Testimony Before the Commerce Committee's Subcommittee on Health and Environment Regarding H.R. 11

 
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 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 gasoline 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, MI 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 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 polynuclear 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 Methanol Institute will be forced to oppose passage of H.R. 11.

MI'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 Methanol Institute with this opportunity to express our thoughts.

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