The gasoline additive MTBE, or methyl tertiary butyl ether, has contaminated groundwater and surface water sources in nearly every region of California and is considered a possible human carcinogen. It is highly soluble in water, does not readily degrade in the environment, and most public water systems are not equipped to completely remove it from drinking water.

Public drinking water wells have been closed due to MTBE contamination or the threat of contamination in Santa Monica, San Jose, South Lake Tahoe, Sacramento, Cambria, Temecula, Kern County, Ventura County and other locations.

The additive has been banned in California’s gasoline altogether pursuant to an Executive Order by former Governor Gray Davis, which took effect in January 2004.

A Legacy of Contamination

Despite regulations that required underground storage tanks to be upgraded by the end of 1998, there is evidence MTBE continues to leak into soil and groundwater. There is currently no cost-effective treatment technology available to remove MTBE from drinking water. Experts believe treatment costs could exceed $1 million per drinking water well.

Although MTBE has been banned in California, on the national level the threat is growing. Early studies such as a 1999 U.S. Geologic Survey study found MTBE in 21% of the urban drinking water wells it sampled, and a more recent USGS survey (July 2003), concluded that MTBE had been detected at varying levels in 55% of large urban drinking water systems.

Oil Companies Act Ahead of Schedule

In August 2002, the South Tahoe Public Utility District announced it had reached a settlement agreement with three oil companies accused of contaminating many of the district's wells with MTBE. The firms chose to settle out of court when a San Francisco Supreme Court jury found them guilty of selling a defective product. The district's total settlement amount now totals $69 million.

In December 2003, another multi-million dollar MTBE suit was settled in California. The settlement commits Shell, ChevronTexaco and ExxonMobil to pay for all costs to construct, operate and maintain a water treatment plant in Santa Monica, and pay the City $92.5 million to cover out-of-pocket costs and water quality improvements.

The Road to Regulating MTBE

MTBE is in gasoline today because the federal Clean Air Act requires the use of "oxygenates" to reduce emissions in the nation’s smoggiest areas. Though MTBE has been around since the 1970s, it wasn’t widely used in California until 1992. It was never specifically mandated, but became the oxygenate of choice for refiners due to its availability and favorable blending characteristics.

As of January 2004, MTBE was banned in all California gasoline. The California Department of Health Services (DHS) has established two drinking water standards for MTBE. In order to prevent health impacts, a primary standard of 13 parts per billion (ppb) has been adopted. To avoid the low-level taste and odor problems associated with MTBE, DHS established a secondary standard of 5 ppb.

Legislation

In 2003, the House approved an energy bill (HR 6) which contains “safe harbor” language for producers of MTBE and ethanol, a national ethanol use mandate and leaves the phase-out of MTBE up to the states. ACWA and other national water groups steadfastly opposed the bill, which failed to pass the Senate.

The “safe harbor” language, if passed, would potentially leave water districts without the most effective legal remedy (defective product claims) for groundwater contamination by MTBE and ethanol. If the “safe harbor” provisions were enacted, ratepayer increases would be the most likely source of funds to replace contaminated water supplies.

Congress again attempted to include the safe harbor language in the 2005 energy legislation. Although the House passed the bill with the MTBE protections, the Senate again refused to include it and passed the energy bill without safe harbor language. The President eventually signed the 2005 energy bill without the MTBE safe harbor language.

To avoid the need to replace MTBE with another oxygenate like ethanol, California has twice requested a waiver for California from the federal oxygenate requirement. In spite of an earlier EPA denial to lift the oxygenate mandate, a federal court ruled in August 2003 that EPA must revisit the state’s waiver request. In June 2005, EPA for the second time denied California’s request for an oxygenate waiver.

Cleanup Costs

Determining the full scope of the MTBE problem nationwide has been difficult. Many states still do not monitor for MTBE in water supplies, detection levels among the states that do monitor are varied and treatment costs are not easily available. This information, however, is greatly needed to show the magnitude of the problem and why water utilities must retain their ability to sue to recover these costs.

In 2001, the consulting firm Komex H2O Science issued a study that found that the cost of cleaning up MTBE in drinking water supplies nationwide could top $29 billion. This number was derived by researching the number of wells contaminated across the country and then applying the known average treatment costs. This calculation was limited since it was based only on the known contaminated wells and, as mentioned, many states were yet to monitor for MTBE.

Due to escalating congressional efforts to provide legal immunity to the makers of MTBE, the Association of Metropolitan Water Agencies (AMWA) and the American Water Works Association (AWWA) independently conducted new cost studies that were completed in June 2005. The AMWA study found MTBE cleanup costs would likely cost around $33.2 million. The AWWA report found MTBE cleanup costs would rise to about $25 million, but could top $85 million if the public determines that extremely low levels of MTBE are aesthetically unacceptable.

One other recent study has been conducted by ENSR International and funded by Lyondell Chemical Co., an MTBE manufacturer. This study found that MTBE cleanup costs would only range between $2 million and $3 million. However, the authors of the study acknowledge that this estimate is based only on cleaning up leaking storage tanks and does not include the costs to cleanup drinking water supplies.

ACWA's Position

ACWA will steadfastly oppose any efforts by Congress to protect MTBE manufacturers from liability for groundwater contamination. A growing body of court precedent shows that MTBE is a defective product whose harmfulness was known well before its use became widespread.

In the meantime, the federal government should grant California a waiver from the oxygenate mandate to allow refiners flexibility in using ethanol in California.

Contacts at MTBE-Impacted Systems
Dennis Cocking, South Tahoe Public Utility District, 530.544.6474
Connie Davidson, Cambria Community Services District, 805.927.6222
Dana Wisehart, United Water Conservation District, 805.525.4431
Craig Perkins, City of Santa Monica, 310.458.8230

ACWA Contacts
Krista Clark, ACWA Director of Regulatory Affairs, (916) 441-4545
Jennifer Persike, ACWA Director of Strategic Coordination and Public Affairs, 916.441.4545
Sarge Green, Chair, ACWA Water Quality Committee, 559.698.7225

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