REFORMULATED GASOLINE

THURSDAY, MAY 6, 1999

HOUSE OF REPRESENTATIVES,
COMMITTEE ON COMMERCE,

SUBCOMMITTEE ON HEALTH AND ENVIRONMENT,

Washington, DC.

The subcommittee met, pursuant to notice, at 9:35 a.m., in room 2322, Rayburn House Office Building, Hon. Michael Bilirakis (chairman) presiding.

Members present: Representatives Bilirakis, Bilbray, Ganske, Shadegg, Bryant, Bliley (ex officio), Brown, Waxman, Pallone, Green, DeGette, Capps, Hall, and Eshoo.

Staff present: Bob Meyers, majority counsel; Anthony Habib, legislative clerk; and Alison Berkes, minority counsel.

Mr. BILIRAKIS. The hearing will come to order. Before the Chair goes into its opening statement, I recognize the full chairman, Mr. Bliley, for his opening statement.

Chairman BLILEY. Thank you, Mr. Chairman. Today's hearing concerns H.R. 11, legislation introduced by our colleague Brian Bilbray to allow the application of California State regulations in areas within that State which are subject to the Federal reformulated gasoline program. Congressman Bilbray has worked long and hard to advance this legislation. He has gained the bipartisan support of nearly the entire California delegation, and Senator Feinstein has introduced his legislation in the other body. Therefore, I am glad that we were able to schedule today's hearing, and I look forward to receiving the testimony of our witnesses.

While it is never possible to construct a perfect hearing, we have made every attempt to accommodate a variety of informed opinions regarding H.R. 11. Although we are unable to accommodate all requests to testify in person, we have included witnesses who are both in favor of and oppose the legislation.

Therefore, our purpose today is simple. We need to examine this bill in detail and receive the benefit of testimony from the administration, the State of California, Members of Congress, and experts and interested parties in the private sector. In other words, this is an old-fashioned legislative hearing on the bill. Our purpose is to both educate the Commerce Committee concerning this legislation and establish a legislative record.

Again, I want to thank our witnesses and congratulate Mr. Bilbray on his ceaseless energy and dedication with respect to this matter. I also want to thank Chairman Bilirakis for his effort in holding this hearing and in furthering the committee's review of H.R. 11. Thank you, Mr. Chairman.

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Mr. BILIRAKIS. Thank you, Mr. Chairman. The purpose of today's hearing is to receive testimony regarding_H.R. 11, legislation introduced by my colleague, Representative Brian Bilbray, concerning the operation of the Federal reformulated gasoline program in California.

This is the second hearing that this subcommittee has had held on this issue. On April 22 of last year, the subcommittee held a hearing on H.R. 630, legislation introduced by Mr. Bilbray which is identical to today's measure. During our hearing, the subcommittee received testimony from the EPA, from the Department of Energy, the California Air Resources Board and a panel of stakehold

ers.

Today's hearing will receive further testimony from Members of Congress, the U.S. EPA, the California Environmental Protection Agency, and private stakeholders. And I am hopeful that this hearing can further illuminate the subcommittee's examination of this legislation as well as assist the subcommittee in reviewing events of the past year affecting the Federal RFG program and the separate California clean-burning gasoline program.

Let me say at the outset that it wasn't possible to extend invitations to all interested witnesses. In some cases the subcommittee was unable to invite all parties that may be impacted by this legislation or the current operation of the Federal RFG or California CBG programs. As you may know, we already have four panels, but we still had to turn down a few people who wanted to testify in person.

It is my intent, however, to have additional views and materials published in a final hearing record and we will work with members of the subcommittee on motions and requests to allow such material into the record. It is not my intent to limit any significant views in this legislation, but rather to conduct a hearing which can be completed in a timely and efficient manner. That being said, I believe today's witnesses will help the subcommittee gain an updated understanding of H.R. 11 and its impact on the operation of current RFG and CBG programs. Since Federal RFG currently represents about one-third of the domestic gasoline market, legislation which would alter the operation of the current program must be thoroughly assessed.

I must say, however, I am extremely disappointed that the Environmental Protection Agency has chosen to ignore or at least not have responded to a specific written request for legal opinion on its ability to waive or otherwise administratively alter the Federal 2 percent oxygenate requirement.

While I appreciate that there are complexities involved, this issue is central to the issue of Federal legislation to amend the Clean Air Act. I believe that the EPA had sufficient verbal and written notice on this matter and yet its written testimony-and I might add that the verbal notice preceded the written notice yet its written testimony indicates only that it is "looking closely" at the California waiver request.

I would remind EPA that a request for a waiver from section 211(k) requirements and an ongoing blue ribbon panel review of the use of oxygenates in RFG are separate and distinct issues. The letter of invitation did not ask for a policy analysis. It requested

a legal analysis of the California waiver request as well as EPA's ability to waive or otherwise not enforce the requirements contained in section 211(k) of the Clean Air Act in California or any other State. This is a necessary request-and I repeat a necessary request-of the subcommittee directly related to its legislative function. And we must insist that the EPA provide such an analysis in a timely fashion.

Hopefully, quite frankly, legislation will not be necessary depending on what their response might be, but we need that response. Otherwise, I think the subcommittee can benefit from information concerning recent studies which have been completed in California as well as information regarding the environmental impact of the Federal RFG program. Testimony received by the committee provides some indication of the real-world benefits of reformulated gasoline, and I am informed that more information may be available shortly in the form of a new National Academy of Sciences study.

Altogether, I would like to thank the gentleman from California, Mr. Bilbray, for his efforts regarding H.R. 11.

As I stated at last year's hearing, he has been a tireless advocate for this legislation. That statement is even more true today, and Mr. Bilbray has brought both the energy of youth as well as the wisdom of age together in his effort to address a most serious concern in his home State of California.

I am therefore glad that we are able to move forward with today's hearing and I look forward to receiving the testimony of our witnesses. I ask for brevity from members of the subcommittee in their opening statement so that we can extend proper courtesy to all these members who have other things to do as we do, too. Mr. Brown.

Mr. BROWN. The wisdom of age, I understand. The energy of youth

Mr. BILIRAKIS. I sometimes wonder about the wisdom of age.

Mr. BROWN. First of all, Mr. Chairman, I would like to ask unanimous consent to enter into the record Mr. Dingell's opening statement, two other documents and other opening statements of members which I have.

Mr. BILIRAKIS. Without objection.

[Additional statement submitted for the record follows:]

PREPARED STATEMENT OF HON. JOHN D. DINGELL, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN

Mr. Chairman, I thank you for the opportunity to hear the divergent views of a variety of stakeholders, as well as our Congressional colleagues, the Environmental Protection Agency, the state of California, and Mayor O'Connor on H.R. 11. I know that our colleague, Mr. Bilbray, has had a keen interest in this subject, and this legislation, for some time. While my interest may not be as pronounced as his, particularly because the current version of H.R. 11 is a California-oriented bill, I am interested in proposals that pertain to the reformulated gasoline program, a largely successful national program which I support. Moreover, I believe that this Subcommittee must scrutinize any amendments to the Clean Air Act. We must exercise caution in reopening the Act for any reason-the threshold must be high and the proposal must be sound. With the possibility of Mr. Bilbray's proposal becoming more national in its scope, as I expect we will learn from our witnesses today, I fear that an objective of passing a narrowly-crafted amendment may fail. I trust that my colleagues share this concern, and I hope that we may commit to one another,

should this bill gain momentum, that only by our mutual agreement will we expand its language or scope.

Even as we consider this legislative proposal today, the EPA is fervently writing rules to implement the Clean Air Act. We have seen thousands of pages of regulatory activity in the past nine months, including such major actions as the NOx SIP call, the regional haze rule and now the Tier II proposal. These proposals, and other actions by the Agency, have not gone unnoticed by our Congressional colleagues, nor their constituents. They will be costly to the American public. I do not mean to diminish Mr. Bilbray's bill by comparison, but I do mean to warn that there are a number of agendas pertaining to the Clean Air Act, some of which I support. I am well aware that those agendas are in search of any vehicle at this time, and will be even more so as time passes in this Congress.

I have heard opposition to this bill from my constituents who support the ethanol industry. For years, the Monroe County Corn Growers, Farm Bureau and Michigan Corn Growers Association have actively supported ethanol. There is concern in my district that the California Governor may support legislation that would prevent the use of ethanol as a replacement for MTBE-a decision viewed as having serious repercussions for our corn farmers. I do not know whether H.R. 11 would prevent the use of ethanol in California or any other state, but I intend to answer this question. I have heard from others who worry about the continued use of MTBE in California, and who advocate banning MTBE. In addition to ethanol as an alternative to MTBE, there are other possibilities. But have we carefully examined the availability, the costs and the quality of these alternatives? We certainly must obtain the answers to these questions, and we must answer these questions for every state, not just California.

I thank the Chairman for inviting witnesses who support H.R. 11, as well as witnesses who may oppose the bill. I look forward to hearing their views.

Mr. BROWN. Thank you, Mr. Chairman. I would like to thank Mr. Bilirakis for holding this hearing on H.R. 11. I also would like to welcome Senator Feinstein, Congressman Franks, Congresswoman Tauscher, and Mayor O'Connor. Thank you for joining us.

Under the 1990 Clean Air Act Amendments, regions of the country with the worst ozone pollution are required to use reformulated gasoline which must include 2 percent of an oxygenate by weight. While the Clean Air Act does not specify the type of oxygen, gasoline refiners primarily use either ethanol or MTBE. Substantial improvements in air quality have been attributed to the use of oxygenates. Use of MTBE comes at a price.

MTBE is highly soluble, biodegrades slowly, and is persistent in groundwater. Leaking underground storage tanks and other sources have released MTBE into groundwater, causing the concern that has led many of my colleagues from California to support H.R. 11. The Governor of California has signed an executive order phasing out MTBE over 3 years and asked the EPA for a waiver from the Clean Air Act oxygenate requirement. The State would prefer, instead, relying on the reformulated gasoline required under California's clean air law.

Governor Gray's interest in protecting California citizens from contamination of drinking water by MTBE is laudable and understandable. I find this situation rather ironic, however, in light of another problem involving a gasoline additive with health and environmental drawbacks. The Ethyl Corporation, an American company, produces a fuel additive called MMT, a manganese-based compound that enhances octane and reduces engine knocking. Health experts believe the neurotoxins in the manganese in MMT pose a significant public health risk, and automobile manufacturers contend that MMT damages pollution control equipment in vehicles.

When the Canadian Government banned the MMT, the Ethyl Corporation sued it under Chapter 11 of the North American Free Trade Agreement for exappropriation of property, loss of sales and profits, and harm to its reputation. Fearing it would lose the lawsuit, the Canadian Government settled with the Ethyl Corporation. Canadian taxpayers paid $13 million to this privately held U.S. company and the Canadians repealed their environmental law, lifting the ban on MMT. Interestingly, California, the only State in the country that could, has banned MMT for public health reasons. It is troubling that because of NAFTA, the Canadian Government, unlike the State of California, cannot protect its citizens from a problematic gasoline additive.

Mr. Chairman, I believe everyone at today's hearing shares the goal of achieving cleaner air while avoiding further environmental or health complications from gasoline additives. We all know that development of the Federal reformulated gasoline program in the 1990 Clean Air Act Amendments required extensive negotiations. While I support State flexibility in meeting clean air requirements, any amendment to the Clean Air Act should be approached with caution.

I am aware, Senator Feinstein, you have introduced a bill to waive the oxygen content requirement nationally and, Congressman Franks, you have introduced a bill to prohibit the use of MTBE in gasoline. I suggest to the subcommittee that it be extremely important to hear this thorough testimony on a national approach before any broad action is taken on the Federal reformulated gas program. I look forward, Mr. Chairman, to hearing the views of today's witnesses.

Mr. BILIRAKIS. I thank the gentleman.

Mr. Bilbray for an opening statement.

Mr. BILBRAY. Thank you, Mr. Chairman. Let me echo my colleague's, the ranking member's comments about making sure that we address the issues specific before us, which is why my legislation, H.R. 11, has been designed in such a way to reflect the rifleshot approach that this committee has proven so successfully in the past.

I would just like to say, Mr. Chairman, I appreciate your support allowing this hearing to move forward and, Mr. Chairman Bliley, I am really grateful for the bipartisan willingness to work together on this issue. In California we are really sort of celebrating the fact that here is an issue that everyone has finally gotten together and gotten behind. Very seldom do you ever see a delegation the size of California where you have 52 of the 54 elected representatives in the Federal Government not just supporting but strongly support the legislation, and I appreciate the fact that my colleagues from California have been willing to get behind this.

You may ask why. Frankly, this is the third Congress in which I have introduced this bill. It was first introduced long before there was any discussion about additive concerns and everything else, and was based mostly on my experience working with the Air Resources Board in California who have some of the best toxicologists and air pollution strategists in the world. My bill is content neutral, outcome-based and California-specific, and I think that the se