U.S. Department of Agriculture, Office of Energy, Personal Communications, December 1998.

STATEMENT OF THOMAS L. ADAMS, PRESIDENT, OXYGENATED FUELS ASSOCIATION (OFA)

Mr. Chairman-Our nation continues to face an energy crisis. Additionally, as you are well aware, the overwhelming majority of citizens continue to express a strong desire for cleaner air. One of the tools that is successfully employed in battling both the energy supply and clean air dilemmas is Methyl Tertiary Butyl Ether (MTBE). However, it is being challenged by some who have concerns about its perceived threat to groundwater and surface water. As President of the association representing international and domestic companies engaged in the manufacture and sale of MTBE, we urge you to avoid a rush to judgment that could seriously impact the nation's precarious energy supply and potentially undo the clean air strides that have been made.

A summary of my testimony is as follows:

• MTBE plays a key role in improving air quality.

MTBE makes up roughly 4 volume percent of the U.S. gasoline pool (11 percent or more in many major metropolitan areas) and with refineries operating at near capacity levels, elimination of this component could have lasting negative impacts on price and supply of gasoline.

MTBE is not a human health threat. In fact, there are many examples of the significant role played by MTBE in improving the health of all Americans. Despite press accounts, no national or international agency has ever classified MTBE as a carcinogen.

Where gasoline components have contaminated drinking water sources, the cause of the problem is a release of gasoline due to leaks from underground storage tanks.

I would like to now briefly address the benefits of MTBE, health effects concerns, its impact on water quality and the options that the nation has as alternatives to its use.

The Environmental Benefits of MTBE

It is important to review the accomplishments of the Reformulated Gasoline (RFG) program, and the role that MTBE has played in those accomplishments. The Clean Air Act requires that all RFG must contain 2 percent, by weight, of oxygen. There are two primary oxygenates being used in the RFG gasoline pool today: MTBE and ethanol. MTBE is a product that is made by combining methanol and isobutylene. It is manufactured by refineries and by chemical companies. Congress was wise enough to allow the marketplace to determine the most cost effective or efficient source of oxygen for RFG. For a variety of environmental, commercial, and performance-related reasons, MTBE has become the oxygenate-of-choice for making RFG for those regions outside the Mid-West. MTBE is used in 80-85 percent of all the RFG produced today.

The RFG program consists of two phases: Phase I-the period from 1995 through 1999. Phase II started at the beginning of 2000.

EPA has compiled data for the United States showing that Phase I RFG has surpassed the requirements of the Clean Air Act. An analysis of the Phase I RFG produced by refiners shows that the fuel reduces ozone-forming compounds, such as VOCs, by over 28 percent-that's 44 percent above the 15 percent requirement of the law. Emissions of air toxics are reduced by approximately 30 percent-that's almost twice as much as required by law.

Ambient air monitoring confirms that the RFG program is working. Testing shows that benzene levels have declined by 31 percent between 1994 and 1997; levels of ethyl benzene, another toxic component of gasoline, have declined 52 percent during the same period. RFG areas also showed significant decreases in other vehicle-related VOC concentrations. EPA has testified that the emissions reductions required for Phase I RFG-which have been met and exceeded-and the emissions reductions of Phase II RFG-which are already nearly met-are equivalent to taking more than 16 million vehicles off the road.

As a key component of RFG, MTBE contributes to the environmental benefits of RFG in several ways. First, by adding MTBE to gasoline, refiners dilute or displace gasoline components such as aromatics (benzene, toluene and xylene) which contribute to the formation of ozone and emissions of toxics and PM (particulate matter). These compounds themselves are hazardous air pollutants. EPA has acknowl

edged that if oxygenates were not used to produce RFG, levels of aromatics may have to be increased to provide the necessary octane.

Second, by adding MTBE to RFG, refiners improve the combustion of the gasoline, resulting in fewer emissions of smog-forming pollutants, such as VOCs and carbon monoxide, as well as Particulate Matter. Use of MTBÉ reduces harmful exhaust emissions, which due to their highly reactive nature causes a disproportionate amount of smog formation.

Third, MTBE has a lower vapor pressure-the rate at which it evaporates-than the primary competitive product, ethanol, and many other volatile components of gasoline. Lower vapor pressure equates to lower evaporative emissions of VOCs. Fourth, oxygenates, like MTBE, play a particularly important role in significantly reducing emissions from millions of small engines without catalytic converters. In California, these small, off-road engines used in recreation, gardening and forestry account for a significant level of toxic air emissions from mobile sources.

Health Effects of MTBE

The detections of MTBE in a small percentage of nation's drinking water supplies have prompted questions concerning the health effects of MTBE. Those with a desire to see MTBE removed from the marketplace have gone further to suggest that little is known about the health effects of MTBE. In fact, nothing could be further from the truth.

MTBE's first contribution to the health of Americans was as a replacement for lead in gasoline in the late 1970's. MTBE was added to maintain octane in the fuel. Under the Clean Air Act, the refiners' ability to use MTBE in unleaded fuel was subject to EPA approval. The refiners made the appropriate demonstrations, including providing information on the known health effects of MTBE, and EPA approved the use of MTBE at concentrations of up to 7 percent, by volume. In 1981, EPA approved a blending of MTBE in unleaded gasoline to a maximum of 11 weight percent. In the early 1980's, refiners created an industry study group, managed by the American Petroleum Institute.

The industry group sponsored a toxicology testing program and submitted the results to EPA. In 1986, a Federal Interagency Testing Committee, acting under authority of the Toxic Substances Control Act, recommended additional testing of MTBE based on expected increased production levels, potential exposure as a gasoline component, and the need to complete data sets. The industry agreed to conduct such testing and established a program under EPA oversight and guidelines. From 1988 until 1992, the industry testing group sponsored and/or conducted all of the tests required by EPA. Progress reports on these tests were submitted to EPA for inclusion in the public docket. In 1988, EPA approved the blending of MTBE in unleaded gasoline to a maximum of 15 percent by volume.

In addition to the industry-sponsored tests, toxicologists at EPA's laboratory in Cincinnati, Ohio conducted the first examination of the risks of exposure to MTBE by ingestion. The peer-reviewed study, reported in the Journal of the American College of Toxicology, did not identify any adverse long-term effects associated with exposure to MTBE. Regretfully, MTBE is repeatedly and incorrectly treated as "the skunk at the garden party." The popular media characterize it as a "probable" or "possible" carcinogen.

In 1999, the International Agency for Research on Cancer (IARC), part of the World Health Organization, conducted a review of the existing research on the chronic (long-term) effects of exposure to MTBE. IARC can classify a substance into one of five categories: Group 1 carcinogenic to humans; Group 2A-probably carcinogenic to humans; Group 2B possibly carcinogenic to humans; Group 3unclassifiable as to carcinogenic risk to humans; and Group 4-probably not carcinogenic to humans. The IARC review put MTBE in Group 3, concluding that there is "inadequate evidence in humans for the carcinogenicity" of MTBE. Such a finding places MTBE in the same category as caffeine, tea, and fluorescent lighting.

As an aside, you might find it interesting to know that MTBE has been used by physicians for years to dissolve gall stones within the human body. Other respected and recognized expert bodies who have recently examined the scientific weight of evidence on MTBE and have also declined to list it as a known, probable, possible or likely human carcinogen include the California Proposition 65 Scientific Advisory Panel Carcinogen Identification Committee and the Federal National Toxicology Program (NTP).

In May 2000, the National Institute for Environmental Health Sciences (NIEHS) released its congressionally mandated report on cancer-causing substances. The report declined to list MTBE as a cancer-causing agent or as an agent likely to cause cancer, but did, however, add ethanol-based beverage alcohol to the list of known carcinogens. As recently as December 20, 2000, the European Union environmental

agency's Classification Labeling Committee announced that it had determined that MTBE was not classifiable as a human carcinogen and that it would not ban MTBE. In summary, we do not believe there is any credible evidence that indicates MTBE presents a significant risk to human health from either a short-term exposure or over a longer term. Over 80 studies have concluded there is no risk to human health. Ethanol on the other hand has been classified as a known human carcinogen. What is clear is that MTBE has resulted in reduced cancer risk by reducing hazardous air pollutants.

Impact on Water Quality

While MTBE quietly labored as the workhorse of the Clean Air Act since 1992, few in the public took notice until MTBE was detected in a few, isolated sources of drinking water, principally in California. A recent study ("A Screening Level Assessment of Household Exposures to MTBE in California Drinking Water," Williams, P.R., et.al.) in the March 2000 edition of Soil, Sediment & Groundwater indicates that the average MTBE concentrations in California have steadily declined over the 1995-99 time period. The source of MTBE contamination of drinking water supplies in most cases is leaking underground gasoline storage tanks. For example, the South Lake Tahoe area in California is served by seven local gas stations. According to testimony given during the California public hearings on groundwater contamination by MTBE, all of these stations were leaking gasoline into the groundwater; not surprisingly, this gasoline eventually found its way into the water supply for South Lake Tahoe, California. Violations of existing regulations included evidence of disabled dispenser sensors, poor installation, disabled leak detection, and inadequate documentation of annual inspections.

This problem primarily can be attributed to inefficiencies in California's tank program. Some 107 agencies and authorities have jurisdiction over gasoline tanks in California. For primarily this reason, the EPA has not certified California's UST Program. Studies and field experience show that leaking underground tanks of gasoline have been the main source of MTBE in the isolated instances where it has been found in groundwater in the past. Other studies show that spills of gasoline with MTBE on surface soils or water are not a significant threat to drinking water supplies. Like other gasoline components, MTBE will easily volatize into the atmosphere within days. It also easily biodegrades in these surface waters. As a result, any contamination that might occur from a surface spill is generally of short duration.

It is important to have some context in evaluating the frequencies, and levels, of MTBE detections in drinking water supplies. The majority of detections of MTBE in groundwater have been at 2 ppb or less. To put the term ppb (parts per billion) in perspective, 1 ppb equates to a time span of 1 second in 31.7 years. Therefore, 2 ppb equates to a time span of less than 5 seconds in the life of the average person. There is currently no enforceable Federal standard for MTBE in drinking water, although EPA has recently required public water systems to monitor for MTBE in their drinking water supplies and report that information to EPA. The EPA has established an MTBE Drinking Water Guideline based only on aesthetics of 20-40 ppb noting that there "is little likelihood that an MTBE concentration of 20 to 40 ppb in drinking water would cause adverse health effects in humans."

Last, if there is a problem with MTBE in groundwater, the answer is to fix the source of the problem-leaking underground storage tanks. A most recent report by the General Accounting Office (GAO) states that while State compliance with Federal equipment requirements is high, operational and maintenance problems could lead to spills, leaks and health risks.

Alternative Oxygenates

Much has been made of ethanol as a potential substitute for MTBE as a fuel oxygenate. In those areas of the country where reliance on ethanol makes some economic sense, it is already the oxygenate of choice and Federal law itself is, of course, neutral as to which oxygenate may be used. However, greatly expanded use of ethanol makes little sense.

First, expanding ethanol use will come at the expense of air quality. Use of ethanol is not as effective at combating air toxics and even increases levels of certain toxics called aldehydes; and peroxyacyl nitrates (PAN). Ethanol is less effective at controlling criteria air pollutants as well. NESCAUM (the Northeast States for Coordinated Air Use Management) has previously commented that, “Greater emissions of volatile organic compounds (VOCs) would occur during the early and late portions of the [Northeast] region's ozone season since gasoline blended with ethanol is more volatile than similar gasoline without ethanol." In addition, the higher volatility ethanol-blended gasoline can contribute to an overloading of an automobile's evapo

rative canister and subsequently lead to higher CO emissions. EPA has acknowledged that the increased use of ethanol will result in increased NOx emissions.

Oxygenates like MTBE go to work in an engine at the point where most pollution is produced: the cold cycle. For the first three to 4 minutes after you start your ignition, your car's engine produces the majority of its emissions. Because oxygenates combust at low temperatures with MTBE combusting at far lower temperatures than ethanol-fuel chemistry clearly demonstrates that MTBE is the most effective component of pollution control when the car is still relatively cold. In addition, to meet the other Federal specifications, RFG without oxygenates would have to increase its ratio of aromatics. The result of this change is two-fold: first, there will be a certain increase in air toxics from automobiles; and second, more ozone precursors from the use of aromatics will be created. In fact, if ethanol is used to replace MTBE, it is more volatile than MTBE and therefore would increase evaporative emissions.

It is not at all clear that greater reliance on ethanol will help resolve any problems with water quality. Gasoline contains a range of aromatics, such as benzene, toluene, and xylene that are among its most toxic components. In subsurface conditions, studies have indicated that ethanol, as part of gasoline, will extend the benzene plumes by 20 percent to 27 percentor more by interfering with the biodegradability of these aromatics, thus creating the potential for a significant source of toxic water contaminants. Given that ethanol can't be blended at the refinery and must be blended at the terminal, this raises a concern about ethanol and it's handling in pure form. Of course, IARC has classified ethanol as a known carcinogen.

Even if expanded ethanol production were a good idea, ethanol cannot be produced in sufficient quantities economically to satisfy America's needs within the RFG program. Indeed, it is unlikely that ethanol can meet its current demands in the Midwest while cost-effectively supplying any new markets on either coast. Just take a look at the cost of ethanol based RFG in the Chicago area. A congressional Research Service Study issued on June 16, 2000 indicates that RFG with ethanol ran roughly 50 cents per gallon higher than MTBE gasoline with 25 cents of that differential attributed to the RFG program with ethanol blending as the oxygenate. This is due to the difficulty in making the non-oyxgenated hydrocarbon portion of the RFG for ethanol known as RBOB. The supplies of gasoline components that can be used with ethanol in RFG are more limited, which contributes to a tighter RFG supply and higher cost. Imagine trying to make an ethanol based RFG that is thousands of miles away from the ethanol supply and which could be further complicated by transportation difficulties and potential summer droughts.

MTBE has extended the nation's supply of gasoline, contributing to the historic low gasoline prices around the country in recent years. Ethanol, due to it's high volatility problem, and the restrictive consequences it places on refiners, has a net impact of reducing the nation's gasoline supply, and thereby increasing the nation's gasoline prices.

Ethanol has logistical problems, including its inability to be carried in gasoline blends through pipelines, the most efficient way to transport fuels. Further, ethanol costs the American taxpayer 53 cents for every gallon consumed. As CBS News described ethanol, it is "probably the most economically inefficient, unwarranted form of corporate welfare in our entire Federal budget.” (Eye on America segment, 3/26/ 96) The American Road and Transportation Builders Association stated in testimony before the U. S. Senate Environment and Public Works Committee that the current ethanol tax subsidy deprived the Federal Highway Trust Fund of approximately $1.1billion/year. In a nutshell, ethanol, in spite of all the State and Federal welfare it receives is not an effective or economically viable alternative.

Conclusion

It is clear that there is no credible evidence that MTBE presents a significant risk to human health, either from short-term exposures or over a longer term. What is clear is that MTBE has resulted in significant reductions in cancer risk by reducing hazardous air pollutants. It has also helped clean the air and we as a nation continue to need to continuously combat the issue of dirty air. The pressure to address the groundwater contamination problems created by leaking underground storage tanks puts several questions in stark relief.

First, is there a need to replace MTBE? The answer is no. Detection data indicates that as underground storage tank compliance improves, detections of MTBE in drinking water supplies decrease. Nationally, measured in the mid 90's when our UST compliance was only 20 percent to 40 percent, less than 1 percent of the community water system detections had concentrations exceeding 20 ppb. Therefore, the

risks to drinking water supplies are decreasing with time, not increasing as some claim.

Second, is there a viable replacement for MTBE? Again, the answer is no. Alternatives to MTBE, including ethanol, are more expensive and more difficult to transport. Industry experts estimate that even under ideal circumstances, replacing MTBE with ethanol will raise prices at the pump a minimum of seven cents or more a gallon. But prices could rise much higher than that if shortages of ethanol and, as a result, of gasoline develop. Currently, refiners use about 286,000 barrels a day of MTBE; total ethanol capacity is far less than half of that today, and most of that ethanol is already committed to supplying octane in other gasolines.

Third, if you restrict or prohibit the use of MTBE, can you be certain that you will not increase the risks of adverse health effects? Some refiners claim that they can make RFG without oxygenates that meets the Federal Phase II requirements, but is there any third-party independent confirmation? EPA has such a question pending before it in the form of request from California, but it seems very reluctant to say yes or no. Possibilities do not always equate to practice. Oxygenates in Phase I RFG allowed for over-achievement. Eliminating oxygenates from Phase II requirements may effectively limit the possibility of similar results.

Finally, what are the other consequences of taking MTBE out of the gasoline supply? As described above, MTBE constitutes a significant percentage of the gasoline pool. If you take away that volume, what are the supply and price ramifications? I think we have seen the answer to that in the spike in gasoline prices across the nation last summer.

President Bush recently stated to the National Energy Policy Development Group, that if we have a price spike in refined product, "It's going to be because we don't have enough capacity, refining capacity-we're not generating enough product."

Our present energy problems will only be compounded by removing this beneficial product from our gasoline supplies. I urge you to avoid a rush to judgment.

I thank you again for the opportunity to offer written comments on this important issue.

SALEM REVISITED: UPDATING THE MTBE CONTROVERSY

(By Richard O. Faulk and John S. Gray)

"I am wronged. IT Is a shameful thing that you should mind these folks that are out of their wits"

What Does "Salem" Have to Do With MTBE?

Martha Carrier, the casualty of those "out of their wits," was hanged as a witch on August 19, 1692 in Salem, Massachusetts. In all, 20 innocent persons were executed in 1692 as a result of hysteria attending the Salem witch trials. After the executions, letters criticizing the trials were sent to the colony's Governor, who then precluded the use of "spectral and intangible evidence" in trials. No prosecution was successful thereafter.

More than 300 years later, Martha Carrier's statement illustrates an almost identical problem that plagues the current controversy surrounding Methyl Tertiary Butyl Ether ("MTBE”), a gasoline additive accused of polluting water supplies and endangering public health when leaked from underground storage tanks ("USTs"). Like the Salem witch trials, UST litigation is presently engulfed in hype-including dire predictions of environmental and health disasters that will flow from MTBE contamination. And like the "spectral and intangible" evidence used in Salem, unreliable evidence is being used to indict MTBE. But as in the witch trials, MTBE will be vindicated if reliable evidence is used to judge the controversy.

A Real Public Health and Environmental Crisis?

Is the MTBE controversy a real public health and environmental crisis? Or is it simply one more example of American regulatory and legal hysteria? Does this controversy mark the beginning of yet another mass tort explosion? Or is it simply another unsubstantiated crusade designed to waste millions of dollars and unnecessarily preoccupy judicial resources? A careful and reflective inquiry suggests that rumors that the class action lawyers have "struck gold" are, at best, premature, and, at worst, utterly false. Although a number of lawsuits regarding MTBE have been filed, their certifiability as class actions is doubtful, and their long-term viability is questionable. The noticeable lack of individual consumer complaints belies the existence of a significant controversy, and the few suits filed by municipal water suppliers already appear to be transparently designed to upgrade previously contami