[Congressional Record Volume 146, Number 54 (Thursday, May 4, 2000)]
[Senate]
[Pages S3514-S3519]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. DASCHLE (for himself and Mr. Lugar):
  S. 2503. A bill to amend the Clean Air Act to authorize States to 
regulate harmful fuel additives and to require fuel to contain fuel 
made from renewable sources, to amend the Solid Waste Disposal Act to 
require that at least 85 percent of funds appropriated to the 
Environmental Protection Agency from the Leaking Underground Storage 
Tank Trust Fund be distributed to States to carry out cooperative 
agreements for undertaking corrective action and for enforcement of 
subtitle I of that act, and for other purposes; to the Committee on 
Environment and Public Works.


                      renewable fuels act of 2000

  Mr. DASCHLE. Mr. President, ten years ago I joined with two 
distinguished colleagues, then-Senate Majority Leader Bob Dole and 
Senator Tom Harkin, to introduce the reformulated gasoline (RFG) 
provision of the 1990 Clean Air Act Amendments. The RFG provision, with 
its minimum oxygen standard, was adopted in the Senate by the 
overwhelming vote of 69 to 30 and eventually signed into law by 
President George Bush.
  I am proud to say that this program has resulted in substantial 
improvement in air quality around the country. It also has stimulated 
increased production and use of renewable ethanol and other oxygenates 
needed to meet the minimum oxygen standard.
  Unfortunately, an unanticipated development involving the petroleum-
based oxygenate MTBE requires us to re-examine the many benefits of the 
RFG program. The detection of MTBE in ground water around the country 
has generated considerable debate in recent months over how to deal 
with this fuel additive and the oxygen requirement of the reformulated 
gasoline program. The resolution of this debate will have significant 
consequences for the environment, for farmers and for the rural 
economy.
  The pace of activity to resolve the MTBE issue is accelerating 
rapidly. Battlelines are being drawn as the state of California and its 
allies focus on scrapping the oxygen requirement.
  It is clear that Congress and/or the Clinton administration will 
respond to the MTBE problem. My focus is on ensuring that that response 
not only serves the environment, but also retains a prominent place for 
ethanol--a place that assures long-term, predictable growth of the 
industry.
  I believe a comprehensive legislative solution is necessary in this 
case--one that recognizes and preserves the important air quality 
benefits of the RFG program, protects water supplies and leads the 
nation away from greater dependence on imported oil.
  I have worked for the last year with the ethanol industry, Republican 
and Democratic colleagues in the Senate, the Governor's Ethanol 
Coalition, environmental organizations and the administration in search 
of a solution that gives states the tools they need to address MTBE 
contamination, ensures the future growth of domestic renewable fuels, 
and prevents supply shortages and price spikes in the nation's fuels 
supply.
  This process has led me to two basic conclusions.
  First, the MTBE crisis has left the RFG oxygen requirement vulnerable 
to legislative attack. Those who doubt this conclusion should reflect 
on the following facts.
  California refiners have shown that clean-burning gasoline can be 
produced without oxygen.
  EPA's Blue Ribbon Panel has recommended that the oxygen requirement 
be repealed.
  The RFG oxygen requirement is opposed by a diverse coalition that 
includes the American Lung Association, the American Petroleum 
Institute, the New England States Coordinated Air Use Management 
agency, the State of California and the Natural Resources Defense 
Council (NRDC).
  Second, support for the oxygen requirement will weaken over time. 
Improvements in auto emissions control technology will cause the air 
quality benefits of oxygen in gasoline to decline and the justification 
for the RFG oxygen requirement to diminish.
  As one of the original authors of the reformulated gasoline 
provisions of the Clean Air Act, I feel something of a proprietary 
interest in the oxygen requirement. As a legislator, I recognize that 
circumstances change, and obstinacy should not be allowed to become a 
barrier to the achievement of important policy goals.
  Ethanol advocates face a choice between defending the oxygen 
requirement in the near term, realizing that its days ultimately are 
numbered, or using the current MTBE debate to guarantee the future 
growth of the ethanol industry based on important public policy goals, 
such as energy security, greenhouse gas emissions reductions, and 
domestic economic growth.
  In my judgment, providing states with the flexibility to waive the 
RFG oxygen requirement is a fair tradeoff for the establishment of a 
renewable fuels standard. It represents the most effective way to 
achieve the environmental and economic goals of governors and 
consumers, while putting the ethanol industry on a steady growth path 
well into the future and promoting ethanol production in new regions of 
the nation.
  Therefore, today, with Senator Richard Lugar, I am introducing the 
Renewable Fuels Act of 2000. Under our

[[Page S3515]]

legislation, EPA is directed to reduce the use of MTBE to safe levels, 
and states can obtain waivers from the RFG oxygen requirement and 
further regulate MTBE if they desire. This will allow the nation to 
deal with the MTBE contamination issue responsibly and avoid gasoline 
supply disruptions. The bill also includes provisions protecting the 
air quality gains that have resulted from the use of oxygenated fuels.
  To protect market opportunities for renewable fuels, the bill 
establishes a renewable fuels standard for the nation's gasoline, which 
begins in 2000 at 1.3 percent--roughly where renewable fuels production 
stands today--and gradually increases over the next decade to 3.3 
percent of the nation's gasoline in 2010. Considering the fact that 
overall gasoline use is expected to increase over the next decade, this 
standard will more than triple ethanol use over that period.
  In meeting that requirement, our legislation stipulates that a gallon 
of biomass ethanol counts as much as 1.5 gallons of starch-based 
ethanol, thereby providing a strong incentive for the development of 
biomass-based ethanol plans throughout the country. It also established 
a renewable fuels standard for diesel fuels to promote the use of 
biodiesel. These renewable fuels standards can be met through 
nationwide credit trading, to allow for the most economomical use of 
ethanol and biodiesel.
  For those who are concerned about the potential impact of a drought 
or other natural disaster on the ability of the renewable fuels 
industry to supply this market, the legislation allows the EPA 
Administrator, in consultation with the Secretary of Agriculture, to 
waive the renewable requirement in any given year upon determination 
that there is indequate domestic supply or distribution capacity, or 
that the requirement would severely harm the economic or environment of 
a State, a region, or the United States.
  I also intend to work with my colleagues on both sides of the aisle 
to establish a strategic corn reserve as a complement to the renewable 
fuel standard. A properly managed strategic corn reserve could serve as 
the equivalent of the strategic petroleum reserve and ensure stable 
feedstocks for domestic ethanol producers in the event of weather 
induced supply interruptions. Taxpayers would benefit as farmers could 
receive fair market prices, thereby reducing the need for emergency 
assistance each year.

  It is important to recognize that under Senator Lugar's and my 
approach, the oxygen requirement is not waived entirely. States can 
decide for themselves whether to apply for a waiver from the RFG oxygen 
requirement. We fully expect that RFG programs that currently are using 
ethanol and have not experienced MTBE contamination, such as Chicago 
and Milwaukee, will stay in the program. Moreover, the bill allows any 
governor to apply to EPA to opt into the RFG program, thus expanding 
its air quality benefits to new regions of the country. Those areas 
that remain in the program or opt into it, and use ethanol, will 
generate credits that can be sold to other regions of the country.
  Finally, the bill prevents adverse effects on states' highway trust 
fund tax allocations, with ``hold harmless'' language ensuring that 
states reporting Federal excise tax receipts on gasoline are not 
penalized for their ethanol blend sales.
  Again, my goal in introducing this legislation is both to support 
states that want to get MTBE out of gasoline and to ensure that this 
effort does not adversely affect ethanol production. It is also to put 
into place a program that will grow the ethanol industry steadily over 
the next decade, thereby assuring the market stability necessary to 
attract investment in the construction of new plants and significantly 
increasing the market for corn and biomass. This approach not only will 
get MTBE out of groundwater; it will do so without backsliding on the 
air quality improvements generated by the RFG program while increasing 
corn demand by 600 million bushels per year.
  Mr. President, since first floating this concept in May of last year, 
I have heard from numerous stakeholders in this complex debate. The 
legislative concept that Senator Lugar and I unveil today has been 
endorsed by diverse interests ranging from the American Coalition for 
Ethanol (ACE) in Sioux Falls, South Dakota, to the 24-state Governors' 
Ethanol Coalition, to the Northeast States for Coordinated Air Use 
Management (NESCAUM) to Mr. Leo Leibowitz, chairman of Getty Petroleum. 
I believe that we have struck a delicate balance between the interests 
of farmers, consumers, state regulatory officials, refiners and those 
concerned about the environment. This plan is a worthy successor to the 
original 1990 RFG provision, preserving all of the good things it has 
achieved and rectifying those elements that need fixing.
  I look forward to working with Senators Smith and Baucus, the 
chairman and ranking member of the Senate Environment and Public Works 
Committee, to enact legislation resolving the MTBE issue. I hope that 
other colleagues will join Senator Lugar and me in support of this 
legislation.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2503

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Renewable Fuels Act of 
     2000''.

     SEC. 2. STATE PETITIONS FOR AUTHORITY TO CONTROL OR PROHIBIT 
                   USE OF MTBE.

       Section 211(c) of the Clean Air Act (42 U.S.C. 7545(c)) is 
     amended--
       (1) in paragraph (1)(A), by striking ``any emission product 
     of such fuel or fuel additive causes, or contributes, to air 
     pollution which may reasonably be anticipated to endanger the 
     public health or welfare,'' and inserting ``the fuel or fuel 
     additive, or an emission product of the fuel or fuel 
     additive, causes or contributes to air, water, or soil 
     pollution that may reasonably be anticipated to endanger the 
     public health or welfare or the environment,'';
       (2) in paragraph (2)(C), by inserting ``or have other 
     environmental impacts'' after ``emissions'';
       (3) in paragraph (4)--
       (A) in subparagraph (A), by redesignating clauses (i) and 
     (ii) as subclauses (I) and (II), respectively, and indenting 
     appropriately to reflect the amendments made by this 
     paragraph;
       (B) by striking ``(4)(A) Except as otherwise provided in 
     subparagraph (B) or (C),'' and inserting the following:
       ``(4) Limitation on state authority with respect to fuels 
     and fuel additives.--
       ``(A) In general.--
       ``(i) Fuels and fuel additives.--Except as otherwise 
     provided in subparagraph (B) or (C) or paragraph (5),'';
       (C) in subparagraph (A)--
       (i) in clause (i) (as designated by subparagraph (B)), by 
     inserting ``or water or soil quality protection'' after 
     ``emission control''; and
       (ii) by adding at the end the following:
       ``(ii) MTBE.--Notwithstanding clause (i), except as 
     otherwise provided in subparagraph (B) or (C) or paragraph 
     (5), no State (or political subdivision of a State) may 
     prescribe or attempt to enforce, for the purpose of motor 
     vehicle emission control or water or soil quality protection, 
     any control or prohibition on methyl tertiary butyl ether as 
     a fuel additive in a motor vehicle or motor vehicle 
     engine.'';
       (D) in subparagraph (B), by inserting ``or water or soil 
     quality protection'' after ``emission control''; and
       (E) in subparagraph (C)--
       (i) in the first sentence--

       (I) by inserting ``or water or soil quality protection'' 
     after ``emission control''; and
       (II) by inserting before the period at the end the 
     following: ``or, if the Administrator grants a petition of 
     the State under paragraph (5)''; and

       (ii) in the second sentence, by striking ``only if he'' and 
     inserting ``if the Administrator''; and
       (4) by adding at the end the following:
       ``(5) State petitions for authority to control or prohibit 
     use of fuels or fuel additives for non-air quality 
     purposes.--
       ``(A) In general.--A State seeking to prescribe and enforce 
     a control or prohibition on a fuel or fuel additive for the 
     purpose of water or soil quality protection under paragraph 
     (4)(C) shall submit a petition to the Administrator for 
     authority to take such action.
       ``(B) Required elements of petition.--A petition submitted 
     under subparagraph (A) shall--
       ``(i) include information on--

       ``(I) the likely effects of the control or prohibition on 
     fuel availability and price in the affected supply area or 
     region; and
       ``(II) the improvements in environmental quality or public 
     health or welfare expected to result from the control or 
     prohibition; and

       ``(ii) demonstrate that the authority is necessary to 
     protect the environment or public health or welfare.

[[Page S3516]]

       ``(C) Action by the administrator.--Not later than 180 days 
     after the date of receipt of a petition submitted under 
     subparagraph (A), the Administrator shall grant or deny the 
     petition.
       ``(D) Criteria for granting of petitions.--The 
     Administrator shall grant a petition submitted by a State 
     under subparagraph (A) unless the Administrator finds that--
       ``(i) the petition fails to reasonably demonstrate that the 
     authority is necessary to protect the environment or public 
     health or welfare;
       ``(ii) the control or prohibition is likely to have a 
     substantial and significant adverse effect on fuel 
     availability or price (including a State or regional effect) 
     that clearly outweighs any benefits associated with the 
     control or prohibition; or
       ``(iii) in the case of a petition submitted by a State 
     seeking the authority primarily to protect water resources, 
     the State has failed to take other appropriate and reasonable 
     actions to prevent contamination of water resources by fuels 
     or fuel additives, such as--

       ``(I) adoption of a prohibition on the delivery of gasoline 
     to noncompliant facilities with underground storage tanks; or
       ``(II) operation of a statewide monitoring and compliance 
     assurance system.

       ``(E) Effect of failure of administrator to act.--If, by 
     the date that is 180 days after the date of receipt of a 
     petition submitted under subparagraph (A), the Administrator 
     has not proposed to grant or deny the petition under 
     subparagraph (C), the petition shall be deemed to be granted.
       ``(F) Procedural requirements.--
       ``(i) Inapplicability of certain requirements.--Section 
     307(d) of this Act and sections 553 through 557 of title 5, 
     United States Code, shall not apply to actions on a petition 
     submitted under subparagraph (A).
       ``(ii) Public notice and opportunity for comment.--The 
     Administrator shall provide public notice and opportunity for 
     comment with respect to a petition submitted under 
     subparagraph (A).
       ``(6) Limitation on mtbe content.--The Administrator shall 
     promulgate regulations applicable to each refiner, blender, 
     or importer of gasoline to ensure that gasoline sold or 
     introduced into commerce by the refiner, blender, or importer 
     on or after January 1, 2004, in an area has a content of 
     methyl tertiary butyl ether that is at a level that--
       ``(A) the Administrator determines may not reasonably be 
     anticipated to endanger natural resources and the public 
     health; and
       ``(B) does not exceed the annual average volume of methyl 
     tertiary butyl ether per gallon of gasoline used in the area 
     before 1995.''.

     SEC. 3. WAIVER OF OXYGEN CONTENT REQUIREMENT.

       (a) In General.--Section 211(k) of the Clean Air Act (42 
     U.S.C. 7545(k)) is amended--
       (1) in paragraph (1)--
       (A) by striking ``Within 1 year after the enactment of the 
     Clean Air Act Amendments of 1990,'' and inserting the 
     following:
       ``(A) In general.--Not later than November 15, 1991,'';
       (B) in the first sentence, by inserting before the period 
     at the end the following: ``and opt-in areas under paragraph 
     (6)''; and
       (C) by adding at the end the following:
       ``(B) Adjustment of voc performance standard.--
       ``(i) In general.--The Administrator may adjust the 
     volatile organic compounds performance standard promulgated 
     under subparagraph (A) in the case of a fuel formulation that 
     achieves reductions in the quantity of mass emissions of 
     carbon monoxide that are greater than or less than the 
     reductions associated with a reformulated gasoline that 
     contains 2.0 percent oxygen by weight and otherwise meets the 
     requirements of this subsection.
       ``(ii) Amount of adjustment.--The amount of an adjustment 
     under clause (i) shall be based on the effect on ozone 
     concentrations of the combined reductions in emissions of 
     volatile organic compounds and reductions in emissions of 
     carbon monoxide.'';
       (2) in paragraph (2)--
       (A) in subparagraph (B)--
       (i) by striking ``The oxygen'' and inserting the following:
       ``(i) In general.--The oxygen''; and
       (ii) by adding at the end the following:
       ``(ii) Waiver for certain states.--The Administrator shall 
     waive the application of clause (i) for any ozone 
     nonattainment area in a State if the Governor of the State 
     submits for such a waiver an application that--

       ``(I) demonstrates that the State is in full compliance 
     with Federal regulations concerning the control and 
     prevention of leaking underground storage tanks; or
       ``(II) provides a plan that outlines the measures the State 
     will take to fully comply with the underground storage tank 
     regulations by a date not later than 2 years after the 
     receipt of the application of the Governor.

       ``(iii) Effective date.--A waiver under clause (ii) shall 
     become effective on the later of--

       ``(I) January 1 of the calendar year immediately following 
     the calendar year during which the application for the waiver 
     is received; or
       ``(II) the date that is 180 days after the date on which 
     the application for the waiver is received.''; and

       (B) by adding at the end the following:
       ``(E) Aromatics.--The aromatic hydrocarbon content of the 
     gasoline shall not exceed 22 percent by volume.'';
       (3) in paragraph (3)--
       (A) in subparagraph (A)(ii), by striking ``25 percent'' and 
     inserting ``22 percent''; and
       (B) in subparagraph (B)--
       (i) by striking ``Any reduction'' and inserting the 
     following:
       ``(iii) Treatment of greater reductions.--Any reduction''; 
     and
       (ii) by adding at the end the following:
       ``(iv) Anti-backsliding provision.--

       ``(I) In general.--Not later than June 1, 2000, the 
     Administrator shall revise performance standards under this 
     subparagraph as necessary to ensure that--

       ``(aa) the ozone-forming potential, taking into account all 
     ozone precursors (including volatile organic compounds, 
     oxides of nitrogen, and carbon monoxide), of the aggregate 
     emissions during the high ozone season (as determined by the 
     Administrator) from baseline vehicles when using reformulated 
     gasoline does not exceed the ozone-forming potential of the 
     aggregate emissions during the high ozone season from 
     baseline vehicles when using reformulated gasoline that 
     complies with the regulations that were in effect on January 
     1, 2000, and were applicable to reformulated gasoline sold in 
     calendar year 2000 and subsequent calendar years; and
       ``(bb) the aggregate emissions of the pollutants specified 
     in subclause (II) from baseline vehicles when using 
     reformulated gasoline do not exceed the aggregate emissions 
     of those pollutants from baseline vehicles when using 
     reformulated gasoline that complies with the regulations that 
     were in effect on January 1, 2000, and were applicable to 
     reformulated gasolines sold in calendar year 2000 and 
     subsequent calendar years.

       ``(II) Specified pollutants.--The pollutants specified in 
     this subclause are--

       ``(aa) toxics, categorized by degrees of toxicity; and
       ``(bb) such other pollutants, including pollutants 
     regulated under section 108, and such precursors to those 
     pollutants, as the Administrator determines by regulation 
     should be controlled to prevent the deterioration of air 
     quality and to achieve attainment of a national ambient air 
     quality standard in 1 or more areas.''; and
       (4) in paragraph (4)(B)--
       (A) by redesignating clauses (i) and (ii) as subclauses (I) 
     and (II), respectively, and indenting appropriately to 
     reflect the amendments made by this paragraph;
       (B) by striking ``The Administrator'' and inserting the 
     following:
       ``(i) In general.--The Administrator'';
       (C) in clause (i) (as designated by subparagraph (B))--
       (i) in subclause (I) (as redesignated by subparagraph (A)), 
     by striking ``, and'' and inserting a semicolon;
       (ii) in subclause (II) (as redesignated by subparagraph 
     (A))--

       (I) by striking ``achieve equivalent'' and inserting the 
     following: ``achieve--

       ``(aa) equivalent'';

       (II) by striking the period at the end and inserting ``; 
     or''; and
       (III) by adding at the end the following:

       ``(bb) combined reductions in emissions of ozone forming 
     volatile organic compounds and carbon monoxide that result in 
     a reduction in ozone concentration, as provided in clause 
     (ii)(I), that is equivalent to or greater than the reduction 
     in ozone concentration achieved by a reformulated gasoline 
     meeting the applicable requirements of paragraph (3); and''; 
     and
       (iii) by adding at the end the following:

       ``(III) achieve equivalent or greater reductions in 
     emissions of toxic air pollutants than are achieved by a 
     reformulated gasoline meeting the applicable requirements of 
     paragraph (3).''; and

       (D) by adding at the end the following:
       ``(ii) Carbon monoxide credit.--

       ``(I) In general.--In determining whether a fuel 
     formulation or slate of fuel formulations achieves combined 
     reductions in emissions of ozone forming volatile organic 
     compounds and carbon monoxide that result in a reduction in 
     ozone concentration that is equivalent to or greater than the 
     reduction in ozone concentration achieved by a reformulated 
     gasoline meeting the applicable requirements of paragraph 
     (3), the Administrator--

       ``(aa) shall consider, to the extent appropriate, the 
     change in carbon monoxide emissions from baseline vehicles 
     attributable to an oxygen content in the fuel formulation or 
     slate of fuel formulations that exceeds 2.0 percent by 
     weight; and
       ``(bb) may consider, to the extent appropriate, the change 
     in carbon monoxide emissions described in item (aa) from 
     vehicles other than baseline vehicles.

       ``(II) Oxygen credits.--Any excess oxygen content that is 
     taken into consideration in making a determination under 
     subclause (I) may not be used to generate credits under 
     paragraph (7)(A).
       ``(III) Relation to title i.--Any fuel formulation or slate 
     of fuel formulations that is certified as equivalent or 
     greater under this subparagraph, taking into consideration 
     the combined reductions in emissions of volatile organic 
     compounds and carbon monoxide, shall receive the same 
     volatile organic compounds reduction credit for the purposes 
     of subsections (b)(1) and (c)(2)(B) of section 182 as a fuel 
     meeting the applicable requirements of paragraph (3).''.

       (b) Reformulated Gasoline Carbon Monoxide Reduction 
     Credit.--Section 182(c)(2)(B) of the Clean Air Act (42 U.S.C.

[[Page S3517]]

     7511a(c)(2)(B)) is amended by adding at the end the 
     following: ``An adjustment to the volatile organic compound 
     emission reduction requirements under section 
     211(k)(3)(B)(iv) shall be credited toward the requirement for 
     VOC emissions reductions under this subparagraph.''.

     SEC. 4. ADDITIONAL OPT-IN AREAS UNDER REFORMULATED GASOLINE 
                   PROGRAM.

       Section 211(k)(6) of the Clean Air Act (42 U.S.C. 
     7545(k)(6)) is amended--
       (1) by striking ``(6) Opt-in areas.--(A) Upon'' and 
     inserting the following:
       ``(6) Opt-in areas.--
       ``(A) Classified areas.--
       ``(i) In general.--Upon'';
       (2) in subparagraph (B), by striking ``(B) If'' and 
     inserting the following:
       ``(ii) Effect of insufficient domestic capacity to produce 
     reformulated gasoline.--If'';
       (3) in subparagraph (A)(ii) (as so redesignated)--
       (A) in the first sentence, by striking ``subparagraph (A)'' 
     and inserting ``clause (i)''; and
       (B) in the second sentence, by striking ``this paragraph'' 
     and inserting ``this subparagraph''; and
       (4) by adding at the end the following:
       ``(B) Nonclassified areas.--
       ``(i) In general.--Upon the application of the Governor of 
     a State, the Administrator shall apply the prohibition 
     specified in paragraph (5) in any area in the State that is 
     not a covered area or an area referred to in subparagraph 
     (A)(i).
       ``(ii) Publication of application.--As soon as practicable 
     after receipt of an application under clause (i), the 
     Administrator shall publish the application in the Federal 
     Register.''.

     SEC. 5. RENEWABLE CONTENT OF GASOLINE AND OTHER MOTOR FUELS.

       (a) In General.--Section 211 of the Clean Air Act (42 
     U.S.C. 7545) is amended--
       (1) by redesignating subsection (o) as subsection (q); and
       (2) by inserting after subsection (n) the following:
       ``(o) Renewable Content of Gasoline.--
       ``(1) In general.--
       ``(A) Regulations.--Not later than September 1, 2000, the 
     Administrator shall promulgate regulations applicable to each 
     refiner, blender, or importer of gasoline to ensure that 
     gasoline sold or introduced into commerce in the United 
     States by the refiner, blender, or importer complies with the 
     renewable content requirements of this subsection.
       ``(B) Renewable content requirements.--
       ``(i) In general.--All gasoline sold or introduced into 
     commerce in the United States by a refiner, blender, or 
     importer shall contain, on a quarterly average basis, a 
     quantity of fuel derived from a renewable source (including 
     biomass ethanol) that is not less than the applicable 
     percentage by volume for the quarter.
       ``(ii) Biomass ethanol.--For the purposes of clause (i), 1 
     gallon of biomass ethanol shall be considered to be the 
     equivalent of 1.5 gallons of fuel derived from a renewable 
     source.
       ``(iii) Applicable percentage.--For the purposes of clause 
     (i), the applicable percentage for a quarter of a calendar 
     year shall be determined in accordance with the following 
     table:

         Applicable percentage of fuel derived from a renewable source:
`Calendar year:
  2000.........................................................1.3 ....

  2001.........................................................1.5 ....

  2002.........................................................1.7 ....

  2003.........................................................1.9 ....

  2004.........................................................2.1 ....

  2005.........................................................2.3 ....

  2006.........................................................2.5 ....

  2007.........................................................2.7 ....

  2008.........................................................2.9 ....

  2009.........................................................3.1 ....

  2010 and thereafter..........................................3.3.....

       ``(C) Fuel derived from a renewable source.--For the 
     purposes of this subsection, a fuel shall be considered to be 
     derived from a renewable source if the fuel--
       ``(i) is produced from grain, starch, oilseeds, or other 
     biomass; and
       ``(ii) is used to replace or reduce the quantity of fossil 
     fuel present in a fuel mixture used to operate a motor 
     vehicle.
       ``(D) Biomass ethanol.--For the purposes of this 
     subsection, a fuel shall be considered to be biomass ethanol 
     if the fuel is ethanol derived from any lignocellulosic or 
     hemicellulosic matter that is available on a renewable or 
     recurring basis, including--
       ``(i) dedicated energy crops and trees;
       ``(ii) wood and wood residues;
       ``(iii) plants;
       ``(iv) grasses;
       ``(v) agricultural commodities and residues;
       ``(vi) fibers;
       ``(vii) animal wastes and other waste materials; and
       ``(viii) municipal solid waste.
       ``(E) Credit program.--
       ``(i) In general.--The regulations promulgated under this 
     subsection shall provide for the generation of an appropriate 
     amount of credits by a person that refines, blends, or 
     imports gasoline that contains, on a quarterly average basis, 
     a quantity of fuel derived from a renewable source or a 
     quantity of biomass ethanol that is greater than the quantity 
     required under subparagraph (B).
       ``(ii) Use of credits.--The regulations shall provide that 
     a person that generates the credits may use the credits, or 
     transfer all or a portion of the credits to another person, 
     for the purpose of complying with subparagraph (B).
       ``(2) Waivers.--
       ``(A) In general.--The Administrator, in consultation with 
     the Secretary of Agriculture, may waive the requirements of 
     paragraph (1)(B) in whole or in part on petition by a State--
       ``(i) based on a determination by the Administrator, after 
     public notice and opportunity for comment, that 
     implementation of the requirements would severely harm the 
     economy or environment of a State, a region, or the United 
     States; or
       ``(ii) based on a determination by the Administrator, after 
     public notice and opportunity for comment, that there is an 
     inadequate domestic supply or distribution capacity to meet 
     the requirements of paragraph (1)(B).
       ``(B) Petitions for waivers.--The Administrator, in 
     consultation with the Secretary of Agriculture--
       ``(i) shall approve or deny a State petition for a waiver 
     of the requirements of paragraph (1)(B) within 180 days after 
     the date on which the petition is received; but
       ``(ii) may extend that period for up to 60 additional days 
     to provide for public notice and opportunity for comment and 
     for consideration of the comments submitted.
       ``(C) Termination of waivers.--A waiver granted under 
     subparagraph (A) shall terminate after 1 year, but may be 
     renewed by the Administrator after consultation with the 
     Secretary of Agriculture.
       ``(D) Oxygen content waivers.--The grant or denial of a 
     waiver under subsection (k)(2)(B) shall not affect the 
     requirements of this subsection.
       ``(3) Small refiners.--The regulations promulgated by the 
     Administrator under paragraph (1) may provide an exemption, 
     in whole or in part, for small refiners (as defined by the 
     Administrator).
       ``(4) Guidance for labeling.--After consultation with the 
     Secretary of Agriculture, the Administrator shall issue 
     guidance to the States for labeling, at the point of retail 
     sale--
       ``(A) the fuel derived from a renewable source that is 
     contained in the fuel sold; and
       ``(B) the major fuel additive components of the fuel sold.
       ``(5) Reports to congress.--Not less often than every 3 
     years, the Administrator shall submit to Congress a report 
     on--
       ``(A) reductions in emissions of criteria air pollutants 
     listed under section 108 that result from implementation of 
     this subsection; and
       ``(B) in consultation with the Secretary of Energy, 
     greenhouse gas emission reductions that result from 
     implementation of this subsection.
       ``(p) Renewable Content of Diesel Fuel.--
       ``(1) In general.--Not later than September 1, 2000, the 
     Administrator, after consideration of applicable economic and 
     environmental factors, shall promulgate regulations 
     applicable to each refiner, blender, or importer of diesel 
     fuel to ensure that the diesel fuel sold or introduced into 
     commerce in the United States by the refiner, blender, or 
     importer complies with the renewable content requirements 
     established by the Administrator under this subsection.
       ``(2) Elements of program.--To the extent that the 
     Administrator determines it to be appropriate, the 
     Administrator shall by regulation establish a program for 
     diesel fuel that has renewable content requirements similar 
     to the requirements of the program for gasoline under 
     subsection (o) in order to ensure the use of biodiesel 
     fuel.''.
       (b) Penalties and Enforcement.--Section 211(d) of the Clean 
     Air Act (42 U.S.C. 7545(d)) is amended--
       (1) in paragraph (1)--
       (A) in the first sentence, by striking ``or (n)'' each 
     place it appears and inserting ``(n), or (o)''; and
       (B) in the second sentence, by striking ``or (m)'' and 
     inserting ``(m), or (o)''; and
       (2) in the first sentence of paragraph (2), by striking 
     ``and (n)'' each place it appears and inserting ``(n), and 
     (o)''.
       (c) Prevention of Effects on Highway Apportionments.--
       (1) Surface transportation program.--Section 104(b)(3) of 
     title 23, United States Code, is amended by adding at the end 
     the following:
       ``(C) Determination of estimated tax payments.--For the 
     purpose of determining under subparagraph (A)(iii) the 
     estimated tax payments attributable to highway users in a 
     State paid into the Highway Trust Fund (other than the Mass 
     Transit Account) in a fiscal year, the amount paid into the 
     Highway Trust Fund with respect to the sale of gasohol or 
     other fuels containing alcohol by reason of the tax imposed 
     by section 4041 (relating to special fuels) or 4081 (relating 
     to gasoline) of the Internal Revenue Code of 1986 shall be 
     treated as being equal to the amount that would have been so 
     imposed with respect to that sale without regard to the 
     reduction in revenues resulting from the application of the 
     regulations promulgated under section 211(o) of the Clean Air 
     Act (42 U.S.C. 7545(o)) and the following provisions of the 
     Internal Revenue Code of 1986:

[[Page S3518]]

       ``(i) Section 4041(b)(2) (relating to exemption for 
     qualified methanol and ethanol fuel).
       ``(ii) Section 4041(k) (relating to fuels containing 
     alcohol).
       ``(iii) Section 4041(m) (relating to certain alcohol 
     fuels).
       ``(iv) Section 4081(c) (relating to reduced rate on 
     gasoline mixed with alcohol).''.
       (2) Minimum guarantee.--Section 105(f)(1) of title 23, 
     United States Code, is amended--
       (A) by striking ``(1) In general.--Before'' and inserting 
     the following: ``(1) In general.--
       ``(A) Adjustment.--Before''; and
       (B) by adding at the end the following:
       ``(B) Determination of estimated tax payments.--For the 
     purpose of determining under this subsection the estimated 
     tax payments attributable to highway users in a State paid 
     into the Highway Trust Fund (other than the Mass Transit 
     Account) in a fiscal year, the amount paid into the Highway 
     Trust Fund with respect to the sale of gasohol or other fuels 
     containing alcohol by reason of the tax imposed by section 
     4041 (relating to special fuels) or 4081 (relating to 
     gasoline) of the Internal Revenue Code of 1986 shall be 
     treated as being equal to the amount that would have been so 
     imposed with respect to that sale without regard to the 
     reduction in revenues resulting from the application of the 
     regulations promulgated under section 211(o) of the Clean Air 
     Act (42 U.S.C. 7545(o)) and the following provisions of the 
     Internal Revenue Code of 1986:
       ``(i) Section 4041(b)(2) (relating to exemption for 
     qualified methanol and ethanol fuel).
       ``(ii) Section 4041(k) (relating to fuels containing 
     alcohol).
       ``(iii) Section 4041(m) (relating to certain alcohol 
     fuels).
       ``(iv) Section 4081(c) (relating to reduced rate on 
     gasoline mixed with alcohol).''.

     SEC. 6. UPDATING OF BASELINE YEAR.

       (a) In General.--Section 211(k) of the Clean Air Act (42 
     U.S.C. 7545(k)) is amended--
       (1) in paragraph (8)--
       (A) in subparagraph (A)--
       (i) in the first sentence, by striking ``Within 1 year 
     after the enactment of the Clean Air Act Amendments of 1990, 
     the'' and inserting ``The''; and
       (ii) by striking the second sentence;
       (B) by striking ``calendar year 1990'' each place it 
     appears and inserting ``calendar year 1999''; and
       (C) in subparagraph (E), by striking ``such 1990 gasoline'' 
     and inserting ``such 1999 gasoline''; and
       (2) in subparagraphs (A) and (B)(ii) of paragraph (10), by 
     striking ``1990'' each place it appears and inserting 
     ``1999''.
       (b) Regulations.--As soon as practicable after the date of 
     enactment of this Act, the Administrator of the Environmental 
     Protection Agency shall revise the regulations promulgated 
     under section 211(k) of the Clean Air Act (42 U.S.C. 7545(k)) 
     to reflect the amendments made by subsection (a).

     SEC. 7. LEAKING UNDERGROUND STORAGE TANKS.

       (a) Trust Fund Distribution.--Section 9004 of the Solid 
     Waste Disposal Act (42 U.S.C. 6991c) is amended by adding at 
     the end the following:
       ``(f) Trust Fund Distribution.--
       ``(1) In general.--
       ``(A) Amount and permitted use of distribution.--The 
     Administrator shall distribute to States at least 85 percent 
     of the funds appropriated to the Environmental Protection 
     Agency from the Leaking Underground Storage Tank Trust Fund 
     established by section 9508 of the Internal Revenue Code of 
     1986 (referred to in this subsection as the `Trust Fund') for 
     each fiscal year for use in paying the reasonable costs, 
     incurred under cooperative agreements with States, of--
       ``(i) actions taken by a State under section 9003(h)(7)(A);
       ``(ii) necessary administrative expenses directly related 
     to corrective action and compensation programs under 
     subsection (c)(1);
       ``(iii) enforcement by a State or local government of a 
     State program approved under this section or of State or 
     local requirements regulating underground storage tanks that 
     are similar or identical to this subtitle;
       ``(iv) State or local corrective actions pursuant to 
     regulations promulgated under section 9003(c)(4); or
       ``(v) corrective action and compensation programs under 
     subsection (c)(1) for releases from underground storage tanks 
     regulated under this subtitle if, as determined by the State 
     in accordance with guidelines developed between the 
     Environmental Protection Agency and the States, the financial 
     resources of an owner or operator (including resources 
     provided by programs under subsection (c)(1)) are not 
     adequate to pay for the cost of a corrective action without 
     significantly impairing the ability of the owner or operator 
     to continue in business.
       ``(B) Nonpermitted uses.--Funds provided by the 
     Administrator under subparagraph (A) shall not be used by a 
     State to provide financial assistance to an owner or operator 
     to meet the requirements concerning underground storage tanks 
     contained in part 280 of title 40, Code of Federal 
     Regulations (as in effect on the date of enactment of this 
     subsection), except as provided in subparagraph (A)(v), or 
     similar requirements in State programs approved under this 
     section or similar State or local provisions.
       ``(C) Tanks within tribal jurisdiction.--The Administrator, 
     in coordination with Indian tribes, shall--
       ``(i) expeditiously develop and implement a strategy to--

       ``(I) take necessary corrective action in response to 
     releases from leaking underground storage tanks located 
     wholly within the exterior boundaries of an Indian 
     reservation or other area within the jurisdiction of an 
     Indian tribe, giving priority to releases that present the 
     greatest threat to human health or the environment; and
       ``(II) implement and enforce requirements regulating 
     underground storage tanks located wholly within the exterior 
     boundaries of an Indian reservation or other area within the 
     jurisdiction of an Indian tribe; and

       ``(ii) not later than 2 years after the date of enactment 
     of this subsection, and every 2 years thereafter, submit to 
     Congress a report summarizing the status of implementation of 
     the leaking underground storage tank program located wholly 
     within the exterior boundaries of an Indian reservation or 
     other area within the jurisdiction of an Indian tribe.
       ``(2) Allocation.--
       ``(A) Process.--Subject to subparagraph (B), in the case of 
     a State with which the Administrator has entered into a 
     cooperative agreement under section 9003(h)(7)(A), the 
     Administrator shall distribute funds from the Trust Fund to 
     the State using the allocation process developed by the 
     Administrator for such cooperative agreements.
       ``(B) Revisions to process.--The Administrator may revise 
     the allocation process only after--
       ``(i) consulting with State agencies responsible for 
     overseeing corrective action for releases from underground 
     storage tanks and with representatives of owners and 
     operators; and
       ``(ii) taking into consideration, at a minimum--

       ``(I) the total revenue received from each State into the 
     Trust Fund;
       ``(II) the number of confirmed releases from leaking 
     underground storage tanks in each State;
       ``(III) the number of notified petroleum storage tanks in 
     each State;
       ``(IV) the percentage of the population of each State using 
     ground water for any beneficial purpose;
       ``(V) the evaluation of the program performance of each 
     State;
       ``(VI) the evaluation of the financial needs of each State; 
     and
       ``(VII) the evaluation of the ability of each State to use 
     the funds in any year.

       ``(3) Distributions to state agencies.--
       ``(A) In general.--Distributions from the Trust Fund under 
     this subsection shall be made directly to the State agency 
     entering into a cooperative agreement or enforcing the State 
     program.
       ``(B) Administrative expenses.--A State agency that 
     receives funds under this subsection shall limit the 
     proportion of those funds that are used to pay administrative 
     expenses to a percentage that the State may establish by law.
       ``(4) Cost recovery prohibition.--Funds provided to States 
     from the Trust Fund to owners or operators for programs under 
     section 9004(c)(1) for releases from underground storage 
     tanks are not subject to cost recovery by the Administrator 
     under section 9003(h)(6).
       ``(5) Permitted uses.--In addition to uses authorized by 
     other provisions of this subtitle, the Administrator may use 
     funds appropriated to the Environmental Protection Agency 
     from the Trust Fund for enforcement of any regulation 
     promulgated by the Administrator under this subtitle.''.
       (b) Addition to Trust Fund Purposes.--Section 9508(c)(1) of 
     the Internal Revenue Code of 1986 (relating to expenditures) 
     is amended by striking ``to carry out section 9003(h)'' and 
     all that follows and inserting ``to carry out--
       ``(A) section 9003(h) of the Solid Waste Disposal Act (as 
     in effect on the date of enactment of the Superfund 
     Amendments and Reauthorization Act of 1986); and
       ``(B) section 9004(f) of the Solid Waste Disposal Act (as 
     in effect on the date of enactment of the Renewable Fuels Act 
     of 2000).''.
       (c) Studies.--Not later than 18 months after the date of 
     enactment of this Act, the Administrator of the Environmental 
     Protection Agency shall conduct--
       (1) a study to determine the corrosive effects of methyl 
     tertiary butyl ether and other widely used fuels and fuel 
     additives on underground storage tanks; and
       (2) a study to assess the potential public health and 
     environmental risks associated with the use of aboveground 
     storage tanks and the effectiveness of State and Federal 
     regulations or voluntary standards, in existence as of the 
     time of the study, to provide adequate protection of public 
     health and the environment.
       (d) Technical Amendments.--
       (1) Section 9001(3)(A) of the Solid Waste Disposal Act (42 
     U.S.C. 6991(3)(A)) is amended by striking ``sustances'' and 
     inserting ``substances''.
       (2) Section 9003(f)(1) of the Solid Waste Disposal Act (42 
     U.S.C. 6991b(f)(1)) is amended by striking ``subsection (c) 
     and (d) of this section'' and inserting ``subsections (c) and 
     (d)''.
       (3) Section 9004(a) of the Solid Waste Disposal Act (42 
     U.S.C. 6991c(a)) is amended in the first sentence by striking 
     ``referred to'' and all that follows and inserting ``referred 
     to in subparagraph (A) or (B), or both, of section 
     9001(2).''.
       (4) Section 9005 of the Solid Waste Disposal Act (42 U.S.C. 
     6991d) is amended--

[[Page S3519]]

       (A) in subsection (a), by striking ``study taking'' and 
     inserting ``study, taking'';
       (B) in subsection (b)(1), by striking ``relevent'' and 
     inserting ``relevant''; and
       (C) in subsection (b)(4), by striking ``Evironmental'' and 
     inserting ``Environmental''.

     SEC. 8. PRIVATE WELL PROTECTION PILOT PROGRAM.

       (a) In General.--The Administrator of the Environmental 
     Protection Agency may enter into cooperative agreements with 
     the United States Geological Survey, the Department of 
     Agriculture, States, local governments, private landowners, 
     and other interested parties to establish voluntary pilot 
     projects to protect the water quality of private wells and to 
     provide technical assistance to users of water from private 
     wells.
       (b) Limitation.--This section does not authorize the 
     issuance of guidance or regulations regarding the use or 
     protection of private wells.

  Mr. LUGAR. Mr. President, I am pleased to join Senator Daschle in 
introducing the Renewable Fuels Act of 2000.
  In July 1999, an independent Blue Ribbon Panel on Oxygenates in 
Gasoline called for major reductions in the use of MTBE as an additive 
in gasoline. They did so because of growing evidence and public 
concerns regarding pollution of drinking water supplies by MTBE. These 
trends are particularly acute in areas of the country using 
Reformulated Gasoline.
  The Reformulated Gasoline Program (RFG) has proven to be a success in 
reducing smog and has exceeded expectations in reducing dangerous and 
carcinogenic air toxics in gasoline. The second stage of the 
Reformulated Gasoline Program (RFG) will commence this summer and will 
have an even greater effect in reducing ozone pollution and air toxics.
  Because of concerns regarding water pollution, it is clear that the 
existing situation regarding MTBE is not tenable. The Governor of 
California has called for a three year phase out of MTBE in California 
and the California Air Resources Board has adopted regulations to that 
effect. Environmental officials from eight Northeastern States have 
proposed a phase down and a capping of the use of MTBE in gasoline in 
their states. MTBE is being found in wells in the Midwest even in areas 
that do not use reformulated gasoline.
  The Renewable Fuels Act of 2000 will lead to about five billion 
gallons of ethanol being produced in 2010 compared to one billion, six 
hundred million gallons today. Under the Act, one gallon of cellulosic 
ethanol will count for one and one-half gallons of regular ethanol in 
determining whether a refiner has met the Renewable Fuels Standard in a 
particular year.
  We are going to have spikes in oil that will disrupt our economy. It 
may or may not be able to be controlled. It will happen before 2010. It 
may happen again next week. Our problem in terms of national security 
and the security of our whole economy revolves around our dependence on 
petroleum-based fuels. We must be able to address this challenge. 
Finding an environmentally sensitive way to resolve the MTBE crisis is 
an important part of this challenge.
  It is clear that MTBE is on its way out. The question is what kind of 
legislation is needed to facilitate its departure and whether that 
legislation will be based on consideration of all of the environmental 
and energy and national security issues involved.
  The Renewable Fuels Act of 2000 will establish a nationwide Renewable 
Fuels Standard (RFS) that would increase the current use of renewable 
fuels from 1.3% in 2000 to 3.3% by 2010. Refiners who produced 
renewable fuels beyond the standard could sell credits to other 
refiners who chose to under comply with the RFS.
  This bill would give the EPA Administrator authority to limit or 
eliminate the use of MTBE in order to protect the public health and the 
environment. It also gives states the ability to further regulate or 
eliminate MTBE use if the EPA does not choose to eliminate it. It would 
also establish strict ``anti backsliding provisions'' to capture all of 
the air quality benefits of MTBE and ethanol as MTBE is phased down or 
phased out.
  The Renewable Fuels Act of 2000 will be good for our economy and our 
environment. Most important of all, it will facilitate the development 
of renewable fuels, a development critical to ensuring U.S. national 
and economic security and stabilizing gas prices.
  I hope that my colleagues will examine this bill as well as other 
legislative approaches that would spur the development of renewable 
fuels such as ethanol, whether derived from corn or other agricultural 
or plant materials.
                                 ______