S. HRG. 109–1026 THE IMPACT OF THE ELIMINATION OF MTBE HEARING BEFORE THE COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS UNITED STATES SENATE ONE HUNDRED NINTH CONGRESS SECOND SESSION MARCH 29, 2006 Printed for the use of the Committee on Environment and Public Works ( Available via the World Wide Web: http://www.access.gpo.gov/congress.senate U.S. GOVERNMENT PRINTING OFFICE 42–273 PDF WASHINGTON : 2008 For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800 Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001 COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS ONE HUNDRED NINTH CONGRESS SECOND SESSION JAMES M. INHOFE, Oklahoma, Chairman JOHN W. WARNER, Virginia JAMES M. JEFFORDS, Vermont CHRISTOPHER S. BOND, Missouri MAX BAUCUS, Montana GEORGE V. VOINOVICH, Ohio JOSEPH I. LIEBERMAN, Connecticut LINCOLN CHAFEE, Rhode Island BARBARA BOXER, California LISA MURKOWSKI, Alaska THOMAS R. CARPER, Delaware JOHN THUNE, South Dakota HILLARY RODHAM CLINTON, New York JIM DEMINT, South Carolina FRANK R. LAUTENBERG, New Jersey JOHNNY ISAKSON, Georgia BARACK OBAMA, Illinois DAVID VITTER, Louisiana ANDREW WHEELER, Majority Staff Director KEN CONNOLLY, Minority Staff Director (II) CONTENTS Page MARCH 29, 2006 OPENING STATEMENTS Boxer, Hon. Barbara, U.S. Senator from the State of California ........................ 4 Inhofe, Hon. James M., U.S. Senator from the State of Oklahoma .................... 1 Jeffords, Hon. James M., U.S. Senator from the State of Vermont, prepared statement .............................................................................................................. 36 Lautenberg, Hon. Frank R., U.S. Senator from the State of New Jersey .......... 6 Lieberman, Hon. Joseph I., U.S. Senator from the State of Connecticut, pre- pared statement ................................................................................................... 38 Murkowski, Hon. Lisa, U.S. Senator from the State of Alaska, prepared state- ment ...................................................................................................................... 37 Obama, Hon. Barack, U.S. Senator from the State of Illinois, prepared state- ment ...................................................................................................................... 37 Warner, Hon. John W., U.S. Senator from the Commonwealth of Virginia ....... 5 WITNESSES Caruso, Guy, Administrator, Energy Information Administration, U.S. De- partment of Energy, Accompanied by: Joanne Shore, Lead Analyst, Energy Information Administration ................................................................................ 8 Prepared statement .......................................................................................... 39 Response to an additional question from Senator Thune ............................. 49 Dinneen, Bob, president and chief executive officer, Renewable Fuels Associa- tion ........................................................................................................................ 26 Prepared statement .......................................................................................... 75 Responses to additional questions from Senator Inhofe ............................... 78 Douglass, Bill, chief executive officer, Douglass Distributing Company ............. 23 Prepared statement .......................................................................................... 70 Responses to additional questions from Senator Inhofe ............................... 74 Early, A. Blakeman, American Lung Association ................................................. 25 Prepared statement .......................................................................................... 58 Meyers, Robert, Associate Assistant Administrator, Office of Air and Radi- ation, U.S. Environmental Protection Agency ................................................... 10 Prepared statement .......................................................................................... 52 Responses to additional questions from Senator Inhofe ............................... 54 ADDITIONAL MATERIAL Analysis, Energy Information Administration, Eliminating MTBE in Gasoline in 2006 .................................................................................................................. 40 Article, Hidden Poison, MTBE Tainting Water Across State, by Matt Pacenza, staff writer, April 9, 2006 .................................................................................... 66 Chart, Estimated Increase in Ethanol Demand, Relative to Recent Ethanol Use ......................................................................................................................... 91 Study, A Review of Cost Estimates of MTBE Contamination of Public Wells, American Water Works Association ................................................................... 60 Court Case, South Tahoe Public Utility District vs., Atlantic Richfield Com- pany ................................................................................................................... 119–126 Letters from: American Lung Association, April 20, 2006 ................................................... 65 U.S. House of Representatives, Committee on Commerce, Bob Meyers, counsel; Stephen Sayle, counsel, June 5, 1995 ......................................... 92–118 (III) IV Page Statements: American Petroleum Institute ......................................................................... 80 National Petrochemical and Refiners Association.......................................... 82–90 THE IMPACT OF THE ELIMINATION OF MTBE WEDNESDAY, MARCH 29, 2006 U.S. SENATE, COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS, Washington, DC. The committee met, pursuant to notice, at 9:30 a.m. in room 628, Senate Dirksen Building, Hon. James M. Inhofe (chairman of the committee) presiding. Present: Senators Inhofe, Warner, Murkowski, Thune, Jeffords, Boxer, Carper, Lautenberg, and Obama. Senator INHOFE. Our meeting will come to order. I understand Senator Boxer is almost here, and some others, here she is. We went ahead and decided to start without you, but I was going to talk until you got here. How is that? Senator BOXER. All right. Senator INHOFE. We will have others that will be joining us. We have two panels today, and I want to welcome the first panel. Guy Caruso, it is nice to have you here, and Robert Meyers. You have an extensive background over in the House. You have all the answers and it’s always refreshing to know that there is someone on a panel that has all the answers. [Laughter.] OPENING STATEMENT OF HON. JAMES M. INHOFE, U.S. SENATOR FROM THE STATE OF OKLAHOMA Senator INHOFE. We appreciate your being here. We will have other members here on both sides of the aisle and their staffs are here. There will be questions submitted for the record. MTBE may be the most carefully scrutinized and debated sub- stance since the 1990 Clean Air Act amendments required its use. Today’s oversight hearing on the impacts if the elimination of MTBE is the latest in a long history before this committee. I am going to summarize that history. The 1990 Clean Air Act Amendments established the reformu- lated gas program, that’s the RFG program, which most regard as an environmental success story. Yet, the inclusion of the oxygenate requirement as a component of RFG resulted in a few unintended consequences. I would like to remind my colleagues that the 2 per- cent oxygen requirement was not included in the bill passed by this committee which laid on the foundation for the amended Clean Air Act. Rather, the oxygenate requirement was added after vigorous de- bate and was the only successful amendment on the Senate floor. (1) 2 Senators from both sides of the aisle hope that the requirement would lay the groundwork for greater ethanol use, but acknowl- edged that MTBE would likely be preferred as it is more affordable to the consumers. Yet, although MTBE exceeded air-related goals, it tainted the taste and the smell of the water in some instances. Further, the 2 percent oxygenate requirement and the air quality concerns of the certain areas created boutique fuel regions, leading to higher prices during supply problems. Last year, this committee passed S. 606, the Reliable Fuels Act, which called for the elimination of the 2 percent requirement and the phase-out of MTBE within 4 years, but still preserving the MTBE authority for States. As was the case with the bill that passed this committee in 1989, S. 606 was changed in material ways after we reported the bill. Today the Nation faces—although temporary—some potential unintended consequences. Pursuant to the Energy bill, the 2 percent oxygenate requirement will be repealed this May. A majority of members recommended that oxygenate producers and marketers be afforded liability pro- tection against defective product lawsuits for their mere compliance with the law. Unfortunately, that provision was not included in the Energy bill. To me, that is just remarkable, that we as Government can mandate things to take place and then not offer the protection for those who are simply following the law. Therefore, refiners have been forced to stop using MTBE more suddenly than stakeholders, industry or the committee have ever considered. They had to stop, because after this is no longer a re- quirement, then that could be used against them in lawsuits, as we all know. One of the facts is that