[Senate Report 108-57]
[From the U.S. Government Publishing Office]



                                                       Calendar No. 119
108th Congress                                                   Report
                                 SENATE
 1st Session                                                     108-57

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



 
                           RELIABLE FUELS ACT

                                _______
                                

                  June 3, 2003.--Ordered to be printed

                                _______
                                

    Mr. Inhofe, from the Committee on Environment and Public Works, 
                        submitted the following

                              R E P O R T

                         [to accompany S. 791]

                             together with



                            ADDITIONAL VIEWS

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Environment and Public Works, to which was 
referred a bill (S. 791) to amend the Clean Air Act to 
eliminate methyl tertiary butyl ether from the United States 
fuel supply, to increase production and use of renewable fuel, 
and to increase the Nation's energy independence, and for other 
purposes, having considered the same, reports favorably thereon 
with an amendment and recommends that the bill, as amended, do 
pass.

                           General Statement

    In 1990, the Clean Air Act was amended to include the 
reformulated gasoline, or RFG, program. The program was 
designed to address persistent pollution from automobiles. 
While tailpipe standards for automobiles are effective for new 
vehicles, the RFG program added additional controls and was 
able to address emissions from vehicles of all ages within the 
current fleet. RFG program was required in metropolitan areas 
that have the most serious air 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 relatively cost-effective measure 
to help combat their air pollution problems. Today, roughly 35 
percent of this country's gasoline consumption is cleaner-
burning reformulated gasoline.
    One element of the RFG program was the requirement that RFG 
contain 2.0 percent minimum oxygen content by weight. This 
provision was of assistance in the goal of making gasoline burn 
cleaner, both in terms of criteria air pollutants and toxic air 
emissions. The addition of oxygen to gasoline resulted in 
greater supplies of fuel being available, given that the 
principal oxygenate additives are not derived from crude 
petroleum.
    RFG blended with oxygenates has exceeded all pollution 
reduction goals and substantially and cost-effectively improved 
the nation's air quality. According to EPA, RFG has cut smog-
forming pollutant emissions by over 17 percent, the equivalent 
of removing 64,000 tons of harmful pollution from the air we 
breathe or taking 10 million vehicles off our roads. RFG has 
reduced emissions of benzene, a known human carcinogen, by some 
43 percent, while reducing total toxic air emissions by about 
22 percent. Cleaner-burning MTBE accounts for a large part of 
the overall emission reductions from RFG.
    The program set a variety of content and performance 
requirements, including a minimum content requirement for 
oxygen and maximum allowable benzene and heavy metal quantities 
in RFG. Through regulatory authority provided by the Act, EPA 
chose, in 1993, to adopt performance standards for toxic air 
pollutants and volatile organic compounds (VOCs) rather than 
the prescriptive fuels formula allowed under Section 
211(k)(3)(A). These performance standards required a 15 percent 
reduction in toxic air pollutants from baseline vehicles 
starting in 1995 and maintained through 1999, and required a 22 
percent reduction from baseline vehicles beginning in 2000, as 
part of Phase II. Phase II also requires reductions in NOx and 
VOCs.
    Motor vehicle emissions of carbon monoxide, volatile 
organic compounds, and, most notably, toxics have been reduced 
drastically in RFG areas. Refiners have produced RFG that 
exceeded the statutory requirements to reduce toxic emissions, 
including emissions of benzene. Recent data suggest that 
refiners have achieved a 27 percent or higher reduction in 
toxic air pollutants in RFG (where MTBE was used) from the 1990 
baseline. A 1998 study by the Northeast States for Coordinated 
Air Use Management (NESCAUM) concluded that Phase II RFG would 
reduce the public cancer risk by 20 percent.
    On March 29, 2001, EPA issued it's Mobile Source Air Toxics 
Rule (MSAT) to limit air toxics emissions from motor fuels, as 
required by Section 202(l) of the Act. It is intended to ensure 
that refiners continue over-compliance with RFG and anti-
dumping requirements by maintaining their average 1998-2000 
toxic emissions performance levels for RFG and conventional 
gasoline. The MSAT rule commits EPA to revisiting additional 
fuel and vehicle MSATs controls in a 2004 rulemaking. The 
deadline in the CAAA for issuance of these regulations was June 
1995.
    The final MSATs rule was challenged by a number of parties. 
On May 24, 2001, the States of New York and Connecticut and the 
Sierra Club, Earth Justice, the Natural Resources Defense 
Council and the U.S. Public Interest Research Group filed suit 
against EPA, charging that the MSATs rule fails to achieve the 
pollution reductions mandated by the Clean Air Act. Other 
parties, including Hovensa LLC, and International Truck and 
Engine Corporation have filed petitions in the United States 
Court of Appeals challenging EPA's final rule on the grounds 
that it is inconsistent with section 202(l) of the Act, that 
EPA acted arbitrarily and capriciously in promulgating the rule 
and did not adequately follow required notice and comment 
rulemaking procedures. On April 25, 2003, the U.S. Court of 
Appeals for the D.C. Circuit issued its decision. It denied on 
the merits the claims of the environmental and State 
petitioners, except for remanding to EPA on the issue of 
explaining its decision not to require on-board diagnostic 
equipment for new heavy-duty vehicles over 14,000 pounds.
    There is no specific deadline in the Act for EPA to further 
reduce toxic air pollutants from mobile sources. Section 204, 
however, requires EPA to promulgate final regulations 
addressing hazardous air pollutants from vehicles and fuels by 
July 1, 2004, as per the MSAT rule. The Agency retains general 
authority to control emissions from motor vehicles of any air 
pollutant that causes or contributes to air pollution which may 
reasonably be anticipated to endanger public health or welfare. 
In a discussion focused on maintaining air toxics reductions 
from the RFG program, EPA's Blue Ribbon Panel on Oxygenates in 
Gasoline specifically recommended that EPA should explore and 
implement mechanisms to achieve equivalent or improved public 
results that focus on reducing those compounds that pose the 
greatest risk.
    The Panel recognized that the current mass-based 
performance requirements in the RFG program may not adequately 
account for and consider that the different exhaust components 
pose differential levels of risk to public health due in large 
part to their variable potency.
    While the RFG program is considered a general success, 
experts acknowledge that there is some uncertainty in 
estimating the actual quantity of mobile source emissions. It 
is difficult to verify the emission reductions associated with 
the RFG program as distinct from other mobile source emission 
reduction programs. In May 2000, the National Research Council 
recommended that EPA make a number of improvements to the 
Mobile Source Emissions Factor model (MOBILE), including 
estimation of off-road vehicle emissions and incorporation of 
both mobile source toxic emissions and high-emitting vehicles.
    More regular revisions and updating of this model is 
important for air quality planners. S. 791 requires the EPA to 
expedite resolution of the current complex model which 
generates important fuels-related emissions information and 
provides input for the MOBILE model so that vehicle 
manufacturers, fuel makers, air quality planners, and Congress 
have accurate information.
Oxygenates
    The CAAA required that 2 percent by weight of RFG be 
oxygen. This requirement was not included in the Senate 
Environment and Public Works Committee's reported version of S. 
1630, the Clean Air Act Amendments of 1989. It was added on the 
Senate floor after vigorous debate and was the only successful 
floor amendment. Proponents of that requirement had expected 
ethanol to be the oxygenate of choice for fuel providers. It 
was not regarded as a mandate to use ethanol, however, even by 
its sponsors. During floor debate on the measure, Senator 
Daschle, a co-sponsor of the amendment, stated that the oxygen 
standard was fuel neutral. (congressional Record, March 29, 
1989, page S3513) Most refiners, blenders, and importers opted 
to use a cheaper and more easily used oxygenate, MTBE, in many 
nonattainment areas. MTBE currently is used in approximately 80 
percent of RFG, while ethanol is used in slightly less than 20 
percent of that fuel.
    In late 1993, EPA issued final regulations implementing the 
RFG program. In 1994, EPA issued another set of final rules 
that revised the RFG program. The revisions included a 
requirement that renewable oxygenates be used to meet 30 
percent of the 2 percent oxygen content requirement in RFG. The 
1994 rules were challenged by the American Petroleum Institute 
and the National Petroleum Refiners Association. The DC Circuit 
Court of Appeals decided that EPA lacked the authority to 
impose the renewable requirement and vacated the 1994 
rulemaking.
    The principal benefits of oxygenates were the reduction of 
carbon monoxide emissions through more complete fuel combustion 
and the reduction of toxic air pollution. The oxygen content 
requirement formally took effect in 1995 and is currently 
satisfied by refiner use of either MTBE or ethanol. Today, 
approximately four billion gallons of MTBE and 380 million 
gallons of ethanol (EtOH) are consumed to meet this 
requirement. Most of the ethanol is produced and consumed in 
the Midwest region of the country, while MTBE use is 
concentrated in the Northeastern States, Texas, and California. 
Approximately 3.5 percent of ethanol and 30 percent of MTBE is 
imported. In addition to use in the RFG program, ethanol and 
MTBE are used to help reduce emissions in carbon monoxide (CO) 
nonattainment areas as part of the wintertime oxygenated fuels 
program, which began in 1992. Originally, 40 CO nonattainment 
areas were required to participate in this winter fuel program. 
Today 15 areas in ten States participate. Approximately 46 
million gallons of MTBE and 240 million gallons of ethanol are 
used each year to satisfy the oxygenate requirement of this 
program.
    Section 211(k)(2)(B) of the CAA provides EPA the authority 
to waive the oxygen content requirement for RFG, in whole or in 
part, for an ozone nonattainment area upon the determination by 
the Administrator that compliance with the requirement would 
prevent or interfere with the attainment of a National Ambient 
Air Quality Standard (NAAQS). On April 12, 1999, California 
submitted to EPA a petition requesting such a waiver. EPA 
subsequently denied California's request. In providing the 
States with access to this waiver authority on the condition of 
meeting a relatively stringent test, and under EPA's authority 
under Section 211(c)(4), Congress sought to balance the desire 
for uniformity in our nation's fuel supply with the obligation 
to empower States to adopt measures necessary to meet national 
air quality standards.

                     Objectives of the Legislation

    The Reliable Fuels Act, S. 791, is intended to address 
existing and potential MTBE contamination.
    In order to accomplish this objective, S. 791 achieves the 
following items:

      Authorizes $200 million from the Leaking 
Underground Storage Tank (LUST) Trust Fund for State grants to 
clean up MTBE and other ether gasoline additives. Also 
authorizes an additional $200 million from the LUST Trust Fund 
for State and Federal activities to prevent releases and 
increase compliance under the UST program.
      Requires EPA to phase down the use of MTBE within 
4 years of enactment. However, individual States may authorize 
the use of MTBE within their borders if they so desire.
      Mandates the use of 5 billion gallons of 
renewable fuels introduced into commerce by the year 2012.
      Expands existing EPA authority to allow for 
regulation of fuel additives for protection of water quality 
(current law only allows for regulation to protect air 
quality).
      Repeals the Federal oxygen content requirement 
for RFG 270 days after date of enactment.
      Instructs EPA to require fuel and additive 
manufacturers to conduct tests on a regular basis to determine 
the health and environmental effects of new fuels and fuel 
additives.
      Requires EPA to study the health and 
environmental impacts of using other additives as a substitute 
for MTBE.
      Requires EPA to release a draft fuel study within 
4 years of enactment. The study must contain an analysis of the 
changes in emissions of air pollutants and changes in overall 
air quality due to the use of fuels and fuel additives 
resulting from this bill. The final study must be published not 
later than 5 years from enactment.
      Allows States a more streamlined procedure for 
disallowing the waiver of the Reid Vapor Pressure limitation 
for ethanol-blended gasoline.
      Allows Governors to opt-in both classified and 
non-classified areas of the Ozone Transport Region States to 
the RFG program.
      Authorizes a total of $1 billion over four fiscal 
years for grants to merchant MTBE producers for assisting in 
the conversion to production of other fuel additives.

                  AREAS THAT USE REFORMULATED GASOLINE
                           as of May 19, 2003



Mandatory areas:
    Los Angeles, CA
    San Diego, CA
    Hartford, CT
    New York City (NY-CT-NJ)
    Greater Philadelphia (PA-NJ-DE-MD)
    Chicago, IL (IL-WI-IN)
    Baltimore, MD
    Houston, TX
    Milwaukee, WI
    Sacramento, CA
    San Joaquin Valley, CA

Opt-In Areas:
    State of Connecticut (that portion not adjacent to NYC or Hartford)
    State of Delaware (that portion not part of Philadelphia area)
    District of Columbia
    Kentucky portion of the Cincinnati Metropolitan Area
    Louisville, KY
    Maryland--the DC suburbs and two other nearby counties
    State of Massachusetts
    St. Louis, MO
    New Hampshire portion of Greater Boston
    The State of New Jersey (that portion not adjacent to NYC or
     Philadelphia area)
    New York--Dutchess County (near NYC) and part of Essex County
     (upstate)
    State of Rhode Island
    Texas--Dallas/Fort Worth area
    Virginia--the DC suburbs, Richmond, Norfolk-Virginia Beach-Newport
     News


                      Section-By-Section Analysis

Section 1. Short Title and Table of Contents
    The bill is entitled ``The Reliable Fuels Act.''

                      Title I--General Provisions

Sec. 101. Renewable Content of Gasoline
    Section 101 sets forth a comprehensive program to increase 
the use of renewable fuels, in the United States. There are 
several essential components of the program, which have been 
carefully designed to achieve the overall goals. Changing any 
of these essential components would undermine the objectives of 
the program.
    The first essential element is the overall size of the 
renewable fuels mandate, and the schedule for its 
implementation. To ensure that the Administrator of the 
Environmental Protection Agency has adequate time to promulgate 
regulations for implementation of the program, the program 
begins in 2005. The program starts at 2.6 billion gallons of 
renewable fuels in 2005, and escalates to 5.0 billion gallons 
in 2012. Thereafter, the relative percentage of renewable fuels 
required, as a percentage of gasoline in 2012, remains 
constant. This phase-in schedule is essential to the success of 
the program. The renewable fuels industry must be given an 
opportunity to ramp-up production capacity and the petroleum 
industry must be given an opportunity to make adjustments to 
the refining, supply and distribution system necessary to 
successfully implement the program.
    The second essential element is the credit trading program. 
The renewable fuels requirement is expected to be satisfied 
primarily with the addition of ethanol to gasoline. Ethanol 
blended gasoline cannot be transported in pipelines because of 
ethanol's affinity for water. This means that the ethanol will 
have to be transported separately to the terminals by rail, 
truck, or barge. As the distance from the location of ethanol 
manufacture to the terminal gets larger, so do the costs. In 
addition, adding ethanol to gasoline increases the gasoline's 
volatility. If the use of ethanol were required in low-
volatility gasoline the industry would be forced to incur the 
additional costs of offsetting ethanol's impact on volatility. 
The credit trading provisions allow the ethanol to be used 
where it makes the most economic and environmental sense while 
providing a mechanism to transfer those credits back to the 
point of gasoline production or importation so that refiners, 
blenders, and importers can demonstrate compliance with the 
renewable fuels obligation.
    The credit banking and trading provisions of the bill give 
the Administrator the flexibility to design a workable program. 
While refiners, blenders, and importers will ultimately be 
responsible for meeting the renewable fuels obligation, the 
fact is that most of the ethanol that is required under this 
program will be added to gasoline at the distribution 
terminals, because ethanol cannot generally be transported with 
gasoline in pipelines. Under the credit banking and trading 
provisions of the bill, the Administrator is required to 
provide for the ``generation of an appropriate amount of 
credits by any person that refines, blends, distributes or 
imports gasoline that contains renewable fuels''. This would 
includes the owners and operators of the distribution 
terminals.
    The program requires the use of renewable fuels in 
gasoline. The requirement can be met by adding ethanol to 
gasoline (i.e., gasohol), or through the use of alternative 
fuels like 70 and 85 percent ethanol fuels (i.e., E70, E85). In 
addition, ethanol made from celluosic biomass is encouraged by 
counting each gallon of ethanol produced from cellulosic 
biomass as if it were 1.5 gallons of corn-based ethanol. This 
should encourage expansion in the cellulosic biomass ethanol 
industry, which makes ethanol from feedstocks like woodchips 
and switchgrass. In addition, the program allows for the 
generation of credits from the use of biodiesel.
    The renewable fuels obligation is an annual average 
obligation for the use of renewable fuels. It is believed that 
the use of ethanol to meet this requirement will be fairly 
uniform throughout the year. Nevertheless, to ensure this, the 
Administrator is required to assess the use of ethanol 
throughout the year and in the event that less than 35 percent 
is used in either the winter or summer periods, the 
Administrator is directed to promulgate regulations to ensure 
that at least 35 percent of the required amount is used in each 
period. If the Administrator promulgates such rules, the life 
of credits will be extended for an additional year.
    The bill provides for waivers from the program under 
certain circumstances. Upon petition by one or more States, the 
bill allows the Administrator to waive the program, in whole or 
in part, based on a determination that the renewable fuel 
requirement would severely harm the economy or environment of a 
State, region, or the U.S. in general, or based on a 
determination that there is an inadequate domestic supply or 
distribution capacity to meet the renewable fuel requirement. 
The bill requires the Secretary of Energy to assess whether the 
program requirements would likely result in significant adverse 
impacts on consumers in calendar year 2005 and if so, requires 
the program to be waived in calendar year 2005 to avoid any 
such adverse impacts on a national, regional or State basis.
    In addition, the bill exempts small refineries from 
participating in the program until 2011, and requires this 
exemption to be extended for not less than 2 years for any 
small refinery for which compliance with the program is found 
to impose a disproportionate economic hardship as determined by 
a study conducted by the Secretary of Energy. In the bill, 
small refineries are allowed to waive this exemption and opt-in 
to the program earlier than 2011, as well as petition for an 
extension of the exemption at any time.
    The bill also requires that a market concentration analysis 
of the ethanol production industry be performed annually by the 
Federal Trade Commission (FTC) to determine whether there is 
sufficient competition within the industry. There is concern 
among some that insufficient competition within the industry, 
particularly in combination with a federally mandated renewable 
fuel program, could lead to price-setting and other anti-
competitive behavior. The FTC is to use the Herfindahl-
Hirschman Index (HHI) to measure market concentration, which is 
a standard tool used by the FTC and the Department of Justice. 
Any industry with an HHI score above 1800 is considered to be 
highly concentrated. The committee recognizes that the HHI is 
one among many indicators of possible anti-competitive 
behavior.
    The bill contains a safe-harbor provision regarding the 
liability of manufacturers and distributors of renewable fuels 
that are subject to the bill's mandate. The principle behind 
this provision is simple. No one should be subject to tort 
liability simply for manufacturing or selling a product that 
was mandated by Congress. This provision is very limited. It 
applies only to claims that a renewable fuel mandated by the 
act is defective in design or manufacture. And, it applies only 
so long as the applicable requirements of section 211 of the 
Clean Air Act have been met. These requirements include both 
compliance with requests for information about a fuel's public 
health and environmental effects and compliance with any 
regulations adopted by the Administrator. If these requirements 
are not met, the safe harbor protection will not be available, 
and liability will be determined under otherwise applicable 
law.
    This provision does not affect claims based on the wrongful 
release of a renewable fuel into the environment. Anyone harmed 
by a release of that kind would retain all the rights he has 
under current law. Also, it also applies only prospectively, so 
it does not affect any claims that have already been filed as 
of the effective date.
    Some have argued that imposition of strict product 
liability is a prerequisite for appropriate remedial actions. 
Congress disagrees. First, negligence theories more than 
suffice to address possible remedial questions. Second, the use 
and improvement of the UST program in this legislation, 
provides a fair and efficient mechanism to address potential 
contamination problems. Third, strict liability theories are 
highly inefficient mechanisms for addressing water quality 
concerns. For example, a recent report from the Council of 
Economic Advisors found that using the tort system in this way 
``is extremely inefficient, returning only 20 cents of the tort 
cost dollar for that purpose.'' (Council of Economic Advisors, 
Who Pays for Tort Liability Claims? An Economic Analysis of the 
U.S. Tort Liability System, April 2002, at 9).
    In Congress, we have considered liability protections in a 
variety of settings, including medical care, firefighter 
assistance, educational institutions, firearms, nuclear energy, 
and many other areas. The point is that liability protection 
makes sense when we are seeking to protect a greater principle, 
such as sound public policy or fairness.
    Of course, there is some uncertainty regarding the long-
term health and environmental effects of renewable fuels. A 
major strength of this bill is its provision requiring EPA to 
conduct studies of those effects. If those studies show that 
additional regulation is necessary, the Administrator has the 
authority to initiate a rulemaking. Liability protection under 
the bill would depend on full compliance with any rules that 
the Administrator may adopt. This balanced approach will 
protect the public from adverse health and environmental 
impacts from renewable fuels while not exposing manufacturers 
and distributors to tort lawsuits for complying with the 
renewable fuels mandate of the bill.
    Some have contended that this provision would give 
``polluters . . . sweeping liability exemptions for damage to 
public health or the environment resulting from renewable fuels 
or their use in conventional gasoline.'' Nothing could be 
further from the truth. In the first place, the safe harbor 
provision does not affect claims based on the wrongful release 
of a renewable fuel into the environment. Those responsible for 
releases to the environment receive no protection whatsoever. 
Moreover, the safe harbor only applies if the maker or seller 
of a renewable fuel complies with EPA regulations to protect 
the public health and environment. Under this bill, the 
Administrator has the authority to control or even prohibit the 
sale of renewable fuels that may adversely affect air or water 
quality or the public health. There is no safe harbor if the 
Administrator's rules are violated.
    Under existing section 211(h) of the Clean Air Act, the 
Administrator was required to promulgate regulations to reduce 
the volatility of conventional (i.e., non-reformulated) 
gasoline by limiting its Reid vapor pressure (RVP). Reid vapor 
pressure is a method for determining gasoline's volatility. 
Those regulations have long since been established and they 
require that during the summer high-ozone season the RVP of 
conventional gasoline not exceed 9.0 pounds per square inch 
(psi) in ozone attainment areas and northern ozone non-
attainment areas, and 7.8 psi in southern ozone nonattainment 
areas. Section 211(h) also recognizes, however, a 1.0 psi RVP 
waiver for gasoline containing 10 percent denatured anhydrous 
ethanol. This means that under the Agency's regulations 
gasoline containing ethanol can have an RVP of 10.0 psi in 
ozone attainment areas and northern ozone nonattainment areas, 
and 8.8 psi in southern ozone nonattainment areas. In addition 
to the Federal RVP regulations, the Agency has also approved 
numerous State RVP controls under section 211(c)(4)(C) of the 
Act, upon a demonstration by the State that the RVP controls 
were necessary to achieve a national ambient air quality 
standard and that there were no reasonable and practicable non-
fuel measures available that would bring about timely 
attainment.
    The one-pound RVP waiver for ethanol blends of conventional 
gasoline is important for supply reasons. Because of the 
waiver, ethanol can be splash blended into finished gasoline at 
the distribution terminals. In other words, because of the 
waiver, the gasoline can be sold either with ethanol or without 
it. In contrast, if the waiver were not allowed, special low 
volatility blendstocks would be required to compensate for 
ethanol's impact on gasoline volatility. This has implications 
for the supply and distribution of gasoline. Without the one-
pound waiver, gasoline could be stranded if there is not 
ethanol available to blend with it. Section 819(c) of the bill 
contains provisions to ensure that there is adequate lead-time 
and that supply considerations are taken into account.
    Section 101(c) of the bill retains the one-pound RVP waiver 
for ethanol blends of conventional gasoline. However, the bill 
also provides States an expedited process to eliminate the one-
pound waiver in any area of a State if the State demonstrates 
to the Administrator that the one-pound waiver will increase 
emissions that contribute to air pollution in any area in the 
State. It is the intent of this provision to require such a 
demonstration for any area of the State for which the one-pound 
waiver would be eliminated. In addition, while it is the intent 
of this provision to establish an expedited process by which 
the State can request the Administrator to eliminate the one-
pound RVP waiver, it is not the intent to expand the authority 
of the Governor of a State beyond what he or she may have under 
State law. Furthermore, it is expected that the supporting 
documentation submitted by the Governor in support of the 
notification to eliminate the one-pound waiver would include a 
detailed analysis, including urban/regional airshed modeling, 
of the impact of the one-pound waiver on air quality in any 
area of the State where the Governor seeks to have the one-
pound waiver eliminated.
Sec. 102. Renewable Fuel
    The bill requires the Administrator to conduct, with 
respect to each conventional gasoline use area and each 
reformulated gasoline use area in each State, a survey to 
determine the market shares of various types of fuels with 
ethanol or renewable fuels. The report is to be submitted to 
Congress.
    The bill provides limited Federal assistance for the 
development of ethanol production capabilities. It is the 
committee's intent that such assistance be targeted to those 
areas of the country that currently has low rates of ethanol 
production.
    For example, the bill requires the Secretary of Energy to 
establish a 10-year program to provide Federal loan guarantees 
for construction of facilities that convert municipal solid 
waste into fuel ethanol. The Secretary is directed to give 
preference to applicants located in markets with the greatest 
need for such a facility, either because of limited 
availability of land for waste disposal or because of a high 
level of demand for fuel ethanol due to low local production 
rates of fuel ethanol.
    The bill also requires the Administrator to provide grants 
for the research, development, and implementation of renewable 
fuel production technologies. Grant eligibility is limited to 
entities located in ``RFG States,'' or States containing one or 
more covered areas as defined in section 211(k)(10)(D) of the 
Clean Air Act (42 U.S.C. 7411(k)(10)(D)). Eligible entities 
must be academic institutions or consortia comprised of 
combinations of academic institutions, industry, and government 
in such States. The bill authorizes $25 million for each of 
fiscal years 2004 through 2008 for the grant program.
    In addition, the bill allows the Secretary of Energy to 
provide grants to merchant producers of cellulosic biomass 
ethanol to assist in the construction of production facilities 
in the United States that use cellulosic biomass feedstocks 
derived from agricultural residues or municipal solid waste. 
The bill authorizes $750 million for such grants for fiscal 
years 2004 through 2006.
Sec. 103. Survey of Renewable Fuels Consumption
    The bill requires the Administrator to conduct and publish 
a survey of renewable fuels consumption in the motor vehicle 
fuels market on a monthly basis. In developing and conducting 
this survey, the Administrator shall protect the 
confidentiality of the responses to the survey and shall 
include the bill's specified elements of the survey.

                  Title II--Federal Reformulated Fuels

Sec. 201. Short Title
    This subtitle may be cited as the ``Federal Reformulated 
Fuels Act of 2003.''
Sec. 202. Leaking Underground Storage Tanks

                                SUMMARY

    The bill authorizes appropriations not to exceed $200 
million from the Leaking Underground Storage Tank (LUST) Trust 
Fund to be used for cleanup and treatment of MTBE. The bill 
authorizes an additional $200 million over 6 years from the 
LUST Trust Fund for EPA and States to conduct inspections, 
issue orders, and bring actions under Subtitle I of the Solid 
Waste Disposal Act.

                               DISCUSSION

    In 1984, Congress enacted, as Subtitle I of the Solid Waste 
Disposal Act, a comprehensive program to address the problem of 
leaking underground storage tanks. Among other things, the 
program required EPA to develop leak detection and prevention 
standards for underground storage tanks (USTs). It authorized 
the Agency to compel tank owners and operators either to take 
corrective action to clean up leaking tanks and comply with 
standards for USTs or to close the tanks. States have largely 
taken the lead in implementing and enforcing the program 
requirements, including corrective action requirements.
    States receive Federal funds from the LUST Trust Fund. 
Revenue for this Fund comes from a one-tenth of one cent tax on 
all petroleum products. This tax generates approximately $170 
million per year. The interest on the principal in the fund 
generates approximately $70 million annually (roughly the 
amount of annual appropriations from the LUST Trust Fund).
    Amounts are appropriated each year from the Trust Fund for 
the States and EPA to implement and enforce the UST corrective 
action requirements; to conduct cleanups in certain limited 
situations where there is no financially viable responsible 
party or where a responsible party fails to undertake the 
appropriate corrective action; to take corrective action in 
cases of emergency; and to bring cost recovery actions against 
parties to seek reimbursement of costs expended from the Fund 
to clean up sites. The balance of the Trust Fund is 
approximately $1.3 billion. The annual appropriation from the 
Trust Fund for fiscal year 2001 was approximately $72 million. 
Congress has appropriated approximately $10 million per year 
from general revenues for State implementation of leak 
prevention and detection programs.
    In addition to the Federal LUST Trust Fund, many States 
have also established funds, capitalized through State gas 
taxes, fees, and other mechanisms, to pay for cleanups and to 
provide assistance to tank owners in complying with other 
requirements. States spend approximately $1 billion per year 
from their trust funds. In recent years, however, the claims 
against those funds have risen dramatically.
    More than a million leaking USTs have been closed under 
this program., EPA estimates that over 740,000 active USTs 
contain petroleum products. Some of these tanks have leaks, 
causing potential harm to human health and the environment. A 
number of recent, high profile contamination cases have 
highlighted this problem. MTBE has been detected at thousands 
of leaking UST sites. In some cases, drinking water wells have 
been closed due to these releases of MTBE. According to EPA, 
States have reported more than 400,000 confirmed releases from 
USTs. Cleanups have been initiated for approximately 357,000 
releases and almost 242,000 cleanups have been completed. In 
spite of this progress, many thousands of cleanups remain to be 
completed. EPA, States, and the private sector have suggested 
that lack of resources, both for cleanup and for inspections 
and enforcement, have limited efforts to fully address MTBE 
contamination and leaking USTs. Title 2 of this bill addresses 
these concerns.
    Section 2 reconfirms the authority of the Administrator and 
the States to use funds from the LUST Trust Fund for the 
cleanup of sites contaminated by MTBE from leaking USTs. In 
addition, Section 2(a) authorizes the Administrator and the 
States to conduct such cleanup activities using specifically 
designated funds made available under new Section 9011(a) from 
the LUST Trust Fund. In order to undertake a corrective action 
under this subsection, the Administrator or a State must still 
comply with the requirements of Section 9003(h)(2) of the Solid 
Waste Disposal Act. States are to exercise this authority in 
accordance with their cooperative agreements.
    Relatively low levels of MTBE can be detected in 
groundwater. The detection of MTBE, by taste and smell, can 
make the water unpalatable, but not necessarily harmful. This 
section amends Section 9003 of the Solid Waste Disposal Act to 
clarify that the Administrator and the States may undertake 
corrective actions whenever the presence of MTBE in groundwater 
presents a threat to public welfare, even in situations where 
the level of MTBE is not so high as to present a threat to 
human health.
    Section 2 amends Subtitle I of the Solid Waste Disposal Act 
by creating a new Section 9010 giving States greater 
flexibility in their use of LUST funds. New Section 9010 
authorizes EPA and the States to use funds appropriated from 
the LUST Trust Fund to conduct inspections, issue orders, or 
bring actions under Subtitle I. Funding authorized under this 
section is for both formal enforcement actions, such as 
judicial actions and administrative orders, and related 
measures to secure compliance, such as notices of violation or 
warnings. This increased funding for inspections and 
enforcement related activities will enable States and EPA to 
secure greater compliance with UST standards. Increased 
compliance will avoid future releases and resulting cleanup 
costs. Funds authorized under this provision may be used for 
cost recovery.
    This section does not change current law on State authority 
under authorized programs or Federal authority to enforce the 
requirements of Subtitle I. Nor does this provision affect 
EPA's authority to use other funds to enforce the UST program. 
EPA receives funding from sources other than the LUST Trust 
Fund to undertake inspection and enforcement related activities 
for leak detection and other preventive requirements. Any LUST 
Trust Fund appropriations used for such enforcement activities 
by EPA are expected to supplement funds that the Agency has 
been receiving, and will continue to receive, from sources 
other than the LUST Trust Fund.
    In addition to authorizing funding for States and EPA for 
federally authorized programs, this section authorizes States 
to use funds to undertake inspection and enforcement related 
actions for State tank leak detection, prevention, and other 
requirements through State programs with requirements that are 
similar or identical to Subtitle I. State agencies currently 
receive funding from EPA from sources other than the LUST Trust 
Fund to undertake such activities for leak detection and other 
preventive requirements. It is expected that States will 
continue to receive funding from EPA from these other sources, 
as well as from the LUST Trust Fund, for these activities. Any 
LUST Trust Fund appropriations used for enforcement related 
activities by States should supplement funds that the States 
have been receiving, and will continue to receive, through 
grants authorized under Section 2007(f).
    Section 2 also creates a new Section 9011 to increase the 
levels of authorized funding for measures related to corrective 
actions and enforcement. This section authorizes appropriations 
for two major and equally important activities--funding an 
immediate need to address MTBE, which is currently coming from 
leaking underground tanks and is creating problems in numerous 
drinking water wells, and facilitating inspection and 
enforcement activities to avoid similar problems being created 
in the future. Section 9011(1) authorizes a one-time 
appropriation of $200 million for corrective actions with 
respect to MTBE. The bill authorizes substantial funding to 
clean up MTBE contamination in recognition of the fact that 
this problem has arisen, in part, as a result of increased use 
of MTBE by refiners in an effort to meet Federal oxygenate 
requirements. Section 9011(2) authorizes an additional $200 
million over the period between fiscal years 2002 through 2007 
to conduct inspections or issue orders or bring actions under 
Subtitle I. There is broad consensus that more resources are 
needed to conduct inspections to ensure that underground tanks 
comply with applicable regulations and to ensure early 
detection of leaks and other problems. EPA has estimated that 
it would cost approximately $93 million over what is currently 
appropriated for the first year, and $70 million each year 
thereafter, to inspect facilities on an annual basis. A 
biannual inspection schedule would cost approximately $63 
million over what is currently appropriated for the first 2 
years combined, and $20 million additional annually thereafter.
Sec. 203. Restriction on the Use of MTBE

                                SUMMARY

    Section 203 restricts the use of MTBE, but allows States to 
individually authorize the sale and use of MTBE within their 
own borders.

                               DISCUSSION

    While the States can authorize the sale and use of MTBE, 
they cannot require its sale or use. Section 203 also clarifies 
the Administrator's authority to allow trace quantities of MTBE 
notwithstanding the prohibition on MTBE use. This provision 
recognizes that MTBE has been used in gasoline for over 20 
years, and as such will be present in trace quantities 
throughout the distribution system even after its use in motor 
fuels is prohibited. Recognition of such trace quantities is 
also appropriate because MTBE may be generated as a trace 
byproduct in the production of other gasoline components.
    The bill provides for transition assistance to merchant 
MTBE manufacturers. To be eligible for such assistance, the 
manufacturer must be making MTBE at time of enactment through 
the time that the prohibition on MTBE use takes effect. This 
provision recognizes that although Congress has reconsidered 
the relative value of MTBE, Congress also recognizes that MTBE 
is an integral part of the fuels system as a result of the 
reformulated gasoline oxygen content requirement and that lead-
time must be provided to allow the industry to transition to 
substitutes. Essentially, transition assistance is premised on 
the facts that: (1) MTBE is widely used because of a Federal 
mandate, the oxygen content requirement; (2) MTBE has been 
effective in addressing the energy and environmental concerns 
that lay at the heart of a larger Federal program requiring the 
use of RFG; (3) the government, as a result of the first two 
points, bears great responsibility for any attendant losses 
attributable to the change in legal status of MTBE; and (4) 
failure to address the consequences of this change in status 
may undermine any incentive for additive manufacturers to 
produce new generations of additives that will be needed to 
replace MTBE and to meet future energy and environmental goals.
Sec. 204. Elimination of the Oxygen Requirement for Reformulated 
        Gasoline
    In addition to repealing the reformulated gasoline oxygen 
content requirement and ensuring that the air toxics benefits 
of the reformulated gasoline program are maintained, this 
provision requires EPA to simplify the existing reformulated 
gasoline regulations by replacing the less stringent VOC 
Control Region 2 requirements with the more stringent VOC 
Control Region 1 requirements. (204(d)) This change has no 
effect on the VOC adjustment that currently applies to ethanol 
blends of reformulated gasoline in Milwaukee and Chicago or on 
the Agency's authority to expand that adjustment to other 
reformulated gasoline areas.
    Section 204(b). The goal of this provision is to ensure 
that real world air toxic emission reduction benefits are 
maintained, as recommended by EPA's Blue Ribbon Panel on 
Oxygenates in Gasoline. The petroleum industry did much better 
than required by law when it came to reducing toxic air 
pollutant emissions from reformulated gasoline. In fact, the 
industry did better in Phase I (1995-1999) of the reformulated 
gasoline program than it was even required to do under the more 
stringent Phase II (2000 and beyond) requirements. Concerns 
were raised by the Blue Ribbon Panel that some of these real 
world benefits could be lost as a result of repeal of the 
reformulated gasoline oxygen mandate and phase-down in MTBE 
use. This provision ensures that those real world benefits are 
not lost.
    To ensure that the air toxics benefits of the reformulated 
gasoline program are maintained, the Administrator promulgated 
the Mobile Source Air Toxics Rule (MSAT Rule) on March 29, 
2001. That rule requires that refineries and importers continue 
to attain the same level of air toxics performance that they 
attained in 1998-2000. The more stringent standards imposed by 
the rule do not apply to incremental volumes of reformulated 
gasoline production, i.e., production in excess of what the 
particular refinery or importer produced in 1998-2000. Gasoline 
production above the baseline volumes is subject to the Phase 
II reformulated gasoline standards, which require a 21.5 
percent reduction in aggregate air toxics emissions reductions, 
relative to 1990 baseline levels. EPA excluded these 
incremental volumes from the more stringent standard because 
the Agency did not want to discourage the production of 
reformulated gasoline and because the incremental volume 
adjustment is ``unlikely to have a material impact on air toxic 
emissions from gasoline.'' 66 Fed. Reg. 17230, 17249 (March 29, 
2001).
    Section 204(b) of the bill improves EPA's existing rule in 
two ways. The provision requires EPA to promulgate a rule 
within 270 days of enactment to establish ``for each refinery 
or importer (other than a refinery or importer in a State that 
has received a waiver under section 209(b) with regard to 
gasoline produced for use in that State), standards for toxic 
air pollutants from use of the reformulated gasoline produced 
or distributed by the refinery or importer that maintain the 
reduction of the average annual aggregate emissions of toxic 
air pollutants for reformulated gasoline produced or 
distributed by the refinery or importer during calendar year 
1999 and 2000 . . . .'' It is the intent of this provision that 
EPA expeditiously revise the mobile source air toxics rule 
promulgated on March 29, 2001, to change the baseline 
provisions from 1998-2000 as in the existing rule to 1999-2000.
    In addition, to ensure that the average annual aggregate 
air toxic emission reduction benefits are maintained on a 
regional basis, defined to be a PADD (Petroleum Administration 
for Defense District), the Administrator is required to 
continue to monitor average annual aggregate air toxics 
emissions to ensure that the performance achieved in 1999-2000 
is maintained into the future. If the Administrator determines 
that average annual aggregate air toxics emission reductions 
are not maintained in any PADD, relative to 1999-2000 
performance, the Administrator is required to expeditiously 
revise the mobile source air toxics rule to eliminate the 
incremental volume exclusion in MSAT for reformulated gasoline.
    Section 204(c) permits commingling at retail stations of 
Reformulated Gasoline (RFG) containing ethanol and RFG that 
does not contain ethanol. This provision is intended to 
increase retailer flexibility during times of tight RFG 
supplies by permitting them to switch between different types 
of RFGs without draining their underground storage tanks, while 
at the same time maintaining environmental protections inherent 
in the RFG program. This provision will be included in section 
211(k) of the Clean Air Act.
    As a practical matter, commingling is unlikely to occur on 
a regular basis. Most gasoline markets are not likely to be 
supplied with various gasoline formulations. In addition, it is 
undesirable for retailers to switch back and forth between 
ethanol-blended and other types of gasoline due to the effects 
that ethanol has on dispenser seals, and the need for more 
frequent filter change-outs. However, if faced with a tight 
market, a commingling allowance provides flexibility to 
retailers to supply gasoline to end-users.
    There is concern that widespread commingling of ethanol 
with non-RVP-adjusted gasolines could increase VOC emissions. 
This section requires that retailers certify that the 
commingled product meet all content and emissions performance 
standards for reformulated gasoline. In addition, emission 
control strategies already in place would limit the amount of 
VOCs that could actually escape into the environment. These 
include Stage I&II vapor recovery (in nonattainment areas), 
pressure/vacuum valves on tank vents, on-board refueling vapor 
recovery systems, and on-board vehicle vapor controls. This 
provision is not intended to authorize or allow the U.S. 
Environmental Protection Agency or any other State or Federal 
Government agency to require that gasoline be reformulated to 
provide an adjustment to offset any potential VOC emissions 
increase from retail commingling.
    In addition, any party other than the retailer shall not be 
subject to an enforcement action or penalties under section (d) 
solely arising from the commingling of compliant gasolines by 
the retailer, unless the other party caused commingling that 
was not intended by the retailer or unless the other party 
failed to complete the quality assurance and oversight measures 
specified under current gasoline regulations.
    Section 204(e) This provision expressly preserves baseline 
adjustments granted previously under 40 CFR 80.915(g) of the 
Mobile Source Air Toxic rule, but only to the extent they are 
based on the 1999-2000 base period adopted by this Section. It 
also allows the Administrator to make adjustments applicable to 
the refinery specific standards that a refiner must meet under 
clause (b)(2) of Section 204.
    The Administrator may, but is not required, to change a 
``clean gasoline producer'' baseline adjustment to reflect the 
Federal MTBE ban, but may not lower a refiner's baseline to 
less than the average reduction in toxic air emissions in 
reformulated gasoline supplied to PADD I during the calendar 
years 1999-2000.
Sec. 205. Public Health and Environmental Impacts of Fuels and Fuel 
        Additives

                                SUMMARY

    The bill directs the Administrator to require tests to 
determine potential public health effects of fuels or fuel 
additives prior to registering fuels or fuel additives and 
during their use. Studies under this provision will be 
conducted on a regular basis. In addition, EPA is instructed to 
study the health and environmental impacts of using ETBE and 
other additives as a substitute for MTBE.

                               DISCUSSION

    The existing law requires the Administrator to require fuel 
and additive manufacturers to conduct tests to determine the 
potential health and environmental effects of fuels and fuel 
additives.
    The Administrator should use this authority to identify and 
assess any adverse public health, welfare, or environmental 
effects from the use of motor vehicle fuels or fuel additives 
or the combustion products of such fuels or fuel additives. The 
Administrator should use the authority to assess threats to 
both air pollution and water pollution in order to effectively 
exercise the authority in Section 211(c) as amended by this 
legislation. This provision is intended to prevent situations 
such as the one presented by MTBE contamination of water 
supplies.
    To avoid such recurrences, the Blue Ribbon Panel on 
Oxygenates in Gasoline recommended that EPA and others 
accelerate ongoing research efforts into the inhalation and 
ingestion health effects, air emission transformation 
byproducts, and environmental behavior of all oxygenates and 
other components likely to increase in the absence of MTBE. 
This should include research on ethanol, alkylates, and 
aromatics, as well as on gasoline compositions containing those 
components.
Sec. 206. Analyses of Motor Vehicle Fuel Changes

                                SUMMARY

    Section 206 requires the Administrator to publish an 
analysis of the changes in emissions of air pollutants and air 
quality due to the implementation of the provisions in S. 791. 
The analysis is to examine changes in all motor vehicle fuels 
and fuel additives and must attempt to identify and quantify 
any increase in emissions or air pollution caused by 
implementing this bill. A draft analysis is to be published 
within 4 years of enactment, and a final analysis is to be 
published within 5 years of enactment. The Administrator should 
include in the analysis consideration of direct and evaporative 
emissions, as well as combustion by-products, from the use of 
these fuels and fuel additives in highway and non-road 
vehicles.
    Section 206 requires the Administrator to develop and 
finalize an emissions model that reasonably reflects the 
effects of characteristics or components of motor vehicle fuel 
or emissions from vehicles in the motor vehicle fleet during 
calendar year 2006.

                               DISCUSSION

    Section 211(c) of the CAA, as amended by this legislation, 
provides the Administrator with the authority to regulate, 
control, or prohibit the manufacture, introduction into 
commerce, offering for sale, or sale of any fuel or fuel 
additive, if, in the judgment of the Administrator, the fuel or 
fuel additive or emission product causes or contributes to air 
pollution or water pollution that may reasonably be anticipated 
to endanger the public health or welfare. The bill requires the 
Administrator to exercise this authority with respect to MTBE. 
The bill also adds water quality as an environmental protection 
criterion in Title II of the Act.
    Section 202(l) of the Act requires the Administrator to 
exercise the authorities in Sections 211(c) and 202(a) and to 
promulgate, and from time to time revise, regulations 
containing reasonable requirements to control hazardous air 
pollutants from motor vehicles and fuels. The regulations must 
reflect the greatest degree of reductions achievable, 
considering cost and projected available technology, and must 
focus on those categories of emissions that pose the greatest 
risk to human health or about which significant uncertainties 
remain.
    The emissions model currently used by EPA to determine 
compliance in both the RFG and conventional anti-dumping 
gasoline programs is called the complex model. It uses 1990 
average gasoline quality and 1990 model year motor vehicle 
technology as its baseline, and models how changes in gasoline 
qualities change emissions of these vehicles compared to 1990 
gasoline. For purposes of this provision, EPA is authorized to 
update its complex model to address changes in motor vehicle 
technology since 1990. The motor vehicle fleet in calendar year 
2005 will be different from model year 1990 vehicles. The 
updated model is expected to contain a mix of technologies 
with, for example, the newer Tier 2 technology entering the 
fleet.
    Developing an emissions model that reflects the actual mix 
of motor vehicle technologies in the fleet during calendar year 
2006 allows EPA to reasonably determine the change in emissions 
between 1999-2000 and 2005-2006 due to changes in gasoline, as 
the 2006 calendar year fleet should still contain the kinds of 
technologies found in the prior years, although with a 
different mix of technologies. EPA should work with a 
consortium of the automobile and oil industries and other 
interested and qualified parties to design and conduct the 
extensive vehicle and fuel combination testing that will be 
necessary to update the complex model, as was done in 
developing the current complex model.
    An updated complex model may be useful for other related 
applications, such as emissions modeling for State planning. 
EPA could use the updated model in the RFG and conventional 
gasoline programs, including future RFG rulemakings, where 
doing so would not be inconsistent with the provisions of 
Section 211(k).
Sec. 207. Additional Opt-In Areas Under Reformulated Gasoline Program

                                SUMMARY

    This section of the bill provides explicit State authority 
to allow non-classified areas in the Ozone Transport Region to 
opt-in to the RFG program.

                               DISCUSSION

    Currently, 17 States and the District of Columbia rely on 
the RFG program as an emissions control strategy. Appendix II 
provides a complete list of all RFG areas. The CAAA mandated 
use of RFG in nine areas. Several States (13) have exercised 
the opt-in authority of Section 211(k)(6) to require the use of 
RFG. Areas that opted in to the RFG program prior to January 1, 
2000, are required to use RFG until December 31, 2003. The Act 
limits opt-in actions to areas that previously violated the 1-
hour ozone NAAQS and are classified according to their current 
status in relation to attainment of the NAAQS. States expend 
considerable resources in an effort to avoid violating the 
NAAQS because of the stringent requirements imposed on 
nonattainment areas by the CAA. This section allows use of the 
RFG program for those areas in the Ozone Transport Region that 
seek to use it as an emissions control technique in the State's 
strategy for avoiding new violations of the NAAQS. Under this 
provision, once the SIP revision is approved the area will be a 
covered area under the Federal program.
Sec. 208. Federal Enforcement of State Fuels Requirements

                                SUMMARY

    This provision requires EPA to enforce State fuels controls 
and prohibitions approved by the Administrator under section 
211(c)(4)(C) of the Act, if the State so requests.

                               DISCUSSION

    Under section 211(c)(4)(C), EPA may approve an otherwise 
preempted State fuel control or prohibition if the State 
submits a revised implementation plan to the Administrator and 
demonstrates that the State fuel controls or prohibitions are 
necessary to achieve the national ambient air quality standard 
that the State's plan implements and that there are no other 
reasonable and practicable non-fuel measures available that 
would bring about timely attainment. Because of the national 
character of the fuels industry and the way that fuels are 
distributed in fungible streams, State fuel controls and 
prohibitions have long been recognized as the control of last 
resort. The new provision does not change these basic 
principles. The States would still be required to submit a 
revised implementation plan that meets the requirements of 
section 110 of the Act, including the requirement that the 
controls be enforceable by the State as a practical matter. 
This means that States are still required to have their own 
enforcement programs if they want to impose fuel controls or 
prohibitions that differ from the controls and prohibitions 
imposed by EPA under section 211 of the Act. The only effect of 
the new provision is that if a State meets all of the existing 
requirements under section 110 and 211(c)(4), the State can 
request that the Administrator take a more active role in 
enforcement of those regulations.
Sec. 209. Fuel System Requirements Harmonization Study

                                SUMMARY

    The Administrator of the Environmental Protection Agency 
and the Secretary of Energy shall jointly conduct a study of 
Federal, State, and local requirements concerning motor vehicle 
fuels.

                               DISCUSSION

    In the last several years, multiple unique gasoline blends 
required in different parts of the country have led to reduced 
fungibility in gasoline distribution systems and exacerbated 
shortages when supply disruptions have occurred. Several 
studies of this ``boutique fuels'' problem have identified it 
as a contributing factor to increased price volatility and 
market tightness. This bill takes the first step in addressing 
boutique fuels by making major changes to Federal fuels 
requirements: a Federal phase-out of MTBE; repeal of the RFG 
oxygen content mandate; and a new Renewable Fuels Standard with 
a credit banking and trading program. Section 209 takes the 
next step by requiring DOE and EPA to conduct a comprehensive 
study on how the various fuels requirements affect several 
things, including (1) the supply of fuels available to 
consumers; (2) achievement of air quality goals; (3) the fuel 
distribution system; and (4) industry investment in new 
capacity. The EPA and DOE are to recommend to Congress 
potential changes to harmonize fuels requirements nationally 
and reduce the number of specialty fuels. The report 
recommendations are required to take into account the need to 
provide advance notice of required modifications to refinery 
and fuel distribution systems in order to ensure an adequate 
supply of motor vehicle fuel in all States.

                          Legislative History

    S. 791 was introduced by Senator Inhofe, on April 4, 2003, 
and was referred to the Committee on Environment and Public 
Works. The committee considered and amended the bill in a 
business meeting on April 9, 2003, and ordered the bill 
favorably reported, as amended by the committee, to the Senate. 
During the 107th Congress, the committee favorably reported a 
related bill, S. 950, the Reformulated Fuels Act, which did not 
pass the Senate.

                                Hearings

    On March 20, 2003, the Subcommittee on Clean Air, Climate 
Change, and Nuclear Safety held a non-legislative hearing on 
alternative fuels and fuel additives. The witnesses providing 
testimony were Hon. Jeffrey R. Holmstead, Assistant 
Administrator for Air and Radiation, U.S. Environmental 
Protection Agency; Hon. David Garman, Assistant Secretary for 
Renewable Energy, U.S. Department of Energy; Mary Hutzler, 
Director, Office of Integrated Analysis and Forecasting, Energy 
Information Administration; Fred Yoder, President, National 
Corn Growers Association; Dr. Edward Murphy, Downstream General 
Manager, American Petroleum Institute; Robert Slaughter, 
President, National Petrochemical and Refiners Association; 
Scott Segal, Partner, Bracewell and Patterson, L.L.P.; Rich 
Wagman, First Vice Chairman of ARTBA, President of G.A. and 
F.C. Wagman, York, Pennsylvania, on behalf of the American Road 
and Transportation Builders Association; A. Blakeman Early, 
Consultant, American Lung Association; Paul J. Granger, P.E., 
Superintendent, Plainview Water District, Plainview, New York; 
and Craig Perkins, Director, Environment and Public Works 
Management, Santa Monica, California.
    During the 105th through the 107th Congresses, the 
committee held hearings on the use of oxygenated fuels under 
the requirements of the Clean Air Act.
    On December 9, 1997, the Committee on Environment and 
Public Works held a field hearing in Sacramento, CA on the 
presence of MTBE in the nation's water supply. Testimony was 
given by Nancy J. Balter, Principal, Center for Environmental 
Health and Human Toxicology, and former Associate Professor of 
pharmacology, Georgetown University Medical Center; Nachman 
Brautbar, Professor of clinical medicine, University of 
Southern California School of Medicine; Cynthia Dougherty, 
Director, Office of Groundwater and Drinking Water, 
Environmental Protection Agency; Stephen K. Hall, Executive 
Director, Association of California Water Agencies; The 
Honorable Tom Hayden, California State Senator; The Honorable 
Richard Mountjoy, California State Senator; Gary Patton, 
Counsel, The Planning and Conservation League; Craig Perkins, 
Director of Environment and Public Works Management, City of 
Santa Monica, California; Peter M. Rooney, Secretary, 
California State Environmental Protection Agency; David Spath, 
Chief, Drinking Water and Environmental Management Division, 
California State Environmental Protection Agency; and John 
Zogorski, Chief of National Synthesis on Volatile Organic 
Compounds and MTBE, U.S. Geological Survey.
    On September 16, 1998, the Committee on Environment and 
Public Works held a hearing on S. 1576, a bill to amend the 
Clean Air Act to permit the exclusive application of California 
State regulations regarding reformulated gasoline in certain 
areas within the State. Testimony was given by The Honorable 
Brian Bilbray, U.S. Representative from the State of 
California; John D. Dunlap, III, Chairman, California Air 
Resources Board; Douglas A. Durante, Executive Director, Clean 
Fuels Development Coalition; The Honorable Dianne Feinstein, 
U.S. Senator from the State of California; Daniel S. Greenbaum, 
President, Health Effects Institute; Al Jessel, Senior Fuels 
Specialist, Chevron Products Company; and Ned Sullivan, 
Commissioner, Maine Department of Environmental Conservation.
    On October 5, 1999, the Subcommittee on Clean Air, 
Wetlands, Private Property and Nuclear Safety of the Committee 
on Environment and Public Works held a hearing on the Blue 
Ribbon Panel findings on MTBE. Testimony was given by Robert H. 
Campbell, Chairman and Chief Executive Officer, Sunoco, Inc.; 
The Honorable Jake Garn, Vice Chairman, Huntsman Corporation; 
Daniel S. Greenbaum, President, Health Effects Institute; and 
Michael P. Kenny, Executive Officer, California Air Resources 
Board.
    On June 14, 2000, the Subcommittee on Clean Air, Wetlands, 
Private Property and Nuclear Safety of the Committee on 
Environment and Public Works held a hearing on the 
environmental benefits and impacts of ethanol under the Clean 
Air Act. Testimony was given by Dan Greenbaum, President, 
Health Effects Institute; Blake Early, Environmental 
Consultant, American Lung Association; Michael Graboski, 
Director, Colorado Institute for Fuels and High Altitude Engine 
Research, Colorado Department of Chemical Engineering, Colorado 
School of Mines; Bob Slaughter, Director, National 
Petrochemical & Refiners Association; Jack Huggins, Vice 
President, Williams Energy Services; Jason Grumet, Executive 
Director, Northeast States for Coordinated Air Use Management; 
Stephen Gatto, President and Chief Executive Officer, BC 
International; Gordon Proctor, Director, Ohio Department of 
Transportation; The Honorable Charles Grassley, United States 
Senator from the State of Iowa; The Honorable Tom Harkin, 
United States Senator from the State of Iowa; The Honorable 
Richard Durbin, United States Senator from the State of 
Illinois.
    On April 27, 2001, at the Media Center, Salem High School, 
Salem, NH, the committee received testimony on the use of the 
gasoline additive methyl tertiary butyl ether (MTBE), from 
Christina Miller, homeowner, Derry NH; Hon. Arthur Klemm, New 
Hampshire State Senator, Windham, NH; Robert Varney, 
Commissioner, New Hampshire Department of Environmental 
Services, Concord, NH; Nancy Kinner, Professor of Civil 
Engineering, University of New Hampshire, Durham, NH; William 
Holmberg, Biofuel Refiner, Bow, NH; Patty Aho, Executive 
Director, Maine Petroleum Association, Augusta, ME.

                             Rollcall Votes

    The Committee on Environment and Public Works met to 
consider S. 791 on April 9, 2003. During consideration of the 
bill, the following amendments were agreed to by voice vote: an 
amendment offered by Senator Murkowski, as amended by her 
second degree amendment, exempting Alaska and Hawaii from 
certain ethanol provisions of the bill; an amendment offered by 
Senator Clinton, modified by a second degree amendment, 
relative to ethanol market concentration analysis; an amendment 
offered by Senator Clinton, relative to cellulosic biomass 
ethanol; an amendment offered by Senator Clinton, relative to 
emissions of toxic pollutants; an amendment offered by Senator 
Clinton, relative to loan guarantees for conversion of solid 
waste facilities to ethanol; an amendment offered by Senator 
Boxer, modified by an amendment offered by Senator Clinton, 
relative to research and development of new technologies for 
cellulosic biomass; an amendment offered by Senator Boxer, 
relative to State and local participation in renewable fuel 
reports; and three amendments offered by Sentor Boxer, relative 
to health effects on children, pregnant women, and sensitive 
populations. An amendment offered by Senator Boxer concerning 
liability treatment of fuels and additives was defeated by 10 
noes to 9 ayes. Voting against the Boxer amendment were 
Senators Inhofe, Baucus, Bond, Crapo, Voinovich, Chafee, 
Cornyn, Murkowski, Thomas, and Allard. Voting in favor were 
Senators Jeffords, Warner, Reid, Graham, Lieberman, Boxer, 
Wyden, Carper, and Clinton. The bill was ordered reported to 
the Senate, as amended, by voice vote.

                      Regulatory Impact Statement

    In compliance with section 11(b) of rule XXVI of the 
Standing Rules of the Senate, the committee makes evaluation of 
the regulatory impact of the reported bill.
    The regulatory authority granted by this bill is structured 
to streamline and make flexible the imposition of any new 
requirements.
    Section 101 requires the Administrator of the EPA to issue 
regulations to establish a renewable fuel content requirement 
applicable to all refineries, blenders, distributors and 
importers of gasoline sold or introduced into commerce in the 
United States, except in Alaska or Hawaii.
    Under Section 203, no regulatory action is required to 
effect the phaseout of MTBE, though the Administrator will need 
to issue regulations to implement and enforce this phaseout. 
The Administrator's existing authority to limit the use of 
fuels or fuel additives is expanded by the bill to allow 
consideration of water pollution effects.
    Section 204 requires EPA to promulgate regulations to 
establish new performance standards for toxic emissions within 
270 days of enactment. In the event that refiners' toxics 
reduction performance does not achieve at least the 1999-2000 
average in a region, EPA must promulgate revised regulations to 
assure such performance. Compliance with the performance 
standards is managed through existing regulatory structures 
under Section 211(k) of the CAA.
    Also in section 204, EPA must revise the current RFG 
regulations to ensure that northern RFG gasoline will meet the 
more stringent VOC requirements of southern RFG.
    The provisions in Section 207 regarding additional opt-in 
areas rely entirely on existing authority and regulatory 
structures for revisions and approvals of SIPs.

                          Mandates Assessment

    In compliance with the Unfunded Mandates Reform Act of 1995 
(Public Law 104-4), the committee finds that S. 791 would 
impose no significant Federal intergovernmental unfunded 
mandates on State, local, or tribal governments.

                          Cost of Legislation

    Section 403 of the Congressional Budget and Impoundment 
Control Act requires that a statement of the cost of the 
reported bill, prepared by the Congressional Budget Office, be 
included in the report. That statement follows:

                                     U.S. Congress,
                               Congressional Budget Office,
                                       Washington, DC, May 6, 2003.

Hon. James M. Inhofe, Chairman,
Committee on Environment and Public Works,
U.S. Senate, Washington, DC.

    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 791, the Reliable 
Fuels Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Susanne S. 
Mehlman (for Federal costs), who can be reached at 226-2860, 
Greg Waring (for the State and local impact), who can be 
reached at 225-3220, and Lauren Marks (for the private-sector 
impact), who can be reached at 226-2940.
            Sincerely,
                                        Douglas Holtz-Eakin
                              ----------                              

S. 791, Reliable Fuels Act, As ordered reported by the Senate Committee 
        on Environment and Public Works on April 9, 2003
Summary
    Under S. 791, methyl tertiary butyl ether (known as MTBE), 
a widely used motor fuel additive, would be banned 4 years 
after enactment of the bill--except individual States could 
choose to continue to allow the use of MTBE by notifying the 
administrator of the Environmental Protection Agency (EPA). The 
bill would eliminate a requirement under current law for motor 
fuel to contain oxygenates and would require that all motor 
fuels sold by a refiner, blender, or importer contain specified 
amounts of renewable fuel. This renewable fuel standard would 
largely be met by adding ethanol to gasoline. S. 791 also would 
authorize funding for several grant programs to support 
research and development of renewable fuels technology. Funding 
also would be authorized for rulemaking, studies, and reports 
to the Congress associated with the renewable fuels program.
    The bill's mandate to use renewable fuels would affect 
spending on farm support programs and also would affect motor 
fuels tax receipts. CBO estimates that enacting S. 791 would 
increase direct spending by about $170 million over fiscal 
years 2005 and 2006 but in total would reduce direct spending 
by about $2 billion over the 2005-2013 period. In addition, CBO 
estimates that the bill would increase revenues by about $130 
million over the 2005-2008 period and decrease revenues by $2.3 
billion over the 2005-2013 period. (We estimate no impact on 
direct spending or revenues before 2005.) Finally, we estimate 
that implementing S. 791 would cost about $250 million in 2004 
and $2.3 billion over the 2004-2008 period, subject to 
appropriation of the necessary amounts.
    S. 791 contains an intergovernmental mandate as defined in 
the Unfunded Mandates Reform Act (UMRA). However, the mandate 
would impose no duty on State, local, or tribal governments 
that would result in additional spending. Therefore, the 
threshold established in UMRA ($59 million in 2003, adjusted 
annually for inflation) would not be exceeded.
    S. 791 contains several private-sector mandates as defined 
in UMRA. While CBO cannot estimate the aggregate cost of all 
the mandates contained in the bill, we expect that the total 
cost of private-sector mandates would exceed the annual 
threshold established in UMRA ($117 million in 2003, adjusted 
annually for inflation). That conclusion is primarily based 
upon our analysis of the renewable fuel standard which would 
impose substantial costs on the motor fuels industry in 2009, 
the fifth year the standard would be in effect.
Estimated Cost to the Federal Government
    The estimated budgetary impact of S. 791 is shown in Table 
1. The costs of this legislation fall within budget functions 
270 (energy), 300 (natural resources and environment), 350 
(agriculture), 370 (commerce and housing credit), and 950 
(undistributed offsetting receipts).
Basis of Estimate
    For this estimate, CBO assumes that the bill will be 
enacted by the end of fiscal year 2003, that the full amounts 
authorized will be appropriated for each fiscal year, and that 
spending will follow historical rates for ongoing or similar 
activities.
Spending Subject to Appropriation
    S. 791 contains several provisions that specify amounts 
authorized to be appropriated for researching methods to 
improve the production of renewable fuels and amounts to 
correct contamination caused by MTBE. The bill also would 
authorize unspecified amounts to be appropriated for the 
promulgation of new rules, studies, and reports to the Congress 
associated with the new renewable fuels standard established 
under the bill. Assuming appropriation of the necessary 
amounts, CBO estimates that implementing these provisions would 
cost $249 million in 2004 and $2.3 billion over the 2004-2008 
period. Major components of this estimate are described below.

                                  TABLE 1. ESTIMATED BUDGETARY IMPACT OF S. 791
                                     By Fiscal Year, in Millions of Dollars
----------------------------------------------------------------------------------------------------------------
                                                     2004         2005         2006         2007         2008
----------------------------------------------------------------------------------------------------------------
  CHANGES IN SPENDING SUBJECT TO APPROPRIATION
Grants for MTBE Producers
    Authorization Level........................          250          250          250          250            0
    Estimated Outlays..........................          100          213          250          250          150

Grants to Producers of Cellulosic Biomass
 Ethanol
    Authorization Level........................          100          250          400            0            0
    Estimated Outlays..........................           45          148          283          183           73

Center for Biomass-Based Energy
    Authorization Level........................            4            4            4            0            0
    Estimated Outlays..........................            3            4            4            1            0

Grants for Renewable Fuel Production
    Authorization Level........................           25           25           25           25           25
    Estimated Outlays..........................           11           20           24           25           25

LUST Program
    Authorization Level........................          280           30           30           30           30
    Estimated Outlays..........................           70          106           88           54           43

    Loan Guarantees
    Estimated Authorization Level..............           50            0           50            0           50
    Estimated Outlays..........................           10           30           20           30           20

Clean Air Act Provisions
    Estimated Authorization Level..............           10           10            7           11           10
    Estimated Outlays..........................           10           10            7           11           10

                                                ----------------------------------------------------------------
Total Proposed Changes
    Estimated Authorization Level..............          719          569          766          316          115
    Estimate Outlays...........................          249          531          676          554          321
           CHANGES IN DIRECT SPENDING
Estimated Budget Authority.....................            0           81           90           -9         -122
Estimated Outlays..............................            0           81           90           -9         -122
              CHANGES IN REVENUES
Estimated Revenues.............................            0           82           47          -42         -130
----------------------------------------------------------------------------------------------------------------
NOTE: LUST = Leaking Underground Storage Tanks.

    Grants to MTBE Producers. S. 791 would authorize the 
appropriation of $1 billion to DOE over the 2004-2007 period 
for grants to assist producers of MTBE to convert facilities to 
produce alternative fuel additives instead of MTBE.
    Grants to Producers of Cellulosic Biomass Ethanol. S. 791 
would authorize the appropriation of $750 million to the 
Department of Energy (DOE) over the 2004-2006 period for grants 
to producers of cellulosic biomass ethanol (ethanol derived 
from such materials as plants, grasses, fibers, municipal solid 
waste, and wood residues) to build production facilities.
    Center for Biomass-Based Energy. This legislation would 
authorize the appropriation of $12 million over the 2004-2006 
period to establish a resource center at the University of 
Mississippi and the University of Oklahoma for the purpose of 
developing new methods for the production of ethanol.
    Research and Development Grants for Renewable Fuel 
Production. S. 791 would authorize the appropriation of $125 
million to EPA over the 2004-2008 period for grants to certain 
academic institutions and consortia (consisting of academic 
institutions, industry, State government agencies, or local 
government agencies) for research and development related to 
technologies for the production of renewable fuel.
    LUST Program. This legislation would authorize the 
appropriation of $400 million over the 2004-2008 period from 
EPA's Leaking Underground Storage Tank (LUST) Trust Fund. This 
funding would be used for grants to States to correct 
contamination caused by MTBE and for enforcement and inspection 
activities related to LUST sites.
    Loan Guarantees. S. 791 would authorize DOE to issue loan 
guarantees to help finance the construction of facilities for 
the processing and conversion of municipal solid waste into 
fuel ethanol and other commercial by-products. The development 
of such facilities poses some risk mainly because the 
technology that would be used to convert municipal solid waste 
into fuel ethanol is new and is not well proven. Construction 
of the first-of-its-kind plant for this new manufacturing 
process is expected to begin sometime before the end of 2003 at 
a site in Middletown, New York.
    For this estimate, we expect that such plants would be 
debt-financed and sponsors would recover costs through the sale 
of ethanol and other recyclable materials. The projects also 
would rely heavily on revenues from ``tipping fees'' (i.e., 
those fees charged by the plant to accept municipal solid 
waste). According to industry experts, the solid waste industry 
is highly competitive and tipping fees fluctuate over time. The 
prices for ethanol and recycled glass, metal, and paper also 
have histories of fluctuating widely. These factors pose some 
additional credit risk for such a project.
    Under credit reform procedures, funds must be appropriated 
in advance to cover the subsidy cost of loan guarantees, 
measured on a present-value basis. Because of the significant 
level of risk associated with this type of project, the subsidy 
rate costs of such loan guarantees could vary widely. At worst, 
the government could absorb all of the risk, effectively 
converting the loan guarantee into a grant. S. 791 does not 
impose any limit on the amount of loan guarantees that could be 
made by DOE. Because the technology for converting municipal 
solid waste into fuel ethanol is very new and unproven, CBO 
estimates that over the next 5 years, DOE would probably 
provide loan guarantees for three projects with a total 
construction cost of about $300 million. In addition, based on 
information from DOE, CBO assumes that the department would 
guarantee up to 50 percent of a project's total investment and 
that DOE would only consider projects with a financial outlook 
at least equivalent to those of bonds rated CCC by companies 
like Standard and Poors and Moodys. Projects with this rating 
typically have a cumulative default risk of more than 50 
percent. Under these assumptions, CBO estimates that this 
provision would result in loans being guaranteed with about a 
50 percent subsidy, requiring appropriations of about $150 
million over the 2004-2008 period.
    Motor Fuels and Clean Air Act Provisions. This legislation 
would require EPA to promulgate new rules, prepare studies for 
the Congress, and implement new programs related to the 
renewable content of motor fuels and air pollution resulting 
from the use of motor fuels. CBO estimates that implementing 
these provisions in S. 791 would cost $10 million in 2004 and 
$48 million over the 2004-2008 period. Of the $48 million, more 
than half would be for EPA's costs to enforce motor fuel 
standards. Specifically, the bill would require that EPA 
promulgate rules that require motor fuels sold by a refiner, 
blender, or importer contain specified amounts of renewable 
fuels. Under the bill, by 2012, gasoline sold to consumers 
would be required to include, on an annual average basis, 5 
billion gallons of renewable fuel.
    Additionally, the bill would require the EPA to conduct 
annual surveys on market shares of various renewable fuels 
starting in December 2006. Such a survey could cost as much as 
$4 million annually if EPA were to undertake a survey of all 
retail gasoline sales. This legislation also would require EPA, 
at the request of a State, to enforce the State-adopted 
regulations concerning fuels requirements. State fuels programs 
can vary. Some programs are seasonal, while others are more 
complex where many fuel parameters are regulated. Specifically, 
EPA staff would be required to travel to the affected cities, 
take samples, review records, and conduct audits of refiners 
and importers. Based on information from EPA, CBO estimates 
that implementing this provision would require the equivalent 
of an additional 22 staff, funding for their travel expenses, 
and funding associated with laboratory sampling and technical 
analysis, resulting in a cost of $5 million annually and $25 
million over the next 5 years.
    S. 791 also includes several other provisions that would 
require new studies, reports to the Congress, and activities 
related to banning the use of MTBE in motor fuels to be 
prepared by DOE and the Federal Trade Commission.
Direct Spending and Revenues
    CBO estimates that enacting S. 791 would decrease direct 
spending by about $2 billion over the next 10 years and 
decrease Federal revenues by about $2.3 billion over the same 
period. The bill's impact on direct spending and revenues over 
the 2004-2013 period is shown in Table 2.

                       TABLE 2. ESTIMATED IMPACT OF S. 791 ON DIRECT SPENDING AND REVENUES
                                       Fiscal Year, in Millions of Dollars
----------------------------------------------------------------------------------------------------------------
                                   2004    2005    2006    2007    2008    2009    2010    2011    2012    2013
----------------------------------------------------------------------------------------------------------------
CHANGES IN DIRECT SPENDING AND
 REVENUES
Estimated Budget Authority......       0      81      90      -9    -122    -276    -359    -434    -477    -489
Estimated Outlays...............       0      81      90      -9    -122    -276    -359    -434    -477    -489
Estimated Revenues..............       0      82      47     -42    -130    -247    -371    -497    -579    -603
----------------------------------------------------------------------------------------------------------------

    Renewable Fuels Mandate and Agriculture Support Programs. 
The bill's mandate to increase the renewable content of motor 
fuels would have an impact of Federal spending for farm support 
programs and would change the amounts collected from Federal 
motor fuels taxes.
    Section 101 of the bill would require that motor fuels sold 
by a refiner, blender, or importer contain specified amounts of 
renewable fuel. The required volume of renewable fuel would 
start at 2.6 billion gallons in 2005 and escalate to 5 billion 
gallons by 2012. The bill also would amend the Clean Air Act to 
eliminate the requirement for gasoline that is sold in certain 
regions to contain 2 percent oxygen by weight. This provision 
would lower demand for gasoline oxygenates, including ethanol. 
In contrast, because S. 791 also would ban the use of MTBE 4 
years after enactment, the demand for ethanol could increase. 
However, under S. 791, any State may authorize the use of MTBE 
by simply notifying EPA. Under this construction, it is 
possible that MTBE use would not be affected by the ban. 
Consequently, CBO has not explicitly included the possible 
effects of a MTBE ban on the demand for ethanol, but the net 
impact of the other provisions in section 101 would increase 
ethanol use over the 2004-2013 period. CBO expects that most of 
the fuel produced to meet the requirements under the act would 
be corn-based ethanol.
    Because ethanol is primarily derived from corn, demand for 
corn would fall or rise with the demand for ethanol. CBO 
expects that lower prices for corn during 2005 and 2006 and 
higher prices for corn during the 2007-2013 period would 
result. Accordingly, the costs of farm price and income 
supports would slightly increase in the first few years but 
fall in the later years of the estimate period. On net, CBO 
estimates that spending for farm price and income supports 
would decline by about $2 billion over the 2005-2013 period due 
to the elimination of the oxygenate requirement for motor fuels 
and the ethanol mandate.
    Renewable Fuels Mandate and Revenues. Because ethanol-
blended fuels are taxed at a lower rate than gasoline, receipts 
to the Highway Trust Fund from motor fuels would change when 
ethanol use changes. We estimate that enacting this provision 
would increase revenues in 2005 and 2006 because the mandated 
level of ethanol use under the bill would be less than CBO's 
projection of ethanol use under current law. Under current law, 
we expect ethanol use to grow as the demand for gasoline 
oxygenates increases. After 2006, the amount of ethanol use 
mandated under the bill would exceed the projections in our 
current-law baseline--leading to a loss of revenues. We 
estimate that the provision would increase net Federal revenues 
by $129 million over the 2005-2006 period and reduce them by 
$2.3 billion over the 2005-2013 period.

        Estimated Impact on State, Local, and Tribal Governments

    S. 791 would shield manufacturers of gasoline from 
liability claims based on the renewable content of their fuel. 
Because this provision would limit the application of State 
law, it constitutes an intergovernmental mandate as defined in 
UMRA. However, the mandate would impose no duty on States that 
would result in additional spending. Therefore, the threshold 
established in UMRA ($59 million in 2003, adjusted annually for 
inflation) would not be exceeded.
    Other provisions of the bill contain no intergovernmental 
mandates and would impose no direct costs on State, local, or 
tribal governments. States with EPA approval to enforce clean 
air standards for motor fuels would have to comply with any new 
requirements, but they would do so voluntarily. In general, the 
bill would benefit States by authorizing grants and amounts 
from the LUST Trust Fund for a variety of activities.

                 Estimated Impact on the Private Sector

    S. 791 contains several private-sector mandates as defined 
in UMRA. While CBO cannot estimate the aggregate cost of all 
the mandates contained in the bill, we expect that the total 
cost of private-sector mandates would exceed the annual 
threshold established in UMRA ($117 million in 2003, adjusted 
annually for inflation). That conclusion is primarily based 
upon our analysis of the renewable fuel standard established 
under a renewable fuel program, which would impose substantial 
costs on the motor fuels industry in 2009, the fifth year the 
standard would be in effect. Numerous other private-sector 
mandates would be imposed by additional requirements in the 
renewable fuel program, a ban on the use of MTBE in motor 
fuels, and through other fuel requirements.
    The bill also would authorize an appropriation of $1 
billion to the Department of Energy over the 2004-2007 period 
for grants to assist manufacturers of MTBE to convert 
facilities to produce fuel additives that would substitute for 
MTBE.

Renewable Fuel Program
    Renewable Fuels Standard. Section 101 would require 
domestic refiners, blenders, and importers of gasoline to 
ensure that gasoline sold or dispensed to consumers in the 
contiguous United States contains a minimum volume of renewable 
fuels. The required volume of renewable fuel would start at 2.6 
billion gallons in 2005 and increase to 5 billion gallons by 
2012. CBO expects that the renewable fuel requirement would be 
met in 2005 and 2006 without additional costs to the motor 
fuels industry. The industry would begin to experience 
additional costs in 2007 as it begins to blend or purchase 
greater amounts of gasoline containing ethanol or other 
renewable fuel than it would in the absence of such a standard. 
In the fifth year the standard would be in effect, 2009, CBO 
estimates that the direct costs of the renewable fuel 
requirement would rise to more than $200 million, an amount 
which would exceed UMRA's annual threshold for private-sector 
mandates.
    Seasonal Variation in Renewable Fuel Use. Section 101 also 
would direct the Energy Information Administration (EIA) to 
determine if there are excessive seasonal variations in the 
amount of renewable fuel blended into gasoline. Refiners might 
have an incentive to use more of the annual requirement for 
renewable fuel (mostly ethanol) in the winter months, when 
evaporative emissions from gasoline are less of a concern. 
Sharp seasonal changes in the demand for ethanol could lead to 
large swings in ethanol and gasoline prices. If EIA determines 
that there are excessive seasonal fluctuations, EPA would 
impose regulations requiring that at least 35 percent of the 
renewable fuel standard be blended into gasoline in summer 
months and another 35 percent be blended in winter months. At 
this time, neither EPA nor the motor fuels industry anticipate 
that such requirements would be necessary. In the event that a 
determination by EIA triggers additional EPA regulations, the 
duty to comply with those regulations would constitute a 
private-sector mandate. Information provided by industry 
sources indicated that compliance would not be expensive.
    Eliminate the Ethanol Waiver. Section 101 also would 
authorize States to apply for an exclusion from a waiver that 
under current law allows gasoline blended with ethanol to have 
higher evaporative properties than gasoline blended with other 
fuel additives. Gasoline blends containing ethanol evaporate 
more readily at a given temperature, contributing to smog 
formation. States that presently use large amounts of ethanol, 
mostly located in the Midwest, would probably not request an 
exclusion from the waiver. States that have trouble meeting air 
quality requirements (several States in the Northeast) would 
likely request an exclusion. To the extent that gasoline 
blended with ethanol is currently sold in those States, the 
exclusion would increase the cost of an existing private-sector 
mandate on refiners who sell in the State. Refiners would incur 
costs as they reduce their use of other highly evaporative 
blendstocks (such as butane). Because we cannot predict what 
States would opt out of the waiver, CBO has no basis to 
quantify those costs; but they are not likely to be large.
    Recordkeeping and Reporting Requirements. As part of the 
renewable fuel program, sections 102 and 103 would require both 
EPA and DOE to collect data and issue reports on the amount of 
renewable fuel blending and the associated impacts of that 
blending. Information provided by EPA and the motor fuels 
industry indicated that the new requirements would be folded 
into existing data collection procedures and that the 
incremental cost of compliance would be low.
    Safe Harbor. The renewable fuel standard required by the 
bill would substantially increase the amount of renewable fuel 
that is blended into gasoline. Section 101 would shield motor 
fuel manufacturers and other persons from liability for a 
defect in design or manufacture of a motor vehicle fuel 
containing renewable fuel. That protection would be in effect 
as long as the fuel is in compliance with other applicable 
Federal requirements. The provision would impose a private-
sector mandate by limiting existing rights to seek compensation 
under current law. Effective on the date of enactment, the 
provision would have no impact on existing claims or court 
determinations or settlements. Because of the lack of 
information on both the number of claims that would be filed in 
the absence of this legislation, and the associated outcomes of 
those claims, CBO cannot determine the cost of this mandate.
MTBE Ban
    Under the Clean Air Act Amendments of 1990, areas with poor 
air quality are required to add chemicals called ``oxygenates'' 
to gasoline as a means of reducing certain air pollution 
emissions. One of the most commonly used oxygenates is methyl 
tertiary butyl ether; about 200,000 barrels of MTBE are blended 
into gasoline each day in the United States. Roughly one-third 
of that amount is supplied to refiners by merchant producers 
and the rest is produced by the refiners themselves or 
imported. In recent years, concerns have been raised about the 
adverse effects on groundwater supplies from MTBE that leaks 
from underground tanks, and 16 States have passed laws to 
either ban or reduce the local use of MTBE.
    Section 203 would ban the use of MTBE in gasoline within 4 
years of the bill's enactment. At the same time, the provision 
would allow any State to authorize the use of MTBE by simply 
notifying EPA. That is, a nationwide ban with States opting to 
continue use of MTBE may not be fundamentally different from 
the current situation in which States impose their own local 
bans. Therefore, it is possible that MTBE use would not be 
affected by the new ban. Moreover, CBO anticipates that the 
renewable fuels standard established in section 101 would, on 
its own, greatly reduce--if not totally eliminate--incentives 
to use MTBE.
    CBO cannot determine in which States, if any, the Federal 
MTBE ban would be more constraining than the renewable fuel 
standard and, therefore, cannot determine the cost of the 
mandate. In States where the Federal ban would be more 
constraining, the ban could impose costs on refiners and 
merchant producers. Gasoline refiners would need to replace 
MTBE with higher-cost blendstocks, and merchant producers would 
likely convert their operations to the production of less-
profitable blendstocks, such as alkylates or iso-octane. The 
bill would authorize Federal transition grants to merchant 
producers to convert their facilities amounting to $1 billion 
over the 2004-2007 period.

Other Fuel Requirements
    Increased Environmental and Public Health Testing. Section 
205 would require fuel manufacturers to test their products 
regularly for any environmental and public health effects of 
the fuel or additive, as part of the registration process with 
the EPA. Under current law, such testing occurs at the 
discretion of the EPA Administrator. Based on information 
provided by the EPA on the most recent round of testing, CBO 
expects the cost of regular testing to be between $10 million 
and $20 million every 5 years, which is the period of time over 
which the EPA expects the testing to take place.
    Anti-Backsliding Baseline. Section 204 would direct EPA to 
establish a more stringent baseline for toxic emissions from 
reformulated gasoline. The current baseline, which became 
effective in 2002, is refinery specific and is based on average 
1998 through 2000 reformulated gasoline parameter values. The 
bill would establish a baseline that averages parameter values 
only from calendar years 1999 and 2000, meaning that 
reformulated gasoline will have to be slightly cleaner. 
According to EPA and the refining industry, the majority of the 
industry is already over-compliant with the current baseline. 
CBO does expect some refineries to experience increased costs 
in meeting the more stringent emission targets, but on the 
whole CBO does not expect the requirement to be expensive.
    Water Quality Protection Authority. Section 203 would grant 
new authority to the EPA to regulate fuels and fuel additives 
to protect water quality. Presently, EPA has no intention to 
regulate any fuel or additive to protect water quality. Future 
regulation would be based upon environmental and public health 
testing. Since no information is available at this time about 
the substances that are likely to be regulated in the future, 
CBO cannot determine the cost of the mandate.
    VOC Region Consolidation. Section 204 would consolidate the 
regional regulations that limit the emissions of volatile 
organic compounds (VOCs) from gasoline, effectively applying 
the more stringent standards for gasoline sold in the southern 
United States to that sold in the North. Meeting the more 
stringent standards would impose a private-sector mandate. 
While CBO expects that the mandate would raise the cost of 
producing gasoline for the Northern United States, we 
anticipate that refiners also would experience some savings 
because the cost of distributing gasoline would fall. Without 
more information about the magnitude of these offsetting 
effects, CBO cannot determine the net cost of the mandate.
    State Opt-in to Reformulated Gasoline (RFG) Program. 
Section 207 would authorize States in the ozone transport 
region (several States in the Northeast) to ask EPA to apply 
the more stringent air emissions standards of the RFG program 
in areas that are already in attainment of air quality 
standards. CBO does not have information at this time on the 
areas to which RFG program requirements could apply, and 
therefore, cannot determine the cost of compliance.

Previous CBO Estimates
    On April 8, 2003, CBO transmitted a cost estimate for H.R. 
6, a bill to enhance energy conservation and research and 
development, to provide for security and diversity in the 
energy supply for the American people, and for other purposes. 
That estimate provided direct spending and revenue effects for 
a renewable fuels mandate that differs from the mandate under 
S. 791. Under H.R. 6, CBO estimates that the renewable fuels 
mandate would increase net Federal revenues by $290 million 
over the 2005-2008 period and reduce them by $284 million over 
the 2005-2013 period. In addition, direct spending would 
decline by $167 million over the 2005-2013 period. CBO also 
estimated that compliance with the renewable fuels standard in 
H.R. 6 would cost the motor fuels' industry roughly $140 
million in 2009. The renewable fuel standard under S. 791 ramps 
up more quickly than the one under H.R. 6, which is primarily 
why CBO expects that the cost of compliance with the standard 
under S. 791 would be greater than that under H.R. 6.
    On May 1, 2003, CBO transmitted a cost estimate for H.R. 
1644, the Energy Policy Act of 2003, as ordered reported by the 
House Committee on Energy and Commerce on April 8, 2003. H.R. 
1644 also contains a mandate for refiners, blenders, and 
importers to use renewable fuels. The amounts of renewable 
fuels that would be mandated by H.R. 1644 and S. 791 are 
different, and our cost estimates reflect those differences.
Estimate Prepared By: Federal Spending: Susanne S. Mehlman--EPA 
and Energy Provisions; David Hull--Agriculture Subsidies; 
Andrew Shaw--Federal Revenues; Greg Waring--Impact on State, 
Local, and Tribal Governments; and Richard Farmer and Lauren 
Marks--Impact on the Private Sector.

Estimate Approved By: Peter H. Fontaine Deputy Assistant 
Director for Budget Analysis; G. Thomas Woodward Assistant 
Director for Tax Analysis.

     ADDITIONAL VIEWS OF SENATORS REID, JEFFORDS, BOXER AND CLINTON

    We write separately here on S. 791, the Reliable Fuels Act 
on 2003, to underscore the importance of ending methyl tertiary 
butyl ether (MTBE) use, to explain why the committee did not 
include liability exemptions for MTBE contamination, and to 
urge the full Senate to reject any measure that would force 
taxpayers to pay for MTBE cleanup rather than responsible 
parties.
    MTBE is classified as a possible human carcinogen, and when 
leaked into water even in small amounts causes water to take on 
the taste and smell of turpentine, rendering it undrinkable. 
MTBE leaking from underground storage tanks, recreational water 
craft and abandoned automobiles has lead to growing detections 
of MTBE in drinking water. In fact, the U.S. Geological Survey 
has estimated that MTBE may contaminate roughly one-third of 
drinking water supplies nationwide. MTBE poses a different 
threat to drinking water relative to the other harmful 
constituents of gasoline because MTBE is more soluble, more 
mobile and degrades slower than those other constituents.
    Oil companies began adding MTBE to gasoline at least as 
early as 1979, using 215,000 tons in that year alone. By 1986, 
oil companies were adding 54,000 barrels of MTBE to gasoline 
each day. By 1991, 1 year before the Clean Air Act (CAA) 
oxygenate requirement went into effect, oil companies were 
using more than 100,000 barrels of MTBE per day. By 1997, the 
volume of MTBE production was the second highest of any 
chemical in the United States. These basic facts underscore two 
extremely important points about the committee's consideration 
of solutions to the MTBE contamination problem.
    First, proposals that simply remove the CAA oxygenate 
requirement from the law without affirmatively banning MTBE 
will simply not end MTBE use. As noted above, MTBE was used for 
octane enhancement long before the CAA Amendments of 1990. 
There is no reason to believe that it would not continued to be 
used if the CAA oxygenate requirement were removed from the 
law, but no ban put in place. In another example, in May 1999, 
two oil companies in the San Francisco area were found to have 
been adding substantial volumes of MTBE to gasoline. At the 
time, that area complied with air standards and therefore the 
CAA didn't require the addition of an oxygenate. Again, 
companies were adding MTBE to gasoline for reasons wholly 
independent of the CAA.
    Second, these facts belie the oil companies' arguments that 
Congress made oil companies use MTBE, and that therefore 
lawsuits against oil companies should be terminated by Congress 
and taxpayers should pay to clean up MTBE contamination. MTBE 
was in use well before the passage of the CAA Amendments. The 
CAA does not mandate the use of MTBE. And the fact that there 
was any oxygenate requirement in those amendments at all was 
due, in part, to oil industry lobbying.
    For example, in 1989 testimony before the Senate Committee 
on Environment and Public Works, an ARCO official strongly 
recommended that the committee include a mandate for MTBE in 
the Clean Air Act Amendments of 1990, touting MTBE's benefits 
but not disclosing its devastating impact on drinking water. 
Hearings Before the Subcommittee on Environmental Protection of 
the Committee on Environment and Public Works on S. 1630, S. 
Hrg. 101-331 at 458 (Sept. 28, 1989). Despite such lobbying, 
Congress did not adopt a MTBE mandate, but rather prescribed 
that reformulated gasoline contain an oxygenate without 
specifying a particular product.
    At the time of such lobbying, oil companies knew they were 
recommending a product that would have a devastating impact on 
drinking water. Indeed, where courts have heard oil industry 
claims that they should not be held liable for MTBE 
contaminated drinking water supplies, they have not only 
rejected those claims but have found that companies acted with 
malice in not disclosing the risks of using MTBE.
    In fact, over a dozen communities have sued oil companies 
for knowingly introducing a defective product into the 
marketplace. Several oil companies recently settled one such 
suit, South Tahoe Public Utility District v. Atlantic Richfield 
Company, et al., for $60 million. In South Tahoe, it was 
determined that oil companies were guilty of irresponsibly 
manufacturing and distributing MTBE because these companies 
knew it would contaminate drinking water.
    It was also found by clear and convincing evidence that two 
companies had acted with ``malice'' by failing to warn of the 
environmental dangers of MTBE.
    Together, documents and sworn testimony in South Tahoe 
demonstrated that several oil companies knew as early as 1980 
that MTBE posed a significant threat to the nation's drinking 
water, that they promoted MTBE to the State and Federal 
Governments without disclosing internal information 
demonstrating that threat, and that they attempted to discredit 
public scientific studies that began to demonstrate that 
threat.
    Documents and sworn testimony in South Tahoe also revealed 
that oil company officials, showing a callous disregard for our 
environment, even gave MTBE telling nicknames such as ``Most 
Things Biodegrade Easier'', ``Menace Threatening our 
Environment'' and ``Major Threat to Better Earnings.'' Further 
the case also revealed that Shell and ARCO, the first refiners 
to add MTBE to gasoline, estimated that 20 percent of all 
underground storage tanks--tanks likely containing MTBE--were 
leaking. Several oil companies were shown to have both 
developed and promoted the concept of using reformulated 
gasoline to reduce air emissions.
    For example, ARCO officials testified that ``EPA did not 
initiate . . . reformulated gasoline'' and that ``[T]he oil 
industry brought [reformulated gasoline] forward as an 
alternative to what the EPA had initially proposed.'' Documents 
and sworn testimony also revealed that in 1987 an ARCO 
representative testified before the Colorado Air Quality 
Control Commission that MTBE would aid in reducing air 
emissions but did not warn of the drinking water contamination 
threat. This representative testified that he also assisted 
Arizona and Nevada develop oxygenate programs that relied upon 
MTBE without disclosing the danger.
    In 1986, the Maine Department of Environmental Protection 
issued a scientific report describing the threat posed by MTBE. 
Documents and sworn testimony in South Tahoe revealed a 
concerted strategy by the oil industry to discredit the article 
at the same time that internal industry documents admitted the 
soundness of the Maine warning. When the Maine paper prompted 
EPA to issue a notice to oil companies for more information 
regarding MTBE, ARCO responded in 1987 that there was little 
information to suggest MTBE was a threat despite internal ARCO 
documents showing the contrary.
    As South Tahoe demonstrates, terminating the right of 
communities to seek legal redress against oil companies for 
MTBE contamination would be a grave injustice. It has not been 
embraced by the committee, it should not be embraced by the 
Senate and it should not become law.
    Just as it is important to clarify oil industry 
responsibility for MTBE contamination, it is also important to 
clarify a number of mischaracterizations that appear in the 
majority views on the MTBE transition program. S. 791 provides 
for limited transition assistance to producers of MTBE to 
mitigate fuel supply problems, such as shortages or 
disruptions, that might occur as a result of the elimination of 
the widespread use of that fuel additive by this legislation. 
The findings section of S. 791 (section 203) notes that it is 
appropriate for the Congress to provide limited transition 
assistance in this fashion. Those findings were arrived at 
after much discussion and debate among the various affected 
parties and were first incorporated into legislation as part of 
H.R. 4, as passed by the Senate in 2002 and reintroduced in S. 
385.
    The majority views attempt to incorrectly convey that such 
assistance is premised on two additional factors that appear 
nowhere in the legislation, that cannot be logically inferred 
from the findings in S. 791, and that do not reflect a 
committee consensus. These incorrect inferences are that, 
first, the government bears ``great'' responsibility for losses 
the MTBE producers experience as a result of Congress' action 
to phaseout MTBE; and, second, that a failure to provide 
transition assistance in light of the ban will discourage 
manufacturers from supplying the market with additives that 
will meet energy and environmental goals.
    The findings state that the fuel industry responded to the 
fuel oxygenate standard established in the CAA of 1990 by 
investing in MTBE production capacity. As noted above, that 
standard did not require or mandate that MTBE be produced or 
that only MTBE could satisfy such a standard. Again, as noted 
above, the oil industry itself lobbied for the oxygenate 
requirement and wanted to use MTBE to meet it. Therefore, 
Congress cannot be held responsible for voluntary industry 
decisions to make or not to make investments in MTBE.
    It logically follows that without such responsibility, 
there certainly is no compensation due to such manufacturers 
when Congress determines that such a fuel additive is 
detrimental to water quality protection and must be eliminated 
from widespread use in gasoline. Given the history of the CAA 
oxygenate requirement it is impossible to maintain otherwise. 
The majority views appears to seek to set a precedent that 
would require Congress to provide compensation for any parties 
that choose to invest in manufacturing a product based on their 
interpretation of congressional intent and its effect on their 
product. That is not supported by the text of S. 791.
    Finally, the majority views' inference that the transition 
program reflects the committee view that companies will not 
invest in fuel additives absent compensation is erroneous and 
not supported by S. 791. Additive manufacturers are free to 
enter the market for the production of additives to replace 
MTBE. The legislation indicates that Congress is concerned 
about the impact on the fuel supply of eliminating MTBE, as 
stated in section 203, and has provided the transition 
assistance to address that issue.
    Congress ``failure'' to compensate MTBE producers for 
manufacturing a product which many within the industry knew 
would pollute drinking water will not affect a business 
decision by additive manufacturers to supply the additive 
market. This is particularly true once the modifications in S. 
791 to the CAA are made to ensure future water quality 
protection by improving testing of fuels and fuel additives 
environmental and public health impacts. Oil companies and 
other additive manufacturers have their own responsibility to 
place products in commerce that do not have ill effects on the 
environment and public health.
    As noted above, several companies maliciously failed to 
discharge this responsibility when it came to MTBE.
    The first hearing of this committee on MTBE was chaired by 
Senator Boxer in December 1997, after Santa Monica lost the 
majority of its drinking water to contamination caused by a 
then little known fuel additive. Since Senator Boxer's first 
call to ban MTBE now over 5 years ago, this committee has 
conducted scores of hearings, considered alternate legislative 
approaches and ultimately approved various versions of 
legislation similar to S. 791.
    Such legislation approved by this committee has 
consistently called for MTBE's phase-out. It has also 
consistently rejected terminating the right of communities 
affected by MTBE to seek redress against oil companies in 
court. As consideration of S. 791 moves to the full Senate, 
these two principles that have guided committee consideration 
of the MTBE issue must remain in tact if the MTBE problem is to 
be truly and equitably solved.

               ADDITIONAL VIEWS OF SENATOR BARBARA BOXER

    I write separately here to strongly oppose the ``safe 
harbor'' provision in S. 791, The Reliable Fuels Act of 2003, 
which creates broad liability exemptions for renewable fuels. I 
also oppose the special exemption from the ethanol requirements 
for two States--Alaska and Hawaii--at the expense of others.
    Under the renewable fuels mandate in S. 791, ethanol will 
be the most commonly used renewable fuel for the foreseeable 
future. Ethanol is a high-octane, water-free alcohol that has 
been used in gasoline in the United States since 1979 when it 
was introduced to enhance oxygen content in fuels.
    Section (p) of S. 791 contains a ``safe harbor'' liability 
waiver for all renewable fuels, renewable fuel additives, and 
any motor vehicle fuel containing renewable fuel. This language 
waives all product liability design defect claims, including 
failure to warn. Any claim that has not been filed by the date 
of enactment of this section will be forever barred. Compliance 
with laws and regulations is not necessary for receiving the 
liability waiver, except for limited compliance with 
requirements under the Clean Air Act.
    This liability exemption is particularly dangerous because 
there are many unanswered questions about ethanol. It is true 
that ethanol does not have the same toxic chemicals in it as 
other fuels and fuel additives. It also helps reduce the 
production of carbon monoxide when fuel is burned. These are 
real benefits.
    However, ethanol also increases the formation of nitrogen 
oxides, which leads to increases in smog. According to EPA's 
1999 Blue Ribbon Panel Report on Oxygenates in Gasoline, 
ethanol is extremely soluble in water and would spread if 
leaked into the environment. It may further spread plumes of 
benzene, toluene, ethyl benzene, and xylene because ethanol may 
inhibit the breakdown of these toxic materials. In addition, 
there are several studies demonstrating that ethanol increases 
the size and migration of benzene plumes. Researchers say that 
more groundwater wells will experience contamination from 
methyl tertiary butyl ether (MTBE) and benzene, a known 
carcinogen, if ethanol leaks into water supplies. There are 
also questions about the impact of ethanol on sensitive 
populations, such as children.
    More study is needed. The Blue Ribbon Panel Report makes 
this point in the section entitled ``Recommendations for 
Evaluating and Learning from Experience:"
    The introduction of reformulated gasoline has had 
substantial air quality benefits, but has at the same time 
raised significant issues about questions that should be asked 
before widespread introduction of a new broadly used product. 
The unanticipated effects of reformulated gasoline on 
groundwater highlight the importance of exploring the potential 
for adverse effects in all media (air, soil, and water), and on 
human and ecosystem health.
    Questions surrounding ethanol's effects on public health 
and the environment should be answered before Congress grants a 
broad waiver from liability for its harmful effects. We should 
err on the side of caution, and we should err on the side on 
protecting taxpayers.
    If ethanol harms public health or the environment, the 
liability exemption in this bill would shift the burden to the 
taxpayer in the event of a contamination of drinking water 
supplies, which could leave many communities with cleanup costs 
beyond their ability to pay. Polluters, not taxpayers or 
victims of pollution, should pay for harm to pubic health and 
the environment.
    Supporters of this liability exemption argue that immunity 
from product liability design defect claims is not so broad, 
that it only protects polluters from one type of lawsuit. But, 
they are ignoring the fact that product defect claims are the 
clearest way to hold accountable those manufacturers (here, 
primarily the refiners) whose products cause injury to public 
health or the environment. Litigation in California involving 
drinking water contamination by MTBE, agricultural chemicals 
(i.e. DBCP), dry cleaning compounds (perc), and others all rest 
on claims that products were defective in design.
    In a landmark case decided in April 2002, a San Francisco 
jury found that based on the theory that MTBE is a ``defective 
product,'' several major oil companies are legally responsible 
for the environmental harm to Lake Tahoe's groundwater. The 
jury also found that many of these same oil companies acted 
with ``malice'' because they were aware of the dangers but 
withheld the information. The oil companies knew of the risks 
MTBE posed. They also knew there were alternatives to MTBE. 
Yet, they chose to use MTBE and not to warn anyone else of the 
risks. The defendants settled the case shortly after the jury 
verdicts were announced. Costs are expected to exceed $45 
million to clean up the Lake Tahoe contamination.
    What would have happened if defective product claims could 
not have been made in Tahoe? Basically, Lake Tahoe and its 
citizens could have been forced to bear the cleanup costs, 
while the polluters got off scot-free. The type of behavior 
that occurred in Lake Tahoe on the part of polluters is exactly 
what S. 791 seeks to shield from liability. Exempting polluters 
from a defective product claim is hardly a narrow exemption. It 
risks letting the polluters off the hook for their wrongdoing 
entirely and shifting the costs of pollution to the taxpayers. 
The taxpayers are not responsible for the pollution; the 
companies are. Taxpayers should not foot the bill; the 
polluters should. Not surprisingly, South Tahoe Public Utility 
District opposes the liability exemption for ethanol in this 
bill, asking that the burden of cleanups not be shifted to 
taxpayers.
    Supporters of this exemption also argue that negligence 
claims are an adequate substitute for product liability design 
defect claims. While negligence and design defect liability are 
related legal theories, they are different. And negligence 
alone is inadequate to protect a community from harm.
    Negligence liability focuses on the defendants' conduct. In 
other words, it focuses on the conduct of the individuals hired 
by the oil companies. Design defect liability focuses on the 
product.
    To establish negligence, a public water agency would have 
to show that each defendant knew (or reasonably should have 
known) of the risk posed by the product, and that the defendant 
acted unreasonably in failing to eliminate the risk. Customary 
practice in an industry--such as commonly using a fuel additive 
without any warning--and the reasonableness of that practice is 
relevant as a defense in a negligence action. This makes it 
difficult for an injured party to recover.
    In contrast, an injured public water agency can establish 
design defect liability in one of two ways. First, a product is 
defective where the jury finds that the risk of danger inherent 
in the challenged design outweighs the benefit of such design. 
Second, even if a product is flawlessly designed or produced, 
it may still be defective if the manufacturer provides 
inadequate warnings or use instructions. A failure to warn 
claim arises only for risks that the manufacturer either knew 
about or that were knowable in light of generally recognized 
and prevailing best scientific knowledge available at the time 
of the product's manufacture and distribution.
    Courts impose strict liability for design defects based on 
strong public policy considerations. The costs of injuries 
caused by defective products should be borne by the 
manufacturers of those products, rather than by innocent 
injured parties. This policy is especially strong where the 
injury occurs to innocent bystanders, like public water 
suppliers, who derive no economic benefit from the defective 
product.
    Supporters of the liability exemption also argue that it is 
necessary because the bill is mandating the use of ethanol. Yet 
Congress regularly mandates that manufacturers meet a variety 
of guidelines and requirements, but does not in so doing exempt 
all manufacturers from State and Federal product liability 
design defect laws. When gasoline leaks today, there is no 
loophole; the polluter pays, despite the fact that Congress 
regulates gasoline. Congress mandated the installation of air 
bags in automobiles, but did not say to those manufacturers 
that they would not be liable for damages caused should their 
products be defective. We should not give a free pass to 
ethanol.
    Finally, supporters of the liability loophole claim that 
ethanol is safe and no one needs to worry about the liability 
exemption. If they are not worried, they do not need an 
exemption and should not oppose striking it from the bill.
    Ethanol should be subject to liability standards as strong 
as any other fuel additive. We should not shift the burden of 
cleaning up problems caused by ethanol to our communities. The 
polluter should pay. No public policy would be served by 
immunizing refiners and chemical companies from responsibility 
for knowingly putting the drinking water resources of the 
Nation at risk and neglecting to tell anyone.
    The ``safe harbor'' liability waiver for renewable fuels is 
opposed by a wide variety of local and State governments, water 
utilities, and public health, consumer and environmental 
organizations. These include the Association of Metropolitan 
Water Agencies and American Water Works Association--which 
together represent water systems serving approximately 180 
million Americans across the country--Association of California 
Water Agencies, National Association of Water Companies, South 
Tahoe Public Utility District and city of Santa Monica--two 
cities with firsthand knowledge of the devastating effects that 
groundwater contamination can have on communities--American 
Lung Association, American Public Health Association, Cahaba 
River Society, California Clean Water Action, Citizens for a 
Future New Hampshire, Citizen's Environmental Coalition, Clean 
Water Action, Consumer Federation of America, Environmental 
Defense, Ecology Center, Environmental Working Group, , Friends 
of the Earth, League of Conservation Voters, Mono Lake 
Committee, National Sludge Alliance, Natural Resources Defense 
Council, New Jersey Coalition Against Toxics, New Jersey 
Environmental Federation, Physicians for Social Responsibility, 
Rivers Unlimited, Sierra Club, Spring Lake Park Groundwater 
Guardians, and U.S. Public Interest Research Group.
    I am also opposed to the amendment added during Committee 
consideration of the bill to exempt from the ethanol mandate 
two States, Alaska and Hawaii. We have had no explanation of 
why an exemption is needed for Alaska and Hawaii and not for 
other States except some vague claims that the transportation 
costs will be too high and that these areas do not need ethanol 
to meet Clean Air Act requirements. However, these same 
arguments apply to many areas of the county, including my State 
of California. My State also will face high shipping and 
transportation costs. Also, as noted in EPA's 1999 Blue Ribbon 
Panel Report on Oxygenates in Gasoline, California does not 
need ethanol to meet its Clean Air Act requirements.
    It has also been argued that the waiver is needed because 
Alaska and Hawaii do not need as much ethanol as they will be 
required to use. Again, the same argument can be made for other 
States. And when those States have raised this concern, the 
authors of the bill respond by pointing out that the bill gives 
States credits that they can sell to other States that may need 
them, thus generating revenue for their States. If this 
argument is good for some States, it should also be good for 
all States.
    If the costs of implementation and the need for ethanol in 
a State are to be factors in determining whether the mandate 
should apply, they should be factors in making a similar 
determination for all States, not just two. Further, although 
Alaska and Hawaii would no longer be required to use renewable 
fuels under this provision, the amount of the national mandate 
has not decreased accordingly. The mandate in this bill was 
designed taking all States into account, including Alaska and 
Hawaii. Now that Alaska and Hawaii are exempt from the mandate, 
other States will be forced to use greater amounts of ethanol 
to meet the overall renewable fuels requirements.
    This is an unfair and unnecessary exemption for two States, 
and I oppose it.

                   ADDITIONAL VIEWS OF SENATOR CORNYN

    These views are submitted to express certain concerns about 
S. 791, the Reliable Fuels Act of 2003, as approved by the 
Senate Committee on Environment and Public Works. I believe 
that S. 791 will hamper our national energy supply and will 
diminish the benefits of the reformulated gasoline program to 
improve air quality.

IMPORTANCE OF A STRONG NATIONAL ENERGY POLICY AND IMPEDIMENTS OF S. 791

    I am proud to hail from the State of Texas, a State long 
known for its contributions to a strong national energy policy. 
Without our domestic producers, the United States would be even 
more dependent on foreign oil, much of it coming from very 
unstable regions of the World. Given the state of current 
events in Iraq, the strike in Venezuela, and an unusually cold 
winter, the need for aggressive development of domestic 
resources is very clear. Oil prices reached a peak of nearly 
$40 a barrel and continue to hover at a 2-year high. Prices for 
gasoline and heating oil reached average all time highs in some 
portions of the country because we have become too dependent of 
foreign imports and easy victims for circumstances beyond our 
control.
    As we see our dependence of foreign oil imports increase, 
the United States has also experienced a decline in refining 
capacity at home. This decline is a direct result of 
overburdening government regulations that make it too expensive 
for small refiners to stay in business or that force refiners 
to consolidate even further thereby eliminating refining 
capacity. According to testimony we heard from the National 
Petrochemical Refiners Association's President Bob Slaughter in 
the Senate Subcommittee on Clean Air, Climate Change, and 
Nuclear Safety, current U.S. refiners are running at 95 percent 
capacity and will be unlikely to meet future demands at this 
level.
    It is quite apparent that the United States lacks the 
ability to produce sufficient volumes of motor fuels to meet 
current demand. For this reason, I am concerned that S. 791 
could further complicate the situation, increase prices for the 
driving consumer, and reduce air quality.

              SECTION 203--RESTRICTIONS ON THE USE OF MTBE

    I have grave concerns that this Congress is proposing to 
eliminate a successful fuel additive from U.S. commerce. 
Findings simply do not exist to justify a ban. There is a 
perception that such an action is necessary to protect water 
supplies from contamination. Nothing could be further from the 
truth. In reality, the major threat to water supplies comes 
from all of the components of gasoline (many of which present 
much more significant threats to human health than MTBE) that 
leak from underground storage tanks. The solution to this 
problem is not to ban one component of gasoline, but to ensure 
that underground storage tanks do not leak. By choosing to ban 
MTBE for political reasons, the Congress is avoiding the real 
problem that threatens water supplies. In addition, it was the 
U.S. Congress that essentially mandated the use of MTBE when it 
passed the 1990 Clean Air Act that established a 2wt. percent 
oxygenate requirement for gasoline. While Congress did not 
specifically designate MTBE as the oxygenate refiners would be 
required to use, it was well known at the time that MTBE was 
the most economical and efficient fuel additive in the 
marketplace for refiners to use to meet the Federal 
requirements.

Supply and Price Implications

    In addition to being the most used oxygenate to meet the 
1990 Clean Air Act requirements; MTBE serves to extend the U.S. 
gasoline supply by three to 4 percent. Further, MTBE extends 
the reformulated gasoline (RFG) pool by 10 to 13 percent. 
Removing MTBE from commerce will create a dramatic energy 
shortfall leading to gasoline price increases between four and 
ten cents per gallon nationwide. According to a recent U.S. 
Energy Information Administration study, price increases could 
be even more drastic in New York, New Jersey and California. A 
three to 4 percent gasoline supply reduction equals the output 
of five medium-sized United States refineries, or the 
equivalent of 400,000 bpd. This amount is equal to or greater 
than gasoline supplied to the U.S. marketplace from Iraq or 
Venezuela and is equivalent to the gasoline that could be 
supplied by ANWR.

Air Quality

    By every measure, clean-burning RFG blended with MTBE has 
exceeded all pollution reduction goals, substantially and cost 
effectively improving the nation's air quality. MTBE is used in 
85 percent of all RFG and the remaining 15 percent of RFG uses 
ethanol, primarily in the Midwest. RFG is currently required by 
the 1990 Clean Air Act to reduce smog-forming pollutant 
emissions by 25 percent, air toxic emissions by 20 percent, and 
nitrogen oxide emissions by four to 7 percent.
    Data collected by refiners, EPA, automakers, and others 
clearly shows that RFG-primarily because of the use of MTBE-has 
actually surpassed all emission reduction requirements. Use of 
RFG with MTBE has resulted in emissions benefits of 13 percent 
above requirements for air toxics; 13 percent more than 
required for VOCs; and an additional 8 percent in NOx 
reductions. Further, RFG with MTBE has reduced emissions of 
benzene, a known human carcinogen, by 43 percent.
    In 1998, a study by the Northeast States found that RFG 
with MTBE substantially reduced ``the relative cancer risk 
associated with gasoline vapors and automobile exhaust compared 
to conventional gasoline,'' concluding that today's RFG reduces 
cancer risk by 20 percent over conventional gasoline.\1\
---------------------------------------------------------------------------
     \1\Northeast States for Coordinated Air Use Management, Relative 
Cancer Risk of Reformulated Gasoline and Conventional Gasoline Sold in 
the Northeast, August 1998.
---------------------------------------------------------------------------

Ban on MTBE is Unprecedented and Arbitrary

    EPA, State health agencies, international health 
organizations, and leading research universities have studied 
the health effects associated with MTBE use in gasoline. The 
overwhelming majority of scientific evaluations from government 
and world-renowned independent health organizations have not 
indentified any health-related risks to humans from the 
intended use of MTBE in gasoline. Furthermore, MTBE does not 
accumulate in the body, and it has not been shown to impair 
fertility, or damage a developing fetus or the genetic 
structure of cells. Additional studies confirm that MTBE 
reduces toxic air pollutions such as benzene; reduces carbon 
monoxide and greenhouse gas emissions; and substantially 
surpasses all Clean Air Act requirements for the reduction of 
smog-forming compounds.
    Like most chemicals, MTBE has the ability to cause some 
injury at extremely high dosages. Extensive research indicates 
that the MTBE doses required to produce illness in laboratory 
animals are thousands of times greater than those to which 
humans could conceivably be exposed to in the real world.
    The issues surrounding MTBE are very scientific and complex 
in nature. I believe it would be in poor choice for this 
Congress to use politics to ban a product that has done much to 
reduce air pollution in the United States. Instead, if the 
Federal Government wishes to regulate MTBE, it should be left 
to the Federal agencies who have extensive knowledge of the 
science behind MTBE and those agencies should work closely with 
industry and the public to solicit input on how to best proceed 
with the use of MTBE in the gasoline supply.

Global Implications

    Other industrialized nations have also looked at MTBE and 
have formed opinions and policies completely different than 
those currently proposed by this committee.
    A European Union study/risk assessment on MTBE was released 
in 2002. This study commissioned by the European Union and 
conducted by the Finnish Environment Institute began in 1997 
and was carried out in two stages. All known data on the health 
and environmental effects of MTBE, together with the potential 
for exposure, were evaluated in order to determine the overall 
risk, and the findings set out in a Risk Assessment Report. The 
EU considered all available scientific and technical 
information, based on more than 20 years of MTBE usage and 
research, and concluded that MTBE is not expected to have any 
harmful impact on human health or the environment.\2\ The study 
also concluded that proper management of underground storage 
tanks (USTs) would appropriately address any risk to the 
environment posed by MTBE in gasoline. Indeed, future European 
Union fuels specifications, recognizing the benefits of MTBE 
toward improving air quality, will likely increase usage of 
that product in the EU.
---------------------------------------------------------------------------
     \2\European Union, Risk Assessment and Risk Reduction Strategy, EC 
Council Regulation No. 793/93, Official Journal (4 December L319).
---------------------------------------------------------------------------
    Accordingly, Europe and other U.S. trade partners are 
likely to have concerns with a U.S. ban, which would terminate 
their current large volume of exports to the United States of 
MTBE, gasoline containing MTBE, and methanol used to produce 
MTBE. These trade partners can be expected to argue that the 
ban is a more burdensome restriction on trade in these 
commodities than is necessary and that it amounts to no more 
than thinly disguised protectionism for ethanol. These 
allegations, in turn, can be expected to exacerbate ongoing 
severe criticism of other recent U.S. trade measures--
particularly those relating to steel and softwood lumber--where 
Europe, Canada, and others have characterized U.S. actions as 
protectionist and extreme.

Water Contamination and Underground Storage Tanks

    I was pleased with the work completed by the Senate 
Committee on Environment and Public Works on passing meaningful 
legislation, S. 195, to improve the Federal Underground Storage 
Tank (UST) program. I believe this was a positive step in 
addressing the real problem of gasoline leaking from USTs and 
polluting drinking water supplies-not MTBE. Because of the 
unpleasant odor and taste MTBE can have, it has been easier for 
local and State water agencies to detect MTBE contamination in 
water sources. However, MTBE should be a precursor to gasoline 
contamination instead of the scapegoat because of the other 
ingredients contained in gasoline are much more harmful and are 
known carcinogens such as benzene and formaldehyde.
    MTBE detections have been found to be at concentrations 
below five parts per billion (ppbs), well below the EPA 
Consumer Advisory recommendation of 20 to 40 ppbs to avoid 
unpleasant odor and taste. In fact, in California, where MTBE 
concentrations were once among the highest, the California 
Department of Health Services determined that the MTBE 
contamination rate has declined and appears to have stabilized 
for public water supply wells. This claim has also been 
supported by testimony from the U.S. Geological Society (USGS) 
before the House Subcommittee on the Environment and Hazardous 
Material. I look forward to working with the Chairman of the 
Committee and the sponsor of the bill, Senator Chafee, to 
passing this important legislation.

        LACK OF LIABILITY PROTECTION EXTENDED TO MTBE PRODUCERS

    As I mentioned in mark up, I believe a major flaw in this 
legislation is the fact that this committee is extending 
liability relief to one product--ethanol--and not another 
product--MTBE.
    The context in which we are denying liability protection to 
MTBE producers makes this situation even more disturbing. In 
1990, Congress set out to encourage clean air by passing the 
1990 Clean Air Act Amendments. Included in this landmark 
legislation was a particular fuel standard. Congress knew that 
MTBE would be widely used to satisfy the standard. As a result, 
manufacturers produced and marketed MTBE to satisfy the 
congressional standard. Now, manufacturers face crippling 
lawsuits solely because they produced a product that Congress 
encouraged them to produce. Because MTBE manufacturers complied 
with the requirements of a federally mandated program, MTBE 
should at a minimum receive the equivalent legal treatment as 
ethanol.
    It is only fair that any fuel producer who responds to a 
congressional mandate should be protected against legal action 
based upon the use of that mandated product. No one should be 
penalized for obeying the law. The government bears the 
responsibility for MTBE liability. Failure to address this 
issue only serves to undermine any incentive for additive 
manufacturers to produce new generations of additives that will 
be needed to replace MTBE and to meet future energy and 
environmental goals. There is a precedent for the Federal 
Government to address liability concerns when the government 
has required a product or process. In the case of nuclear 
facilities the Federal Government's role is limited to 
licensing and approving facilities. Regardless of this limited 
role, specific caps have been enacted to limit economic damages 
arising from liability. In another instance, the Federal 
Government required that a flame retardant, TRIS, be used in 
children's sleepwear. TRIS was subsequently banned after 
learning the retardant was carcinogenic. The Federal Government 
limited liability and set up a settlement fund to deal with 
claims made by companies that manufactured TRIS.
    Product liability makes the product manufacturer strictly 
liable for placing an unreasonably dangerous product into the 
market. The purpose of product liability is to deter unwanted 
behavior, but such liability cannot deter behavior when the 
government mandates the product. A narrowly tailored safe 
harbor provision does not interfere with the ability of 
plaintiffs to obtain relief for truly negligent behavior that 
result in diminished value of resources.
                        Changes in Existing Law

    In compliance with section 12 of rule XXVI of the Standing 
Rules of the Senate, changes in existing law made by the bill 
as reported are shown as follows: Existing law proposed to be 
omitted is enclosed in [black brackets], new matter is printed 
in italic, existing law in which no change is proposed is shown 
in roman:

                         THE CLEAN AIR ACT \1\

             TITLE I--AIR POLLUTION PREVENTION AND CONTROL

              Part A--Air Quality and Emission Limitations

                         findings and purposes

      Sec. 101. (a) The Congress finds--
---------------------------------------------------------------------------
    \1\ The Clean Air Act (42 U.S.C. 7401-7626) consists of Public Law 
159 (July 14, 1955; 69 Stat. 322) and the amendments made by subsequent 
enactments.

           *       *       *       *       *       *       *

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

              TITLE I--AIR POLLUTION PREVENTION AND CONTROL

              Part A--Air Quality and Emission Limitations

Sec. 101. Findings and purposes.
Sec. 102. Cooperative activities and uniform laws.
Sec. 103. Research, investigation, training, and other activities.
Sec. 104. Research relating to fuels and vehicles.
Sec. 105. Grants for support of air pollution planning and control 
          programs.
Sec. 106. Interstate air quality agencies or commissions.
Sec. 107. Air quality control regions.
Sec. 108. Air quality criteria and control techniques.
Sec. 109. National ambient air quality standards.
Sec. 110. Implementation plans.
Sec. 111. Standards of performance for new stationary sources.
Sec. 112. Hazardous air pollutants.
Sec. 113. Federal Enforcement.
Sec. 114. Inspections, monitoring, and entry.
Sec. 115. International air pollution.
Sec. 116. Retention of state authority.
Sec. 117. President's air quality advisory board and advisory 
          committees.
Sec. 118. Control of pollution from federal facilities.
Sec. 119. Primary nonferrous smelter orders.
Sec. 120. Noncompliance penalty.
Sec. 121. Consultation.
Sec. 122. Listing of certain unregulated pollutants.
Sec. 123. Stack heights.
Sec. 124. Assurance of adequacy of state plans.
Sec. 125. Measures to prevent economic disruption or unemployment.
Sec. 126. Interstate pollution abatement.
Sec. 127. Public notification.
Sec. 128. State boards.
Sec. 129. Solid waste combustion.
Sec. 130. Emission factors.
Sec. 131. Land use authority.

                        Part B--Ozone Protection

[Secs. 150 through 159 Repealed]

     Part C--Prevention of Significant Deterioration of Air Quality

                                 subpart 1

Sec. 160. Purposes.
Sec. 161. Plan requirements.
Sec. 162. Initial classifications.
Sec. 163. Increments and ceilings.
Sec. 164. Area redesignation.
Sec. 165. Preconstruction requirements.
Sec. 166. Other pollutants.
Sec. 167. Enforcement.
Sec. 168. Period before plan approval.
Sec. 169. Definitions.

\1\ This table of contents is not part of the Clean Air Act but is 
included herein for the convenience of the users of this publication.
---------------------------------------------------------------------------

                                 Subpart 2

Sec. 169A. Visibility protection for Federal class I areas.
Sec. 169B. Visibility.

            Part D--Plan Requirements for Nonattainment Areas

                 subpart 1--nonattainment areas in general

Sec. 171. Definitions.
Sec. 172. Nonattainment plan provisions in general.
Sec. 173. Permit requirements.
Sec. 174. Planning procedures.
Sec. 175. Environmental Protection Agency grants.
Sec. 175A. Maintenance plans.
Sec. 176. Limitation on certain Federal assistance.
Sec. 176A. Interstate transport commissions.
Sec. 177. New motor vehicle emission standards in nonattainment areas.
Sec. 178. Guidance documents.
Sec. 179. Sanctions and consequences of failure to attain.
Sec. 179B. International border areas.

      subpart 2--additional provisions for ozone nonattainment areas

Sec. 181. Classifications and attainment dates.
Sec. 182. Plan submissions and requirements.
Sec. 183. Federal ozone measures.
Sec. 184. Control of interstate ozone air pollution.
Sec. 185. Enforcement for Severe and Extreme ozone nonattainment areas 
          for failure to attain.
Sec. 185A. Transitional areas.
Sec. 185B. NOx and VOC study.

    subpart 3--additional provisions for carbon monoxide nonattainment 
                                  areas

Sec. 186. Classifications and attainment dates.
Sec. 187. Plan submissions and requirements.

  subpart 4--additional provisions for particulate matter nonattainment 
                                  areas

Sec. 188. Classifications and attainment dates.
Sec. 189. Plan provisions and schedules for plan submissions.
Sec. 190. Issuance of RACM and BACM guidance.

   subpart 5--additional provisions for areas designated nonattainment 
              for sulfur oxides, nitrogen dioxide, or lead

Sec. 191. Plan submission deadlines.
Sec. 192. Attainment dates.

                       subpart 6--savings provisions

Sec. 193. General savings clause.

             TITLE II--EMISSION STANDARDS FOR MOVING SOURCES

Sec. 201. Short title.

            Part A--Motor Vehicle Emission and Fuel Standards

Sec. 202. Establishment of standards.
Sec. 203. Prohibited acts.
Sec. 204. Injunction proceedings.
Sec. 205. Civil penalties.
Sec. 206. Motor vehicle and motor vehicle engine compliance testing and 
          certification.
Sec. 207. Compliance by vehicles and engines in actual use.
Sec. 208. Information collection.
Sec. 209. State standards.
Sec. 210. State grants.
Sec. 211. Regulation of fuels.
Sec. 212. Renewable fuels.
Sec. 213. Fuel economy improvement from new motor vehicles.
Sec. 214. Study of particulate emissions from motor vehicles.
Sec. 215. High altitude performance adjustments.
Sec. 216. Definitions for part A.
Sec. 217. Motor vehicle compliance program fees.
Sec. 218. Prohibition on production of engines requiring leaded 
          gasoline.
Sec. 219. Urban bus standards.

                   Part B--Aircraft Emission Standards

Sec. 231. Establishment of standards.
Sec. 232. Enforcement of standards.
Sec. 233. State standards and controls.
Sec. 234. Definitions.

                       Part C--Clean Fuel Vehicles

Sec. 241. Definitions.
Sec. 242. Requirements applicable to clean fuel vehicles.
Sec. 243. Standards for light-duty clean fuel vehicles.
Sec. 244. Administration and enforcement as per California standards.
Sec. 245. Standards for heavy-duty clean-fuel vehicles (gvwr above 8,500 
          up to 26,000 lbs).
Sec. 246. Centrally fueled fleets.
Sec. 247. Vehicle conversions.
Sec. 248. Federal agency fleets.
Sec. 249. California pilot test program.
Sec. 250. General provisions.

                           TITLE III--GENERAL

Sec. 301. Administration.
Sec. 302. Definitions.
Sec. 303. Emergency powers.
Sec. 304. Citizen suits.
Sec. 305. Representation in litigation.
Sec. 306. Federal procurement.
Sec. 307. General provisions relating to administrative proceedings and 
          judicial review.
Sec. 308. Mandatory licensing.
Sec. 309. Policy review.
Sec. 310. Other authority not affected.
Sec. 311. Records and audit.
Sec. 312. Economic impact analyses.
[Sec. 313. Repealed]
Sec. 314. Labor standards.
Sec. 315. Separability.
Sec. 316. Sewage treatment grants.
Sec. 317. Short title.
Sec. 317.\1\ Economic impact assessment.
[Sec. 318. Repealed]
Sec. 319. Air quality monitoring.
Sec. 320. Standardized air quality modeling.
Sec. 321. Employment effects.
Sec. 322. Employee protection.
Sec. 323. Cost of emission control for certain vapor recovery to be 
          borne by owner of retail outlet.
Sec. 324. Vapor recovery for small business marketers of petroleum 
          products.
Sec. 325. Exemptions for certain territories.
Sec. 326. Construction of certain clauses.
Sec. 327. Authorization of appropriations.
Sec. 328. Air pollution from outer continental shelf activities.

\1\ There are two sections numbered 317. This section should be numbered 
318.
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                          regulation of fuels

      Sec. 211. (a) The Administrator may by regulation 
designate any fuel or fuel additive (including any fuel or fuel 
additive used exclusively in nonroad engines or nonroad 
vehicles) and, after such date or dates as may be prescribed by 
him, no manufacturer or processor of any such fuel or additive 
may sell, offer for sale, or introduce into commerce such fuel 
or additive unless the Administrator has registered such fuel 
or additive in accordance with subsection (b) of this section.
      (b)(1) For the purpose of registration of fuels and fuel 
additives, the Administrator shall require--
            (A) the manufacturer of any fuel to notify him as 
        to the commercial identifying name and manufacturer of 
        any additive contained in such fuel; the range of 
        concentration of any additive in the fuel; and the 
        purpose-in-use of any such additive; and
            (B) the manufacturer of any additive to notify him 
        as to the chemical composition of such additive.
      (2) For the purpose of registration of fuels and fuel 
additives, the Administrator [may also] shall, on a regular 
basis require the manufacturer of any fuel or fuel additive--
            [(A) to conduct tests to determine potential public 
        health effects of such fuel or additive (including, but 
        not limited to, carcinogenic, teratogenic, or mutagenic 
        effects), and]
                    (A) to conduct tests to determine potential 
                public health and environmental effects of the 
                fuel or additive (including carcinogenic, 
                teratogenic, or mutagenic effects); and
            (B) to furnish the description of any analytical 
        technique that can be used to detect and measure any 
        additive in such fuel, the recommended range of 
        concentration of such additive, and the recommended 
        purpose-in-use of such additive, and such other 
        information as is reasonable and necessary to determine 
        the emissions resulting from the use of the fuel or 
        additive contained in such fuel, the effect of such 
        fuel or additive on the emission control performance of 
        any vehicle, vehicle engine, nonroad engine or nonroad 
        vehicle, or the extent to which such emissions affect 
        the public health or welfare.
Tests under subparagraph (A) shall be conducted in conformity 
with test procedures and protocols established by the 
Administrator. The results of such tests shall not be 
considered confidential.
      (3) Upon compliance with the provisions of this 
subsection, including assurances that the Administrator will 
receive changes in the information required, the Administrator 
shall register such fuel or fuel additive.
            (4) Study on certain fuel additives and 
        blendstocks.--
                    (A) In general.--Not later than 2 years 
                after the date of enactment of this paragraph, 
                the Administrator shall--
                            (i) conduct a study on the effects 
                        on public health (including the effects 
                        on children, pregnant women, minority 
                        or low-income communities, and other 
                        sensitive populations), air quality, 
                        and water resources of increased use 
                        of, and the feasibility of using as 
                        substitutes for methyl tertiary butyl 
                        ether in gasoline--
                                    (I) ethyl tertiary butyl 
                                ether;
                                    (II) tertiary amyl methyl 
                                ether;
                                    (III) di-isopropyl ether;
                                    (IV) tertiary butyl 
                                alcohol;
                                    (V) other ethers and heavy 
                                alcohols, as determined by then 
                                Administrator;
                                    (VI) ethanol;
                                    (VII) iso-octane; and
                                    (VIII) alkylates; and
                            (ii) conduct a study on the effects 
                        on public health (including the effects 
                        on children, pregnant women, minority 
                        or low-income communities, and other 
                        sensitive populations), air quality, 
                        and water resources of the adjustment 
                        for ethanol-blended reformulated 
                        gasoline to the volatile organic 
                        compounds performance requirements that 
                        are applicable under paragraphs (1) and 
                        (3) of section 211(k); and
                            (iii) submit to the Committee on 
                        Environment and Public Works of the 
                        Senate and the Committee on Energy and 
                        Commerce of the House of 
                        Representatives a report describing the 
                        results of the studies under clauses 
                        (i) and (ii).
                    (B) Contracts for study.--In carrying out 
                this paragraph, the Administrator may enter 
                into 1 or more contracts with nongovernmental 
                entities such as--
                    (i) the national energy laboratories; and
                    (ii) institutions of higher education (as 
                defined in section 101 of the Higher Education 
                Act of 1965 (20 U.S.C. 1001)).
      (c)(1) The Administrator may, from time to time on the 
basis of information obtained under subsection (b) of this 
section or other information available to him, by regulation, 
control or prohibit the manufacture, introduction into 
commerce, offering for sale, or sale of any fuel or fuel 
additive for use in a motor vehicle, motor vehicle engine, or 
nonroad engine or nonroad vehicle (A) if in the judgment of the 
Administrator any fuel or fuel additive or emission product of 
such fuel or fuel additive causes, or contributes, to [air 
pollution which] air pollution, or water pollution, that may 
reasonably be anticipated to endanger the public health or 
welfare, or (B) if emission products of such fuel or fuel 
additive will impair to a significant degree the performance of 
any emission control device or system which is in general use, 
or which the Administrator finds has been developed to a point 
where in a reasonable time it would be in general use were such 
regulation to be promulgated.
      (2)(A) No fuel, class of fuels, or fuel additive may be 
controlled or prohibited by the Administrator pursuant to 
clause (A) of paragraph (1) except after consideration of all 
relevant medical and scientific evidence available to him, 
including consideration of other technologically or 
economically feasible means of achieving emission standards 
under section 202.
      (B) No fuel or fuel additive may be controlled or 
prohibited by the Administrator pursuant to clause (B) of 
paragraph (1) except after consideration of available 
scientific and economic data, including a cost benefit analysis 
comparing emission control devices or systems which are or will 
be in general use and require the proposed control or 
prohibition with emission control devices or systems which are 
or will be in general use and do not require the proposed 
control or prohibition. On request of a manufacturer of motor 
vehicles, motor vehicle engines, fuels, or fuel additives 
submitted within 10 days of notice of proposed rulemaking, the 
Administrator shall hold a public hearing and publish findings 
with respect to any matter he is required to consider under 
this subparagraph. Such findings shall be published at the time 
of promulgation of final regulations.
      (C) No fuel or fuel additive may be prohibited by the 
Administrator under paragraph (1) unless he finds, and 
publishes such finding, that in his judgment such prohibition 
will not cause the use of any other fuel or fuel additive which 
will produce emissions which will endanger the public health or 
welfare to the same or greater degree than the use of the fuel 
or fuel additive proposed to be prohibited.
      (3)(A) For the purpose of obtaining evidence and data to 
carry out paragraph (2), the Administrator may require the 
manufacturer of any motor vehicle or motor vehicle engine to 
furnish any information which has been developed concerning the 
emissions from motor vehicles resulting from the use of any 
fuel or fuel additive, or the effect of such use on the 
performance of any emission control device or system.
      (B) In obtaining information under subparagraph (A), 
section 307 (a) (relating to subpenas) shall be applicable.
      (4)(A) Except as otherwise provided in subparagraph (B) 
or (C), no State (or political subdivision thereof) may 
prescribe or attempt to enforce, for the purposes of motor 
vehicle emission control, any control or prohibition respecting 
any characteristic or component of a fuel or fuel additive in a 
motor vehicle or motor vehicle engine--
            (i) if the Administrator has found that no control 
        or prohibition of the characteristic or component of a 
        fuel or fuel additive under paragraph (1) is necessary 
        and has published his finding in the Federal Register, 
        or
            (ii) if the Administrator has prescribed under 
        paragraph (1) a control or prohibition applicable to 
        such characteristic or component of a fuel or fuel 
        additive, unless State prohibition or control is 
        identical to the prohibition or control prescribed by 
        the Administrator.
      (B) Any State for which application of section 209(a) has 
at any time been waived under section 209(b) may at any time 
prescribe and enforce, for the purpose of motor vehicle 
emission control or water quality protection, a control or 
prohibition respecting any fuel or fuel additive.
      [(C) A State]
                    (C) Authority of state to control fuels and 
                fuel additives for reasons of necessity.--
                            (i) In general.--A State may 
                        prescribe and enforce, for purposes of 
                        motor vehicle emission control, a 
                        control or prohibition respecting the 
                        use of a fuel or fuel additive in a 
                        motor vehicle or motor vehicle engine 
                        if an applicable implementation plan 
                        for such State under section 110 so 
                        provides. The Administrator may approve 
                        such provision in an implementation 
                        plan, or promulgate an implementation 
                        plan containing such a provision, only 
                        if he finds that the State control or 
                        prohibition is necessary to achieve the 
                        national primary or secondary ambient 
                        air quality standard which the plan 
                        implements. The Administrator may find 
                        that a State control or prohibition is 
                        necessary to achieve that standard if 
                        no other measures that would bring 
                        about timely attainment exist, or if 
                        other measures exist and are 
                        technically possible to implement, but 
                        are unreasonable or impracticable. The 
                        Administrator may make a finding of 
                        necessity under this subparagraph even 
                        if the plan for the area does not 
                        contain an approved demonstration of 
                        timely attainment.
                            (ii) Enforcement by the 
                        administrator.--In any case in which a 
                        State prescribes and enforces a control 
                        or prohibition under clause (i), the 
                        Administrator, at the request of the 
                        State, shall enforce the control or 
                        prohibition as if the control or 
                        prohibition had been adopted under the 
                        other provisions of this section.
            (5) Restrictions on use of mtbe.--
                    (A) In general.--Subject to subparagraph 
                (E), not later than 4 years after the date of 
                enactment of this paragraph, the use of methyl 
                tertiary butyl ether in motor vehicle fuel in 
                any State other than a State described in 
                subparagraph (C) is prohibited.
                    (B) Regulations.--The Administrator shall 
                promulgate regulations to effect the 
                prohibition in subparagraph (A).
                    (C) States that authorize use.--A State 
                described in this subparagraph is a State that 
                submits to the Administrator a notice that the 
                State authorizes use of methyl tertiary butyl 
                ether in motor vehicle fuel sold or used in the 
                State.
                    (D) Publication of notice.--The 
                Administrator shall publish in the Federal 
                Register each notice submitted by a State under 
                subparagraph (C).
                    (E) Trace quantities.--In carrying out 
                subparagraph (A), the Administrator may allow 
                trace quantities of methyl tertiary butyl 
                ether, not to exceed 0.5 percent by volume, to 
                be present in motor vehicle fuel in cases that 
                the Administrator determines to be appropriate.
            (6) MTBE merchant producer conversion assistance.--
                    (A) In general.--
                            (i) Grants.--The Secretary of 
                        Energy, in consultation with the 
                        Administrator, may make grants to 
                        merchant producers of methyl tertiary 
                        butyl ether in the United States to 
                        assist the producers in the conversion 
                        of eligible production facilities 
                        described in subparagraph (C) to the 
                        production of--
                            (i) iso-octane or alkylates, unless 
                        the Administrator, in consultation with 
                        the Secretary of Energy, determines 
                        that transition assistance for the 
                        production of iso-octane or alkylates 
                        is inconsistent with the criteria 
                        specified in subparagraph (B); and
                            (ii) any other fuel additive that 
                        meets the criteria specified in 
                        subparagraph (B).
                    (B) Criteria.--The criteria referred to in 
                subparagraph (A) are that--
                            (i) use of the fuel additive is 
                        consistent with this subsection;
                            (ii) the Administrator has not 
                        determined that the fuel additive may 
                        reasonably be anticipated to endanger 
                        public health or the environment;
                            (iii) the fuel additive has been 
                        registered and tested, or is being 
                        tested, in accordance with the 
                        requirements of this section; and
                            (iv) the fuel additive will 
                        contribute to replacing quantities of 
                        motor vehicle fuel rendered unavailable 
                        as a result of paragraph (5).
                    (C) Eligible production facilities.--A 
                production facility shall be eligible to 
                receive a grant under this paragraph if the 
                production facility--
                            (i) is located in the United 
                        States; and
                            (ii) produced methyl tertiary butyl 
                        ether for consumption in nonattainment 
                        areas during the period--
                                    (I) beginning on the date 
                                of enactment of this paragraph; 
                                and
                                    (II) ending on the 
                                effective date of the 
                                prohibition on the use of 
                                methyl tertiary butyl ether 
                                under paragraph (5).
                    (D) Authorization of appropriations.--There 
                is authorized to be appropriated to carry out 
                this paragraph $250,000,000 for each of fiscal 
                years 2004 through 2007.
    (d) Penalties and Injunctions.--
            (1) Civil penalties.--Any person who violates 
        subsection (a), (f), (g), (k), (l), (m), [or (n)] (n), 
        or (o) of this section or the regulations prescribed 
        under subsection (c), (h), (i), (k), (l), (m), [or (n)] 
        (n), or (o) of this section or who fails to furnish any 
        information or conduct any tests required by the 
        Administrator under subsection (b) of this section 
        shall be liable to the United States for a civil 
        penalty of not more than the sum of $25,000 for every 
        day of such violation and the amount of economic 
        benefit or savings resulting from the violation. Any 
        violation with respect to a regulation prescribed under 
        subsection (c), (k), (l), [or (m)] (m), or (o) of this 
        section which establishes a regulatory standard based 
        upon a multiday averaging period shall constitute a 
        separate day of violation for each and every day in the 
        averaging period. Civil penalties shall be assessed in 
        accordance with subsections (b) and (c) of section 205.
            (2) Injunctive authority.--The district courts of 
        the United States shall have jurisdiction to restrain 
        violations of subsections (a), (f), (g), (k), (l), (m), 
        [and (n)] (n), and (o) of this section and of the 
        regulations prescribed under subsections (c), (h), (i), 
        (k), (l), (m), [and (n)] (n), and (o) of this section, 
        to award other appropriate relief, and to compel the 
        furnishing of information and the conduct of tests 
        required by the Administrator under subsection (b) of 
        this section. Actions to restrain such violations and 
        compel such actions shall be brought by and in the name 
        of the United States. In any such action, subpoenas for 
        witnesses who are required to attend a district court 
        in any district may run into any other district.
      (e)(1) Not later than one year after the date of 
enactment of this subsection and after notice and opportunity 
for a public hearing, the Administrator shall promulgate 
regulations which implement the authority under subsection 
(b)(2) (A) and (B) with respect to each fuel or fuel additive 
which is registered on the date of promulgation of such 
regulations and with respect to each fuel or fuel additive for 
which an application for registration is filed thereafter.
      (2) Regulations under subsection (b) to carry out this 
subsection shall require that the requisite information be 
provided to the Administrator by each such manufacturer--
            (A) prior to registration, in the case of any fuel 
        or fuel additive which is not registered on the date of 
        promulgation of such regulations; or
            (B) not later than three years after the date of 
        promulgation of such regulations, in the case of any 
        fuel or fuel additive which is registered on such date.
      (3) In promulgating such regulations, the Administrator 
may--
            (A) exempt any small business (as defined in such 
        regulations) from or defer or modify the requirements 
        of, such regulations with respect to any such small 
        business;
            (B) provide for cost-sharing with respect to the 
        testing of any fuel or fuel additive which is 
        manufactured or processed by two or more persons or 
        otherwise provide for shared responsibility to meet the 
        requirements of this section without duplication; or
            (C) exempt any person from such regulations with 
        respect to a particular fuel or fuel additive upon a 
        finding that any additional testing of such fuel or 
        fuel additive would be duplicative of adequate existing 
        testing.
      (f)(1)(A) Effective upon March 31, 1977, it shall be 
unlawful for any manufacturer of any fuel or fuel additive to 
first introduce into commerce, or to increase the concentration 
in use of, any fuel or fuel additive for general use in light 
duty motor vehicles manufactured after model year 1974 which is 
not substantially similar to any fuel or fuel additive utilized 
in the certification of any model year 1975, or subsequent 
model year, vehicle or engine under section 206.
    (B) Effective upon the date of the enactment of the Clean 
Air Act Amendments of 1990, it shall be unlawful for any 
manufacturer of any fuel or fuel additive to first introduce 
into commerce, or to increase the concentration in use of, any 
fuel or fuel additive for use by any person in motor vehicles 
manufactured after model year 1974 which is not substantially 
similar to any fuel or fuel additive utilized in the 
certification of any model year 1975, or subsequent model year, 
vehicle or engine under section 206.
      (2) Effective November 30, 1977, it shall be unlawful for 
any manufacturer of any fuel to introduce into commerce any 
gasoline which contains a concentration of manganese in excess 
of .0625 grams per gallon of fuel, except as otherwise provided 
pursuant to a waiver under paragraph (4).
      (3) Any manufacturer of any fuel or fuel additive which 
prior to March 31, 1977, and after January 1, 1974, first 
introduced into commerce or increased the concentration in use 
of a fuel or fuel additive that would otherwise have been 
prohibited under paragraph (1)(A) if introduced on or after 
March 31, 1977 shall, not later than September 15, 1978, cease 
to distribute such fuel or fuel additive in commerce. During 
the period beginning 180 days after the date of the enactment 
of this subsection and before September 15, 1978, the 
Administrator shall prohibit, or restrict the concentration of 
any fuel additive which he determines will cause or contribute 
to the failure of an emission control device or system (over 
the useful life of any vehicle in which such device or system 
is used) to achieve compliance by the vehicle with the emission 
standards with respect to which it has been certified under 
section 206.
      (4) The Administrator, upon application of any 
manufacturer of any fuel or fuel additive, may waive the 
prohibitions established under paragraph (1) or (3) of this 
subsection or the limitation specified in paragraph (2) of this 
subsection, if he determines that the applicant has established 
that such fuel or fuel additive or a specified concentration 
thereof, and the emission products of such fuel or additive or 
specified concentration thereof, will not cause or contribute 
to a failure of any emission control device or system (over the 
useful life of any vehicle in which such device or system is 
used) to achieve compliance by the vehicle with the emission 
standards with respect to which it has been certified pursuant 
to section 206. If the Administrator has not acted to grant or 
deny an application under this paragraph within one hundred and 
eighty days of receipt of such application, the waiver 
authorized by this paragraph shall be treated as granted.
      (5) No action of the Administrator under this section may 
be stayed by any court pending judicial review of such action.
    (g) Misfueling.--(1) No person shall introduce, or cause or 
allow the introduction of, leaded gasoline into any motor 
vehicle which is labeled ``unleaded gasoline only,'' which is 
equipped with a gasoline tank filler inlet designed for the 
introduction of unleaded gasoline, which is a 1990 or later 
model year motor vehicle, or which such person knows or should 
know is a vehicle designed solely for the use of unleaded 
gasoline.
    (2) Beginning October 1, 1993, no person shall introduce or 
cause or allow the introduction into any motor vehicle of 
diesel fuel which such person knows or should know contains a 
concentration of sulfur in excess of 0.05 percent (by weight) 
or which fails to meet a cetane index minimum of 40 or such 
equivalent alternative aromatic level as prescribed by the 
Administrator under subsection (i)(2).
    (h) Reid Vapor Pressure Requirements.--
            (1) Prohibition.--Not later than 6 months after the 
        date of the enactment of the Clean Air Act Amendments 
        of 1990, the Administrator shall promulgate regulations 
        making it unlawful for any person during the high ozone 
        season (as defined by the Administrator) to sell, offer 
        for sale, dispense, supply, offer for supply, 
        transport, or introduce into commerce gasoline with a 
        Reid Vapor Pressure in excess of 9.0 pounds per square 
        inch (psi). Such regulations shall also establish more 
        stringent Reid Vapor Pressure standards in a 
        nonattainment area as the Administrator finds necessary 
        to generally achieve comparable evaporative emissions 
        (on a per-vehicle basis) in nonattainment areas, taking 
        into consideration the enforceability of such 
        standards, the need of an area for emission control, 
        and economic factors.
            (2) Attainment areas.--The regulations under this 
        subsection shall not make it unlawful for any person to 
        sell, offer for supply, transport, or introduce into 
        commerce gasoline with a Reid Vapor Pressure of 9.0 
        pounds per square inch (psi) or lower in any area 
        designated under section 107 as an attainment area. 
        Notwithstanding the preceding sentence, the 
        Administrator may impose a Reid vapor pressure 
        requirement lower than 9.0 pounds per square inch (psi) 
        in any area, formerly an ozone nonattainment area, 
        which has been redesignated as an attainment area.
            (3) Effective date; enforcement.--The regulations 
        under this subsection shall provide that the 
        requirements of this subsection shall take effect not 
        later than the high ozone season for 1992, and shall 
        include such provisions as the Administrator determines 
        are necessary to implement and enforce the requirements 
        of this subsection.
            (4) Ethanol waiver.--For fuel blends containing 
        gasoline and 10 percent denatured anhydrous ethanol, 
        the Reid vapor pressure limitation under this 
        subsection shall be one pound per square inch (psi) 
        greater than the applicable Reid vapor pressure 
        limitations established under paragraph (1); Provided, 
        however, That a distributor, blender, marketer, 
        reseller, carrier, retailer, or wholesale purchaser-
        consumer shall be deemed to be in full compliance with 
        the provisions of this subsection and the regulations 
        promulgated thereunder if it can demonstrate (by 
        showing receipt of a certification or other evidence 
        acceptable to the Administrator) that--
                    (A) the gasoline portion of the blend 
                complies with the Reid vapor pressure 
                limitations promulgated pursuant to this 
                subsection;
                    (B) the ethanol portion of the blend does 
                not exceed its waiver condition under 
                subsection (f)(4); and
                    (C) no additional alcohol or other additive 
                has been added to increase the Reid Vapor 
                Pressure of the ethanol portion of the blend.
            (5) Exclusion from ethanol waiver.--
                    (A) Promulgation of regulations.--Upon 
                notification, accompanied by supporting 
                documentation, from the Governor of a State 
                that the Reid vapor pressure limitation 
                established by paragraph (4) will increase 
                emissions that contribute to air pollution in 
                any area in the State, the Administrator shall, 
                by regulation, apply, in lieu of the Reid vapor 
                pressure limitation established by paragraph 
                (4), the Reid vapor pressure limitation 
                established by paragraph (1) to all fuel blends 
                containing gasoline and 10 percent denatured 
                anhydrous ethanol that are sold, offered for 
                sale, dispensed, supplied, offered for supply, 
                transported, or introduced into commerce in the 
                area during the high ozone season.
                    (B) Deadline for promulgation.--The 
                Administrator shall promulgate regulations 
                under subparagraph (A) not later than 90 days 
                after the date of receipt of a notification 
                from a Governor under that subparagraph.
                    (C) Effective date.--
                            (i) In general.--With respect to an 
                        area in a State for which the Governor 
                        submits a notification under 
                        subparagraph (A), the regulations under 
                        that subparagraph shall take effect on 
                        the later of--
                                    (I) the first day of the 
                                first high ozone season for the 
                                area that begins after the date 
                                of receipt of the notification; 
                                or
                                    (II) 1 year after the date 
                                of receipt of the notification.
                            (ii) Extension of effective date 
                        based on determination of insufficient 
                        supply.--
                                    (I) In general.--If, after 
                                receipt of a notification with 
                                respect to an area from a 
                                Governor of a State under 
                                subparagraph (A), the 
                                Administrator determines, on 
                                the Administrator's own motion 
                                or on petition of any person 
                                and after consultation with the 
                                Secretary of Energy, that the 
                                promulgation of regulations 
                                described in subparagraph (A) 
                                would result in an insufficient 
                                supply of gasoline in the 
                                State, the Administrator, by 
                                regulation--
                                            (aa) shall extend 
                                        the effective date of 
                                        the regulations under 
                                        clause (i) with respect 
                                        to the area for not 
                                        more than 1 year; and
                                            (bb) may renew the 
                                        extension under item 
                                        (aa) for 2 additional 
                                        periods, each of which 
                                        shall not exceed 1 
                                        year.
                                    (II) Deadline for action on 
                                petitions.--The Administrator 
                                shall act on any petition 
                                submitted under subclause (I) 
                                not later than 180 days after 
                                the date of receipt of the 
                                petition.
            [(5)] (6) Areas covered.--The provisions of this 
        subsection shall apply only to the 48 contiguous States 
        and the District of Columbia.
    (i) Sulfur Content Requirements for Diesel Fuel.--(1) 
Effective October 1, 1993, no person shall manufacture, sell, 
supply, offer for sale or supply, dispense, transport, or 
introduce into commerce motor vehicle diesel fuel which 
contains a concentration of sulfur in excess of 0.05 percent 
(by weight) or which fails to meet a cetane index minimum of 
40.
    (2) Not later than 12 months after the date of the 
enactment of the Clean Air Act Amendments of 1990, the 
Administrator shall promulgate regulations to implement and 
enforce the requirements of paragraph (1). The Administrator 
may require manufacturers and importers of diesel fuel not 
intended for use in motor vehicles to dye such fuel in a 
particular manner in order to segregate it from motor vehicle 
diesel fuel. The Administrator may establish an equivalent 
alternative aromatic level to the cetane index specification in 
paragraph (1).
    (3) The sulfur content of fuel required to be used in the 
certification of 1991 through 1993 model year heavy-duty diesel 
vehicles and engines shall be 0.10 percent (by weight). The 
sulfur content and cetane index minimum of fuel required to be 
used in the certification of 1994 and later model year heavy-
duty diesel vehicles and engines shall comply with the 
regulations promulgated under paragraph (2).
    (4) The States of Alaska and Hawaii may be exempted from 
the requirements of this subsection in the same manner as 
provided in section 324. \1\ The Administrator shall take final 
action on any petition filed under section 324 \1\ or this 
paragraph for an exemption from the requirements of this 
subsection, within 12 months from the date of the petition.
---------------------------------------------------------------------------
    \1\ So in original. Probably should refer to section ``325''.
---------------------------------------------------------------------------
    (j) Lead Substitute Gasoline Additives.--(1) After the date 
of the enactment of the Clean Air Act Amendments of 1990, any 
person proposing to register any gasoline additive under 
subsection (a) or to use any previously registered additive as 
a lead substitute may also elect to register the additive as a 
lead substitute gasoline additive for reducing valve seat wear 
by providing the Administrator with such relevant information 
regarding product identity and composition as the Administrator 
deems necessary for carrying out the responsibilities of 
paragraph (2) of this subsection (in addition to other 
information which may be required under subsection (b)).
    (2) In addition to the other testing which may be required 
under subsection (b), in the case of the lead substitute 
gasoline additives referred to in paragraph (1), the 
Administrator shall develop and publish a test procedure to 
determine the additives' effectiveness in reducing valve seat 
wear and the additives' tendencies to produce engine deposits 
and other adverse side effects. The test procedures shall be 
developed in cooperation with the Secretary of Agriculture and 
with the input of additive manufacturers, engine and engine 
components manufacturers, and other interested persons. The 
Administrator shall enter into arrangements with an independent 
laboratory to conduct tests of each additive using the test 
procedures developed and published pursuant to this paragraph. 
The Administrator shall publish the results of the tests by 
company and additive name in the Federal Register along with, 
for comparison purposes, the results of applying the same test 
procedures to gasoline containing 0.1 gram of lead per gallon 
in lieu of the lead substitute gasoline additive. The 
Administrator shall not rank or otherwise rate the lead 
substitute additives. Test procedures shall be established 
within 1 year after the date of the enactment of the Clean Air 
Act Amendments of 1990. Additives shall be tested within 18 
months of the date of the enactment of the Clean Air Act 
Amendments of 1990 or 6 months after the lead substitute 
additives are identified to the Administrator, whichever is 
later.
    (3) The Administrator may impose a user fee to recover the 
costs of testing of any fuel additive referred to in this 
subsection. The fee shall be paid by the person proposing to 
register the fuel additive concerned. Such fee shall not exceed 
$20,000 for a single fuel additive.
    (4) There are authorized to be appropriated to the 
Administrator not more than $1,000,000 for the second full 
fiscal year after the date of the enactment of the Clean Air 
Act Amendments of 1990 to establish test procedures and conduct 
engine tests as provided in this subsection. Not more than 
$500,000 per year is authorized to be appropriated for each of 
the 5 subsequent fiscal years.
    (5) Any fees collected under this subsection shall be 
deposited in a special fund in the United States Treasury for 
licensing and other services which thereafter shall be 
available for appropriation, to remain available until 
expended, to carry out the Agency's activities for which the 
fees were collected.
    (k) Reformulated Gasoline for Conventional Vehicles.--
            (1)  EPA regulations.--[Within 1 year after the 
        enactment of the Clean Air Act Amendments of 1990
                    (A) In general.--Not later than November 
                15, 1991, the Administrator shall promulgate 
                regulations under this section establishing 
                requirements for reformulated gasoline to be 
                used in gasoline-fueled vehicles in specified 
                nonattainment areas. Such regulations shall 
                require the greatest reduction in emissions of 
                ozone forming volatile organic compounds 
                (during the high ozone season) and emissions of 
                toxic air pollutants (during the entire year) 
                achievable through the reformulation of 
                conventional gasoline, taking into 
                consideration the cost of achieving such 
                emission reductions, any nonair-quality and 
                other air-quality related health and 
                environmental impacts and energy requirements.
                    (B) Maintenance of toxic air pollutant 
                emissions reductions from reformulated 
                gasoline.--
                            (i) Definition of padd.--In this 
                        subparagraph the term `PADD' means a 
                        Petroleum Administration for Defense 
                        District.
                            (ii) Regulations concerning 
                        emissions of toxic air pollutants.--Not 
                        later than 270 days after the date of 
                        enactment of this subparagraph, the 
                        Administrator shall establish by 
                        regulation, for each refinery or 
                        importer (other than a refiner or 
                        importer in a State that has received a 
                        waiver under section 209(b) with 
                        respect to gasoline produced for use in 
                        that State), standards for toxic air 
                        pollutants from use of the reformulated 
                        gasoline produced or distributed by the 
                        refiner or importer that maintain the 
                        reduction of the average annual 
                        aggregate emissions of toxic air 
                        pollutants for reformulated gasoline 
                        produced or distributed by the refiner 
                        or importer during calendar years 1999 
                        and 2000 (as determined on the basis of 
                        data collected by the Administrator 
                        with respect to the refiner or 
                        importer).
                            (iii) Standards applicable to 
                        specific refineries or importers.--
                                    (I) Applicability of 
                                standards.--For any calendar 
                                year, the standards applicable 
                                to a refiner or importer under 
                                clause (ii) shall apply to the 
                                quantity of gasoline produced 
                                or distributed by the refiner 
                                or importer in the calendar 
                                year only to the extent that 
                                the quantity is less than or 
                                equal to the average annual 
                                quantity of reformulated 
                                gasoline produced or 
                                distributed by the refiner or 
                                importer during calendar years 
                                1999 and 2000.
                                    (II) Applicability of other 
                                standards.--For any calendar 
                                year, the quantity of gasoline 
                                produced or distributed by a 
                                refiner or importer that is in 
                                excess of the quantity subject 
                                to subclause (I) shall be 
                                subject to standards for 
                                emissions of toxic air 
                                pollutants promulgated under 
                                subparagraph (A) and paragraph 
                                (3)(B).
                            (iv) Credit program.--The 
                        Administrator shall provide for the 
                        granting and use of credits for 
                        emissions of toxic air pollutants in 
                        the same manner as provided in 
                        paragraph (7).
                            (v) Regional protection of toxics 
                        reduction baselines.--
                                    (I) In general.--Not later 
                                than 60 days after the date of 
                                enactment of this subparagraph, 
                                and not later than April 1 of 
                                each calendar year that begins 
                                after that date of enactment, 
                                the Administrator shall publish 
                                in the Federal Register a 
                                report that specifies, with 
                                respect to the previous 
                                calendar year--
                                            (aa) the quantity 
                                        of reformulated 
                                        gasoline produced that 
                                        is in excess of the 
                                        average annual quantity 
                                        of reformulated 
                                        gasoline produced in 
                                        1999 and 2000; and
                                            (bb) the reduction 
                                        of the average annual 
                                        aggregate emissions of 
                                        toxic air pollutants in 
                                        each PADD, based on 
                                        retail survey data or 
                                        data from other 
                                        appropriate sources.
                                    (II) Effect of failure to 
                                maintain aggregate toxics 
                                reductions.--If, in any 
                                calendar year, the reduction of 
                                the average annual aggregate 
                                emissions of toxic air 
                                pollutants in a PADD fails to 
                                meet or exceed the reduction of 
                                the average annual aggregate 
                                emissions of toxic air 
                                pollutants in the PADD in 
                                calendar years 1999 and 2000, 
                                the Administrator, not later 
                                than 90 days after the date of 
                                publication of the report for 
                                the calendar year under 
                                subclause (I), shall--
                                            (aa) identify, to 
                                        the maximum extent 
                                        practicable, the 
                                        reasons for the 
                                        failure, including the 
                                        sources, volumes, and 
                                        characteristics of 
                                        reformulated gasoline 
                                        that contributed to the 
                                        failure; and
                                            (bb) promulgate 
                                        revisions to the 
                                        regulations promulgated 
                                        under clause (ii), to 
                                        take effect not earlier 
                                        than 180 days but not 
                                        later than 270 days 
                                        after the date of 
                                        promulgation, to 
                                        provide that, 
                                        notwithstanding clause 
                                        (iii)(II), all 
                                        reformulated gasoline 
                                        produced or distributed 
                                        at each refiner or 
                                        importer shall meet the 
                                        standards applicable 
                                        under clause (iii)(I) 
                                        beginning not later 
                                        than April 1 of the 
                                        calendar year following 
                                        publication of the 
                                        report under subclause 
                                        (I) and in each 
                                        calendar year 
                                        thereafter.
                            (vi) Regulations to control 
                        hazardous air pollutants from motor 
                        vehicles and motor vehicle fuels.--Not 
                        later than July 1, 2004, the 
                        Administrator shall promulgate final 
                        regulations to control hazardous air 
                        pollutants from motor vehicles and 
                        motor vehicle fuels, as provided for in 
                        section 80.1045 of title 40, Code of 
                        Federal Regulations (as in effect on 
                        the date of enactment of this 
                        subparagraph).
            (2) General requirements.--The regulations referred 
        to in paragraph (1) shall require that reformulated 
        gasoline comply with paragraph (3) and with each of the 
        following requirements (subject to paragraph (7)):
                    (A)  NOx emissions.--The 
                emissions of oxides of nitrogen 
                (NOx) from baseline vehicles when 
                using the reformulated gasoline shall be no 
                greater than the level of such emissions from 
                such vehicles when using baseline gasoline. If 
                the Administrator determines that compliance 
                with the limitation on emissions of oxides of 
                nitrogen under the preceding sentence is 
                technically infeasible, considering the other 
                requirements applicable under this subsection 
                to such gasoline, the Administrator may, as 
                appropriate to ensure compliance with this 
                subparagraph, adjust (or waive entirely), any 
                other requirements of this paragraph (including 
                the oxygen content requirement contained in 
                subparagraph (B)) or any requirements 
                applicable under paragraph (3)(A).
                    (B) Oxygen content.--The oxygen content of 
                the gasoline shall equal or exceed 2.0 percent 
                by weight (subject to a testing tolerance 
                established by the Administrator) except as 
                otherwise required by this Act. The 
                Administrator may waive, in whole or in part, 
                the application of this subparagraph for any 
                ozone nonattainment area 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.
                    (C) Benzene content.--The benzene content 
                of the gasoline shall not exceed 1.0 percent by 
                volume.
                    (D) Heavy metals.--The gasoline shall have 
                no heavy metals, including lead or manganese. 
                The Administrator may waive the prohibition 
                contained in this subparagraph for a heavy 
                metal (other than lead) if the Administrator 
                determines that addition of the heavy metal to 
                the gasoline will not increase, on an aggregate 
                mass or cancer-risk basis, toxic air pollutant 
                emissions from motor vehicles.
            (3) More stringent of formula or performance 
        standards.--The regulations referred to in paragraph 
        (1) shall require compliance with the more stringent of 
        either the requirements set forth in subparagraph (A) 
        or the requirements of subparagraph (B) of this 
        paragraph. For purposes of determining the more 
        stringent provision, clause (i) and clause (ii) of 
        subparagraph (B) shall be considered independently.
                    (A) Formula.--
                            (i) Benzene.--The benzene content 
                        of the reformulated gasoline shall not 
                        exceed 1.0 percent by volume.
                            (ii) Aromatics.--The aromatic 
                        hydrocarbon content of the reformulated 
                        gasoline shall not exceed 25 percent by 
                        volume.
                            (iii) Lead.--The reformulated 
                        gasoline shall have no lead content.
                            (iv) Detergents.--The reformulated 
                        gasoline shall contain additives to 
                        prevent the accumulation of deposits in 
                        engines or vehicle fuel supply systems.
                            (v) Oxygen content.--The oxygen 
                        content of the reformulated gasoline 
                        shall equal or exceed 2.0 percent by 
                        weight (subject to a testing tolerance 
                        established by the Administrator) 
                        except as otherwise required by this 
                        Act.
                    (B) Performance standard.--
                            (i) VOC emissions.--During the high 
                        ozone season (as defined by the 
                        Administrator), the aggregate emissions 
                        of ozone forming volatile organic 
                        compounds from baseline vehicles when 
                        using the reformulated gasoline shall 
                        be 15 percent below the aggregate 
                        emissions of ozone forming volatile 
                        organic compounds from such vehicles 
                        when using baseline gasoline. Effective 
                        in calendar year 2000 and thereafter, 
                        25 percent shall be substituted for 15 
                        percent in applying this clause, except 
                        that the Administrator may adjust such 
                        25 percent requirement to provide for a 
                        lesser or greater reduction based on 
                        technological feasibility, considering 
                        the cost of achieving such reductions 
                        in VOC emissions. No such adjustment 
                        shall provide for less than a 20 
                        percent reduction below the aggregate 
                        emissions of such air pollutants from 
                        such vehicles when using baseline 
                        gasoline. The reductions required under 
                        this clause shall be on a mass basis.
                            (ii) Toxics.--During the entire 
                        year, the aggregate emissions of toxic 
                        air pollutants from baseline vehicles 
                        when using the reformulated gasoline 
                        shall be 15 percent below the aggregate 
                        emissions of toxic air pollutants from 
                        such vehicles when using baseline 
                        gasoline. Effective in calendar year 
                        2000 and thereafter, 25 percent shall 
                        be substituted for 15 percent in 
                        applying this clause, except that the 
                        Administrator may adjust such 25 
                        percent requirement to provide for a 
                        lesser or greater reduction based on 
                        technological feasibility, considering 
                        the cost of achieving such reductions 
                        in toxic air pollutants. No such 
                        adjustment shall provide for less than 
                        a 20 percent reduction below the 
                        aggregate emissions of such air 
                        pollutants from such vehicles when 
                        using baseline gasoline. The reductions 
                        required under this clause shall be on 
                        a mass basis.
        Any reduction greater than a specific percentage 
        reduction required under this subparagraph shall be 
        treated as satisfying such percentage reduction 
        requirement.
            (4) Certification procedures.--
                    (A) Regulations.--The regulations under 
                this subsection shall include procedures under 
                which the Administrator shall certify 
                reformulated gasoline as complying with the 
                requirements established pursuant to this 
                subsection. Under such regulations, the 
                Administrator shall establish procedures for 
                any person to petition the Administrator to 
                certify a fuel formulation, or slate of fuel 
                formulations. Such procedures shall further 
                require that the Administrator shall approve or 
                deny such petition within 180 days of receipt. 
                If the Administrator fails to act within such 
                180-day period, the fuel shall be deemed 
                certified until the Administrator completes 
                action on the petition.
                    (B) Certification; equivalency.--The 
                Administrator shall certify a fuel formulation 
                or slate of fuel formulations as complying with 
                this subsection if such fuel or fuels--
                            (i) comply with the requirements of 
                        paragraph (2), and
                            (ii) achieve equivalent or greater 
                        reductions in emissions of ozone 
                        forming volatile organic compounds and 
                        emissions of toxic air pollutants than 
                        are achieved by a reformulated gasoline 
                        meeting the applicable requirements of 
                        paragraph (3).
                    (C) EPA determination of emissions level.--
                Within 1 year after the enactment of the Clean 
                Air Act Amendments of 1990, the Administrator 
                shall determine the level of emissions of ozone 
                forming volatile organic compounds and 
                emissions of toxic air pollutants emitted by 
                baseline vehicles when operating on baseline 
                gasoline. For purposes of this subsection, 
                within 1 year after the enactment of the Clean 
                Air Act Amendments of 1990, the Administrator 
                shall, by rule, determine appropriate measures 
                of, and methodology for, ascertaining the 
                emissions of air pollutants (including 
                calculations, equipment, and testing 
                tolerances).
            (5) Prohibition.--Effective beginning January 1, 
        1995, each of the following shall be a violation of 
        this subsection:
                    (A) The sale or dispensing by any person of 
                conventional gasoline to ultimate consumers in 
                any covered area.
                    (B) The sale or dispensing by any refiner, 
                blender, importer, or marketer of conventional 
                gasoline for resale in any covered area, 
                without (i) segregating such gasoline from 
                reformulated gasoline, and (ii) clearly marking 
                such conventional gasoline as ``conventional 
                gasoline, not for sale to ultimate consumer in 
                a covered area''.
        Any refiner, blender, importer or marketer who 
        purchases property segregated and marked conventional 
        gasoline, and thereafter labels, represents, or 
        wholesales such gasoline as reformulated gasoline shall 
        also be in violation of this subsection. The 
        Administrator may impose sampling, testing, and 
        recordkeeping requirements upon any refiner, blender, 
        importer, or marketer to prevent violations of this 
        section.
            [(6) Opt-in areas.--(A) Upon]
            (6) Opt-in areas.--
                    (A) Classified areas.--
                            (i) In general.--Upon  the 
                        application of the Governor of a State, 
                        the Administrator shall apply the 
                        prohibition set forth in paragraph (5) 
                        in any area in the State classified 
                        under subpart 2 of part D of title I as 
                        a Marginal, Moderate, Serious, or 
                        Severe Area (without regard to whether 
                        or not the 1980 population of the area 
                        exceeds 250,000). In any such case, the 
                        Administrator shall establish an 
                        effective date for such prohibition as 
                        he deems appropriate, not later than 
                        January 1, 1995, or 1 year after such 
                        application is received, whichever is 
                        later. The Administrator shall publish 
                        such application in the Federal 
                        Register upon receipt.
            [(B) If]
                            (ii) Effect of insufficient 
                        domestic capacity to produce 
                        reformulated gasoline.--If the 
                        Administrator determines, on the 
                        Administrator's own motion or on 
                        petition of any person, after 
                        consultation with the Secretary of 
                        Energy, that there is insufficient 
                        domestic capacity to produce gasoline 
                        certified under this subsection, the 
                        Administrator shall, by rule, extend 
                        the effective date of such prohibition 
                        in Marginal, Moderate, Serious, or 
                        Severe Areas referred to in 
                        [subparagraph (A)] clause (i) for one 
                        additional year, and may, by rule, 
                        renew such extension for 2 additional 
                        one-year periods. The Administrator 
                        shall act on any petition submitted 
                        under [this paragraph] this 
                        subparagraph within 6 months after 
                        receipt of the petition. The 
                        Administrator shall issue such 
                        extensions for areas with a lower ozone 
                        classification before issuing any such 
                        extension for areas with a higher 
                        classification.
                    (B) Ozone transport region.--
                            (i) Application of prohibition.--
                                    (I) In general.--On 
                                application of the Governor of 
                                a State in the ozone transport 
                                region established by section 
                                184(a), the Administrator, not 
                                later than 180 days after the 
                                date of receipt of the 
                                application, shall apply the 
                                prohibition specified in 
                                paragraph (5) to any area in 
                                the State (other than an area 
                                classified as a marginal, 
                                moderate, serious, or severe 
                                ozone nonattainment area under 
                                subpart 2 of part D of title I) 
                                unless the Administrator 
                                determines under clause (iii) 
                                that there is insufficient 
                                capacity to supply reformulated 
                                gasoline.
                                    (II) Publication of 
                                application.--As soon as 
                                practicable after the date of 
                                receipt of an application under 
                                subclause (I), the 
                                Administrator shall publish the 
                                application in the Federal 
                                Register.
                            (ii) Period of applicability.--
                        Under clause (i), the prohibition 
                        specified in paragraph (5) shall apply 
                        in a State--
                                    (I) commencing as soon as 
                                practicable but not later than 
                                2 years after the date of 
                                approval by the Administrator 
                                of the application of the 
                                Governor of the State; and
                                    (II) ending not earlier 
                                than 4 years after the 
                                commencement date determined 
                                under subclause (I).
                            (iii) Extension of commencement 
                        date based on insufficient capacity.--
                                    (I) In general.--If, after 
                                receipt of an application from 
                                a Governor of a State under 
                                clause (i), the Administrator 
                                determines, on the 
                                Administrator's own motion or 
                                on petition of any person, 
                                after consultation with the 
                                Secretary of Energy, that there 
                                is insufficient capacity to 
                                supply reformulated gasoline, 
                                the Administrator, by 
                                regulation--
                                            (aa) shall extend 
                                        the commencement date 
                                        with respect to the 
                                        State under clause 
                                        (ii)(I) for not more 
                                        than 1 year; and
                                            (bb) may renew the 
                                        extension under item 
                                        (aa) for 2 additional 
                                        periods, each of which 
                                        shall not exceed 1 
                                        year.
                                    (II) Deadline for action on 
                                petitions.--The Administrator 
                                shall act on any petition 
                                submitted under subclause (I) 
                                not later than 180 days after 
                                the date of receipt of the 
                                petition.
            (7) Credits.--(A) The regulations promulgated under 
        this subsection shall provide for the granting of an 
        appropriate amount of credits to a person who refines, 
        blends, or imports and certifies a gasoline or slate of 
        gasoline that--
                    (i) has an oxygen content (by weight) that 
                exceeds the minimum oxygen content specified in 
                paragraph (2);
                    (ii) has an aromatic hydrocarbon content 
                (by volume) that is less than the maximum 
                aromatic hydrocarbon content required to comply 
                with paragraph (3); or
                    (iii) has a benzene content (by volume) 
                that is less than the maximum benzene content 
                specified in paragraph (2).
            (B) The regulations described in subparagraph (A) 
        shall also provide that a person who is granted credits 
        may use such credits, or transfer all or a portion of 
        such credits to another person for use within the same 
        nonattainment area, for the purpose of complying with 
        this subsection.
            (C) The regulations promulgated under subparagraphs 
        (A) and (B) shall ensure the enforcement of the 
        requirements for the issuance, application, and 
        transfer of the credits. Such regulations shall 
        prohibit the granting or transfer of such credits for 
        use with respect to any gasoline in a nonattainment 
        area, to the extent the use of such credits would 
        result in any of the following:
                    (i) An average gasoline aromatic 
                hydrocarbon content (by volume) for the 
                nonattainment (taking into account all gasoline 
                sold for use in conventional gasoline-fueled 
                vehicles in the nonattainment area) higher than 
                the average fuel aromatic hydrocarbon content 
                (by volume) that would occur in the absence of 
                using any such credits.
                    (ii) An average gasoline oxygen content (by 
                weight) for the nonattainment area (taking into 
                account all gasoline sold for use in 
                conventional gasoline-fueled vehicles in the 
                nonattainment area) lower than the average 
                gasoline oxygen content (by weight) that would 
                occur in the absence of using any such credits.
                    (iii) An average benzene content (by 
                volume) for the nonattainment area (taking into 
                account all gasoline sold for use in 
                conventional gasoline-fueled vehicles in the 
                nonattainment area) higher than the average 
                benzene content (by volume) that would occur in 
                the absence of using any such credits.
            (8) Anti-dumping rules.--
                    (A) In general.--Within 1 year after the 
                enactment of the Clean Air Act Amendments of 
                1990, the Administrator shall promulgate 
                regulations applicable to each refiner, 
                blender, or importer of gasoline ensuring that 
                gasoline sold or introduced into commerce by 
                such refiner, blender, or importer (other than 
                reformulated gasoline subject to the 
                requirements of paragraph (1)) does not result 
                in average per gallon emissions (measured on a 
                mass basis) of (i) volatile organic compounds, 
                (ii) oxides of nitrogen, (iii) carbon monoxide, 
                and (iv) toxic air pollutants in excess of such 
                emissions of such pollutants attributable to 
                gasoline sold or introduced into commerce in 
                calendar year 1990 by that refiner, blender, or 
                importer. Such regulations shall take effect 
                beginning January 1, 1995.
                    (B) Adjustments.--In evaluating compliance 
                with the requirements of subparagraph (A), the 
                Administrator shall make appropriate 
                adjustments to insure that no credit is 
                provided for improvement in motor vehicle 
                emissions control in motor vehicles sold after 
                the calendar year 1990.
                    (C) Compliance determined for each 
                pollutant independently.--In determining 
                whether there is an increase in emissions in 
                violation of the prohibition contained in 
                subparagraph (A) the Administrator shall 
                consider an increase in each air pollutant 
                referred to in clauses (i) through (iv) as a 
                separate violation of such prohibition, except 
                that the Administrator shall promulgate 
                regulations to provide that any increase in 
                emissions of oxides of nitrogen resulting from 
                adding oxygenates to gasoline may be offset by 
                an equivalent or greater reduction (on a mass 
                basis) in emissions of volatile organic 
                compounds, carbon monoxide, or toxic air 
                pollutants, or any combination of the 
                foregoing.
                    (D) Compliance period.--The Administrator 
                shall promulgate an appropriate compliance 
                period or appropriate compliance periods to be 
                used for assessing compliance with the 
                prohibition contained in subparagraph (A).
                    (E) Baseline for determining compliance.--
                If the Administrator determines that no 
                adequate and reliable data exists regarding the 
                composition of gasoline sold or introduced into 
                commerce by a refiner, blender, or importer in 
                calendar year 1990, for such refiner, blender, 
                or importer, baseline gasoline shall be 
                substituted for such 1990 gasoline in 
                determining compliance with subparagraph (A).
            (9) Emissions from entire vehicle.--In applying the 
        requirements of this subsection, the Administrator 
        shall take into account emissions from the entire motor 
        vehicle, including evaporative, running, refueling, and 
        exhaust emissions.
            (10) Definitions.--For purposes of this 
        subsection--
                    (A) Baseline vehicles.--The term ``baseline 
                vehicles'' mean representative model year 1990 
                vehicles.
                    (B) Baseline gasoline.--
                            (i) Summertime.--The term 
                        ``baseline gasoline'' means in the case 
                        of gasoline sold during the high ozone 
                        period (as defined by the 
                        Administrator) a gasoline which meets 
                        the following specifications:

                    BASELINE GASOLINE FUEL PROPERTIES
                        API Gravity...........................     57.4 
                        Sulfur, ppm...........................      339 
                        Benzene, %............................      1.53
                        RVP, psi..............................      8.7 
                        Octane, R+M/2.........................     87.3 
                        IBP, F................................       91 
                        10%, F................................      128 
                        50%, F................................      218 
                        90%, F................................      330 
                        End Point, F..........................      415 
                        Aromatics, %..........................     32.0 
                        Olefins, %............................      9.2 
                        Saturates, %..........................     58.8 

                            (ii) Wintertime.--The Administrator 
                        shall establish the specifications of 
                        ``baseline gasoline'' for gasoline sold 
                        at times other than the high ozone 
                        period (as defined by the 
                        Administrator). Such specifications 
                        shall be the specifications of 1990 
                        industry average gasoline sold during 
                        such period.
                    (C) Toxic air pollutants.--The term ``toxic 
                air pollutants'' means the aggregate emissions 
                of the following:

            Benzene
            1,3 Butadiene
            Polycyclic organic matter (POM)
            Acetaldehyde
            Formaldehyde.

                    (D) Covered area.--The 9 ozone 
                nonattainment areas having a 1980 population in 
                excess of 250,000 and having the highest ozone 
                design value during the period 1987 through 
                1989 shall be ``covered areas'' for purposes of 
                this subsection. Effective one year after the 
                reclassification of any ozone nonattainment 
                area as a Severe ozone nonattainment area under 
                section 181(b), such Severe area shall also be 
                a ``covered area'' for purposes of this 
                subsection.
            (E) \1\ Reformulated gasoline.--The term 
        ``reformulated gasoline'' means any gasoline which is 
        certified by the Administrator under this section as 
        complying with this subsection.
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    \1\ So in original. Subparagraphs (E) and (F) should be indented.
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            (F) \1\ Conventional gasoline.--The term 
        ``conventional gasoline'' means any gasoline which does 
        not meet specifications set by a certification under 
        this subsection.
            (11) Commingling.--The regulations under paragraph 
        (1) shall permit the commingling at a retail station of 
        reformulated gasoline containing ethanol and 
        reformulated gasoline that does not contain ethanol if, 
        each time such commingling occurs--
                    (A) the retailer notifies the Administrator 
                before the commingling, identifying the exact 
                location of the retail station and the specific 
                tank in which the commingling will take place; 
                and
                    (B) the retailer certifies that the 
                reformulated gasoline resulting from the 
                commingling will meet all applicable 
                requirements for reformulated gasoline, 
                including content and emission performance 
                standards.
    (l) Detergents.--Effective beginning January 1, 1995, no 
person may sell or dispense to an ultimate consumer in the 
United States, and no refiner or marketer may directly or 
indirectly sell or dispense to persons who sell or dispense to 
ultimate consumers in the United States any gasoline which does 
not contain additives to prevent the accumulation of deposits 
in engines or fuel supply systems. Not later than 2 years after 
the date of the enactment of the Clean Air Act Amendments of 
1990, the Administrator shall promulgate a rule establishing 
specifications for such additives.
    (m) Oxygenated Fuels.--
            (1) Plan revisions for co nonattainment areas.--(A) 
        Each State in which there is located all or part of an 
        area which is designated under title I as a 
        nonattainment area for carbon monoxide and which has a 
        carbon monoxide design value of 9.5 parts per million 
        (ppm) or above based on data for the 2-year period of 
        1988 and 1989 and calculated according to the most 
        recent interpretation methodology issued by the 
        Administrator prior to the enactment of the Clean Air 
        Act Amendments of 1990 shall submit to the 
        Administrator a State implementation plan revision 
        under section 110 and part D of title I for such area 
        which shall contain the provisions specified under this 
        subsection regarding oxygenated gasoline.
            (B) A plan revision which contains such provisions 
        shall also be submitted by each State in which there is 
        located any area which, for any 2-year period after 
        1989 has a carbon monoxide design value of 9.5 ppm or 
        above. The revision shall be submitted within 18 months 
        after such 2-year period.
            (2) Oxygenated gasoline in co nonattainment 
        areas.--Each plan revision under this subsection shall 
        contain provisions to require that any gasoline sold, 
        or dispensed, to the ultimate consumer in the carbon 
        monoxide nonattainment area or sold or dispensed 
        directly or indirectly by fuel refiners or marketers to 
        persons who sell or dispense to ultimate consumers, in 
        the larger of--
                    (A) the Consolidated Metropolitan 
                Statistical Area (CMSA) in which the area is 
                located, or
                    (B) if the area is not located in a CMSA, 
                the Metropolitan Statistical Area in which the 
                area is located,
        be blended, during the portion of the year in which the 
        area is prone to high ambient concentrations of carbon 
        monoxide to contain not less than 2.7 percent oxygen by 
        weight (subject to a testing tolerance established by 
        the Administrator). The portion of the year in which 
        the area is prone to high ambient concentrations of 
        carbon monoxide shall be as determined by the 
        Administrator, but shall not be less than 4 months. At 
        the request of a State with respect to any area 
        designated as nonattainment for carbon monoxide, the 
        Administrator may reduce the period specified in the 
        preceding sentence if the State can demonstrate that 
        because of meteorological conditions, a reduced period 
        will assure that there will be no exceedances of the 
        carbon monoxide standard outside of such reduced 
        period. For areas with a carbon monoxide design value 
        of 9.5 ppm or more \1\ of the date of enactment of the 
        Clean Air Act Amendments of 1990, the revision shall 
        provide that such requirement shall take effect no 
        later than November 1, 1992, (or at such other date 
        during 1992 as the Administrator establishes under the 
        preceding provisions of this paragraph). For other 
        areas, the revision shall provide that such requirement 
        shall take effect no later than November 1 of the third 
        year after the last year of the applicable 2-year 
        period referred to in paragraph (1) (or at such other 
        date during such third year as the Administrator 
        establishes under the preceding provisions of this 
        paragraph) and shall include a program for 
        implementation and enforcement of the requirement 
        consistent with guidance to be issued by the 
        Administrator.
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    \1\ Probably should add the word ``as'' before ``of''.
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            (3) Waivers.--(A) The Administrator shall waive, in 
        whole or in part, the requirements of paragraph (2) 
        upon a demonstration by the State to the satisfaction 
        of the Administrator that the use of oxygenated 
        gasoline would prevent or interfere with the attainment 
        by the area of a national primary ambient air quality 
        standard (or a State or local ambient air quality 
        standard) for any air pollutant other than carbon 
        monoxide.
            (B) The Administrator shall, upon demonstration by 
        the State satisfactory to the Administrator, waive the 
        requirement of paragraph (2) where the Administrator 
        determines that mobile sources of carbon monoxide do 
        not contribute significantly to carbon monoxide levels 
        in an area.
            (C)(i) Any person may petition the Administrator to 
        make a finding that there is, or is likely to be, for 
        any area, an inadequate domestic supply of, or 
        distribution capacity for, oxygenated gasoline meeting 
        the requirements of paragraph (2) or fuel additives 
        (oxygenates) necessary to meet such requirements. The 
        Administrator shall act on such petition within 6 
        months after receipt of the petition.
            (ii) If the Administrator determines, in response 
        to a petition under clause (i), that there is an 
        inadequate supply or capacity described in clause (i), 
        the Administrator shall delay the effective date of 
        paragraph (2) for 1 year. Upon petition, the 
        Administrator may extend such effective date for one 
        additional year. No partial delay or lesser waiver may 
        be granted under this clause.
            (iii) In granting waivers under this subparagraph 
        the Administrator shall consider distribution capacity 
        separately from the adequacy of domestic supply and 
        shall grant such waivers in such manner as will assure 
        that, if supplies of oxygenated gasoline are limited, 
        areas having the highest design value for carbon 
        monoxide will have a priority in obtaining oxygenated 
        gasoline which meets the requirements of paragraph (2).
            (iv) As used in this subparagraph, the term 
        distribution capacity includes capacity for 
        transportation, storage, and blending.
            (4) Fuel dispensing systems.--Any person selling 
        oxygenated gasoline at retail pursuant to this 
        subsection shall be required under regulations 
        promulgated by the Administrator to label the fuel 
        dispensing system with a notice that the gasoline is 
        oxygenated and will reduce the carbon monoxide 
        emissions from the motor vehicle.
            (5) Guidelines for credit.--The Administrator shall 
        promulgate guidelines, within 9 months after the date 
        of the enactment of the Clean Air Act Amendments of 
        1990, allowing the use of marketable oxygen credits 
        from gasolines during that portion of the year 
        specified in paragraph (2) with higher oxygen content 
        than required to offset the sale or use of gasoline 
        with a lower oxygen content than required. No credits 
        may be transferred between nonattainment areas.
            (6) Attainment areas.--Nothing in this subsection 
        shall be interpreted as requiring an oxygenated 
        gasoline program in an area which is in attainment for 
        carbon monoxide, except that in a carbon monoxide 
        nonattainment area which is redesignated as attainment 
        for carbon monoxide, the requirements of this 
        subsection shall remain in effect to the extent such 
        program is necessary to maintain such standard 
        thereafter in the area.
            (7) Failure to attain co standard.--If the 
        Administrator determines under section 186(b)(2) that 
        the national primary ambient air quality standard for 
        carbon monoxide has not been attained in a Serious Area 
        by the applicable attainment date, the State shall 
        submit a plan revision for the area within 9 months 
        after the date of such determination. The plan revision 
        shall provide that the minimum oxygen content of 
        gasoline referred to in paragraph (2) shall be 3.1 
        percent by weight unless such requirement is waived in 
        accordance with the provisions of this subsection.
    (n) Prohibition on Leaded Gasoline for Highway Use.--After 
December 31, 1995, it shall be unlawful for any person to sell, 
offer for sale, supply, offer for supply, dispense, transport, 
or introduce into commerce, for use as fuel in any motor 
vehicle (as defined in section 219(2)) \1\ any gasoline which 
contains lead or lead additives.
---------------------------------------------------------------------------
    \1\ Reference should probably be to section 216(2). See section 220 
of Public Law 101-549.
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    (o) Renewable Fuel Program.--
            (1) Definitions.--In this section:
                    (A) Cellulosic biomass ethanol.--The term 
                `cellulosic biomass ethanol' means 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 residues;
                            (vi) fibers;
                            (vii) animal wastes and other waste 
                        materials; and
                            (viii) municipal solid waste.
                    (B) Renewable fuel.--
                            (i) In general.--The term 
                        `renewable fuel' means motor vehicle 
                        fuel that--
                                    (I)(aa) is produced from 
                                grain, starch, oilseeds, or 
                                other biomass; or
                                    (bb) is natural gas 
                                produced from a biogas source, 
                                including a landfill, sewage 
                                waste treatment plant, feedlot, 
                                or other place where decaying 
                                organic material is found; and
                                    (II) is used to replace or 
                                reduce the quantity of fossil 
                                fuel present in a fuel mixture 
                                used to operate a motor 
                                vehicle.
                            (ii) Inclusion.--The term 
                        `renewable fuel' includes--
                                    (I) cellulosic biomass 
                                ethanol; and
                                    (II) biodiesel (as defined 
                                in section 312(f) of the Energy 
                                Policy Act of 1992 (42 U.S.C. 
                                13220(f))).
                    (C) Small refinery.--The term `small 
                refinery' means a refinery for which the 
                average aggregate daily crude oil throughput 
                for a calendar year (as determined by dividing 
                the aggregate throughput for the calendar year 
                by the number of days in the calendar year) 
                does not exceed 75,000 barrels.
            (2) Renewable fuel program.--
                    (A) Regulations.--
                            (i) In general.--Not later than 1 
                        year after the date of enactment of 
                        this paragraph, the Administrator shall 
                        promulgate regulations to ensure that 
                        gasoline sold or introduced into 
                        commerce in the United States (except 
                        in Alaska and Hawaii), on an annual 
                        average basis, contains the applicable 
                        volume of renewable fuel determined in 
                        accordance with subparagraph (B).
                            (ii) Provisions of regulations.--
                        Regardless of the date of promulgation, 
                        the regulations promulgated under 
                        clause (i)--
                                    (I) shall contain 
                                compliance provisions 
                                applicable to refineries, 
                                blenders, distributors, and 
                                importers, as appropriate, to 
                                ensure that the requirements of 
                                this paragraph are met; but
                                    (II) shall not--
                                            (aa) restrict cases 
                                        in which renewable fuel 
                                        may be used; or
                                            (bb) impose any 
                                        per-gallon obligation 
                                        for the use of 
                                        renewable fuel.
                            (iii) Requirement in case of 
                        failure to promulgate regulations.--If 
                        the Administrator does not promulgate 
                        regulations under clause (i), the 
                        percentage of renewable fuel in 
                        gasoline sold or dispensed to consumers 
                        in the United States, on a volume 
                        basis, shall be 1.8 percent for 
                        calendar year 2005.
                    (B) Applicable volume.--
                            (i) Calendar years 2005 through 
                        2012.--For the purpose of subparagraph 
                        (A), the applicable volume for any of 
                        calendar years 2005 through 2012 shall 
                        be determined in accordance with the 
                        following table:

                                                    Applicable volume of
``Calendar year:                                          renewable fuel
                                               (in billions of gallons):
    2005......................................................      2.6 
    2006......................................................      2.9 
    2007......................................................      3.2 
    2008......................................................      3.5 
    2009......................................................      3.9 
    2010......................................................      4.3 
    2011......................................................      4.7 
    2012......................................................      5.0.
                            (ii) Calendar year 2013 and 
                        thereafter.--For the purpose of 
                        subparagraph (A), the applicable volume 
                        for calendar year 2013 and each 
                        calendar year thereafter shall be equal 
                        to the product obtained by 
                        multiplying--
                                    (I) the number of gallons 
                                of gasoline that the 
                                Administrator estimates will be 
                                sold or introduced into 
                                commerce in the calendar year; 
                                and
                                    (II) the ratio that--
                                            (aa) 5,000,000,000 
                                        gallons of renewable 
                                        fuel; bears to
                                            (bb) the number of 
                                        gallons of gasoline 
                                        sold or introduced into 
                                        commerce in calendar 
                                        year 2012.
            (3) Applicable percentages.--
                    (A) Provision of estimate of volumes of 
                gasoline sales.--Not later than October 31 of 
                each of calendar years 2003 through 2011, the 
                Administrator of the Energy Information 
                Administration shall provide to the 
                Administrator of the Environmental Protection 
                Agency an estimate of the volumes of gasoline 
                sold or introduced into commerce in the United 
                States during the following calendar year.
                    (B) Determination of applicable 
                percentages.--
                            (i) In general.--Not later than 
                        November 30 of each of calendar years 
                        2005 through 2012, based on the 
                        estimate provided under subparagraph 
                        (A), the Administrator of the 
                        Environmental Protection Agency shall 
                        determine and publish in the Federal 
                        Register, with respect to the following 
                        calendar year, the renewable fuel 
                        obligation that ensures that the 
                        requirements of paragraph (2) are met.
                            (ii) Required elements.--The 
                        renewable fuel obligation determined 
                        for a calendar year under clause (i) 
                        shall--
                                    (I) be applicable to 
                                refineries, blenders, and 
                                importers, as appropriate;
                                    (II) be expressed in terms 
                                of a volume percentage of 
                                gasoline; and
                                    (III) subject to 
                                subparagraph (C)(i), consist of 
                                a single applicable percentage 
                                that applies to all categories 
                                of persons specified in 
                                subclause (I).
                    (C) Adjustments.--In determining the 
                applicable percentage for a calendar year, the 
                Administrator shall make adjustments--
                            (i) to prevent the imposition of 
                        redundant obligations on any person 
                        specified in subparagraph (B)(ii)(I); 
                        and
                            (ii) to account for the use of 
                        renewable fuel during the previous 
                        calendar year by small refineries that 
                        are exempt under paragraph (9).
            (4) Cellulosic biomass ethanol.--For the purpose of 
        paragraph (2), 1 gallon of cellulosic biomass ethanol 
        shall be considered to be the equivalent of 1.5 gallons 
        of renewable fuel.
            (5) Credit program.--
                    (A) In general.--The regulations 
                promulgated under paragraph (2)(A) shall 
                provide--
                            (i) for the generation of an 
                        appropriate amount of credits by any 
                        person that refines, blends, or imports 
                        gasoline that contains a quantity of 
                        renewable fuel that is greater than the 
                        quantity required under paragraph (2);
                            (ii) for the generation of an 
                        appropriate amount of credits for 
                        biodiesel; and
                            (iii) for the generation of credits 
                        by small refineries in accordance with 
                        paragraph (9)(C).
                    (B) Use of credits.--A person that 
                generates credits under subparagraph (A) may 
                use the credits, or transfer all or a portion 
                of the credits to another person, for the 
                purpose of complying with paragraph (2).
                    (C) Duration of credits.--A credit 
                generated under this paragraph shall be valid 
                to show compliance--
                            (i) subject to clause (ii), for the 
                        calendar year in which the credit was 
                        generated or the following calendar 
                        year; or
                            (ii) if the Administrator 
                        promulgates regulations under paragraph 
                        (6), for the calendar year in which the 
                        credit was generated or any of the 
                        following 2 calendar years.
                    (D) Inability to generate or purchase 
                sufficient credits.--The regulations 
                promulgated under paragraph (2)(A) shall 
                include provisions allowing any person that is 
                unable to generate or purchase sufficient 
                credits to meet the requirements of paragraph 
                (2) to carry forward a renewable fuel deficit 
                on condition that the person, in the calendar 
                year following the year in which the renewable 
                fuel deficit is created--
                            (i) achieves compliance with the 
                        renewable fuel requirement under 
                        paragraph (2); and
                            (ii) generates or purchases 
                        additional renewable fuel credits to 
                        offset the renewable fuel deficit of 
                        the previous year.
            (6) Seasonal variations in renewable fuel use.--
                    (A) Study.--For each of calendar years 2005 
                through 2012, the Administrator of the Energy 
                Information Administration shall conduct a 
                study of renewable fuel blending to determine 
                whether there are excessive seasonal variations 
                in the use of renewable fuel.
                    (B) Regulation of excessive seasonal 
                variations.--If, for any calendar year, the 
                Administrator of the Energy Information 
                Administration, based on the study under 
                subparagraph (A), makes the determinations 
                specified in subparagraph (C), the 
                Administrator of the Environmental Protection 
                Agency shall promulgate regulations to ensure 
                that 35 percent or more of the quantity of 
                renewable fuel necessary to meet the 
                requirements of paragraph (2) is used during 
                each of the 2 periods specified in subparagraph 
                (D) of each subsequent calendar year.
                    (C) Determinations.--The determinations 
                referred to in subparagraph (B) are that--
                            (i) less than 35 percent of the 
                        quantity of renewable fuel necessary to 
                        meet the requirements of paragraph (2) 
                        has been used during 1 of the 2 periods 
                        specified in subparagraph (D) of the 
                        calendar year; and
                            (ii) a pattern of excessive 
                        seasonal variation described in clause 
                        (i) will continue in subsequent 
                        calendar years.
                    (D) Periods.--The 2 periods referred to in 
                this paragraph are--
                            (i) April through September; and
                            (ii) January through March and 
                        October through December.
                    (E) Exclusion.--Renewable fuel blended or 
                consumed in calendar year 2005 in a State that 
                has received a waiver under section 209(b) 
                shall not be included in the study under 
                subparagraph (A).
            (7) Waivers.--
                    (A) In general.--The Administrator, in 
                consultation with the Secretary of Agriculture 
                and the Secretary of Energy, may waive the 
                requirements of paragraph (2) in whole or in 
                part on petition by 1 or more States by 
                reducing the national quantity of renewable 
                fuel required under paragraph (2)--
                            (i) based on a determination by the 
                        Administrator, after public notice and 
                        opportunity for comment, that 
                        implementation of the requirement 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 
                        requirement.
                    (B) Petitions for waivers.--The 
                Administrator, in consultation with the 
                Secretary of Agriculture and the Secretary of 
                Energy, shall approve or disapprove a State 
                petition for a waiver of the requirements of 
                paragraph (2) within 90 days after the date on 
                which the petition is received by the 
                Administrator.
                    (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 and the Secretary of 
                Energy.
            (8) Study and waiver for initial year of program.--
                    (A) In general.--Not later than 180 days 
                after the date of enactment of this paragraph, 
                the Secretary of Energy shall conduct for the 
                Administrator a study assessing whether the 
                renewable fuel requirement under paragraph (2) 
                will likely result in significant adverse 
                impacts on consumers in 2005, on a national, 
                regional, or State basis.
                    (B) Required evaluations.--The study shall 
                evaluate renewable fuel--
                            (i) supplies and prices;
                            (ii) blendstock supplies; and
                            (iii) supply and distribution 
                        system capabilities.
                    (C) Recommendations by the secretary.--
                Based on the results of the study, the 
                Secretary of Energy shall make specific 
                recommendations to the Administrator concerning 
                waiver of the requirements of paragraph (2), in 
                whole or in part, to prevent any adverse 
                impacts described in subparagraph (A).
                    (D) Waiver.--
                            (i) In general.--Not later than 270 
                        days after the date of enactment of 
                        this paragraph, the Administrator 
                        shall, if and to the extent recommended 
                        by the Secretary of Energy under 
                        subparagraph (C), waive, in whole or in 
                        part, the renewable fuel requirement 
                        under paragraph (2) by reducing the 
                        national quantity of renewable fuel 
                        required under paragraph (2) in 
                        calendar 2005.
                            (ii) No effect on waiver 
                        authority.--Clause (i) does not limit 
                        the authority of the Administrator to 
                        waive the requirements of paragraph (2) 
                        in whole, or in part, under paragraph 
                        (7).
            (9) Small refineries.--
                    (A) Temporary exemption.--
                            (i) In general.--The requirements 
                        of paragraph (2) shall not apply to 
                        small refineries until calendar year 
                        2011.
                            (ii) Extension of exemption.--
                                    (I) Study by secretary of 
                                energy.--Not later than 
                                December 31, 2007, the 
                                Secretary of Energy shall 
                                conduct for the Administrator a 
                                study to determine whether 
                                compliance with the 
                                requirements of paragraph (2) 
                                would impose a disproportionate 
                                economic hardship on small 
                                refineries.
                                    (II) Extension of 
                                exemption.--In the case of a 
                                small refinery that the 
                                Secretary of Energy determines 
                                under subclause (I) would be 
                                subject to a disproportionate 
                                economic hardship if required 
                                to comply with paragraph (2), 
                                the Administrator shall extend 
                                the exemption under clause (i) 
                                for the small refinery for a 
                                period of not less than 2 
                                additional years.
                    (B) Petitions based on disproportionate 
                economic hardship.--
                            (i) Extension of exemption.--A 
                        small refinery may at any time petition 
                        the Administrator for an extension of 
                        the exemption under subparagraph (A) 
                        for the reason of disproportionate 
                        economic hardship.
                            (ii) Evaluation of petitions.--In 
                        evaluating a petition under clause (i), 
                        the Administrator, in consultation with 
                        the Secretary of Energy, shall consider 
                        the findings of the study under 
                        subparagraph (A)(ii) and other economic 
                        factors.
                            (iii) Deadline for action on 
                        petitions.--The Administrator shall act 
                        on any petition submitted by a small 
                        refinery for a hardship exemption not 
                        later than 90 days after the date of 
                        receipt of the petition.
                    (C) Credit program.--If a small refinery 
                notifies the Administrator that the small 
                refinery waives the exemption under 
                subparagraph (A), the regulations promulgated 
                under paragraph (2)(A) shall provide for the 
                generation of credits by the small refinery 
                under paragraph (5) beginning in the calendar 
                year following the date of notification.
                    (D) Opt-in for small refineries.--A small 
                refinery shall be subject to the requirements 
                of paragraph (2) if the small refinery notifies 
                the Administrator that the small refinery 
                waives the exemption under subparagraph (A).
            (10) Ethanol market concentration analysis.--
                    (A) Analysis.--
                            (i) In general.--Not later than 180 
                        days after the date of enactment of 
                        this paragraph, and annually 
                        thereafter, the Federal Trade 
                        Commission shall perform a market 
                        concentration analysis of the ethanol 
                        production industry using the 
                        Herfindahl-Hirschman Index to determine 
                        whether there is sufficient competition 
                        among industry participants to avoid 
                        price-setting and other anticompetitive 
                        behavior.
                            (ii) Scoring.--For the purpose of 
                        scoring under clause (i) using the 
                        Herfindahl-Hirschman Index, all 
                        marketing arrangements among industry 
                        participants shall be considered.
                    (B) Report.--Not later than December 1, 
                2004, and annually thereafter, the Federal 
                Trade Commission shall submit to Congress and 
                the Administrator a report on the results of 
                the market concentration analysis performed 
                under subparagraph (A)(i).
    (p) Renewable Fuel Safe Harbor.--
            (1) In general.--
                    (A) Safe harbor.--Notwithstanding any other 
                provision of Federal or State law, no renewable 
                fuel (as defined in subsection (o)(1)) used or 
                intended to be used as a motor vehicle fuel, 
                nor any motor vehicle fuel containing renewable 
                fuel, shall be deemed to be defective in design 
                or manufacture by reason of the fact that the 
                fuel is, or contains, renewable fuel, if--
                            (i) the fuel does not violate a 
                        control or prohibition imposed by the 
                        Administrator under this section; and
                            (ii) the manufacturer of the fuel 
                        is in compliance with all requests for 
                        information under subsection (b).
                    (B) Safe harbor not applicable.--In any 
                case in which subparagraph (A) does not apply 
                to a quantity of fuel, the existence of a 
                design defect or manufacturing defect with 
                respect to the fuel shall be determined under 
                otherwise applicable law.
            (2) Exception.--This subsection does not apply to 
        ethers.
            (3) Applicability.--This subsection applies with 
        respect to all claims filed on or after the date of 
        enactment of this subsection.
    (q) Analyses of Motor Vehicle Fuel Changes and Emissions 
Model.--
            (1) Anti-backsliding analysis.--
                    (A) Draft analysis.--Not later than 4 years 
                after the date of enactment of this paragraph, 
                the Administrator shall publish for public 
                comment a draft analysis of the changes in 
                emissions of air pollutants and air quality due 
                to the use of motor vehicle fuel and fuel 
                additives resulting from implementation of the 
                amendments made by the Reliable Fuels Act.
                    (B) Final analysis.--After providing a 
                reasonable opportunity for comment but not 
                later than 5 years after the date of enactment 
                of this paragraph, the Administrator shall 
                publish the analysis in final form.
            (2) Emissions model.--For the purposes of this 
        subsection, as soon as the necessary data are 
        available, the Administrator shall develop and finalize 
        an emissions model that reasonably reflects the effects 
        of gasoline characteristics or components on emissions 
        from vehicles in the motor vehicle fleet during 
        calendar year 2006.
    (r) [(o)] Fuel and Fuel Additive Importers and 
Importation.--For the purposes of this section, the term 
``manufacturer'' includes an importer and the term 
``manufacture'' includes importation.

SEC. 212. RENEWABLE FUEL.

    (a) Definitions.--In this section:
            (1) Municipal solid waste.--The term ``municipal 
        solid waste'' has the meaning given the term ``solid 
        waste'' in section 1004 of the Solid Waste Disposal Act 
        (42 U.S.C. 6903).
            (2) RFG state.--The term ``RFG State'' means a 
        State in which is located 1 or more covered areas (as 
        defined in section 211(k)(10)(D)).
            (3) Secretary.--The term ``Secretary'' means the 
        Secretary of Energy.
    (b) Survey of Renewable Fuel Market.--
            (1) Survey and report.--Not later than December 1, 
        2006, and annually thereafter, the Administrator 
        shall--
                    (A) conduct, with respect to each 
                conventional gasoline use area and each 
                reformulated gasoline use area in each State, a 
                survey to determine the market shares of--
                            (i) conventional gasoline 
                        containing ethanol;
                            (ii) reformulated gasoline 
                        containing ethanol;
                            (iii) conventional gasoline 
                        containing renewable fuel; and
                            (iv) reformulated gasoline 
                        containing renewable fuel; and
                    (B) submit to Congress, and make publicly 
                available, a report on the results of the 
                survey under subparagraph (A).
            (2) Recordkeeping and reporting requirements.--
                    (A) In general.--The Administrator may 
                require any refiner, blender, or importer to 
                keep such records and make such reports as are 
                necessary to ensure that the survey conducted 
                under paragraph (1) is accurate.
                    (B) Reliance on existing requirements.--To 
                avoid duplicative requirements, in carrying out 
                subparagraph (A), the Administrator shall rely, 
                to the maximum extent practicable, on reporting 
                and recordkeeping requirements in effect on the 
                date of enactment of this section.
            (3) Confidentiality.--Activities carried out under 
        this subsection shall be conducted in a manner designed 
        to protect confidentiality of individual responses.
    (c) Commercial Byproducts From Municipal Solid Waste Loan 
Guarantee Program.--
            (1) Establishment of program.--The Secretary shall 
        establish a program to provide guarantees of loans by 
        private institutions for the construction of facilities 
        for the processing and conversion of municipal solid 
        waste into fuel ethanol and other commercial 
        byproducts.
            (2) Requirements.--The Secretary may provide a loan 
        guarantee under paragraph (1) to an applicant if--
                    (A) without a loan guarantee, credit is not 
                available to the applicant under reasonable 
                terms or conditions sufficient to finance the 
                construction of a facility described in 
                paragraph (1);
                    (B) the prospective earning power of the 
                applicant and the character and value of the 
                security pledged provide a reasonable assurance 
                of repayment of the loan to be guaranteed in 
                accordance with the terms of the loan; and
                    (C) the loan bears interest at a rate 
                determined by the Secretary to be reasonable, 
                taking into account the current average yield 
                on outstanding obligations of the United States 
                with remaining periods of maturity comparable 
                to the maturity of the loan.
            (4) Criteria.--In selecting recipients of loan 
        guarantees from among applicants, the Secretary shall 
        give preference to proposals that--
                    (A) meet all applicable Federal and State 
                permitting requirements;
                    (B) are most likely to be successful; and
                    (C) are located in local markets that have 
                the greatest need for the facility because of--
                            (i) the limited availability of 
                        land for waste disposal; or
                            (ii) a high level of demand for 
                        fuel ethanol or other commercial 
                        byproducts of the facility.
            (5) Maturity.--A loan guaranteed under paragraph 
        (1) shall have a maturity of not more than 20 years.
            (6) Terms and conditions.--The loan agreement for a 
        loan guaranteed under paragraph (1) shall provide that 
        no provision of the loan agreement may be amended or 
        waived without the consent of the Secretary.
            (7) Assurance of repayment.--The Secretary shall 
        require that an applicant for a loan guarantee under 
        paragraph (1) provide an assurance of repayment in the 
        form of a performance bond, insurance, collateral, or 
        other means acceptable to the Secretary in an amount 
        equal to not less than 20 percent of the amount of the 
        loan.
            (8) Guarantee fee.--The recipient of a loan 
        guarantee under paragraph (1) shall pay the Secretary 
        an amount determined by the Secretary to be sufficient 
        to cover the administrative costs of the Secretary 
        relating to the loan guarantee.
            (9) Full faith and credit.--
                    (A) In general.--The full faith and credit 
                the United States is pledged to the payment of 
                all guarantees made under this subsection.
                    (B) Conclusive evidence.--Any guarantee 
                made by the Secretary under this subsection 
                shall be conclusive evidence of the eligibility 
                of the loan for the guarantee with respect to 
                principal and interest.
                    (C) Validity.--The validity of the 
                guarantee shall be incontestable in the hands 
                of a holder of the guaranteed loan.
            (10) Reports.--Until each guaranteed loan under 
        this subsection has been repaid in full, the Secretary 
        shall annually submit to Congress a report on the 
        activities of the Secretary under this subsection.
            (11) Authorization of appropriations.--There are 
        authorized to be appropriated such sums as are 
        necessary to carry out this subsection.
            (12) Termination of authority.--The authority of 
        the Secretary to issue a new loan guarantee under 
        paragraph (1) terminates on the date that is 10 years 
        after the date of enactment of this section.
    (d) Authorization of Appropriations for Resource Center.--
There is authorized to be appropriated, for a resource center 
to further develop bioconversion technology using low-cost 
biomass for the production of ethanol at the Center for 
Biomass-Based Energy at the University of Mississippi and the 
University of Oklahoma, $4,000,000 for each of fiscal years 
2004 through 2006.
    (e) Renewable Fuel Production Research and Development 
Grants.--
            (1) In general.--The Administrator shall provide 
        grants for the research into, and development and 
        implementation of, renewable fuel production 
        technologies in RFG States with low rates of ethanol 
        production, including low rates of production of 
        cellulosic biomass ethanol.
            (2) Eligibility.--
                    (A) In general.--The entities eligible to 
                receive a grant under this subsection are 
                academic institutions in RFG States, and 
                consortia made up of combinations of academic 
                institutions, industry, State government 
                agencies, or local government agencies in RFG 
                States, that have proven experience and 
                capabilities with relevant technologies.
                    (B) Application.--To be eligible to receive 
                a grant under this subsection, an eligible 
                entity shall submit to the Administrator an 
                application in such manner and form, and 
                accompanied by such information, as the 
                Administrator may specify.
            (4) Authorization of appropriations.--There is 
        authorized to be appropriated to carry out this 
        subsection $25,000,000 for each of fiscal years 2004 
        through 2008.
    (f) Cellulosic Biomass Ethanol Conversion Assistance--
            (1) In general.--The Secretary may provide grants 
        to merchant producers of cellulosic biomass ethanol in 
        the United States to assist the producers in building 
        eligible production facilities described in paragraph 
        (2) for the production of cellulosic biomass ethanol.
            (2) Eligible production facilities.--A production 
        facility shall be eligible to receive a grant under 
        this subsection if the production facility--
                    (A) is located in the United States; and
                    (B) uses cellulosic biomass feedstocks 
                derived from agricultural residues or municipal 
                solid waste.
            (3) Authorization of appropriations.--There is 
        authorized to be appropriated to carry out this 
        subsection--
                    (A) $100,000,000 for fiscal year 2004;
                    (B) $250,000,000 for fiscal year 2005; and
                    (C) $400,000000 for fiscal year 2006.

           *       *       *       *       *       *       *

                              ----------                              


                    SOLID WASTE DISPOSAL ACT 1

         [As Amended Through P.L. 106-580, Dec. 29, 2000]

                     TITLE II--SOLID WASTE DISPOSAL

                     Subtitle A--General Provisions

                   short title and table of contents

      Sec. 1001. This title (hereinafter in this title referred 
to as ``this Act''), together with the following table of 
contents, may be cited as the ``Solid Waste Disposal Act'':
---------------------------------------------------------------------------
    1 The Solid Waste Disposal Act (42 U.S.C. 6901-6992k) 
consists of title II of Public Law 89-272 and the amendments made by 
subsequent enactments. This Act is popularly referred to as the 
Resource Conservation and Recovery Act, after the short title of the 
law that amended the Solid Waste Disposal Act in its entirety in 1976 
(P.L. 94-580).
---------------------------------------------------------------------------

                     Subtitle A--General Provisions

Sec. 1001. Short title and table of contents.
Sec. 1002. Congressional findings.
Sec. 1003. Objectives.
Sec. 1004. Definitions.
Sec. 1005. Governmental cooperation.
Sec. 1006. Application of Act and integration with other Acts.
Sec. 1007. Financial disclosure.
Sec. 1008. Solid waste management information and guidelines.

   Subtitle B--Office of Solid Waste; Authorities of the Administrator

Sec. 2001. Office of Solid Waste and Interagency Coordinating Committee.
Sec. 2002. Authorities of Administrator.
Sec. 2003. Resource recovery and conservation panels.
Sec. 2004. Grants for discarded tire disposal.
Sec. 2005. Labeling of certain oil.
Sec. 2006. Annual report.
Sec. 2007. General authorization.
Sec. 2008. Office of Ombudsman.

                 Subtitle C--Hazardous Waste Management

Sec. 3001. Identification and listing of hazardous waste.
Sec. 3002. Standards applicable to generators of hazardous waste.
Sec. 3003. Standards applicable to transporters of hazardous waste.
Sec. 3004. Standards applicable to owners and operators of hazardous 
          waste treatment, storage, and disposal facilities.
Sec. 3005. Permits for treatment, storage, or disposal of hazardous 
          waste.
Sec. 3006. Authorized State hazardous waste programs.
Sec. 3007. Inspections.
Sec. 3008. Federal enforcement.
Sec. 3009. Retention of State authority.
Sec. 3010. Effective date.
Sec. 3011. Authorization of assistance to States.
Sec. 3012. Hazardous waste site inventory.
Sec. 3013. Monitoring, analysis, and testing.
Sec. 3014. Restrictions on recycled oil.
Sec. 3015. Expansion during interim status.
Sec. 3016. Inventory of Federal Agency hazardous waste facilities.
Sec. 3017. Export of hazardous waste.
Sec. 3018. Domestic sewage.
Sec. 3019. Exposure information and health assessments.
Sec. 3020. Interim control of hazardous waste injection.
Sec. 3021. Mixed waste inventory reports and plan.
Sec. 3022. Public vessels.
Sec. 3023. Federally owned treatment works.

             Subtitle D--State or Regional Solid Waste Plans

Sec. 4001. Objectives of subtitle.
Sec. 4002. Federal guidelines for plans.
Sec. 4003. Minimum requirements for approval of plans.
Sec. 4004. Criteria for sanitary landfills; sanitary landfills required 
          for all disposal.
Sec. 4005. Upgrading of open dumps.
Sec. 4006. Procedure for development and implementation of State plan.
Sec. 4007. Approval of State plan; Federal assistance.
Sec. 4008. Federal assistance.
Sec. 4009. Rural communities assistance.
Sec. 4010. Adequacy of certain guidelines and criteria.

Subtitle E--Duties of the Secretary of Commerce in Resource and Recovery

Sec. 5001. Functions.
Sec. 5002. Development of specifications for secondary materials.
Sec. 5003. Development of markets for recovered materials.
Sec. 5004. Technology promotion.
Sec. 5005. Nondiscrimination requirement.
Sec. 5006. Authorization of appropriations.

                  Subtitle F--Federal Responsibilities

Sec. 6001. Application of Federal, State, and local law to Federal 
          facilities.
Sec. 6002. Federal procurement.
Sec. 6003. Cooperation with Environmental Protection Agency.
Sec. 6004. Applicability of solid waste disposal guidelines to executive 
          agencies.

                  Subtitle G--Miscellaneous Provisions

Sec. 7001. Employee protection.
Sec. 7002. Citizen suits.
Sec. 7003. Imminent hazard.
Sec. 7004. Petition for regulations; public participation.
Sec. 7005. Separability.
Sec. 7006. Judicial review.
Sec. 7007. Grants or contracts for training projects.
Sec. 7008. Payments.
Sec. 7009. Labor standards.
Sec. 7010. Law enforcement authority.

    Subtitle H--Research, Development, Demonstration, and Information

Sec. 8001. Research, demonstrations, training, and other activities.
Sec. 8002. Special studies; plans for research, development, and 
          demonstrations.
Sec. 8003. Coordination, collection, and dissemination of information.
Sec. 8004. Full-scale demonstration facilities.
Sec. 8005. Special study and demonstration projects on recovery of 
          useful energy and materials.
Sec. 8006. Grants for resource recovery systems and improved solid waste 
          disposal facilities.
Sec. 8007. Authorization of appropriations.

           Subtitle I--Regulation of Underground Storage Tanks

Sec. 9001. Definitions.
Sec. 9002. Notification.
Sec. 9003. Release detection, prevention, and correction regulations.
Sec. 9004. Approval of State programs.
Sec. 9005. Inspections, monitoring, and testing.
Sec. 9006. Federal enforcement.
Sec. 9007. Federal facilities.
Sec. 9008. State authority.
Sec. 9009. Study of underground storage tanks.
[Sec. 9010. Authorization of appropriations.]
Sec. 9010. Release prevention and compliance.
Sec. 9011. Authorization of appropriations.

        Subtitle J--Demonstration Medical Waste Tracking Program

Sec. 11001. Scope of demonstration program for medical waste.
Sec. 11002. Listing of medical wastes.
Sec. 11003. Tracking of medical waste.
Sec. 11004. Inspections.
Sec. 11005. Enforcement.
Sec. 11006. Federal facilities.
Sec. 11007. Relationship to State law.
Sec. 11008. Health impact report.
Sec. 11009. General provisions.
Sec. 11010. Effective date.
Sec. 11011. Authorization of appropriations.

           *       *       *       *       *       *       *


          Subtitle I--Regulation of Underground Storage Tanks

                       definitions and exemptions

      Sec. 9001. For the purposes of this subtitle--
            (1) The term ``underground storage tank'' means any 
        one or combination of tanks (including underground 
        pipes connected thereto) which is used to contain an 
        accumulation of regulated substances, and the volume of 
        which (including the volume of the underground pipes 
        connected thereto) is 10 per centum or more beneath the 
        surface of the ground. Such term does not include any--
                    (A) farm or residential tank of 1,100 
                gallons or less capacity used for storing motor 
                fuel for noncommercial purposes,
                    (B) tank used for storing heating oil for 
                consumptive use on the premises where stored,
                    (C) septic tank,
                    (D) pipeline facility (including gathering 
                lines)--
                            (i) which is regulated under 
                        chapter 601 of title 49, United States 
                        Code, or
                            (ii) which is an intrastate 
                        pipeline facility regulated under State 
                        laws as provided in chapter 601 of 
                        title 49, United States Code,
                and which is determined by the Secretary to be 
                connected to a pipeline or to be operated or 
                intended to be capable of operating at pipeline 
                pressure or as an integral part of a pipeline,
                    (E) surface impoundment, pit, pond, or 
                lagoon,
                    (F) storm water or waste water collection 
                system,
                    (G) flow-through process tank,
                    (H) liquid trap or associated gathering 
                lines directly related to oil or gas production 
                and gathering operations, or
                    (I) storage tank situated in an underground 
                area (such as a basement, cellar, mineworking, 
                drift, shaft, or tunnel) if the storage tank is 
                situated upon or above the surface of the 
                floor.
        The term ``underground storage tank'' shall not include 
        any pipes connected to any tank which is described in 
        subparagraphs (A) through (I).
            (2) The term ``regulated substance'' means--
                    (A) any substance defined in section 
                101(14) of the Comprehensive Environmental 
                Response, Compensation, and Liability Act of 
                1980 (but not including any substance regulated 
                as a hazardous waste under subtitle C), and
                    (B) petroleum.
            (3) The term ``owner'' means--
                    (A) in the case of an underground storage 
                tank in use on the date of enactment of the 
                Hazardous and Solid Waste Amendments of 1984, 
                or brought into use after that date, any person 
                who owns an underground storage tank used for 
                the storage, use, or dispensing of regulated 
                [sustances] substances, and
                    (B) in the case of any underground storage 
                tank in use before the date of enactment of the 
                Hazardous and Solid Waste Amendments of 1984, 
                but no longer in use on the date of enactment 
                of such Amendments, any person who owned such 
                tank immediately before the discontinuation of 
                its use.
            (4) The term ``operator'' means any person in 
        control of, or having responsibility for, the daily 
        operation of the underground storage tank.
            (5) The term ``release'' means any spilling, 
        leaking, emitting, discharging, escaping, leaching, or 
        disposing from an underground storage tank into ground 
        water, surface water or subsurface soils.
            (6) The term ``person'' has the same meaning as 
        provided in section 1004(15), except that such term 
        includes a consortium, a joint venture, and a 
        commercial entity, and the United States Government.
            (7) The term ``nonoperational storage tank'' means 
        any underground storage tank in which regulated 
        substances will not be deposited or from which 
        regulated substances will not be dispensed after the 
        date of the enactment of the Hazardous and Solid Waste 
        Amendments of 1984.
            (8) The term ``petroleum'' means petroleum, 
        including crude oil or any fraction thereof which is 
        liquid at standard conditions of temperature and 
        pressure (60 degrees Fahrenheit and 14.7 pounds per 
        square inch absolute).

           *       *       *       *       *       *       *


       release detection, prevention, and correction regulations

      Sec. 9003. (a) Regulations.--The Administrator, after 
notice and opportunity for public comment, and at least three 
months before the effective dates specified in subsection (f), 
shall promulgate release detection, prevention, and correction 
regulations applicable to all owners and operators of 
underground storage tanks, as may be necessary to protect human 
health and the environment.

           *       *       *       *       *       *       *

      (f) Effective Dates.--(1) Regulations issued pursuant to 
[subsection (c) and (d) of this section] subsections (c) and 
(d), and standards issued pursuant to subsection (e) of this 
section, for underground storage tanks containing regulated 
substances defined in section 9001(2)(B) (petroleum, including 
crude oil or any fraction thereof which is liquid at standard 
conditions of temperature and pressure) shall be effective not 
later than thirty months after the date of enactment of the 
Hazardous and Solid Waste Amendments of 1984.

           *       *       *       *       *       *       *


           *       *       *       *       *       *       *

      (h) EPA Response Program for Petroleum.--
            (1) Before regulations.--Before the effective date 
        of regulations under subsection (c), the Administrator 
        (or a State pursuant to paragraph (7)) is authorized 
        to--
                    (A) require the owner or operator of an 
                underground storage tank to undertake 
                corrective action with respect to any release 
                of petroleum when the Administrator (or the 
                State) determines that such corrective action 
                will be done properly and promptly by the owner 
                or operator of the underground storage tank 
                from which the release occurs; or
                    (B) undertake corrective action with 
                respect to any release of petroleum into the 
                environment from an underground storage tank if 
                such action is necessary, in the judgment of 
                the Administrator (or the State), to protect 
                human health and the environment.
        The corrective action undertaken or required by this 
        paragraph shall be such as may be necessary to protect 
        human health and the environment. The Administrator 
        shall use funds in the Leaking Underground Storage Tank 
        Trust Fund for payment of costs incurred for corrective 
        action under subparagraph (B), enforcement action under 
        subparagraph (A), and cost recovery under paragraph (6) 
        of this subsection. Subject to the priority 
        requirements of paragraph (3), the Administrator (or 
        the State) shall give priority in undertaking such 
        actions under subparagraph (B) to cases where the 
        Administrator (or the State) cannot identify a solvent 
        owner or operator of the tank who will undertake action 
        properly.
            (2) After regulations.--Following the effective 
        date of regulations under subsection (c), all actions 
        or orders of the Administrator (or a State pursuant to 
        paragraph (7)) described in paragraph (1) of this 
        subsection shall be in conformity with such 
        regulations. Following such effective date, the 
        Administrator (or the State) may undertake corrective 
        action with respect to any release of petroleum into 
        the environment from an underground storage tank only 
        if such action is necessary, in the judgment of the 
        Administrator (or the State), to protect human health 
        and the environment and one or more of the following 
        situations exists:
                    (A) No person can be found, within 90 days 
                or such shorter period as may be necessary to 
                protect human health and the environment, who 
                is--
                            (i) an owner or operator of the 
                        tank concerned,
                            (ii) subject to such corrective 
                        action regulations, and
                            (iii) capable of carrying out such 
                        corrective action properly.
                    (B) A situation exists which requires 
                prompt action by the Administrator (or the 
                State) under this paragraph to protect human 
                health and the environment.
                    (C) Corrective action costs at a facility 
                exceed the amount of coverage required by the 
                Administrator pursuant to the provisions of 
                subsections (c) and (d)(5) of this section and, 
                considering the class or category of 
                underground storage tank from which the release 
                occurred, expenditures from the Leaking 
                Underground Storage Tank Trust Fund are 
                necessary to assure an effective corrective 
                action.
                    (D) The owner or operator of the tank has 
                failed or refused to comply with an order of 
                the Administrator under this subsection or 
                section 9006 or with the order of a State under 
                this subsection to comply with the corrective 
                action regulations.
            (3) Priority of corrective actions.--The 
        Administrator (or a State pursuant to paragraph (7)) 
        shall give priority in undertaking corrective actions 
        under this subsection, and in issuing orders requiring 
        owners or operators to undertake such actions, to 
        releases of petroleum from underground storage tanks 
        which pose the greatest threat to human health and the 
        environment.
            (4) Corrective action orders.--The Administrator is 
        authorized to issue orders to the owner or operator of 
        an underground storage tank to carry out subparagraph 
        (A) of paragraph (1) or to carry out regulations issued 
        under subsection (c)(4). A State acting pursuant to 
        paragraph (7) of this subsection is authorized to carry 
        out subparagraph (A) of paragraph (1) only until the 
        State's program is approved by the Administrator under 
        section 9004 of this subtitle. Such orders shall be 
        issued and enforced in the same manner and subject to 
        the same requirements as orders under section 9006.
            (5) Allowable corrective actions.--The corrective 
        actions undertaken by the Administrator (or a State 
        pursuant to paragraph (7)) under paragraph (1) or (2) 
        may include temporary or permanent relocation of 
        residents and alternative household water supplies. In 
        connection with the performance of any corrective 
        action under paragraph (1) or (2), the Administrator 
        may undertake an exposure assessment as defined in 
        paragraph (10) of this subsection or provide for such 
        an assessment in a cooperative agreement with a State 
        pursuant to paragraph (7) of this subsection. The costs 
        of any such assessment may be treated as corrective 
        action for purposes of paragraph (6), relating to cost 
        recovery.
            (6) Recovery of costs.--
                    (A) In general.--Whenever costs have been 
                incurred by the Administrator, or by a State 
                pursuant to paragraph (7), for undertaking 
                corrective action or enforcement action with 
                respect to the release of petroleum from an 
                underground storage tank, the owner or operator 
                of such tank shall be liable to the 
                Administrator or the State for such costs. The 
                liability under this paragraph shall be 
                construed to be the standard of liability which 
                obtains under section 311 of the Federal Water 
                Pollution Control Act.
                    (B) Recovery.--In determining the equities 
                for seeking the recovery of costs under 
                subparagraph (A), the Administrator (or a State 
                pursuant to paragraph (7) of this subsection) 
                may consider the amount of financial 
                responsibility required to be maintained under 
                subsections (c) and (d)(5) of this section and 
                the factors considered in establishing such 
                amount under subsection (d)(5).
                    (C) Effect on liability.--
                            (i) No transfers of liability.--No 
                        indemnification, hold harmless, or 
                        similar agreement or conveyance shall 
                        be effective to transfer from the owner 
                        or operator of any underground storage 
                        tank or from any person who may be 
                        liable for a release or threat of 
                        release under this subsection, to any 
                        other person the liability imposed 
                        under this subsection. Nothing in this 
                        subsection shall bar any agreement to 
                        insure, hold harmless, or indemnify a 
                        party to such agreement for any 
                        liability under this section.
                            (ii) No bar to cause of action.--
                        Nothing in this subsection, including 
                        the provisions of clause (i) of this 
                        subparagraph, shall bar a cause of 
                        action that an owner or operator or any 
                        other person subject to liability under 
                        this section, or a guarantor, has or 
                        would have, by reason of subrogation or 
                        otherwise against any person.
                    (D) Facility.--For purposes of this 
                paragraph, the term ``facility'' means, with 
                respect to any owner or operator, all 
                underground storage tanks used for the storage 
                of petroleum which are owned or operated by 
                such owner or operator and located on a single 
                parcel of property (or on any contiguous or 
                adjacent property).
            (7) State authorities.--
                    (A) General.--A State may exercise the 
                authorities in [paragraphs (1) and (2) of this 
                subsection] paragraphs (1), (2), and (12), 
                subject to the terms and conditions of 
                paragraphs (3), (5), (9), (10), and (11), and 
                including the authorities of paragraphs (4), 
                (6), and (8) of this subsection and section 
                9010 if--
                            (i) the Administrator determines 
                        that the State has the capabilities to 
                        carry out effective corrective actions 
                        and enforcement activities; and
                            (ii) the Administrator enters into 
                        a cooperative agreement with the State 
                        setting out the actions to be 
                        undertaken by the State.
                The Administrator may provide funds from the 
                Leaking Underground Storage Tank Trust Fund for 
                the reasonable costs of the State's actions 
                under the cooperative agreement.
                    (B) Cost share.--Following the effective 
                date of the regulations under subsection (c) of 
                this section, the State shall pay 10 per centum 
                of the cost of corrective actions undertaken 
                either by the Administrator or by the State 
                under a cooperative agreement, except that the 
                Administrator may take corrective action at a 
                facility where immediate action is necessary to 
                respond to an imminent and substantial 
                endangerment to human health or the environment 
                if the State fails to pay the cost share.
            (8) Emergency procurement powers.--Notwithstanding 
        any other provision of law, the Administrator may 
        authorize the use of such emergency procurement powers 
        as he deems necessary.
            (9) Definition of owner or operator.--
                    (A) In general.--As used in this subtitle, 
                the terms ``owner'' and ``operator'' do not 
                include a person that, without participating in 
                the management of an underground storage tank 
                and otherwise not engaged in petroleum 
                production, refining, or marketing, holds 
                indicia of ownership primarily to protect the 
                person's security interest.
                    (B) Security interest holders.--The 
                provisions regarding holders of security 
                interests in subparagraphs (E) through (G) of 
                section 101(20) and the provisions regarding 
                fiduciaries at section 107(n) of the 
                Comprehensive Environmental Response, 
                Compensation, and Liability Act of 1980 shall 
                apply in determining a person's liability as an 
                owner or operator of an underground storage 
                tank for the purposes of this subtitle.
                    (C) Effect on rule.--Nothing in 
                subparagraph (B) shall be construed as 
                modifying or affecting the final rule issued by 
                the Administrator on September 7, 1995 (60 Fed. 
                Reg. 46,692), or as limiting the authority of 
                the Administrator to amend the final rule, in 
                accordance with applicable law. The final rule 
                in effect on the date of enactment of this 
                subparagraph shall prevail over any 
                inconsistent provision regarding holders of 
                security interests in subparagraphs (E) through 
                (G) of section 101(20) or any inconsistent 
                provision regarding fiduciaries in section 
                107(n) of the Comprehensive Environmental 
                Response, Compensation, and Liability Act of 
                1980. Any amendment to the final rule shall be 
                consistent with the provisions regarding 
                holders of security interests in subparagraphs 
                (E) through (G) of section 101(20) and the 
                provisions regarding fiduciaries in section 
                107(n) of the Comprehensive Environmental 
                Response, Compensation, and Liability Act of 
                1980. This subparagraph does not preclude 
                judicial review of any amendment of the final 
                rule made after the date of enactment of this 
                subparagraph.
            (10) Definition of exposure assessment.--As used in 
        this subsection, the term ``exposure assessment'' means 
        an assessment to determine the extent of exposure of, 
        or potential for exposure of, individuals to petroleum 
        from a release from an underground storage tank based 
        on such factors as the nature and extent of 
        contamination and the existence of or potential for 
        pathways of human exposure (including ground or surface 
        water contamination, air emissions, and food chain 
        contamination), the size of the community within the 
        likely pathways of exposure, and the comparison of 
        expected human exposure levels to the short-term and 
        long-term health effects associated with identified 
        contaminants and any available recommended exposure or 
        tolerance limits for such contaminants. Such assessment 
        shall not delay corrective action to abate immediate 
        hazards or reduce exposure.
            (11) Facilities without financial responsibility.--
        At any facility where the owner or operator has failed 
        to maintain evidence of financial responsibility in 
        amounts at least equal to the amounts established by 
        subsection (d)(5)(A) of this section (or a lesser 
        amount if such amount is applicable to such facility as 
        a result of subsection (d)(5)(B) of this section) for 
        whatever reason the Administrator shall expend no 
        monies from the Leaking Underground Storage Tank Trust 
        Fund to clean up releases at such facility pursuant to 
        the provisions of paragraph (1) or (2) of this 
        subsection. At such facilities the Administrator shall 
        use the authorities provided in subparagraph (A) of 
        paragraph (1) and paragraph (4) of this subsection and 
        section 9006 of this subtitle to order corrective 
        action to clean up such releases. States acting 
        pursuant to paragraph (7) of this subsection shall use 
        the authorities provided in subparagraph (A) of 
        paragraph (1) and paragraph (4) of this subsection to 
        order corrective action to clean up such releases. 
        Notwithstanding the provisions of this paragraph, the 
        Administrator may use monies from the fund to take the 
        corrective actions authorized by paragraph (5) of this 
        subsection to protect human health at such facilities 
        and shall seek full recovery of the costs of all such 
        actions pursuant to the provisions of paragraph (6)(A) 
        of this subsection and without consideration of the 
        factors in paragraph (6)(B) of this subsection. Nothing 
        in this paragraph shall prevent the Administrator (or a 
        State pursuant to paragraph (7) of this subsection) 
        from taking corrective action at a facility where there 
        is no solvent owner or operator or where immediate 
        action is necessary to respond to an imminent and 
        substantial endangerment of human health or the 
        environment.
            (12) Remediation of contamination from ether fuel 
        additives.--
                    (A) In general.--The Administrator and the 
                States may use funds made available under 
                section 9013(1) to carry out corrective actions 
                with respect to a release of methyl tertiary 
                butyl ether or other ether fuel additive that 
                presents a threat to human health, welfare, or 
                the environment.
                    (B) Applicable authority.--Subparagraph (A) 
                shall be carried out--
                            (i) in accordance with paragraph 
                        (2), except that a release with respect 
                        to which a corrective action is carried 
                        out under subparagraph (A) shall not be 
                        required to be from an underground 
                        storage tank; and
                            (ii) in the case of a State, in 
                        accordance with a cooperative agreement 
                        entered into by the Administrator and 
                        the State under paragraph (7).
           * * * * * * *

                       approval of state programs

      Sec. 9004. (a) Elements of State Program.--Beginning 30 
months after the date of enactment of the Hazardous and Solid 
Waste Amendments of 1984, any State may, submit an underground 
storage tank release detection, prevention, and correction 
program for review and approval by the Administrator. The 
program may cover tanks used to store regulated substances 
[referred to in 9001(2) (A) or (B) or both] referred to in 
subparagraph (A) or (B), or both, of section 9001(2). A State 
program may be approved by the Administrator under this section 
only if the State demonstrates that the State program includes 
the following requirements and standards and provides for 
adequate enforcement of compliance with such requirements and 
standards--
           * * * * * * *
      Sec. 9005. (a) Furnishing Information.--For the purposes 
of developing or assisting in the development of any 
regulation, conducting any [study taking] study, taking any 
corrective action, or enforcing the provisions of this 
subtitle, any owner or operator of an underground storage tank 
(or any tank subject to study under section 9009 that is used 
for storing regulated substances) shall, upon request of any 
officer, employee or representative of the Environmental 
Protection Agency, duly designated by the Administrator, or 
upon request of any duly designated officer, employee, or 
representative of a State acting parsuant to subsection (h)(7) 
of section 9003 or with an approved program, furnish 
information relating to such tanks, their associated equipment, 
their contents, conduct monitoring or testing, permit such 
officer at all reasonable times to have access to, and to copy 
all records relating to such tanks and permit such officer to 
have access for corrective action. For the purposes of 
developing or assisting in the development of any regulation, 
conducting any study, taking corrective action, or enforcing 
the provisions of this subtitle, such officers, employees, or 
representatives are authorized--
            (1) to enter at reasonable times any establishment 
        or other place where an underground storage tank is 
        located;
            (2) to inspect and obtain samples from any person 
        of any regulated substances contained in such tank;
            (3) to conduct monitoring or testing of the tanks, 
        associated equipment, contents, or surrounding soils, 
        air, surface water or ground water, and
            (4) to take corrective action.
Each such inspection shall be commenced and completed with 
reasonable promptness.
      (b) Confidentiality.--(1) Any records, reports, or 
information obtained from any persons under this section shall 
be available to the public, except that upon a showing 
satisfactory to the Administrator (or the State, as the case 
may be) by any person that records, reports, or information, or 
a particular part thereof, to which the Administrator (or the 
State, as the case may be) or any officer, employee, or 
representative thereof has access under this section if made 
public, would divulge information entitled to protection under 
section 1905 of title 18 of the United States Code, such 
information or particular portion thereof shall be considered 
confidential in accordance with the purposes of that section, 
except that such record, report, document, or information may 
be disclosed to other officers, employees, or authorized 
representatives of the United States concerned with carrying 
out this Act, or when [relevent] relevant in any proceeding 
under this Act.
      (2) Any person not subject to the provisions of section 
1905 of title 18 of the United States Code who knowingly and 
willfully divulges or discloses any information entitled to 
protection under this subsection shall, upon conviction, be 
subject to a fine of not more than $5,000 or to imprisonment 
not to exceed one year, or both.
      (3) In submitting data under this subtitle, a person 
required to provide such data may--
            (A) designate the data which such person believes 
        is entitled to protection under this subsection, and
            (B) submit such designated data separately from 
        other data submitted under this subtitle.
A designation under this paragraph shall be made in writing and 
in such manner as the Administrator may prescribe.
      (4) Notwithstanding any limitation contained in this 
section or any other provision of law, all information reported 
to, or otherwise obtained, by the Administrator (or any 
representative of the Administrator) under this Act shall be 
made available, upon written request of any duly authorized 
committee of the Congress, to such committee (including 
records, reports, or information obtained by representatives of 
the [Evironmental] Environmental Protection Agency).
           * * * * * * *

                    [authorization of appropriations

      [Sec. 9010. For authorization of appropriations to carry 
out this subtitle, see section 2007(g).]

SEC. 9010. RELEASE PREVENTION AND COMPLIANCE.

    Funds made available under section 9013(2) from the Leaking 
Underground Storage Tank Trust Fund may be used for conducting 
inspections, or for issuing orders or bringing actions under 
this subtitle--
            (1) by a State (pursuant to section 9003(h)(7)) 
        acting under--
                    (A) a program approved under section 9004; 
                or
                    (B) State requirements regulating 
                underground storage tanks that are similar or 
                identical to this subtitle, as determined by 
                the Administrator; and
            (2) by the Administrator, acting under this 
        subtitle or a State program approved under section 
        9004.

SEC. 9011. AUTHORIZATION OF APPROPRIATIONS.

    In addition to amounts made available under section 
2007(f), there are authorized to be appropriated from the 
Leaking Underground Storage Tank Trust Fund, notwithstanding 
section 9508(c)(1) of the Internal Revenue Code of 1986--
            (1) to carry out section 9003(h)(12), $200,000,000 
        for fiscal year 2003, to remain available until 
        expended; and
            (2) to carry out section 9010--
                    (A) $50,000,000 for fiscal year 2003; and
                    (B) $30,000,000 for each of fiscal years 
                2004 through 2008.
           * * * * * * *

                           UNITED STATES CODE

                TITLE 42--THE PUBLIC HEALTH AND WELFARE

                    CHAPTER 84--DEPARTMENT OF ENERGY

               SUBCHAPTER II--ESTABLISHMENT OF DEPARTMENT

SEC. 7135. ENERGY INFORMATION ADMINISTRATION

    (a) Establishment; appointment of Administrator; 
compensation; qualifications; duties.--
           * * * * * * *
    (l) Data collection.--In order to improve the ability to 
evaluate the effectiveness of the Nation's energy efficiency 
policies and programs, the Administrator shall, in carrying out 
the data collection provisions of subsections (i) and (k) of 
this section, consider--
            (1) expanding the survey instruments to include 
        questions regarding participation in Government and 
        utility conservation programs;
            (2) expanding fuel-use surveys in order to provide 
        greater detail on energy use by user subgroups; and
            (3) expanding the scope of data collection on 
        energy efficiency and load-management programs, 
        including the effects of building construction 
        practices such as those designed to obtain peak load 
        shifting.
    (m) Survey of Renewable Fuels Consumption.--
            (1) In general.--In order to improve the ability to 
        evaluate the effectiveness of the Nation's renewable 
        fuels mandate, the Administrator shall conduct and 
        publish the results of a survey of renewable fuels 
        consumption in the motor vehicle fuels market in the 
        United States monthly, and in a manner designed to 
        protect the confidentiality of individual responses.
            (2) Elements of survey.--In conducting the survey, 
        the Administrator shall collect information 
        retrospectively to 1998, on a national basis and a 
        regional basis, including--
                    (A) the quantity of renewable fuels 
                produced;
                    (B) the cost of production;
                    (C) the cost of blending and marketing;
                    (D) the quantity of renewable fuels 
                blended;
                    (E) the quantity of renewable fuels 
                imported; and
                    (F) market price data.
           * * * * * * *

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