William Kovarik
Radford University
and
Matthew E. Hermes
Kennesaw State University

Fuels and Society C: 13. Corporate/Government Decisions, 1990's

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Because MTBE pollution of water supplies, the EPA is looking at MTBE use. Its advisors have suggested that we:

1.Reduce the use of MTBE substantially and clarify federal and state authority to regulate and/or eliminate the use of gasoline additives that threaten drinking water supplies.

2. remove the Clean Air Act requirement of 2 percent oxygen in gasoline in order to provide flexibility to blend adequate fuel supplies in a cost-effective manner while reducing usage of MTBE and maintaining air quality benefits.

In December 1999, the California Air Resources Board approved the California Phase 3 gasoline regulation, which prohibits the formulation of gasoline with MTBE after December 31, 2002. Governor Davis has also asked the U.S. EPA to waive the
reformulated gasoline oxygen requirement. A decision from the U.S. EPA is pending.

One major MTBE manufacturer based in Canada, Methanex Corporation, filed a $1.48-billion lawsuit under the North American Free Trade Agreement. The Canadian government has urged the US and Mexico to re-interpret the Nafta to restrict the provision, arguing the measure was never intended to prevent governments from enacting environmental regulations. But the three governments failed to reach any agreement at a meeting of trade ministers in 2000;.

In 1994, the EPA. blocked MMT, citing the health hazards. But in October a Federal appeals court in Washington ruled that the additive was not covered by a regulation that required fuel additives to be tested before they could be sold. It ruled that the Ethyl Corporation could test the additive while selling it, and set no deadlines for completion of the tests.

EPA secretary Carol Browner said in 1996 that agency "believes more testing should be done before cars across the country begin emitting this additive." The EPA. and environmental groups also wanted the petroleum industry to label pumps that use gasoline containing MMT. Ethyl succeeded in overturning the ban on MMT but the additive remains illegal in California and much of the East Coast. About 15 percent of US gasoline does contain MMT, however, and is not labeled.

In 1998, Ethyl sued the government of Canada for blocking MMT use there on health grounds. The company argued that Canada violated the North American Free Trade Agreement. The government agreed to settle out of court and pay Ethyl $13 million.