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July 30, 2000

Another Fine Mess

Claiming to promote cleaner air, in the early 1990s the Environmental Protection Agency began requiring the nation’s oil refiners to blend oxygenated additives into their gasoline, and a substance called MTBE soon became the dominant additive at gas pumps. Now we’re learning that MTBE, which is seeping into much of the nation’s water supply, is itself a dangerous pollutant. Hoover media fellow Deroy Murdock on another fine mess the EPA has gotten us into.

Many Americans cheered when Congress passed and President George Bush signed the Clean Air Act Amendments of 1990. After all, who doesn’t love clean air? But 10 years later, a small regulation that sprang from that law has sickened thousands of citizens, slashed real estate values, and, most ironically, spawned its own pollution problems that could cost billions of dollars to fix. How could the finest, Earth-friendly intentions go so wrong?

MTBE, or methyl tertiary butyl ether, has become a four-letter word for regulatory nightmare. Amid widespread controversy, the Environmental Protection Agency decided in March to phase out this former dream substance whose class of chemicals it once required. The story of how this simple, clean air–oriented gasoline additive became a reviled ecological menace is a textbook case in how not to handle environmental challenges.

With the Clean Air Act Amendments under their belts, officials at the EPA mandated in 1992 and 1993 that the 39 cities with the highest levels of carbon monoxide (CO) pollution use oxygenated fuels to clean their skies. The EPA contended that higher levels of oxygen in gasoline would make it burn more cleanly, thus reducing CO emissions. The EPA initiated this requirement without testing such fuels for safety.

After investing some $7 billion in new plant and equipment, petroleum companies and refineries began manufacturing MTBE to satisfy this new federal edict. In 1998, they produced about 290,000 barrels per day and began to blend gasoline with between 11 and 15 percent MTBE. About one-third of the gas sold in America over the last two years contained this additive.

Consumers first noticed a two- to five-cent-per-gallon increase in retail gasoline prices once MTBE had been added. This mild pain in the wallet was quickly overwhelmed by more serious complaints. After pumping gas, many people reported strong odors at filling stations. Residents of Alaska, North Carolina, and New Jersey, among other states, said they suffered nausea, headaches, rashes, diarrhea, and other symptoms after fueling their cars. North Carolina’s state health department launched a radio campaign urging drivers to pull over if they became dizzy or faint after pumping gas. Alaska went even further. After just three months, it disobeyed the EPA and banned MTBE altogether.

While individuals grappled with this substance’s apparent impact on personal health, it began to seep into the ground. Although some fault gas stations and distributors for having leaky tanks and pipes, others say MTBE is wily enough to slip through all but the tightest seals. Wherever the blame may lie, MTBE quickly entered drinking water supplies. Unlike other substances that remain fairly compact when they come into contact with water (such as crude oil or heating fuel), MTBE can go with the flow of groundwater for thousands of feet. "It doesn’t really biodegrade, and it doesn’t absorb into the soil, so it gets into the groundwater and moves fast," Don Darmer of New York’s state conservation department told Newsday. MTBE is also especially difficult to clean up.

From coast to coast MTBE started popping up on residential property and in water supplies. In Long Island, New York, two homeowners had to clean up two wells that were polluted with MTBE after someone poured a few gallons of gasoline on the ground. Cost: $50,000. A public well in Montauk was closed due to MTBE contamination. Of the 1,100 private water wells in Suffolk County, 125 were found to have traces of MTBE.

The troubles have been particularly bad in the Golden State. Sacramento and Santa Clara both closed wells due to MTBE contamination. South Lake Tahoe spent more than $500,000 and closed seven wells after finding MTBE in its water supply. The seaside city of Santa Monica also closed seven wells and had to buy drinking water from the Metropolitan Water District of Southern California for $3.5 million after 50 percent of its groundwater was spoiled by MTBE. Scientists at Lawrence Livermore Laboratory found some 10,000 shallow monitoring sites in California that tested positive for MTBE pollution. At least 27 California lakes and reservoirs have been tainted with MTBE, both from leaky storage tanks and, more directly, from gasoline that spills from the outboard motors of pleasure boats. All in all, MTBE has been found in the groundwater of 19 states.

Back in Glennville, California, MTBE was discovered in a dozen wells serving four businesses and three homes. One of those homes belongs to the Kubas family. In addition to migraines, seizures, and stomach trouble, the Kubases saw the value of their home plunge from $81,000 in 1996 to $28,000 two years later. Seventy-two residents of Glennville have filed suit against eight MTBE producers.

As these worries mounted, the petroleum industry began to step off the MTBE bandwagon. Chevron and Tosco, which sells the Union 76 gasoline brand, asked the EPA for permission to stop blending MTBE in their gas. Tosco, in fact, started using ethanol in fuel it sells in greater San Francisco, while Chevron tested low-emission formulas that use no oxygenates at all.

Public officials lost patience with this situation. As Dianne Feinstein, California’s senior senator put it: "It is simply unacceptable to clean the air by polluting groundwater." Feinstein introduced legislation cosponsored by Representative Brian Billbray to allow gasoline manufacturers to reduce or eliminate MTBE as long as their final product satisfies federal emissions standards.

Beyond the water contamination that it has caused, evidence is mounting that—even more ironically—MTBE doesn’t even clean the air.

"It doesn’t really work because all cars since 1986 are made with oxygen sensors, which adjust the oxygen percentage anyway," explains Hudson Institute scholar Michael Fumento. "MTBE only helps the few cars that are pre-1986 or that have broken sensors." Fumento uses a medical analogy to observe that MTBE also costs everybody money: It’s like putting "aspirin in the water supply for the few percent of us each day that will develop headaches."

A November 1998 study by researchers at UC Davis and three other University of California campuses supports Fumento’s contention that reports of MTBE’s effectiveness are greatly exaggerated. "MTBE and other oxygenates were found to have no significant effect on exhaust emissions from advanced technology vehicles," concludes the five-volume report. "Thus there is no significant additional air quality benefit to the use of oxygenates such as MTBE in reformulated gasoline." The researchers conclude that newer combustion systems, ethanol, and other nonoxygenated formulae can clear the air without the difficulties MTBE poses.

This study further maintained that cleanup costs for MTBE-related water contamination could exceed $1 billion a year in California alone. Also, oxygenated fuels are thought to boost emissions of nitrogen oxide, a smog ingredient, as well as aldehydes, a potential carcinogen, according to the EPA. Denver and Phoenix experienced a boost in aldehyde levels after launching their oxygenated fuels initiatives in the early 1990s.

The MTBE case shows how the finest, Earth-friendliest intentions can go terribly wrong when mixed with bad science.

Debate has raged over whether MTBE also causes cancer. The very same EPA that has promoted MTBE considers it a possible human carcinogen because it has led to leukemia, lymphoma, and thyroid, kidney, and testicular tumors in laboratory rodents. Others respond that these rats and mice were exposed to MTBE levels 28,000 times higher than what humans would confront in any given year.

This debate likely will be settled after many exhausting rounds of costly litigation among aggrieved parties, MTBE manufacturers, and various governmental agencies. Even if MTBE does not cause cancer, as some suggest, millions of Americans complain about MTBE-tainted tap water that tastes odd and smells like turpentine even in minuscule concentrations. As recent asbestos litigation has shown, the mere fear of future health effects can constitute sufficient grounds for massive tort awards. Along these lines, even psychosomatic health effects from "MTBE-phobia syndrome" could result in litigation. Trial lawyers eager to file huge class-action suits could do so almost effortlessly. After all, is there any larger class than water drinkers?

Whether the health risks are legitimate or not, MTBE clearly has caused significant confusion and distress, at a minimum. How could this pandemonium have been avoided? The following are lessons policymakers can learn to prevent such a fiasco from recurring:

1. Avoid single, top-down approaches. The federal oxygenated fuels mandate is the driving force behind the entire MTBE fiasco. Instead of such a one-size-fits-all edict for highly polluted communities around the country, the EPA should have allowed various localities to experiment with different approaches. True, air pollution—unlike, say, landfill waste—travels across state lines. In that sense, strict federal standards can be defended. Still, Washington could either have allowed states and cities to set their own reasonable pollution limits or at least given them maximum flexibility in their methods of achieving a standard federal emissions level.

2. Conduct scientific tests before rather than after requiring new substances. Just as schoolchildren are taught to look before they leap, the EPA should have subjected MTBE and similar fuel additives to rigorous testing before mandating their use. As Dan Fagin wrote in Newsday: The EPA "hasn’t even completed a ‘research strategy’ to map out a comprehensive testing plan, the first step toward establishing a safety standard for MTBE in air and water." In essence, the EPA has used humans as guinea pigs in oxygenated fuels research. Had it bothered with such basic due diligence, MTBE might have been excluded from the oxygenated fuels mandate. And, if it were deemed safe, the EPA could point to such studies in order to calm an increasingly nervous public.

3. Try incentive-based approaches first. Most CO comes from older vehicles that lack the efficiency and high-tech fuel systems of today’s cars. Tax credits, a waiver of new-vehicle registration fees, or similar inducements would give owners of older, polluting cars concrete reasons to trade them in for newer, cleaner cars. Such vehicles would also emit lower levels of pollutants beyond CO.

4. Make polluters pay cleanup costs. A much more direct and cost-effective means of reducing automobile emissions—as Jonathan Adler of the Competitive Enterprise Institute describes them—are remote sensing devices that can analyze a car’s tailpipe fumes at freeway entrances, designated intersections, and so on. Just as radar detectors identify speeders, this technology can determine when a car is belching out pollutants above allowable levels. Automatically snapped photographs of the license plates of heavy polluters would allow motor vehicle bureaus to contact the drivers and require them to tune up their cars or replace faulty equipment. Rather than socialize air cleanup expenses, this approach would hand the bill to the 20 percent of the vehicles that produce 80 percent of the CO emissions.

"My own view and experience in working with state policymakers is that many would have opted for more remote sensing over MTBE had EPA just given them the chance," Adler notes. "It’s good enough that it would have outcompeted EPA’s preferred policies."

Jonathan Adler suggested that policymakers implement such a tailpipe-testing program in a Washington Times article in December 1992. Imagine all the grief that could have been avoided had the EPA simply heeded his advice seven and a half years ago.

Special to the Hoover Digest.

New from the Hoover Press is Political Environmentalism: Going beyond the Green Curtain, edited by Terry L. Anderson. Also available is the Hoover Essay in Public Policy Reforming Hazardous Waste Policy, by Hilary Sigman. To order, call 800-935-2882.