether, 
in the reformulated gasoline areas, we find, and the USGS has 
found in 21 percent of the samples of ambient groundwater, you 
find a detection of MTBE. And if you go into the nonRFG areas, 
you only find it 2 percent of the time. So it is clearly a 
relationship between the RFG program and the level of 
contamination.
    As has also been mentioned, we put a Blue Ribbon Panel 
together over a year ago to look at all of these issues. We 
have scientists, health professionals, water utilities, 
environmental groups, industries, State and local governments, 
including California, represented on the committee, and they 
grappled with many of these issues and an assessment to 
alternatives for the use of MTBE.
    But they also wanted to make sure that we continue to 
maintain the benefits the RFG program has delivered in air 
quality of the United States, and therein lies one of the major 
challenges in terms of how we can work together to make sure we 
don't lose the gains we have made in air quality but at the 
same time avoid the downside of the potential groundwater 
contamination.
    The panel's recommendations were in several broad areas: 
Continue to improve leak protection, because under any 
circumstances, with or without MTBE, gasoline is a toxic and 
potent mixture of chemicals that we don't want in our 
groundwater regardless; remediate existing contamination; amend 
the Clean Air Act to remove the 2 percent oxygenate 
requirement; maintain the current air quality benefits; reduce 
the use of MTBE, and they said significantly reduce the use of 
MTBE; and accelerate research on MTBE and its substitutes.
    The panel recommended that MTBE be significantly reduced. 
The sources of the potential release into the environment are 
many. It is not just the underground storage tanks. And clean 
up, once it is released, is difficult, as has already been laid 
out, due to solubility movement, slow degradation.
    We are concerned about this, and we have concluded that a 
comprehensive approach must be considered that either 
significantly reduces or eliminates MTBE from the use in the 
reformulated gasoline program. We believe there are 
alternatives such as ethanol. But adequate lead time will be 
necessary.
    We have also initiated a number of other activities along 
the lines of the panel. I will just try to go through them 
quickly.
    We are developing revised drinking water standards. We are 
developing water quality standards for ambient water. We have 
increased compliance with the underground storage tank program. 
We have been funding research with the University of California 
at Davis to evaluate new ways of leak detection. Because even 
if we have perfect tanks, there are still going to be leaks. We 
are also conducting a million dollar remediation technology 
review also in California. I might also add, in 1998, we 
initiated a $15 million research program on all of the 
different additives to the gasoline.
    While we pursue some of these--if I might digress for a 
minute, Congressman LaHood brought up the issue of carbon 
monoxide and the National Academy of Sciences. I want to say we 
do have--we have analyzed that. We do have an interagency 
process under way looking at the carbon monoxide, benefits of 
ethanol, and how that relates to the VOC goals of the 
reformulated gasoline program. We hope to have a proposal and 
to complete the interagency review process very soon.
    But while we pursue these, we still feel this is something 
we are going to have work on together, and Congress needs to 
address some of these issues with us.
    Finally, let me say something very quickly about the 
California situation; and I will try to be as straightforward 
as I can. And I am sure you will have more questions.
    As I mentioned in our testimony last year, this is the 
first time anybody has tried to request the utilization of this 
part of the Clean Air Act where we have to determine that using 
oxygenates actually interferes with the attainment of a 
national ambient air quality standard. It isn't whether you are 
using the oxygenates or a certain kind of oxygenate actually 
causing a problem in the groundwater. We don't have the 
authority to do that. But we do have the authority to say using 
these oxygenates could interfere with air quality.
    I think you have heard testimony even amongst the opening 
statements that the oxygenates have helped air quality. So 
trying to prove that it doesn't help air quality we have never 
done before. In fact, our analysis and California's analysis 
still do not coincide with each other. In fact, we were trying 
to do this with California during the same time they were 
actually changing their fuel, which they finally did in 
December of last year.
    So they changed their fuel. They changed their predictive 
models on how they predict the reaction to their fuel and their 
motor vehicle fleet. And we are now in the process of verifying 
their model changes, which are different than our models.
    You might imagine, you can't go around and check the 
emissions from millions and millions of cars. You have to model 
and do the best you can with those analytical tools. We have to 
determine, if you changed the formula of gasoline, the recipe, 
what happens coming out of the tail pipe? And then, as that 
change is coming out of the tail pipe, is that really affecting 
the attainment of a national ambient air policy?
    Mr. Bilirakis. Bob, you are already close to 12 minutes. 
But I also don't want to not give you the opportunity because 
you did hear an awful lot of comments up here, and I am trying 
to be as fair as I can.
    Mr. Perciasepe. I will complete right now by simply saying, 
as what you have already determined from what I started to say 
about the California waiver, and we can probably talk from a 
couple questions in more detail about it, it is not easy. We 
want to do it in a legally defensible way. The administrators 
talked to the Governor about this. I am in constant contact 
with the State environmental agencies.
    It won't do any use to anybody for us to make a decision on 
incomplete information or incomplete analysis that just gets 
shot down in the courts. Certainty is what is going to be 
needed for those refiners, and we need to do this the right 
way.
    Finally, let me just say in summary, it is clear that we 
need to change the reformulated gasoline program. We are here 
today telling you that we agree with that, and we want to work 
with you to do it. You may not have the full confidence, Mr. 
Chairman, and I really am sorry about that, that I am sincere 
in telling you that. But we can't do it alone. We don't have 
the legal authority or the tools to do what needs to be done 
alone. We are going to have to find a common ground between 
what we can do and what you need to help us do in legislation 
to get this done.
    We used to come here and say, no legislation. Don't touch 
the Clean Air Act. We are not saying that anymore. We want to 
work with the members who are trying to move legislation 
forward. We think it needs to be done. The real solution will 
be a mix of something we do and something you do, and I think 
we can do it this year, and I think we need to do it this year. 
So I will stop there, and I really appreciate your indulgence.
    [The prepared statement of Hon. Robert Perciasepe follows:]
   Prepared Statement of Robert Perciasepe, Assistant Administrator, 
    Office of Air & Radiation, U.S. Environmental Protection Agency
    Thank you, Mr. Chairman and Members of the Subcommittee, for the 
invitation to appear here today. I am pleased to have this opportunity 
to share information with the Subcommittee on the environmental 
benefits of the reformulated gasoline or RFG program, to provide an 
update regarding the Agency's efforts to move forward on the 
recommendations of the Blue Ribbon Panel and future steps that should 
be taken to address issues regarding the use of oxygenates in the 
program. In addition, I would like to take a few moments to discuss the 
status of the request by the state of California for a waiver of the 
statutory oxygen content requirement.
    My testimony today will stress the following: first, the RFG 
program works and has provided significant air quality improvements, 
second, growing concerns about MTBE need to be addressed, and third, 
Congress must act.
    An understanding of the history of the federal RFG program is 
important in order to put the issues surrounding the use of the 
oxygenates methyl tertiary butyl ether (MTBE) and ethanol in 
perspective. As you know, the Clean Air Act Amendments of 1990 put in 
place a number of programs to achieve cleaner motor vehicles and 
cleaner fuels. Over all, these programs have been highly successful. 
Congress struck the balance between vehicle and fuel emissions control 
programs after extensive deliberation. The RFG requirements also 
emerged as a program designed to serve Congressional goals, including 
air quality improvement, enhanced energy security by extending the 
gasoline supply through the use of oxygenates, and encouraging the use 
of renewable energy sources.
    The federal reformulated gasoline program introduced cleaner 
gasoline in January 1995 primarily to help reduce ozone or smog levels. 
Unhealthy smog levels are still of significant concern in this country, 
with over 30 areas still in nonattainment of the current 1-hour ozone 
standard, and more areas are expected to exceed the new, 8-hour ozone 
standard, should it take effect.
    Ozone has been linked to a number of health effects concerns. 
Repeated exposures may increase susceptibility to respiratory 
infection, cause lung inflammation, and aggravate pre-existing 
respiratory diseases such as asthma. Other health effects attributed to 
smog exposures include significant decreases in lung function and 
increased respiratory symptoms such as chest pain and coughing.
    RFG is an effective way to reduce smog precursors such as volatile 
organic compounds (VOCs) and oxides of nitrogen (NOX). The 
Clean Air Act Amendments of 1990 required that RFG contain 2.0 percent 
minimum oxygen content by weight. The first phase of the RFG program, 
from 1995 through 1999, required average reductions of smog-forming 
volatile organic compounds and toxics of 17% each, and NOX 
by 1.5%. Phase I RFG, on average, exceeded these requirements for VOC, 
NOX and toxics reductions. Most notably, overall toxics 
reductions were about 27% versus a 17% requirement. This year, the 
second phase of the RFG program will achieve even greater average 
benefits: a 27% reduction in VOCs, 7% reduction in oxides of nitrogen 
emissions and a comparable toxics reduction. These reductions for RFG 
are equivalent to taking more than 16 million vehicles off the road. 
States rely on the air quality benefits of the RFG program to 
demonstrate in their State Implementation Plans (SIPs) that they can 
achieve the ozone standard. In fact, seventeen states and the District 
of Columbia currently rely on reduction credits from the RFG program in 
their attainment SIPs.
    The federal RFG program is required in ten metropolitan areas which 
have the most serious smog pollution levels. Although not required to 
participate, some areas in the Northeast, in Kentucky, Texas and 
Missouri have elected to join, or ``opt-in'' to the RFG program as a 
cost-effective measure to help combat their air pollution problems. At 
this time, approximately 30% of this country's gasoline consumption is 
cleaner- burning reformulated gasoline.
    Ambient monitoring data from the first year of the RFG program 
(1995) also showed strong signs that RFG is working. RFG areas showed 
significant decreases in vehicle-related VOC concentrations. One of the 
air toxics controlled by RFG is benzene, a known human carcinogen. The 
benzene level at air monitors showed the most dramatic declines with a 
median reduction of 38% from the previous year.
    Neither the Clean Air Act nor EPA requires the use of specific 
oxygenates in RFG. The statute and, subsequently, EPA's regulations 
only specify the oxygen content by weight; they do not specify which 
oxygenate to use. Both ethanol and MTBE are used in the current RFG 
program, with fuel providers choosing to use MTBE in about 87 percent 
of the RFG mainly because of cost and ease of transport reasons.
     Despite the air quality aspects of oxygenates in RFG, there is 
significant concern about contamination of drinking water by MTBE in 
many areas of the country including California, and Maine. EPA is very 
concerned about the widespread detection of MTBE in drinking water. 
Current data on MTBE levels in ground and surface waters indicate 
widespread and numerous detections of MTBE at low levels. The United 
States Geological Survey has found that the occurrence of MTBE in 
groundwater is strongly related to its use as a fuel additive in an 
area, finding detections at low levels of MTBE in 21% of ambient 
groundwater tested in areas where MTBE is used in RFG compared to 2% of 
ambient groundwater in areas using conventional gasoline.
    In response to concerns associated with the use of oxygenates in 
gasoline, the Administrator established a blue ribbon panel of leading 
experts from public health and scientific communities, water utilities, 
environmental groups, industry, and local and state government, 
including California, to assess issues posed by the use of oxygenates 
in gasoline in California and the rest of the nation. The panel held 
monthly meetings beginning in January 1999, and presented its 
recommendations to the Clean Air Act Advisory Committee in July. This 
panel grappled with a number of complex issues, including an assessment 
of alternatives to the use of MTBE to ensure that current air quality 
benefits of RFG are continued and the additional benefits of the second 
phase of the program are not endangered.
    The panel's recommendations to the Administrator fall under the 
following broad categories:

 Prevent leaks through improvement of existing programs
 Remediate existing contamination
 Amend the Clean Air Act to remove the requirement that federal 
        reformulated gas contain 2% oxygen (by weight)
 Maintain current air benefits (no environmental backsliding)
 Reduce the use of MTBE
 Accelerate research on MTBE and its substitutes
    The panel recommended that MTBE be significantly reduced. Given the 
numerous and diverse sources of potential release into the environment 
and the problems associated with cleaning it up once it is released 
(due to solubility, rapid movement, and very slow degradation), EPA is 
very concerned that MTBE presents a significant risk to the nation's 
drinking water supply. Consequently, EPA believes that a comprehensive 
approach must include consideration of either reducing or eliminating 
the use of MTBE as a gasoline additive in an expeditious and 
practicable time frame. We believe there are alternatives, such as 
ethanol, but adequate lead time is necessary.
    EPA has initiated a number of actions in response to the panel's 
recommendations. This will include developing a drinking water standard 
under the Safe Drinking Water Act and establishing a water quality 
standard under the Clean Water Act, and enhancing underground storage 
tank program compliance to a 90% level in 2000. The Agency is currently 
funding a grant with the University of California-Davis to evaluate the 
effectiveness of leak detection technologies. EPA is also conducting a 
$1 million technology demonstration project for the clean up of MTBE 
contaminated aquifers. In addition, where possible, we will work to 
provide more flexibility to states and refiners as they move to 
decrease the use of MTBE in gasoline. For example, a proposed 
rulemaking that will account for the impact on ozone formation from CO 
emission reductions associated with ethanol use would provide 
flexibility.
    While we will pursue administrative remedies under our various 
authorities to achieve this goal, we believe Congress needs to address 
the complex set of issues surrounding the use of oxygenates in gasoline 
through national legislation.
    Finally, Mr. Chairman, I want to discuss the status of the state of 
California's request for a waiver from the reformulated gasoline (RFG) 
program's oxygen requirement. Before I discuss details of the 
California waiver, I will note that this request marks the first time 
in the history of the RFG program that a state has made such a waiver 
request. In addition, while requesting a fuel waiver, California was in 
the process of changing their fuel regulations which was completed in 
December 1999. In March last year, Governor Davis announced his 
intention to phase out the use of MTBE in California. A month later, 
California sent a letter requesting a waiver under Section 211 
(k)(2)(B). As you know, under the Clean Air Act, EPA may waive the 
oxygen mandate, in whole or in part, ``. . . upon a determination by 
the Administrator that compliance with such requirement would prevent 
or interfere with the attainment by the area of a national primary 
ambient air quality standard [NAAQS].'' This initial letter did not 
contain the technical analysis to demonstrate how the oxygen 
requirement might actually prevent or interfere with the attainment of 
the NAAQS in California. In the course of the process, CARB has not 
only changed their fuel but modified the modeling assumptions 
surrounding the program. EPA and CARB have worked cooperatively to 
complete the submission. This process was completed on February 9, 
2000, when California submitted all the needed information necessary 
for EPA to begin its comprehensive review.
    In order to act on the California request, the Agency must conduct 
an independent evaluation of the data and modeling, as well as the 
other information submitted by the state in support of its request for 
a waiver from the federal RFG oxygen requirement. This is not a simple 
task. It will require a review of the detailed modeling assumptions 
associated with the waiver request. We hope to complete our assessment 
by early summer. Based on our productive discussions with the 
California Air Resources Board up to this point, we fully expect that 
we will meet this schedule.
    If the statutory conditions to grant the waiver are met, EPA would 
be required to provide public notice of our decision. Such procedures 
include a comment period of at least thirty days.
    Mr. Chairman, in closing, we will move forward to thoroughly review 
California's waiver request and arrive at a timely decision concerning 
this vital matter. We are committed to working with the Congress, as 
well as the States and the regulated community to address the Blue 
Ribbon Panel's recommendations to the Administrator. We also are 
committed to working with Congress to provide 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.
    This concludes my prepared statement. I would be happy to answer 
any questions that you may have.

    Mr. Bilirakis. Bob, I have to be part of a veterans' 
Medicare subvention meeting at 1 o'clock over in the Capitol, 
and it is imperative that I leave. Mr. Greenwood is going to 
take over.
    But I would just very quickly say that I am not aware of 
any suggestions, any recommendations in changes in the Clean 
Air Act and in giving you the flexibility you feel you may need 
and that sort of thing. That has not been forthcoming. So we 
want to work together. We want to work together. We want to 
work together. We want to work together. But we don't see 
anything coming from EPA in that regard.
    I would just merely ask you one question, with leave of the 
rest of the committee. On February 16, Chairman Bliley and I 
wrote you a letter regarding documents requested. Your February 
29 letter to us indicated we can expect you to fully comply 
with that within several days. What is the date?
    Mr. Perciasepe. It will either be Tuesday or Wednesday.
    Mr. Bilirakis. All right.
    Mr. Perciasepe. The lawyers have just gone through to mark 
things, which ones are delivered or not. We are not going to 
take anything back. We are going to deliver it to you Tuesday 
or Wednesday.
    Mr. Bilirakis. Good.
    Mr. Perciasepe. If anything changes on that, I will call 
your staff and tell them personally.
    Mr. Bilirakis. Please, don't let them change.
    Mr. Perciasepe. As far as I know, that is the schedule.
    Mr. Bilirakis. I have given you flexibility, but not that 
much.
    Mr. Bilirakis. Dr. Mazur, please proceed. I am sorry, sir. 
I appreciate your patience, you and Mr. Greenbaum.

                   STATEMENT OF MARK J. MAZUR

    Mr. Mazur. Mr. Chairman and members of the subcommittee, 
thank you for inviting the Department of Energy to be here 
today to give this testimony on the Federal reformulated 
gasoline program. We are going to focus on gasoline markets and 
the role of oxygenates like methyl tertiary butyl ether.
    Mr. Bilirakis. I am not sure that you are speaking into the 
mike. Is that on, sir? I can barely hear you.
    Mr. Mazur. I will use the one that works.
    We want to focus our testimony today on the Federal 
reformulated gasoline program, gasoline markets, and the role 
of oxygenates, like MTBE and ethanol, in this program and 
gasoline supply more generally. Basically, that is what we 
figure our expertise is in this matter.
    Over the last decade, DOE has worked with our colleagues at 
the Environmental Protection Agency to develop and implement 
the RFG program and subsequent clean fuel rulemakings, 
including most recently the tier 2 low sulfer gasoline program.
    The Department has done detailed analyses of the costs and 
refinery operational impacts of the various product quality 
regulations as well as looking at broader fuel supply and 
pricing issues.
    More specific to this hearing, we spent considerable time 
over the past year working with EPA and the Blue Ribbon Panel 
on oxygenates to examine possible consequences of restricting 
the use of MTBE and modifying oxygenate requirements for the 
RFG program.
    As you have heard several times today, the reformulated 
gasoline program has been an air quality success with very few 
negative impacts on gasoline markets. There are adequate 
supplies of RFG, and the price is only slightly higher than 
conventional gasoline.
    One very important reason for this is the fungible nature 
of the gasoline used in this program, which allows gasolines 
produced at different refineries to go to different States and 
to be mixed and exchanged.
    Our analysis indicates that the current level of oxygenate 
use is not far from the level that refiners would choose to use 
even if there was not a specific oxygenate mandate. This is 
largely because oxygenates like MTBE and ethanol are valuable 
blendstocks for producing clean, high- performing gasolines.
    The availability of these oxygenates provides valuable 
gasoline blending flexibilities to refiners who are trying to 
meet tight product specifications. The oxygenates are aromatic-
free, high octane, virtually sulfur-free blendstocks. They can 
be put in almost any shipment of gasoline to offset the 
performance shortfalls in other parts of the refinery.
    The effect of being able to readily blend even small 
amounts of MTBE into gasoline is to help assure product 
deliverability, reliable supplies, and affordable gasoline 
prices to consumers.
    We share the concerns expressed by many over the impact of 
MTBE and water quality. Reducing or eliminating the use of 
specific oxygenates like MTBE to help protect water may be 
necessary but should be phased in over a period of time to 
minimize the impacts on gasoline production, gasoline supplies, 
and, most importantly, gasoline prices to consumers.
    Predicting the impacts of an MTBE phase-down or phase-out 
of gasoline supplies and market operations is difficult. 
Completely phasing out the use of MTBE in gasoline would be the 
equivalent to closing four or five refineries in the 
distribution system in terms of the volumes that we need to be 
made up elsewhere.
    Given enough time, the fuel industry can respond to the 
possible loss of MTBE. Clearly, increased use of ethanol would 
play a role, and there would be other steps taken by the 
industry as well.
    We don't know what the right answer is at this point. We 
are willing to work with EPA, Congress, States, and the fuel 
supply industry to develop an approach that fully addresses 
water quality problems and still ensures adequate supplies of 
gasoline at affordable prices.
    Thank you for the opportunity to present this testimony. I 
would be glad to answer any questions you might have.
    [The prepared statement of Mark J. Mazur follows:]
 Prepared Statement of Mark J. Mazur, Director, Office of Policy, U.S. 
                          Department of Energy
    Mr. Chairman, members of the Subcommittee, I am pleased to be here 
and give this testimony on the Federal reformulated gasoline program, 
gasoline markets, and the role oxygenates like methyl tertiary butyl 
ether (MTBE) and ethanol, play in this program and in gasoline supply 
more generally.
    Over the last decade DOE has assisted the Environmental Protection 
Agency (EPA) in the developing and implementing the RFG program and 
subsequent clean fuel rulemakings including, most recently, the Tier II 
low sulfur gasoline program. The Department has done detailed analyses 
of the costs and refinery operational impacts of the various product 
quality regulations as well as broader fuel supply and pricing issues. 
More specific to this hearing, we have spent considerable time over the 
last year working with EPA and the Blue Ribbon Panel on Oxygenates 
examining the possible consequences of restricting the use of MTBE and 
modifying the oxygenate requirements for the RFG program.
    In addition to these specific, focused analyses, the Department has 
the lead within the Administration for gathering and disseminating 
energy markets data, as well as producing analysis and forecasts of 
energy markets through our Energy Information Administration. As you 
are well aware, Secretary Richardson and the rest of the Department, 
particularly the Energy Information Administration and the Office of 
Policy, have been intensely involved in trying to help states, 
consumers and fuel suppliers respond to the problems caused by the 
heating oil and diesel fuel price spikes recently experienced in the 
Northeast. We are, at the same time, paying careful attention to the 
gasoline market and are concerned, as was explained in testimony by EIA 
last week, that we could experience very tight gasoline supplies this 
year.
    In addition to the work we do within the Department and the 
comments and analyses we have provided to EPA, we have asked the 
National Petroleum Council (NPC), a federal advisory committee to the 
Secretary of Energy, to examine various issues related to environmental 
regulations and petroleum product markets. For example, in 1991, we 
asked the NPC to look at the impacts of environmental regulations on 
the refining industry with specific attention to the RFG program that 
was still being developed at that time. In 1997, the NPC examined the 
role that crude oil and petroleum product inventories play in the 
supply system and in affecting price volatility. The NPC is now 
finishing a third study in this area which addresses the cumulative 
impacts of several product quality regulations, including changing the 
role of oxygenates in reformulated gasoline, on refinery viability and 
product deliverability.
    This brings me to the subject of this hearing which is the 
operation of the RFG program, the role of oxygenates in RFG production, 
and the potential impact on gasoline markets of limitations on MTBE 
use. The reformulated gasoline program has been an air quality success 
with very few negative impacts on gasoline markets. Phase I of the 
program started in 1995 and provided important reductions in VOC and 
toxic emissions. Phase II is underway now with the crucial start of 
production of summer, ozone-control season gasoline (with lower VOC and 
NOx emission potential) beginning later this month at refineries around 
the country. Phase II gasoline will be lower in sulfur and have a lower 
vapor pressure, providing additional VOC reductions and significant NOx 
reductions. Toxic emissions are required to be lower but most of the 
Phase I gasoline already met the Phase II toxic performance standards.
    This program also has been a market success for consumers in that 
there were adequate supplies of RFG and its price was only slightly 
higher than conventional gasoline. There are several reasons for this. 
These include the relatively small fraction of gasoline production 
represented by RFG (about 25% of the total outside California) and the 
large number of refineries ( about half of east coast, gulf coast and 
mid-west refineries) and importers participating in the production of 
RFG. Another very important reason is the fungible nature of the 
gasoline, which allows the gasolines produced at the different 
refineries and going to different states to be mixed and exchanged. 
Finally, refiners have significant flexibility to formulate the 
gasoline in many different ways to match their refining capacity. While 
the mandate to use certain amounts of oxygenate in RFG has been 
controversial, refiners have adapted to this and integrated that 
oxygenate use into the economic production of their total gasoline 
pool.
    Our analysis, and that of others, indicates that the current level 
of oxygenate use is not far from the level of use that refiners would 
choose, at today's gasoline and oxygenate prices, even if there were no 
specific oxygenate mandate. This is largely because oxygenates like 
MTBE and ethanol are valuable blendstocks for producing clean, high 
performing gasolines. Under these circumstances, simply removing the 
oxygenate mandate would have little effect on oxygenate use other than 
allow some additional flexibility in where, within a refiner's total 
gasoline pool, these oxygenates are used.
    As refiners face additional requirements to meet even tighter 
environmental standards for their gasoline, like the recently 
promulgated standards for Tier II low sulfur gasoline or possible 
additional toxic emission control requirements for conventional 
gasoline, they will find oxygenates such as MTBE even more necessary 
and valuable to make up for lost volume, octane and other property 
changes. The availability of oxygenates also provides valuable 
immediate gasoline blending flexibility to refiners trying to meet 
tight product specifications; the oxygenates are aromatic-free, high 
octane, virtually sulfur-free blendstocks that can be put in almost any 
shipment of gasoline to offset performance shortfalls in other parts of 
the refinery. This is particularly true for MTBE which can be blended 
at the refinery, shipped in pipelines and which has little negative 
impact on vapor pressure. The effect of being able to readily blend 
even small amounts of MTBE into gasoline is to help assure product 
deliverability, reliable supplies and affordable gasoline prices to 
consumers.
    We share the concerns expressed by many over the impact of MTBE on 
water quality. Reducing or eliminating the use of specific oxygenates 
like MTBE, to help protect water may prove to be necessary but will 
need to be phased in over a period of time to minimize impacts on 
gasoline production, gasoline supplies and prices. While the estimates 
vary somewhat, we believe there is general agreement that the refining 
industry outside California will have to spend $1 to $2 billion in 
capital investments to continue producing acceptable quality gasoline 
at the same volumes if MTBE use is eliminated. This is in addition to 
the more than $1 billion estimated capital investments required in 
California refineries to make gasoline without MTBE. The capital 
investments vary little whether or not the oxygenate mandate for RFG is 
eliminated because of the need to replace MTBE's volume, octane, and 
other valuable properties. Recovering this investment will add to the 
cost of gasoline, as will various operating costs including the need 
for additional crude oil to replace the lost gasoline volume and the 
purchase of other oxygenates like ethanol. Overall federal reformulated 
gasoline production cost increases could be three to four cents per 
gallon over the long term, with the lower end of the range reflecting 
the costs without the oxygenate mandate. As I mentioned earlier, the 
Department has done extensive analysis of these refinery impacts and 
gasoline costs changes through our Oak Ridge National Laboratory, and I 
would like to submit this information for the record.
    Predicting the impacts of a MTBE phase-down, or phase-out, on 
gasoline supplies and on market operation is more difficult. Phasing 
MTBE out of gasoline is equivalent in its impact on gasoline supplies 
to losing, over whatever the phase-out period is, some 400,000 barrels 
a day of gasoline production capacity or to closing four to five large 
refineries. A phase-out that ultimately leads to a ban on 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 count on the use of MTBE to some degree as well.
    State-by-state restrictions on MTBE could have essentially the same 
volume impacts as a national ban if refiners were forced to take MTBE 
out of all gasoline to protect the fungibility of the gasoline 
distribution system. Alternatively, gasolines with and without MTBE 
could continue to be produced but with less flexibility and exchange 
opportunities in the distribution system. If there were a regional 
refinery or distribution supply problems, this could easily lead to 
regional gasoline shortfalls and longer periods of price volatility as 
markets struggle to re-balance on a state-by-state basis, rather than a 
national basis.
    Given enough time, the fuel supply industry can respond to the 
possible loss of MTBE. Clearly, increased use of ethanol will play an 
important role. However, what is not so clear is the speed and degree 
to which refiners can or will make up the loss in volume and quality of 
gasoline given all the other demands for improved environmental quality 
of gasoline and diesel fuel, the uncertain market conditions, and the 
continuing growing demand for all petroleum products.
    Resolving the role of all oxygenates in gasoline will be important 
to the refinery planning and construction process that is starting to 
take place as refiners prepare for the Tier II low sulfur gasoline 
program, potential new gasoline toxic control requirements and other 
fuel quality changes for diesel fuel. However, if MTBE must be reduced 
or eliminated in the same time frame, refiners will be faced with 
additional demands for capital and engineering resources that they may 
not be capable of meeting. The outcome of this could be a significant 
further tightening of gasoline supplies, price increases and price 
volatility that are not predicted in the cost analyses we and others 
have done.
    Obviously, the serious problem of MTBE contamination of water 
supplies must be addressed. Short of eliminating MTBE from gasoline, 
there may be other options for dealing with this issue. In addition to 
doing our best to reduce the leaking of gasoline from underground 
storage tanks, the primary source of MTBE reaching water supplies, and 
the spilling of gasoline containing MTBE, reducing the amount of MTBE 
allowed in any given gallon of gasoline (i.e. its allowable 
concentration) and increasing the flexibility of the oxygenate 
requirement in RFG are possible approaches for mitigating the problem, 
particularly in the short term. Our examination of these options, 
included in the refinery analyses performed by our Oak Ridge National 
Laboratory that I am submitting for the record, indicates that the cost 
and potential market impacts of a phase-down in allowable level of MTBE 
would be significantly less, about half the per gallon cost, than a 
phase-out of MTBE from the entire national gasoline pool.We do not know 
what the right answer is at this point but we are prepared to work with 
EPA, Congress, the States, and the fuel supply industry to develop an 
approach that fully addresses thewater quality problems and still 
assures adequate supplies of gasoline at reasonable prices.
    Thank you for the opportunity to present this testimony. I will be 
glad to answer any questions you may have.

    Mr. Greenwood [presiding]. Thank you.
    Mr. Greenbaum.

                STATEMENT OF DANIEL S. GREENBAUM

    Mr. Greenbaum. Thank you. This microphone is working. Thank 
you, Mr. Chairman and members of the subcommittee.
    For the record, I am Dan Greenbaum. I come before you today 
both as the Chair of the Blue Ribbon Panel as well as someone 
who has nearly 10 years of experience with the RFG Program, 
first as the Commissioner of Environmental Protection in 
Massachusetts, where I ``opted'' the entire State into using 
the RFG program, and then more recently in 1996 as president of 
an independent research institute that reviewed the health 
effects of both MTBE and ethanol.
    I would like to start by highlighting four points.
    First, to echo what many have said already, that the RFG 
program has been an air quality success.
    Second, to note that the availability of cost-effective 
oxygenates such as MTBE played a role in the early air quality 
success of the program. However, there are now alternative 
formulations using both ethanol as well as other components of 
crude oil that do not rely on MTBE and that can maintain the 
air benefits and relatively low cost of the program so long as 
there is adequate lead time to implement changes and assurance 
of no backsliding in air quality.
    Third, as many have noted, there have been--and this is 
documented in our report--growing detections of MTBE in 
drinking water, with MTBE detected in between 5 and 10 percent 
of both public and private drinking water supplies in RFG 
areas. The great majority of these detections, fortunately, 
have been below levels of public health concern. However, 
approximately 1 percent have risen to levels above 20 parts per 
billion and in some rare instances levels are above 100 parts 
per billion. Detections at lower levels have raised significant 
consumer taste and odor concerns that have caused water 
suppliers to stop using some water supplies and incur costs of 
treatment and remediation.
    Fourth, the major source we found of groundwater 
contamination appears to be releases from underground gasoline 
storage systems. As you know, these systems have been upgraded 
over the last decade in response to rules adopted by EPA in 
1998, and that has resulted in reduced risks. However, as of 
last year, approximately 20 percent of those storage systems 
had not yet been upgraded, and there continue as well to be 
reports of releases in some upgraded systems.
    The other major sources of contamination appear to be small 
and large gasoline spills and recreational water craft.
    This issue of detection of MTBE in drinking water was why 
the panel was formed in the first place. That panel consisted 
of experts on air and water quality, as well as representatives 
of the oil, ethanol, and the MTBE industries and the 
environmental community.
    Based on our investigation, six meetings held in 6 months 
in a variety of parts of the country, the panel recommended 
that both U.S. EPA as well as Congress working with the States 
implement a four-part integrated package of reforms to ensure 
that water supplies are better protected while the benefits of 
RFG are maintained.
    Specifically, one, the panel recommended a comprehensive 
set of improvements to the Nation's water protection programs.
    Two, the panel agreed broadly that use of MTBE should be 
reduced substantially, with some members supporting its 
complete phase-out, and that Congress should act to provide 
clear Federal and State authority to regulate and/or eliminate 
the use of MTBE and other gasoline additives that threaten 
drinking water supplies.
    Three, the panel recommended that Congress remove the 
current Clean Air Act requirement that 2 percent of RFG by 
weight consist of oxygen, to ensure that adequate fuel supplies 
can be blended in a cost-effective manner while reducing the 
use of MTBE.
    Fourth, and finally, the panel recommended that EPA and 
Congress seek mechanisms to ensure that there is no loss of 
current air quality benefits as the use of MTBE declines.
    We also called for accelerated research into all compounds 
whose use would likely increase as replacements for MTBE, 
including ethanol, aromatics, and alkylates. A copy of the 
report is available at the panel's homepage on the Internet.
    Although we agreed broadly on our recommendations, two 
members, while agreeing with most of them, had concerns with 
specific provisions, and their statements are also included in 
the panel's report.
    In sum, the panel found that we have a successful cleaner-
burning gasoline program, but we need to take action today to 
ensure that the detections of MTBE in drinking water that we 
have seen, and which fortunately in the great majority of cases 
have not yet been of public health concerns, do not continue to 
grow.
    Thank you for this opportunity. I would be glad to answer 
questions.
    [The prepared statement of Daniel S. Greenbaum follows:]
 Prepared Statement of Daniel S. Greenbaum, President, Health Effects 
    Institute and Chair, Blue Ribbon Panel on Oxygenates in Gasoline
    Mr. Chairman, and members of the Subcommittee, thank you for the 
opportunity to appear before you today. For the record, my name is 
Daniel Greenbaum and my comments today are based on nearly a decade's 
experience with the RFG program: first, as Commissioner of 
Environmental Protection in Massachusetts in the early 1990's where I 
``opted'' the state into RFG; second as President of HEI--an 
independent institute that reviewed the health effects of both MTBE and 
ethanol in 1996, and finally and most recently as Chair of the Blue 
Ribbon Panel on Oxygenates in Gasoline, whose recommendations were 
published last July.
    I would like to highlight four points:

1. The RFG program has been an air quality success. It has provided 
        substantial reductions in the emissions of a number of air 
        pollutants from motor vehicles, most notably volatile organic 
        compounds (precursors of ozone), carbon monoxide, and mobile-
        source air toxics (such as benzene, 1,3-butadiene, and others), 
        in most cases resulting in emissions reductions that exceed 
        those required by law;
2. The availability of cost-effective oxygenates such as MTBE (Methyl 
        Tertiary Butyl Ether) likely played a role in the early air 
        quality success of the program. However, there appear now to be 
        alternative formulations, that do not rely on MTBE, that can 
        maintain the air quality benefits and relatively low cost of 
        the program, so long as there is adequate lead time, and 
        assurance of no backsliding in air quality.
3. There have been growing detections of MTBE in drinking water, with 
        MTBE detected in between 5% and 10% of both public and private 
        drinking water supplies in RFG areas. The great majority of 
        these detections have been below levels of public health 
        concern, with approximately one percent rising to levels above 
        20 ppb and some rare instances of levels above 100ppb. 
        Detections at lower levels have raised consumer taste and odor 
        concerns that have caused water suppliers to stop using some 
        water supplies and to incur costs of treatment and remediation.
4. The major source of groundwater contamination appears to be releases 
        from underground gasoline storage systems (UST). These systems 
        have been upgraded over the last decade, likely resulting in 
        reduced risk of leaks. However, as of last year approximately 
        20% of the storage systems had not yet been upgraded. There 
        continue, as well, to be reports of releases from some upgraded 
        systems. The other major sources of water contamination appear 
        to be small and large gasoline spills and recreational water 
        craft.
    This detection of MTBE in drinking water supplies led to the 
formation of the Blue Ribbon Panel. The Panel consisted of experts on 
air and water quality, as well as representatives of the oil, ethanol, 
and MTBE industries, and the environmental community.
    We began our work in January, 1999, and conducted an in-depth 
investigation of the air quality, water quality, fuel supply, and price 
issues surrounding the use of oxygenates in gasoline, holding six 
meetings in six months in Washington, New England, and California, 
hearing from experts, and reviewing dozens of existing and new studies 
of oxygenates in gasoline.
    Based on its investigation, the Panel recommended that U.S. EPA 
work with Congress and the states to implement a 4-part integrated 
package of reforms to ensure that water supplies are better protected 
while the substantial reductions in air pollution that have resulted 
from RFG are maintained. Specifically,:

 the Panel 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 
        considered these necessary, but not sufficient in and of 
        themselves, to prevent future water contamination.
 the Panel agreed broadly that use of MTBE should be reduced 
        substantially (with some members supporting its complete phase 
        out), and that Congress should act to provide clear federal and 
        state authority to regulate and/or eliminate the use of MTBE 
        and other gasoline additives that threaten drinking water 
        supplies;
 the Panel recommended that Congress act to remove the current 
        Clean Air Act requirement that 2% of RFG, by weight, consist of 
        oxygen, to ensure that adequate fuel supplies can be blended in 
        a cost-effective manner while reducing usage of MTBE; and
 the Panel recommended that EPA seek mechanisms to ensure that 
        there is no loss of current air quality benefits as the use of 
        MTBE declines.
    The Panel also called for accelerated research into all compounds 
whose use would likely increase as replacements for MTBE, including 
aromatics, alkylates, and ethanol. A copy of the full report of the 
Panel, including the Executive Summary and Recommendations which were 
issued on July 27, 1999, is available at the Panel's Home Page on the 
Internet: http://www.epa.gov/oms/consumer/fuels/ oxypanel/blueribb.htm
    Although the Panel agreed broadly on its recommendations, two 
members, while agreeing with most recommendations, had concerns with 
specific provisions. Their statements are included in the Panel's 
report.
    In sum, the Panel found that we have a successful cleaner-burning 
gasoline program but need to take action to ensure that the detections 
of MTBE in drinking water that we have seen--and which fortunately in 
the great majority of cases have not been of public health concern--do 
not continue to grow.
    Thank you again for this opportunity to testify. I would be pleased 
to answer any of the Committee's questions.

    Mr. Greenwood. I thank all three panelists for their 
testimony, and the Chair will recognize himself for 5 minutes 
for inquiry.
    I would like to direct my first question to Mr. Perciasepe.
    Reading from your testimony on page 5, you list the panel's 
recommendations, and one of them is very straightforward. It 
says, ``Amend the Clean Air Act to remove the requirement that 
Federal reformulated gas contain 2 percent oxygen (by 
weight).''
    The same page, you say, ``EPA believes that a comprehensive 
approach must include consideration of either reducing or 
eliminating the use of MTBE as a gasoline additive in an 
expeditious and practical timeframe.''
    At the end of your testimony, you said, ``We also are 
committed to working with Congress to provide 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.''
    So I think it is time to get right down to it. The question 
I have for you is: Does EPA agree that the Clean Air Act should 
be amended to remove the reform requirement that the Federal 
reformulated gasoline contain 2 percent oxygenate?
    Mr. Perciasepe. This issue is being looked at across the 
administration. The issue that the Chairman brought up and that 
you are asking now is, do we have specific administration 
recommendations to the Congress on this? And I am going to take 
that--take the Chairman's request back to the administration, 
and we will work on that.
    But let me just say, the administrator, in receiving the 
Blue Ribbon Panel's report, said that EPA embraces these 
recommendations.
    Now, I would add on the--I believe on the same page, and I 
can't--I have asked the chairman over here, but I can't 
remember for sure, but on the same page, I think, of that 
report, or in some section of the report, it talked about the 
other policy goals that Congress had that are in the 
legislative record in 1990 in establishing the 2 percent 
oxygenate requirement.
    So you hit on a very sensitive--it is going to be sensitive 
for us and sensitive for you--parameter of solving this 
problem.
    How do you provide more flexibility for refiners to deal 
with this MTBE issue and, at the same time, meet the other 
objectives, both air quality, and I might add, when the debate 
took place in 1990, agricultural policy and energy policy in 
terms of the volume of the Nation's fuel and where does it come 
from? And they were specifically talking about renewable fuel.
    So I believe that in the Blue Ribbon Panel's report, when 
the panel acted on that recommendation, it added a statement 
that when Congress considers removing the 2 percent oxygenate 
requirement that the panel expects that Congress will also want 
to consider those other policy objectives it had in 
establishing that requirement.
    Now, that being said, a practical person without any 
administration position to carry in a briefcase here today 
would be, you know, the obvious; and that is, the 2 percent 
oxygenate requirement can be, and as my colleagues in 
California and the member from California will point out, 
somewhat constraining in terms of solving the MTBE, not 
impossible, but somewhat constraining.
    The flexibility provided by removing the oxygenate 
requirement perhaps could make the MTBE reduction go more 
quickly, but then you run the risk of losing perhaps other 
objectives Congress had when they enacted the 2 percent option.
    Mr. Greenwood. I think it goes without saying that whatever 
we consider legislatively here will have a no-rollback 
provision. So the assumption going in, I think, on the part of 
every member in this panel is there is no rollback in air 
quality. But we do have to fish or cut bait here. We do have to 
decide to get rid of the 2 percent or not.
    Let me ask you another question--my time is running out--
and that is: What are your assumptions about what would be most 
likely substituted for MTBE? Do you agree with the assumption 
that ethanol is not going to work in every geographic location 
in the country for issues of transport and volatility? And what 
are the most likely substitutes? And in 10 seconds, what are 
their potential unintended consequences environmentally?
    Mr. Perciasepe. Okay. Very quickly, removing the 2 percent 
oxygenate requirement will provide more flexibility for all of 
us to solve the problem, but it will not answer all the other 
issues that have to be brought to bear, both politically and 
substantively, to solve this problem. I will leave the 
political to all of you.
    Now, the substantive side is that oxygenates of some kind 
or another are always going to be needed in gasoline. They are 
good for octane. They dilute the aromatics which are the toxic 
emitters, things like benzene. And we won't be able to achieve 
the same if we have a no rollbacks on toxics and things like 
distillation characteristics of gasoline which relate to 
driveability of the car. All of these are going to require some 
oxygenates.
    So the matter, then, of just removing the oxygenate 
standard won't necessarily solve the bigger problem we have 
here, because there is going to be a need to meet some of these 
other parameters.
    So things that are likely to replace MTBE, if you couple 
the increased flexibility in making reformulated gas with the 
requirement to maintain all these same benefits, things that 
are likely to replace it would be ethanol, and it could be 
other components.
    There may be some aromatics that could be increased, 
depending on how the constraints are placed on it; and there 
could be things like alkylates, which also have a reasonable 
octane profile.
    And now the characteristics of those things I just 
mentioned as they relate to MTBE, ethanol, obviously, is 
soluble in water, but it is much more quickly degraded and 
easily removed. It doesn't have those kinds of characteristics 
of MTBE.
    Alkylates and some of the other parameters that might--
other components or constituents that might be added all to 
replace the volume are more likely to act as the same as the 
rest of the--of what the oil and gasoline people call the BTX 
complex--the benzene, toluene, and xylene--and other components 
of the gasoline is likely to stay closer to that plume and not 
get out ahead.
    Keeping in mind that gasoline in the ground or in the water 
is bad, and we are going to have to get it, it is the delta 
badness or problem that is presented by these highly soluble 
chemicals that move more quickly, and the ethers generally fall 
into that category.
    I tried to do that, not in 10 seconds, unfortunately.
    Mr. Greenwood. You did a good job.
    Mr. Pallone from New Jersey for 5 minutes.
    Mr. Pallone. Mr. Chairman, just procedurally, I was going 
to ask if we could have Mr. Barrett next and after the next 
Republican if you would come back to me.
    Mr. Greenwood. Without objection, the Chair recognizes Mr. 
Barrett for 5 minutes.
    Mr. Barrett. Thank you, Mr. Chairman.
    Mr. Perciasepe, you have a copy, I think, in front of you 
of the April 6, 1987, memorandum, correct?
    Mr. Perciasepe. Just placed here, correct.
    Mr. Barrett. And I don't mean to blindside you with that, 
but my understanding is the first time the committee received 
this document was yesterday afternoon. Is that correct?
    Mr. Perciasepe. I don't know when the committee received 
it. Personally, I don't know.
    Mr. Barrett. Let me just check and verify.
    Mr. Perciasepe. Much of this was published in the Federal 
Register of 1980.
    Mr. Barrett. The memorandum I am referring to was first 
received by this committee yesterday morning, and this is a 
memorandum that makes reference to the mental health and 
groundwater effects of MTBE, isn't it?
    Mr. Perciasepe. Yes. Yes, it does refer to those potential 
issues.
    Mr. Greenwood. If the gentleman will yield, the counsel 
advises that this committee received the memorandum by fax from 
EPA yesterday.
    Mr. Barrett. Yesterday. So this was the first time that 
this committee has ever received this memorandum.
    This member, again, I made reference to in my opening 
statement, says that the health effects of MTBE cited in this 
memo are, quote, chronic inhalation toxidity, including 
neurotoxic, hematologic, and oncogenetic effects.
    When EPA came to Milwaukee in 1995, there were complaints 
of headaches, dizziness, and nausea, which I would think would 
be compatible with that same finding. Would you agree with 
that?
    Mr. Perciasepe. Yes.
    Mr. Barrett. And we were not told of this study at that 
time. Is that correct?
    Mr. Perciasepe. I don't know--I have no personal knowledge. 
I don't have any reason to disagree with you. I would say it is 
likely that that is the case, but I don't know.
    Mr. Barrett. Why would EPA--and I realize you don't have 
any personal knowledge, but given the claims that were made at 
that time, why would EPA not have acknowledged its own 
memorandum underscoring exactly what the complaints were?
    Mr. Perciasepe. My understanding of this memorandum in 
1988, it was generated inside the toxic substances section of 
the agency, that is, you know, looking to see where changes 
are--where things are changing. And they note there is going to 
be an increased use of this chemical, and in so seeing that, 
recommend a research agenda to look into these issues.
    I don't think it is conclusionary about these issues. I 
believe that the intent of the memo was to precipitate a 
research interaction with the industry that was going to 
produce it, which I believe did occur in the late 1980's and 
early 1990's, into the early 1990's, which resulted in research 
being conducted and an analysis made in the inhalation impacts 
of MTBE and of gasoline in general. That is my understanding of 
what the memo was for, that it was not necessarily 
conclusionary at the time.
    Mr. Barrett. And I understand it. But, again, for the 
record, when EPA came to Milwaukee in 1995, we were essentially 
told there were no health concerns with MTBE. And this document 
certainly contradicts that or at least preliminarily 
contradicts that, doesn't it?
    Mr. Perciasepe. Well, look, I--it is easy for me to say I 
didn't participate in Milwaukee and the early phases of this. 
But let me just say that the purpose of the memo was to set 
forth a research agenda. The context of inhalation of MTBE at a 
pump in conjunction with the inhalation of things like benzene 
and toluene and olefins and paraffins and everything else that 
is in gasoline, it is a toxic brew of very potent chemicals. I 
can understand why you are trying to tease out what is any 
additional risk that may be provided. Inhaling gasoline is 
carcinogenic. So the question is----
    Mr. Barrett. I am not trying to tease out anything. I am 
angry that when I was standing before 600 people that EPA 
didn't say there are some questions. I am angry about that, 
because I think it was irresponsible. And now, 5 years later, 
to get this memorandum and to be told that there is some 
concern----
    And I look at the Federal Register. You are right. The 
Federal Register here and on page62 here, it says, the agency 
has reviewed these studies and has determined that additional 
testing is necessary to determine whether distribution of MTBE 
presents an unreasonable risk of injury to health as discussed 
above. Producers of MTBE represented by the MTBE task force 
have agreed to perform the necessary tests to determine the 
effects, if any, associated with the use and distribution of 
MTBE.
    The people selling the product are the ones who are going 
to be determining this. I am looking for some credibility here.
    Mr. Perciasepe. Under the Toxic Substances Control Act, 
which is the only place we have any authority to deal with 
this, that requires us--it provides the authority to require 
the manufacturers to do the testing and do the studies which 
they did do.
    Mr. Barrett. But my request to you is never in your agency 
go into a city again when you have a document like this and 
allow elected officials to stand before the public and ask them 
to support you and not give them a document like this. It is 
unconscionable that those of us who believe in a clean 
environment and want to have people have trust in your agency 
have to go back to the people we represent and say, well, I am 
sorry, they didn't give us all the information.
    I yield back the balance of my time.
    Mr. Greenwood. The Chair recognizes the gentleman from 
Iowa, Dr. Ganske, for 5 minutes.
    Mr. Ganske. Thanks, Mr. Chairman. I just have to say that I 
am as troubled as Mr. Barrett is that a memo come--that was 
written in 1987 was not made public during hearings.
    I want to summarize what I took from your three 
testimonies. No. 1, MTBE, bad stuff. No. 2, ethanol, okay 
stuff. No. 3, don't throw out the baby with the water. In other 
words, don't throw out RFG with MTBE.
    Now, Mr. Perciasepe, knowing what you know now, what would 
be the impact on air quality in cities like Los Angeles if 
oxygenates were removed from gasoline and significantly 
reduced?
    Mr. Bilbray. Excuse me. Could I ask the gentlemen to 
clarify? Is it oxygenates or the 2 percent mandate?
    Mr. Ganske. Oxygenates is my question.
    Mr. Bilbray. Okay.
    Mr. Perciasepe. You know, based on what I know, and, 
believe me, I am not the complete expert on that level of--I 
mean, there is a lot of technical information that has to go 
into answering that question. But based on my understanding, 
oxygenates enable reduction in toxic emissions from gasoline 
that is burned in motor vehicles. They have other 
characteristics in terms of the distillation characteristics 
and octane characteristics of the gasoline. Can you do it 
without oxygenates, meet the same kind of performance standard? 
I believe, from what I know, that it is technically possible to 
do it. Whether it is possible to do it in a reasonable cost, in 
a reasonable time and all those other parameters that always 
have to be taken into consideration as we look at these things, 
I am not competent to be able to give you a full answer.
    Mr. Ganske. If we removed oxygenates today, would it be a 
good thing or a bad thing for Los Angeles?
    Mr. Perciasepe. I think oxygenates have improved the air in 
Los Angeles.
    Mr. Ganske. Okay. I have been told, and we are going to 
hear later today, that in the absence of an oxygenate standard, 
an elimination of MTBE would lead refiners to increased 
production in blending of aromatics and alkylates. In fact, I 
have been told Mr. Robert Campbell, CEO of Sunoco, who will get 
a chance to rebut, has recommended toluene as a substitute for 
MTBE. Correct me if I am wrong, but isn't toluene an aromatic?
    Mr. Perciasepe. Toluene is an aromatic. I think our view of 
this would be that if you provide the flexibility of a reduced 
or eliminated oxygenate mandate, that you will have to have 
safeguards put in place to keep the backsliding, keep the baby 
from being thrown out with the bath water. And that will 
control, as the State of California does, the content of 
aromatics. But if you have the proper air quality performance 
standards, you will avoid that problem and provide flexibility 
on how you achieve it, which will include oxygenates.
    Mr. Ganske. If you increased production and blending of 
aromatics and alkylates, can you discuss for us the impact that 
that would have on emissions and health-related matters 
associated with those compounds? Would it be a good thing or a 
bad thing?
    Mr. Perciasepe. I would say replacing oxygenates with 
alkylates or aromatics will, depending on how much you use and 
what you do to the other parts of the gasoline, olefins and 
paraffins and all the other chemicals that are in there could 
increase toxic emissions.
    Mr. Ganske. Thank you.
    Now, I want to just finish up. I have got MTBE right here. 
I don't think you want me to dump this down the drain, do you--
--
    Mr. Perciasepe. No.
    Mr. Ganske [continuing]. Here in Washington.
    Mr. Perciasepe. No, I wouldn't want you to dump any part of 
gasoline down the water.
    Mr. Ganske. Great. How do I get rid of this?
    Mr. Perciasepe. Once it is in the water or----
    Mr. Ganske. Now. No, how do I get rid of it? What is the 
EPA's recommendation of getting rid of MTBE?
    Mr. Perciasepe. There are probably five or six different 
ways you can enact legislation that would provide for a path to 
get rid of MTBE.
    Mr. Ganske. I am just asking how do you get rid of it 
physically.
    Mr. Perciasepe. How do you get it out?
    Mr. Greenwood. What is he supposed to do with that vial 
after this hearing is over?
    Mr. Ganske. Am I supposed to dump it into an incinerator or 
what?
    Mr. Perciasepe. I apologize. You mean, when it is in the 
water how do you remediate it?
    Mr. Ganske. No. I've got my little vial of MTBE. It is bad 
stuff. I can't dump it down the drain or I am going to 
contaminate Washington, DC's water, oaky? So how do I get rid 
of it? What is the EPA's recommendation for disposing of MTBE?
    Mr. Green. Mr. Chairman, maybe you can send it back to 
wherever you brought these vials from.
    Mr. Ganske. Should I give these all to Mr. Green to take 
back to Texas?
    Mr. Perciasepe. I will take it to my office and store it 
for you. But the current method of getting rid of MTBE is 
burning it in gasoline.
    Mr. Ganske. So the emissions, as people drive through Iowa, 
can get into our groundwater.
    Mr. Perciasepe. I mean, I don't think that that would be 
the result.
    Mr. Ganske. All right. Thank you very much, Mr. Chairman.
    Mr. Perciasepe. We do have gasoline experts here, I want to 
say, from the Department of Energy.
    Mr. Greenwood. The procedural next step is to recognize the 
gentleman from New Jersey.
    Mr. Greenbaum, it looked like you were pregnant with 
comment there.
    Mr. Greenbaum. It only took us 6 months, not 9 months, to 
complete the Blue Ribbon Panel's report.
    I just briefly want to note to Dr. Ganske, actually, the 
Blue Ribbon Panel considered and rejected a recommendation of 
any option that would say don't use oxygenates. We did not say 
that and didn't say that in our recommendations and would 
assume that some form of oxygenated fuel would be a part of the 
solution, as would some fuel formulations that had no 
oxygenates in them. We were concerned that, if too much 
aromatics came into that mix, you would lose some of the air 
quality benefits, which is why we called for mechanisms to 
assure that the air quality standards stay just as tight as 
they have been.
    Mr. Ganske. So you would be concerned about toluene also.
    Mr. Greenbaum. We would be concerned about any of the 
aromatics. We said that. That is why we constantly reject the 
idea that you wouldn't have any oxygenates in the mix because 
we understood they would be a useful part of the mix.
    Mr. Ganske. Thank you.
    Mr. Greenwood. Mr. Pallone for 5 minutes.
    Mr. Pallone. Thank you, Mr. Chairman.
    I wanted to ask Mr. Perciasepe, if we want to do so, how 
would we go about waiving the oxygenate requirement? For 
example, would you leave it solely to the States to do, to the 
EPA administrator? How would you actually do it if we were to 
legislate that?
    Mr. Perciasepe. I think the preferred approach would be to 
provide a national approach to this to avoid a, you know, and 
this will probably sound pejorative, but a patchwork quilt of 
different fuel requirements. I mean, to the extent we can, and 
I will--I would like to defer to at least a little bit of this 
to some of my colleagues here, particularly from Energy. But to 
the extent that you have many different kinds of gasoline 
recipes to be produced and delivered in the country, you are 
going to, in general, as you know, as a proportion, potentially 
increase the price of gasoline and have a hard time controlling 
the quality of what we are expecting these recipes to do for us 
in terms of these other policy objectives like clean air.
    On the other hand, Congressman, I am not opposed to, nor is 
EPA opposed to, providing the States with more flexibility. But 
I think that the solution we would prefer would be a national 
approach to dealing with the problem.
    Mr. Pallone. In the Blue Ribbon Panel, they seem primarily 
concerned about the potential increases in toxic air 
pollutants. And again to Mr. Perciasepe, but, if you know, I 
just want to add in, in your view is there reason to be 
concerned about other pollutants as well such as carbon 
monoxide or not?
    Mr. Perciasepe. As I said in my opening comments, there are 
a number of computer models that are around that you use to 
predict the emissions characteristics from a--sort of average 
fleet of cars. Remember, there are all these different cars as 
well as all these different recipes of what the emissions would 
be, you know, in an aggregate way. And it is based on real data 
from many hundreds of cars that are incorporated into these 
models. So you can look at different recipes. In general, if 
you increase aromatics, you are going to increase toxics. If 
you decrease oxygenates, you could have, if--depending on how 
the filling takes place, if you fill it with aromatics, you 
could have increased toxic emissions.
    It should be pointed out that all the gasoline formulations 
we are talking about have a substantial amount of aromatics in 
them. I don't know what the average is, but it is at least 18 
to 22 percent, something like that. So there are consequences 
of how you change the formula.
    And this is one of the central issues that we are trying to 
deal with in California. If you decrease the oxygenate 
requirement, what are you going to put into place? So 
California had to go through a process of changing their phase 
3 clean burning gasoline last November and December so they can 
specify, you know, how they would replace it and then run their 
version of this model I am talking about to look at the, you 
know, if everything else is held constant, what happens as you 
change the oxygenate requirement.
    And generally what happens, as you change the oxygenate 
environment, things happen to nitrogen oxides, carbon monoxide, 
and other various volatile organic compounds. Some go up; some 
go down.
    So in addition to just looking at increased nitrogen oxide 
potential, or decreased, you have to look at the other ones and 
then look at the net effect of that on the ozone problem.
    Mr. Pallone. Well, if you could tell me, what are the 
potential health or water quality or air quality effects of 
phasing down the MTBE versus phasing it out? Because obviously 
we have talked about one versus the other, phasing it out as 
opposed to phasing it down.
    Mr. Perciasepe. I think you have hit on one of the other 
difficult points that are going to have to be decided between 
us as we move to solve this problem. I mentioned data that is 
available, and I think it is to some extent summarized in the 
blue ribbon panel report.
    If you go to areas of the country that are using 
conventional gasoline, which may or may not have some MTBE in 
it as an octane booster, you see very low occurrences of MTBE 
detections in the groundwater--I think it is 2 percent--and you 
go to the RFG areas, where you use a large volume of it, up to 
10 to 11 percent of the gasoline, you see more detections. So 
the relationship of the volume of MTBE used in the gasoline to 
the frequency of detection in the groundwater is clear, and it 
has been established by the U.S. Geologic Survey.
    So that would lead you to believe that at some point there 
may be a volume that would be a manageable level. I am not at 
that point. If you want to take the purely precautionary 
approach, you are going to want to completely shift. But on the 
other hand, as we get into this, there is going to be a 
technical aspect to this that needs to be looked at to balance 
all these public purposes that we are trying to achieve here, 
including air quality.
    Mr.  Pallone. Thank you. Thank you, Mr. Chairman.
    Mr. Greenwood. The Chair recognizes the gentleman from 
California, Mr. Bilbray, for inquiry.
    Mr. Perciasepe. I just want to point out that my colleague 
from the Department of Energy keeps pointing out that I am 
answering these relatively correctly.
    Mr. Greenwood. You have not noticed it, but sometimes he 
has been shaking his head in dismay.
    Mr. Perciasepe. If he starts doing this, let me know.
    Mr. Bilbray. Bob, let us try to clarify. There was an 
interesting issue here with the questions about Los Angeles, 
and I was telling my colleague that maybe Denver would have 
been a better example because there is always the backup there. 
We need to clarify that California already has a reformulated 
mandate in the rest of the State where the Federal Government 
does not have a mandate. So if L.A. dropped out of the Federal 
mandate, we have a state-ordered mandate already there; is that 
right?
    Mr. Perciasepe. That is right.
    Mr. Bilbray. So that is why the world does not come to an 
end. If it was some other nonattainment area or severe area, 
you do not have those guarantees.
    Mr. Perciasepe. Right. But the question about the oxygenate 
is universal to both inside and outside L.A.
    Mr. Bilbray. What is interesting is that even to the 
extreme of using no oxygenates at all, we are at a point we 
never thought we would be at 10 years ago, and that is that 
there may be ways of doing it as clean without any oxygenate. I 
think economically we are going to maintain it, and I think 
that that has statistically been proven.
    What I want to clarify is that when you were talking about 
the burden of proof regarding the California waiver, we need to 
clarify what that is. Your burden of proof that you are trying 
to determine is that you have to prove that the California 
formula is cleaner and will fulfill the mandate quicker, as 
opposed to H.R. 11 that says it is equal to or better. Is that 
the big difference we have between H.R. 11 and your existing 
mandate right now, the burden of proof of is it cleaner or is 
it equal to?
    Mr. Perciasepe. In terms of the waiver request?
    Mr. Bilbray. Yes.
    Mr. Perciasepe. Yes, the waiver request is pretty specific. 
Let me try to explain that, and then we can make the 
comparisons.
    The Congress put in the Clean Air Act in 1990 that the 
administrator could waive in part or in whole the oxygenate 
requirement if the State can show that the inclusion of that 
oxygenate requirement is interfering with the attainment of a 
national ambient air quality standard.
    You can see the multilayers. And so we are trying to use 
that provision to deal with a groundwater problem.
    Mr. Bilbray. Okay. So one thing I was concerned about is 
the tailpipe emission issue. In California we discovered that 
we grossly underestimated the evaporative emissions, so we have 
gone to the bar in testing the modeling based on cold start, 
hot start, the total emissions rather than tailpipe emissions. 
And I hope, when we talk about this issue, we are trying to use 
the best-case modeling available.
    We have disagreed back and forth between the EPA and 
California; and frankly, to pat California on the back, when we 
have gone to court, we have done pretty darn well. Wouldn't you 
agree?
    Mr. Perciasepe. Yeah.
    Mr. Bilbray. I want to congratulate the chairman, Mr. 
Greenbaum, for this report. I think it gave us the blueprint of 
exactly where we ought to go and what we need to move forward 
with. The challenge I see, though, is trying to articulate to 
the rest of America why you could, in a report, say that 
dropping the mandate in California will increase the ability 
for air quality to be able to be addressed, and that this 
flexibility is a tool to help the environment, but at the same 
time saying outside of California this flexibility may 
constitute a threat.
    Can you explain to the members here why you can say, 
basically, move forward in California because it will help, but 
take a close look at what you are doing nationally, because it 
may hurt? Can you explain the difference?
    Mr. Greenbaum. I can certainly try, Congressman. First of 
all, I think the key to understanding--and you certainly 
understand it and I think others do, that California has for a 
long time had its own set of air quality standards for fuels as 
well as car emissions. And those, in some respects, actually 
have been more stringent than the standards that the Federal 
Government has had, although there are differences in how they 
are done.
    Nationally, we have had the Federal RFG program. We have a 
program that had a first phase in January 1995 and a second 
phase coming into effect this year, in January 2000. What we 
saw is the first phase nationally actually exceeded our 
expectations. We got lower reductions, more reductions of air 
toxics, of precursors to ozone than what was even put in the 
act and what was required.
    When we looked, however, at the next phase of RFG, what we 
found was that for most of those, for nitrogen oxides and for 
volatile organic compounds that are precursors of ozone, the 
new standards would actually be even tighter than what we have 
achieved in the first phase nationally.
    The one area where that was not true was in air toxics, 
where the requirement for air toxic reductions from clean air 
RFG phase II was not as tough as what we actually achieved in 
phase I. And so the concern was this might be the margin that 
absolutely requires oxygenates or, at a minimum, requires 
tougher standards nationwide.
    In California that was less of a problem, because 
California had a different way of controlling the air toxic 
components. And so what we had said was, in addition to any 
action to provide the flexibility to blend the fuels, we also 
needed the assurance that there was some tightening of the 
standards, particularly in the air toxics area, so that you 
could be assured that no matter what was used, whether it was 
ethanol being used, although the presumption would be that 
ethanol would give you air toxic performance, or a fuel that 
did not have oxygenates, which some of the companies have said, 
but could meet all the other standards, that they would also 
meet the air toxic standards.
    Mr. Bilbray. So the real challenge is to develop those air 
toxic protection strategies nationally as they have done it 
back in Sacramento.
    Mr. Greenbaum. That is correct.
    Mr. Bilbray. A question to the EPA.
    Mr. Greenwood. Does the gentleman request unanimous consent 
for an additional 2 minutes?
    Mr. Bilbray. Yes, I do, Mr. Chairman. I appreciate that.
    Mr. Greenwood. Without objection.
    Mr. Bilbray. There was a discussion that there was a 
strategy here, in the 1990 modifications of the Clean Air Act, 
of 2 percent oxygen mandate, for energy independence. My 
question is, if that was the overt intent, and if that was a 
major factor in the implementation of this law, why did it not 
apply universally in the United States? Why would it only apply 
in those areas where there are public health threats if you 
want to implement a national energy independence strategy?
    Mr. Perciasepe. I really do not know--I mean, I just know 
the general legislative history. I do not know why that was. I 
think probably those things were discussed, and the solution or 
the conclusion of the debate was let us do it in these areas. 
Because, after all, it does have, these oxygenates do have 
these beneficial effects. They reduce toxics.
    Let me be clear. Emissions from gasoline, vapors from 
gasoline with oxygenates, are less toxic, whether it be ethanol 
or MTBE, than without it. And the same thing with the emissions 
and the combustion. So there was a convergence there that I can 
only speculate on.
    Mr. Bilbray. But we can speculate that because it was not 
applied universally it was an ancillary, not a major focus of 
the legislation.
    Mark, there was a letter that your department sent to the 
Alcohol Fuel Caucus on November 1, 1999, in response to a 
question about the potential impacts of H.R. 11 on the Midwest 
markets. And in that letter you wrote that ``a number of 
specific assumptions would have to be made and many complicated 
market interreactions would have to be addressed to address 
your question specifically. H.R. 11 in and of itself will have 
little direct or predictable effect on midwestern gasoline 
markets.''
    Now, the fourth paragraph there, I think, is pretty 
telling. Would you mind reading that fourth paragraph of your 
letter?
    Mr. Mazur. Sure. The letter that I sent to the House 
Alcohol's caucus, fourth paragraph on page 2, says: ``in trying 
to understand all these possible effects, it is important to 
understand that California is a very large but relatively 
isolated gasoline market. Actions taken in California can and 
do impact other gasoline and gasoline blend stock markets. 
However, these impacts are limited or mitigated by the lack of 
direct and low-cost logistical links between California and 
these other gasoline supply centers. Other than the effect on 
the demands for and the price of oxygenates like MTBE and 
ethanol, impacts on the Midwest markets caused by California 
actions are likely to be limited.''
    And that is all in the context of the discussion of H.R. 
11.
    Mr. Greenwood. The gentleman's time has expired. The Chair 
recognizes the gentleman from Texas, Mr. Green, for inquiry.
    Mr. Green. Thank you, Mr. Chairman, and I am glad my 
colleague from California had an extension on his time, because 
we talk a lot slower in Texas, and I might ask for that, too.
    Mr. Mazur, in your testimony you suggested phase-in of a 
number of years, if we actually abolished MTBE. We have heard 3 
or 4 years from Congressman Forbes. Does the department have 
any suggestion: 3 or 4 years, 5, 7 years?
    Mr. Mazur. Well, we understand some people in the industry 
have said 4 years would be a sufficient amount of time to allow 
the refining distribution systems to adjust to a situation 
where MTBE was not used in gasoline. We have an ongoing study 
by the National Petroleum Council, which is an advisory council 
made up of industry members to the Secretary of Energy, and 
they advise on oil and gas issues.
    Looking at the total investment and construction costs 
facing the refining industry, with a wide range of product 
changes that are taking place, Tier 2 rules and so on, they 
conclude it would be difficult to address the low sulfur 
gasoline rules at the same time you are faced with eliminating 
MTBE.
    Mr. Green. That gets to my second question. Then you are 
talking about the Tier 2 standards?
    Mr. Mazur. The low sulfur gasoline and then the ultra low 
sulfur diesel fuel.
    Mr. Green. And the concern I have--and can the Department 
of Energy assure me that the refiners will have the additional 
demands for capital engineering or resources to not only 
eliminate MTBE at the same time they are preparing for Tier 2 
potential toxic control requirements?
    Mr. Mazur. That is exactly the question that the National 
Petroleum Council is looking at, and their report will be done 
sometime this summer.
    Mr. Green. But 4 years may be too short; is that correct?
    Mr. Mazur. At this point I don't want to speculate if it is 
too short or too long or whatever.
    Mr. Green. So if we passed a bill that said 3 or 4 years, 
as Congressman Forbes mentioned, we wouldn't know?
    Mr. Mazur. When you look at these costs and benefits, you 
will be weighing costs and benefits on the refining industry, 
on the consumer and on water quality, and you will be pulling 
all those together. What we know is a faster phase-out or 
phase-down would be more costly than a slower one. So you will 
have to make those judgments.
    Mr. Green. Mr. Bilbray is gone, but in an aside I know of 
the statement from the Department about the lack of access to 
the California market from the southern producers, but we have 
a pipeline we are working on to go to El Paso and ultimately to 
California. So we will send lots of that out there so we can 
enter that market from Texas. But that pipeline is going to be 
a few years being built.
    I have some questions of Mr.--could you pronounce your name 
again?
    Mr. Perciasepe. Just say Bob.
    Mr. Green. Bob. Okay, Bob. I understand the EPA is getting 
ready to propose a regulation that relaxes the standards for 
phase II of RFG. Supposedly EPA is planning to increase the 
limits on VOC emissions and allow refiners to take credit for 
certain carbon monoxide reductions. Why is this relaxation 
necessary?
    Mr. Perciasepe. We have a National Academy of Sciences 
report that I think was alluded to in some of the opening 
comments that looked at the relative reactivity for the 
creation of ozone of hydrocarbons under different uses of 
oxygenates. And one of the things that the National Academy of 
Sciences' report pointed out is that ethanol does do a better 
job on carbon monoxide.
    Mr. Green. So the relaxation of those would be to use 
ethanol; is that correct?
    Mr. Perciasepe. Well, it would be.
    Mr. Green. I hate to interrupt, but I only have so much 
time.
    Mr. Perciasepe. I understand.
    Mr. Green. So the reason for that relaxation was so that 
refiners could use more ethanol?
    Mr. Perciasepe. Well, it would account for the increased 
carbon monoxide reduction that you get from the use of ethanol. 
How it is used by anybody will be up to them. And we have not 
made a proposal yet; we are just in interagency discussions 
about the scientific facts of it.
    Mr. Green. The concern I have--and again not only do I 
represent where the refineries are at but the people who live 
around them--but it is my understanding that the proposal would 
result in not only more emissions of VOCs but also more 
emissions of toxic air pollutants. Is that correct?
    Mr. Perciasepe. Well, those would be one of the things that 
would have to be analyzed in the proposal process.
    Mr. Green. In the EPA can you tell me, if you do approve 
those, that that would not allow for any backsliding in the 
environmental standards of the RFG program?
    Mr. Perciasepe. The RFG statutory requirements will have to 
be maintained. The issue of backsliding from current levels, 
which I think we have heard from a couple of places we have 
been overachieving, and Dan brought this up--we have been 
overachieving in many of these areas on toxics--will be a very 
important issue that we would have to look at in the proposal 
process. We cannot do what you are suggesting by any kind of 
fiat. We would have to put a proposal out, there would have to 
be public comment, and we would have to analyze it.
    Mr. Green. And again, my concern is that the RFG program, 
and MTBE is part of it because there are only two RFGs, MTBE 
and ethanol--and by the way, Mr. Chairman, for the record, RFG 
is 8 percent, alcohol is 8 percent, whereas MTBE is 85 percent 
of the RFG. Is that correct?
    Mr. Perciasepe. It is 85 to 87 percent is MTBE.
    Mr. Green. So we are talking about something substantial to 
RFG if we do remove MTBE.
    I know RFG has done better than the modeling. It is a 
concern of some of us on this panel that we do not want to 
backslide even to the modeling amount. And I know the industry 
is split, but we have benefited more from that cleaner air than 
the modeling expected; is that correct?
    Mr. Perciasepe. I'm sorry?
    Mr. Green. The modeling, when we first went into RFG, we 
expected so much, and that was why we went into the program; 
but the actual use of RFG, MTBE, ethanol for its small 
percentage, actually produced better results than the modeling 
expected.
    Mr. Perciasepe. That is correct, especially in the area of 
toxics.
    Mr. Green. So the concern is that if you provide more use 
of ethanol, or if there is backsliding, I consider backsliding 
from actual clean air now and not from the modeling. Does EPA 
still believe that?
    Mr. Perciasepe. I agree with that.
    Mr. Green. Mr. Chairman, I know my red light is on, but if 
I could have one more question, although it is pretty long.
    Mr. Greenwood. Without objection, the Chair will grant an 
additional 1 minute to the gentleman from Texas.
    Mr. Green. I might get the question in.
    Bob, section 6 of the Toxic Substances Control Act, does 
that allow the EPA to regulate or ban MTBE?
    Mr. Perciasepe. I think it is either section or Title VI of 
the Toxic Substances Control Act gives EPA some broad authority 
to look at chemicals in commerce and whether they are posing an 
unreasonable risk to the environment or public health. There 
are many, many tests that we would have to overcome to actually 
use that provision of the Toxic Substances Control Act to 
regulate a particular chemical in commerce.
    And it is a risk-benefit, cost-benefit, looking at all 
other alternatives. And then the remedies that are available 
are reduced use--it does not necessarily----
    Mr. Green. Well, let me go on with the question. So 
obviously, EPA can do it?
    Mr. Perciasepe. That is correct.
    Mr. Green. If you use it under title or section 6, do you 
also weigh the problem of--for example, there are a lot of 
pesticides and herbicides used in farming that can get into the 
groundwater, and some of which have been proven to cause 
cancer, even though MTBE has not. Do you balance that?
    So if we have a choice of more ethanol to plant more corn, 
and to make it productive we used more pesticides herbicides, 
what have you, does EPA balance that using the section 6 or 
Title VI?
    Mr. Perciasepe. Title VI is a pretty unbounded risk, risk-
benefit act. And if there is any significance or anything of 
significance to what you are mentioning, it would have to be 
analyzed at the Department.
    Mr. Green. I am not suggesting we should under title or 
section 6 talk about farm chemicals; I just want to make sure 
that EPA looks at the whole gamut instead of just one 
particular problem.
    Again, my last question, Mr. Chairman, to follow up was----
    Mr. Greenwood. The Chair has granted the gentleman from 
Texas even more time than he granted the gentleman from 
California, so the gentleman's time has expired.
    Mr. Green. Okay. I just talk a little slower, Mr. Chairman. 
If we have a second round, and maybe we will not have anybody 
here left----
    Mr. Greenwood. The gentleman yields back his time. There 
will not be a second round.
    Does the gentleman from New York wish to inquire of this 
panel?
    Mr. Lazio. I do, Mr. Chairman.
    Mr. Greenwood. The Chair grants 5 minutes to the gentleman 
from New York.
    Mr. Lazio. I can understand, gentlemen, why, if you were 
from Texas or Iowa, you would have some strong feelings about 
what type of additive was being used, but I think we need to 
try and move past that and deal with actual science. Let us get 
a sense of ethanol and how volatile it is.
    Now, I live in New York. We do not have any natural 
production of either of those sources, so it means that there 
has got to be transmission. What kind of difficulties does the 
ethanol production or use entail if that was the only potential 
additive here?
    Mr. Perciasepe. I will answer very quickly, and then my 
colleagues might want to fill in.
    Ethanol does create an increased challenge when blended 
into gasoline at the volumes we are talking about here. To 
achieve the 2 percent by weight for ethanol, it is about--and I 
am probably going to get this wrong--it is about 5.5 percent by 
volume. When you start to get to these kinds of volumes, 
between 5 and 10 percent by volume of ethanol, the vapor 
pressure of the gasoline blend will go up. And as the vapor 
pressure goes up, the emissions potential goes up.
    Now, that can be compensated for in the blend stock that 
you blend the ethanol into. So the performance standards can be 
achieved with ethanol. We are confident that that can happen; 
and indeed, we expect it to happen, particularly in areas that 
are currently using ethanol for the reformulated gasoline 
program even as the challenge increases with the second phase 
of reformulated gasoline. But it does require further work on 
the blend stock that you would blend it into.
    Mr. Mazur. If I may, I would like to address the logistical 
side of this.
    In order to blend ethanol into gasoline, say in New York, 
you would need to somehow get the ethanol to New York, and that 
would generally be trucked or transported by rail to the New 
York area. There would need to be some additional investment in 
terminals, blending facilities and so on. It would be a 
manageable amount of investment, but it would be some 
additional amount of investment.
    Mr. Lazio. Let me ask Mr. Perciasepe, if I can, about EPA 
investment in alternatives to either. Do we have grants that 
have been let out? Do we have studies being done? Where are we 
overall on alternative sources?
    Mr. Perciasepe. We do have health effect studies under way 
on, I think, probably all the reasonably anticipated oxygenates 
that might replace MTBE or be used in the oxygenate type of 
program, and we do know a lot about some of them already.
    Mr. Lazio. Anything promising? Let me ask you: How much 
investment is being made in alternatives?
    It is pretty clear, I think, if you listen to the growing 
drumbeat and the concerns of the members, that both of these 
oxygenates have serious problems that we are concerned about. 
Where is the EPA investment? Where is the Federal investment to 
try to develop some alternative oxygenates?
    Mr. Perciasepe. I will let you mention this.
    Mr. Mazur. I can at least answer part of that. At the 
Department of Energy, we have been undertaking a fairly serious 
and long-standing R&D program in cellulosic ethanol, not corn-
based ethanol, as a potential oxygenate. That is a program that 
is probably a few years away from having commercial scale of 
ethanol production. But if it does work out, you would have 
feedstocks that essentially are considered waste products today 
turning into ethanol that could be used as an oxygenate in the 
future.
    Mr. Lazio. Give me a sense of scale, if you can, in terms 
of investment. What are we talking about in terms of DOE 
investment? In development.
    Mr. Mazur. In the ethanol area, alternative fuel area?
    Mr. Lazio. Yes.
    Mr. Mazur. I do not have the exact figures. I would guess 
$100 million a year, somewhere around that. Maybe the high tens 
of millions of dollars.
    Mr. Lazio. And how much of a difference, in your opinion, 
would that make in terms of when an ethanol derivative, if I 
can use that term, might be in a position to be marketed?
    Mr. Mazur. Well, as Mr. Ganske knows quite well, we have a 
large amount of ethanol produced today. Much of it from corn-
based ethanol, but there are a few other sources.
    Mr. Lazio. You are talking noncorn right now?
    Mr. Mazur. Generally noncorn ethanol.
    Mr. Lazio. Right. So how much is money holding you back 
from the development of a noncorn alternative?
    Mr. Mazur. Part of it I think is money, part of it is just 
the advancement of the technology. It is kind of hard to 
separate the two out. I do not think anyone at the Department 
would turn down additional support for this.
    Mr. Lazio. But you would have to establish to us what we 
would be buying with it, and I am not hearing that right now.
    Mr. Mazur. And that is partly because our office of 
renewable energy is really the one that has the lead there. I 
could have the assistant secretary get in touch with you on 
that.
    Mr. Lazio. I think that would be very helpful.
    Mr. Greenwood. Time of the gentleman has expired. We thank 
the panel for your testimony and for your responses.
    Mr. Green. Mr. Chairman.
    Mr. Greenwood. The Chair recognizes the gentleman from 
Texas.
    Mr. Green. Mr. Chairman, I just wanted to be sure we could 
submit written questions, because I have a list of them, just 
like other members.
    Mr. Greenwood. Certainly. I regret that we cannot offer a 
second round, but we have two more panels to go.
    Mr. Shimkus has arrived for inquiry. The Chair recognizes 
the gentleman for 5 minutes.
    Mr. Shimkus. I apologize, Mr. Chairman. I have been in 
another meeting, as I am sure other members have been. I will 
try to be really brief.
    Director Perciasepe--I hope I pronounced that fairly close.
    Mr. Perciasepe. Bob is easier.
    Mr. Shimkus. The chairman butchered mine.
    You mentioned Congressman LaHood and the VOC standards. Can 
you just reiterate that, for those members who may not have 
been here, for that little brief statement, the role of carbon 
monoxide. And is that marrying what Director Skinner has 
presented to you all from the Illinois EPA?
    Mr. Perciasepe. Yes, and we did go through that again with 
Mr. Barrett just a minute ago; but don't worry, I will quickly 
summarize.
    The National Academy of Sciences did a look at reactivity 
of different VOC compounds that are emitted with different 
oxygenates. While they did not find a lot of fruitful ground 
there, they did note, and specifically noted, that ethanol does 
an improved job of reducing carbon monoxide.
    Carbon monoxide is also a precursor to ozone. It is not the 
same as the volatile organic compounds. So the question then 
is, if you are using ethanol in reformulated gasoline, and you 
are looking at VOC emissions as opposed to carbon monoxide 
emissions, but you get more carbon monoxide reductions, should 
you somehow be able to equate the ozone-forming aspects of 
this, which is the goal of the program?
    And the things you have to balance there--and we discussed 
this--is that if you say that the increased carbon monoxide 
performance should be taken into account, but you end up with 
some increased VOCs and it balances out from an ozone 
perspective, what does that do with a toxic perspective? 
Because the VOCs tend to have toxic emissions in them.
    So that is the kind of stuff, if we did a proposal on this, 
we would have to look at all those aspects.
    Mr. Shimkus. Great. And we are looking forward to the 
finalization of all of that.
    Mr. Mazur, if we take 11 percent of the oxygenate program 
off the market, what does that do to the cost ratio on the 
price of a gallon of gasoline presently?
    Mr. Mazur. You are referring to if you were to take the 
MTBE out of gasoline?
    Mr. Shimkus. Or the ethanol component.
    Mr. Mazur. Right. We estimate that, in the long run, that 
making up that amount of volume would increase the cost of 
gasoline by some 3 to 4 cents a gallon. The lower end of that 
range would basically represent if the oxygenate mandate had 
been taken away as well. The higher end, if you still had to 
meet the oxygenate mandate.
    Mr. Shimkus. And not a good statement to make in light of 
the high gasoline prices today?
    Mr. Mazur. As I said earlier, I think you need to weigh the 
cost and benefits of all the things you are doing here, and 
part would be increased cost for gasoline; part of it might be 
improved groundwater.
    Mr. Shimkus. Have you all done an analysis of what the 
industry might do in the absence of MTBE?
    Mr. Mazur. I think Bob Perciasepe said that there would be 
a number of steps that the industry could take to make up that 
loss of volume and the loss of octane and other attractive 
properties.
    One would be increase the amount of ethanol that was used; 
second would be increase alkylates and other types of 
substances, and also perhaps increase some of the use of 
toxics.
    Mr. Shimkus. I just want to put on the record my concern--
and I know legislation that was drafted did not cause this to 
happen, and in my opening statement I would also have said that 
we want to make sure we do not throw the baby out with the 
bathwater--in that to replace the oxygen issue that we go back 
to aromatics and we have actually a dirtier fuel, which is a 
distinct possibility based upon the capital investments that 
will probably be required for alcoholates.
    With that, Mr. Chairman, and trying to be brief, I yield 
back.
    Mr. Greenwood. The gentleman's time has expired, and I 
think finally we thank this panel for your testimony and for 
your stamina and excuse you at this time.
    I will call the third panel. Mr. Thomas Skinner, the 
director of the Illinois Environmental Protection Agency; Mr. 
Jason Grumet, executive director of the Northeast States for 
Coordinated Air Use Management; and Mr. Milazzo, who will be 
introduced by the gentleman from New York, Mr. Lazio.
    The Chair recognizes the gentleman from New York for an 
introduction of his guest.
    Mr. Lazio. Thank you, Mr. Chairman. I am pleased to be able 
to welcome and introduce John Milazzo, who is an attorney with 
the Suffolk County Water Authority. That is my home county, and 
it also happens to be the largest groundwater supplier in 
America. It serves in excess of a million residents of Suffolk 
County with water developed from groundwater resources within 
the county, or rather underneath the county.
    Mr. Milazzo serves as a resource for water authority 
management in the daily operation of the water authority. He 
has worked on a number of efforts critical to the environmental 
integrity of the largest source of pure groundwater in New 
York, the largest aquifer actually as well.
    And I just want to comment, if I can, that I have had the 
pleasure of working with the Suffolk County Water Authority for 
many years. They have the highest level of professionalism. I 
know they, together with the Suffolk County Department of 
Health, have been out front and probably been doing more in 
terms of testing of tanks and groundwater, because they are the 
largest groundwater supplier in the Nation than any other 
jurisdiction.
    So they have had some interesting data that they have been 
sharing with me, including--and I am not sure that Mr. Milazzo 
will be testifying as to this, but the sense that there may be 
another source of contamination beyond just tank leakage.
    But I would like to welcome and thank Mr. Milazzo for being 
here. Thank you, Mr. Chairman.
    Mr. Greenwood. Thank the gentleman from New York for his 
introduction, and now turn to Mr. Skinner and yield to him 5 
minutes for his statement, please.

 STATEMENT OF THOMAS SKINNER, DIRECTOR, ILLINOIS ENVIRONMENTAL 
    PROTECTION AGENCY; JASON S. GRUMET, EXECUTIVE DIRECTOR, 
 NORTHEAST STATES FOR COORDINATED AIR USE MANAGEMENT; AND JOHN 
      C. MILAZZO, ATTORNEY, SUFFOLK COUNTY WATER AUTHORITY

    Mr. Skinner. Thank you, Mr. Chairman, and members of the 
committee. It is a pleasure to be here and an honor to be here 
before you today.
    You have heard this morning from a number of folks that the 
RFG program has been successful since its implementation. I am 
here to take that a step further, I guess. I represent the 
State of Illinois. I am the environmental protection director 
there. I am here because Illinois is proof that RFG, without 
MTBE, is a successful program; and it has worked extremely well 
for us in the past years.
    Over 95 percent of our RFG in Illinois contains ethanol, 
not MTBE. We have had tremendous reductions of VOCs, carbon 
monoxide, and air toxics since implementing RFG. For example, 
100 tons per day of VOCs are reduced, which is an essential 
part of our State implementation plan, a point that Bob 
Perciasepe made in passing a while ago, but it is terribly 
important.
    Our overall State air quality plan, as well as reductions 
of toxics, is well beyond what was anticipated when the program 
was first put into place. In fact, I am not sure what the 
consultant to the Lung Association on the next panel is going 
to say here today, but I can tell you that the Illinois chapter 
of the Lung Association has been very laudatory with regard to 
our ethanol RFG program and, in fact, believes very strongly in 
its efficacy.
    We are concerned--I guess Illinois is concerned that in 
reaction to a very real problem, MTBE contamination, that, and 
I am trying to search for another metaphor, but essentially 
that the baby will be thrown out with the bathwater--I came up 
with a blank in trying to find an alternative there--the very 
beneficial oxygenate program might be eliminated as well. We 
believe such an action would cause environmental backsliding, 
both in our State and elsewhere. We have all kind of danced 
around the issue here this morning. Everyone says we want to 
eliminate MTBE, but we don't want environmental backsliding. I 
am not sure anybody has come up with a way to do that. We think 
the way to do that is ethanol.
    We are also concerned--and this is a slightly different 
point--with environmental backsliding as a result of the new 
Phase II RFG program that went into effect January 1 of this 
year. If gas formulations are switched, even in part, from 
ethanol to MTBE because the new Phase II RFG program makes MTBE 
use cheaper for the refiners, then Illinois and others likely 
will suffer the same fate as New York, California, the 
northeast States, and others: widespread contamination of our 
water supplies.
    Already, even with 95 percent ethanol use in our State, we 
have suffered three instances where we have had to shut down 
public drinking water wells due to MTBE contamination, and we 
have had MTBE hits slightly below the action level in literally 
hundreds of other locations. This does not even take into 
account the private water supplies where we do not do quite as 
much monitoring.
    Already there is a rumor I heard last night--and it has 
been our fear all along--that at least one of our oil producers 
will switch to MTBE as a result of the Phase II regulations for 
the summer season. There has been a lot of discussion about 
this. USEPA has told us repeatedly that will not be the case. 
It has been our fear that will in fact happen, and we will have 
increased amounts of MTBE in our State rather than less. This 
is not acceptable.
    We agree a solution must be found for the MTBE problem, but 
I emphasize it is important that the solution not create or 
exacerbate other problems in the process. We do not need more 
benzene and toluene in gasoline in Illinois, nor do I think 
anybody else in the United States desires that.
    In summary, we urge this committee and Congress as a whole, 
No. 1, to deal with MTBE, but recognize the improvements that 
oxygenated fuels have brought and that the alternative of 
ethanol does exist. And, No. 2, urge my counterparts at USEPA 
to recognize the role that oxygenates, and ethanol in 
particular, play in reduced carbon monoxide and thereby reduced 
levels of low level ozone.
    Thank you for your time this morning.
    [The prepared statement of Thomas Skinner follows:]
        Prepared Statement of Tom Skinner, Illinois EPA Director
    It is an honor for me to appear before you today as you continue to 
evaluate implementation of the reformulated gasoline program. Depending 
on one's perspective, that program raises some concerns and/or a 
continued opportunity to improve the quality of our air in Illinois and 
across the nation.
    Our first concern, as many of you already know, is that the Chicago 
metropolitan area could be forced to use reformulated gasoline that 
uses methyl tertiary butyl ether (MTBE) as the oxygenate, unless U.S. 
EPA makes some fundamental policy changes in the next few months on 
Phase II reformulated gasoline (RFG) regulations.
    Our second concern is that the oxygenate requirement for RFG not be 
eliminated entirely in overreaction to the growing awareness of the 
MTBE threat to the environment, particularly our groundwater and 
surface water. That would be one case, where the old cliche ``let's not 
throw out the baby with the bathwater'' (or in this case groundwater) 
would certainly be true. The oxygenate requirement has helped clean the 
air in our urban areas and there are environmentally beneficial 
oxygenate blends, in particular those using ethanol, which have been a 
great success in the Chicago and Milwaukee areas, and which I will 
discuss in more detail later.
    The recent ``60 Minutes'' segment on MTBE described it as ``already 
the second most common water contaminant in the country,'' noting that 
in New Jersey it has turned up in 65 public drinking water supplies and 
in Long Island, New York in more than 100 public water supplies. The 
New York Times recently reported state environmental officials had 
catalogued 1,500 incidents of MTBE soil or water contamination for all 
of New York state.
    Detection of high levels of MTBE in drinking water supplies in 
Santa Monica and South Lake Tahoe, California has forced the closure of 
these resources.
    You may be surprised that in Illinois, even though MTBE has not 
been a significant factor in RFG blends sold in-state, we have found 
detections of MTBE in 26 public water supplies out of more than 900 
that participate in our state laboratory program.
    Three of our community water supplies, East Alton, Island Lake, and 
Oakdale Acres, had to discontinue use of wells as a result of MTBE 
contamination. Oakdale Acres had to shut down the entire supply and 
hook-up to an alternate source of water.
    Illinois EPA is developing proposals to amend the state groundwater 
quality regulations to establish both a groundwater quality standard 
and preventive response level for MTBE. Additionally, sampling at 
approximately 100 leaking underground gasoline storage tanks sites has 
indicated MTBE in the soils at about three-quarters of them. As a 
result, we are also establishing cleanup objective levels for leaking 
tank cleanups and voluntary site remediation projects.
    So you can understand why we are very alarmed about the prospect of 
being forced to switch from ethanol to MTBE as a result of the new 
Phase II RFG regulations and the potential for additional MTBE 
contamination of Illinois= groundwater supplies. Since the reformulated 
gasoline program was introduced in the Chicago area in 1995, more than 
95 percent of the area's gasoline has contained ethanol as its 
oxygenate. Ethanol-blended RFG has enjoyed the acceptance of millions 
of vehicle owners in that area since its introduction. In fact, 
refiners serving areas such as Milwaukee, St. Louis and portions of 
California have chosen to use ethanol as opposed to MTBE. In our 
neighboring state of Wisconsin, the implementation of the RFG program 
in the Milwaukee area in January 1995 was initially met with public 
outcry. Within weeks of the start of the program, citizen complaints of 
the fuel causing headaches, dizziness, and nausea began pouring into 
U.S. EPA. That outcry quickly ended when refiners substituted ethanol 
in the RFG blend used in the Milwaukee area.
    MTBE is an organic chemical which is highly soluble in water and 
travels faster and further in soil and groundwater than other gasoline 
constituents. MTBE can be detected in water by taste and smell at 
extremely low concentrations of 20 to 40 parts per billion. MTBE is 
also persistent in that it degrades very slowly by natural chemical or 
biological processes within the soil or groundwater environment. It 
also does not respond well to groundwater remediation options such as 
treatment through the use of granular activated carbon or air 
stripping, processes typically used to clean up organic chemical 
contamination.
    Due to this increasing risk to our nation's drinking water 
supplies, actions are being considered and undertaken on several 
fronts. California Governor Gray Davis issued an executive order to 
phase-out the use of MTBE in California, and the California Air 
Resources Board recently adopted requirements curtailing its use by the 
end of 2002. In November 1998, the USEPA appointed a Blue Ribbon Panel 
to investigate issues regarding the use of oxygenates in RFG and in its 
July 1999 Final Report recommended that the use of MTBE should be 
substantially reduced.
    In Illinois, the Chicago City Council adopted a resolution 
demanding that state and federal environmental agencies take 
appropriate action to prevent the use of MTBE in gasoline in the 
Chicago area. Due to the environmental characteristics of MTBE I 
discussed earlier, I believe the concerns expressed through the above 
actions are warranted. However, the appropriate legal means to limit or 
ban the use of a gasoline component is not clear. Section 211(c) of the 
Clean Air Act (CAA) limits the ability of state or local units of 
government to affect the characteristics of gasoline. We have heard 
that USEPA is considering seeking to prohibit or limit MTBE under the 
Toxic Substances Control Act. If that is the case, because of the 
typical length of time a TSCA process takesBmore than four monthsBwe 
also hope it will not become another obstacle to the continued use of 
ethanol-blended RFG in Chicago and other areas where it is now in use.
    In attempting to address concerns about MTBE contamination of 
drinking water, however, the overall role of oxygenates in reformulated 
gasoline has also been questioned. As I mentioned earlier, oxygen in 
gasoline provides a significant air quality benefit by reducing 
emissions of VOCs, carbon monoxide, and toxic air pollutants such as 
benzene, a known human carcinogen. In fact, due in large part to the 
role of oxygenates, Phase I RFG has far exceeded the minimum emission 
reduction requirements. I understand that toxic air emissions have been 
reduced by approximately 27 percent compared to the 15 percent 
reduction requirement. Acknowledging these benefits, both the Blue 
Ribbon Panel and the North Eastern States for Combined Air Use 
Management (NESCAUM) recommended that even while dropping the RFG 
oxygenate requirement, USEPA seek to ensure that there is no loss of 
the current air quality benefits.
    The Clean Air Act requires RFG to contain at least 2.0 percent 
oxygen by weight. The presence of oxygen in fuels allows the blend to 
burn more completely, reducing exhaust VOC and toxics emissions. The 
two primary ``oxygenates'' used in RFG are ethanol and MTBE. Ethanol-
blended RFG is used primarily in the Midwest and makes up approximately 
15 percent of the RFG supply. MTBE, which can be blended into RFG at 
the refinery and shipped throughout the country via pipelines, makes up 
roughly 84 percent of the RFG oxygen market.
    Chicago is one of nine areas required by the Clean Air Act to 
market cleaner-burning reformulated gasoline. Since the inception of 
this program in January 1995, the Chicago area has benefitted through 
reduced vehicle emissions of volatile organic compounds (VOCs), carbon 
monoxide, and toxic air pollutants. The CAA requires all ozone 
nonattainment areas to reduce VOC emissions by 15 percent from 1990 
levels by 1996. In Chicago, the 15 percent reduction requirement 
equated to a total of approximately 250 tons per day. The federal RFG 
program was one of the key elements in our State Implementation Plan 
strategy to achieve this reduction, reducing VOC emissions by over 100 
tons per day. The use of a cleaner burning gasoline provides an area 
with immediate emissions reductions, as opposed to improvements in 
vehicle engine technology which, although necessary and important, 
accrue over the course of years as consumers purchase the new vehicles.
    The CAA also requires ozone nonattainment areas to continue to 
reduce ozone forming emissions by 3 percent per year until attaining 
the ozone national ambient air quality standard (NAAQS). The use of RFG 
will continue to play a large role in area's like Chicago meeting this 
``Rate-of-Progress'' requirement and ultimately meeting the ozone 
NAAQS.
    Phase II of the RFG program began in January. The use of Phase II 
RFG will further reduce VOC and toxic air pollutant emissions, 
increasing the reduction requirement from 15 to 25 percent. Phase II 
RFG will also reduce emissions of oxides of nitrogen (NOx), which also 
contributes to the formation of ozone. In Chicago, and likely 
throughout the rest of the country, the use of RFG provides more 
emissions reduction benefit than any other measure. Currently, 
approximately 30 percent of all the gasoline sold nationwide is 
reformulated gasoline, with the State of Missouri joining the program 
for the St. Louis area beginning last summer.
    I believe that the RFG oxygenate requirement should be maintained, 
and that ethanol should be allowed to play a larger role in improving 
our nation's air quality.
    The cleaner burning properties of ethanol also reduce emissions of 
carbon monoxide, a criteria pollutant. Ethanol use has proved highly 
successful in the oxygenated fuels programs in carbon monoxide 
nonattainment areas such as Denver and Phoenix. Carbon monoxide is also 
a precursor to ozone formation. In May 1999, the National Research 
Council recognized this, stating that carbon monoxide in vehicle 
exhaust emissions contributes about 20 percent to the overall 
reactivity of motor vehicle emissions. In addition, ethanol biodegrades 
quickly in the soil and groundwater, therefore not providing a threat 
to our drinking water supplies.
    The National Governors Association Center for Best Practices 
concluded last month that ``ethanol's positive impact on air quality 
and fuel performance and minimal water quality risks and health effects 
make it the most viable replacement fuel additive.''
    The California Environmental Policy Council, chaired by California 
EPA Director Winston Hickox, also recently unanimously approved reports 
which found no air quality, water quality or health problems associated 
with the use of ethanol as an oxygenate in California's cleaner burning 
gasoline program.
    We hope and expect the Phase II RFG program to continue to provide 
air quality benefits.
    However, in their current form, the new RFG requirements may 
jeopardize the benefits supplied by the use of ethanol. This is because 
the summertime VOC emission reduction requirements for Phase II RFG 
necessitate the use of a very low volatility fuel. Since the addition 
of ethanol slightly increases the volatility of the resulting blend, an 
even lower volatility (and therefore more expensive) base gasoline must 
be supplied. Without such a base gasoline to accommodate the addition 
of ethanol, and refiners= willingness to produce such a base gasoline, 
ethanol-blended RFG may be effectively excluded from the summertime 
program.
    Many are citing this situation as another reason to drop the RFG 
oxygenate requirement completely. We believe that taking that step is 
unnecessary and unwarranted.
    The Phase II RFG compliance program does not take the benefit of 
reduced carbon monoxide emissions into account. Dropping the oxygenate 
requirement would result in an increase in these emissions and in ozone 
levels. In November 1999, the Illinois EPA submitted an analysis to 
USEPA quantifying the carbon monoxide emission reduction benefits, and 
proposing a means to incorporate these benefits into the RFG program. I 
understand that the USEPA has, or will soon be, submitting a proposal 
to the Office of Management and Budget to propose changes to the RFG 
program to take these benefits into consideration. I commend USEPA for 
taking this action and encourage them to provide the maximum benefit 
for the carbon monoxide reductions, and design a program that offers 
sufficient flexibilities to petroleum refiners and ethanol blenders in 
order to encourage further and expanded use of this clean fuel 
additive.
    In summation, the reformulated gasoline program has been an 
unqualified success in the Chicago area, and we are looking forward to 
the additional benefits which will be provided by Phase II of the 
program. We believe that the use of oxygenates in reformulated gasoline 
has also provided significant air quality benefits in our nation's 
metropolitan areas, well beyond those required in the Clean Air Act. 
Although we share the nation's concerns about MTBE contamination of 
drinking water, and agree that the use of MTBE should be phased out as 
quickly as practicable, we believe that the reformulated gasoline 
oxygen requirement should be maintained and that the proper benefit for 
the use of ethanol should be incorporated into the RFG program.
    Thank you for inviting me to join you today.

    Mr. Greenwood. Thank you for your testimony.
    And the Chair recognizes Mr. Grumet for his testimony.

                  STATEMENT OF JASON S. GRUMET

    Mr. Grumet. I would like to thank the Chair and members of 
the committee for the opportunity to speak to you today. My 
name is Jason Grumet, and I am the director of an organization 
called NESCAUM, which represents the air quality agencies in 
the eight northeast States. I am pleased to be here on their 
behalf.
    I am also pleased to be here as a member of what, for me at 
least, has been a truly unprecedented collaboration, a 
coalition between the northeast States, national environmental 
organizations, and the American Petroleum Institute companies, 
Sun Oil Company, and other independent oil refiners and 
distributors to try to bring together a set of consensus 
principles that we hope can form the basis of timely action.
    Now, the history of this problem has been long on 
discussions of problem and short on discussions of solutions, 
so I will try in my brief testimony to reverse that ratio and 
focus the bulk of my comments on these six principles for 
legislative action that we believe are necessary to move this 
debate forward.
    I would like to say a word or two about the problem. And 
based on the desire for brevity, I will be so brief as to 
probably confuse some and maybe even inflame others. And if 
that is the case, I suggest my full written comments and an 
earlier study that we have provided to the committee might 
help.
    To understand this problem, we have come to conclude that 
MTBE has been good for public health. MTBE has also been bad 
for environmental quality and, in certain situations, very bad 
for the quality of life for the few members of our society who 
have been unable to use their local drinking water. The 
challenge before this committee is how do we mitigate the 
significance and unacceptable environmental harms that MTBE 
poses without sacrificing the very considerable public health 
benefits that it has provided.
    The use of MTBE in gasoline has substantially reduced smog-
forming emissions and, even more importantly, we believe 
substantially reduced the emissions of known human carcinogens, 
like benzene. As we remove MTBE, if we do it precipitously and 
without thought, more toxic substitutes will come into the 
gasoline supply and we will have undermined public health.
    That said, we must have a severe curtailment of the use of 
MTBE, because at present levels MTBE is posing an unacceptable 
risk to our natural resource water quality. At present the 
statute, the Clean Air Act, for which we have great respect, 
and the authors of which, whom we have great respect for, 
prevents States and also prevents EPA from our fundamental 
obligation to manage risk. We are not capable with the 
statutory authority we have right now to manage this difficult 
problem.
    So it is with great respect for that statute that I would 
like to propose six different principles.
    First and foremost, we must repeal the oxygen mandate. It 
is simply not possible to maintain air quality benefits, to 
protect water quality, and to maintain a stable price and 
supply of gasoline in the Northeast while the oxygen mandate is 
in place.
    As we severely curtail MTBE use, what we get is a de facto 
ethanol mandate in the Northeast. Due to the volatility of 
ethanol used in the summertime, that could actually exacerbate 
our ozone problem. That would be unacceptable. Moreover, we are 
ambivalent about the distribution issues and fear that a single 
product mandate which is not mindful of market constraints 
could cause unacceptable price increases.
    That said, ethanol has many lovely attributes. It does not 
have the same type of risk in groundwater, and it has 
substantial benefits, we believe, to agriculture policy, to 
energy policy and to climate change policy. In the northeast, 
we embrace the goal of increasing the use of renewable 
resources; and in particular, we are very optimistic about the 
role that biomass ethanol in our region's energy future.
    That said, there are policy approaches to support those 
legitimate ends that are far preferable to forcing the use of 
ethanol in the summertime, which is the worst opportunity, and 
in regions of the country that are as far away as possible from 
its production.
    Second, we have to phase down and cap the use of MTBE in 
all gasoline. We believe that if we severely curtail MTBE to 
its historic levels, and continue to improve our air quality 
programs, we can adequately mitigate this risk while 
maintaining the air quality benefits at an acceptable cost. 
While it is politically attractive, a precipitous ban on MTBE 
we believe will undermine public policy, and for that simple 
reason, we continue to not support that approach.
    That said, we agree with the earlier sentiments that 
knowledge does evolve. And if in fact a Federal reduction of 
MTBE we find to be inadequate, States and EPA must be 
authorized to act and take the next step to further reduce or, 
if necessary, ban MTBE. We do not believe we have that 
authority in the States. While we recognize EPA's frustration 
about their inadequate authority and appreciate their desire to 
leave no stone unturned, we are not confident an approach based 
on existing TSCA authority will be satisfactory.
    Fourth, we must maintain the full air qualities benefits of 
this program. In particular, the air toxic benefits using RFG 
with MTBE have far exceeded the minimum statutory requirements. 
As we work with our partners to provide the oil industry with 
the flexibility that it needs to solve the MTBE problem, we 
must make sure that flexibility is not used to undermine air 
quality. In particular, I am pleased that members of the 
American Petroleum Institute and the Sun Oil Company support 
this goal, and we have language I hope we can bring to this 
committee in the near future to achieve that end.
    Last, we should promote consistency through pushing for 
timely and effective Federal action. That is the best way to 
avoid a patchwork of different State laws. And we have to 
ensure that the petroleum industry is granted adequate lead 
time to make a shift away from MTBE that does not undermine 
environmental quality.
    In closing, we recognize the challenge that the committee 
faces to balance the intense and diverse interests before you. 
Until recently, everyone has been in a separate camp. States 
have been in one place, the oil industry in another, the oxygen 
industry in a third, and the environmental community in a 
fourth. I personally am greatly encouraged that three of those 
four camps have now come together around a set of what we hope 
to be prudent principles for action.
    Thank you.
    [The prepared statement of Jason S. Grumet follows:]
 Prepared Statement of Jason S. Grumet, Executive Director, Northeast 
               States for Coordinated Air Use Management
    Thank you Mr. Chairman. My name is Jason Grumet and I am the 
Executive Director of the Northeast States for Coordinated Air Use 
Management (NESCAUM). NESCAUM is an association of state air pollution 
control agencies representing Connecticut, Maine, Massachusetts, New 
Hampshire, New Jersey, New York, Rhode Island and Vermont. The 
Association provides technical assistance and policy guidance to our 
member states on regional air pollution issues of concern to the 
Northeast. We appreciate this opportunity to address the Subcommittee 
regarding reformulated gasoline and MTBE.
    As I hope you are already aware, the Northeast states have much at 
stake in the debate over RFG and MTBE. RFG, with or without, MTBE is 
one of the most significant public health achievements of the 1990 
Clean Air Act. The RFG program has provided substantial reductions in 
smog forming emissions and has dramatically reduced emissions of 
benzene and other known human carcinogens found in vehicle exhaust. 
However, MTBE's unique mobility and resistance to biodegradation pose 
unacceptable risks to our region's potable ground water. Testing 
conducted throughout the northeast has detected low levels of MTBE in 
roughly fifteen percent of the drinking water sampled. MTBE's 
unpleasant taste and odor at higher concentrations and the frequency of 
MTBE detections has convinced us that MTBE use must be severely 
curtailed.
    Fortunately, concentrations of MTBE detected in the vast majority 
of samples (99%) are extremely low. Compared against other gasoline 
constituents, the relative toxicity of MTBE is also low. These two 
factors lead public health experts in our region to conclude that the 
health threat posed by MTBE is minimal when compared against the 
present risk posed by other drinking water contaminants or when 
compared against public health benefits of the RFG program as a whole. 
The challenge facing us all is to mitigate the environmental and 
economic harms caused by MTBE contamination without sacrificing the 
environmental and public health benefits provided by RFG using MTBE. 
Unfortunately, the law as currently written prevents both EPA and the 
states from effectively facing this challenge. For the nine mandatory 
RFG areas, which in our region include parts of NY, NJ and all of CT, 
the Clean Air Act provides literally no opportunity for states to limit 
MTBE use. For areas that have joined the RFG program voluntarily, the 
only option available under statute is to abandon the RFG program and 
the benefits it provides and hope that refiners respond by reducing the 
MTBE content of the resulting conventional gasoline. Even this 
inadequate option is constrained by an EPA rulemaking that prevents 
states that currently participate in the RFG program from opting out 
until 2003.
    Dissatisfied with these options, the eight Northeast states have 
joined together to promote a unified strategy to address the MTBE 
problem. The centerpiece of this strategy is a set of six legislative 
principles designed to protect water quality from the threat posed by 
MTBE, maintains the full air quality and public health benefits of the 
current RFG program, and ensure adequate fuel supply and price 
stability. These principles were announced by NESCAUM in mid January 
and have since been endorsed by the American Lung Association (ALA), 
the American Petroleum Institute (API), the Natural Resources Defense 
Council (NRDC) and the Sun Company. Moreover, the eight NESCAUM states 
have joined to date with Pennsylvania, and Delaware to form a state 
Task Force in support of these federal legislative principles as well 
as state actions to address MTBE. Allow me now to outline the 
principles that form the foundation of our unique alliance:
    At the outset, I must note that the following principles are 
limited to changes that we believe must be made under the Clean Air 
Act. There are a host of measures to improve fuel storage, fuel 
handling and groundwater remediation that are under active discussion 
in our state task force. Some of these measures may also require 
changes in federal statute, however such changes are beyond the scope 
of what I will present today.
    I. Repeal the 2 percent oxygen mandate for RFG in the Clean Air 
Act--It is simply not possible to protect air quality, water quality 
and ensure gasoline price stability unless the oxygen mandate is lifted 
or at minimum modified to require EPA to waive this requirement upon 
state request. Unless the oxygen requirement is lifted or waived, a 
substantial reduction in MTBE use creates a de facto summertime ethanol 
mandate. While ethanol usage is far preferable to MTBE from a 
groundwater perspective and promotion of ethanol can further a host of 
energy, aricultural, and environmental goals, an ethanol mandate in the 
reformulated gasoline program is not sound environmental or economic 
policy for our region. Due to its high volatility and resulting 
increase in evaporative emissions, the use of ethanol during the 
summertime ozone season may actually exacerbate our urban and regional 
smog problems.
    The recent experience with rising home heating oil prices serves as 
a reminder of our region's sensitivity to energy price increases. The 
economic impact of mandating the use of ethanol in the Northeast, 
California and the Gulf Coast is simply unknown. Setting aside the 
wisdom of coupling mandates with subsidies, serious questions remain 
about the cost of transporting and distributing ethanol throughout 
regions of the country where it is not produced. There is no question 
that it is possible to dramatically increase ethanol production. 
Similarly there is no question that it is possible to ship massive 
quantities of ethanol to the northeast by barge, rail and truck. The 
question is at what cost. While our region embraces the goal of 
increasing renewable fuels nationally and sees great promise in the 
development of a biomass ethanol industry in the Northeast, we are 
convinced that there are policy approaches to achieve these legitimate 
ends that are far preferable to mandating the use of ethanol in 
summertime RFG.
    II. Phase down and Cap MTBE in all gasoline--MTBE use must be 
severely curtailed across the entire fuel supply. Consistent with the 
conclusions of the Blue Ribbon Panel, NESCAUM believes that, MTBE 
concentrations in gasoline should be returned to the levels commonly 
used prior to adoption of the oxygen standard in 1990. Coupled with the 
substantial and ongoing improvements in underground storage tank 
integrity and fuel handling, we are optimistic that a fifty to seventy-
five percent reduction in allowable per gallon MTBE concentrations will 
effectively mitigate the risk to groundwater while enabling refiners to 
preserve air quality gains at an acceptable cost. However, our analysis 
indicates that a precipitous and complete phase-out of MTBE is likely 
to undermine public health in our region because of the high toxicity 
of the economically viable alternatives to replace the volume and 
octane MTBE presently provides in the fuel supply. While politically 
attractive, a federal ban on MTBE is equally as inflexible and 
intrusive as the oxygen mandate. It is time to get beyond the polemics 
of mandates and bans and empower federal and state environmental 
regulators to effectively manage risk.
    III. Maintain the toxic emission benefits achieved to date by the 
federal RFG program--The use of RFG with MTBE in the Northeast has 
produced dramatic air quality gains. Most significant have been the 
reductions in airborne toxics which have substantially surpassed the 
performance standards of both the first phase RFG requirements and 
substantially exceed the performance requirements of the more stringent 
second phase requiremens that take effect this year. We believe that a 
substantial portion of these benefits have been provided by the high 
volume of oxygenates currently mandated in RFG. As we seek to provide 
refiners with the flexibility to reduce the use of MTBE, it is 
necessary to ensure that this flexibility is not used to produce higher 
polluting gasoline. Importantly, the American Petroleum Institute, 
Sunoco and other independent refiners agree. The members of our 
alliance are working diligently to craft legislative language that we 
believe accurately and equitably maintains the full air quality 
benefits of the present day RFG program. We hope to provide this 
language for the Committee's consideration within a week.
    Our focus on crafting legislative language to maintain RFG toxic 
benefits should not be confused with a failure to appreciate the 
critical importance of also maintaining the full VOC and NOx reductions 
provided by the RFG program. However, the Phase 2 performance 
requirements for these two pollutants are more aggressive than the 
performance of RFG to date. Hence, the EPA regulations and statute in 
their current form ensure that emissions of these pollutants will not 
increase if the oxygen standard is lifted or waived.
    IV. Clarify state and federal authority to regulate, and/or 
eliminate, MTBE or other oxygenates if necessary to protect public 
health and the environment--The evidence before our states has not 
convinced us that a federal ban on MTBE is in the best interest of 
public health. However, we believe that it is critical that states and 
the EPA are provided with measured but clear authority to regulate and 
if necessary phase-out MTBE if such action is found necessary to 
effectively protect public health or environmental quality. At present, 
we fear that any prescriptive state efforts to limit MTBE use would be 
tied up for years in costly and counterproductive litigation. Recent 
suggestions that the Administration is exploring its authority to limit 
MTBE use under the Toxic Substances Control Act (TOSCA), does not allay 
our concern about the inadequacy of existing Agency authority. A 
cursory review of the language under TOSCA suggests that its 
application to the question at hand will be arduous, inelegant and 
almost certainly tangled in years of litigation.
    The northeast states share EPA's frustration over the inadequacy of 
our mutual authority and applaud the Agency's efforts to leave no stone 
unturned. However, the issues at hand are too important to rest their 
outcome on a courageous interpretation of existing authority. Moreover, 
this approach does not empower our states to adopt more protective 
requirements if federal action is demonstrated inadequate to address 
state concerns. Balancing the desire for regional and national 
consistency in fuel specifications with the autonomous obligation of 
each state to protect its citizens and environment is not a new 
challenge for the Clean Air Act. We believe that the approach suggested 
by Congressman Greenwod in HR 3449 is consistent with the Clean Air 
Act's historic balancing of these competing desires and provides a 
sound foundation for this Committee's deliberations
    V. Promote consistency in fuel specifications through the timely 
implementation of effective federal requirements--As indicated 
previously, the Northeast states share the goal of providing fuel 
refiners and suppliers with a uniform set of regulatory requirements. 
The most effective means of achieving this consistency is to authorize 
and require timely action on the part of EPA. Our states are committed 
to working with other regions and EPAto develop a federal regulation 
that meets our collective needs.
    VI. Provide adequate lead time for the petroleum infrastructure to 
adjust in order to ensure adequate fuel supply and price stability--At 
present, the gasoline system in the Northeast and much of the nation is 
dependent upon the presence of high volumes of MTBE. Much as we want 
immediate action to reinvigorate the RFG program, we recognize that the 
substantial reductions in MTBE that must occur can not be completed 
overnight. Depending on the ultimate extent of required reductions, our 
states anticipate that two to four years will be necessary to complete 
the phase down of MTBE in the northeast. We are committed to working 
with our partners in the refining industry to ensure that fuel quality, 
supply and price are protected as we shift from our current dependence 
on MTBE.
    In closing, the northeast states and our partners in the refining 
and environmental community recognize that reconciling the diversity 
and intensity of interests around the table poses a considerable 
challenge for this Committee. Until recently, agreement among the 
states refining industry, environmental community and oxygenate 
industry have generally been limited to concurrence over the table's 
shape. I am greatly encouraged that three corners have joined together 
around a common set of principles that I believe form a sound basis for 
legislative action. I look forward to hearing from our partners from 
the Lung Association and Sunoco later today and thank the Committee for 
the opportunity to appear before you today.

    Mr. Greenwood. Thank you very much, Mr. Grumet.
    Mr. Milazzo, 5 minutes for your testimony.

                  STATEMENT OF JOHN C. MILAZZO

    Mr. Milazzo. Thank you. It is an honor to be here today; 
and on behalf of the Suffolk County Water Authority, I want to 
thank Congressman Lazio for inviting us down.
    The Suffolk County Water Authority is the Nation's largest 
water supplier based entirely on groundwater. We serve more 
than a million county residents with pure, safe, constantly 
tested water while maintaining approximately 340,000 customer 
accounts. We operate the Nation's largest and most 
technologically advanced groundwater testing laboratory, which 
was built at a cost of $6 million and has an annual operating 
budget of more than $3 million. Our laboratory is staffed by 35 
chemists, microbiologists, and technicians who conducted more 
than 60,000 tests last year measuring more than 200 chemical 
constituents.
    Twice per year the laboratory performs proficiency tests 
and submits the results to the New York State Department of 
Health. Only after we pass these tests are we certified by the 
State. We have always maintained our certification. In 
addition, the Department of Health reviews our quality 
assurance and quality control data as part of the New York 
State Environmental Laboratory Approval program. Furthermore, 
we have developed testing policies at our laboratory that have 
been adopted by and published by the United States EPA for use 
by other labs.
    In our 48-year history, we have never failed to meet every 
water quality standard established by Federal regulation or by 
New York State. And New York State are among the strictest in 
the Nation. We will do all that is necessary to ensure that we, 
like the majority of public water suppliers, continue to supply 
water that is pure, safe and constantly tested. This is an 
obligation that infuses every water authority action.
    Mr. Chairman, I have made mention of our laboratory, our 
testing, and the quality of the water that we serve because I 
want to assure our customers, who include our neighbors, our 
friends, and our own families, that the water we serve is safe. 
However, there is a significant cost involved in ensuring that 
the water we serve meets our own demanding standards. In 
addition to the expenses incurred in building our laboratory 
and the testing performed by our lab staff, there are costs 
associated with treating water which does not meet Federal and 
State drinking water standards in its raw pretreated form.
    The water authority operates 479 wells across Suffolk 
County, drawing water from aquifers deep below the surface of 
Long Island. Approximately 10 percent of the wells that we 
operate have filtration systems which remove harmful 
contaminants from the raw water before it enters our system. 
The types of contaminants that we find in the unfiltered water 
of these wells includes herbicides and volatile organic 
compounds such as degreasers, solvents and dry cleaning fluids. 
Filtration systems are also used to purify water affected by 
the aftermath of leaking gas tanks or gasoline spills.
    As the largest water supply based entirely on groundwater, 
we are keenly aware of the issues which affect groundwater 
resources. The water authority appears before this subcommittee 
in an effort to provide information to you as you wrestle with 
the difficult issue of the reformulated gasoline requirements 
of the Clean Air Act Amendments of 1990. Suffolk County is a 
non-attainment area for purposes of the 1990 amendments. 
Consequently, gasoline supplied in Suffolk County must meet the 
reformulated gasoline requirements.
    To date, many gasoline suppliers have met the requirements 
with the use of MTBE. MTBE is problematic for the water 
authority because it is a highly aggressive and soluble 
compound that moves with relative ease through the 
supersaturated sands of our federally designated sole-source 
aquifer system. As a testament to our commitment to serve pure, 
safe, and constantly tested water, the water authority began 
testing for MTBE more than 10 years ago, long before such 
testing was required by the State or Federal Government.
    Unfortunately, MTBE has been detected in 105 of our 
drinking water wells. The maximum allowable limit of MTBE in 
drinking water is 50 parts per billion under New York State 
drinking water standards. There is currently no Federal 
standard. Several States, including New York, are expected to 
drop their drinking water standard to 10 parts per billion in 
the near future.
    It should be pointed out that many of our detections of 
MTBE are extremely low levels, as low as 5 parts per billion, 
which is really at the border of the detection capability of 
the equipment we use in our lab. And these detects at that low 
level are seen once and not seen again. The types of these low-
level detections can often be attributed to sampling anomalies 
and may not actually be indicative of the presence of MTBE.
    Just to put things in perspective, one part per billion is 
equivalent to 1 second in the life of one 32-year-old. I have 
not had a one part per billion yet. So when we talk about zero 
parts per billion, we are talking about an infinitesimally 
small level of detection. Laboratory data from 1999 indicates 
that we have detected MTBE in 61 of our operational wells at 
levels between 0.5 and 2.5 parts per billion. Of these 61 
wells, 30 had MTBE levels that were consistent between 0.5 and 
2.5. The remaining detections were only once and extremely low 
levels as I talked about.
    In addition to these 61 wells, we do have two MTBE 
detections at two facilities that are consistently between 6 
parts per billion and 10 parts per billion. One of the sites, 
we suspect, is from a gasoline spill, and the other we are not 
quite sure of the source. The raw water from these sites is 
being treated with GAC filters to remove the MTBE.
    MTBE presents several probables for the water authority. As 
previously mentioned, it is an aggressive compound. It breaks 
through the activated carbon of our filter systems at a rate 
three to four times greater than contaminants. Once 
breakthrough occurs, the carbon in the vessel can no longer 
remove MTBE, and depending on the detection level, may need 
changing. However, it costs almost $40,000 to replace a carbon 
in one of our filters. If we have to install a GAC filter at a 
well, the cost would approach $500,000.
    As an organization with total annual revenues in excess of 
$100 million and net assets exceeding three-quarters of a 
billion dollars, we can continue to filter water; and if 
necessary, we will expand our filtration system. Unfortunately, 
we have to pass those additional costs associated with the 
filtration on to our customers. In those instances where the 
source of a pollutant requiring mediation can be identified, we 
will, as we have successfully done in the past, aggressively 
pursue the polluter of our water resource through litigation.
    A significant concern for the water authority, and the 
reason we are here today, is if the low level of detections 
that have been discovered represent the proverbial tip of the 
iceberg. If MTBE contamination becomes more pervasive, and the 
concentrations of MTBE increase, the water authority will be 
forced to dedicate appreciable resources at combating the MTBE 
contamination at great expense to our customers. Absent a 
prohibition on MTBE use in Suffolk County, the potential will 
always exist that MTBE will continue to degrade our groundwater 
resources.
    Given the questionable benefits to air quality of MTBE, as 
my colleague has spoken to, we believe and have called for the 
complete ban of MTBE. This position recognizes that the water 
served to our customers must be pure and safe. We further 
believe that we are at a critical crossroads. Limited 
contamination exists. However, we believe you have the ability 
to be proactive rather than reactive when dealing with the MTBE 
issue. Action now can limit and curtail more costly future 
damage. While the reformulated gasoline goals are laudable, air 
and water quality should not be mutually exclusive.
    I want to thank you for inviting us and look forward to 
answering your questions.
    [The prepared statement of John C. Milazzo follows:]
 Prepared Statement of John C. Milazzo, Suffolk County Water Authority
    The Suffolk County Water Authority is the nation's largest water 
supplier based entirely on groundwater. We serve more than a 1 million 
county residents with pure, safe, and constantly tested water while 
maintaining approximately 340,000 customer accounts. We operate the 
nation's largest and most technologically advanced groundwater testing 
laboratory which was built at a cost of $6 million and has an annual 
operating budget of more than $3 million. Our laboratory is staffed by 
35 chemists, microbiologists, and technicians who conducted more than 
60,000 tests last year, measuring more than 200 chemical constituents. 
Twice per year, the laboratory performs Proficiency Tests and submits 
the results to New York State Department of Health. Only after we pass 
these tests are we ``certified'' by the state. We have always 
maintained our certification. In addition, the Department of Health 
reviews our Quality Assurance/Quality Control Data as part of the New 
York State Environmental Laboratory Approval Program. Furthermore, we 
have developed testing methodologies at our laboratory that have been 
adopted by and published by the United States Environmental Protection 
Agency for use by other laboratories.
    In our 48 year history, we have never failed to meet every water 
quality standard established by federal regulation or by New York 
State, and New York's standards are among the strictest water quality 
standards in the nation. We will do all that is necessary to ensure 
that we, like the majority of public water suppliers, continue to 
supply water that is pure, safe, and constantly tested. This is an 
obligation that infuses every Water Authority action.
    Mr. Chairman, I've made mention of our laboratory, our testing, and 
the quality of the water we serve because I want to assure our 
customers, who include our neighbors, friends, and our own families 
that the water we serve is safe!
    However, there is a significant cost involved in ensuring that the 
water we serve meets our demanding standards. In addition to the 
expenses incurred in building our laboratory and the testing performed 
by our laboratory staff, there are the costs associated with treating 
water which does not meet federal and state drinking water standards in 
its raw, pre-treated, form. The Water Authority operates 479 wells 
across Suffolk County, drawing water from aquifers deep below the 
surface of Long Island. Approximately 10 percent of the wells that we 
operate have filtration systems which remove harmful contaminants from 
the raw water before it enters our system. The types of contaminants 
that we find in the unfiltered water of these wells include herbicides 
and volatile organic compounds such as degreasers, solvents, and dry 
cleaning fluids. Filtration systems are also used to purify water 
affected by the aftermath of leaking gasoline tanks or gasoline spills.
    As the largest water supplier based entirely on groundwater, we are 
keenly aware of the issues which affect groundwater resources. The 
Water Authority appears before this Committee in an effort to provide 
information to the Committee members as you wrestle with the difficult 
issue of the reformulated gasoline requirements of the Clean Air Act 
Amendments of 1990. Suffolk County is a nonattainment area for purposes 
of the Clean Air Act and its 1990 Amendments. Consequently, gasoline 
supplied in Suffolk County must meet the reformulated gasoline 
requirements of the Clean Air Act as amended. To date, many gasoline 
suppliers have met the requirements with the use of the oxygenate 
methyl tertiary butyl ether (MTBE).
    MTBE is problematic for the Water Authority because it is a highly 
aggressive and soluble compound that moves with relative ease through 
the super saturated sands of our federally designated Sole Source 
Aquifer system. Testament to our commitment to serve pure and safe 
water, the Water Authority began testing for MTBE more than 10 years 
ago, long before such testing was required. Unfortunately, MTBE has 
been detected in 105 of our wells since we began testing.
    The maximum allowable limit of MTBE in drinking water is 50 parts 
per billion under New York State drinking water standards. There is 
currently no federal standard for MTBE. Several states, including New 
York, are expected to drop their respective drinking water standards to 
10 parts per billion in the near future.
    It should be pointed out that many of our detections of MTBE at 
extremely low levels (as low as 0.5 parts per billion) were seen once 
and were not seen again. These types of low level detections can often 
be attributed to sampling anomalies and may not actually be indicative 
of the presence of MTBE. Just to put things in perspective, Mr. 
Chairman, one part per billion is equivalent to one second in the life 
of a thirty-two (32) year old individual. So when we talk about 0.5 
parts per billion, we are talking about an infinitesimal level of 
detection.
    Laboratory data from 1999 indicates that we detected MTBE in 61 of 
our 425 operational wells at levels between 0.5 and 2.5 parts per 
billion. Of these 61 wells, 30 wells had MTBE that showed consistent 
levels at 0.5 to 2.5 parts per billion. The remaining wells had 
detections only once, at extremely low levels of 0.5 parts per billion. 
In addition to these 61 wells, we did have ongoing MTBE detections at 
our Edgemere pump station at Montauk Point, at levels between 6 and 10 
parts per billion. It is suspected that the source of this 
contamination was from a nearby firehouse. Another continuous detection 
in 1999 was at a well at our Wheeler Road facility, located in the 
Hauppauge area, where readings of MTBE were between 5 and 10 parts per 
billion. The raw water at these sites is being treated with granular 
activated carbon filtration (GAC) systems.
    MTBE presents several problems for the Water Authority. As 
previously mentioned, MTBE is an aggressive compound. It breaks through 
the activated charcoal medium in our filtration systems at a rate three 
to four times greater than other contaminants. Once breakthrough 
occurs, the carbon in the vessel can no longer remove MTBE and thus 
depending on the detection level may require changing. However, it 
costs approximately $40,000 to refill a GAC vessel. The cost of 
installing a GAC vessel for a single well approaches $500,000. As an 
organization with total annual revenues in excess of $100 million and 
with net assets exceeding three quarters of a billion dollars, the 
Water Authority has the resources to continue filtering water, and, if 
necessary, to expand its filtration systems. But, as we are a not-for-
profit, public benefit corporation, any additional costs associated 
with the filtration must be borne by our customers. In those instances 
where the source of a pollutant requiring remediation can be 
identified, we will, as we have successfully done in the past, 
aggressively pursue the polluter of our water resource through 
litigation.
    A significant concern for the Water Authority is if the low level 
detections that have been discovered represent the proverbial ``tip of 
the iceberg.'' If MTBE contamination becomes more pervasive and the 
concentrations of MTBE increase, the Water Authority will be forced to 
dedicate appreciable resources to combating MTBE contamination at a 
great expense to our customers. Absent a prohibition on the use of MTBE 
in Suffolk County, the potential will always exist that MTBE will 
continue to degrade our water resources. Given the questionable 
benefits to air quality of MTBE, we believe in and have called for the 
ban of MTBE. This position recognizes that the water served to our 
customers must be pure and safe. We further believe that we are at a 
critical crossroads; while limited contamination exists, we believe you 
have the ability to be pro-active rather than reactive in dealing with 
the MTBE issue. Action now, can limit and curtail more costly future 
damage. While the reformulated gasoline goals are laudable, air quality 
and water quality should not be mutually exclusive!
    In closing, I want to thank the Chairman of the Subcommittee for 
inviting the Water Authority to provide our perspective of the MTBE 
issue.

    Mr. Greenwood. Thank you, Mr. Milazzo.
    I will recognize myself for 5 minutes of questioning and 
turn my first question to Mr. Grumet.
    In your testimony you raised the issue of uniformity fuel 
specifications. Uniformity of fuel specifications would prevent 
suppliers from having to make many different types of fuels for 
different States.
    The question is do you think that fuel consistency should 
occur at the regional or national level?
    Mr. Grumet. In this area more consistency is always a good 
thing. But at the same time we have to recognize the regional 
differences and the autonomous obligation of each State to 
protect their environment and their public health.
    The Clean Air Act has tried to balance that and I think has 
done a decent job of requiring a reasonable high hurdle for 
States to have to surpass in order to come up with the unique 
regulatory approaches. On this issue in particular, I think 
regional approaches make a lot of sense.
    As a regional organization, we are committed in the 
Northeast to ensuring, to the greatest extent possible, a 
consistent approach with fuel regulation. There is only one 
area where I could see the need for anything that was not 
uniform across the Nation, and that is with regard to 
maintaining the full air quality benefits of the program, 
because the air quality benefits of the program have been 
different in different parts of the country.
    In the northeast, we have achieved the most substantial air 
toxic reductions. And if we are going to maintain those 
reductions, we will need to bring the air toxic benefits of the 
program up in the rest of the country. That will cost some 
money. If we are not willing to do that, we may need to have 
some kind of regional bifurcation that recognizes the 
substantial air quality and toxic reductions.
    Mr. Greenwood. I know this is a question that is not easy 
to answer, but what is your sense of the size of a region? When 
we try to balance the desire for regional flexibility with 
uniformity we have to have some sense of how many pieces to 
cut.
    Mr. Grumet. It strikes me there are two or three pieces on 
two issues. You have a choice, in my mind, to either 
proactively lift the oxygen mandate across the entire Nation or 
you have the choice of requiring EPA to grant States waivers of 
the oxygen mandate. If you took the latter approach, I imagine 
we would see two regions. We would see a region of the Midwest, 
represented by my colleague to the right, who is very confident 
that the current situation works, and would probably not seek, 
I imagine, to act on that waiver. And you would see a region of 
everybody else that I expect would very quickly seek to act.
    On the area of air quality, I also see two regions, because 
the Midwest, for a host of reasons I will not get into, has not 
had as substantial toxic benefits under this program as the 
rest of the country. So you may need to carve out a different 
standard for the Midwest than for everybody else.
    Mr. Greenwood. Thank you. Let me ask Mr. Skinner a 
question.
    Your statement indicates that Chicago may be ``forced'' to 
start using MTBE as an oxygenate. Your statement also later 
explains that phase II of the RFG program will require a more 
expensive gasoline blend stock due to low volatility limits in 
phase II. Is this the only factor that you believe will force 
the use of MTBE?
    Mr. Skinner. Yes. As of right now we believe it is the only 
factor.
    And when I say Chicago is going to be forced to see more 
MTBE, forced may be the wrong word. We are being forced, the 
producers are not being forced to use MTBE. They are choosing 
to use MTBE because of the lower cost of mixing it with a 
higher blend stock, higher volatility gasoline. It is a choice 
not to go to the more expensive lower volatility route.
    Mr. Greenwood. It is economically driven phenomena?
    Mr. Skinner. Yes.
    Mr. Greenwood. Let me ask you this question. We are 
informed that the Department of Energy estimates that the cost 
impact of utilizing ethanol phase II of the RFG program is 
about 1 cent per gallon of RFG under current regulations. Do 
you believe this 1 cent per gallon differential is in fact 
substantial enough to force the introduction of MTBEs? Is that 
the order of magnitude we are talking about here?
    Mr. Skinner. Well, I think the estimates have varied. I 
have heard 1 cent, I have heard 2 to 4 cents. But, at any rate, 
when you calculate it over hundreds, millions, billions of 
gallons of gasoline, it does add up. So it is a significant 
economic factor, I think.
    Mr. Greenwood. You mentioned Illinois has found detections 
of MTBE in 26 public water supplies. Can you tell us the extent 
of this contamination and what steps the Illinois EPA or the 
water systems themselves have taken to address this 
contamination?
    Mr. Skinner. Well, the local water systems are probably not 
in the best position to do much about these sort of hits. They 
try to trace it to the source. A lot of time it is leaking 
underground storage tanks. Sometimes it is a source that cannot 
be traced, whether it is vehicles, boats, whatever.
    We are formulating currently in Illinois drinking water 
standards for MTBE. We have the regulations proposed and 
hopefully within the next few months it will make it through 
the process so that we have some mechanism for enforcing on our 
public water supply standards and taking the wells out of 
service whenever necessary. But we are bound somewhat in terms 
of an overall MTBE solution by what I would refer to as Federal 
preemption. Its role in the Federal air program limits what we 
can do unilaterally as a State.
    Now, it may come to the point where Illinois, as other 
States have, chooses to proceed and essentially risk a legal 
battle because the MTBE problem has become so serious. We have 
not quite gotten there yet.
    Mr. Greenwood. Without objection, I would like to at this 
time submit for the record a Department of Energy study of June 
14, 1999 on the impact of phase II gasoline reformulation 
requirements and the cost of using ethanol in PADD II. Without 
objection, it will be entered into the record.
    [The information referred to follows:]
    [GRAPHIC] [TIFF OMITTED]62976.015
    
    [GRAPHIC] [TIFF OMITTED]62976.016
    
    [GRAPHIC] [TIFF OMITTED]62976.017
    
    [GRAPHIC] [TIFF OMITTED]62976.018
    
    [GRAPHIC] [TIFF OMITTED]62976.019
    
    [GRAPHIC] [TIFF OMITTED]62976.020
    
    [GRAPHIC] [TIFF OMITTED]62976.021
    
    [GRAPHIC] [TIFF OMITTED]62976.022
    
    [GRAPHIC] [TIFF OMITTED]62976.023
    
    [GRAPHIC] [TIFF OMITTED]62976.024
    
    [GRAPHIC] [TIFF OMITTED]62976.025
    
    [GRAPHIC] [TIFF OMITTED]62976.026
    
    [GRAPHIC] [TIFF OMITTED]62976.027
    
    [GRAPHIC] [TIFF OMITTED]62976.028
    
    [GRAPHIC] [TIFF OMITTED]62976.029
    
    [GRAPHIC] [TIFF OMITTED]62976.030
    
    [GRAPHIC] [TIFF OMITTED]62976.031
    
    [GRAPHIC] [TIFF OMITTED]62976.032
    
    [GRAPHIC] [TIFF OMITTED]62976.033
    
    [GRAPHIC] [TIFF OMITTED]62976.034
    
    [GRAPHIC] [TIFF OMITTED]62976.035
    
    [GRAPHIC] [TIFF OMITTED]62976.036
    
    Mr. Greenwood. The Chair recognizes for 5 minutes of 
inquiry the gentleman from Texas, Mr. Green.
    Mr. Green. Thank you, Mr. Chairman.
    Mr. Milazzo, in your testimony you mention, and you 
boldface: ``Given the questionable benefits to air quality of 
MTBE we believe in and have called for the ban on MTBE.''
    ``Questionable benefits of air quality.'' Did you hear the 
last panel?
    Mr. Milazzo. Yes, I did.
    Mr. Green. None of those, the EPA, Energy, none of them 
questioned--in fact, your testimony is the first on this panel 
that I have heard say that MTBE does not help our air quality.
    Mr. Milazzo. I think when you look at it on the whole basis 
of the air quality benefits versus the impacts of groundwater, 
that is what we are talking about.
    Mr. Green. No, we are talking air quality, not groundwater. 
I will get to that on my next question.
    Why is this statement in here? Like I say, I have not heard 
that; and we have had three hearings so far on this, that MTBE 
is not beneficial to air quality. In fact, we have heard it has 
done better than they even modeled it back in the late 1980's.
    Mr. Milazzo. Well, I have a November 20, 1998, Water Week 
Publication, which is something that is given out to water 
utilities and water companies, which says, ``A study from the 
University of California at Davis concluded there is no 
significant additional air quality benefit through the use of 
oxygenates such as MTBE in a reformulated gasoline.''
    Now, that is a study from 1998.
    Mr. Green. Well, obviously, it is from a water authority; 
and I would not quote them for air quality.
    Mr. Bilbray. If the gentleman would yield.
    Mr. Green. I yield.
    Mr. Bilbray. I would like to reinforce the gentleman's 
point.
    Mr. Green. Okay. It's just that I run out of time so quick.
    Mr. Bilbray. I just want to point out that was U.C. Davis 
talking about the reformulated fuel in comparison to 
California. I think it is unfair, because you are using a 
reference to a gasoline standard that is not used in the rest 
of the country.
    So Mr. Green's point was MTBE as opposed to the other 
Federal formulas, not in comparison to the California formula.
    Mr. Green. Let me follow up. What is the parts per billion 
of MTBE in the Suffolk County Water Authority?
    Mr. Milazzo. In the water?
    Mr. Green. Yes.
    Mr. Milazzo. As I mentioned, we have some detections at .5 
parts per billion to 10, with a couple of wells having 
consistent levels in the six to 10 range. There have been 
historically some sites that were higher.
    Mr. Green. Higher than 20, for example?
    Mr. Milazzo. Yes, sir.
    Mr. Green. In the testimony we heard from the last panel, 
the majority of the detections are below levels of public 
health concern, with approximately 1 percent rising to the 
levels of 20 parts per billion, with some rare instances above 
100 parts per billion.
    Let me for the record, Mr. Chairman, say that Mr. Franks 
from New Jersey gave me some MTBE that is 600 parts per 
billion. It does not identify where it is from, so I would hope 
that we would find out if there is some water authority in New 
Jersey that has water with 600 parts per billion. Because if 
only 1 percent is above 20 parts per billion, I would be 
concerned about 600 parts per billion.
    But to continue the testimony from Mr. Greenbaum, the major 
source of groundwater contamination appears to be releases from 
underground storage tank systems. Have you found that to be 
correct?
    Mr. Milazzo. Well, again, it is never simple. What we find 
is that the higher level detections in that six to 10 range and 
higher levels are attributable to a source. There is a USGS 
study that I was just looking at, updated in 1998, which 
indicated the lower levels may be point or nonpoint sources, 
and small concentrations that are detected in groundwater, the 
source contamination may be a point source but more likely is 
nonpoint source, such as atmospheric wash-off.
    Mr. Green. You said atmospheric. Again, Mr. Chairman, I 
have sat through these and read as much as I could. Is it your 
belief that by the cars burning MTBE, that that then gets into 
the groundwater?
    Mr. Grumet, can you?
    Mr. Grumet. If I might, yes, it is.
    Mr. Green. Can you quote any studies showing that?
    Mr. Grumet. I can quote my own.
    Mr. Green. Well, I have not seen your own studies, so I am 
not prepared to ask questions on it. But I would like to see 
it, and we will submit questions on it.
    Mr. Grumet. Very quick, though, and you are making this 
point, the vast majority of detections are at very low levels. 
We believe the dominant mechanism leading to the vast majority 
of those detections is atmospheric deposition. The good news is 
it cannot get much worse than it already is.
    Mr. Green. Okay, I will send some questions to follow up, 
if you could submit that. And, Mr. Chairman, if we have that 
study, I would like to look at it.
    Is New Jersey part of the group you represent?
    Mr. Grumet. Proudly, they are.
    Mr. Greenwood. Let me quote Robert Shinn, who is 
Commissioner of the Department of Environmental Quality, that 
was published in the letter to the press of Atlantic City on 
February 24 of this year.
    After reading an article on gas additives, I wanted to give 
some facts, and this is quoting Mr. Shinn, ``A 1997 survey 
conducted by the New Jersey Department of Environmental Quality 
found traces of MTBE contamination in untreated water at 46 
noncommunity water systems and 29, only one noncommunity water 
system and one community water system in Fair Lawn exceeding 
New Jersey's 70 parts per billion.''
    So, again, to follow up, I don't know where 600 parts per 
billion came from.
    But to continue to quote him. ``the `60 Minutes' show left 
the erroneous impression that MTBE cannot be removed from 
water. In the example of the Fair Lawn Water Department, 
untreated water sampled 37 to 73 parts per billion, but treated 
water was only one part per billion. MTBE is just one facet of 
the historic problem of leaking underground storage tanks. That 
problem is being solved.''
    Again, I would look forward to any information, scientific, 
that by me burning MTBE in my truck it will get into the 
groundwater, because that has not been the testimony that I 
have heard, up until your testimony.
    Mr. Chairman, I have some other questions.
    Mr. Greenwood. The gentleman from Texas needs to know that 
we could not get the timer started, so you got an extra minute 
already.
    Mr. Green. Okay. Well, let me just say that I was intrigued 
by the different standards for different parts of the country. 
Are you suggesting we have a different standard for the East 
Coast, the Midwest, the West Coast, or the Gulf Coast?
    Mr. Grumet. I am suggesting that the status quo of the 
performance of the RFG program is that the air toxics benefits 
in the Northeast and the Gulf Coast have been greater than in 
the Midwest. Our commitment is to make sure that there is no 
deterioration of benefits as we change this program.
    Mr. Green. We agree.
    Mr. Grumet. So if you want to try to maintain the status 
quo, we need to decide whether to do it uniformly or whether to 
come up with some regional scheme.
    Mr. Green. Again, I have some concern about regional 
issues, because I would not want one city to have to comply 
with different standards that another city may not have to.
    Mr. Greenwood. Mr. Ganske for 5 minutes of inquiry.
    Mr. Ganske. Thank you, Mr. Chairman. When I was talking 
earlier in the day about MTBE showing up in Iowa's water, I 
said I thought some of it could come from emissions from cars. 
But I think also, because in the past MTBE, as used in Iowa, we 
also, I am sure, have an underground water storage problem too. 
So that is probably part of it.
    I got the sense from all three panelists that you are 
concerned about increased aromatic and olefin content in 
gasoline. So I just have one question, Mr. Chairman, in the 
interest of moving on; and I would like all three members to 
just address this question: Would you support a cap on aromatic 
content as a part of an anti-backsliding provision if we do 
some legislation in this area? Mr. Skinner.
    Mr. Skinner. I think that would have to be an important 
component. There is no question. I do not know how else you get 
around the backsliding issue.
    Mr. Ganske. Mr. Grumet.
    Mr. Grumet. I think there are multiple ways to address the 
backsliding issue. I think that is one viable option.
    Mr. Ganske. Mr. Milazzo.
    Mr. Milazzo. I think the water authority will not take a 
progression on that. We are a water purveyor, and we just want 
to make sure the water we serve is safe and meets our 
customers' requirements.
    Mr. Ganske. I appreciate that. Thank you, Mr. Chairman.
    The Greenwood. The gentleman from Iowa yields the balance 
of his time. The gentleman from California is recognized for 5 
minutes.
    Mr. Bilbray. I am sorry that the gentleman from Texas left 
because he was saying he did not want one city to have one 
standard and another city to have a different one. The fact is 
right now the Clean Air Act specifically discriminates one city 
against another with this mandate. Not all cities have this. 
And, in fact, you can have cities a few miles away from each 
other that will have a totally different fuel mixture because 
of the way the act is applied.
    Maybe we ought to talk about a national standard. Maybe we 
ought to talk about that, if this is for fuel independence, 
that we need to have a national standard. But that is not what 
we thought in the past.
    Mr. Skinner, in your testimony you state that Illinois, at 
least three separate communities, have discontinued the use of 
drinking water due to MTBE contamination. Your neighborhoods 
and also your neighboring State of Wisconsin have addressed 
this. My question is, with all the considerable public outcry 
and complaints about headaches, dizziness, nausea and 
everything else, was that due to the presence of MTBE in the 
reformulated gasoline?
    Mr. Skinner. Well, there are two separate situations. The 
one you are referring to, and the one Mr. Barrett referred to, 
was the Milwaukee implementation of RFG probably 5 years ago 
now. I not only had a professional interest in that, but my 
sister strayed to the dark side, and she is a TV reporter, or 
was a TV reporter in Milwaukee and happened to be doing this 
story at that time, so we actually talked about it at that 
point.
    USEPA will tell you it was not conclusive. The result was 
not conclusive. They claimed it was not the MTBE. At one point 
I think they probably thought it was a figment of Milwaukee's 
imagination. The fact of the matter is when the fuel was 
switched from MTBE to ethanol, the complaints ceased. They 
disappeared. So I think you could probably extrapolate a cause 
and effect there.
    Mr. Bilbray. Didn't have anything to do with their beer?
    Mr. Skinner. I still drink Milwaukee beer, so I do not 
think it did.
    Mr. Bilbray. So now is ethanol the oxygen of choice for 
this region?
    Mr. Skinner. Yes.
    Mr. Bilbray. Is it reasonable then for the subcommittee to 
assume that the people in those areas would not welcome MTBE 
back into the gasoline?
    Mr. Skinner. I think that is our belief, yes. I think there 
would be an outcry if we, and I use ``we'' loosely, tried to 
substitute MTBE for ethanol.
    Mr. Bilbray. One other question that was brought up was 
specifically about the division between and the implementation 
of the mandate. It was a reference to the Davis study. I wanted 
to clarify that. That study was not comparing the use of MTBE 
or ethanol and an unoxygenated Federal fuel. It was comparing 
it to a California reformulated standard.
    Now, there was a comment by the gentleman about content 
regulations, and I just asked our witness from the air 
districts about this. Isn't one of the biggest problems we have 
run into with the oxygenated mandate that it is one of the few 
times in the Clean Air Act where process takes precedence over 
outcome; that when we talk about content, about what goes in 
and not necessarily what comes out, it eliminates the 
flexibility?
    My background working on the air issue is--isn't this 
true--that one of the great successes we have had is with the 
Clean Air Act, which is probably one of the most outcome-based 
environmental strategies that we have ever implemented; as 
opposed to the Clean Water Act, which is obsessed with process? 
You want to articulate the flexibility of setting standards and 
allowing the local people to fulfill those standards?
    Mr. Grumet. I think the basic wisdom of the Clean Air Act 
is that it sets national requirements and, to the greatest 
extent possible, empowers local officials to design plans to 
meet those requirements. And when local officials are so 
empowered, we tend, to the greatest extent possible, to defer 
the actual specifications of things like the way a car is built 
or the way a gasoline is refined to the experts who actually 
undertake those processes.
    So I think that general notion of deference to those who 
have expertise is one that we would like to try to maintain in 
our approach to this problem.
    Mr. Bilbray. That is the frustration, is trying to mandate 
it out of here in Washington. By the time we make a law, the 
concept is 5 years old. And you can imagine what would happen 
in the private sector if they tried to compete in the open 
market with that attitude, and I think the environment has 
reflected that.
    The question really comes down to this issue of, when you 
have an outcry about a product like MTBE, and people, your 
constituents, are asking you why aren't you doing something 
about that, you have a mandate that says you have to have 2 
percent no matter what. Can you explain to me the frustration 
you have run into in trying to address the water quality issues 
at the same time you have the Federal Government placing this 
mandate on your back?
    Mr. Grumet. I can tell you that there is no experience we 
have had of late more frustrating than trying to deal with the 
public outcry over this. I would add that I think the outcry 
and, to some extent hysteria, is amplified by our impotence to 
respond. Because we are incapable of pursuing the kind of 
prudent principles that we have set before you today, that 
leads people to think government doesn't care, that government 
is callous, there are all kinds of conspiracy theories.
    So I would suggest we can both not only solve the problem 
but increase public confidence in government if we move away 
from mandates, if we do not fall into the simple trap of bans 
and we give environmental regulators the authority we need to 
manage risk.
    Mr. Bilbray. I appreciate that. A ban is easy to talk 
about; it looks good in a sound bite, but it does not get it 
done.
    Mr. Ganske. [presiding] The gentleman's time has expired.
    Mr. Bilbray. I would ask for unanimous consent on one last 
question, Mr. Chairman.
    Mr. Ganske. One additional minute.
    Mr. Bilbray. Thank you. This issue of flexibility. You 
talked about the different impacts it would have on different 
regions based on toxic emissions. One of the frustrations I 
have had sitting at this panel, after sitting where you have, 
is the lack of understanding of the unique challenges not only 
geographically but also based on seasons. A clean fuel that is 
great in the summer may not be great in the winter. Standards 
that really work in the winter may be disastrous in the summer. 
Standards that are great at sea level may be disastrous at 
places at high altitudes.
    Can you articulate about that, trying to develop those 
outcome-based strategies in implementation?
    Mr. Grumet. Sir, you are absolutely right. The natural 
state of nature is chaos. So coming up with a one-size-fits-all 
approach to that has proven different. On this particular 
issue, I think it is possible to balance the needs for that 
autonomy at the State level and the need for having consistent 
specifications at the refinery level with some basic approaches 
that bound and measure State authority to act in our own 
interests. And I would suggest to you the principles we have 
put together with environmental organizations and the oil 
companies does just that.
    Mr. Bilbray. Thank you, Mr. Chairman.
    Mr. Ganske. The gentleman from New York, Mr. Lazio, is 
recognized for 5 minutes.
    Mr. Lazio. Thank you very much, Mr. Chairman. Let me thank 
all the witnesses. I have a couple of questions for Mr. 
Milazzo, and I would like to sort of follow up on my previous 
line of questions with the previous panel.
    Having to do with trying to achieve a reasonable balance 
between air quality and water quality--and this may take some 
time--give me a sense based on the testing that has been done 
by the Water Authority--and I am happy to hear from the other 
panelists, as well--what is your assessment of whether or not 
we would have the time to develop an alternative? And I know it 
is a difficult question because how much time is that, but does 
this look like it is an immediate health issue, or is it 
something that is likely to evolve into a more serious health 
issue?
    Mr. Milazzo. I would submit it is the latter.
    What we are finding is we have detects--and I talked about 
those--and we have a few significant detects where 10 parts per 
billion, but we are treating that water with filtration 
systems.
    But we talked to our lab director yesterday, and we are 
finding that the detections are increasing and that low-level 
detects, those less than 2.5 parts per billion, are becoming 
widespread. We can address those. We can handle that. And we 
can make sure that the water we are providing is safe. But if 
those levels start to increase up and if the State reduces its 
limit to 10 parts per billion, that will be a problem for us.
    So, as the condition exists today, we can handle it; and 
the water we provide is safe. If the detections become more 
pervasive and the concentrations are higher, it will be a 
problem, and it will be something that we will address and make 
sure the water is safe, but it will be something that will add 
additional costs and expense.
    Mr. Lazio. Is there a trajectory that you can identify from 
the earliest testings that you have been testing for 10 years 
based on the earliest testings to where we are right now?
    Mr. Milazzo. I would submit that what we are seeing is just 
a general trend up in the number of detections. Lower-level 
detections are becoming more widespread, and occasionally we 
will get that one significant detection, but again that is 
attributable usually to a source.
    Mr. Lazio. Has there been any change in the detection 
methodology that would explain part of the increase in 
detection?
    Mr. Milazzo. Not that I am aware of. I think we are using 
the same methods.
    Mr. Lazio. How about the depth of the wells that are being 
tested here? Is there evidence that it actually is in the 
aquifer, or is it somewhere else in the well system do you 
think is the primary contamination?
    Mr. Milazzo. That is a good question, and it allows me to 
illustrate one thing. In my testimony, I talked about 480-odd 
wells. We have more wells than we use right now. We have 425 
operational wells for 1999. Those are wells that were in 
service and providing water to our customers. They draw from 
three aquifers.
    The first is the Upper Glacial, which is, and I am not a 
hydrogeologist, I will say on the order of hundreds of feet 
below. And then we have the Magothy, which is much deeper. And 
then underneath that is the Lloyd. That is the deepest of our 
aquifers.
    We draw most of our water from the two upper aquifers, the 
Magothy and the Upper Glacial. The well depths range from 30 
feet to, I would guess, on the order of 500 or 350 feet or 
somewhere in there. I can get you the exact figures.
    One of the characteristics or features of the MTBE is that 
it moves awfully quick through our sands and awfully fast once 
it gets into the aquifer. The USGS study indicated it moves 
almost as fast as water in the aquifer. It spreads along the 
top of the water, so if we have a well and it gets in contact 
with our well screen, we are going to pull it up.
    Mr. Lazio. I want to ask you this question, because the 
Department of Health was in the other day in my office, and 
they were talking about the fact that they thought that tank 
leakage could not account for all the MTBE that they felt was 
turning up.
    Do you have an opinion about that?
    Mr. Milazzo. I would tend to agree.
    Again, when you have a tank, you would find the higher 
levels of the detection; and what we are finding is that .5 to 
2.5 levels, again, the USGS is indicating that may be a 
nonpoint source.
    Tanks can usually point to it. You can say, look at the 
levels, it is increasing, it is high.
    Mr. Lazio. Mr. Chairman, I would make a unanimous consent 
request to put in my opening statement because I was late 
getting in here.
    The identification of the source of MTBE contamination is 
an important issue for a study, and a think the good 
partnership approach would be for us to think through how we 
can help facilitate that, especially with some of the 
localities that are on the cutting edge of testing.
    With that, I yield back. I want to thank again the panel.
    [The prepared statement of Hon. Rick Lazio follows:]
  Prepared Statement of Hon. Rick Lazio, a Representative in Congress 
                       from the State of New York
    Mr. Chairman, I thank you for holding this hearing on the 
reformulated gasoline requirement of the Clean Air Act. As you are 
aware, this is a critically important issue in my home state of New 
York and in particular, in my own Suffolk County, Long Island district. 
I thank you for allowing us to explore the complexities of this issue 
for the nation as a whole.
    Many around the country are looking to this body to resolve this 
complex issue, which pits one environmental program over another. Many 
members see an outright ban on MTBE as the only needed action. Others 
would have us do nothing. Unfortunately, for the State and local 
officials who have the awesome responsibility of managing our health-
related environmental programs, for ensuring that our citizens have 
both healthy air to breathe and water to drink, the best solution may 
be more complex. We, in this subcommittee, have the unenviable task of 
untangling the web of requirements in a manner that reaps positive 
environmental benefits for both our air and water resources. I 
appreciate your foresight in holding this hearing and for inviting 
these distinguished panels of experts to help us before we start 
solving this difficult problem.
    We, in Long Island, have seen the complexities of the reformulated 
gas issue from both the air quality and water quality perspective. As 
you are aware, my New York district is one of the non-attainment areas 
that relies upon the reformulated gasoline requirement to meet our air 
quality standards. New York State officials believe that we must make 
full use of all available tools if we are to make our air healthy for 
our people. They feel strongly that the reformulated gasoline 
requirement has played a significant role in those plans and has helped 
us with our air quality successes that we have achieved thus far.
    Long Island, however, also has seen the adverse impacts of this 
requirement. Long Island relies heavily on groundwater for its drinking 
water. Unfortunately, with its sandy soils, the island's groundwater is 
very vulnerable to contamination from spills. In a heavily suburbanized 
district as mine, tank leaks and spills associated with everyday life 
are only too common. The Suffolk County Department of Health Services 
has been analyzing for MTBE in their samples since they first detected 
it in 1991. With over 49,000 samples since then, they have built up a 
sizable database on MTBE. It has been detected in about 13% of the 
community water supply wells, generally at very low levels. It has also 
been detected in a higher percentage of private wells in the major 
towns of my district.
    Today, we will be fortunate to be hearing from individuals 
representing both the air and water management perspectives of my Long 
Island, New York constituents. New York is one of eight states 
participating in the Northeast States for Coordinated Air Use 
Management, NESCAUM. That organization has been studying the 
reformulated gas issue and has developed a set of principles that my 
state supports. I am pleased that this committee has invited the 
Executive Director of that organization to testify today.
    In that same panel, we will be hearing from a representative the 
local water authority in my district. The Suffolk County Water 
Authority is the nation's largest supplier of drinking water from 
groundwater. This group has been collecting data on MTBE in the ground 
water since the requirement first came on the books. They have been 
looking closely at the cost of removing the MTBE from the water they 
supply to my constituents. Since these costs are passed along to my 
constituents, their observations should prove useful to understanding 
the urgency I attach to this issue.
    I would also like to submit for the record, written testimony from 
the Suffolk County Department of Health Services. They have an 
extensive database on this contaminant. It would be useful if we could 
arrange for localities like this to be able to communicate with each 
other about their experiences and findings. This interchange of ideas 
and information would be very useful to our local officials who have to 
manage this very difficult issue.
    Finally, I hope to learn today from our panels that our experts in 
EPA and elsewhere are looking at the multimedia implications of future 
environmental solutions so that we do not find ourselves in a similar 
situation again. We should have foreseen the impacts on our groundwater 
of this Clean Air requirement.
                                 ______
                                 
  Prepared Statement of Clare B. Bradley, M.D., M.P.H., Commissioner, 
              Suffolk County Department of Health Services
Background
    As Commissioner of the Suffolk County, New York, Department of 
Health Services (SDHS), I am pleased to have the opportunity to outline 
our experiences and concerns with MTBE as a groundwater contaminant.
    The department is responsible for ensuring that the drinking water 
supplies of Suffolk County, which comprises the eastern two-thirds of 
Long Island, New York, are safe now and for future generations.
    For a county-level water supply enforcement agency, my department 
expends extensive resources in its commitment to water supply and 
groundwater resource monitoring. However, the importance of our 
resource deserve nothing less. The Long Island groundwater aquifer 
system is one of the most closely monitored and painstakingly 
researched in the United States. In 1978 it became one of the first 
Sole Source Aquifer Systems established pursuant to Section 1424(e) of 
the Federal Safe Drinking Water Act (SDWA). The significance of this 
designation was an assurance that federal funds could not be committed 
to any project that may contaminate the aquifer through a recharge zone 
so as to create a significant hazard to public health.
    With our guidance and technical support, municipalities on Long 
Island have joined together to create a comprehensive planning 
structure to ensure the safety of our water resources for all time. I 
am proud of our department's role in furthering this effort.
SDHS--Environmental Division
    Our Division of Environmental Quality has water supply and water 
resource protection as a major area of focus. Its Office of Water 
Resources is charged with data-gathering responsibilities and acts as 
the designated enforcement arm of the State Department of Health, which 
was granted Primacy under the SDWA.
    Another unit of the Environmental Division, the Office of Pollution 
Control acts to enforce a comprehensive battery of county sanitary code 
requirements that limit and control the storage of toxic and hazardous 
materials, some of which are still quite unique. The office has been 
charged with the enforcement of Article 12 of the Suffolk County 
Sanitary Code, which has succeeded in the removal of old gasoline 
tanks, and which began an aggressive program of tank testing and 
replacement in 1980. Under this Article 6,724 gasoline tanks have been 
removed and 2,133 tanks installed in conformance with these 
regulations. This regulation, which I believe was the first of its kind 
in the nation, requires the replacement of steel tanks with double-wall 
fiberglass tanks. Article 12 anticipated the federal EPA underground 
storage tank requirements that became effective at the end of last 
year.
    The Office of Wastewater Management is responsible for the 
enforcement of regulations which control sanitary sewage disposal 
practices, limiting density or requiring sewers in deep recharge areas 
of the county, in conformance with the recommendations of the 1978 Long 
Island Wastewater Management Plan, prepared under the auspices of 
Section 208 of the Federal Water Pollution Control Act of 1972.
    Our Environmental Division has also acted as project managers for a 
series of groundwater planning activities, including the aforementioned 
208 Study and the Suffolk County Comprehensive Groundwater Resources 
Management Plan in 1987. Very shortly we expect to begin the Long 
Island component of the New York State Source Water Assessment Program 
(SWAP), mandated by congress under the 1998 SDWA amendments. The Long 
Island SWAP, one of the most ambitious in the country, will examine the 
areas contributing to the sources of public drinking water and assess 
the potential for drinking water supply contamination. The Division 
also has an important role in coordination of efforts of the County 
Pine Barrens Commission to preserve critical portions of the county 
deep recharge areas by acquisition and innovative development rights 
transfers, as well as providing technical assistance in other watershed 
management and acquisition activities.
    Finally, the Division's water resource protection structure is 
supported by our Public and Environmental Health Laboratory (PEHL), 
which provides the Division with analytical services. The PEHL has 
allowed my department to investigate and uncover many water supply 
contamination problems years before they were recognized to be 
nationally significant issues. Our MTBE findings are one such example.
MTBE
    In Suffolk County, MTBE is a groundwater contaminant of significant 
concern at this point, primarily due to the frequency of its detection 
in public water supply well sources and groundwater test wells. The 
ability of MTBE to contaminate water supplies was evident since its 
detection in 1991, when our laboratory extended its analytical 
capabilities to include it in our volatile organic chemical analyses. 
Since that time over 49,000 samples have been analyzed by our PEHL. 
Using our authority under the County Sanitary Code in 1994, we required 
that large community water suppliers (CWS) incorporate MTBE into their 
self-monitoring of wells. Nationally, monitoring under the Unregulated 
Contaminant Monitoring Rule update will not be required by EPA until 
the 2001-2003 monitoring cycle.
    I wish to also point out that our larger suppliers often 
voluntarily go well beyond our minimum monitoring frequency 
requirements, and the evaluation of MTBE occurrence is no exception. 
Most notably the Suffolk County Water Authority (SCWA), the largest 
supplier in the county and the largest (by population) groundwater 
source--CWS in the United States, voluntarily samples some of their 
wells as often as weekly during their operation. This not only 
illustrates the depth of the commitment of our water suppliers to the 
safety of the product they provide, but underscores the point that 
routine comprehensive monitoring of Suffolk's over 530 community wells 
costs several million dollars each year. Each new contaminant 
incrementally increases this cost, which ultimately is borne by the 
water supply customer.
    I can say with some confidence that our total base of data on MTBE 
is extensive. However, our findings are not unique. MTBE detections 
were reported elsewhere, predating Federal EPA policy decisions that 
led to its use in Reformulated Gasoline. For example, the USGS National 
Water Quality Assessment Program reported detectable MTBE in 27% of 
shallow urban wells in 1993-1994 sampling.
    As you probably have heard from other participants in these 
proceedings, MTBE chemistry makes it a significant groundwater 
contaminant. The high vapor pressure of MTBE allows it to volatilize 
rapidly from liquid gasoline into the air; its high solubility allows 
the vapor to be removed from an equilibrium condition by dissolving 
into rainwater, moving it into the water cycle. In groundwater it is a 
very mobile contaminant, approaching conservative groundwater tracers 
in mobility and non-biodegradability.
    Our experience in the early 1990's was that MTBE was encountered at 
a relatively lower frequency and usually in conjunction with other 
gasoline fractions--benzene, xylend, toluene, and ethyibenzene. 
Beginning in 1979 its use as an octane enhancer replacing lead meant 
initially that it was present in gasoline in relatively lower 
concentrations (2-7%). Those rare occurrences in which MTBE was found, 
without the presence of BTEX compounds, were thought to reflect the 
inefficient removal of MTBE in some earlier gasoline spill site 
cleanups.
    By 1992 MTBE emerged as the clear choice as an oxygenate in many 
parts of the country. In more recent years, detection patterns have 
changed significantly, almost certainly due to MTBE's usage in much 
higher percentages in RFG (typically 11-15%). Frequency of detection in 
both private and public wells subsequently increased, but rarely in co-
occurrence with BTEX. The frequency of MTBE detection in Suffolk's 
community wells has held at the 10 to 13%. On the order of 80% of these 
detections are in the .5-2.0 ppb range. A review of SCWA data generated 
last year indicated only 4 CWS wells had levels between 5 and 10 ppb. 
Even so, frequency of detection should be recognized as being different 
from frequency of exposure. That is primarily because a fair percentage 
of these wells (on the order of 40% of the SCWA wells with MTBE) 
already provide granular activated carbon treatment for other volatile 
organic chemical contaminants. This observation is something that will 
bear further consideration during the previously mentioned 
comprehensive investigation of the SWAP.
    MTBE is now almost always the basis for any nominations that we 
make to the NYSDEC Spill Program and MTBE detection is the most common 
non-pesticide contaminant driving our private well surveys.
    I enclose with a copy of my testimony a table indicating MTBE 
detection in private wells in Suffolk. Although about 90% of Suffolk's 
population (approximately 1.3 million people) are served by one of 43 
community water systems, the balance of our residents (approximately 
200,000 people) are served by one-site relatively shallow private 
wells. We estimate on the basis of the 1990 census that there are 
approximately 60,000 private wells serving year round and seasonal 
homes. Although concentrated primarily in eastern Suffolk, there are 
private wells in each of the ten towns in Suffolk. In a review of 1997-
1999 data, MTBE detection in tested private wells ranged from 0.5- to 
approximately 1300 ppb. Frequency of MTBE detection in private wells 
for the period was 7.5% (325 of 4,312 records).
    Because of the presence of a ``generic'' MCL for individual 
Unspecified Organics in the New York State Sanitary Code since 1989, we 
have from the time of the first MTBE detection enforced a 5-ppb 
standard. New York is developing a new regulation in no small part in 
response to the frequency of MTBE detection, public concerns, and some 
health effects studies nearing completion. Based on the recent State 
Department of Health request for information for a Regulatory Impact 
Statement currently under development, we believe that the likely new 
state MCL will be 10 ppb. This would be in line with MTBE standards in 
some other states.
    The short-term impact of a lower state standard to currently 
operating community wells (based largely on review of recent data) is 
low. However, the short-term impact to non-community public supplies 
and private well is expected to be more significant.
    In the absence of an MTBE ban, we assume the frequency of low level 
detection in all groundwater sources will increase, and that the 
economic burden of treating water supplies or seeking alternative 
sources will continue to increase over time.
    While the state and federal review process will concentrate on 
health effects, MTBE's ability to degrade the aesthetic character of 
water should be given serious consideration. MTBE is often described as 
having a turpentine-like taste and smell, even at very low 
concentrations. Some reports indicate that consumers can detect it in 
drinking water at concentrations as low as 2.5 parts per billion (ppb). 
With such a low taste and odor threshold, it is possible that consumers 
would notice MTBE contamination at much lower levels than are likely to 
cause health effects. Accordingly, the California Department of Health 
Services has finalized a secondary standard at 5 ppb, based on taste 
and odor, and a primary drinking water standard of 13 ppb was under 
reviews at last report. This concern of public water suppliers is 
completely legitimate in my view. Aesthetic characteristics have 
historically been criteria for rejection of water sources in the water 
supply industry. From the perspective of the water supplies, they have 
not brought on this problem and should not be left to deal with it 
alone.
    Environmental health professionals are awaiting the evaluation of 
health effect studies regarding MTBE. There is relatively little 
further information that my office can bring to you on this issue. 
However, from the standpoint of exposure to MTBE, the most significant 
contact with MTBE for the average resident of Suffolk is not drinking 
water, but breathing air. This exposure should be better documented in 
the light of overall health concerns. I have concluded that the 
anticipated increase frequency of MTBE detections warrant action to 
remove it from gasoline formulations.
    However, my department must continue to determine the extent of 
problems that have already occurred, understand the mechanisms under 
which contamination can occur, and pursue remediation of the problems 
that exist. Other MTBE contamination mechanisms besides direct fuel 
storage leaks should be reviewed: gas transfer operations, 
volatilization from storage or incompletely combusted gasoline exhaust 
return in precipitation and recharged, and homeowner misuse. I am 
hopeful that the national importance of these steps will be recognized 
and that federal assistance in this effort would be extended to us.
    Finally, I wish to continue to offer whatever technical assistance 
our department can provide to you as this national dialogue continues.

                                          MTBE Private Well Detections
                                             Suffolk County--1997-99
----------------------------------------------------------------------------------------------------------------
                            Town                              Samples   Detects    % detect    Lowest    Highest
----------------------------------------------------------------------------------------------------------------
Babylon....................................................        21         8        38          0.5        34
Brookhaven.................................................       907        65         7          0.5       140
East Hampton...............................................       544        24         4          0.5       790
Huntington.................................................        71         3         4          1         360
Islip......................................................        24         7        29          0.6         3
Riverhead..................................................       289        13         4          0.5         9
Shelter Island.............................................        47         3         6          0.5         2
Smithtown..................................................       516        31         6          0.5      1300
Southampton................................................       676        56         8          0.5       430
Southold...................................................      1217       115         9          0.5       750
County.....................................................      4312       325         7.50       ppb       ppb
----------------------------------------------------------------------------------------------------------------
Source: SCDHS Bureau of Drinking Water.


    Mr. Bilirakis. [presiding] Without objection, the opening 
statement of the gentleman from New York will be entered into 
the record. And without objection, if the gentleman, Mr. 
Milazzo, would supply the staff with a copy of his report, we 
would like to have

that entered into the record, as well. If the staff would pick 
that up from Mr. Milazzo, that would be useful.
    [The information referred to follows:]
    [GRAPHIC] [TIFF OMITTED]62976.037
    
    [GRAPHIC] [TIFF OMITTED]62976.038
    
    [GRAPHIC] [TIFF OMITTED]62976.039
    
    [GRAPHIC] [TIFF OMITTED]62976.040
    
    [GRAPHIC] [TIFF OMITTED]62976.041
    
    [GRAPHIC] [TIFF OMITTED]62976.042
    
    Mr. Bilirakis. Mr. Shimkus, do you wish to inquire?
    Mr. Shimkus. Yes, I do.
    Mr. Bilirakis. The gentleman is recognized for 5 minutes.
    Mr. Shimkus. A simple question first. The RFG program, has 
it proven to clean the air? And let's go from Director Skinner 
on down.
    Mr. Skinner. Yes.
    Mr. Grumet. I will say more than one word. It has been one 
of the most effective air quality programs that were adopted in 
the 1990 amendments.
    Mr. Shimkus. Thank you.
    Mr. Milazzo. From what I am hearing today, I will concur.
    Mr. Shimkus. It would be safe to say yes.
    Second question: Is there any recorded instance of ethanol 
contributing to pollution of groundwater?
    Mr. Skinner. No.
    Mr. Grumet. Yes. I mean, we want our groundwater to be 
absolutely pure. It never will be.
    Mr. Shimkus. Do you have a specific case?
    Mr. Grumet. Certainly. We are aware that ethanol, like any 
gasoline, is spilled into groundwater.
    Mr. Shimkus. Do you have a specific location? I mean, 
Director Skinner has how many locations of groundwater 
contamination in Illinois?
    Mr. Skinner. Twenty-six MTBE hits, anyway.
    Mr. Shimkus. How many contributed to ethanol? I am 
directing my question to Director Skinner now.
    Mr. Skinner. None to ethanol.
    Mr. Shimkus. Director Skinner, the head of the EPA from 
Illinois, can answer that question. So my question to you is, 
name the location of the site that has groundwater pollution on 
ethanol.
    Mr. Grumet. Sir, I do not have that off the top of my head, 
but I would be happy to provide you with the sites of ethanol 
occurring in groundwater. It has occurred in the course of 
human history. I am agreeing with you.
    Mr. Shimkus. We will expect a response to this committee 
based upon your answer.
    Mr. Milazzo, based upon your experience, did you notice 
any?
    Mr. Milazzo. I do not think the Water Authority has. And it 
is my understanding there is not that much ethanol being used 
in Long Island in the gasoline. I can find out for sure.
    Mr. Shimkus. Director Skinner, would you characterize the 
ethanol program in Chicago a success?
    Mr. Skinner. Yes.
    Mr. Shimkus. Has there been any incidence of water 
contamination in Chicago from RFG?
    Mr. Skinner. No, not to my knowledge.
    Mr. Shimkus. Can you give us a perspective of the 
groundwater debate, since Illinois is a predominantly ethanol 
oxygen State? The issue I want to address here is we have got 
two environmental issues, groundwater contamination, that is 
MTBE, and air quality, which is a positive oxygenate program 
with an ethanol mix. Can you tell us how, in Illinois, from 
your experience as the director of the EPA, proportionally how 
we fare.
    Mr. Skinner. Well, I think that Mr. Grumet is making a 
point that, if fully elaborated on, I would not disagree with, 
which is, if there is a gasoline spill of gasoline containing 
ethanol, then there would be ethanol showing up in the results.
    The difference between MTBE and ethanol, though, is that 
MTBE is much more soluble, it is much more pervasive, and it 
lasts much longer in the water supply. Therefore, it is much 
harder to clean.
    So you will always have gasoline spills, but it is much 
worse if you have a gasoline spill with MTBE.
    Mr. Shimkus. You meant to say gasoline with MTBE.
    Mr. Skinner. If you have a gasoline spill with MTBE in it, 
it is much worse than a gasoline spill with ethanol in it 
because it lasts much longer and it is much more expensive to 
resolve.
    The answer to your immediate question is, no, in the 
Chicago RFG area, while there have been gasoline spills I am 
sure, we have not had a particular problem with remediation 
because it contains ethanol rather than MTBE.
    Mr. Shimkus. Let me go back to Mr. Grumet. I do not want to 
really get into an argument.
    What about the question of remediation versus gasoline with 
an ethanol additive?
    Mr. Grumet. I would like to thank Director Skinner and say 
I entirely agree with the thrust of your question. In 
groundwater, hands down, ethanol is the winner. In air quality 
it is not so clear; and, in fact, in air quality we think there 
are liabilities.
    Mr. Shimkus. I am not trying to debate the benefits of MTBE 
and ethanol and air quality.
    The reality is they both create significant benefits for 
air quality. MTBE is disadvantageous to the groundwater supply 
if spilled.
    Mr. Grumet. If you are trying to raise the comprehensive 
question, which is obviously all of our goal is to protect both 
air quality and groundwater simultaneously, ethanol has actual 
liabilities in the summertime use because of volatility. So 
ethanol can actually, while it has other benefits, create 
liabilities to air quality.
    Mr. Shimkus. I would request that you stick around for the 
next panel because I think that Dr. Graboski can answer some of 
those questions, being a qualified scientist in that area.
    Let me just ask the final question, and it is kind of the 
same question I asked at the end of the last panel. And it was 
asked by Dr. Ganske, the backsliding issue.
    Are you concerned about the aromatics being the new 
inclusive ingredient to raise the standards, which, in essence, 
would create a dirtier environment for air?
    Mr. Grumet. Absolutely. That is probably one of our most 
significant concerns. If we do not enhance the toxic standards 
in RFG and do nothing with the oxygen mandate, we expect that 
that will happen, that highly toxic aromatics, because they are 
the most economical and available source, will come into the 
fuel supply.
    There are two approaches we suggest you use to address 
that. You can cap aromatics, which would be very effective but 
not very flexible, or you can enhance the toxic standard to 
make certain that it is not possible to use any compound that 
would make gasoline more toxic. Either approach I think is 
viable.
    Mr. Skinner. We think that the solution exists out there. I 
do not know whether that approach is feasible or not. It is not 
something that I have particularly looked at. I may be able to 
get you an answer from our staff on that.
    But the fact of the matter is we think ethanol is a perfect 
substitute. The question becomes, if you are not going to allow 
the aromatics in there, you are not going to require oxygenates 
in there, what is it that is going to be placed into the 
gasoline? And I do not think we know the answer to that 
question.
    Mr. Shimkus. Thank you, Mr. Chairman. I yield back my time.
    Mr. Bilirakis. I thank each of the panelists for your very 
excellent contribution to our hearing today. You are excused.
    We call, at long last, the fourth panel, beginning with Mr. 
Robert H. Campbell, chairman and chief executive officer of 
Sunoco, Inc.; Dr. Michael S. Graboski, director of CIFER 
Institute, Department of Chemical Engineering, Colorado School 
of Mines; Mr. A. Blakeman Early, environmental consultant, 
American Lung Association; Mr. Dale O. Young, director, 
Oxygenated Fuels Business, Lyondell Chemical; Mr. Eric Vaughn, 
president and chief executive officer of Renewable Fuels 
Association; and Mr. Barry Grossman, founder of Oxybusters.
    Gentleman, we welcome all of you. We apologize for keeping 
you waiting for 3\1/2\ hours for your opportunity to testify, 
and we are glad that you all were able to stay with us.
    We turn first to Mr. Campbell for your 5 minutes of 
statement, please.

 STATEMENTS OF ROBERT H. CAMPBELL, CHAIRMAN AND CHIEF EXECUTIVE 
  OFFICER, SUNOCO, INC.; MICHAEL S. GRABOSKI, DIRECTOR, CIFER 
INSTITUTE, DEPARTMENT OF CHEMICAL ENGINEERING, COLORADO SCHOOL 
   OF MINES, ALDERSON HALL; A. BLAKEMAN EARLY, ENVIRONMENTAL 
CONSULTANT, AMERICAN LUNG ASSOCIATION; DALE O. YOUNG, DIRECTOR, 
  OXYGENATED FUELS BUSINESS, LYONDELL CHEMICAL; ERIC VAUGHN, 
    PRESIDENT AND CHIEF EXECUTIVE OFFICER, RENEWABLE FUELS 
      ASSOCIATION; AND BARRY GROSSMAN, FOUNDER, OXYBUSTERS

    Mr. Campbell. Mr. Chairman, I, first of all, want to thank 
the committee for inviting me to be with you today.
    Rather than read my prepared statements, which I think you 
already have on file, what I would like to do is take the time 
available to me to address three points.
    The first point: What is the best path out of the current 
dilemma? My answer to that question is to reiterate my support 
of the recommendations of the blue ribbon panel.
    David Greenbaum and Bob Perciasepe did a great job, in my 
opinion, in crafting a reasonable approach from very diverse 
interests.
    As you know, the recommendations increase public awareness 
of handling gasoline; eliminate the 2-percent mandate; preserve 
the existing air toxic improvements; phase down and cap MTBE 
use, but do it in a timeframe that assures adequate fuel 
supply.
    I also believe that the bill filed last year by Congressman 
Greenwood captures very well the key elements that the panel 
raised. And that bill also supports the principals being 
promoted by NESCAUM, various environmental groups, and the 
petroleum refining industry. It is certainly my hope that this 
committee will be able to support Congressman Greenwood's bill.
    My second point: when you are addressing the gasoline 
composition issue, also keep in mind the need to reduce the 
instance of leaking underground storage tanks, the main 
remaining source, I believe.
    As we know, there has been an EPA program begun in 1988 to 
upgrade, replace, or close the approximately 2 million 
underground fuel storage tanks. The vast majority of petroleum 
companies, including my own, completed the program ahead of 
schedule at a cost of billions of dollars.
    Today, the 2 million tanks have been reduced to 
approximately 825,000. Unfortunately, EPA estimates that 
between 80,000 and 150,000 tanks have not been upgraded, 
removed, or replaced even though the deadline has passed.
    Simple logic demands that noncompliant tanks be replaced in 
an expedited manner, beginning with tanks in the RFG areas 
where MTBEs are most prevalent.
    I know some of those tanks and the businesses that own them 
are small. But I will tell you, from extensive personal 
experience, that the size of the tank is of little consequence 
when a leak occurs. A small leak over a long period of time 
from even a very small tank in continuous service can adversely 
impact a large area of real estate.
    Frankly, I personally believe that anyone that cannot 
afford to upgrade the tanks and put in place an inventory 
control and monitoring program should not be in the business.
    My third and final point: I believe that most people agree 
that MTBE in gasoline needs to be drastically reduced. The 
critical question is, how do you go about doing it 
constructively?
    Let me reiterate that I believe that we can produce low-
oxygen-content gasoline or even oxygen-free gasoline and still 
achieve or exceed the air toxics emissions standards in 
existence. But if the transition is not done constructively, I 
believe that it will have very serious supply and/or gasoline 
price issues.
    It took us 10 years to get to our current condition, and it 
cannot be corrected overnight. But I believe that if the 
mandate is removed and refiners are given flexibility that they 
have been asking for, the competitive free-market system will 
drive down MTBE out of gasoline faster than most people now 
consider likely.
    I believe that most refiners will ultimately want to 
advertise that, ``our gasoline is MTBE free.'' There is nothing 
to be gained by saying, ``our gasoline has less MTBE this area 
than it did last year.''
    Currently, with the mandate in place, most manufacturers of 
RFG are required, as a practical matter, to continue blending 
MTBE into the gasoline. We have no practical alternative. But 
with the mandate gone, I believe that most refiners will want 
to expedite its removal, if for no other reason but to minimize 
liability.
    But please make no mistake about it, replacing 250,000 
barrels a day of MTBE with anything, anything, is going to take 
time and investment on the part of the industry. This is not a 
trivial issue.
    My greatest concern is that the result of all this national 
debate will be to leave the mandate in place and simply ban 
MTBE, which is effective, of course, a mandate for ethanol in 
RFG gasoline. I personally believe that to eliminate one 
mandate that has turned out to be problematic and replace it 
with another or try to legislate some complex, phased-down 
schedule will simply result in a situation that will need to be 
corrected again in the future.
    What I am, basically, asking you to do is tell us the goal 
you want achieved, tell us the environmental standard you 
believe is necessary, and let this very competitive industry 
that I am involved in achieve it in the most cost-effective 
manner. I truly believe we have proven our ability do that over 
the years in the past.
    Once again, Mr. Chairman, I thank you for the opportunity 
to speak to you today.
    [The prepared statement of Robert H. Campbell follows:]
 Prepared Statement of Robert H. Campbell, Chairman and CEO of SUNOCO, 
                                  Inc.
    Good morning Mr. Chairman and members of the committee. My name is 
Bob Campbell and I am chairman and ceo of SUNOCO Inc.--a company that 
is one of the largest refiners and marketers of gasoline on the east 
coast of the U.S.
    As you may know, last year I served on the EPA's blue ribbon panel 
on oxygenates and gasoline, I testified before the U.S. Senate 
Environment and Public Works Subcommittee on clean air, and I have had 
several opportunities to speak publicly on what steps I felt needed to 
be taken to address the growing public concern about the use of MTBE in 
gasoline. At every opportunity, I have strongly endorsed the 
recommendations of the EPA panel, and I urge you today to take whatever 
steps are necessary to implement those recommendations.
    The continued use of MTBE in gasoline is a technically and 
politically complex issue with much at stake. The EPA panel formed to 
address the problem had representatives from all of the major 
constituencies involved, and after much discussion and debate, that 
panel published a set of recommendations that addresses both the long 
and short term steps required to solve the problem.
    It is probably safe to say that no one on that diverse panel was 
100% satisfied with the finished product. But the vast majority of the 
members felt that a workable solution had been derived and were in 
support of the recommendations. The fact that we could reach any 
semblance of agreement on such a complex and contentious issue is a 
tribute to Dr. Dan Greenbaum of the health effects institute who 
chaired the blue ribbon panel and guided our deliberations.
    One of the most critical elements in the series of panel 
recommendations involves the repeal of the 2% oxygen mandate imposed by 
Congress in 1990 for reformulated gasoline. As long as that mandate is 
in place, most of the refining industry is required as a practical 
matter to continue blending MTBE into gasoline and distribute it in 
many of the large populated areas of this country.
    Today (10 years after the mandate was first imposed) the 
combination of new fuel formulation and evolving automotive technology 
enables us in the refining industry to produce cleaner burning fuels 
without oxygenates at the mandated level. In fact we believe in the 
north eastern United States we can commit to producing gasoline which 
will achieve an even greater level of toxics reduction than is 
currently mandated by EPA for the year 2000 RFG.
    As I said, I realize that there are powerful forces that want the 
mandate retained, but the key to no longer adding to the existing 
environmental problem is to give our industry the flexibility to meet 
the performance standards we originally asked for 10 years ago. The EPA 
panel published their recommendations on July 27, 1999. Since that 
point in time, our industry has blended 2.5 billion gallons of MTBE to 
produce almost 25 billion gallons of oxygenated gasoline. Every day the 
mandate remains in place and the problem goes unaddressed, we blend 
another 11.5 million gallons of MTBE to produce 115 million gallons of 
oxygenated gasoline. It is small wonder that the general population is 
upset, and the individual states are starting to take unilateral 
action. We need your help to address this issue on a coordinated, 
national basis.
    I believe the bill filed last fall by Congressman Jim Greenwood 
captures very well the elements of the blue ribbon panel's 
recommendations:

 Eliminate the 2% oxygen mandate
 Preserve existing air toxics improvements
 Phase down and cap MTBE use
 But do it in a time frame that assures adequate fuel supply 
        (an immediate ban will absolutely have gasoline supply 
        implications)
    Let me add that Mr. Greenwood's bill also addresses most of the 
legislative principles being promoted by NESCAUM, environmental groups 
and the refining industry. It is certainly my hope that this committee 
will be able to support Congressman Greenwood's bill.
    But the use of MTBE in gasoline is only a part of the problem. The 
second, and in my opinion equally serious issue is the continued 
existence of leaking underground storage tanks. In 1988 EPA announced a 
10-year program to upgrade, replace, or close the approximately 2 
million underground fuel storage tanks. To not comply with this program 
meant the imposition of very serious penalties, and the vast majority 
of petroleum companies (including my own) completed the program ahead 
of schedule. Today the 2 million tanks have been reduced to 825,000 
regulated tanks. Unfortunately epa estimates that of those 825,000 
regulated tanks there are between 80,000 and 150,000 tanks that have 
not been upgraded, removed or replaced even though the deadline has 
passed. It's a pretty safe bet that many of those tanks are adding to 
this growing national groundwater problem. Most of the non-compliant 
tanks are owned by state or federal governments, small independent 
service stations, farmers and other small businesses. Simple logic 
demands that non-compliant tanks be replaced in an expedited manner 
beginning with the gasoline tanks in rfg areas where MTBE is most 
prevalent.
    I realize that many of these tanks and businesses are small. But I 
will tell you from extensive personal experience that the size of the 
tank is of little consequence when a leak occurs. A very small leak 
over a long period of time from a tank in continuous service can 
adversely impact a large area of real estate.
    Ladies and gentlemen it is my firm belief that today we have a 
growing national problem, that is an unintended consequence of people 
trying to do the right thing 10 years ago. I urge you to support the 
legislation being proposed by congressman greenwood and in addition 
address the problem of non-compliant and exempt underground storage 
tanks.
    Thank you for the opportunity to testify.

    Mr. Bilirakis. Thank you, Mr. Campbell, for your testimony.
    We turn now to Dr. Graboski for his testimony.

                STATEMENT OF MICHAEL S. GRABOSKI

    Mr. Graboski. Mr. Chairman, I am Mike Graboski from the 
Colorado School of Mines. I have provided some detailed written 
material in my statement for today; and so, as Mr. Campbell has 
done, what I would like to do is just try to briefly summarize 
what I have to say and leave you to study the details.
    We have heard a great deal of discussion about the value of 
oxygenates in gasoline and the ability to make gasoline that is 
non-oxygenated. My interest in talking to you today is that, in 
any legislative change you might make to the RFG program, that 
we preserve the public health benefits that the current program 
provides.
    In my mind, protecting public health means that we cannot 
have any backsliding in terms of future emissions from RFG 
compared to those today.
    Now, RFG currently is certified in terms of certain mass-
base standard. We add up all the toxics, we add up all the 
VOCs, and we say, are these emissions comparable or better than 
the required standards? But when we talk about anti-
backsliding, we need to consider some other issues; and these 
issues are, will the new fuel produce the same amount of ozone 
when the emissions are admitted to the atmosphere or more or 
less? And anti-backsliding would mean the same or less.
    How about potency-weighted toxics? Potency means the 
tendency of these things to cause cancer after long-term 
exposure. All of these materials are not the same. Benzene is 
far worse as a toxic than, for example, acid aldehyde or 
formaldehyde; but in the Clean Air Act, for gasoline purposes, 
they are counted the same.
    How about carbon monoxide? Carbon monoxide is a pollutant 
that is named as a criteria pollutant. And finally, how about 
the emissions of fine particulate matter from vehicles? We are 
learning more and more that today, in terms of studies, that as 
you get oxygenates into gasoline, particulate matter goes down 
and that, as you add things like aromatics into gasoline, 
particulate matter goes up.
    So my interest is trying to make sure that when you do what 
you have to do, you create a situation that is environmentally 
neutral compared to today, however that standard is crafted, 
and not rely on the performance standards of the Clean Air Act, 
but rely on a combination of the general requirements of the 
Clean Air Act and the performance standards.
    The general requirements talk about using oxygenation, 
permissible benzene levels, taking lead and metals out of 
gasoline; and the performance standards talk about hydrocarbons 
and toxics and NOX.
    When I read the Clean Air Act, I read these things together 
and I say, the Clean Air Act is providing performance standards 
and de facto performance standards. The de facto performance 
standards are the things that these general requirements give 
me.
    Even if the Congress did not know what oxygenates were 
going to do, we found from science since 1990 that there are 
quantifiable benefits from oxygenates. Now that we have them, 
let's make sure that if we recraft the Clean Air Act section 
that has to do with reformulated gasoline, we make sure that we 
get the benefits of these general requirements built into the 
regulation, into the law. And that is really what we are 
talking about in terms of anti-backsliding.
    When one puts oxygenates in gasoline--and I am not here to 
talk about ethanol or MTBE separately, I am talking about 
oxygenates, I am not a water person--the things that we find 
are that, in general, there are fewer aromatics in gasoline; we 
get a lower potency-weighted toxics emissions and, thus, a 
lower long-term cancer risk; we reduce emissions of carbon 
dioxide; we reduce ozone at least due to carbon monoxide and 
partly due to fuel reformulation; and we get less fine 
particulate in-exhaust emissions.
    People have talked today a little bit about aromatics. 
There is a lot of experience in the past in terms of aromatics. 
At the time we phased down lead, the first thing that happened 
in gasoline is the aromatic content went up and the national 
average content reached about 34 percent. Since we have put 
oxygenates in, the national average aromatic contents fall into 
about 26 percent. This tradeoff, which is almost volume for 
volume, is logical because the octane contents of these things 
are very, very similar. The refiners are trying to produce a 
gasoline that meets an octane specification. If he takes 
something out with high octane, he has to put something else 
in.
    Aromatics scare me, for a couple of reasons. First of all, 
they are highly toxic and, like benzene, they are known to be 
human carcinogens. Increasing aromatics themselves in fuels 
increases benzene in the exhaust. That is known.
    The EPA complex model also suggests that increasing the 
hydrocarbon portion of the fuel, taking oxygenates out, will 
increase things called polynuclear aromatic hydrocarbons, which 
are very, very carcinogenic relative even to benzene. And there 
is a lot of research around now that shows that adding 
oxygenates in will reduce PNAs, putting aromatics in fuels will 
increase PNAs. So this is a danger, I believe.
    Mr. Bilirakis. Mr. Graboski, if you could summarize.
    Mr. Graboski. Absolutely.
    Refiners are going to replace oxygenates with aromatics and 
whether they do that that is going to make a more toxic 
gasoline.
    I could talk about some of these other issues, but one I 
would just summarize on is particulate matter. I would like to 
point out that 80 percent of the Clean Air Act benefits 
attributable since the beginning of the Clean Air Act are due 
to reductions in particulates.
    I think that changing a rule that would increase aromatics 
and decrease oxygenates will increase particulate matter, and 
that would be negative as far as public health is concerned.
    If the panel is interested in the future, I would be very, 
very glad to work with the panel and others here in order to 
provide more in detail scientific input into these issues. And 
so, with that, I will pass.
    [The prepared statement of Michael S. Graboski follows:]
Prepared Statement of Michael S. Graboski, Director, Colorado Institute 
 for Fuels and High Altitude Engine Research, Colorado School of Mines 
           on Behalf of the National Corn Growers Association
    Mr. Chairman, my name is Michael Graboski, I am Director of the 
Colorado Institute for Fuels and High Altitude Engine Research and a 
Professor of Chemical Engineering in the Department of Chemical 
Engineering and Petroleum Refining at the Colorado School of Mines. I 
am testifying here today on behalf of the National Corn Growers 
Association as an expert in the effects of adding oxygenates to 
gasoline. I have submitted a technical paper to the Committee that 
documents the arguments I have been making on the efficacy of the 
oxygen standard in the federal reformulated gasoline (RFG) program. I 
will summarize my arguments for you and the Members of the 
Subcommittee, but ask that the full text of my paper be included in the 
hearing record.
    Mr. Chairman, you have heard a great deal of discussion about the 
value of oxygenates in gasoline from many points of view. I have 
analyzed this problem by looking at actual fuels that are being sold 
today using the certification tools that refiners and regulators use. 
That is, I have looked at fuels that are being sold as certified RFG or 
conventional gasoline, and I am using EPA's complex model to determine 
the effects of changes in fuel oxygen content on fuel quality and 
emissions.
The Benefits of Oxygen in Fuel
    The Clean Air Act sets forth both general requirements and 
performance standards for RFG. Theses are provided in section 211(k)(2) 
and section 211(k)(3) respectively. The general requirements include 
provisions for limiting nitrogen oxide emissions from vehicles using 
RFG, require the use of oxygenate, specify permissible benzene content, 
and they prohibit heavy metal additives in RFG. The performance 
standards require specified minimum mass-based reductions of 
hydrocarbon (VOC) and air toxic emissions. This means that refiners 
must make specific reductions in the tons of VOC and toxic emissions 
without regard to their ozone-forming potential or cancer potency.
    Both 211(k)(2) and 211 (k)(3) define fuel performance standards. 
There are air quality and public health benefits that are implicit in 
the general requirements in addition to those that are explicit in the 
performance requirements. Specifically with respect to the oxygen 
requirement, the implicit environmental performance is related to the 
benefits accruing directly from the use of oxygenates and those that 
result from the effect oxygenates have on the composition of gasoline. 
In quantifying the full environmental benefits of the RFG program, the 
effects of both the general requirements and performance standards of 
Section 211(k) of the Clean Air Act must be considered.
    The following long-term environmental and public health benefits 
result from the use of oxygenates, both ethanol and MTBE, in RFG when 
compared with gasoline that meets the mass-based RFG performance 
standards but is produced without oxygenates:

 Fewer aromatics in gasoline
 Lower Potency weighted toxic emissions and thus lower long 
        term cancer risk
 Reduced emissions of carbon monoxide
 Reduced ozone due to carbon monoxide
 Fewer fine particles in exhaust emissions
    I would like to use the remainder of my presentation to discuss 
some of these benefits.
The Impact of Oxygenates on the Refining Processes:
    Oxygenates add octane to gasoline, something essential for the 
smooth operation of spark-ignition engines. Aromatics also provide 
octane in gasoline, though not as much per unit as oxygenates. When 
refiners put oxygenates into gasoline they reduce the aromatic content 
of the fuel so that they produce a fuel with the proper octane 
specification. Therefore, oxygenates are good substitutes for 
aromatics. The tradeoff between aromatics and oxygenates is well 
documented in historical gasoline surveys.
    In my paper, I discuss the sources of aromatics within the refinery 
and how refiners may wish to use these sources. However, there are two 
important things to note from this discussion. First, aromatic 
compounds are highly toxic and many like benzene are known human 
carcinogens. The toxic potency of aromatics and their combustion 
byproducts are, in many cases, orders of magnitude greater than the 
potency of oxygenates or their combustion byproducts. Second, refiners 
will replace oxygenates with aromatics if they can and this will result 
in more toxic gasoline on a potency-weighted basis. All toxics are not 
created equal, but the mass-based standard of the Clean Air Act treats 
them as equal. Mr. Chairman, let me be clear, the oxygen requirement in 
RFG has a real and substantial benefit because clean-burning oxygenates 
are substitutes for highly toxic aromatics.
Reducing Carbon Monoxide Emissions
    Most ambient CO is generated by mobile sources. Carbon monoxide is 
a criteria pollutant. EPA is currently reviewing the CO standard to 
determine its adequacy to protect public health. CO also is an 
important summer ozone precursor. Recently the National Research 
Council \1\ has suggested that CO emissions be treated as an important 
factor in assessing the impact of fuel formulation on ozone. CO 
reductions are another implicit benefit of oxygenates in RFG because 
they are not accounted for in the calculations used to certify RFG.
---------------------------------------------------------------------------
    \1\ NRC, ``Ozone Forming potential of reformulated Gasoline'', 
National Academy Press, Wash DC, 1999.
---------------------------------------------------------------------------
    The National Research Council \2\ also reported that oxygenates 
could be responsible for a 10% reduction in ambient CO a Clean Air Act 
criteria pollutant. In addition, CO emissions are highly correlated 
with other products of combustion, particularly VOC (hydrocarbon) 
emissions and fine particulate matter (PM2.5). Including 
oxygen in gasoline reduces both summer and winter CO emissions. The 
reduction in CO is 15% or more for 3.5% oxygen. Increasing aromatics in 
gasoline to offset loss of octane from oxygenates may increase CO 
emissions and eliminate the direct and indirect benefits of these 
reductions.
---------------------------------------------------------------------------
    \2\ NRC, ``Toxicological and Performance Aspects of Oxygenated 
Motor Vehicle Fuels,'' 1996.
---------------------------------------------------------------------------
    Carbon monoxide affects ozone formation during the summer. I have 
used the EPA Complex Model to calculate potential ozone effects that 
could occur if oxygenates were removed from gasoline and replaced with 
aromatics. Based on my analysis, the potential to form ozone is higher 
for non-oxygenated fuels. Considering CO effects only, the ozone 
reduction benefit of using a 3.5% oxygen provided by an ethanol blend 
with 26%aromatics compared to a non-oxygenated fuel with 34% aromatics 
is nearly 5%. This represents about 50% of the incremental benefits of 
phase 2 RFG compared to phase 1 RFG.
Particulate Matter Emissions:
    Particulate matter, especially fine particles (PM2.5) is 
emitted directly in automotive exhaust. In addition, other exhaust 
products react in the atmosphere to produce secondary particulate. More 
than 80% of the cumulative Clean Air Act benefits have been found to be 
associated with the reduction of fine particulate. Oxygenates are known 
to reduce primary particulate emissions. Because there are explicit 
regulations in RFG that control emissions that contribute to the 
formation of secondary particulate, adding oxygenates to gasoline has 
little or no demonstrated effect on secondary particulate. Thus, 
removing oxygenates will increase primary PM. there is a risk that 
overall PM will increase with a reduction in the use of oxygenates in 
gasoline.
Summary
    Based on the available data, it is my conclusion that the benefits 
of using oxygenates in gasoline are clear. The oxygen requirement has 
provided implicit benefits in the RFG program that are not currently 
accounted for in the RFG certification process. Aromatics in gasoline 
are reduced leading to significant reductions in the toxic potency of 
emissions. Carbon monoxide emissions that contribute to ozone formation 
are reduced significantly. Particulate matter emissions are reduced. 
Eliminating the RFG oxygen requirement will lead to greater use of 
aromatics in gasoline reducing public health and welfare.
    I recognize that today's concern with MTBE is posing serious policy 
questions for the Committee. In my opinion, the benefits of adding 
oxygenates to gasoline are clear. I would be willing to work with you 
and Members of the Committee on any technical matters as you wrestle 
with the policy implications of addressing the groundwater pollution 
problem associated with MTBE. What is most important in my view is that 
we continue to achieve the objectives of the Clean Air Act.

    Mr. Bilirakis. Thank you very much for that offer. We 
appreciate that.
    Mr. Early.

                 STATEMENT OF A. BLAKEMAN EARLY

    Mr. Early. Good afternoon, Mr. Chairman. My name is 
Blakeman Early. I am here on behalf of the American Lung 
Association and am very happy to be here. And I, too, will try 
not to take up too much of the committee's time and summarize 
my testimony.
    I am here principally for one reason, and it is to 
emphasize to you how important it is for this committee to join 
with a very disparate group of organizations in support of the 
Blue Ribbon Panel principles for legislation.
    You have already heard Mr. Campbell talk about it, but I 
ask you, when was the last time you had an opportunity to adopt 
legislation and incorporated principles supported by State air 
regulators, the Natural Resources Defense Council, the American 
Lung Association, and the American Petroleum Institute? This 
does not happen very often.
    We believe that the Blue Ribbon Panel recommendations are a 
moderate, very practical way to solve some very significant 
problems in terms of threats to our groundwater while 
maintaining actual air quality benefits in reformulated 
gasoline.
    We believe those principles are very important. I want to 
emphasize that repealing the 2-percent oxygen requirement we 
think is a very important element of those principles. It 
allows us to drastically reduce MTBE in reformulated gasoline. 
It allows refiners to actually produce a gasoline that is 
cleaner than the gasoline being produced today, which is one of 
the things that the California Air Resources Board is mandating 
and trying to get done in California, and the 2-percent oxygen 
mandate they believe is preventing them from doing that.
    Keeping the 2-percent mandate and banning MTBE we think 
from an air quality perspective--and we urge the committee to 
look at this question from an air quality perspective--is not 
the best way to maintain and enhance the air quality benefits 
from reformulated gasoline.
    Refiners should be allowed to use as much or as little 
ethanol as they may want to use, but keeping the 2-percent 
mandate and banning MTBE is essentially an ethanol mandate; and 
we do not believe that that is in the best interest of air 
quality.
    We believe also that Congress must phase down and cap MTBE 
in all gasoline and also provide the authority to regulate MTBE 
out of existence in all gasoline, not just reformulated 
gasoline.
    And we do support the call Mr. Campbell has just made for 
adequate lead time to the refiners to make changes, taking MTBE 
down, and finding a way to continue to provide air quality 
benefits in reformulated gasoline.
    At the back of my testimony are a couple of examples of new 
technologies that are already being offered for sale to 
refiners to allow them to convert their MTBE facilities to 
produce alcoholates. Alcoholates are one of the substitutes for 
MTBE that the Blue Ribbon Panel heard testimony and evidence on 
that hold a lot of promise, although, I have to say, 
alcoholates, like many other components of gasoline, have not 
been well tested in terms of their total public health impacts. 
And one of the important elements of the Blue Ribbon Panel's 
recommendations is to get this testing and research on all 
different components of gasoline, the substitutes for 
oxygenates and oxygenates themselves, get this underway so that 
we do not make the same mistake again.
    One of the major benefits of removing the oxygen mandate, 
in our opinion, is it allows California to once again show the 
clean air road map for the future. California's reformulated 
gasoline is already cleaner than Federal reformulated gasoline. 
California, of course, has a very serious air pollution 
problem; and they are seeking to make it even cleaner by 
producing another generation of reformulated gasoline that is 
even cleaner than the generation they are using today. The 
evidence that they have presented convinces us that the oxygen 
mandate gets in the way of them doing that.
    With respect to the waiver that was discussed earlier 
today, one of the things that we want to emphasize is that, 
both by State law and by the Clean Air Act, California has an 
obligation of meeting the national air quality standards as 
expeditiously as practicable. If they cannot produce as clean a 
gasoline as they require, that gets in the way of meeting that 
requirement. So we believe that the waiver should be granted. 
But, really, the simple solution is to waive the oxygen 
mandate.
    I think that pretty much concludes my major remarks. We see 
a way of fixing these problems in reformulated gasoline while 
being able to deliver on the air quality benefits, and we urge 
this committee to take the principles as that way and move 
forward as soon as you can.
    Thank you.
    [The prepared statement of A. Blakeman Early follows:]
  Prepared Statement of A. Blakeman Early, Environmental Consultant, 
                       American Lung Association
    Mr. Chairman and members of the Sub-committee. Thank you for the 
opportunity to discuss with you the federal reformulated gasoline (RFG) 
program. You have already received testimony from other witnesses 
substantiating the significant air quality benefits being provided by 
this program. I will not review those issues but observe that these 
benefits have too often been ignored by the media as they focus on 
almost exclusively on water contamination issues. The American Lung 
Association has long supported the RFG program as one of the most 
effective programs implemented to date that were adopted in the Clean 
Air Act Amendments of 1990. We do, however, share the concern of all 
Americans that the nation's water quality be protected. It is important 
to realize that few of the other air pollution reduction efforts 
emanating from the 1990 Amendments have contributed more to the 
emissions reduction than the RFG program.
    The RFG and the oxy-fuels program have been plagued with 
controversy about effectiveness, cost, and the growing problem of MTBE 
contamination of surface and ground water. The American Lung 
Association believes it is time to modernize the RFG program, and make 
necessary changes. These changes must be made based on what is needed 
to maintain and enhance the air quality benefits of the RFG program 
while reducing the environmental and health threats posed by 
constituents of gasoline leaking into surface and groundwater. A 
secondary goal should be to reduce the level of controversy surrounding 
this program so that it can contribute more to the protection of public 
health. We believe the recommendations of the Blue Ribbon Panel 
represent the best way of achieving those goals. The American Lung 
Association was a member of the Blue Ribbon Panel and we support all of 
the Panel recommendations, not just those relating to the Clean Air 
Act. Many of these measures focus on protecting groundwater from 
leaking gasoline and increasing protections for public and private 
drinking water sources. Another important component focuses on 
conducting additional research on the health and environmental impacts 
of constituents of gasoline, including oxygenates and chemical 
compounds that might be substituted for oxygenates. The testimony of 
Dr. Greenbaum, Chairman of the Blue Ribbon Panel, provides an excellent 
explanation of the recommendations and how they were arrived at. We 
urge Congress to take appropriate action in support of the other 
recommendations of the Blue Ribbon Panel. Let me turn to changes the 
American Lung Association believes are needed to the Clean Air Act that 
are based on what is necessary to preserve and enhance actual air 
quality benefits achieved by the RFG program.
    The American Lung Association and the Natural Resources Defense 
Council have endorsed the legislative principles presented by Mr. 
Grumet on the previous panel. These principles have also been endorsed 
by Mr. Campbell and the American Petroleum Institute. These disparate 
interests have come together around these principles for legislative 
change after extensive examination of the problem and identifying 
achievable changes that will improve the RFG program. These 
recommendations make sense. It is rare that members of this committee 
get an opportunity to embrace a legislative proposal supported by many 
members of the oil industry, health and environmental organizations, 
and a group that represents the bulk of state air regulators who 
actually implement the RFG program. We urge you to embrace them, as 
well.
    Congress must increase the minimum reduction in air toxics required 
for RFG to reflect the actual reductions achieved by RFG fuels in 1998 
and 1999. A major weakness in the current law is that faced with a 
regulatory or congressional mandate to reduce or eliminate MTBE, 
refiners are likely to produce a fuel that will produce more air toxics 
emissions than the fuel produced today. Using EPA's updated complex 
model, I understand refiners are achieving a 26-27 percent reduction in 
air toxics when Phase 2 of the law only requires a 22 percent reduction 
from the 1990 baseline gasoline. Given the growing body of evidence 
demonstrating mobile source emissions to be a major contributor to air 
toxics exposure, Congress must act to make sure we do not slip 
backwards in the effort to reduce air toxic emissions from cars and 
trucks through the use of cleaner fuels. It is important that I 
reiterate that the API shares our support of this principal.
    Congress must repeal the two percent oxygen mandate for RFG in the 
Clean Air Act. It is clear that the oxygen mandate is driving the 
extensive use of MTBE and that this use represents a growing and 
unacceptable threat to water resources, particularly those relied on 
for drinking water. We have learned much more about making cleaner 
gasoline than we knew when the RFG program was enacted in 1990. While 
adding oxygen can help refiners meet air pollution reduction goals, it 
is by no means the only way, or even among the most important ways, to 
achieve such results.
    Some people are advocating the banning of MTBE in RFG to protect 
water while maintaining the oxygen mandate. The American Lung 
Association does not believe that this approach would provide the best 
assurance that the RFG program would maintain air quality benefits. 
Such an approach would lock refiners into using between 5.7% and 10% 
ethanol in all RFG across the nation. We believe refiners can best 
maintain or enhance air quality benefits by being allowed to use as 
much or as little ethanol as they choose. This flexibility will best 
enable them to transition to new RFG formulas that are not dependent on 
MTBE and meet air quality goals with a minimum disruption to supply and 
price. The American Lung Association finds no compelling air quality 
related basis that would justify the daunting effort needed to produce, 
transport, store, and splash blend between 7.8 and 13 million gallons 
per day of ethanol in the nation's entire national RFG 
supply.1 This represents an increase of between 55 percent 
and 160 percent of the national ethanol production, assuming every drop 
was devoted to use in RFG. Indeed, as discussed below, the California 
Air Resources Board has provided evidence that requiring ethanol in RFG 
actually impedes the ability of refiners to produce a new generation of 
cleaner fuel that would increase emissions reductions and air quality 
benefits.
---------------------------------------------------------------------------
    \1\  See Report of the Blue Ribbon Panel on Oxygenates in Gasoline, 
September, 1999, p. 69.
---------------------------------------------------------------------------
    The American Lung Association supports phasing down and capping 
MTBE in all gasoline, not just RFG. We also support Congress providing 
clear authority to enable EPA and the States to further regulate or 
eliminate MTBE in gasoline if necessary to protect public health or the 
environment. Evidence provided to the Blue Ribbon Panel convinced us 
that at a minimum, a dramatic reduction in MTBE use, back to pre-RFG 
levels, is needed as a first step to protect water resources from 
further MTBE contamination. We would support elimination of MTBE in 
fuel if further research demonstrates the need. Allowing use of MTBE 
for octane in the short term in smaller quantities appears to be 
prudent step as refiners transition to new RFG formulas.
    Finally, as I have already discussed, the American Lung Association 
support the concept of providing adequate lead time to the petroleum 
industry to make the necessary changes consistent with the other 
changes we recommend. We fear that precipitous change could lead to 
supply disruptions or price spikes in various RFG program areas. This 
may lead to more air pollution and it also would continue to embroil 
the RFG program in continuing controversy which erodes public support 
for an overall meritorious air quality program. The question of how 
long the industry needs for a smooth transition needs some examination. 
We note that two companies have already announced the introduction of 
new technologies that can be used to modify MTBE production facilities 
to produce alkylates at relatively low cost. The Blue Ribbon Panel 
identified alkylates, which are already an existing component of 
gasoline, as a potential substitute for MTBE. Alkylates are low in 
volatility and are not soluble in groundwater like MTBE. But alkylates 
are just as poisonous as many other components of gasoline. The 
American Lung Association cautions that Congress must take the Blue 
Ribbon Panel recommendation for significant new research on MTBE 
substitutes seriously so that we can avoid creating new unanticipated 
health or environmental problems as the refining industry transitions 
to MTBE-free RFG formulas. I have appended two press articles regarding 
the conversion technologies for modifying MTBE facilities.
    In conclusion, we know that RFG can be made that maintains the air 
quality benefits of currently produced fuels, while dramatically 
reducing the potential threat to water resources. It is being produced 
today in California. As you know, California has lead the nation in 
requiring cleaner fuels for many years. Both oxygen-free and MTBE-free 
fuels are being produced in California today that meet or exceed the 
current air quality goals of the federal RFG program. But the governor 
of California has asked for a waiver of the federal oxygen requirement 
so that he can require refiners to produce fuels that achieve even more 
reduction of air pollution than today's fuels. CARB asserts that a 
CalRFG3 without mandatory oxygen provided by ethanol can achieve 
greater reductions of Nox and air toxics, and VOCs than a fuel meeting 
2 percent oxygen using ethanol. CARB tested a fuel composed of CalRFG 
with 10 percent ethanol and waiving the volatility limit that would 
normally apply in a dozen automobiles. It found Nox increased 10-
12percent, total hydrocarbon increased 10 to 15 percent and total 
toxics increased by 9 percent.2 Of course this fuel could 
never be sold in California. Refiners would be required to adjust their 
refining process to compensate for these increases which they can and 
are doing in some cases. The point is that if all refiners were 
required to make these adjustments because they have to use ethanol in 
their RFG, they can not be additionally be required to actually improve 
the fuel and make it even cleaner. There is little doubt that in 
California, to the extent CARB can obtain additional reductions from an 
even cleaner fuel, they clearly need to do so in order to achieve the 
national ambient air quality standards. This is why CARB in December 
1999 in fact adopted tighter fuel parameters referred to as CalRFG3.
---------------------------------------------------------------------------
    \2\ See Proposed Determination Pursuant to Health and Safety Code 
Section 43830(g)of the Ozone Forming Potential of Elevated RVPGasoline 
Containing 10 Percent Ethanol
---------------------------------------------------------------------------
    The American Lung Association believes that the experts at CARB 
know more about producing clean fuels than any other governmental 
entity, bar none. If Congress to removes the oxygen mandate and adopts 
the other principals I have discussed, cleaner fuels can be produced in 
California helping to clean the air and also providing a model we can 
look to for future improvements in the Federal RFG program.

    Mr. Bilirakis. Thank you, Mr. Early.
    I recognize Mr. Young for your testimony, sir.

                   STATEMENT OF DALE O. YOUNG

    Mr. Young. I would first like to say, if anyone has a 
problem with my last name, my first name is Dale.
    I work for Lyondell Chemical Company as the business 
director for Oxygenated Fuels. Lyondell Chemical Company is 
based in Houston, Texas. We represent the largest manufacturer 
of MTBE. We have assets totaling $17 billion. We operate in 
nine States and 14 countries. We have a total employee 
population of approximately 11,000 individuals.
    We at Lyondell are proud of our contribution that we have 
been able to make toward improving air quality in the United 
States, and that associates directly with our manufacture of 
MTBE.
    We are also proud of the fact that MTBE extends the 
gasoline pool itself. And, of course, the issue of improving 
air quality and reducing the U.S. dependence on imported oil 
are two key principles associated with the development of the 
RFG program.
    I am going to limit my discussion today two key points. 
Those areas involve environmental benefits associated with 
oxygenates and directly with MTBE, as well as talking about the 
gasoline pool, which we have heard a lot about today and the 
impact of any ban or caps on MTBE related to the oxygenate 
pool.
    With regard to MTBE and oxygenates, let me point out three, 
to me, key areas where oxygenates provide substantial benefits 
from the air quality standpoint. The first we have heard a lot 
about today is that it displaces aromatics in the gasoline 
pool. And, of course, aromatics, again as we have heard, when 
you burn aromatics, result in higher toxic formations, as well 
as particulate matter, in comparison to oxygenates in general.
    MTBE and oxygenates also improve the vaporization of 
gasoline. The reason that is important is, when you start your 
car, your catalytic converter is not heated up so it is not 
destroying any of the VOCs or toxics that are admitted from the 
combustion process. In approximately a 3- to 5-minute period of 
time, any production is actually just coming right out of the 
tailpipe because that catalytic converter is not started up.
    Because of increasing the vaporization, you are able to 
increase the combustion of the gasoline and, therefore, 
minimize the amount of toxics, as well as VOCs, that are 
generated during that cold startup time.
    One area that has been talked a lot about is that we ensure 
that there is no backsliding from an air quality standpoint. We 
have talked a lot about automobiles and burning gasoline in 
automobiles; but one area, as an example, that oxygenates 
provide a particularly valuable role is in items such as off-
road vehicles. An example of an off-road vehicle would be a 
lawn mower where you have no catalytic converter.
    To give you an example of the impact of those off-road 
vehicles, on a national basis, approximately 25 percent of the 
pollutants resulting from combustion in sources comes from 
those particular sources. So it is key to address that issue as 
it comes to backsliding. Clearly, MTBE and oxygenates reduce 
VOC, reduce CO, reduce toxic production in those particular 
vehicles.
    Regarding the gasoline pool in general, we have heard a lot 
today about MTBE blending in the United States alone. 
Approximately 300,000 barrels a day of MTBE is blended into 
gasoline. That represents just shy of 4 percent of the gasoline 
pool. But, again, the other thing we have heard is that the 
octane component of MTBE is very high. And, as a result, you 
can view that MTBE represents probably closer to 5 percent of 
the octane pool.
    In the end, if you ban MTBE, if you phase it out in a 
precipitous way, it is going to have a direct impact on the 
price of gasoline. And at today's $32 barrel crude, I do not 
think anybody looks forward to higher gasoline prices.
    The last thing I would like to talk about just very briefly 
relates to the water contamination associated with MTBE. We 
have obviously clearly heard today that the primarily source 
for what I will call actionable levels associated with MTBE 
relates to leaking underground storage tanks. It is a point-
source location.
    We think the best approach toward resolving this issue is 
to ensure that there are no underground leaking storage tanks. 
You first ensure that they do not. But when they do, you 
monitor them so that if a leak occurs, you catch it quickly and 
you are allowed to clean it up.
    So, again, we support certainly no air quality backsliding. 
We think you have to take a hard look associated with the 
impacts on the price of gasoline associated with MTBE. And 
certainly you need to improve and fix underground leaks in 
storage tanks.
    Thank you.
    [The prepared statement of Dale O. Young follows:]
    Prepared Statement of Dale O. Young, Director, Oxygenated Fuels 
                Business, Lyondell Chemical Corporation
    Mr. Chairman and members of the Subcommittee, I appreciate very 
much the opportunity to appear before you today on the important topic 
of the national implementation of the reformulated gasoline program. My 
name is Dale Young, and I am director of the MTBE business unit at 
Lyondell Chemical Company. Lyondell is based in Houston, Texas, and is 
an MTBE producer. In total, the Lyondell enterprise consists of 
businesses with more than $17 billion in assets, operations in 9 states 
and 15 countries, with approximately 11,000 employees worldwide. 
Products made from Lyondell materials fill the supermarket shelves and 
go into automobiles, housing, clothing and other necessities that 
improve the quality of people's lives by making these products safer, 
healthier and more convenient.
    I am proud to say that Lyondell has an enviable record for 
occupational safety and community relations throughout the United 
States and abroad. Facilities owned or operated by Lyondell subscribe 
to the Responsible Care principles of the Chemical Manufacturers 
Association and have received awards for environmental excellence and 
leadership by state regulators in Texas and Louisiana.
    I am testifying this morning on behalf of Lyondell and the 
Oxygenated Fuels Association (OFA), of which Lyondell is a member. OFA 
is an international trade association of manufacturers of fuel 
oxygenates.
The Environmental Benefits of MTBE
    To begin with, it is important to review the accomplishments of the 
RFG program, and the role that MTBE has played in those 
accomplishments. As you know, RFG is required to be sold in the ten 
large urban areas of the United States with the worst ozone (smog) 
problems. In addition, all or parts of 17 states with ozone problems 
have ``opted in'' to the RFG program. As a result, about one third of 
the gasoline consumed in the United States is RFG.
    The Clean Air Act requires that all RFG must contain 2 percent, by 
weight, of oxygenates. There are effectively only two oxygenates being 
used in the RFG gasoline pool today: MTBE and ethanol. MTBE is a 
product that is made by combining methanol and isobutylene. It is 
manufactured both by refineries and by chemical companies. For a 
variety of environmental, commercial, and performance-related reasons, 
MTBE has become the oxygenate-of-choice for making RFG. MTBE is used in 
80-85 percent of RFG produced today, while ethanol is used in the 
remaining 15-20 percent of RFG produced.
    As you know, the Congressionally-mandated RFG program consists of 
two phases: Phase I covers the period from 1995 through 1999. Phase II 
started at the beginning of this year. The following chart summarizes 
the minimum air quality improvements mandated for each phase of the RFG 
program:

----------------------------------------------------------------------------------------------------------------
                                                                 VOCs       NOx       Toxics  Benzene    Oxygen
----------------------------------------------------------------------------------------------------------------
RFG Phase I (1995-99)........................................      15%  no increase      17%       1%    2.0 wt%
RFG Phase II (2000)..........................................      27%         6.8%      22%       1%    2.0 wt%
----------------------------------------------------------------------------------------------------------------

    EPA has compiled data showing that Phase I RFG has surpassed the 
requirements of the Clean Air Act. An analysis of the Phase I RFG 
produced by refiners shows that the fuel reduces ozone-forming 
compounds, such as VOCs, by over 28 percent--that's 44 percent above 
the 15 percent requirement of the law. Emissions of air toxics 
pollutants are reduced by approximately 30 percent--that's almost twice 
as much as required by law. Even emissions of oxides of nitrogen (NOx) 
are reduced by 2-3 percent with Phase I RFG, even though the law does 
not require any specific reduction in NOx emissions in Phase I RFG.
    Ambient air monitoring confirms that the RFG program is working. 
Testing shows that benzene levels have declined by 31 percent between 
1994 and 1997; levels of ethyl benzene, another toxic component of 
gasoline, have declined 52 percent during the same period. RFG areas 
also showed significant decreases in other vehicle-related VOC 
concentrations. EPA has testified that the emissions reductions 
mandated for Phase I RFG--which have been met and exceeded--and the 
emissions reductions of Phase II RFG--which are already nearly met--are 
equivalent to taking more than 16 million vehicles off the road.
    As a key component of RFG, MTBE contributes to the environmental 
benefits of RFG in several ways. First, by adding MTBE to gasoline, 
refiners dilute or displace gasoline components such as aromatics 
(benzene, toluene and xylene) which contribute to the formation of 
ozone. These compounds are hazardous air pollutants, themselves. EPA 
has acknowledged that if oxygenates were not used to produce RFG, 
levels of aromatics or olefins may have to be increased to provide the 
necessary octane. Second, by adding MTBE to RFG, refiners improve the 
combustion of the gasoline, resulting in fewer emissions of smog-
forming pollutants, such as VOCs, NOx, particulate matter, and carbon 
monoxide. Third, by adding MTBE, refiners reduce the overall vapor 
pressure of gasoline-the rate at which it evaporates--thus reducing 
evaporative emissions of VOCs.
    These environmental benefits are not likely to be duplicated by 
formulations of clean fuels without MTBE. Consider that changes 
suggested by refiners will only likely be successful when used in 
conjunction with a catalytic converter. However, virtually no off-road 
engines have such converters, meaning that the loss of oxygenates would 
result in fuels doing nothing for between 25 and 30 percent of the 
emissions inventory. No matter how you slice it, an ill-considered move 
to take oxygenates out of fuel will result in environmental backsliding 
from current levels of achievement.
Impact on Water Quality
    While MTBE quietly labored as the workhorse of the Clean Air Act, 
few in the public took notice until MTBE was detected in certain 
drinking water supplies, principally in California. Lyondell shares the 
concerns of most Americans for clean water, having made substantial 
investments itself in waste minimization and pollution prevention that 
protects our water resources. In fact, the Oxygenated Fuels Association 
joined with the Western States Petroleum Association (WSPA), and the 
Association of California Water Agencies (ACWA) in October 1997 to form 
the California MTBE Research Partnership. The purpose of the 
partnership is to develop a statewide research program concerned with 
MTBE treatment technology and source-protection issues. The mission of 
the partnership is to identify, plan, and sponsor practical research 
projects to protect, treat or remove MTBE contamination from drinking 
water supplies. The partnership has begun to identify the best means 
and technologies for removing MTBE from drinking water supplies, and 
from preventing such contamination in the first place.
    The source of the MTBE contamination of drinking water supplies in 
California, and in most other cases of MTBE found in drinking water 
supplies, is leaking underground gasoline storage tanks. For example, 
the South Lake Tahoe area is served by seven local gas stations. 
According to testimony given during the California public hearings, all 
of these stations were leaking gasoline into the ground water; not 
surprisingly, this gasoline eventually found its way into the water 
supply for South Lake Tahoe, California. Violations of existing 
regulations included evidence of disabled dispenser sensors, poor 
installation, disabled leak detection, and inadequate documentation of 
annual inspections.
    As the Subcommittee is aware, in March 1999, California Governor 
Gray Davis issued an executive order calling for an end to the use of 
MTBE in reformulated gasoline. It is important to note that Governor 
Davis's executive order identifies leaking underground storage tanks as 
the source of the problem:
        [W]hile MTBE has provided California with clean air benefits, 
        because of leaking underground fuel storage tanks MTBE poses an 
        environmental threat to groundwater and drinking water . . . 
        [emphasis added]
    In fact, there are more than 750,000 active underground fuel 
storage tanks, and another 1.3 million tanks which have been closed. In 
California alone, there are nearly 50,000 active underground petroleum 
storage tanks. In 1984, Congress recognized the threat posed by leaking 
underground storage tanks and amended the Resource Conservation and 
Recovery Act (RCRA) to require owners of these tanks to comply with new 
design and monitoring standards, or close the tanks permanently. EPA 
gave the owners of such tanks ten years, until December 1998, to meet 
the requirements of the new law. The most recent data, from September 
1999, shows that approximately 91 percent of the active underground 
storage tanks in California have approved leak detection systems, and 
87 percent of active underground storage tanks have met the California 
upgrade requirements. This is a marked improvement from December 1998, 
when the compliance rate was just 60 percent, according to the 
Petroleum Equipment Institute. Thus, California, like other states, is 
moving toward full and complete compliance with the new underground 
storage tank requirements.
    Of course, what these statistics do not tell us is whether the leak 
detection systems on new and upgraded tanks are being maintained. 
Unfortunately, although leak detection requirements were to be in place 
by 1993, we understand that the compliance rate is only at about 50 
percent. The California Bureau of State Audits said in 1998 that more 
than 25 percent of the surveyed leaking underground storage tanks sites 
that contaminated groundwater resulted from tanks that were not 
permitted and otherwise not monitored for leaks. The bottom line: We 
must have proper leak detection of new and upgraded underground storage 
tanks.
    In testimony before the Senate Appropriations Committee last year, 
Senator Diane Feinstein noted that MTBE is ``the oxygenate of choice . 
. . in areas that need clean-burning gasoline to meet or maintain clean 
air standards. The major way MTBE gets into groundwater is from 
defective underground tanks storing petroleum products.'' As a result, 
Senator Feinstein introduced S.267, a bill to direct the EPA 
Administrator to give highest priority to petroleum contaminants in 
drinking water in issuing corrective action orders under the tank 
program. We believe that this, or similar initiatives, reflects a 
common-sense and direct approach to solving the problem. And better 
yet--an approach which neither endangers air quality or energy price 
and supply.
    There is evidence to indicate that detections of MTBE in drinking 
water supplies have decreased as underground petroleum storage tanks 
have been upgraded to comply with the new requirements. The State of 
California has had a program for monitoring MTBE in drinking water 
supplies since the mid-1990s. According to information made available 
by the California Department of Health Services, 56 percent of sources 
of drinking water in California have been tested for MTBE. MTBE has 
been detected in less than one percent (0.8 percent) of the sources 
tested. (54 detects in 6,684 sources). In May 1997, only 16 percent of 
drinking water sources were tested, and MTBE was detected in 1.3 
percent of those tests (24 detects of 1868 sources). This represents an 
approximately 54 percent decline in the rate of MTBE detections from 
May 1997 through February 2000.
    It is important to have some context in evaluating the frequencies, 
and levels, of MTBE detections in drinking water supplies. There is 
currently no enforceable Federal standard for MTBE in drinking water, 
although EPA has recently required public water systems to monitor for 
MTBE in their drinking water supplies and report that information to 
EPA. (This information is expected to be available in the next several 
months, and EPA could use that information to decide whether a Federal 
standard for MTBE in drinking water is warranted.)
    In December 1997, EPA issued what it called an ``advisory'' on MTBE 
levels in drinking water. EPA's Advisory provided as follows:
        This Advisory recommends that keeping levels of [MTBE] 
        contamination in the range of 20 to 40 ug/l [micrograms per 
        liter] or below to protect consumer acceptance of the water 
        resource would also provide a large margin of exposure (safety) 
        from toxic effects.
Thus, while the basis of the recommendation was to protect the 
``acceptance'' of the drinking water, the Advisory acknowledged that 
the recommended level provided ``a large margin'' of safety from 
exposure to potential toxic effects.
    The State of Maine has done extensive testing for MTBE in drinking 
water supplies. In a report issued in October 1998, it reported that 
MTBE had been detected in about 15.8 percent of private wells tested, 
and in 16 percent of public water supplies tested. In private wells 
tested, 92.3 percent of the detections were less than 1 part per 
billion. Only 1.1 percent of detections were greater than 35 parts per 
billion. In public water supplies, 93.9 percent of detections were 
below 1 part per billion. None of the detections were greater than 35 
ppb.
    Recently reported data from Massachusetts shows similar results. Of 
662 wells tested, MTBE was detected in 45 (6.8 percent). However, there 
were only 3 detections above 10 ppb, and no detections above 15 ppb. In 
short, gasoline is stored and consumed in every state. And while some 
detections of gasoline components have in the past been made in 
drinking water supplies, the levels at which such detections are found 
are well below levels of public health concern. In addition, the 
presence of a well-implemented and enforced tank program appears to 
reduce the instances of releases of gasoline product into the 
environment.
    In New Jersey, Robert C. Shinn, Commissioner of the Department of 
Environmental Quality, responded to a news report concerning MTBE 
contamination with the following letter to the editor of The Press of 
Atlantic City on February 24, 2000:
          After reading your recent article on the gas additive MTBE, I 
        want to bring a few facts to the discussion.
          A 1997 survey, conducted by the New Jersey Department of 
        Environmental Protection, found traces of MTBE contamination in 
        the untreated water at 46 non-community water systems, such as 
        diners or office complexes supplied by a well, and 29 community 
        water systems. Only one noncommunity water system and one 
        community system, in Fairlawn, exceeded New Jersey's 70 parts 
        per billion health standard for MTBE. Most of the wells on the 
        list had MTBE levels of no more than 2 parts per billion.
          The ``60 Minutes'' show left the erroneous impression that 
        MTBE cannot be removed from water. In the example of the 
        Fairlawn Water Department, untreated water sampled ranged from 
        37 to 73 parts per billion of MTBE, but treated water had only 
        1 part per billion.
          MTBE contamination is just one facet of the historic problem 
        of leaking underground storage tanks, and that problem is being 
        solved. Since December 1998, 10,308 substandard or leaking 
        underground storage tanks have been removed. More than 3,000 
        underground storage tank sites are under active remediation.
          MTBE contamination of groundwater is a problem but certainly 
        not a crisis in New Jersey.
    Experience in New Hampshire has been similar. Governor Jeanne 
Shaheen of New Hampshire wrote EPA Administrator Carol Browner on 
September 14, 1999 and referred to her state's Source Water Protection 
program as ``a national leader in protecting sources of public and 
private drinking water.'' The Governor concluded: ``As a result, MTBE 
levels detected in surface water supplies are extremely low, ranging 
from 1 to 5 ppb.'' By way of comparison, the NHDES has established an 
extremely conservative action level for MTBE at 15 ppb, still well 
above the levels of MTBE being detected.
Health Effects of MTBE
    The detections of MTBE in drinking water supplies have prompted 
questions concerning the health effects of MTBE in drinking water 
supplies. Those with a desire to see MTBE removed from the marketplace 
have gone further to suggest that little is known about the health 
effects of MTBE. In fact, nothing could be further from the truth.
    MTBE's first contribution to the health of Americans was as a 
replacement for lead in gasoline in the late 1970s. MTBE was added to 
maintain octane in the fuel. Under the Clean Air Act, the refiners' 
ability to use MTBE in fuel was subject to EPA approval. The refiners 
made the appropriate demonstrations, including providing information on 
the known health effects of MTBE, and EPA approved the use of MTBE at 
concentrations of up to seven percent, by volume. In 1981, EPA approved 
a blending of MTBE in unleaded gasoline to a maximum of 11 percent. In 
the early 1980s, refiners created an industry study group, managed by 
the American Petroleum Institute. The industry group sponsored a 
toxicology testing program and submitted the results to EPA.
    In 1986, a Federal Interagency Testing Committee, acting under 
authority of the Toxic Substances Control Act, recommended additional 
testing of MTBE based on expected increased production levels, 
potential exposure as gasoline component, and need to complete data 
sets. The industry agreed to conduct such testing and established a 
program under EPA oversight and guidelines. From 1988 until 1992, the 
industry testing group sponsored and/or conducted all of the tests 
required by EPA. Progress reports on these tests were submitted to EPA 
for inclusion in the public docket. In 1988, EPA approved the blending 
of MTBE in unleaded gasoline to a maximum of 15 percent by volume.
    In addition to the industry-sponsored tests, toxicologists at EPA's 
laboratory in Cincinnati, Ohio, conducted the first examination of the 
risks of exposure to MTBE by ingestion. The peer-reviewed study, 
reported in the Journal of the American College of Toxicology, did not 
identify any adverse long-term effects associated with exposure to 
MTBE.
    Nonetheless, MTBE is repeatedly referred to in the popular media as 
a ``probable'' or ``possible'' carcinogen. These assertions apparently 
are based on the study conducted in 1995 by Italian researchers in 
which laboratory rats were exposed to very large doses of MTBE over a 
two-year period. The author of this study found that these rats 
contracted leukemia and lymphoma. However, this study has been 
repudiated on the grounds that it lacked independent peer-review, it 
used unconventional laboratory procedures, and its results have not 
been replicated.
    In 1999, the International Agency for Research on Cancer (IARC), 
part of the World Health Organization, conducted a review of the 
Italian study and the broad range of other research on the chronic 
(long-term) effects of exposure to MTBE. IARC can classify a substance 
into one of five categories: Group 1--carcinogenic to humans; Group 
2A--probably carcinogenic to humans; Group 2B--possibly carcinogenic to 
humans; Group 3--unclassifiable as to carcinogenic risk to humans; and 
Group 4--probably not carcinogenic to humans. The IARC review put MTBE 
in Group 3, concluding that there is ``inadequate evidence in humans 
for the carcinogenicity'' of MTBE. Such a finding places MTBE in the 
same category as caffeine, tea, and fluorescent lighting.
    In fact, a case could be made that MTBE actually reduces the risk 
of cancer. According to the California Environmental Protection Agency, 
the cancer risk from emissions of gasoline-powered vehicles throughout 
the state has been reduced by approximately 40 percent since the 
reformulated gasoline program began, in large part because MTBE 
displaces known carcinogens in gasoline. In October 1998, the Northeast 
States for Coordinated Air Use Management (NESCAUM) completed a study 
of the relative risks of conventional gasoline compared to Federal RFG 
with MTBE. The report found that Phase I RFG reduced cancer risk over 
conventional gasoline by 12 percent. It predicted that Phase II RFG 
would reduce cancer risk over conventional gasoline by 20 percent.
Energy Implications of Changing the RFG Program
    In addition to the environmental benefits described above, MTBE 
provides another important benefit: its helps to extend the gasoline 
supply and moderate supply disruptions. The Department of Energy has 
testified that, ``From an energy security perspective, oxygenates 
provide a way to extend gasoline supplies. The transportation sector is 
almost totally dependent on oil. One of the few near-term options for 
reducing oil dependency is to expand our use of oxygenates.'' EPA's own 
Blue Ribbon Panel further noted that, ``MTBE is currently an integral 
component of the U.S. gasoline supply both in terms of volume and 
octane.''
    MTBE makes up a significant percentage of the volume of every 
gallon of RFG. The Clean Air Act requires each gallon of RFG to contain 
two percent, by weight, of oxygen. To achieve this level, refiners must 
add enough MTBE by volume equal to approximately ten percent of the 
volume of each gallon of gasoline. As described above, MTBE is the 
oxygenate-of-choice in 80-85 percent of RFG. Thus, the total 
consumption of MTBE in the United States gasoline pool is approximately 
286,000 barrels per day. Domestic production supplies approximately 
202,000 barrels per day. Approximately 18,000 barrels per day enter the 
U.S. as part of imported reformulated gasoline. And another 89,000 
barrels per day is imported ``neat,'' or not yet mixed with gasoline.
    Assuming that the total U.S. gasoline pool is 8.2 million barrels 
per day, MTBE represents about 3.5 percent of the total volume of 
gasoline consumed. It is important to note, however, that MTBE is of 
higher octane than gasoline, and thereby allows refiners to use 
components of the refining process that are of lesser quality (i.e., 
lesser octane). Therefore, if you remove MTBE from the gasoline supply, 
you would lose between five and seven percent of the total volume of 
gasoline. The Department of Energy has estimated that this is 
equivalent to removing four or five refineries producing 100,000 
barrels a day.
    We can hardly envision a less auspicious time to announce a frontal 
assault on between 11 and 15 percent of gasoline supply in RFG areas, 
and as much as 5 to 7 percent of the overall supply. Recent months have 
seen substantial increases in the price of both gasoline and home 
heating oil. Many have blamed the price of imported oil for this 
result, and they are partially correct. However, even phasing down the 
use of MTBE in the near future could have a devastating effect. A cap 
could send an unfortunate market signal that MTBE is not a favored 
additive. As a result, obtaining additional capitalization for 
expansion and maintenance would be difficult, thus endangering the 
industrial base of production.
    Let us not forget that California first felt substantial price 
increases and short supply of gasoline when two West Coast refineries 
were down intermittently. If Congress should effectively eliminate the 
use of MTBE, it would create a market effect similar to the complete 
loss of 4 to 5 100,000 barrel per day refineries. American consumers--
and particularly those nearest the poverty level with the least 
disposable income--would surely find such a result intolerable.
Alternative Oxygenates
    Much has been made of ethanol as a potential substitute for MTBE as 
a fuel oxygenate. In those areas of the country where reliance on 
ethanol makes some economic sense, it is already the oxygenate of 
choice and federal law itself is, of course, neutral as to which 
oxygenate may be used. However, greatly expanded use of ethanol makes 
little sense.
    First, expanding ethanol use will come at the expense of air 
quality. Use of ethanol is not as effective at combating air toxics and 
even increases levels of certain toxics called aldehydes and peroxyacyl 
nitrates (PAN). Ethanol is less effective at controlling criteria air 
pollutants as well. NESCAUM has previously commented that, ``Greater 
emissions of volatile organic compounds (VOCs) would occur during the 
early and late portions of the [Northeast] region's ozone season since 
gasoline blended with ethanol is more volatile than similar gasoline 
without ethanol.'' In addition, the higher volatility ethanol-blended 
gasoline can contribute to an overloading of an automobiles evaporative 
canister and subsequently lead to higher CO emissions. EPA has 
acknowledged that the increased use of ethanol will result in increased 
NOx emissions.
    Oxygenates like MTBE go to work in an engine at the point where 
most pollution is produced: the cold cycle. For the first three to four 
minutes after you start your ignition, your car's engine produces the 
majority of its emissions. Because oxygenates combust at low 
temperatures with MTBE combusting at far lower temperatures than 
ethanol--fuel chemistry clearly demonstrates that MTBE is the most 
effective component of pollution control when the car is still 
relatively cold. In addition, to meet the other federal specifications, 
RFG without oxygenates would have to change its ratio of aromatics. The 
result of this change is two-fold: first, there will be a certain 
increase in air toxics from automobiles; and second, more byproducts 
from the use of aromatics may be created. In fact, if ethanol is used 
to replace MTBE, it is more volatile than MTBE and therefore would 
increase evaporative emissions.
    Second, the ethanol production process itself is not without 
significant environmental consequences. Modern agriculture is reliant 
upon pesticides and fertilizers, and has become a substantial source of 
non-point source water pollution. The most noted contamination of water 
bodies such as the Chesapeake Bay and the Everglades have come at the 
hands of agricultural production. In a study of the environmental 
impacts of energy crops, the Office of Technology Assessment 
essentially dismissed the expanded use of annual crops such as corn as 
a source of energy because of the environment damage associated with 
its cultivation. Of course, the greenhouse gases released during the 
ethanol fuel cycle contain relatively more nitrous oxide and other 
potent greenhouse gases as compared to the clean natural gas at the 
heart of the MTBE process.
    Third, it is not at all clear that greater reliance on ethanol will 
help resolve any problems with water quality. Gasoline contains a range 
of aromatics, such as benzene, toluene, and xylene, that are among its 
most toxic components. In subsurface conditions, it appears that 
ethanol may interfere with the biodegradability of these aromatics, 
thus potentiating a significant source of toxic water emissions. And, 
of course, IARC has classified ethanol as a known carcinogen.
    Last, even if expanded ethanol production were a good idea, ethanol 
cannot be produced in sufficient quantities economically to satisfy 
America's needs within the RFG program. Indeed, it is unlikely that 
ethanol can meet its current demands in the Midwest while cost-
effectively supplying any new markets on either coast. Ethanol has 
logistical problems, including its inability to be carried in gasoline 
blends through pipelines--the most efficient way to transport fuels. 
Further, ethanol costs the American taxpayer 54 cents for every gallon 
consumed. As CBS News described ethanol, it is ``probably the most 
economically inefficient, unwarranted form of corporate welfare in our 
entire federal budget.'' (Eye on America segment, 3/26/96)
Conclusion
    In summary, it is clear that the Federal RFG program has 
contributed to significant improvements in air quality in many of the 
most polluted regions of the United States. It is also clear that 
MTBE--the oxygenate-of-choice in 85 percent of RFG produced--has 
contributed in a large way to the air quality improvements attributed 
to RFG.
    It is also clear that there is no credible evidence that MTBE 
presents a significant risk to human health, either from short-term 
exposures or over a longer term. What is clear is that MTBE has 
resulted in reduced cancer risk by reducing hazardous air pollutants.
    The pressure to address the groundwater contamination problems 
created by leaking underground storage tanks puts several questions in 
stark relief. First, is there a need to replace MTBE? The answer is no. 
The detection data indicates that as underground storage tank 
compliance improves, detections of MTBE in drinking water supplies 
decrease.
    Second, is there a viable replacement for MTBE? Again, the answer 
is no. Alternatives to MTBE, including ethanol, are more expensive and 
more difficult to transport. Industry experts estimate that even under 
ideal circumstances, replacing MTBE with ethanol will raise prices at 
the pump a minimum of seven cents a gallon. But prices could rise much 
higher than that if shortages of ethanol and, as a result, of gasoline 
develop. Currently, refiners use about 286,000 barrels a day of MTBE; 
total ethanol capacity is far less than that.
    Can refiners make gasoline without MTBE--or any other oxygenate--
that still meets the requirements of the Clean Air Act? Some refiners 
say they can, but it is incumbent on members of this Subcommittee to 
examine those assertions carefully. If MTBE constitutes 10-11 percent 
of the volume of a gallon of gasoline, and you remove that volume, you 
must replace it or have less gasoline. If you replace MTBE with more 
refined petroleum product, you have more of the cancer-causing 
contaminants that cause urban smog. It is hard to see how taking MTBE 
out of the gasoline supply will not both create more pollution and less 
gasoline, and therefore higher gasoline prices.
    Refinements in regulations for underground storage tanks will go a 
long way toward solving the problem of gasoline constituents in 
groundwater. If you restrict or prohibit the use of MTBE, can you be 
certain that you will not increase the risks of adverse health effects. 
Some refiners claim that they can make RFG without oxygenates that 
meets the Federal Phase II requirements, but is there any third-party 
independent confirmation? EPA has such a question pending before it in 
the form of request from California, but it seems very reluctant to say 
yes or no. And possibilities do not always equate to practice. 
Oxygenates in Phase I RFG allowed for over-achievement. Eliminating 
oxygenates from Phase II requirements may effectively limit the 
possibility of similar results.
    Finally, what are the other consequences of taking MTBE out of the 
gasoline supply? As described above, MTBE constitutes a significant 
percentage of the gasoline pool. If you take away that volume (between 
5-7 percent) what are the supply and price ramifications? And if you do 
as some have suggested, that is, give States the right to establish 
their own formulae for RFG, do you threaten the ability of regional and 
even national refiners to provide the necessary gasoline supplies at 
the best available price?
    We thank you again for the opportunity to testify on this important 
issue. We stand ready to assist the Subcommittee in its efforts to 
identify effective and commonsense solutions to the problem of gasoline 
constituents in drinking water supplies. However, we strongly encourage 
the Subcommittee not to sacrifice the environmental and energy 
advantages created by the use of oxygenates--and particularly MTBE--in 
reformulated gasoline.

    Mr. Bilirakis. Thank you, Mr. Young.
    Mr. Vaughn.

                    STATEMENT OF ERIC VAUGHN

    Mr. Vaughn. Thank you, Mr. Chairman. I want to thank the 
subcommittee for the opportunity to be here.
    My name is Eric Vaughn. I am the president and chief 
executive officer of the National Trade Association for the 
ethanol industry. It is called the Renewable Fuels Association. 
We have about 275 member companies representing just over 60 
ethanol production facilities in 27 states.
    Maybe to correct one item earlier, while the bulk of the 
ethanol today is made from the starch component of corn, we are 
manufacturing ethanol today from 27 different feed stocks; and 
we expect that will grow in the years to come.
    I want to congratulate the chairman--I know that is not 
necessarily pandering at this late date and time of the day, 
but for your efforts of trying to put together a package to 
bring this to a resolution. But lest the pandering go too far, 
I would like to suggest a couple of modifications.
    First and maybe foremost, this problem, if indeed it is 
serious enough at this stage to open the Clean Air Act for 
amendments, and by ``this problem'' I mean MTBE-associated 
water contamination, it is a problem that requires a national, 
not a regional solution or subregional solution. For anyone to 
suggest that we ought to have an East Coast plan, a Midwest 
plan, a West Coast plan, the reality is that is what sparked 
much of the ethanol industry's anger, concern, frustration; and 
it extends even to today, that if you simply eliminate the 
requirement or the use of MTBE, let's say in California, for 
example, what will happen to 1.5 billion gallons of MTBE 
gallons in California? Will Saudi Arabia or Bahrein or somebody 
else just take it back, or will it continue to find markets 
elsewhere? It is a reasonable concern. It is a reasonable 
issue. So a national solution, if in fact this needs a 
solution, is something that is incredibly important.
    Second, if MTBE is such a serious contaminant, and I 
honestly do not have any scientific studies, if you had them, 
you would probably share them with us, that would document or 
demonstrate to you serious long-term health effects with MTBE. 
We do not have those studies. This is a resource degradation 
issue.
    I could smell the little vials of MTBEs that various 
members were opening in the back of the room. It is a vile 
smell. It is an unpleasant odor. And if it is contaminating 
water to the point where people will not use it, they will not 
drink it, it is causing serious disruption, not just casual 
disruption that makes your hair smell bad for half a day. No. 
It is shutting down expensive water supply systems and it is 
needless.
    But the process of how we move from where we are to where 
we are going to need to be is going to have to address a number 
of critical issues, not the least of which is backsliding.
    I am not going to go anywhere near as deep into this as Mr. 
Graboski did, but I will add this: a previous statement was 
just made that the blueprint may very well be, once again, 
California. I ask the committee, Mr. Chairman, I implore you, 
look at this blueprint before you adopt it.
    One of the critical components of the 1999 Clean Air 
program, CARB-3, is a 10 percent increase in aromatics. This is 
not necessary. The ability to provide flexibility is critical 
to the refining industry. The objective of producing clean air 
should not be parsed against increases in aromatic content in 
gasoline. Flexibility is not needed to be met that way.
    Last, we have worked long and hard and very closely with 
our refining industry friends, and we have many of them. I 
think we are starting in a very effective path we are trying to 
find a reasonable, cost-effective solution to this problem. I 
would point to this: the refining industry has invested 
hundreds of millions, billions of dollars, to get us to the 
point that we are today: cleaner burning, reformulating 
gasoline fuels in many markets around the country. They have a 
serious problem.
    Ultimately, this problem will affect their customers and 
our customers, as well. We want to work with them to solve that 
problem. They need time and flexibility, absolutely critically 
important, especially when you juxtapose that the other 
requirements put on them from sulfur reduction and a range of 
other initiatives coming down, they need that time and that 
flexibility.
    We honestly believe both can be met, and we honestly feel, 
very strongly obviously, that our fuel oxygenate, our clean 
source of octane can be helpful in achieving those objectives.
    I would remind the committee that, when this amendment was 
adopted in the Clean Air Act of 1990, it was called the Clean 
Octane Amendment and it was intended to try to find ways to 
reduce and replace toxic aromatic components with cleaner 
alternative sources of octane. And if we are going to have the 
courage to look at this Clean Air Act in 2000 and make some 
adjustments, let's take the time to make serious adjustments, 
aggressive and effective air quality adjustments.
    I was looking at sulfur, looking at the aromatic content 
fraction. I think Mr. Graboski's point on weighted toxicity is 
absolutely on the mark. And of course we should be looking at 
the oxygen content issue. But that is a full, comprehensive 
assessment of where we are in the year 2000, not a piecemeal 
approach. And that is an approach worthy of this committee; and 
our industry stands firmly committed to working with you, Mr. 
Chairman, to try to come up with a solution. We want to be part 
of the solution to this problem and work with you aggressively 
on it.
    Thank you for the time.
    [The prepared statement of Eric Vaughn follows:]
     Prepared Statement of Eric Vaughn, President, Renewable Fuels 
                              Association
    Good morning Mr. Chairman and Members of the Committee. I am very 
pleased to be here to discuss the national environmental and public 
health affects of the reformulated gasoline (RFG) program generally, 
and the RFG oxygen content requirement specifically. These are 
important issues with far-reaching consequences for both consumers and 
air quality, and I appreciate the opportunity to provide comments on 
behalf of the domestic ethanol industry.
    The Renewable Fuels Association (RFA) is the national trade 
association for the domestic ethanol industry. Our membership includes 
a broad cross-section of ethanol producers, marketers, agricultural 
organizations and state agencies interested in the increased 
development and use of fuel ethanol. There are more than 50 ethanol 
producing facilities in 21 states in operation today, including a 
growing number of farmer-owned cooperatives that have begun production 
in just the past five years. The industry currently produces 
approximately 100,000 barrels of ethanol per day (1.5 billion gallons 
annually), and utilizes more than 600 million bushels of grain per 
year. The RFA membership represents more than 95% of all ethanol 
produced and sold in the United States today.
Background:
    Before turning to the RFG program, I would like to provide some 
perspective as to why ethanol is so critically important to the 
nation's economic, energy and environmental policies. One need only 
look at today's headlines to appreciate the need for increased 
production and use of fuel ethanol. With overall conditions in the farm 
economy in 2000 expected to be similar to last year and the nation 
facing record oil prices due to OPEC production cutbacks, ethanol 
production and use will play a pivotal role in providing value-added 
processing for grain while helping to constrain gasoline prices and 
promote competition.
    At a recent USDA Agricultural Outlook Forum, USDA Chief Economist 
Keith Collins stated that the price for corn this year is ``expected to 
average only $1.90 a bushel, slightly below the 1998 crop.'' With total 
supplies predicted to be near 1999 levels and little change in ending 
stocks, Collins noted that ``corn prices are expected to show only 
modest improvement next season.'' Collins also predicted that in light 
of weak markets, substantial government payments will be made under 
current programs in 2000. The use of corn for ethanol production not 
only adds to the price of a bushel of corn, it also helps to reduce 
government payments.
    At the same time, the Energy Department reports oil prices are at 
the highest levels since the Gulf War, and gasoline prices are expected 
to top $1.60/gallon this summer. Blending ethanol with gasoline 
provides an economically competitive source of octane, helping to 
constrain gasoline prices. As the Congress considers policies to 
moderate gasoline prices and assure fuel supplies, providing increased 
market opportunities for domestically-produced renewable energy, such 
as ethanol, should be a top priority. In fact, the farm income and 
energy security benefits of ethanol were principle factors leading to 
congressional approval of the RFG program and the oxygen content 
requirement in the Clean Air Act Amendments of 1990. Today's headlines 
merely reinforce the efficacy of that decision.
The Reformulated Gasoline Program:
    First, I think it is important to underscore that the RFG program, 
with its oxygen content requirement, has worked quite effectively. Air 
quality has improved. Indeed, about 75 million people are breathing 
cleaner air because of RFG. EPA reports that RFG is reducing ozone-
forming hydrocarbon emissions by 41,000 tons and toxic pollutants such 
as benzene by 24,000 tons annually. That's the equivalent of taking 16 
million vehicles off the road each year. A study by the Northeast 
States for Coordinated Air Use Management (NESCAUM) shows that today's 
RFG reduces the cancer risk from gasoline by about 20 percent. It is 
critically important to recognize that these benefits are significantly 
greater than required by the Clean Air Act's performance standards for 
hydrocarbons and toxics, at least in part because of the federal oxygen 
requirement.
    At the same time, the decision by refiners to use MTBE in most RFG 
has had a devastating impact on water quality. The U.S. Geological 
Survey reports that MTBE has been detected in 27 percent of urban wells 
nationwide. In RFG areas, where MTBE is more commonly used, the problem 
is more severe. MTBE is four to six times more likely to be detected in 
RFG areas than in conventional gasoline areas. USGS reports that 79% of 
the wells tested in Denver and 37% of the wells tested in New England 
had detectable levels of MTBE. Indeed, MTBE is now the second most 
commonly found chemical in groundwater, behind only chloroform.
    Leaking underground storage tanks and spills at the land surface 
are important point sources for MTBE in the environment. But there are 
many other sources of MTBE water contamination. Potential non-point 
sources of MTBE include precipitation, urban runoff, and motor water 
craft. Once MTBE is in water it is expected to move between surface and 
ground water with the natural movement of water. Indeed, MTBE is very 
water soluble compared to the BTEX compounds and other components in 
gasoline; the solubility of MTBE is about 50,000 mg/L (milligrams per 
liter) whereas the next most soluble component of gasoline is benzene, 
which has a solubility of 1,780 mg/L. Therein lies the problem; if MTBE 
is in gasoline it will find its way to water where it is extremely 
soluble and will eventually contaminate drinking water supplies.
    As a consequence of the growing concerns regarding MTBE water 
contamination, there is interest in amending the Clean Air Act and the 
RFG program to allow refiners to reduce or eliminate their MTBE use. 
Refiners claim they cannot eliminate their use of MTBE without the 
``flexibility'' of producing non-oxygenated fuel and have sought the 
elimination of the oxygen requirement. The domestic ethanol industry 
has steadfastly opposed efforts which seek only to eliminate the 
federal RFG oxygen requirement or address the issue for particular 
states or regions. However, we do not want to hinder legislative 
efforts to address this serious public health and environmental issue. 
We want to be part of the solution, not part of the problem. Toward 
that end, we have developed the following principles which we believe 
should guide congressional action on this issue.

 Develop a national solution;
 Address the cause of the problem;
 Protect the environment; and,
 Provide the necessary time and ``flexibility'' to allow 
        refiners to make a rational transition to increased ethanol 
        utilization.
Develop a national solution. Regional or state-specific actions will 
        create a patchwork of fuel regulations resulting in increased 
        consumer costs and will encourage MTBE use in areas not using 
        MTBE today--expanding potential MTBE water contamination.
    Approximately 4 billion gallons of MTBE are consumed in the United 
States today, with the vast majority of it used in RFG markets. 
Approximately one-third of the MTBE used is imported, either as a fuel 
blendstock or in finished gasoline. In the absence of a national MTBE 
control program, states will continue to take action phasing out MTBE. 
Already, California, Iowa and South Dakota have enacted MTBE controls. 
Missouri, Colorado, Wisconsin and several northeast states have MTBE 
ban bills pending. In the Congress, H.R. 11 and various other 
legislative proposals attempt to address this issue regionally. But 
unless a national control is imposed, MTBE will flow unfettered into 
areas where MTBE is currently not being used. Saudi Arabia is not going 
to take its MTBE back. MTBE producers will find other markets. The 
first place MTBE will flow is Midwest oxygenate markets where MTBE is 
currently not used. It is logical to assume that MTBE will also flow 
into conventional gasoline octane markets. In addition to displacing 
ethanol from these critical markets, this will merely expand potential 
MTBE water contamination and jeopardize precious water supplies. Only a 
national control of MTBE will protect everyone's water supplies and not 
disrupt existing oxygen and octane markets for ethanol.
Address the cause of the problem--MTBE. The use of MTBE in the nation's 
        motor fuel should be reduced or eliminated as expeditiously as 
        possible.
    The domestic ethanol industry should not be advising the Congress 
on how to control the use of its competition in the marketplace. 
However, we can state with conviction that if the problems associated 
with the use of MTBE are so serious as to warrant legislative action, 
Congress ought to be sure to fix them. The problem is not oxygen in 
gasoline, it is MTBE in water. Congress should determine what controls 
on MTBE are necessary to protect water supplies and take them. But 
simply eliminating the RFG oxygen requirement will NOT assure that MTBE 
use is reduced and WILL undermine the ``real world'' environmental 
benefits of the current RFG program with oxygen.
    EPA's Blue Ribbon Panel concluded that MTBE use should be ``reduced 
or eliminated.'' EPA staff recently went further, stating that MTBE 
should be removed from gasoline as quickly as possible. The Department 
of Energy has stated a 3% volume cap on MTBE is appropriate. Because 
MTBE is bio-accumulative and persistent in the environment, many 
believe the only sure means of protecting drinking water supplies is to 
prevent MTBE from getting into gasoline in the first place. In any 
case, Congress needs to take whatever action it deems appropriate to 
protect public health and water resources.
    We would only suggest that as Congress debates this issue, and if 
an MTBE phase-out or other control is imposed, that consumers be made 
aware whether MTBE is being used in the gasoline they purchase. Pump 
labeling of MTBE is something that can be done quickly and effectively. 
We would strongly encourage EPA to act expeditiously so that consumers 
are aware when MTBE is being used. Consumers have a right to know.
Protect the Environment. The air quality gains provided by RFG with 
        oxygenates should not be sacrificed as MTBE use is reduced, 
        i.e., the toxic and carbon monoxide emissions benefits of 
        oxygen should be preserved.
    The RFG program assures air quality benefits through the combined 
application of emissions performance standards and an oxygen 
requirement. As a result, the RFG program has provided toxic reductions 
in excess of those required by the performance standards alone. The 
oxygen standard has also provided reductions in carbon monoxide for 
which there is no performance standard at all. Congress should not 
reward the disastrous decision of the oil industry to utilize MTBE as 
the oxygenate of choice in RFG by allowing them to increase pollution.
    Industry analysts have concluded that given the opportunity to 
produce non-oxygenated RFG, refiners will dramatically increase their 
use of aromatics and other petroleum-derived octane such as alkylate. 
The environmental consequences of alkylates is not known. The 
environmental impacts of aromatics certainly is known, and it is 
troubling. Increased aromatics will lead to higher toxic emissions and 
increased ozone pollution.
    It is ironic that the RFG program was initiated largely in response 
to environmental concerns about the rising levels of aromatics in 
gasoline. Increased aromatics, including benzene, toluene and xylene 
(BTEX), resulted from the congressionally-mandated lead phase-down of 
the late 70's. To replace the lost octane associated with lead, 
refiners dramatically increased aromatic levels. By the mid-80's, some 
premium gasolines had BTEX levels as high as 50 percent. Seeing this, 
Congress created the RFG program in the Clean Air Act Amendments of 
1990, including a specific cap on aromatic levels. That cap was 
forfeited by EPA in the regulations implementing the RFG program in 
favor of a complex model, with the understanding that the use of 
oxygenates in RFG would supply the octane and volume provided by 
aromatics. Congress should assure that as MTBE use is reduced, the cap 
on aromatics originally included as an RFG specification is re-
established.
    In addition, EPA should conduct a rigorous analysis of the ``real 
world'' emissions benefits of oxygen, including the impact on higher 
emitting vehicles, off-road and off-cycle driving (areas where the 
impact of oxygen is more critical) to assure there is no backsliding 
from these effects. EPA should also compare the potency-weighted toxic 
affects of oxygenated and non-oxygenated RFG.
    Finally, it is critical that the carbon monoxide (CO) benefits of 
oxygenates not be ignored. The oxyfuel program worked and CO has been 
dramatically reduced nationwide. Several CO non-attainment areas have 
been reclassified into attainment based in part on maintenance plans 
which include the oxygen content benefits of RFG. If the RFG oxygen 
requirement is repealed, the CO attainment status of these areas will 
be jeopardized. In addition, the National Academy of Sciences concluded 
last year that as much as 20% of the ozone coming from automobiles was 
attributable to carbon monoxide. EPA should assess this beneficial 
impact and either 1) incorporate a CO performance standard into the 
program or 2) promulgate a CO offset so that refiners can balance CO 
reductions with VOC increases.
Provide Flexibility to Refiners. The expeditious removal of MTBE should 
        not result in dramatically increased gasoline prices or supply 
        shortages. Refiners and gasoline marketers should be given some 
        flexibility in meeting this challenge.
    Refiners claim the only way to eliminate MTBE without increasing 
consumer gasoline costs is to eliminate the oxygen standard itself. 
Indeed, some see the two as synonymous. At a time when gasoline prices 
across the country are soaring, Congress must consider the economic 
implications of reducing MTBE use. MTBE currently represents about 3% 
of the nation's transportation fuel supply. If it is precipitously 
eliminated without providing for a replacement of that supply, gasoline 
prices will clearly rise. Indeed, this fact has been established by 
both the Department of Energy and the California Energy Commission, 
which concluded a non-oxygenated fuel scenario in California (with no 
ethanol used) was the most expensive option available to the state in 
addressing MTBE. It is therefore critical that if MTBE volume is to be 
reduced, it is replaced with safe alternatives such as ethanol. 
Following the oil companies' ``flexibility'' agenda of no oxygen 
requirement and an all-hydrocarbon fuel supply will increase consumer 
gasoline costs.
    But we believe there are ways to provide increased flexibility in 
meeting the oxygenate standard such that replacing MTBE with ethanol 
will not result in price spikes or supply shortages. Certainly, a 
gradual phase-out is the best way to protect against potential consumer 
impacts. The U.S. Department of Agriculture has completed a 
comprehensive analysis demonstrating that ethanol can effectively 
replace MTBE by 2004 without price spikes or supply shortages. The 
Department's analysis shows that total ethanol production capacity will 
have to increase roughly 50%, to approximately 3 billion gallons by 
2004, in order to supply the oxygenate demands of RFG while maintaining 
the existing ethanol octane markets in conventional gasoline.
[GRAPHIC] [TIFF OMITTED]62976.043

    USDA also analyzed the transportation affects of increased 
ethanol RFG. The Department concluded that ethanol would be 
shipped by barge or rail cost-competitively, and that ``there 
appear to be no transportation impediment to the use of ethanol 
as a replacement for MTBE.''

The Ethanol Solution

    The primary concern with maintaining the oxygen standard 
appears to be the industry's ability to supply the increased 
demand for ethanol. But such concerns are unfounded. It is 
important to understand that because ethanol has twice the 
oxygen content of MTBE, it will only take half as much ethanol 
to satisfy the oxygen requirements of RFG. Current MTBE use in 
RFG is approximately 257 bb/d (thousand barrels per day). That 
level of oxygen can be met by only 128 bb/d of ethanol. Current 
ethanol production is 100 bb/d. But added to that is about 300 
million gallons of idle ethanol production capacity, 85 million 
gallons under construction and expected to be on stream 
shortly, and more than 440 million gallons of production 
capacity which has been proposed and is seeking financing. 
Thus, the industry's actual production capacity will soon 
exceed 2.3 billion gallons annually, or 150 bb/d. In addition, 
industry sources indicate that such expansions could easily add 
another 39 bb/d (600 million gallons) of ethanol production 
capacity within 12 to 18 months.

                      Ethanol Supply/Demand in RFG
------------------------------------------------------------------------
                                                  Ethanol      Ethanol
                                                   Demand       Supply
------------------------------------------------------------------------
RFG Ethanol Demand............................     128 bb/d
Current Ethanol Use in RFG and Oxyfuels.......      45 bb/d
Current Ethanol Production....................                  100 bb/d
Existing Idle Capacity........................                   17 bb/d
Ethanol Production Capacity Under Construction                    7 bb/d
Planned Ethanol Capacity......................                   28 bb/d
Proposed Expansions to Existing Plants........                   39 bb/d
Total.........................................     173 bb/d     191 bb/d
------------------------------------------------------------------------

    It is important to understand that ethanol production facilities 
are largely modular. Expansions can be done very quickly by simply 
adding new equipment to existing production streams. New production 
from green fields is also now done quite efficiently. Since 1990, most 
new ethanol production has been by farmer-owned cooperatives. These 
highly efficient dry mill plants typically go from drawing board to 
production within two years, at an approximate cost of $1.00-$1.50 per 
gallon of capacity.
    The next generation of ethanol production facilities will also 
include production from cellulose and biomass feedstocks. In just the 
past two weeks, a new ethanol production plant in Jennings, Louisiana 
was awarded a $120 billion bond and is expected to begin construction 
this spring. When completed, this plant will produce ethanol from rice 
hulls and bagasse. Three other plants are currently planned in 
California that will produce ethanol from rice straw. Another facility 
is planned in upstate New York producing ethanol from municipal waste. 
Already, ethanol is being produced from wood and paper waste by Georgia 
Pacific in Washington state, and production from forest residue is not 
far behind. None of this will happen, however, without the assurance of 
increased market opportunities for ethanol in RFG. If the oxygenate 
requirement itself is repealed, there will be little increased ethanol 
production in the coming years. On the other hand, maintaining the 
oxygen requirement as MTBE use is phased out will stimulate tremendous 
new economic development across the country.

                                            Plants Under Construction
----------------------------------------------------------------------------------------------------------------
                   Company                                 Location                     Feedstock          MMPY
----------------------------------------------------------------------------------------------------------------
Adkins Energy*...............................  Lena, IL........................                        Corn   30
Golden Triangle*.............................  St. Joseph, MO..................                        Corn   25
Nebraska Nutrients...........................  Sutherland, NE..................                        Corn   15
NE Missouri Grain Processors*................  Macon, MO.......................                        Corn   15
Subtotal Under Construction Capacity (by                                                                      85
 2000)
----------------------------------------------------------------------------------------------------------------


                                                 Proposed Plants
----------------------------------------------------------------------------------------------------------------
                   Company                                 Location                     Feedstock          MMPY
----------------------------------------------------------------------------------------------------------------
American Agri-Technology Corporation.........  Great Falls, MT.................            Wheat/Barley       30
Lower Caskaskia Economic Devp. Board.........  Lower Caskaskia, IL.............                        Corn  100
BC International.............................  Jennings, LA....................      Bagasse/rice hulls       20
Quincy Library Group.........................  NE Region, CA...................         Forest Residues       15
BC International (Sacramento Valley).........  Gridley, CA.....................              Rice Straw       30
Arkenol*.....................................  Mission Viejo, CA...............              Rice Straw        8
MASADA.......................................  Middletown, NY..................   Municipal Solid Waste      6.6
New Jersey Project...........................  Burlington, NJ..................                    corn       15
Sustainable Energy Devp......................  Central Region, OR..............              Wood Waste       30
Pacific Rim Ethanol Corp.....................  Moses Lake, WA..................                   Grain       40
Pacific Rim Ethanol Corp.....................  Longview, WA....................                   Grain       40
Schmidt Brewery..............................  St. Paul, MN....................              Beer waste        5
GreenLeaf....................................  Platte, SD......................                        Corn   15
Pratte Project...............................  Pratte, KS......................                        Corn/mi15
Iowa #1......................................  Central Iowa, IA................                        Corn   15
Iowa #2......................................  Central Iowa, IA................                        Corn   15
SIRS.........................................  Central Missouri, MO............                        Corn   30
N/a..........................................  Black Hills, SD.................         Forest Residues       12
Subtotal Proposed Capacity (by 2001)                                                                         442
Current Production Capacity                                                                                1,800
TOTAL CURRENT AND PROJECTED ETHANOL PRODUCTION CAPACITY                                                    2,327
----------------------------------------------------------------------------------------------------------------
MMPY = million gallons per year
*Cooperatives
Source: Bryan & Bryan Inc.

    Ethanol RFG will provide a tremendous economic stimulus to rural 
America by creating value-added demand for 500 million bushels of 
grain. According to USDA, replacing MTBE with ethanol in RFG nationwide 
would:

 increase net farm income $1 billion annually;
 create 13,000 new jobs;
 enhance our balance of trade $12 billion by 2010; and,
 reduce farm program costs more than $1 billion for each $0.10 
        increase in corn price.
    Thus, replacing MTBE with domestically-produced renewable ethanol 
will provide a tremendous economic stimulus to rural America while 
protecting air quality, preserving water resources and maintaining 
stable consumer gasoline prices and supply.
Conclusion:
    The members of the Renewable Fuels Association understand that the 
Congress is faced with a daunting challenge, i.e, how to protect water 
supplies by reducing the use of MTBE without sacrificing air quality or 
increasing fuel prices. We see ethanol as a solution. Increasing 
ethanol use in this program will allow MTBE to be phased out cost-
effectively while protecting precious water resources and air quality. 
Stimulating rural economies by increasing the demand for grain used in 
ethanol production will help farmers left behind by our booming 
economy. Encouraging new ethanol production from biomass feedstocks 
will provide additional environmental benefits and take a positive step 
toward a sustainable energy future and global climate change. The 
bottom line is that we need to protect both air quality and water 
quality. With ethanol, we can.
    Thank you.

    Mr. Bilirakis. Thank you for your testimony.
    Mr. Grossman.

                   STATEMENT OF BARRY GROSSMAN

    Mr. Grossman. Mr. Chairman, I want to thank the chairman 
and the subcommittee for giving me the opportunity to speak on 
behalf of Oxybusters across the Nation.
    First of all, I would like to say, we are not 
environmentalists, we are not politicians, and we are not 
beholden to any special interest groups, and we are certainly 
funded out of our own pockets.
    Let me tell you, everybody, what prompted the formation of 
Oxybusters to begin with. In November 1992, that was the time 
oxygenated gasoline with MTBE was snuck into the gasoline 
supply. I say ``snuck in'' because there was no publicity about 
it. Well, during that month sometime, I personally started to 
get a headache that simply would not disappear. I visited a 
couple of different doctors, and they could find nothing 
seriously wrong with me.
    A few weeks had passed by and my wife, who was in 
journalism, read some obscure publication, and I emphasize 
``obscure,'' where, in the State of Alaska, some 25,000 people 
were experiencing headaches and other symptoms because of 
oxygenated gasoline.
    So that prompted me to call the editor of the Anchorage 
Times, and he put me in touch with at least 30 people from both 
Fairbanks and Anchorage, Alaska, who were experiencing the 
exact same thing I was.
    I talked to housewives, taxi drivers, school teachers, 
medical doctors, every walk of life; and they were all 
experiencing the same awful thing. They were getting these 
severe type of headaches that would not disappear.
    Again, we are just citizens trying to deal with a serious 
health problem. Finally, people started calling into this 
Oxybuster hotline that we created. And when I told them that 
there was a possibility that this new gasoline was making them 
sick, at first they were relieved because at least now they 
knew why they were feeling this way, but soon the relief turned 
to anger when they realized that their own government was 
poisoning them.
    I also note that the vast majority of the people that 
called into the Oxybuster hotline had never suffered from any 
type of chemical sensitivity before November 1992. And it was 
affecting again a wide variety of people and a host of health 
problems. It affected people from the children to the elderly. 
And they all had similar symptoms: severe headache, sinus 
problems, breathing difficulties, and skin rashes.
    Finally, within the course of a short year, Oxybusters 
documented over 1,000 cases from people from New Jersey alone 
who all suffered what they felt was severe effects of MTBE 
poisoning.
    By 1995, we collected 15,000 signatures that we presented 
to Governor Whitman in New Jersey. This led to the funding of 
the Rutger's University study, which last week, by the way, it 
took many years, concluded that MTBE was in fact the cause of 
these problems that people were experiencing.
    One thing that Rutger's University did not test for--and it 
was briefly touched upon here--were the combustion by-products 
of MTBE. From what we could tell, the EPA never really 
seriously tested for the combustion by-products of MTBE; or if 
they had, it had not become common knowledge. And we learned 
from the auto and oil industry, not to mention the EPA 
themselves, yes, there was an increase in formaldehyde 
associated with MTBE. When you put MTBE in gasoline, even 
according to the California Air Resources Board, there is a 26-
percent increase in formaldehyde coming out of that tailpipe.
    Now, this is years before the water problem came into play.
    In our opinion, MTBE is not a cleaner burning fuel. If 
anything, we think it is a dirtier burning fuel. It is 
documented. There is, according to these studies, an increase 
in formaldehyde, nitrogen oxides, formic acid, and others.
    If it were really cleaning the air, as I have heard some 
people say here today, wouldn't people start experiencing a 
health improvement? But, no, exactly the opposite is happening. 
Is it any coincidence that somehow thousands of people in 
Alaska were getting sick at the exact same time thousands of 
people from New Jersey and Connecticut and other parts of the 
country were? Is that just a coincidence?
    Take Dr. Peter Joseph, professor of radiologic physics at 
the University of Pennsylvania Hospital, who is also on the 
Philadelphia Task Force, a Harvard grad, mind you. He has 
conducted several studies and he has concluded that the 
dramatic increase in asthma in this nation is directly linked 
to the dramatic increase in MTBE in our gasoline supply.
    Now, again, it sickens me to hear people saying it is 
cleaning the air. If you sit here with a bunch of people 
suffering from asthma and you tell them that this is good for 
you, I hate to see what the reaction would be.
    People with asthma are worse. People who never had asthma 
are developing it for the first time. Again, note, the vast 
majority of people who have been sickened by MTBE had never 
suffered from any chemical sensitivity in the past.
    In Liberty, New York, I got a call from somebody called 
Diane Atkins back in 1993 when Oxybusters started. She said, 
``Art, there is MTBE in my water.'' I didn't follow what she 
was talking about. This was 1993.
    It was not until early 1995, when we learned from the 
United States Geological Survey in Denver, Colorado, that, yes 
indeed, MTBE had the potential to contaminate groundwater, not 
just from underground leaking tanks. But it did get into the 
exhaust. It did get into the environment. It got into the snow-
peaked mountains and it dripped down, getting into the lakes 
and streams and, boom, into your water.
    We brought our concerns to the Department of Environmental 
Protection in New Jersey, to the Federal EPA. They ignored us. 
What was that, 5 years ago?
    Spillage is another way that MTBE gets into the water, as 
has been clearly indicated here today.
    Let me summarize by saying there are other ways, a variety 
of ways, MTBE gets into the water. It can get into there by 
spilling and other ways. But I just want to close by saying, 
our group supports Congressman Frank Pallone's bill, H.R. 1705, 
to eliminate the oxygen requirement from RFG and phaseout what 
we feel is an idiotic fuel additive at the speed of light, not 
in 3 years. We have been doing this for 7 years. We do not want 
to wait another 3 years.
    I would like to close again by saying that it is sad that 
it has come to this that this issue has proven to be far more 
than just whether MTBE is or is not cleaning the air. It is a 
shame that profits and politics have been given more importance 
than people's health. And I urge you to do what is best for the 
American people, not what is best for individual business 
interests, and please stop playing politics with people's 
health.
    Thank you.
    [The prepared statement of Barry Grossman follows:]
        Prepared Statement of Barry Grossman, Oxybuster Founder
    Mr. Chairman and members of the Committee: My name is Barry 
Grossman and I live in Plainsboro, New Jersey. I am the founder of 
Oxybusters, a grass-roots organization made up of thousands of people 
throughout the country who oppose the use of MTBE and all other 
oxygenates in gasoline. I am here to tell you that the federal 
requirement to use these additives has been a grave mistake.
    In November of 1992, when the oxygenated fuel program first began 
in New Jersey, I started experiencing severe headaches that doctors 
could not explain, and that medications could not relieve. When I read 
about thousands of people in Alaska getting sick from MTBE, the main 
ingredient in oxygenated fuel, I made the connection. After announcing 
on a New Jersey radio station the formation of ``Oxybusters'' to 
protest the new fuel, I received literally 30 calls a day from people 
experiencing similar symptoms. These symptoms include headaches, 
nausea, chest pains, eye irritation, respiratory problems and heart 
palpitations.
    We collected more than 15,000 signatures on a petition to ban 
oxygenated fuel in New Jersey, which led to the funding of an MTBE 
health study at Rutgers University. Just last week the results of that 
study were released, and they confirmed what we have known for the past 
seven years--that MTBE can in fact cause headaches, nausea, eye 
irritation and fatigue, among other ailments.
    In 1997, Oxybusters in California collected more than 100,000 
signatures on a petition to ban MTBE, because of health complaints and 
widespread water contamination, which led to a study of MTBE by the 
University of California. That study concluded that MTBE was a threat 
to the environment and was not a necessary component of cleaner burning 
gasoline. Based on the study, Governor Gray Davis issued an Executive 
Order to phase out MTBE.
    According to the Interagency Assessment of Oxygenated Fuels, 
prepared by the National Science and Technology Council, all ether-
based additives, including MTBE, ETBE, TAME and DIPE are highly water 
soluble and difficult to biodegrade. Consequently, they pose a 
significant threat to our water supplies. A series of studies done by 
the Auto & Oil industries found that oxygenates increase certain 
harmful emissions. MTBE increases formaldehyde, and ETBE and ethanol 
increase acetaldehyde. In low aromatic fuels, oxygenates also increase 
nitrogen oxides, which contribute to smog. Last year the National 
Research Council concluded that oxygenates do little to reduce smog.
    MTBE is currently classified by the EPA as a possible human 
carcinogen. A study published last October by the University of 
Southern California Cancer Research Laboratory found MTBE to be a 
mutagen.
    Those of you who think the Clean Air Act has been a success should 
consider the statistics on asthma. Since 1990, incidents of asthma have 
skyrocketed unexplainably. But we believe this increase can be 
explained by the increased use of MTBE, and Dr. Peter Joseph, professor 
of Radiologic Physics at the University of Pennsylvania Hospital, has 
evidence dating back to 1980 which supports this theory.
    I would like to speak for a moment about what really matters most--
people. Liberty, New York has had low levels of MTBE in its water 
supply since 1990. This pristine town in the Catskill Mountains now has 
some of the highest cancer rates in the state of New York. Diane 
Atkins, a 48 year old Liberty resident who heads Oxybusters of New 
York, lost her husband, brother-in-law and pet dog to cancer in the 
past 3 years.
    Gina Wall, of Washington Township, New Jersey, was a healthy 30 
year-old mother of two before moving into a house with MTBE in its well 
eight years ago. Since then she has undergone 19 operations for 
multiple tumors, bladder cancer and kidney disease.
    Gary Franklin of Scarborough, Maine, had to give up his lawn & 
garden equipment business five years ago at age 48. Working around 
gasoline-powered equipment with high levels of MTBE left him disabled.
    I could go on for hours, as these are just a few of the thousands 
of people whose lives have been devastated one way or another by MTBE. 
And the problems are not limited to MTBE. We have Oxybuster groups in 
Colorado, Arizona and Oregon where ethanol has predominately been the 
oxygenate of choice.
    It's time to put an end to this failed process of replacing one 
harmful additive with another, as was done when benzene replaced lead 
and MTBE replaced benzene. The studies done by the Auto & Oil 
industries, the University of California and the National Research 
Council all support the elimination of the oxygen mandate. Refiners 
have said they can meet the emission standards of the Clean Air Act 
without oxygenates. Let's give them that opportunity. Our group 
supports bill H.R. 1705, sponsored by Congressman Frank Pallone, Jr., 
to eliminate the oxygen requirement for reformulated gasoline, and 
phase out the use of MTBE as quickly as possible, so that we can 
finally end this federally mandated poisoning of America.
    Thank you Mr. Chairman.

    Mr. Bilirakis. Thank you, Mr. Grossman.
    I am going to turn now and go out of order at the request 
of Dr. Ganske that we recognize him for 5 minutes.
    Mr. Ganske. Mr. Grossman, you certainly increased the 
oxygen in my blood level with your presentation.
    Mr. Grossman. We are very passionate, as you can tell, 
about this issue.
    Mr. Ganske. Very passionate.
    Mr. Early, the American Lung Association of Metropolitan 
Chicago released a report last year citing the air quality 
benefits of its ethanol reformulated fuel program.
    More recently, the American Lung Association of Minnesota 
released a paper clearly endorsing the air quality benefits of 
ethanol stating, ``The American Lung Association of Minnesota 
began its fight against multiple-source pollution in the 
1960's; and today we continue our support of oxygenated 
gasoline as a cause-effective tool for reducing tailpipe 
emissions.''
    My question to you, then, is, why is there a discrepancy 
between State organizations and the national American Lung 
Association?
    Mr. Early. Well, we are talking about different programs. 
The Minnesota program was part of the so-called Oxy-fuel 
program aimed at reducing carbon monoxide in the wintertime. 
That program has been expanded by State law. It is not required 
to be expanded by Federal law.
    And the Lung Association fully supports the winter time 
Oxy-fuels program. There is no question that, in the winter 
time, the ability of oxygen to reduce carbon monoxide is a very 
important tool in achieving emission and air quality standards 
for CO.
    The question to this committee is, is the mandating of 
oxygen in reformulated gasoline utilized in the summer time 
when carbon monoxide is much less of a problem?
    So that is the difference, the Minnesota Lung Association 
is expressing its support for Minnesota's program; and the 
benefits of that program are primarily releasing CO in the 
winter time.
    Mr. Ganske. Are all of the State Lung Associations in 
concordance with the national policy?
    Mr. Early. To the best of my knowledge, yeah.
    Mr. Ganske. Now, let me ask you: Mr. Early, you are a 
consultant to the American Lung Association.
    Is that a paid position?
    Mr. Early . Yes, it is.
    Mr. Ganske. Do you have any other paid consulting 
relationships?
    Mr. Early. Not at this time.
    Mr. Ganske. Are you now or have you ever been funded by the 
MTBE industry or their representatives?
    Mr. Early. Have I been a consultant for the MTBE industry? 
No.
    Mr. Ganske. Have you ever received compensation or worked 
for Arco?
    Mr. Early. No.
    Mr. Ganske. Who funds your current contract with the 
American Lung Association?
    Mr. Early. Well, the Lung Association.
    Mr. Ganske. The Lung Association.
    Does the Lung Association receive funds for that contract?
    Mr. Early. Well, the Lung Association receives funds for 
activities that I perform from the Energy Foundation.
    Mr. Ganske. And in the Energy Foundation, are some of the 
Energy Foundation members MTBE producers?
    Mr. Early. Not to my knowledge.
    Mr. Ganske. Who is the Energy Foundation?
    Mr. Early. The Energy Foundation is headquartered in San 
Francisco. It is a 501(c)(3) foundation that focuses a lot of 
its attention on environmental and energy issues.
    Mr. Ganske. Are any of the members members of the petroleum 
industry?
    Mr. Early. Not to my knowledge.
    Mr. Ganske. I thank you.
    Mr. Campbell, I want to give you a chance to respond 
because I mentioned you earlier. If the oxygen requirement was 
waived and MTBE was phased out, what would you use in your 
gasoline to ensure emissions reductions do not rise?
    Mr. Campbell. I assume you are talking about our company.
    Mr. Ganske. Yes.
    Mr. Campbell. And the reason I preempt it that way is 
because the solution for one company might be quite different 
than others.
    But for us the hydrocarbon of choice would probably be 
alcoholate. Alcoholate has been in gasoline for decades. It has 
been in there for an extended period of time. Actually, because 
of MTBE going into the gasoline in the amount we do, we have 
shut down an alcoholate plant in Philadelphia and are running 
an MTBE plant.
    I would expect that the first hydrocarbon that would go in 
would be potentially some toluene. But it is going to depend on 
the type of goal or emissions standards that we are trying to 
match at that point in time.
    Mr. Ganske. So toluene is a possibility?
    Mr. Campbell. Absolutely.
    Mr. Ganske. Are you concerned about comments that Mr. 
Perciasepe made about the use of toluene?
    Mr. Campbell. I was not here for Mr. Perciasepe's comments. 
We had a board of directors meeting today. But I hear people 
referring to aromatics as though it is one compound.
    Actually, aromatics is a whole potpourri of compounds, 
going from benzene to toluene, orthometeparazylene and right on 
down the chain. So it is a broad mixture that has been in 
gasoline almost since the very beginning of time.
    Just one more time I would like to go back to what I 
referred to in my testimony; and that is, if you think of the 
variability of refineries, if you think of the variability of 
blend stocks that are out there, trying to specify or mandate a 
formula I think is a flawed approach.
    That is why what I was asking for in my testimony was tell 
us the standard you are trying to achieve, tell us the goal 
that you want, whether it is an air-toxic emission, or 
whatever, and then allow each of us to achieve it in the way we 
can.
    Mr. Ganske. That last question, Dr. Graboski, can you make 
a comment on increasing the use of toluene as an oxygenate?
    Mr. Graboski. As a replacement for oxygenates?
    Mr. Ganske. Yes.
    Mr. Graboski. Well, from a point of view of the gasoline 
you are producing, it would be fine from a performance point of 
view because you would get the octane back that you would lose 
from the oxygenates.
    But I think the issue is that raising that aromatic content 
in the gasoline is going to have negative public health 
effects. Toluene will de-alcoholate to make benzene in the 
exhaust. And benzene is a very, very potent toxic. Toluene, 
like the other aromatics in the fuel, tend to increase fine 
particulate emissions out the exhaust, while oxygenates will 
reduce the fine particulate emissions out of the exhaust.
    Toluene and other aromatics are precursors for much more 
toxic aromatic and nitro aromatic compounds that are found in 
the particulate matter and in the VOC exhaust. And so, even 
though you might be able to make the fuel that meets the mass 
base requirements of the Clean Air Act, my concern would be 
that going back to where we were in 1985, which is really what 
we are talking about, let us go back to now low-sulfur, low-RVP 
conventional gasoline as opposed to reformulated gasoline, that 
that is going to have public health impact.
    Mr. Bilirakis. The gentleman from Texas, Mr. Green, for 5 
minutes.
    Mr. Green. Thank you, Mr. Chairman.
    I think it is appropriate both the American Lung 
Association and Mr. Campbell talk about alcoholates would be 
the substitute and the preferred substitute.
    Are we where we were with MTBE 10 years ago? I do not 
really want to drink alcoholates either, as well as MTBE. If we 
use that as a substitute that will have the same octane ability 
that MTBE would have, what would that do to groundwater or all 
the other problems that we see?
    Mr. Campbell. That is absolutely not the case. First of 
all, it is alcoholate. And it has been in gasoline, it has been 
a fundamental part of our processing ever since certainly I 
have been in the business 40 years, and it was there before I 
came in. We have it in all of our refineries. It is almost as 
pure hydrocarbon as we put in gasoline. It is a high octane 
component, and it is a preferred component over certainly 
aromatics or certainly oxygenates in gasoline.
    Now, to the point that somebody raised earlier that there 
probably has not been enough studies looking at all the 
variety, dozens and dozens, of compounds that happen to be in 
gasoline, I would imagine that would be the case. But I would 
think that of all the hydrocarbons that you can think of to 
replace MTBE, there is not one more purer or more simple than 
alcoholate. And it is already there.
    Mr. Green. Again, not being here in the late 1980's when 
MTBE was being discussed and I was concerned, and my colleague 
from Wisconsin, Mr. Barrett, you know, there was a 1987 memo 
and of course the industry participated. You wanted to follow 
up?
    Mr. Early. It is certainly a legitimate question to say, 
let's say if we doubled the amount of alcoholates in fuel, what 
are the public health impacts of doing that. And that is why 
one of the Blue Ribbon Panel recommendations was to do much 
more research in this area so we do not.
    I mean, MTBE was already in gasoline, and then it got 
dramatically increased. And then we found out that that was a 
problem. So we do need to have the research on alcoholates and 
other components of gasoline so that we do not make the same 
mistake again. I mean, we should learn from our mistakes, there 
is no question.
    Mr. Green. Mr. Vaughn, I understand that numerous health 
organizations said that boosting the amount of ethanol in 
reformulated gas increases the VOCs, CO, and NOX.
    Is it your testimony that ethanol does not cause such 
increases in comparison to MTBE?
    Mr. Vaughn. Congressman Green, it is my testimony that, by 
law and Federal regulation, we are not allowed to.
    In Chicago, in Milwaukee, in northern Illinois and northern 
Indiana, two of the reformulated gasoline requirement areas, 
approximately 420 million gallons of ethanol is sold in the 
Federal Reformulated Gasoline area, and it is not allowed by 
law to do that.
    Can it theoretically increase and does it increase? It can. 
It is not allowed to in reformulate gasoline. And the gasoline 
needs to be manufactured in such a way as Mr. Perciasepe said 
that would accommodate that, meaning a sub-vapor pressure fuel 
is necessary to accommodate ethanol in the reformulated 
gasoline program.
    Mr. Green. The Sierra Club testified in the Senate 
Environmental Committee in 1994 and said that they saw 
expanding ethanol uses as potentially increasing global 
warming, increasing smog, increasing air toxics, increasing 
water pollution, and damaging the sensitive habitat areas. And 
that was, again, in August 1994.
    How can this committee be assured that, knowing that 
testimony that was recorded then, that increased use of ethanol 
would not cause environmental backsliding from current levels 
as achieved by MTBE? Or is the Sierra Club wrong?
    Mr. Vaughn. I think I remember their testimony back 6 or 7 
years ago from the Sierra Club on this issue. But there are 
certainly a range of recent studies, in fact, one just released 
2\1/2\ weeks ago commissioned by the Department of Agriculture 
on the very issue of global warming and a range of biofuel 
plants, ethanol plants being among them. And what they 
documented is there is a modestly efficient plant, a modestly 
efficient farmer producing ethanol with fairly good but not 
exemplary techniques and can produce a tremendous reduction in 
CO2 emissions on an energy-per-content basis.
    Mr. Green. Let me follow up since you mentioned that 
average farmer. Let us turn to water quality, then, since that 
is why we are here today.
    Obviously, expanding ethanol production is not without its 
water quality implications, particularly downstream for corn 
production; and those of us who live and work along the Gulf 
Coast know only too well what happens when nonpoint pollution 
in the Mississippi increases.
    The Environmental Defense Fund told the EPA that with a 
poor environmental record of modern-day agriculture, 
environmental harm that can be caused by greatly expanding corn 
ethanol production would far outweigh the marginal air quality 
benefits that use of ethanol may have on reformulated gasoline. 
Again, that is from the Congressional Record of 1994.
    How can we be certain that the water quality, if we 
increased ethanol, like my colleagues from the Midwest or 
Illinois like to do, that we would not see a continued problem 
or even greater problem with water pollution particularly in 
the Mississippi Basin?
    Mr. Vaughn. Yes, sir. I think that there are a couple of 
answers. But among them, we probably are not talking about a 
tremendous amount of increase in corn production. We are 
talking about the increased utilization of the corn crop. We 
are using the starch component of that corn, about 600 million 
bushels of it today. We produce about 9 billion bushels.
    We are also going to be moving into crop areas such as 
sugar beets, a range of bio-mass feed stocks in your part of 
the country, some cane, some bagasse being developed down in 
Louisiana.
    But the point about ethanol is that you--if you get stuck 
back in 1994-1995 studies, those are based on an analysis done 
4 or 5 years earlier. All of the recent analysis from the 
Department of Agriculture, Department of Energy, and virtually 
every State organization, including the Texas National 
Resources Commission, points to a far more energy efficient, 
far more environmentally efficient utilization of resources to 
produce high-quality, high-impact, high-value, low-polluting 
ethanol.
    Mr. Green. Let me follow up, Mr. Chairman, in closing and 
just say I don't know if the environmental groups have changed, 
but maybe we could with 54 percent subsidy; and that is again 
an issue that another committee has to deal with. But we might 
be able to produce something else that might be cleaner if we 
would--as a government would subsidize it like we do ethanol.
    Mr. Greenwood. Thank you.
    The Chair recognizes himself for 5 minutes. Let me direct a 
question, if I may, to Mr. Campbell. Your written testimony 
indicates that the refining industry can make cleaner burning 
fuels without oxygenates at the mandated level. Given that the 
oxygenates currently displace a significant volume of the other 
more toxic components of gasoline, how would refiners maintain 
the toxic emission benefits of the current RFG Program?
    Mr. Campbell. Mr. Chairman, again, I have to say that that 
is going to differ from one refinery to the other. But what we 
would be doing, if in fact we are given the flexibility, would 
be reducing MTBE. As I indicated, we would be replacing 
compounds, at least with--certainly within our own company, 
initially alkylate, which we would believe is a less toxic 
substance; probably more reformate; and potentially some of the 
other aromatics, certainly not benzene.
    But the important point is, we are convinced that we can be 
able to manufacture that low-oxygenate or even a nonoxygenate 
gasoline and have an air toxics reduction that is in excess of 
what the EPA is requiring for the year 2000. We take the 
formulation, we put it into the model, and that is the results 
we came out with, sir.
    Mr. Greenwood. Why can't the refining industry simply 
switch to ethanol and still meet the oxygenate requirement of 
the Clean Air Act?
    Mr. Campbell. First of all, let me indicate that we, as a 
company, are probably one of the largest manufacturers in the 
United States of ethanol and gasoline, so we have extensive 
experience in the Midwest. In fact, as we speak, we are 
expanding into the Pittsburgh area. So it is a compound that we 
use a great amount of.
    It has several problems. One is manufacturing. If you just 
try to instantly do it, you would have a supply problem. 
Logistics, it has to be distributed separately. But those can 
be overcome. I mean, with a lot of time and a lot of money, you 
can overcome that.
    The key problem with ethanol in gasoline and the reason 
that we don't use it in the Northeast United States, but we do 
use it in the Midwest, is because of the environmental 
characteristics, as Mr. Grumet testified. And the problem with 
ethanol, it has a very high RVP or vapor pressure, which causes 
VOCs or volatile organic compounds, which in turn bring about 
smog formation. The only way that can be overcome--that is why 
it has a 1 pound RVP waiver, because when you put it into 
gasoline, it requires a 1 pound waiver from the specification.
    If, in fact, you took ethanol and eventually put it into 
the Northeastern system, got the distribution, had the plants 
there and got it into the system, and mandated that the RVP 
remain the same, or the total blend, as it did before. That 
would mean the blendstock that we put the ethanol in would have 
to have even a much, much lower RVP, around 5.8 pounds. I will 
tell you that is extraordinarily expensive to accomplish, and 
to do that means you also remove more barrels out of the 
gasoline blendstock.
    So it is because of that characteristic that the companies 
have not chosen to put ethanol in gasoline in the reformulated 
gasoline areas or out in California in the CARB area. But it is 
very popular and used elsewhere.
    Mr. Greenwood. I am going to yield the balance of my time, 
and I am also going to yield the chair to the gentleman from 
California. I am desperately trying to catch a 4 o'clock train. 
I promised my daughters I would be home tonight for dinner. So 
thank you.
    Mr. Grossman. I have a 4 o'clock train to catch, too. Would 
that be okay?
    Mr. Bilbray  [presiding]. Sure. I think you articulated 
your position quite clearly and distinctly.
    Mr. Shimkus. Mr. Chairman, he needs to change the name to 
MTBE Busters instead of Oxybusters.
    Mr. Bilbray. I guess we will take a look at the mandate 
again. And again, let me say sincerely as somebody who has been 
a little involved in this process over the last decade that, 
Mr. Early, I appreciate your intestinal fortitude for being 
willing to stand up and point something out. It was sort of 
interesting that Mr. Vaughn was articulating that the attack on 
ethanol was based on science that was 5, 6, 10 years old. And 
in 1995, the data available then was not what is available now.
    The issue is that the Lung Association is taking a look at 
the information you have today and have come to a conclusion as 
a result.
    Mr. Graboski. I would observe that the testimony that Mr. 
Green was quoting from the Sierra Club was delivered by myself. 
I would also agree with Mr. Vaughn that we know more about the 
global warming impacts of ethanol in light of changed 
agricultural practices, And we need to make the decisions on 
modern information. That is why we are emphasizing the change 
in our position, which, you know, the Lung Association 
supported the 2 percent mandate in 1990. We know a lot more 
know than we did then.
    Mr. Bilbray. That's what I appreciate. I know there are 
those in this city that want to defend the status quo, that 
will attack the Lung Association because they have taken a 
position that a lot of people in Washington don't appreciate. 
But I was very, very impressed with your testimony, as you 
pointed out, that we have learned much more about cleaner 
gasoline, as stated, and that the Lung Association believes 
that the experts at the California Air Resources Board know 
more about producing clean fuels than any other government 
entity, bar none.
    Do you want to expand on that statement to some degree?
    Mr. Graboski. Well, as you well know, they have been at it 
a lot longer. And they have more people looking at the issue. 
They have more data available to them. They generated more 
data. They have, as you know, been struggling very much in the 
last couple of years with regard to the MTBE problem, and a 
tremendous amount of money and research has gone into trying to 
solve that problem. They are asking for a waiver because they 
have come to the conclusion that a 2 percent oxygen requirement 
gets in the way of being able to produce cleaner gasoline 
while, of course, phasing down--phasing completely out MTBE in 
California by the Governor's executive order.
    Mr. Bilbray. But as your testimony said, CARB has provided 
the evidence that the 2 percent requirement actually impedes 
the ability of the refiners to produce a new generation, which 
will be an evolutionary step beyond. And you want to see that 
step made, so the initial step to even cleaner gasoline is the 
elimination of the 2 percent mandate on the State of 
California?
    Mr. Graboski. Absolutely.
    Mr. Bilbray. Okay.
    Mr. Strickland.
    Mr. Strickland. Thank you. And my good friend from Texas 
has asked for any time that I may have left over. So I would 
like to ask one question, if each of you would please respond; 
and then I will yield the rest of my time to Mr. Green.
    The question I would like for you to respond to is: Can you 
estimate how the removal of the mandate would affect the 
current usage of the two primary oxygenates, MTBE and ethanol? 
Would each of you please respond to that briefly, if you could?
    Mr. Bilbray. Point of clarification, the mandate totally or 
a mandate with a backsliding clause included?
    Mr. Strickland. No backsliding clause.
    Mr. Bilbray. With?
    Mr. Strickland. No, without.
    Mr. Bilbray. Without the backsliding clause.
    Mr. Campbell. Assuming you want to go from left to right--
--
    Mr. Strickland. If you would, Mr. Campbell.
    Mr. Campbell [continuing]. I will be glad to give it a try.
    I believe that if, in fact, we eliminate the oxygenate 
mandate and give the flexibility to refiners, then what will 
happen is, MTBE usage will drop considerably; and as I 
indicated in my testimony, I think it will happen ultimately 
faster and probably further than people thought when we met as 
a panel. The reason is because the heightened awareness of the 
MTBE issues. And I think companies in general would--many of 
them are going to want to be able to advertise, ``Our gasoline 
is MTBE free.'' And I think that will ultimately happen.
    As far as ethanol is concerned, I believe that almost 
regardless of what you do, the amount of ethanol in gasoline is 
going to increase. And the reason that I say that is, if you 
look at all the things that are going to happen to the gasoline 
pool in the United States--lower sulfur gasoline, the new 
gasoline is coming out right now, RFG 2--every one of those 
things tends to lower the octane of the pool, and refiners need 
to replenish that. I think in many ways they will be 
replenishing that with ethanol.
    So I really fundamentally believe the amount of ethanol is 
going to go up even if no mandate is set on that. As I 
indicated, we are increasing our usage of it and expanding it 
to western Pennsylvania today.
    Mr. Graboski. Were we banning MTBE as a part of your 
question?
    Mr. Strickland. I'm sorry, sir?
    Mr. Graboski. Were we banning MTBE as a part of your 
question?
    Mr. Strickland. Assuming we are not.
    Mr. Graboski. We are not. So the market is going to be 
exactly the same, but what we are going to do is get rid of the 
oxygen mandate.
    I think the issue is what refiners will choose to do. I 
agree with Bob Campbell that ethanol consumption is going to 
stay the same, or it is going to increase. I mean, I think that 
is going to happen.
    What happens with MTBE, I am really not sure about. About a 
third of the MTBE is produced by the refiners, a third is 
produced by the merchants like Lyondell. And I think about a 
third is imported from Saudi Arabia. And I think maybe the 
refiners, some of them who produce MTBE, now want to get out of 
the MTBE business. But that still leaves two-thirds of the MTBE 
around.
    My guess would be that without some kind of a push on oil 
refiners, together to get rid of it, that what you are going to 
find is that some will want to use it. And when some want to 
use it, they will all want to use it. I think we will have 
status quo, maybe slightly reduced MTBE, but I really don't see 
it going away. I mean, I think if you want it to go away, you 
have got to ban it. If you say, we are going to get rid of the 
oxy rule, I really don't see the situation changing very much.
    Mr. Early. Based on the evidence that was presented to the 
Blue Ribbon Panel, I would conclude that if you just got rid of 
the oxygen mandate, MTBE usage will go down, ethanol usage will 
go up, but toxics will also go up. In other words, we will see 
some backsliding, which is why you need the other pieces that 
we are advocating.
    Mr. Strickland. Okay. Thanks.
    Mr. Young. It is important what I have heard to this point. 
Actually, I haven't at any point given any thought to 
elimination of oxygen standard without any backsliding, but 
clearly I think we would see a substantial reduction in MTBE.
    Now, when you do that, you obviously have to ask yourself 
what replaces it. I think you could possibly see ethanol move 
up, because ethanol has particular good characteristics from an 
octane standpoint. But, clearly, I think you have to point back 
to the backsliding issue. As far as I am concerned from air 
quality standpoint, we would degrade as a nation as a result.
    Mr. Vaughn. Congressman, the ethanol perspective would be 
that the ethanol expansion or development would probably be 
stalled. We would probably see some reduction in the use of 
ethanol, certainly reformulated gasoline areas where we are 
currently seeing a modest, but important amount of ethanol 
being used.
    But I think if you don't take action to deal with this 
problem--for example, the way Governor Gray Davis has in 
California--to set a timeframe and to actually eliminate the 
use of this product, a ban will create--excuse me, a phaseout 
or elimination requirement will create the exact situation that 
Mr. Graboski pointed out. A third of the product will go away, 
but we will see more of this product used in more markets, 
maybe attainment markets. But the problem, if it is water 
contamination you are concerned about, will spread.
    I think Mr. Early is actually on the mark, excuse me, that 
toxics will go up.
    Mr. Green. I think you yielded to me.
    Mr. Strickland. Yes.
    Mr. Green. Mr. Chairman, I couldn't help but hear outside 
that your concern about quoting 1994--and let me quote Mr. 
Grumet's testimony today where he talks about repeal of 2 
percent on page 3: ``while ethanol usage is far preferable to 
MTBE from groundwater perspective and promotion of ethanol can 
further a host of energy, agriculture, environmental goals as 
ethanol mandate is not sound environmental economic policy for 
our region. Due to its high volatility and resulting increase 
in evaporative emissions, the use of ethanol during the 
summertime ozone season may actually exacerbate our urban and 
regional smog problems.''
    So that is not from 1994. That is from testimony that we 
heard just a few minutes ago.
    Let me, if we have more time for--a question, Mr. Chairman, 
for Mr. Campbell.
    Mr. Campbell, you have been involved in the refining 
industry, you said, for 40 years. You testified that your 
company used MTBE in its gasoline in the early 1980's for 
oxygen--I guess for increased performance. Would you agree with 
the characterization put forward by the ``60 Minutes'' program 
and others, that we did not know anything about the health 
effects of MTBE when we started to use it in the late 1970's 
and early 1980's?
    Mr. Campbell. Congressman, what I would like to say here is 
that I am here today to talk about where we are and how we go 
forward from here. And the reason I draw that distinction is 
because, in the intervening timeframe, very rapidly, there have 
been a number of suits filed, class action suits against 
refiners, manufacturers and everybody, talking about how we got 
to where we are and what was known back when.
    So I would respectfully have to decline to answer that 
question.
    Mr. Green. Okay.
    Mr. Barrett then talked about the memo that was from 1987. 
And I have the resulting study, that was EPA released, that was 
December 1997. I guess it was that follow-up, the EPA fact 
sheet on drinking water consumer acceptability and advice on 
MTBE. So I admit it kind of worries me that it took EPA from 
1987 to 1997 to do something. But some of the reports in that 
study again had been testified about today, you know, the 
concern about groundwater resources.
    But let me ask one last question of the panel, because it 
came up in our last panel. The water pollution problem we have 
with MTBE, have any of you had any experience you can testify 
to, whether it is from the burning of MTBE in a car or truck, 
or is it from leaky source tanks, people spilling it when they 
fill their tanks?
    Is there any evidence that MTBE is getting in our water 
supply from being burned as a fuel?
    Mr. Vaughn. Mr. Congressman, there is an enormous amount of 
data coming out of California from both the Energy Commission 
and a study that has been conducted throughout 11 months of the 
State of California to review MTBE sources. And there is a 
tremendous amount of data that indicates that both the range of 
leaks from tanks, shipping points, car accidents, and air or 
emissions deposition. And all that documentation, if nobody 
else has made it available to you, I certainly will.
    But the California has completed a thorough fate analysis 
on these issues, which is the most updated analysis on both 
ethanol and other oxygenate alternatives. That is also to be 
part of the committee's deliberations or part of the record.
    Mr. Green. I appreciate that response. But again, I have 
heard or seen most of the effort was that the pollution 
problems in water, groundwater, was because of spills; and 
again, nobody has quantified it to say 5 percent, 10 percent, 
20 percent or whatever it could be that would come out of 
burning fuel in a vehicle. Any other response?
    Mr. Early. Well, evidence presented to the Blue Ribbon 
Panel, some of which is the evidence that Mr. Vaughn referred 
to, indicated that air deposition from MTBE was a source of 
contamination of water resources. These would primarily be, 
obviously, lakes and streams, some of which are hydrologically 
connected with groundwater. But I think the evidence also 
showed that that was, you know, not the most important source 
of contamination; that leaking, spilling, and other sources 
were far more important.
    Mr. Green. Okay.
    Mr. Campbell. Congressman, all I can say is, all of our 
experience in cleanup has been in a result of spills or leaks.
    Mr. Green. Thank you, Mr. Chairman.
    Mr. Bilbray. The Chair will yield himself 5 minutes as 
indicated by the previous Chair. I would like to remind the 
panel and the Members of the Congress that, as Mr. Vaughn 
pointed out, California has done an extensive study on this. 
And Lake Tahoe, which was identified as one of the cleanest 
lakes in the world, has had a problem with this material 
because of 20 percent of the blowby of two-cycle engines. And I 
guess it could fall under Mr. Green's presumption that this is 
unburned fuel, but it still----
    Mr. Green. It spills out of the tank.
    Mr. Bilbray. It is not the spilling out of the tank. It is 
actually the fact that, during the combustion process, the 
blowby is--during the compression process, a two-cycle is not a 
sealed system. It is an open system, and that the fuel blows 
right past the cylinder and right back out the exhaust and 
drips out into the water. That is why two-cycle is being 
outlawed in Tahoe, and why the California Air Resources Board 
right now is requiring a whole new redesign of two-cycles for 
the State of California.
    That said, I think that we need, and I appreciate you 
bringing up just how much we are working on this stuff. It 
still comes down--Mr. Early, you live back here on the East 
Coast?
    Mr. Early. I live in the Washington, DC, area.
    Mr. Bilbray. Thank you. Let me just tell you, and I know 
the members are sick and tired of hearing it, I am glad to see 
that somebody on the East Coast appreciates what we are trying 
to do back West. And I am glad somebody back here reads our 
reports every once in a while.
    Mr. Early. Well, I would just observe the Lung Association 
just got through a vigorous campaign supporting EPA's 
regulations so-called tier 2 regulations to crank down on tail 
pipe emissions for new automobiles and to lower the sulfur in 
gasoline. And there is no question that California's program, 
which preceded it, was essentially the clean air road map for 
that program. And so, obviously, we pay a lot of attention to 
what is happening in terms of air quality efforts in 
California.
    Mr. Bilbray. Well, then, can I ask us all to remember to 
use new jargon--EPA uses it, you just used it--"tail pipe 
emissions'' is something we need to avoid. ``total auto 
emissions'' is our new slang, seeing that we have found that 
evaporative emissions are a major problem that we have 
underestimated grossly. And maybe when we are talking between 
EPA and CARB, one of the problems is we are using barn testing 
there and using total emission as a standard where they are 
still working off of the tail pipe issue.
    But, Mr. Early, the Lung Association was really pointing 
out a point that I would like you to expand on. The California 
fuel system has actually preempted the Federal. In fact, 
Senator Kennedy once said that he didn't want the Federal fuel 
to stand in the way of California, but more to follow its lead. 
That aside, the air laws in this whole country, the regs and 
the rules and everything else, are pretty well based on one 
assumption; and that the goal is to attain the national ambient 
air quality standards, right?
    Mr. Early. As expeditiously as practicable.
    Mr. Bilbray. As practicable. So if that is the overriding--
you know, golden rule of the implementation of our clean air 
strategies, how do we reconcile that with your testimony that 
points out that the 2 percent content may create a barrier to 
California attaining that golden rule?
    Mr. Early. That is why we--it is a problem, which is why we 
support waiving the 2 percent requirement for California. But 
if it makes sense for California, one might argue that it makes 
sense for Federal RFG as well.
    Mr. Bilbray. So the point is that the Lung Association has 
recognized what CARB has recognized, which is that the content 
specific standard, although it may be appreciated by the 
ethanol industry, may be a barrier to local jurisdictions from 
acquiring their mandates under the Clean Air Act.
    Mr. Early. Well, as an example of why the content 
requirement may not make a lot of sense, evidence presented to 
the Blue Ribbon Panel showed that benzene levels in the 
Chicago/Milwaukee market are among the highest of any RFG area 
in the country. Now, this is also the market you just heard 
testimony on, that is using 10 percent ethanol in their RFG. 
So, you know, I think it illustrates more than anything else 
that making gasoline is very complicated, and that it is best 
to tell refiners what you want in the way of clean air results 
rather than mandating specific--inclusion of specific things in 
the fuel.
    Mr. Bilbray. More like what we are doing with the auto 
industry where we are starting to require tail pipe--total 
emission standards, and not necessarily telling them the 
technology that they have to use to clean it up.
    Mr. Early. Correct.
    Mr. Graboski. I have to object. Benzene levels and ethanol 
levels in Chicago are not related, and it is a separate 
economic issue as far as refining is concerned, compared to 
other places. There is no petrochemical market for benzene in 
the Midwest and so it is not extracted. And that is the reason 
why the benzene levels are higher. It is not because of using 
ethanol.
    Mr. Early. I don't disagree with you. My point is that just 
adding ethanol doesn't necessarily guarantee you that you are 
going to have low levels of benzene.
    Mr. Graboski. No. The thing that guarantees that you all 
have benzene levels below 1 percent is the standards of the 
Clean Air Act, which represents the cap.
    Mr. Early. Absolutely. I am with you all the way.
    Mr. Bilbray. And I think that we have seen that in 
California the caps are pretty stringent.
    But, Mr. Young, do you want to--everybody is getting their 
little piece of this question. Do you guys want to--the fact is 
that there are those that are saying--let's go back to the good 
old Washington way of doing things, and let's not say what we 
want to see; let's just outlaw what we say we don't want to 
see. There is a big outcry right now that the answer to all our 
problems is to outlaw your product nationally.
    Mr. Young. I would contend that you have to go to the 
source of the problem, which is underground leaking storage 
tanks. A lot of people, I think, we have heard today say that 
the primary source for any actionable level associated with 
MTBE contamination of groundwater is clearly underground 
storage tanks. Being in the refining industry and the 
petrochemical industry, I don't accept the fact that tanks will 
always leak. But I accept the fact that they can leak, which, 
to me, requires monitoring of all tanks to ensure that when 
they do leak, it can be fixed before they contaminate 
groundwater.
    Mr. Bilbray. In all fairness, Mr. Young, I would challenge 
you to find a State that has had as aggressive an underground 
tank surveillance and replacement system as the State of 
California, and we still are running into this problem.
    But I guess, Mr. Early, your comment is, while this 2 
percent mandate exists, it is not practical for a State like 
California or whatever to be able to implement a ban if we want 
to do it. I know some people are supporting a Federal ban, but 
right now, would the 2 percent oxygen be almost tying the hands 
of local jurisdictions to be able to implement a ban if they 
want to implement it?
    Mr. Early. That goes a little further than I am comfortable 
with.
    Mr. Bilbray. Okay.
    Mr. Early. What California is wanting to do right now is to 
make a gasoline that is even cleaner than the gasoline that 
they have been requiring. And they are saying that the 2 
percent requirement makes that much, much more difficult. In 
other words, you could have a cleaner fuel if you didn't have 
to meet the 2 percent mandate than if you do. They are not 
saying--they have not said that you can't meet the mandate. In 
fact, you know--I mean, the California Resources Board has 
said, you know, refiners will meet the 2 percent requirement if 
it remains in the Federal law, and they will meet clean 
gasoline--California's cleaner gasoline standards.
    But they have also asked for a waiver because they said we 
could--we could get an even cleaner gasoline and make even more 
progress toward meeting ambient air quality standards if we 
didn't have the 2 percent requirement. It is mostly for the 
reasons Mr. Campbell explained; you have got to crank down on 
the refining process in order to compensate for the volatility 
of ethanol and some of the other increases in air pollution 
caused by the presence of ethanol, which is the only 
commercially available oxygenate in California.
    So the question is, rather than doing that, why don't we 
get rid of the 2 percent mandate and crank down on those 
pollutants and make a cleaner gasoline, rather than going 
through all this effort just to accommodate the 2 percent 
oxygen requirement.
    Mr. Bilbray. I appreciate your testimony because you bring 
us back to where we should be, not talking about ethanol or 
methanol, but talking about the fact that the 2 percent was put 
in there for clean air strategies, and the 2 percent was 
supposed to be a quality control. And, at least in California, 
we are recognizing that the 2 percent has now become an 
obstruction to quality control rather than an aid.
    I appreciate your getting us back to the fact that it is 
air pollution we are talking about, not one substance or 
another.
    Let me yield to our colleague, Mr. Shimkus.
    Mr. Shimkus. Thank you, Mr. Chairman. I know Mr. Graboski 
wanted to respond to the 2 percent debate. You have time now, 
sir, to respond.
    Mr. Graboski. I would contend that the gasoline without 
oxygenate in California is not going to be cleaner than 
gasoline with oxygenate in California. I would further contend 
that while I think that California RFG 2 is a great fuel, I 
think that California RFG 3 provides the refiner with the 
flexibility to produce fuels that are not cleaner, but fuels 
that are dirtier than fuels that are in the marketplace now in 
California. And I am willing to debate that point.
    Mr. Bilbray. The question----
    Mr. Shimkus. Mr. Chairman.
    Mr. Bilbray. Go ahead.
    Mr. Shimkus. It is my time. Thank you.
    Mr. Bilbray. Go ahead.
    Mr. Shimkus. I could yield to you if you would ask.
    Did you want to finish, Mr. Graboski?
    Mr. Graboski. Yes. California RFG 2 has a tail pipe 
specification, and it has a vapor pressure cap. California RFG 
3 doesn't have a tail pipe specification anymore. One can do 
like an EPA complex model, and that is, tradeoff evaporative 
emissions for tail pipe emissions.
    Under California RFG 2, the tail pipe emission cap 
basically limited the refiners ability to increase aromatics in 
gasoline and increase the T-90 of gasoline. But under the new 
regulation, the refiner is provided flexibility to both 
increase aromatics and increase T-90.
    While ARB and CEC did an economic study that showed that 
putting alkylates in gasoline would produce a cleaner gasoline, 
the problem was that the study was predicated on the fact that 
refiners would use the base formulation of California RFG 2 in 
trying to meet the California RFG 3 rules. And that is 
basically not what is going to happen, because a constraint has 
been lifted; the refiner has been given flexibility. And he 
will increase the aromatic content of his gasoline, and he will 
lower his vapor pressure, and that is how he will meet the 
rule; and that will be not as clean a gasoline as the gasoline 
that is being sold now.
    Mr. Bilbray. Will the gentleman yield?
    Mr. Shimkus. As long as the chairman is very generous in 
making sure that I can get my final questions in.
    Mr. Bilbray. First of all, the assumption that all 
oxygenates would be taken out in the California market, I don't 
think you or I have ever seen any suggestion that that was 
going to happen, right?
    Mr. Graboski. No. But the point is that, in trying to 
justify the fact that the only--that the waiver should go--the 
waiver should be awarded because air is guaranteed to be 
improved. ARB has said that the gasoline formulation that they 
propose is going to be the one that is in the marketplace.
    And I grant you that if oxygenates are in the marketplace--
if they are in the marketplace, the gasoline will probably be 
different than what ARB proposed it would be. But then we would 
get the environmental benefits. And so, therefore, we have 
oxygenates. We don't have these environmental benefits that 
CARB is asking for. So why are we even debating this?
    The only way that we should reduce the waiver--award the 
waiver is if we are convinced that that is the gasoline that is 
going to be made, and those environmental benefits will exist. 
And the refiners are not going to make that gasoline, and the 
reason they are not going to make it is, they have to buy 10 
percent of their gasoline from Texas and other places as 
alkylate, and they have got to buy another 10 percent of their 
supply from Texas and other places as California RFG 3, because 
under the scenario that is proposed, they can't make it all. 
And I don't think the refiners are going to operate that way.
    Mr. Bilbray. So your assumption is, the California 
regulatory system is too lenient to be able to implement a 
program like this.
    Mr. Graboski. No. What I am saying is that the California 
regulatory system, as it was under California RFG 2, 
effectively capped what the refiners could do by saying that 
you--that you had to meet both separate exhaust and evaporative 
emissions standards. And I think that is very good. That is 
better than the Federal program, which said you can add them 
together.
    Mr. Bilbray. I appreciate that. I was the one who made the 
motion to do that.
    Mr. Graboski. But what has happened with California RFG 3, 
is you are now allowed, like in the Federal program, to 
tradeoff exhaust emissions for evaporative emissions; and when 
you do that, that opens up the game to be very, very flexible 
and make gasolines very, very far different than what ARB 
thinks the gasolines will be.
    And if you examine the economics of where a refiner is 
likely to go in the real world, he is going to go toward 
cranking up his reformer the way he used to run it. He will try 
and buy some alkylate, but he is not going to find a lot 
because it is not generally available in the marketplace. But 
he will go buy natural gasoline to control his T-50 problems. 
And that fuel that comes out is not going to offer any 
NOX benefits, which is what California wants.
    Mr. Bilbray. In all fairness, Doctor, in 35 years in its 
administration, I would be very, very questionable of, first of 
all, that California has ever retreated from its air quality 
standards, that California has ever looked the other way when 
the pollution index went up, and the fact that California has 
not only continued the pressure, but it is proven it has got 
the administrative ability to respond to the glitches when they 
do show up.
    I think that we have been litigated in court. We have been 
sued by people around this table to try to force us toward 
going other ways. And both the scientists in the general field 
and the courts in the general field have substantiated the fact 
that California usually is very, very substantial in addressing 
that thing. And to be frank with you, I sit there and look the 
stuff that we are still doing and we have to live with in 
California. And then to see somebody in Washington say, somehow 
California is going to backslide, I challenge you on consumer 
products, on emission issues, on design--unique design.
    Mr. Shimkus. Mr. Chairman, can I reclaim my time?
    Mr. Bilbray. I just challenge saying what State has done 
better, who has done better, and the EPA has done better.
    Mr. Graboski. I don't know that the EPA has done better. I 
would respond by saying that I am glad that California could 
respond in the case that there is environmental backsliding. 
And I will look forward to seeing that happen in the future.
    Mr. Bilbray. Thank you.
    Mr. Shimkus. Dr. Graboski, you are from Colorado; is that 
correct?
    Mr. Graboski. Now or originally? Originally, I was from New 
York and New Jersey. I don't like to talk about that too much, 
but I live in Denver, Colorado now, yes, for 22 years.
    Mr. Shimkus. Mr. Campbell, I will go back, but I have got 
to ask a question first, and I have got to make sure I have got 
this covered.
    Because the debate has been asked--the question has been 
asked, if MTBE is banned, how can ethanol expand to meet the 
market? The chairman has asked me that numerous times.
    Mr. Vaughn, could you address the expansion of the supply?
    Mr. Vaughn. Thank you, Congressman.
    Mr. Shimkus. And then follow up on--the other question that 
has been asked today is how--the increased costs or inability 
to get ethanol from point A to point B throughout the country.
    Mr. Campbell. Excuse me, before Mr. Vaughn answers that 
question, I'm not sure of the protocols, okay, but I have a 
guaranteed, cannot-miss flight that I have to leave right now 
for unless somebody has a question.
    If I can be excused, Mr. Chairman, I would very much 
appreciate that.
    Mr. Shimkus. I am sure you can, Mr. Campbell.
    Mr. Bilbray. Go ahead, Mr. Campbell.
    Mr. Campbell. What I was saying is I have a guaranteed, 
cannot-miss flight that I have to leave for. If there are any 
questions.
    Mr. Shimkus. I understand. I think many of us are in the 
same position. In other words, you can go.
    Mr. Bilbray. Thank you, Mr. Campbell. I appreciate your 
testimony. It is not every day we see the Lung Association and 
an oil company agreeing on anything.
    Mr. Green. You can follow the Oxybusters.
    Mr. Shimkus. MTBE Busters, I think that is what we are 
going to name them.
    Mr. Vaughn. I will also try to be brief, Mr. Shimkus, as 
Mr. Campbell is leaving the room.
    One of the expansion opportunities we are seeing right now 
is in the Pennsylvania area, a tremendous amount of activity 
going on. Carol Browner just 2 days ago, a meeting with 11 
Governors, put a challenge to them. Could ethanol--if we don't 
grant the California waiver, could ethanol expand? How? How 
could you do it? How quickly could you do it?
    Today our industry released an analysis that documents 
exactly how that can be done. You start out with the point that 
there is twice as much oxygen in ethanol as there is in MTBE. 
Therefore, you need half as much volume. Right now, today, the 
current ethanol industry supply of the surplus capacity 
documented by the Energy Information Agency is 275 million 
gallons of surplus production--much of it in the Rocky Mountain 
West. This, by the way--is more than sufficient to meet the 
minimum oxygenate requirement right now, today, for the State 
of California. All of this is going to be taken from Governors 
in the Midwest and in the Southeast and given to the Federal 
EPA, along as with an expansion plan that complements Secretary 
Glickman's plan, Secretary Richardson's commitment, and 
Secretary Daley's new and strong enthusiasm for expanding the 
production and use of this product.
    Again, it is all in the context that we are very confident, 
given Governor Gray Davis' leadership in California, having 
completed an 11-month fate analysis on ethanol, that there is 
going to a very strong role for ethanol as a renewable 
oxygenate, meeting--and I think Mr. Graboski is absolutely 
right, exceeding clean air standards now being implemented and 
improved in California, with ethanol.
    Thank you for the question.
    Mr. Bilbray. I might point out that is without the mandate 
or with the mandate. In fact, with the mandate, it is a 7 
percent increase. Without the mandate, as Mr. Early has pointed 
out, it is a 1-cent reduction. But the ethanol expansion is 
going to be there regardless.
    Go ahead, Mr. Green.
    Mr. Green. Thank you, Mr. Chairman.
    Mr. Graboski, I appreciate your pointing out that 
California, even though there be may some sensitivity to the 
backsliding amendment to an earlier bill, that their fuels 
could be dirtier without an oxygenate requirement.
    But let me, first of all, Mr. Vaughn, let me ask you one--
that information about the California non--you know, if it is 
nonpoints pollution by MTBE, I would appreciate it. And maybe 
Mr. Bilbray has it. If you have that report, if you could 
provide it to the committee, I would like to see it.
    Mr. Vaughn. Yes, sir.
    Mr. Green. Let me ask you one last question. Page 85 of the 
Blue Ribbon Panel report talks about ethanol and the health 
effects of it. Obviously there is some ethanol in all of our 
bodies, although some more than others, maybe. Health effect 
questions have been raised, however, about potentially 
sensitive subpopulations. In addition, increased use of ethanol 
may result in an increase of certain atmospheric trends, 
formation products such as PAN and acetaldehyde, although the 
extent of such increases are unknown. PAN, which has been shown 
to be mutagenic in cellular research, is known as a toxin to 
plant life and respiratory air to humans. Combustion, by-
products of ethanol may also cause adverse health effects.
    So could you comment on that part of that report?
    Mr. Vaughn. Congressman, I certainly want to tell you how 
much I appreciate the fact that every report that you are 
bringing up is getting closer and closer to this precise 
moment. And I did in no way to disparage you that you were 
suggesting 1994 data earlier. My trusty staff aides handed me 
something that I could probably read from.
    Let me just tell you that these issues have been brought 
up. And, again, I will make certain that I will get to your 
staff directly.
    The California complete analysis, the fate analysis, 11 
separate technical documentations, PAN was absolutely debated, 
discussed, and thoroughly reviewed. And all of these pollutant 
issues, upper atmospheric, mutagenic issues have all been 
debated and discussed. And ethanol was given by the Governor of 
California and the State of California a clean bill of health 
and an A on the report card. We are looking forward to being in 
the market.
    I think Chairman Bilbray points out, as Governor Davis told 
the President on Monday, they fully expect to have a great 
growth of ethanol use in California, something they would not 
allow to happen if they weren't entirely, completely confident 
of its environmental and economic impacts in the great State of 
California. We are confident about that.
    Mr. Green. Then the Blue Ribbon Panel was wrong in their 
study?
    Mr. Vaughn. No, sir. I didn't mean to suggest that either. 
I think what they were suggesting at page 84, as I recall, was 
that there are issues, there are concerns, and they ought to be 
addressed. We fully agree with that.
    But since that report was completed, the California ethanol 
fate analysis has been submitted. It was a peer-reviewed 
analysis by some of the finest institutions of higher education 
in the great State of California and have been approved now by 
the California Energy and Environmental officials, and signed 
off on by the Governor.
    So I am just saying that, as the data is coming out, the 
questions are being raised. We are attempting--in this case, 
California responded and answered some of those questions in a 
very efficient, highly technically proficient fashion. But I 
will make sure I get that entire record to you, sir.
    Mr. Bilbray. Any more questions?
    I want to thank you. It is nice to hear somebody 
congratulate California when they agree with their data.
    Let me say I think we have all come to a conclusion. As a 
Californian, I realize why the original law kept California's 
air quality, gasoline program separate from the rest of the 
country. I regret that the 1990 act tied us hip to hip with the 
rest of the country. I think this hearing was about what we are 
going to do outside of California. I just hope that we are able 
to work together.
    I don't think there are any exclusive agenda here. I think 
change sometimes scares everybody. But the fact is that we have 
got to learn how to do things better. Just as a 1990 car is not 
going to be the most environmentally friendly, so we need to 
make sure that we have a 2000 model for our clean air 
strategies.
    Thank you very much. Three days for each member to 
introduce written statements and testimony. This meeting stands 
adjourned.
    [Whereupon, at 4:06 p.m., the subcommittee was adjourned, 
subject to the call of the Chair.]
    [Additional material submitted for the record follows:]
    [GRAPHIC] [TIFF OMITTED]62976.044
    
    [GRAPHIC] [TIFF OMITTED]62976.045
    
    [GRAPHIC] [TIFF OMITTED]62976.046
    
    [GRAPHIC] [TIFF OMITTED]62976.047
    
    [GRAPHIC] [TIFF OMITTED]62976.048
    
    [GRAPHIC] [TIFF OMITTED]62976.049
    
    [GRAPHIC] [TIFF OMITTED]62976.050
    
    [GRAPHIC] [TIFF OMITTED]62976.051
    
    [GRAPHIC] [TIFF OMITTED]62976.052
    
    [GRAPHIC] [TIFF OMITTED]62976.053
    
    [GRAPHIC] [TIFF OMITTED]62976.054
    
    [GRAPHIC] [TIFF OMITTED]62976.055
    
    [GRAPHIC] [TIFF OMITTED]62976.056
    
    [GRAPHIC] [TIFF OMITTED]62976.057
    
    [GRAPHIC] [TIFF OMITTED]62976.058
    
    [GRAPHIC] [TIFF OMITTED]62976.059
    
    [GRAPHIC] [TIFF OMITTED]62976.060
    
    [GRAPHIC] [TIFF OMITTED]62976.061
    
    [GRAPHIC] [TIFF OMITTED]62976.062
    
    [GRAPHIC] [TIFF OMITTED]62976.063
    
    [GRAPHIC] [TIFF OMITTED]62976.064
    
    [GRAPHIC] [TIFF OMITTED]62976.065
    
    [GRAPHIC] [TIFF OMITTED]62976.066
    
    [GRAPHIC] [TIFF OMITTED]62976.067
    
    [GRAPHIC] [TIFF OMITTED]62976.068
    
    [GRAPHIC] [TIFF OMITTED]62976.069
    
    [GRAPHIC] [TIFF OMITTED]62976.070
    
    [GRAPHIC] [TIFF OMITTED]62976.071
    
