cret here is that we have focused it on being California-specific and outcome-based. I want to thank Senator Feinstein because her leadership in the Senate has been essential at getting the message across, not just across to the Senate but across this country, and I appreciate the Senator's leadership on this issue. She has supported this legislation for two Congresses now and has been way ahead on this issue, and I appreciate her understanding of air pollution issues-those of us who come from local government who have worked these environmental issues in California understand why we need this bill. We are basically talking about a public health issue and placing the public health above and supreme to other strategies and other economic and social concerns. I would also like to thank Congresswoman Tauscher for her leadership. She has a district that is well aware of this situation, and has taken a lead here. Subcommittee members Capps and Eshoo have both been strongly in support here and I want to thank them. Mr. Chairman, when I introduced this bill in 1976, some claimed that it was going to be used as a blanket approach Mr. BILIRAKIS. Not in 1976. Mr. BILBRAY. 1996, I am sorry. 1976 was the first year I was elected, about the time the Senator was involved. But I just want to point out that the issue at that time was the fact that the 2 percent oxygen approach was based on a concept that it was the best public health strategy that the Federal Government could initiate in the most polluted areas at that point in time. The Clean Air Act at that time-in fact going back to the original Clean Air Act-reflected the fact that California was way ahead of the Federal Government in many ways. That is why the original act back in the 1970's specifically isolated California's clean air strategies and gasoline fuel strategies in this regard from other States-in fact, California has a specific section in the act. That is why my bill is written specifically for California, because I am not talking about opening up the entire act. With H.R. 11, we are only talking about opening up that section that specifically has been earmarked for California's clean gasoline. The EPA has recognized again and again that California has developed and designed a "better mousetrap" when it comes to cleaner burning gasoline. The Federal EPA understands that, and has said it clearly, working with my-with my ex-colleague from California who has now gone back to California, Mary Nichols. Her frustration with the fact that the law did not foresee that Federal regulations may stand in the way of a clean air strategy led to my first introduction to this bill in 1996. Let me just say, though, that things have changed. Things have changed dramatically since I first introduced the bill. New scientific information reinforces the merits of H.R. 11. Some past opposition has actually evolved into thoughtful support for H.R. 11. Here I would ask that the statements of the American Methadol Institute and the Methanex Company be introduced into the record at the appropriate time. Mr. BILIRAKIS. Without objection. [The information referred to follows:] METHANEX METHANOL COMPANY Honorable BRIAN BILBRAY DEAR REPRESENTATIVE BILBRAY: I am writing to express Methanex Methanol Company's conditional support for your legislation, H.R. 11, to provide flexibility to the state of California under the Clean Air Act's (CAA) reformulated gasoline (RFG) program. Would you please ensure that this letter is placed in the record for the May 6, 1999, Subcommittee on Health and Environment hearing on H.R. 11. As we have discussed previously, Methanex believes that the anti-federalism aspects of the CAA's requirement for a minimum oxygen content in RFG make it very difficult to devise a rational and workable solution to the problem of methyl tertiary butyl ether (MTBE) in groundwater. A major provision of a rational and workable solution should provide refiners of RFG with maximum flexibility to meet stringent fuel performance standards that ensure continued progress in the reduction of air emissions from mobile sources. Within that flexibility, refiners should be allowed to use the type and amount of oxygenates, including MTBE, that make the most sense for their refineries. While Methanex disagrees with Governor Davis' decision to phase out the use of MTBE in California, we understand his desire to address the MTBE water contamination problem using the most effective means available. The lack of flexibility under the minimum oxygen requirement of the CAA limited the options available to the Governor and contributed significantly to his decision to phase out MTBE. At this point, a continuing requirement to add a minimum level of oxygen in RFG while simultaneously phasing out the use of MTBE will only force refiners to use other oxygenates that are more expensive, in short supply, and not as effective in reducing air emissions. Given this, Methanex supports the enactment of H.R. 11 provided that the bill is amended to ensure that the repeal of the oxygen standard and removal of oxygenates for gasoline will not result in backsliding on air quality benefits currently being achieved in California. In this regard, Methanex endorses the statement submitted by the American Methanol Institute in support of H.R. 11. I look forward to working with you as the debate on RFG and MTBE continues in the Congress. Sincerely, FRED T. WILLIAMS Methanex Methanol Company, Vice President Marketing PREPARED STATEMENT OF JOHN LYNN, PRESIDENT & CEO, AMERICAN METHANOL INSTITUTE Mr. Chairman and members of the Subcommittee, I appreciate the opportunity to provide you with testimony regarding H.R. 11. I am John Lynn, President and CEO of the American Methanol Institute, our industry's trade association here in Washington, D.C. The methanol industry is a principal partner in our nation's clean air programs. This year, over 1 billion gallons of methanol will be used to manufacture the oxygenate methyl tertiary butyl ether or "MTBE"." Nearly one-third of all gasolines sold in the United States is cleaner-burning reformulated gasoline, and MTBE is the oxygenate of choice. Further, about 70 percent of all gasoline sold in the country contains some MTBE. In the United States, there are 18 methanol plants located in eight states with total annual production capacity of over 2.6 billion gallons, about one-fourth of the worldwide capacity. Our industry creates over 18,000 jobs in the U.S., while generating nearly $3 billion in economic activity each year. The methanol industry also is a major consumer of domestic natural gas-our basic feedstock—using 200 trillion BTUs of natural gas each year. In the last decade, the methanol industry has undergone an enormous transformation. While methanol continues to be an important building block for hundreds of widely used products, the production of the gasoline additive MTBE now serves as the largest market for methanol in the U.S. The methanol and oxygenates industries, along with the gasoline refining industry, have spent billions of dollars developing the production capacity to meet the reformulated gasoline market directed by Congress in the Clean Air Act Amendments of 1990. The reformulated gasoline program has been one of the shining success stories of the Clean Air Act, dramatically improving air quality for 75 million Americans. RFG reduces smog precursor emissions by 36,000 tons per year, which is equal to removing over eight million cars from our streets and highways. According to the U.S. EPA, the actual emission reduction benefits of reformulated gasoline have greatly exceeded the mandated targets of the Clean Air Act for volatile organic compounds (VOCs), oxides of nitrogen (NOx), and air toxics. In just eight months, the second phase of the reformulated gasoline program will begin, with twice the smog-fighting benefits being achieved today. MTBE has been the refinery industry's oxygenate of choice in reformulated gasoline. This past weekend, President Clinton announced the Administration's Tier II proposal to set tougher standards for tailpipe emissions, and cut sulfur levels in gasoline by about 90 percent over the next five years. The EPA estimates that this cleaner gasoline will only cost between one and two cents per gallon more at the pump. One way refiners may choose to meet these fuel requirements would be to add MTBE to replace the octane lost by removing sulfur, and for its favorable dilution benefits. Just over a year ago, AMI Chairman Roger Seward testified to this Committee expressing concern about the legislation offered by Congressman Bilbray regarding California's participation on the federal RFG program. A lot has happened in the past year, most notably the Executive Order instituted by Governor Gray Davis of California. Today, the American Methanol Institute is prepared to offer its support for H.R. 11, if the bill is amended to ensure that the air quality benefits Californians now enjoy are not compromised. We recognize that the bill as drafted attempts to prevent backsliding on air emissions by requiring equivalency. However, we are concerned that "equivalency" refers to the emission reduction requirements of the Clean Air Act, which fails to take into account the fact that actual air quality benefits being achieved through the use of reformulated gasoline have greatly exceeded the mandated targets. Based on discussions with the Oxygenated Fuel Association, we would like to offer the following language to provide greater definition on this critical point: Equivalent air quality shall be demonstrated for actual in-use vehicle fleet mass emissions of Volatile Organic Compounds (VOCs), Oxides of Nitrogen (NOx), and Air Toxics (i.e., the reactivity adjusted sum of benzene, butadiene, formaldehyde, acetaldehyde and ploynuclear organic matter), using the California Air Resources Board's predictive model in effect on December 31, 1998. The new gasoline formulation shall also be shown to result in equivalent or lower mass emissions of Carbon Monoxide (CO), and Particulate Matter smaller than 2.5 microns (PM 2.5), as well as equivalent reactivity-adjusted ozone emissions. We believe that the addition of this or similar language will prevent air quality backsliding, and ensure that the actual air quality benefits that are provided citizens of California today are not lost or sacrificed by this change to the Clean Air Act. We also believe that this legislation, if amended, will provide the refining industry with the flexibility needed to meet California's gasoline demands. Without the language necessary to safeguard today's air quality benefits, the American Methanol Institute will be forced to oppose passage of H.R. 11. AMI's insistence on protecting the air quality gains that have been achieved is consistent with the actions taken by Governor Davis. Keep in mind, that the actions taken in California were not instigated by any immediate concerns for human health. Rather, the Governor was reacting to incidences of groundwater contamination from MTBE. Our industry continues to be concerned about the lax response to state and federal requirements for the upgrading of underground storage tanks (USTs), and the uneven enforcement of existing law. Of the 892,000 federally regulated USTS, the U.S. EPA estimated that only 56% were in compliance with federal upgrade standards when the December 22, 1998 deadline was reached. As a nation, we must do more to ensure the proper handling and containment of gasoline products. Further, any new fuel formulations must be carefully evaluated for their potential to impact groundwater resources and to affect air quality. Finally, I'd like to close my remarks by looking ahead. In a few weeks, the U.S. EPA Blue Ribbon Panel on Oxygenates will be issuing its final report and recommendations. Likewise, the Northeast States for Coordinated Air Use Management (NESCAUM) will be issuing a set of policy recommendations to guide officials in the Northeast states. I would strongly urge the Congress not to take any precipitous action on the federal reformulated gasoline program until these reports have been made available, and given an ample opportunity for review and comment. The RFG program has been a huge air quality success, and there is no pressing health concern that would warrant premature action by Congress that may ultimately weaken this program. Thank you for providing the American Methanol Institute with this opportunity to express our thoughts. Mr. BILBRAY. I believe that this evolution of thinking is reflecting the philosophy that the underlying bill, H.R. 11, needs to be passed. Mr. BILIRAKIS. Please finish up. Mr. BILBRAY. I will, Mr. Chairman. I just want to close by saying the issue here is that H.R. 11 is content-neutral. We don't chase our tail trying to figure out what to allow or what to outlaw. We basically say that outcome is what is really important. MTBE contamination and other issues can be addressed locally with the California option if you provide that flexibility. And I want to remind you that the Senate has discussed the flexibility issue, along with the possibility of making it national. Mr. Franks has introduced a bill specifically to outlaw MTBE and now it is my understanding that my colleague, Mr. Pallone, is also contemplating a national approach to my California-specific bill. I think all of these approaches point out that there is strong support not just in California but across the country to allow California to go specific with this bill and to see exactly how much public benefit we can have by allowing the flexibility to allow the State of California to do the right thing for the people at the right time with this legislation, and I hope we gain your support. Mr. BILIRAKIS. The gentleman's time has expired. [The prepared statement of Hon. Brian P. Bilbray follows:] PREPARED STATEMENT OF HON. BRIAN P. BILBRAY, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA Mr. Chairman, thank you for holding this hearing today, and for your willingness to work with me on behalf of the State of California on this important issue. As you are well aware, this is an issue that I've been working on since the 104th Congress, and on which the State of California is united in support. I appreciate your ongoing support and that of our colleagues, as the circumstances surrounding H.R. 11 have evolved into the higher profile landscape which we face today. We will hear witness testimony_shortly, but I want to take this opportunity to specifically thank Senator Dianne Feinstein, who has been a champion on this issue in the Senate and has introduced companion legislation to H.R. 11 in the last two Congresses, for taking the time to be here today. I would also like to thank our House colleague Ellen Tauscher, who represents California's 10th District in the Pleasanton area, and has been a tireless advocate in support of this legislation among our delegation and the entire House. Mr. Winston Hickox, the new Secretary of the California EPA, is here on behalf of Governor Davis and H.R. 11, and I should say here that I am very grateful for the long and continuing history of support from ČalEPA and the ARB on this legislation, which has been essential. We will also hear strong support for H.R. 11 from Mayor Pam O'Connor from the City of Santa Monica, part of California's 29th District which is represented by our Committee colleague Henry Waxman. Mr. Chairman, it has certainly been very interesting watching the landscape around H.R. 11 evolve. When I first introduced this content-neutral, outcome-based and California-specific legislation back in 1996, it came under fire by some stakeholders which characterized it as a "camel's nose under the tent", the "real" intention of which was to erode the national 2% oxygenate requirement, by allowing states other than California to take advantage of its flexibility. Well, Mr. Chairman, then as now, three years later, this bill is specific only to California, recognizing the facts that 1) Congress has already provided California with a unique and exclusive provision in the Clean Air Act that allows it to operate its own fuels program, and 2) since 1990, California has built the proverbial "better mousetrap" in that it has developed a cleaner-burning gasoline that meets or exceeds existing federal emissions standards. But despite the resounding stability of this message of regulatory flexibility for California throughout three Congresses, Mr. Chairman, there have been a number of developments, albeit separate from H.R. 11 itself, which nonetheless have served to color the ongoing discussion of this issue. There is compelling new information which serves to further underscore the benefits of and need for the bill, and there is also new support of the bill from several stakeholders which have in the past expressed skepticism or been opposed to this legislation outright. Expanding on this, I have statements here from the American Methanol Institute, and a former member of the Oxygenated Fuels Association, the Methanex Company, which I would ask to be included in the record at their request. I strongly believe that this evolution is a result of a much-improved understanding of the intent and scope of this bill, and an acknowledgement of the strength and merits of the outcome-based philosophy which underlies H.R. 11. Also for the record, Mr. Chairman, I would also like to include with this the July 31, 1996 letter to Chairman Bliley from thenChairman of the Air Resources Board John Dunlap in support of this legislation, and the September 10, 1996 letter to Chairman Bliley from AMI, OFA, and RFA. I think these letters help to show, respectively, the continuity of the argument on behalf of H.R. 11 since its introduction, and how the perception of it has evolved among specific stakeholders. At this point, Mr. Chairman, I think it would be helpful to reiterate two basic points-first, H.R. 11 is content-neutral, and because it is focused on outcome and not process, it neither requires nor bans the use of any particular ingredient which might be used to manufacture California's reformulated gasoline. Its purpose is to provide California-specific relief from the federal mandate which California's own fuel has outpaced, and it is written to give California that added flexibility by which to meet its already stringent emissions standards. Second, I want to emphasize that this legislation predates, and is not a direct reaction to, the separate issue of MTBE contamination, which since this bill was first introduced in 1996 has itself has developed into a public health concern of such magnitude in California that Governor Davis was recently compelled to issue an executive order to phase out its use. Clearly, in California, which, led by Governor Davis, continues to strongly support H.R. 11, the MTBE issue has reached new levels of concern. As a result, Governor Davis has taken decisive action, based on the findings of several comprehensive scientific studies, including by the University of California, to phase out the use of MTBE in California over the next three years. Several other states have begun to experience similar concerns and explore similar actions, and in the Senate legislation has been drafted which would seek to provide governors with the kind of flexibility which would be provided to California by H.R. 11. Our New Jersey colleague Mr. Franks, who has introduced legislation which deals solely with MTBE, will provide his state's perspective on H.R. 11, and it is my understanding that our Committee colleague Mr. Pallone may be contemplating taking up a broader bill on state flexibility similar to that now pending in the Senate. Some might find it rather ironic that there is now a growing discussion of whether the kind of flexibility that H.R. 11 would provide only to California should be available to other states. However, while these other initiatives may take differing perspectives from H.R. 11, they are part of an important ongoing dialogue on this broader issue, all of which I believe keeps circling back to H.R. 11 as the practical solution. Separately, Mr. Chairman, let me say that I appreciate your specific interest in requesting EPA to discuss whether it has the legal authority to waive the 2% minimum oxygen requirement in section 211(k) of the Clean Air Act, for California or any other state. As you are aware, this was a primary consideration which led to my initial introduction of this legislation in the 104th Congress. Prior to introduction of what was then H.R. 3518, I worked in close consultation with EPA, particularly Mary Nichols, who like myself is an alum of the California Air Resources Board, and who then served as EPA's Administrator for Air and Radiation. Based on these consultations, it was clear at that time that legislative action was in fact necessary to provide California with the legal ability to operate its own fuels program in lieu of the federal program established by the 1990 Clean Air Act Amendments, and I introduced legislation, now H.R. 11, as a result. Given this history, I am very interested in the views of Mr. Perciasepe on the State of California's question to this effect. Having touched on these more recent developments, Mr. Chairman, I would like to revisit the basic principles which underlay the bill and its high level of support. H.R. 11 would simply build on the existing California-specific provision in the Clean Air Act to allow California to meet its already tough standards without being mandated to follow a specific "recipe". In essence, the state's more stringent RFG program would operate in lieu of the overlapping and less stringent federal program, |