MTBE in Gasoline: Clean Air and Drinking Water Issues

CRS Report for Congress
MTBE in Gasoline:
Clean Air and Drinking Water Issues
Updated April 14, 2006
James E. McCarthy and Mary Tiemann
Specialists in Environmental Policy
Resources, Science, and Industry Division

Congressional Research Service ˜ The Library of Congress

MTBE in Gasoline: Clean Air and Drinking Water Issues
Summary
As gasoline prices have risen in March and April 2006, renewed attention has
been given to methyl tertiary butyl ether (MTBE), a gasoline additive being phased
out of the nation’s fuel supply. Many argue that the phaseout of MTBE and its
replacement by ethanol have been a major factor in driving up prices.
MTBE has been used by refiners since the late 1970s. It came into widespread
use when leaded gasoline was phased out — providing an octane boost similar to that
of lead, but without fouling the catalytic converters used to reduce auto emissions
since the mid-1970s. MTBE has also been used to produce cleaner-burning
Reformulated Gasoline (RFG), which the Clean Air Act has required in the nation’s
most polluted areas since 1995. The act didn’t mandate the use of MTBE (ethanol
or other substances could have been used to meet the act’s oxygenate requirement),
but price and handling characteristics of the additive led to its widespread use.
Under the Energy Policy Act of 2005 (P.L. 109-58), the RFG program’s oxygen
mandate terminates on May 6, 2006, and refiners are scrambling to remove MTBE
from the nation’s gasoline supply by that date. The phaseout of MTBE (like its use)
is not required by federal law, but gasoline refiners have focused on the May 6 date
because of concerns over their potential liability for its continued presence. MTBE
has contaminated drinking water in a number of states, and about half have passed
legislation to ban or restrict its use. Hundreds of suits have been filed to require
petroleum refiners and marketers to pay for cleanup of contaminated water supplies,
the cost of which has been estimated to be in the billions of dollars. The petroleum
industry has maintained that it used MTBE to meet the RFG program’s oxygen
mandate and therefore should not be held liable. That position could become more
difficult to maintain once the oxygen mandate is removed.
To replace MTBE, refiners are switching to ethanol as swiftly as they can,
leading temporarily to supply shortages and higher prices. The ethanol industry
maintains that there will be sufficient ethanol to meet demand but concedes that
temporary shortages exist in some parts of the country that could affect prices until
the end of June. These shortages and higher prices have led to renewed discussion
by some of exempting gasoline refiners from liability for MTBE cleanup (a so-called
“safe harbor” provision). Others have renewed their call for federal legislation to
stimulate the construction of new refining capacity.
Besides removing the RFG program’s oxygen requirement, Congress provided
a major incentive to the production of ethanol in the Energy Policy Act of 2005.
Under a Renewable Fuels Standard, an increasing amount of the nation’s motor fuels
must consist of renewable fuel, such as ethanol. The law requires 4.0 billion gallons
in 2006 (a level already being achieved) and an increase of 700 million gallons each
year through 2011, before reaching 7.5 billion gallons in 2012.
This report provides background regarding MTBE and summarizes the actions
taken by states and Congress to address problems raised by MTBE contamination of
the nation’s water supplies. It will be updated if future developments warrant.

Contents
In troduction ..................................................1
Air Quality Benefits Resulting from MTBE Use......................4
Health-Related Questions.......................................5
Water Quality and Drinking Water Issues...........................7
Occurrence of MTBE in Drinking Water.......................8
Occurrence of MTBE in Ambient Ground Water................10
EPA’s Responses to MTBE Occurrence in Water....................11
Safe Drinking Water Act Initiatives...........................11
Underground Storage Tank Regulation........................12
Blue Ribbon Panel on Oxygenates in Gasoline......................13
State Initiatives...............................................15
Alternatives to MTBE.........................................17
Legislation ..................................................19
Safe Harbor Provision.....................................20
Renewable Fuels Standard..................................23
Changes to the RFG Requirements...........................23
Phase-out of MTBE and Transition Assistance..................23
Leaking Underground Storage Tank Issues.....................23
NAFTA Arbitration...........................................24
Conclusion ..................................................25
List of Figures
Figure 1. Federal RFG & Winter OXY/RFG Programs ..................3
List of Tables
Table 1. Areas Using Reformulated Gasoline, as of February 2005...........2
Table 2. State Actions Banning MTBE................................16

MTBE in Gasoline:
Clean Air and Drinking Water Issues
Introduction
This report provides background information concerning the gasoline additive
methyl tertiary butyl ether (MTBE), discusses air and water quality issues associated
with it, and reviews options available to congressional and other policy-makers
concerned about its continued use. It includes a discussion of legislation in the 109^th
Congress.
Under the Clean Air Act Amendments of 1990, numerous areas with poor air
quality were required to add chemicals called “oxygenates” to gasoline as a means
of improving combustion and reducing emissions. The act had two programs that
required the use of oxygenates, but the more significant of the two was the¹
reformulated gasoline (RFG) program, which took effect January 1, 1995. Under
the reformulated gasoline program, areas with “severe” or “extreme” ozone pollution
(124 counties with a combined population of 73.6 million) must use reformulated
gasoline; areas with less severe ozone pollution may opt into the program as well,
and many have. In all, portions of 17 states and the District of Columbia use
reformulated gasoline (see Table 1 and Figure 1); about 30% of the gasoline sold in
the United States is RFG.
The law required that RFG contain at least 2% oxygen by weight. Refiners
could meet this requirement by adding a number of ethers or alcohols, any of which
contain oxygen and other elements. Because these substances are not pure oxygen,
the amount used to obtain a 2% oxygen level is greater than 2% of the gasoline blend.
For example, MTBE is only 19% oxygen and, thus, RFG made with MTBE needed
to contain 11% MTBE by volume to meet the 2% requirement.
By far the most commonly used oxygenate has been MTBE. In 1999, 87% of
RFG contained MTBE. As restrictions on MTBE use took effect in California, New
York, and Connecticut at the end of 2003, this number was reduced, but even with
these state bans, 46% of RFG nationally contained MTBE in 2004.

¹ The requirements for reformulated gasoline (RFG), to reduce air toxics and the emissions
that contribute to smog formation, are found in Section 211(k) of the Clean Air Act.
Separate requirements for oxygenated fuel, to reduce carbon monoxide formation, are
contained in Section 211(m). Of the two programs, that for RFG has a much larger impact
on the composition of the nation’s gasoline, because RFG requirements are in effect year-
round and apply to a larger percentage of the country. The Section 211(m) requirements,
by contrast, are in effect during winter months only and affect a small percentage of the
nation’s gasoline. Ethanol has been the primary oxygenate used in winter oxygenated fuels
and MTBE the primary oxygenate used in RFG, although either can be used in both fuels.

Table 1. Areas Using Reformulated Gasoline,
as of February 2005
Mandatory RFG Areas^a
Baltimore, MD
Chicago, IL (and portions of Indiana and Wisconsin)^b
District of Columbia (and suburbs in MD and VA)
Hartford, CT
Houston, TX
Los Angeles, CA
Milwaukee, WI^b
New York, NY (and portions of CT and NJ)
Philadelphia, PA (and portions of DE, MD, and NJ)
Sacramento, CA
San Diego, CA
San Joaquin Valley, CA
Southeast Desert, CA
Ventura County, CA
Opt-In RFG Areas^c
Connecticut (entire state)
Dallas / Fort Worth, TX
Delaware (entire state)
Kentucky portion of Cincinnati metropolitan area
Louisville, KY
Massachusetts (entire state)
New Hampshire portion of Greater Boston
New Jersey (entire state)
New York (counties near New York City)
Rhode Island (entire state)
St. Louis, MO
Virginia (Richmond, Norfolk - Virginia Beach - Newport News)
^Source:^{U.S. EP}^A.
^No^tes:
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^L^A^{, are n}^o^w^als^o^requ^{ired to u}^s^{e R}^F^{G becau}^s^e^th^ey^h^a^v^e^b^e^eⁿ^r^e^c^l^a^s^sⁱ^fⁱ^{ed as}^s^e^v^e^{re ozon}^e
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^p^eⁿ^dⁱⁿ^g^th^{e r}^e^so^lu^tioⁿ^o^f^co^u^r^{t ch}^allen^g^e^s.
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Figure 1. Federal RFG & Winter OXY/RFG Programs

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Also, MTBE has been used since the late 1970s in gasoline as an octane
enhancer. MTBE use grew rapidly in the 1980s, as it replaced lead in gasoline and
was used in premium fuels. As a result, gasoline with MTBE has been used virtually
everywhere in the United States, whether or not an area has been subject to RFG
requirements.
Air Quality Benefits Resulting from MTBE Use
State and local environmental agencies and EPA attribute marked improvements
in air quality to the use of fuels containing MTBE and other oxygenates, but the exact
role of oxygenates in achieving these improvements is subject to debate. In Los
Angeles, which has had the worst air quality in the country, the use of reformulated
gasoline was credited with reducing ground-level ozone by 18% during the 1996
smog season, compared to weather-adjusted data for the same period in 1994 and
1995. Use of RFG also reduced the cancer risk associated with exposure to vehicle
emissions by 30% to 40%, according to the California EPA, largely because it uses
less benzene, a known human carcinogen.²
Whether the oxygenates themselves should be given credit for these
improvements has been the subject of debate, with the answer depending to some
extent on what one assumes would replace the oxygenates if they were removed.
Asked to look at the ozone-forming potential of different oxygenates used in
reformulated gasoline, a National Academy of Sciences panel concluded that “the
addition of commonly available oxygenates to RFG is likely to have little air-quality
impact in terms of ozone reduction.”³ An EPA advisory panel, by contrast,
concluded that the use of oxygenates “appears to contribute to reduction of the use
of aromatics with related toxics and other air quality benefits.”⁴
Less controversy exists regarding oxygenates’ role in reducing carbon monoxide
emissions. Both EPA and an interagency group chaired by the White House Office
of Science and Technology Policy (OSTP) have reported improvements in carbon
monoxide (CO) levels due to the use of oxygenates. According to the June 1997
OSTP report, “analyses of ambient CO measurements in some cities with winter

² See “Reformulated Fuels Help Curb Peak Ozone Levels in California,” Daily Environment
Report, November 6, 1996, pp. A-1 and A-2.
³ Committee on Ozone-Forming Potential of Reformulated Gasoline, National Research
Council, Ozone-Forming Potential of Reformulated Gasoline, May 1999, p. 5. The NAS
study concluded that other characteristics of RFG, notably “lowering the Reid Vapor
Pressure (RVP) of the fuel, which helps depress evaporative emissions of VOC [volatile
organic compounds], and lowering the concentration of sulfur in the fuel, which prevents
poisoning of a vehicle’s catalytic converter,” result in a reduction of about 20% in VOC
emissions.
⁴ U.S. Environmental Protection Agency, Blue Ribbon Panel on Oxygenates in Gasoline,
Executive Summary and Recommendations, July 27, 1999, Appendix A. Available at
[ ht t p: / / www.epa.gov/ ot aq/ c onsumer / f uel s / oxypanel / bl uer i bb.ht m] .

oxygenated gasoline programs find a reduction in ambient CO concentrations of
about 10%.”⁵
EPA also “believes that the reductions estimated in air quality studies are
significant and that these reductions help to protect the public from the adverse health
effects associated with high levels of CO in the air.”⁶ The agency based its
conclusions both on its own analysis and on a report prepared for two industry
groups. The latter, using hourly data for more than 300 monitoring sites gathered
over a nine-year period, concluded that use of oxygenated fuels was associated with
a 14% reduction in ambient CO concentrations.⁷
Health-Related Questions
The improvements in measured air quality have not come without questions.
After oxygenated fuels containing MTBE were introduced, residents in several cities
complained of a variety of health effects from exposure to MTBE/RFG exhaust:
headaches, dizziness, nausea, sore eyes, and respiratory irritation. Some complaints
centered around the use of MTBE in cold weather; two of the principal areas noting
complaints were Alaska and Milwaukee, Wisconsin. The Interagency Task Force
examined these complaints and concluded:
With regard to exposures ... experienced by the general population and motorists,
the limited epidemiological studies and controlled exposure studies conducted
to date do not support the contention that MTBE as used in the winter
oxygenated fuels program is causing significant increases over background in⁸
acute symptoms or illnesses.
Additional health effects research is being conducted by EPA, universities, and
others. Under the authority of Section 211 of the Clean Air Act, EPA has requested
refiners to conduct health effects studies on conventional, reformulated, and
oxygenated (particularly MTBE-oxygenated) gasoline. These studies examine health
effects associated with the inhalation of evaporative emissions, and several are near
completion. Very little research has been done to assess the potential health risks
associated with exposure to MTBE in drinking water (ingestion).

⁵ Executive Office of the President, National Science and Technology Council, Interagency
Assessment of Oxygenated Fuels, Washington, D.C., June 1997, p. iv. Referred to hereafter
as the OSTP Report. (The executive summary, recommendations, and full report are
available at [http://www.ostp.gov/NSTC/html/MTBE/mtbe-top.html]). The report expressed
some hesitation about its conclusions, particularly regarding the impacts of MTBE in colder
weather. It also noted methodological difficulties in identifying statistically significant
reductions smaller than 10%, and recommended additional research.
⁶ U.S. EPA Response to Interagency Assessment of Oxygenated Fuels, undated, p. 2.
⁷ Systems Applications International, Inc., for the Renewable Fuels Association and the
Oxygenated Fuels Association, Regression Modeling of Oxyfuel Effects on Ambient CO
Concentrations, Final Report, January 8, 1997, p. 1.
⁸ OSTP Report, p. vi. The report did suggest that “greater attention should be given to the
potential for increased symptoms reporting among workers exposed to high concentrations
of oxygenated fuels containing MTBE,” however.

Much discussion has centered on whether MTBE has the potential to cause
cancer. Although there are no studies on the carcinogenicity of MTBE in humans,
EPA’s Office of Research and Development (ORD) reported in 1994 that
inhalation carcinogenicity studies in mice and rats show evidence of three types
of animal tumors [testicular, liver, and kidney]. These particular studies are
difficult to interpret because of some high-dose general toxicity. Nevertheless,
ORD believes the inhalation carcinogenicity evidence would support placing⁹
MTBE in Group C as a “possible human carcinogen.”
Also, one metabolite of MTBE (formaldehyde) is considered a probable human
carcinogen, and another metabolite (tertiary butyl alcohol (TBA)) induces male rat
kidney tumors.¹⁰
Based on animal studies, EPA has concluded that MTBE poses a potential for
carcinogenicity to humans at high doses; however, because of uncertainties and
limitations in the data, EPA has been unable to make a confident estimation of risk
at low exposure levels.¹¹ The Interagency Task Force assessing oxygenated fuels
concluded that the weight of the evidence supports regarding MTBE as having a
carcinogenic hazard potential for humans.¹²
In 1998, the International Agency for Research on Cancer (IARC) and the U.S.
National Toxicology Program determined not to list MTBE as a known human
carcinogen. The IARC noted that MTBE was “not classifiable as to its
carcinogenicity in humans,” based on inadequate evidence in humans and limited
evidence in experimental animals.¹³ In 1999, California’s Environmental Protection
Agency determined that the MTBE carcinogenicity studies were of similar quality to
studies on many other carcinogens, and established a public health goal for MTBE
in drinking water based on cancer risk.¹⁴

⁹ U.S. Environmental Protection Agency, Health Risk Perspectives on Fuel Oxygenates.
Office of Research and Development, EPA 600/R-94/217, December 1994, p. 8. Detailed
information is available in ORD’s 1993 MTBE risk assessment, Assessment of Potential
Health Risks of Gasoline Oxygenated with Methyl Tertiary Butyl Ether (MTBE),
EPA/600/R-93/206, at [http://www.epa.gov/ncea/pdfs/mtbe/gasmtbe.pdf].
¹⁰ U.S. Environmental Protection Agency, Assessment of Potential Health Risks of Gasoline
Oxygenated with Methyl Tertiary Butyl Ether (MTBE), EPA/600/R-93/206, p. 30.
¹¹ U.S. Environmental Protection Agency, Drinking Water Advisory: Consumer
Acceptability Advice and Health Effects Analysis on Methyl Tertiary-Butyl Ether (MTBE),
EPA-822-F-97-009, December 1997, pp. 1-2, 9-10. This and other health effects information
is available at [http://epa.gov/waterscience/criteria/drinking/mtbe.html].
¹² OSTP Report, pp. 4-26.
¹³ International Agency for Research on Cancer, IARC Monographs on the Evaluation of
Carcinogenic Risks to Humans and Their Supplements: Methyl tert-Butyl Ether (Group 3),
World Health Organization, v. 73, 1999, pp. 339-340.
¹⁴ California Environmental Protection Agency, Public Health Goal for Methyl Tertiary
Butyl Ether (MTBE) in Drinking Water, Office of Environmental Health Hazard
Assessment, March 1999, pp. 1-2.

Regarding noncancer effects, a California advisory committee determined that
there was not clear scientific evidence to support listing MTBE as a toxic substance
affecting human development or reproduction. In reviewing the research on cancer
and noncancer effects, these groups generally noted that research gaps exist, and that
the data were particularly limited on health effects associated with MTBE ingestion.
In response to the need for research to evaluate the potential health risks from
exposure to MTBE and other oxygenates in drinking water, EPA in 1998 published
a document that identified the most critical and immediate research needs. The
document was intended to serve as a guide to planning future research; however,
EPA has not pursued research to address the needs identified in this document.¹⁵
For practical purposes, the interpretation of any health risks associated with the
addition of MTBE to gasoline could benefit from a comparison to the health risks
associated with conventional gasoline. The Interagency Task Force, EPA, and some
environmental groups have all argued that current knowledge suggests that MTBE
is a less serious pollutant than the gasoline components it replaced. According to the
OSTP report, the cancer risk from exposure to MTBE is “substantially less than that
for benzene, a minor constituent of gasoline that is classified as a known human
carcinogen; and more than 100 times less than that for 1,3-butadiene, a carcinogenic
emission product of incomplete fuel combustion.”¹⁶ Such a comparison might be of
limited usefulness, however, given the data gaps regarding MTBE’s health effects
and MTBE’s ability to reach water supplies more readily than conventional gasoline.
Water Quality and Drinking Water Issues
A major issue regarding the use of MTBE concerns its detection in ground water
at thousands of locations nationwide, and, usually at low levels, in various municipal
drinking water supplies, private wells, and reservoirs. Although MTBE has provided
air quality benefits, the inclusion of MTBE in gasoline has been a growing concern
as an environmental risk since the 1980s, for several reasons. Specifically, compared
to other gasoline components, MTBE (1) is much more soluble in water, (2) has a
lower taste and odor threshold, (3) has a higher transport rate, and (4) often requires
more time to be remediated and must be treated by more complicated and expensive
treatment technologies.¹⁷ MTBE is extremely soluble and, once released, it moves
through soil and into water more rapidly than other chemical compounds present in
gasoline. Once in ground water, it is slow to biodegrade and is more persistent than
other gasoline-related compounds. In surface water, it dissipates more rapidly.

¹⁵ U.S. Environmental Protection Agency, Oxygenates in Water: Critical Information and
Research Needs, Office of Research and Development, EPA/600/R-98/048, 1998.
¹⁶ OSTP Report, p. vii.
¹⁷ See, e.g., U.S. Environmental Protection Agency Memorandum from Beth Anderson, Test
Rule Development Branch, re. Division Director Briefing for Methyl tert-Butyl Ether
(MTBE), April 1987, which notes that “[t]he tendency for MTBE to separate from the
gasoline mixture into ground water could lead to widespread drinking water contamination.”

Studies show that most of it evaporates from the upper levels of surface water in a
few weeks, while it persists longer at greater depths.¹⁸
The primary source of MTBE in ground water has been petroleum releases from
leaking underground storage tank (UST) systems. Other significant sources include
leaking above-ground storage tanks, fuel pipelines, refueling facilities, and accidental
spills. The most significant source of MTBE in lakes and reservoirs appears to be
exhaust from motorized watercraft, while smaller sources include gasoline spills,
runoff, and ground water flow.¹⁹
Occurrence of MTBE in Drinking Water. Available information on the
occurrence of MTBE in public drinking water supplies has increased substantially in
recent years, but has been somewhat limited geographically. Although a number of
serious contamination incidents have been reported, particularly in California, the
available data generally do not indicate a broad presence of MTBE in drinking water
supplies at levels of public health concern. However, as monitoring has increased
among the states, so has the number of public water systems and private wells
showing low-level detections of MTBE.
The most extensive MTBE monitoring data for drinking water are available for
California, where testing for MTBE was made mandatory for most water systems in
1997. Through April 2002, some 2,957 systems had tested 9,905 sources of drinking
water. MTBE was detected in 85 (0.9%) of these sources, including 54 (0.6%) of
9,234 ground water sources and 31 (4.6%) of 671 surface water sources. Overall, 53
(1.8%) of the 2,957 public water systems reported detections of MTBE in at least one
of their drinking water sources, and 13 (0.4%) of the systems reported that a total of
21 (0.2%) sources of water had MTBE concentrations exceeding California’s MTBE
drinking water standard of 13 micrograms per liter (:g/L). As of October 2005,
monitoring results had been reported for 13,620 sources. Nearly all of these results
were nondetections, while 113 sources had two or more MTBE detections.²⁰
In 1998, the state of Maine tested nearly 800 public water supplies and 950
randomly selected private wells and found detectable levels of MTBE in 16% of the
public water supplies and 15.8% of the private wells. None of the public water supply
samples exceeded the state drinking water standard of 35 :g/L, while 1% of private
well samples contained MTBE concentrations above the standard. Roughly 94% of
public water supply samples showed MTBE levels that were either not detectable or
below 1 :g/L; the remaining 6% of samples were between 1 :g/L and 35 :g/L.²¹

¹⁸ Arturo Keller et al., Health and Environmental Assessment of MTBE, Report to the
Governor and Legislature of the State of California as Sponsored by SB 521, Volume I,
Summary and Recommendations, University of California, November 1998, p. 35.
¹⁹ Keller, pp. 33-34.
²⁰ California EPA, MTBE in California Drinking Water, Oct. 18, 2005. For more
information, see [http://www.dhs.ca.gov/ps/ddwem/chemicals/MTBE/mtbeindex.htm].
(Micrograms per liter(:g/L) are equivalent to parts per billion (ppb) for fresh water.)
²¹ Maine Department of Human Services, Department of Environmental Protection, and
(continued...)

Nationwide, the data on the presence of MTBE in drinking water have been
more limited. In July 1999, the EPA-appointed Blue Ribbon Panel on Oxygenates
in Gasoline reported that between 5% and 10% of drinking water supplies tested in
high oxygenate-use areas show at least detectable amounts of MTBE, and that the
vast majority of these detections have been well below levels of public health
concern, with roughly 1% of detections exceeding 20 :g/L.²²
In a study completed in 2001, the United States Geological Survey (USGS), in
cooperation with EPA, assessed the occurrence of MTBE and other volatile organic
compounds (VOCs) in public water supplies in 10 mid-Atlantic and northeastern
states where MTBE use is common.²³ The study analyzed water from 1,194
randomly selected community water systems. The USGS reported that MTBE was
detected in 8.9% of the tested water systems and was strongly associated with areas
where reformulated and/or oxygenated (RFG/OXY) fuels are used. Fifteen percent
of systems in RFG/OXY areas reported detecting MTBE at concentrations of 1 :g/L
or more, while 3% of systems outside of RFG/OXY areas reported such detections.
Most MTBE concentrations ranged from 0.5 to 5 :g/L, and less than 1% of the
systems reported MTBE at levels equal to or exceeding 20 :g/L, the lower limit of
EPA’s drinking water advisory.²⁴
A 2003 nationwide survey conducted by the American Water Works
Association Research Foundation (AWWARF) reported similar results. This survey
monitored sources of drinking water for 954 randomly selected community water
systems (including 579 samples from groundwater-supplied systems and 375 samples
from surface-water-supplied systems). MTBE was found in 8.7% of the community
water system source waters, at concentrations ranging from 0.2 to 20 :g/L.²⁵
AWWARF also conducted a focused survey, including 451 samples collected from

134 community water systems source waters (including ground water, reservoirs,

²¹ (...continued)
Department of Conservation, The Presence of MTBE and Other Gasoline Compounds in
Maine’s Drinking Water, preliminary report, October 1998, 24 pp. (Maine was not required
to use RFG, but had done so voluntarily; the state opted out of the RFG program in October
1998 because of concerns over MTBE contamination of ground water and drinking water
wells.)
²² The Blue Ribbon Panel on Oxygenates in Gasoline, Executive Summary and
Recommendations, July 27, 1999. Summary and full report are available at [http://www.
epa.gov/ otaq/consumer/fuels/oxypanel/blueribb.htm] .
²³ For information on this 2001 study and other MTBE research at the USGS, see
[http://sd.water.usgs .gov/nawqa/vocns/mtbe.html ].
²⁴ Stephen J. Grady and George D. Casey, MTBE and Other VOCs in Drinking Water in the
Northeast and Mid-Atlantic Region. Available at [http://sd.water.usgs.gov/nawqa/vocns/
dw_12state.html]. MTBE was the second most frequently detected VOC in drinking water,
after trihalomethanes (disinfection byproducts), which were detected in 45% of systems
tested. Chloroform, the most frequently detected trihalomethane, was found in 39% of
systems.
²⁵ American Water Works Association Research Foundation, Occurrence of MTBE and
VOCs in Drinking Water Sources of the United States, 2003, p. xxiii, p. 101.

lakes, rivers, and streams) that were suspected or known to contain MTBE. The
researchers found MTBE in 55.5% of the water systems.²⁶
Occurrence of MTBE in Ambient Ground Water. Looking at ground
water generally (not only drinking water wells), the data indicate that low levels of
MTBE are found often. Nationally, the most comprehensive ground water research
has been conducted by the USGS through the National Water Quality Assessment
Program (NAWQA). USGS data for some 2,743 monitoring, observation, and water
supply wells in 42 states (from 1993 to 1998) showed MTBE present in about 5%
(145) of the wells, with MTBE levels exceeding 20 :g/L in 0.5% (12) of the wells.
In all, MTBE was detected in ground water in 22 of the 42 states. The USGS further
evaluated the occurrence data based on whether or not detections occurred in RFG
or winter oxyfuel program areas. The researchers reported that low concentrations
of MTBE were detected in 21% of ambient ground water samples in high MTBE-use²⁷
areas and in 2.3% of samples in low or no-MTBE use areas.
MTBE has been detected most frequently in ground water associated with
leaking underground storage tank (UST) sites. The California Environmental
Protection Agency has estimated that, based on monitoring information available for
these sites, MTBE can be expected to be found in shallow, unused ground water at
thousands of UST sites in the state, and often at high concentrations (in the parts per
million range).²⁸ Moreover, a report by the Lawrence Livermore National Laboratory
found that MTBE was not significantly degrading in the monitoring networks for
these leaking UST sites.²⁹ The situation in other states may be similar. In a
September 2000 survey of state leaking underground storage tank (LUST) programs,

31 states reported that MTBE was found in ground water at 40% or more of gasoline-³⁰

contaminated sites in their states; 24 states reported MTBE at 60% to 100% of sites.
A 2003 update to that survey found that, averaged among the states, MTBE was³¹

found in groundwater at 60% of gasoline-contaminated sites.
²⁶ Ibid., p. 120.
²⁷ U.S. Geological Survey, data summary submitted to the EPA Blue Ribbon Panel on the
Use of MTBE and Other Oxygenates in Gasoline, January 22, 1999. Available at
[ ht t p: / / www.epa.gov/ ot aq/ c onsumer / f uel s / oxypanel / bl uer i bb.ht m#Pr esent a t i ons] .
²⁸ California Environmental Protection Agency, MTBE Briefing Paper, p. 17.
²⁹ Anne Happel, E. H. Beckenbach, and R. U. Halden, An Evaluation of MTBE Impacts to
California Groundwater Resources, Lawrence Livermore National Laboratory and the
University of California, Berkeley, June 11, 1998, p. iv.
³⁰ New England Interstate Water Pollution Control Commission (NEIWPCC), Survey of
State Experiences with MTBE Contamination at LUST Sites (August 2000). Available at
[http://www.neiwpcc.org]. The survey notes that some states began requiring testing at
LUST sites in the 1980s (Maine in 1986 and Minnesota in 1987).
³¹ New England Interstate Water Pollution Control Commission (NEIWPCC), Survey of
State Experiences with MTBE and Other Oxygenate Contamination at LUST Sites (August

2003). Available at [http://www.neiwpcc.org/Index.htm?MTBE.htm~mainFrame].

EPA’s Responses to MTBE Occurrence in Water
Safe Drinking Water Act Initiatives. MTBE has not been regulated under
the Safe Drinking Water Act (SDWA), but to address concerns raised by the
detection of MTBE in ground water and drinking water supplies, EPA has pursued
several initiatives. In December 1997, the agency issued a drinking water advisory
for MTBE based on consumer acceptability (for taste and smell). EPA issues
drinking water advisories to provide information on contaminants in drinking water
that have not been regulated under SDWA.³² Advisories are not enforceable, but
provide guidance to water suppliers and other interested parties regarding potential
health effects or consumer acceptability. While the MTBE advisory is not based on
health effects, EPA notes that keeping MTBE levels in the range of 20-40 :g/L or
lower for consumer acceptability reasons would also provide a large margin of safety
from adverse health effects. Specifically, the advisory states that
[c]oncentrations in the range of 20 to 40 :g/L are about 20,000 to 100,000 (or
more) times lower than the range of exposure levels in which cancer or
noncancer effects were observed in rodent tests. This margin of exposure is in
the range of margins of exposure typically provided to protect against cancer
effects by the National Primary Drinking Water Standards under the Federal Safe
Drinking Water Act. This margin is greater than such standards typically
provided to protect against noncancer effects. Thus, protection of the water
source from unpleasant taste and odor as recommended will also protect³³
consumers from potential health effects.
In addition, EPA has taken steps that could lead to the development of an
enforceable drinking water standard for MTBE. In February 1998, EPA included
MTBE on a list of contaminants that are potential candidates for regulation under the
Safe Drinking Water Act. Compounds on the contaminant candidate list are
categorized as regulatory determination priorities, research priorities, or occurrence
priorities. Because of data gaps on MTBE health effects and occurrence, EPA placed
MTBE in the category of contaminants for which further occurrence data collection
and health effects research are priorities. Thus, while EPA has not selected MTBE
for regulation to date, the agency is pursuing research to fill the existing data gaps so
that a regulatory determination may be made.
The Safe Drinking Water Act also directed EPA to publish a rule by August

1999 requiring public water systems to conduct monitoring for a list of unregulated

³² At least seven states have set health-based drinking water standards for MTBE ranging
from 13 parts per billion (ppb) to 240 ppb. (Parts per billion are equivalent to :g/L.) At least
five states have adopted a secondary standard (based on aesthetic qualities, i.e., taste and
odor), ranging from 5 ppb to 70 ppb. At least 10 states have adopted drinking water advisory
levels. At least 32 states have adopted a very wide range of ground water cleanup levels;
some are guidelines, some are enforceable, and some vary depending on the use of ground
water; some states apply these levels to ground-water cleanup at leaking underground
storage tank sites where ground water is used for drinking water.
³³ EPA Drinking Water Advisory, p. 2.

contaminants that may require regulation. EPA included MTBE in this rule and
directed large public water systems to begin monitoring for MTBE in January 2001.³⁴
The occurrence data generated under the Unregulated Contaminant Monitoring
Rule, combined with the results of ongoing health effects studies, are intended to
provide information needed by EPA to make a regulatory determination for MTBE.
Under SDWA, the next round of regulatory determinations will be made in 2006.
EPA typically requires roughly three and one-half years to promulgate a drinking
water regulation; thus, the earliest EPA would be expected to issue a drinking water
regulation for MTBE is 2010.
Underground Storage Tank Regulation. A key EPA and state
contamination prevention effort involves implementing the underground storage tank
program established by the 1984 amendments to the Resource Conservation and
Recovery Act (RCRA). Under this program, EPA has set operating requirements and
technical standards for tank design and installation, leak detection, spill and overfill
control, corrective action, and tank closure. As of 1993, all tanks were required to
comply with leak detection regulations. Additionally, all tanks installed before
December 1988 (when standards for new tanks took effect) were required to be
upgraded, replaced, or closed by December 22, 1998.
Federal and state regulators anticipate that as tank owners and operators comply
with these requirements, the number of petroleum and related MTBE leaks from UST
systems should decline significantly. However, MTBE has been detected at
thousands of leaking tank sites, and this additive is proving more difficult and costly
to remediate than conventional gasoline. A key concern for states is that, as testing
increases, it is likely that the number and scope of needed cleanups may increase as
well. A 2003 state survey found that many sites have not been tested for MTBE, and
most states do not plan to reopen previously closed Leaking Underground Storage
Tank (LUST) sites to look for MTBE, although 32 states reported that MTBE plumes³⁵
are often or sometimes longer than plumes from conventional gasoline leaks. A key
concern for community water suppliers and well owners is that fewer than half of the
states are taking steps to ensure that MTBE and other oxygenates are not migrating
beyond standard monitoring boundaries for LUST cleanup,³⁶ thus leaving an
unknown number of MTBE plumes unremediated and ground water supplies at risk
for future contamination.
In 1986, Congress created a federal response program for cleaning up releases
from leaking petroleum USTs through the Superfund Amendments and
Reauthorization Act, which amended RCRA Subtitle I. These provisions created the
LUST Trust Fund and authorized EPA and states to use the fund to clean up

³⁴ 64 Federal Register 50555, September 17, 1999. The law requires monitoring by all
large public water systems (serving more than 10,000 people) and requires a representative
sampling of smaller systems.
³⁵ New England Interstate Water Pollution Control Commission (NEIWPCC), Survey of
State Experiences with MTBE and Other Oxygenate Contamination at LUST Sites (August

2003), Executive Summary, pp. 1-2.

³⁶ Ibid.

underground storage tank spills and leaks in cases where tank owners or operators do
not clean up sites. EPA and states use the annual trust fund appropriation primarily
to oversee and enforce corrective actions performed by responsible parties. EPA and
states also use fund monies to conduct corrective actions where no responsible party
has been identified, where a responsible party fails to comply with a cleanup order,
or in the event of an emergency, and to take cost recovery actions against parties. For
FY2006, Congress provided $73 million from the LUST Trust Fund for states and
EPA to administer the LUST remediation program. EPA allocates approximately

80% of the appropriated amount to the states.³⁷

Since the federal underground storage tank program began, nearly 1.6 million
of the roughly 2.2 million petroleum tanks subject to regulation have been closed,
and, overall, the frequency of leaks from UST systems has been reduced. Through
FY2005, 653,621 tanks subject to UST regulations remained in service, 452,041
releases had been confirmed, 421,924 cleanups had been initiated, and 332,799
cleanups had been completed. During FY2005, 7,421 releases were newly confirmed,
compared with 8,850 in FY2004 and 12,000 in FY2003.³⁸
Blue Ribbon Panel on Oxygenates in Gasoline
As part of its effort to gather information and focus research, in November 1998,
EPA established an independent Blue Ribbon Panel on Oxygenates in Gasoline to
review the broad range of issues posed by the use of MTBE and other oxygenates.
The panel was established under the auspices of the Clean Air Act Advisory
Committee, and its membership reflected a broad range of experts and stakeholders.³⁹
The panel:
^!recommended that Congress act to remove the Clean Air Act
requirement that 2% of RFG, by weight, consist of oxygen, in order
to ensure that adequate fuel supplies can be blended in a cost-
effective manner while reducing usage of MTBE;
^!recommended that the winter oxygenated fuels program be
continued;
^!agreed broadly that use of MTBE should be reduced substantially
(with some members supporting its complete phaseout), and that
Congress should act to provide clear federal and state authority to
regulate and/or eliminate the use of MTBE and other gasoline
additives that threaten drinking water supplies;

³⁷ For more information on the LUST program and related legislation, see CRS Report
RS21201, Leaking Underground Storage Tanks: Program Status and Issues, by Mary
Tiemann.
³⁸ For state-by-state information, see [http://www.epa.gov/oust/cat/camarchv.htm].
³⁹ A list of Blue Ribbon Panel members is provided, along with the panel report and related
materials, at [http://www.epa.gov/oar/caaac/mtbe.html].

^!recommended that EPA seek mechanisms to ensure that there is no
loss of current air quality benefits (i.e., no backsliding); and
^!recommended a comprehensive set of improvements to the nation’s
water protection programs, including over 20 specific actions to
enhance Underground Storage Tank, Safe Drinking Water, and
private well protection programs.
The panel’s numerous water protection recommendations addressed prevention,
treatment, and remediation. For example, the panel recommended that EPA work
with Congress to determine whether above-ground petroleum storage tanks (which
generally are not regulated) should be regulated; work to enhance state and local
efforts to protect lakes and reservoirs that serve as drinking water supplies by
restricting use of recreational watercraft; and accelerate research for developing cost-
effective drinking water treatment and remediation technologies.
The panel also suggested that EPA and others should accelerate ongoing health
effects and environmental behavior research of other oxygenates and gasoline
components that would likely increase in use in the absence of MTBE.
Then-EPA Administrator Carol Browner concurred with the recommendation
of the Blue Ribbon Panel calling for a significant reduction in the use of MTBE. She
also stated her commitment to work with Congress for “a targeted legislative solution
that maintains our air quality gains and allows for the reduction of MTBE, while
preserving the important role of renewable fuels like ethanol.”⁴⁰
On March 20, 2000, the former administrator announced that EPA would begin
the process of issuing regulations to reduce or phase out use of MTBE. Recognizing
that this process could take several years to complete, she renewed her call for
congressional action to “amend the Clean Air Act to provide the authority to
significantly reduce or eliminate the use of MTBE,” to “ensure that air quality gains
are not diminished,” and to “replace the existing oxygen requirement contained in the
Clean Air Act with a renewable fuel standard for all gasoline.”⁴¹
In its few public statements on MTBE, the Bush Administration has not
indicated any change in the Clinton Administration’s policy, although EPA’s effort
to regulate MTBE using its existing authority slowed noticeably and now appear to
have been terminated. Five years after EPA began the development of regulations
to reduce or phase out MTBE, the agency quietly published a note in the Federal
Register stating that its efforts to control MTBE were being “withdrawn.”⁴² This
Administration, like the previous one, appears to have preferred a legislative solution.

⁴⁰ Statement by former EPA Administrator Carol Browner on findings by the EPA’s Blue
Ribbon MTBE Panel, July 26, 1999, available on the Blue Ribbon Panel home page,
previously cited.
⁴¹ U.S. Environmental Protection Agency, “Clinton-Gore Administration Acts to Eliminate
MTBE, Boost Ethanol,” EPA Headquarters Press Release, March 20, 2000, pp. 7-8.
⁴² U.S. EPA, Semiannual Regulatory Agenda, 70 Federal Register 27604, Sequence
Number 3106.

State Initiatives
Among the states, California has arguably been the most active in addressing
MTBE issues. Actions taken by the state legislature and the governor helped propel
the issue to national prominence. Legislation signed October 8, 1997, required the
state to set standards for MTBE in drinking water, and required the University of
California to conduct a study of the health effects of MTBE and other oxygenates and
risks associated with their use. The UC report, which was issued in November 1998,
recommended a gradual phaseout of MTBE from gasoline in California.⁴³ Based on
the report and on public hearings, Governor Davis issued a finding that “on balance,
there is a significant risk to the environment from using MTBE in gasoline in
California,” and required the state’s Energy Commission to develop a timetable for
the removal of MTBE from gasoline at the earliest possible date, but not later than
December 31, 2002. (This date was amended, in March 2002, to December 31,
2003.) The governor also required the California Air Resources Board (CARB) to
make a formal request to U.S. EPA for a waiver from the requirement to use
oxygenates in reformulated gasoline and required three state agencies to conduct
additional research on the health and environmental impacts of ethanol, the most
likely substitute for MTBE.
The waiver request resulted in months of negotiation between EPA and CARB,
with EPA expressing skepticism that it had authority to grant a waiver under the
circumstances.⁴⁴ More than two years later, on June 12, 2001, the agency finally
denied California’s request. Without a waiver, gasoline sold in ozone nonattainment
areas in the state was required to contain another oxygenate once the MTBE ban took
effect. During 2003, California’s motor fuels gradually phased out MTBE in favor
of ethanol.⁴⁵
Following California’s decision to phase out MTBE, at least 24 other states have
acted to limit or phase out its use. The largest of these, New York, set a date of
January 1, 2004, to ban MTBE. (Table 2 summarizes state actions to ban MTBE.)

⁴³ See Arturo Keller et al., Health & Environmental Assessment of MTBE, Report to the
Governor and Legislature of the State of California As Sponsored by SB 521, November

1998. Available at [http://www.tsrtp.ucdavis.edu/mtberpt/homepage.html].

⁴⁴ The Clean Air Act, in Section 211(k)(2)(B), authorizes waiver of the RFG oxygenate
requirement only if the Administrator determines that oxygenates would prevent or interfere
with the attainment of a National Ambient Air Quality Standard. The law does not address
other impacts, such as drinking water contamination.
⁴⁵ In January 2004, Governor Schwarzenegger again requested EPA to grant California a
waiver from the oxygenate requirement. The governor noted that EPA’s Blue Ribbon Panel
concluded that a minimum oxygen content is not needed in California, and that CARB had
demonstrated that the oxygen requirement is detrimental to the state’s efforts to improve air
quality. Governor Schwarzenegger further stated that the oxygenate requirement greatly
increases fuel costs and “is no longer required to ensure substantial and sustained ethanol
use in California.” EPA denied Governor Schwarzenegger’s request on June 2, 2005.

Table 2. State Actions Banning MTBE
StatePhaseoutDate Complete or Partial Ban?
AZ1/1/05Partial: no more than 0.3% (vol.) MTBE in gasoline
CA12/31/03Complete ban
CO4/30/02Complete ban
Complete ban by 1/1/04, coordinated with NESCAUM
CT1/1/04(North East States for Coordinated Air Use Management)
regional fuels task force
Partial: may not use, sell, or manufacture MTBE as a fuel
IL7/24/04additive; may sell motor fuel containing no more than 0.5%
(vol.) MTBE
IN7/24/04Partial: no more than 0.5% (vol.) MTBE in gasoline
IA7/1/00Partial: no more than trace amounts (0.5% by vol.) MTBE inmotor vehicle fuel
KS7/1/04Partial: may not sell or deliver any motor vehicle fuelcontaining more than 0.5% (vol.) MTBE
KY1/1/06Partial: no more than trace amounts of MTBE in fuel
ME1/1/07Partial: no more than 0.5% (vol.) MTBE in gasoline sold
MI6/1/03Complete ban by 6/1/03; can be extended if determined by6/1/02 that phaseout date is not achievable
7/2/00Partial/then complete: no more than 1/3 of 1% oxygenate asof 7/2/00; complete ban as of 7/2/05. Ban also applies to
MN(partial)ethyl tertiary butyl ether (ETBE) and tertiary amyl methyl

7/2/05 (full)ether (TAME)

MO7/31/05Partial: no more than 0.5% (vol.) MTBE in gasoline sold orstored
MT1/1/06Partial: no more than trace amounts in gasoline sold, stored,or dispensed
NE7/13/00Partial: no more than 1% (vol.) MTBE in any petroleumproduct
Partial: no more than 0.5% (vol.) MTBE in gasoline sold or
NH1/1/07stored. Ban applies to other gasoline ethers and tertiary
butyl alcohol (TBA)
NJ1/1/09Partial: no more than 0.5% (vol.) MTBE in gasolinedistributed in commerce for sale in the state
NY1/1/04Complete ban as of 1/1/04
NC1/1/08Partial: no more than 0.5% (vol.) MTBE in motor fuel

StatePhaseoutDate Complete or Partial Ban?
OH7/1/05Partial: no more than 0.5% (vol.) MTBE in motor vehiclefuels
Partial: no more than 0.5% (vol.) MTBE in gasoline sold,
RI6/1/07delivered, or imported. Ban also applies to other gasoline
ethers, and TBA.
SD7/1/01Partial: no more than trace amounts (less than 0.5% vol.)resulting from commingling during storage or transfer
VT1/1/07Partial: no more than 0.5% (vol.) MTBE or other gasolineethers in fuel products sold or stored
WA1/1/04Partial: may not be intentionally added to fuel or knowinglymixed in gasoline above 0.6% (vol.)
WI8/1/04Partial: no more than 0.5% (vol.) MTBE in gasoline
^Source:^En^vⁱ^ron^m^en^t^a^l^Prot^ectⁱ^oⁿ^A^g^eⁿ^c^y^,^EPA^420-^B-^04-^{009, Ju}ⁿ^e^{2004, u}^pdat^e^{d Ju}^l^y^{2005 by}
^CRS.
Alternatives to MTBE
The major potential alternatives to MTBE are other oxygenates. Oxygenates
possess several advantages, including high octane and the ability to replace toxic
components of conventional gasoline.
Oxygenates that could replace MTBE include ethers, such as ethyl tertiary butyl
ether (ETBE), and alcohols, such as ethanol. These other oxygenates may pose
health and environmental impacts, but inadequate data make it difficult to reach
definite conclusions. EPA’s Blue Ribbon Panel concluded:
The other ethers (e.g., ETBE, TAME, and DIPE) have been less widely used and
less widely studied than MTBE. To the extent that they have been studied, they
appear to have similar, but not identical, chemical and hydrogeologic
characteristics. The Panel recommends accelerated study of the health effects
and groundwater characteristics of these compounds before they are allowed to⁴⁶
be placed in widespread use.
Ethanol and other alcohols are considered relatively innocuous on their own;
they generally do not persist in ground water and are readily biodegraded. However,
research suggests that the presence of ethanol in a gasoline plume can extend the⁴⁷
spread of benzene and other toxic constituents of gasoline through ground water.
This is largely because ethanol is likely to be degraded preferentially by

⁴⁶ Blue Ribbon Panel Report, p. 8.
⁴⁷ See, for example, “Ethanol-Blended RFG May Cause Small Hike in Gasoline Plume
Size,” Mobile Source Report, December 2, 1999, p. 11, or “Experts Charge Cal/EPA
Rushing Approval of Ethanol in RFG,” Inside Cal/EPA, January 14, 2000, p. 1.

microorganisms that would otherwise feed on other chemical components of
gasoline, including benzene, toluene, ethylbenzene, and xylene (BTEX).
In announcing the phaseout of MTBE in his state on March 25, 1999,
California’s Governor Davis required three state agencies to conduct additional
research on the health and environmental impacts of ethanol, the most likely
substitute. In reports approved in January 2000, the agencies concluded that if
ethanol were substituted for MTBE, there would be “some benefits in terms of water
contamination” and “no substantial effects on public-health impacts of air
pollution.”⁴⁸
A more recent article, based on the California ethanol review, focused
specifically on the relative risks of ground water contamination by spills of ethanol-
blended gasoline, MTBE-blended gasoline, and non-RFG gasoline. The authors
concluded that
relative to risks associated with standard formulation gasoline, there is an
increase in the risk that wells will be contaminated by RFG using either MTBE
or ethanol as an oxygenate [emphasis added]. With ethanol, the risk of
contaminating wells decreases after approximately five years. However, the risk
continues to grow for MTBE because of the assumption that this chemical is not
degraded in the subsurface. The conservative approach used in this analysis,
including the low biodegradation rates and assumption that the gasoline source
areas are not remediated, results in an overstatement of the risks associated with
these additives to gasoline. Nevertheless, the relative trends do favor ethanol⁴⁹
when considering risk associated with RFG spills.
The switch from MTBE to ethanol is not without technical problems, as well.
Ethanol costs substantially more to produce than MTBE; and it poses challenges to
the gasoline distribution system (it separates from gasoline if transported long
distances by pipeline, so it must be mixed with non-oxygenated gasoline blendstock
close to the market in which it is to be sold).⁵⁰ Because most ethanol is produced in
the Midwest, whereas most RFG is consumed on the East and West Coasts,
transportation of ethanol to markets poses logistical problems and adds cost to any
gasoline-ethanol blend.

⁴⁸ California Air Resources Board, Water Resources Control Board, and Office of
Environmental Health Hazard Assessment, Health and Environmental Assessment of the
Use of Ethanol as a Fuel Oxygenate, Report to the California Environmental Policy Council
in Response to Executive Order D-5-99, Dec. 1999, vol. 1, Executive summary, pp. 1-22.
Report is available at [http://www-erd.llnl.gov/ethanol/]).
⁴⁹ Susan Powers et al., “Will Ethanol-Blended Gasoline Affect Groundwater Quality?”
Environmental Science & Technology, American Chemical Society, January 1, 2001, p.

28A.

⁵⁰ For additional information on ethanol, see CRS Report RL33290, Fuel Ethanol:
Background and Public Policy Issues, Brent D. Yacobucci.

Since 1997, some refiners have discussed the possibility of making gasoline that
meets the performance requirements for RFG without using oxygenates.⁵¹ However,
in the absence of congressional action, this was not permitted. Now, with the
enactment of the Energy Policy Act of 2005, which ends the oxygenate requirement
in May 2006 and imposes a renewable fuels requirement for gasoline, refiners
generally are choosing to use ethanol to replace MTBE. Temporarily, this has led to
shortages of ethanol and has contributed to higher gasoline prices in March and April

2006. Ethanol producers, represented by the Renewable Fuels Association (RFA),

assert that these shortages are temporary: 500 million gallons of additional annual
capacity are expected online before July, 2006, according to RFA, and another 900
million gallons by the end of the year. With additional imports from Brazilian and
Caribbean suppliers, reallocation of ethanol within the marketplace, and the use of
ethanol stored at terminals in anticipation of the transition, RFA says, “...virtually
every refiner and gasoline analyst now acknowledges there will be sufficient ethanol
supplies to meet the demand created by MTBE replacement.”⁵²
The increased demand for ethanol has stimulated the market for corn. Nearly
13% of the nation’s corn crop was used to produce ethanol in 2004, and ethanol
production has grown at least 20% since then. As much as 30% of the corn crop may
be dedicated to ethanol production by 2012. Federal tax credits for ethanol blending
and other state and federal legislation have played key roles in promoting this growth.
(For background on ethanol and a discussion of ethanol issues, including the effect
of the Energy Policy Act, see CRS Report RL33290, Fuel Ethanol: Background and
Public Policy Issues, by Brent D. Yacobucci.)
Legislation
Building on the work of earlier Congresses, the 109^th Congress addressed
MTBE, ethanol, and many other energy issues in H.R. 6, the comprehensive energy
bill enacted in the summer of 2005. The bill passed the House April 21, 2005; a
different version passed the Senate June 28, 2005.⁵³ Both houses — in their separate
legislation — would have banned future use of MTBE in motor fuels, with some
exceptions, and authorized transition assistance for MTBE producers, although the

⁵¹ In earlier versions of this report, we quoted Chevron and Tosco, two firms with large
stakes in the California gasoline market, who asked permission to produce RFG without
oxygenates in October and December 1997.
⁵² Testimony of Bob Dinneen, President and CEO, Renewable Fuels Association, “The
Impact of the Elimination of MTBE in Gasoline,” Hearing, U.S. Senate, Committee on
Environment and Public Works, March 29, 2006. Mr. Dinneen’s testimony quotes the CEOs
of Valero Energy, the nation’s largest refiner, and ExxonMobil in support of his statement.
⁵³ Legislation that could affect MTBE use has been introduced in every Congress since the
104^th. In the 108^th Congress, both the House and Senate passed comprehensive energy bills
(H.R. 6) that addressed MTBE. A conference report on the legislation (H.Rept. 108-375)
was adopted by the House, November 18, 2003, on a vote of 246-180. In the Senate,
however, a cloture vote on the conference report, November 21, 2003, failed to achieve the
60 votes necessary to limit debate, in large part because of the MTBE safe harbor provision
contained in the conference report.

specifics of these provisions differed. The House bill would also have provided a
“safe harbor” from product liability suits for MTBE producers.
Conferees on the legislation could not reach agreement on most of these
provisions, so the version of H.R. 6 that emerged from conference and was signed by
the President August 8, 2005 (P.L. 109-58), was stripped of many MTBE-related
elements. As a result, controls on the use of MTBE and liability for cleanup of
MTBE in ground water and drinking water will be left to the states and the courts
respectively.
The reasons why these provisions were left out of the final version are
complicated. The conferees faced time pressure as the result of a White House
demand that energy legislation be delivered to the President by August 1. For that
deadline to be met, the conferees needed to reach agreement on a range of issues
quickly. The safe harbor and the provisions on the phaseout of MTBE, described in
more detail below, were not amenable to a quick compromise. Thus, the path of least
resistance was to remove them.
In the enacted version, Congress did address two issues that will affect future
MTBE use. The act removes the Clean Air Act’s mandate to use oxygenates (such
as MTBE or ethanol) in reformulated gasoline, eliminating a major incentive for
continued use of MTBE. However, the enacted bill will also require a substantial
increase in the use of renewable fuels, such as the competing oxygenate, ethanol, in
both conventional and reformulated gas. With ethanol use required, there will be less
need for gasoline refiners to use MTBE.
Refiners began reacting to these provisions almost immediately: Valero Energy,
the nation’s largest petroleum refiner, announced August 2, 2005, that it will
discontinue production of MTBE in May 2006, when the RFG oxygenate
requirement is eliminated.⁵⁴
The remainder of this section discusses the principal features of the House and
Senate bills and how they were addressed in the enacted legislation.
Safe Harbor Provision. Perhaps the most controversial element in H.R. 6
was the House version’s inclusion of a safe harbor provision protecting
manufacturers and distributors of renewable fuels and fuels containing MTBE from
product liability claims. The Senate bill contained a safe harbor for renewable fuels,
but not for MTBE.
The effect of the House provision would have been to protect anyone in the
product chain, from manufacturers to retailers, from liability for damages for
contamination related to MTBE and renewable fuels, or for personal injury or
property damage based on the nature of the product. The safe harbor provision would
have applied retroactively to September 5, 2003, potentially barring lawsuits filed on
or after that date, including those filed by the State of New Hampshire and numerous

⁵⁴ “Valero to Quit Making Additive,” MySA.com, posted August 2, 2005,
[ h t t p: / / www.mys a na nt oni o.c om/ bus i n e s s / s t or i e s / M Y S A 080305.01E.V alero.12325438.html ].

cities, towns, counties, municipal water suppliers, and schools. Prior to that date, five
lawsuits had been filed. After that date, more than 150 suits have been filed on
behalf of some 210 communities in 15 different states.⁵⁵
The safe harbor provision stated that the defective products liability shield
would not affect the liability of a person for environmental cleanup costs, drinking
water contamination, negligence for spills, or other liabilities other than liability
based upon a claim of defective product. However, MTBE manufacturers and those
who blend fuels would likely have been more difficult to reach under these other
bases of liability.⁵⁶
State attorneys general, local governments, and drinking water suppliers noted
that providing a products liability shield would effectively leave only gas station
owners liable for cleanup, and because these businesses often have very limited
resources, the effect of the safe harbor provision would have been that the burden for
cleanup would fall to local communities, drinking water utilities, and the states. In
light of this, the Congressional Budget Office identified the safe harbor provision as
an intergovernmental and private-sector mandate in its review of the House version
of H.R. 6.⁵⁷ The Attorneys General for at least 14 states, including states where RFG
has been heavily used, strongly opposed the MTBE safe harbor provision. Others
questioned the fairness of placing the liability burden primarily on gas station
owners, who were not made aware of MTBE’s exceptional contamination potential.
Oil companies and other proponents of the provision argued that a safe harbor
provision was reasonable, given that the fuels were used to meet the 1990 federal
oxygenated fuels and reformulated gasoline mandates, and that the key problem lay

⁵⁵ Environmental Working Group. Like Oil and Water: As Congress Considers Legal
Immunity for Oil Companies More Communities Go to Court Over MTBE Pollution. April

2005, at [http://www.ewg.org/reports/oilandwater/execsumm.php].

⁵⁶ For a more detailed discussion, see CRS Report RS21676, The Safe-Harbor Provision for
Methyl Tertiary Butyl Ether (MTBE), Aaron M. Flynn.
⁵⁷ Congressional Budget Office, “Cost Estimate for H.R. 6, the Energy Policy Act of 2005,
as Introduced in the House of Representatives.” Addressed to Honorable David Dreier,
Chairman of the Committee on Rules, U.S. House of Representatives, April 19, 2005, 4 pp.
This document is available at [http://www.cbo.gov/CESearch.htm]. The CBO determined
that the MTBE and renewable fuels liability safe harbor “would impose both an
intergovernmental and private-sector mandate as it would limit existing rights to seek
compensation under current law.... Under current law, plaintiffs in existing and future cases
may stand to receive significant amounts in damage awards, based, at least in part, on claims
of defective product. Because section 1502 would apply to all such claims filed on or after
September 5, 2003, it would affect more than 100 existing claims filed by local
communities, states, and some private companies against oil companies. Individual
judgments and settlements for similar lawsuits over the past several years have ranged from
several million dollars to well over $100 million. Based on the size of damages already
awarded and on information from industry experts, CBO anticipates that precluding existing
and future claims based on defective product would reduce the size of judgments in favor
of state and local governments over the next five years. CBO estimates that those reductions
would exceed the threshold established in UMRA (Unfunded Mandates Relief Act) [$62
million] in at least one of those years.”

not with MTBE, but with leaking underground storage tanks, which are the primary
source of MTBE contamination. Even so, MTBE producers appeared to remain
concerned about potential liability exposure. MTBE production and use grew rapidly
during the 1980s, and several oil companies experienced some incidents of MTBE
contamination of groundwater and drinking water wells before the RFG and oxy-fuel
mandates. In 1984, oil company engineers estimated that, if MTBE use in gasoline
became widespread, the number of well contamination incidents would triple, and
treatment costs would increase by a factor of five compared to conventional gasoline
incidents.⁵⁸ In 1985, Exxon engineers “recommend[ed] that from an environmental
risk point of view MTBE not be considered as an additive to Exxon gasolines on a
blanket basis throughout the United States.”⁵⁹
The total costs of treating MTBE contaminated drinking water are unknown, but
are expected to be in the billions. Two studies by water utilities place their best
estimates of the costs, given the limited data, at $25 billion⁶⁰ and $33.2 billion.⁶¹ A
study sponsored by the American Petroleum Institute estimated that the costs of
MTBE cleanup for UST sites, public wells, and residential wells that are not covered
by a private party, the LUST Trust Fund, state cleanup funds, or insurance, could
range from $500 million to $1.5 billion.⁶²
The conference did not reach agreement on the safe harbor issue. Unable to
persuade Senate conferees to accept the provision without some concessions to the
local governments and water utilities that might bear the cost of cleanup (in place of
MTBE producers), Representatives Barton and Bass, on behalf of the House
conferees, offered to establish an $11.43 billion MTBE cleanup fund, financed by the
petroleum industry, states, and federal contributions over a 12-year period.⁶³
Lawsuits filed by a state attorney general (i.e., New Hampshire) after September 5,

⁵⁸ Memorandum from B. J. Mickelson to V. M. Dugan, MTBE Contamination of Ground
Water, Exxon Oil Company, August 23, 1985, presented in South Tahoe Public Utility
District v. Atlantic Richfield Co., Case No. 999128 (San Fran. Super. Ct. Aug. 5, 2002).
⁵⁹ Memorandum from B. J. Mickelson to Mr. J. M. E. Mixtar, Introduction of Methyl
Tertiary Butyl Ether (MTBE) in the Texas Eastern Transmission, Jacksonville, Florida;
Charleston, South Carolina; and Wilmington, North Carolina Areas, Exxon Oil Company,
April 19, 1985, presented in South Tahoe Public Utility District v. Atlantic Richfield Co.,
Case No. 999128 (San Fran. Super. Ct. Aug. 5, 2002).
⁶⁰ American Water Works Association. A Review of Cost Estimates of MTBE
Contamination of Public Wells. June 21, 2005.
⁶¹ Association of Metropolitan Water Agencies. Cost Estimate to Remove MTBE
Contamination from Public Drinking Water Systems in the United States. June 20, 2005.
⁶² American Petroleum Institute. Analysis of MTBE Groundwater Cleanup Costs. June 2005.
⁶³ See “Bass Presents MTBE Cleanup Plan,” News, House Committee on Energy and
Commerce [http://energycommerce.house.gov/108/News/07222005_1608.htm#Related],
July 22, 2005. Additional detail can be found in numerous places, including “Barton, Bass
Unveil MTBE Cleanup Plan; Petroleum Industry Refuses to Give Support,” Daily
Environment Report, July 25, 2005, p. A-9. The text of the proposal is available from CRS
upon request.

2003, would also have been exempt from the safe harbor provision. But the offer did
not pick up additional support, and the safe harbor died.
Renewable Fuels Standard. Both the House and Senate versions of H.R.
6 and the enacted version of the bill amend the Clean Air Act to establish a new
requirement that an increasing amount of gasoline contain renewable fuels such as
ethanol. The House bill would have required that 3.1 billion gallons of renewable
fuel be used in 2005, increasing to 5.0 billion gallons by 2012. (This compares to 3.4
billion gallons actually used in 2004.) The Senate bill would have required 4.0
billion gallons in 2006, increasing to 8.0 billion in 2012. The enacted bill is closer
to the Senate version, requiring 4.0 billion gallons in 2006, and an increase of 700
million gallons each year through 2011, before reaching 7.5 billion gallons in 2012.
Changes to the RFG Requirements. As noted above, the enacted bill, like
the earlier House and Senate versions, repeals the RFG program’s 2% oxygen
requirement. This step removes a major incentive for refiners to use MTBE in their
fuel. The enacted bill also contains anti-backsliding provisions: gasoline refiners and
importers, with some exceptions, must maintain the reduction in emissions of air
toxics that they achieved in gasoline produced or distributed during 2001 and 2002.
Phase-out of MTBE and Transition Assistance. Many of the other
MTBE provisions in the House- and Senate-passed bills did not make it into the
enacted version. Both House and Senate would have banned the use of MTBE in
motor vehicle fuel, with exceptions — the House version by December 31, 2014; the
Senate, four years after the date of enactment. The conferees dropped the ban
entirely.
The House and Senate bills would also have authorized funds to assist the
conversion of merchant MTBE production facilities to the production of other fuel
additives ($2.0 billion in the House bill, $1.0 billion in the Senate). These provisions
were also dropped by the conferees.
Leaking Underground Storage Tank Issues. Both chambers addressed
the issue of MTBE leaks from underground storage tanks (USTs). Adopting
provisions from the House bill, Title XV, Subtitle B, of the Energy Policy Act of
2005 comprises “The Underground Storage Tank Compliance Act” (USTCA). The
USTCA amends SWDA Subtitle I to add new leak prevention and enforcement
provisions to the UST regulatory program and impose new requirements on states,
EPA, and tank owners. The USTCA requires EPA or states that receive funding
under Subtitle I to conduct UST compliance inspections every three years. It also
requires states to comply with EPA guidance prohibiting fuel delivery to ineligible
tanks, develop training requirements for UST operators and individuals responsible
for tank maintenance and spill response, prepare compliance reports on government-
owned tanks in the state, and implement groundwater protection measures for UST
manufacturers and installers. The act also requires EPA to implement a strategy to
address UST releases on tribal lands.
As amended in January 2006, the USTCA authorizes the appropriation of $155
million annually for FY2006 through FY2011 from the Leaking Underground
Storage Tank (LUST) Trust Fund for states to use to implement the new UST leak

prevention requirements and to administer state programs.⁶⁴ However, the Energy
Policy Act’s fuels tax extension language (§1362) prohibits the use of LUST Trust
Fund appropriations for any new purposes. Thus, the Energy Policy Act significantly
expands states’ leak prevention responsibilities, while at the same time, it prohibits
the use of the trust fund money by states to implement the new requirements, some
of which have tight deadlines. States that receive funds under Subtitle I are required
to implement these provisions.
The USTCA authorizes annually, from the Trust Fund, for FY2006 through
FY2011, the appropriation of $200 million for the LUST clean-up program for
petroleum tanks and another $200 million specifically for responding to tank leaks
involving MTBE or other oxygenated fuel additives (e.g., ethanol). The Senate bill
would have authorized a one-time appropriation of $200 million for the cleanup of
MTBE and other ether fuels (but not ethanol) from USTs and other sources. (For a
detailed comparison of the MTBE and ethanol provisions of the House and Senate
bills with the enacted version, see CRS Report RL32865, Renewable Fuels and
MTBE: A Comparison of Selected Provisions in the Energy Policy Act of 2005, by
Brent D. Yacobucci, Mary Tiemann, James E. McCarthy, and Aaron M. Flynn.)
NAFTA Arbitration
Another MTBE issue that emerged in the wake of California’s decision to phase
out the use of MTBE in gasoline concerns the applicability of certain provisions in
the North American Free Trade Agreement (NAFTA). Chapter 11, Article 1110, of
the NAFTA requires the United States, Canada, and Mexico to treat each other’s
investors and investments in accordance with the principles set out in the chapter.
It also allows these investors to submit to arbitration a claim that a NAFTA party has
breached Chapter 11 obligations and to recover damages from any such breach.
In June 1999, the Methanex Corporation, a Canadian company that produces
methanol in the United States and Canada, notified the U.S. Department of State of
its intent to institute an arbitration against the United States under the investor-state
dispute provisions of the NAFTA, claiming that the phaseout of MTBE ordered by
the governor of California on March 25, 1999, breaches U.S. NAFTA obligations
regarding fair and equitable treatment and expropriation of investments, entitling the
company to recover damages which it estimated at $970 million. (Methanol is a
major component of MTBE and is Methanex’s only product. The California market
for MTBE reportedly accounted for roughly 6% of global demand for methanol.)
The 1999 Methanex claim asserted that California’s phaseout was motivated by a
desire to favor an MTBE competitor, ethanol, which is produced in the United States.
In August 2002, an arbitration panel ordered Methanex to file a new claim more
specifically relating the actions of California to the company’s manufacture of

⁶⁴ Technical corrections to the Energy Policy Act were enacted in P.L. 109-168 on January
10, 2006. The single substantial correction to the USTCA was the revision of the dates
authorizing appropriations for Subtitle I from FY2005-FY2009 to FY2006-FY2011.

methanol. Methanex did so, and a hearing was held in June 2004. In August 2005,
a NAFTA arbitration panel dismissed the claim.⁶⁵
Conclusion
Numerous detections in ground and surface water, and particularly in municipal
and private drinking water wells, have raised significant concerns about the
continued use of MTBE in gasoline. Half the states have now taken action to phase
out its use, and Congress, in enacting H.R. 6, has removed the federal requirement
that oxygenates (such as MTBE) be used in reformulated gasoline.
These actions may lead refiners to phase out the substance entirely. Within days
of final passage of the 2005 energy bill, the nation’s largest refiner, Valero,
announced that it will discontinue production of MTBE. Other producers appear to
be following suit.
Whether this marks the end of congressional action on MTBE remains to be
seen. More than 150 suits have been filed over liability for cleanup of MTBE-
contaminated water. With substantial sums of money in play, the results of this
litigation will be closely watched, and may generate further pressure for
congressional action.
The effects of MTBE removal on gasoline supply and price are also of concern.
In mid-April 2006, gasoline prices were near record highs, and many analysts blamed
the phaseout of MTBE and shortages of ethanol for a significant part of the run-up
in price. Whether these factors prove transitory will bear watching

⁶⁵ U.S. Department of State. NAFTA Tribunal Dismisses Methanex Claim. August 10, 2005,
available at [http://www.state.gov/r/pa/prs/ps/2005/50964.htm]. See also CRS Report
RL31638, Foreign Investor Protection Under NAFTA Chapter 11, by Robert Meltz.