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Issues Concerning the Use of MTBE in Reformulated Gasoline: An Update.
Subcommittee on Oversight and Investigations
Mr. Edward H. Murphy
Mr. Chairman, my name is Edward
Murphy and I manage downstream activities for the American Petroleum Institute,
a trade association representing 400 companies involved in all aspects of the
U.S. oil and natural gas industry. My responsibilities include oversight of
issues important to the refining and marketing sectors of the industry. These
include fuels issues, such as MTBE. MTBE has
been widely used in gasoline for more than 20 years - first, in limited
quantities to enhance octane as lead was removed and, more recently, in far
greater quantities to add oxygen to cleaner burning fuels, as required by the
reformulated gasoline and oxygenated gasoline provisions of the Clean Air Act
Amendments of 1990. API opposed the oxygen mandate, stressing that it wasn't
necessary and urged setting a simple performance standard instead, but our
advice wasn't taken. As you know, in recent years,
testing of groundwater, lakes and water supplies has detected generally low
concentrations of MTBE in several states, which, in many cases, has been traced
to underground storage tanks. While, in nearly all cases, the concentrations
found have been well below the levels EPA determined to pose public health
concern, taste and odor concerns have required the installation of filters and
reliance on other sources of water supply. This is unacceptable and needs to be
corrected. New EPA underground tank
regulations have been implemented that have led to the upgrade and replacement
of hundreds of thousands of tanks. API member companies have replaced and
upgraded all of their underground storage tanks - some 60,000 tanks - at a
cost of $1.2 billion. In addition, API has supported rigorous enforcement of EPA
underground tank regulations to ensure that the hundreds of thousands of tanks
operated by non-API companies are also upgraded. This is an area where stronger
EPA enforcement efforts are called for; EPA recently estimated that about 15
percent of underground tanks do not comply with the requirements. API's member
companies feel strongly that any location that is not in compliance should not
be in operation. Further, API has been a strong supporter of state laws and
regulations that prohibit deliveries into tanks that are not in compliance. As a result of the increased
detections of MTBE in water, EPA convened a special Blue Ribbon Panel of experts
from industry, government and academia to analyze the issue and make
recommendations. According to the Blue Ribbon Panel, "the great majority of [MTBE]
detections to date have been well below levels of public health concern. . . .
." However, the presence of MTBE
has, in the Blue Ribbon Panel's view, "raised consumer taste and odor
concerns that have caused water suppliers to stop using some water supplies and
to incur costs of treatment and remediation." Against this background, the Blue Ribbon Panel recommended that the federal reformulated gasoline (RFG) oxygen mandate be repealed, that the use of MTBE be substantially reduced, and that EPA and state authority to regulate MTBE and other oxygenates be clarified. The Panel further recommended that all of these changes be made without sacrificing the air quality benefits of the RFG program. API strongly supports the Blue Ribbon Panel's recommendations, and implored Congress to implement them. In particular, we commend you on your bill, H.R. 20, which is consistent with the Panel's recommendations. The
October 15 issue of Octane Week
quotes Tom White of the U.S. Department of Energy's Office of Policy as
describing the current state of the MTBE issue as "the worst
regulatory/legislative mess seen in a dozen years." We believe the simplest
and most effective solution is repeal of the RFG oxygen mandate. It will enhance
the environment, increase gasoline supplies, and reduce price volatility. It is
urgently needed. I know that the Subcommittee is
interested in the industry's views regarding MTBE replacement - how will the
volume and octane losses be made up if the use of MTBE is restricted.
The short answer is that, with adequate lead time and a major objective
of reducing MTBE use, refiners can and will make the investments to replace the
roughly 300 MB/D of MTBE presently added to gasoline. Some of the ways in which
this will be accomplished are:
There is no doubt that the U.S.
oil and natural gas industry will be challenged to replace the lost volume if
the use of MTBE is restricted. However,
the industry has established a solid track record over many decades of meeting
consumer needs when faced with changing conditions - provided it has adequate
lead time and a climate favorable to refinery investment.
We commend you for recognizing the need to provide the industry with
sufficient lead-time in H.R. 20. In closing, let me reiterate that API member companies are committed to addressing the MTBE issue and are anxious to fulfill their obligation to ensure that consumers have ready access to readily available and affordable supplies of environmentally acceptable gasoline. We stand ready to work with this Subcommittee and others in the Congress to address concerns about MTBE in a practical, effective way. Once again, the first step must be repeal of the federal oxygen mandate. Thank you.
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