Good afternoon Mr. Chairman, Members of the Committee. My name is Robert Varney; I am the Commissioner of the New Hampshire Department of Environmental Services ("DES" or the "Department"). I am pleased to be here today to present the State of New Hampshire's views on the gasoline additive methyl tertiary butyl ether (MtBE), the effect this compound has had on the water resources of our state, and the costs associated with the investigation and remediation of MtBE contamination. Our testimony also addresses the significant constraints imposed by the Clean Air Act Amendments of 1990 on the State's ability to remove MtBE from our gasoline supply. Thank you for this opportunity to address this important issue with you.
BACKGROUND
MtBE was first introduced in the 1970s to help replace lead in gasoline. MtBE's desirable blending characteristics, its relatively low cost, and its favorable impact on -octane rating made it an attractive gasoline additive. As a result, it was mixed with conventional gasoline at concentrations of approximately 2% by volume in regular grades and up to 9% in premium grades. In addition, the use of ethers, and in particular MtBE, was dramatically increased in 1995 with the introduction of federal reformulated gasoline (RFG) requirements as part of the 1990 Amendments to the federal Clean Air Act (CAA). Because its high oxygen content enables more complete combustion (reducing CO emissions, particularly in carbureted engines), and its relatively low vapor pressure reduces evaporative emissions (reducing VOC and air toxics emissions), MtBE was chosen by most refiners to meet he federal oxygenate requirement (minimum 2% oxygen by weight) for RFG when it was mandated in the CAA. The presence of MTBE (and other ethers) in RFG also dilutes the concentration of more harmful toxics and carcinogens that are normally present in gasoline, such as benzene. The CAA requires the use of RFG in certain ozone nonattainment areas, and RFG was adopted for use in New Hampshire's ozone nonattainment areas (the State's four southeastern counties) in 1991 to help meet New Hampshire's emission reduction obligations under the CAA.
There is no federal maximum contaminant level (MCL) for MtBE in drinking water. New Hampshire law requires that the state drinking water standard, for any compound for which no federal standard exists and where the compound has been shown to cause cancer in laboratory animals, must be protective to a risk of one cancer incidence in a population of one million. In 1990, in consultation with the New Hampshire Department of Health and Human Services (DHHS), DES adopted a state criterion for MtBE of 100 parts per billion (ppb). In 1997, this was lowered to 70 ppb, again after consultation with DHHS based on a review of more recent studies on the health effects of MtBE.
In 1999, DES and DHHS, at the request of the state legislature, performed further review of the available information on the human health effects of MtBE, focused particularly on research and analysis performed since 1997. As a result, in May 2000, DES set New Hampshire's MtBE standard at 13 ppb. One other state, California, has also adopted a State MCL of 13 ppb. Nationally, New Hampshire and California now have the most stringent MtBE drinking water standard.
MTBE IN PUBLIC WATER SUPPLIES AND PRIVATE WELLS
New Hampshire first monitored for MtBE in drinking water in 1987. From 1987 to 1995, a total of 92 public water supplies reported first-time detects of MtBE, for an average of 11 new public water supply detects per year. In 1996, after one full year of RFG use in New Hampshire's four southeastern counties, 35 public water supplies reported first time detects of MtBE. Since 1996, an average of 40 public water suppliers per year have reported first time detects. DES believes that the observed increase in average new detects from 11 per year to 40 per year is directly related to RFG usage in New Hampshire.
In the year 2000, 16.2% (or 187) of public water supplies had reported MtBE detects. In the four RFG counties, the percentages are higher than statewide averages, ranging from 18.6% in Merrimack County to 24.5% in Rockingham County. In contrast, the six "non-RFG" counties have MtBE detects in just over 8% of public water supplies. This further confirms the relationship between RFG in gasoline and MtBE in groundwater.
Fortunately, the detected concentrations of MtBE are between 0.5 and 5 ppb in approximately 85% of public water supplies with detectable MtBE, as compared with the MCL of 13 ppb. Only 2 of the 8 systems that currently have MtBE concentrations above 13 ppb do not have treatment systems installed, and these two are expected to take corrective action over the next several months.
New Hampshire has about 200,000 private residential wells that provide approximately 35 percent of the population with its drinking water. These wells are largely unregulated, in contrast with public water supplies that are subject to the rigorous standards established in the Safe Drinking Water Act. As a result, comprehensive water quality testing of private residential wells rarely occurs, although it is widely recognized that contaminants with significant public health implications exist in these wells at predictable frequencies, including radon, arsenic and MtBE. Consequently, this population of wells has not been universally tested for MtBE. In December 2000, DES announced an ongoing private well testing initiative to increase public awareness of the need for periodic and more extensive water testing for contaminants of concern, including MtBE.
Although the available data are limited, we know that MtBE contamination has had an impact on a significant number of private residential wells. For the period from 1995 to 2000, of 269 private wells tested by the DES laboratory, 39 (14%) experienced detections of MtBE, with concentrations below the 13 ppb MCL in 27 wells (10%) and above the MCL in 12 wells (4.4%). In the year 2000 alone, 105 private wells were sampled, and MtBE detected at levels below the MCL in 24 wells and above the MCL in 5 wells. This indicates an increasing trend in both the number of residential wells sampled -- which we attribute to the increased attention to MtBE -- and the rate of MtBE detection. Not surprisingly, these detection rates are comparable with those found during a 1998 study by the State of Maine, in which MtBE was detected in 15.8% (or 150) of 951 private wells sampled. Considering the available date from New Hampshire and Maine, with approximately 200,000 residential wells in New Hampshire, it is reasonable to project that between 30,000 (15%) and 40,000 (20%) of New Hampshire's wells may have detectable levels of MtBE, with levels above the 13 ppb MCL in around 8,000 wells (4%).
STATE FUNDING FOR REMEDIATION AND WATER TREATMENT
The State of New Hampshire has taken aggressive action to address MtBE contamination.. Among the specific measures the Department has undertaken are the following:
In 1998, DES set in motion a process to reduce the risk to citizen exposure to MtBE-contaminated drinking water. DES began having all drinking water laboratories do what DES's lab had already been doing: test for MtBE along with other volatile organic compounds they routinely analyze for in drinking water samples.
DES requested all public water suppliers to notify their consumers whenever MtBE has been detected in concentrations over 5 ppb.
All municipal public water supplies have been tested for MtBE. (None currently exceed the State's drinking water standard.)
DES has implemented an educational outreach plan for the prevention of gasoline spillage. This ongoing effort includes: radio and television public service announcements; DES web page information; numerous press releases, interviews with news media; presentations at public forums; conference displays; and coordination with other organizations. In cooperation with Northeast States for Coordinated Air Use Management and the private sector, DES also launched "Gas Care," a national spill prevention program that Governor Shaheen participated in launching through the taping of a video news release.
DES has continued its aggressive underground storage tank (UST) program that replaces old, sometimes leaking tanks with new, state-of-the-art tanks throughout the State. This program has a compliance rate of nearly 100 percent. Over 13,000 old tanks have been removed and replaced with over 4,600 owner-purchased and installed new leak-resistant tanks. The success of this program has translated into a substantial decline in UST gasoline leaks.
DES sponsors an active household hazardous waste collection program that includes collecting old gasoline. DES contributes $250,000 annually to municipalities for this program, which serves 150 communities statewide.
In 2000, the Legislature passed and Governor Shaheen signed HB 1569 which instructed DES to analyze levels of MtBE in all grades of gasoline in the six counties outside the reformulated gasoline area. DES expanded the scope of the study to include gasoline sampling in all ten of the State's counties. The analyses found MtBE and four other oxygenates in gasoline. This finding was unexpected, and resulted in a requirement for the reporting of analytical results for these other oxygenates in drinking water and groundwater. DES has also requested the New Hampshire Department of Health and Human Services to review the data available regarding these compounds to determine if drinking water standards should be established for these contaminants as well.
DES and the New Hampshire Marine Trades Association instituted a "Clean Marine Initiative", aimed at reducing pollution from motorboat outboard engines. In an effort to achieve quicker introduction of the new low pollution marine outboard engines, DES and the Marine Trades Association entered into an agreement to promote the sale of these cleaner engines. Twenty one dealers have signed the agreement, setting high goals for the sales of low pollution marine engines, half of all engines sold in the year 2000 and more than 90% by the year 2003, well ahead of the mandated introduction of clean marine engines in 2006. (This initiative received an Environmental Merit Award from EPA-New England last week.)
In the summer of 2001, DES will undertake a focused investigation of private water supplies near automobile junkyards, which we suspect may be a source of groundwater contamination, including MtBE. Thirty junkyards will be chosen at random throughout the state and sampling will be conducted of private wells near each of these facilities to determine if groundwater has been affected.
Through 1999 when the drinking water criterion for MtBE in New Hampshire was 70 ppb, the number of private wells that were known to have had a concentration of MtBE exceeding that level was small. To deal with MtBE contaminated wells, nine point-of-entry (POE) treatment systems were installed by the Department of Environmental Services through 1999. However, with the reduction in the drinking water standard to 13 ppb and an increased awareness by the public of the MtBE contamination, the number of POEs installed in 2000 was 25. The installation costs alone of those treatment systems was nearly $160,000. The installation cost, coupled with short term bottled water use and sampling and maintenance of the nine systems previously installed, resulted in a total POE cost due to MtBE contamination in excess of over $ 190,000.
More significant than the costs that the State of New Hampshire incurred last year for non-UST sites is the projected future costs associated with the investigation and remediation of MtBE contamination. The assessment of MtBE contaminated sites has absorbed significant personnel resources, and based on our best estimates of the number of new sites we expect to discover in the future, this demand for contracted engineering work and DES staff time will increase significantly. We are estimating, and need to budget for, a total cost for engineering consulting services for the investigation and remediation of MtBE contamination of $150,000 per year for the next five years. This is in addition to the more than $1,000,000 in state personnel time that we estimate will be needed to deal with MtBE contaminated sites. Moreover, there will continue to be a need to install POE treatment systems for those homes whose wells have been contaminated by MtBE. We have every reason to expect that the number of POEs needed in the coming years will increase, with the cost of installation of new systems increasing from $150,000 next year to $270,000 five years out. The operation and maintenance expenses for all of the POEs installed by the State increasing to well over $100,000 per year in the next few years. We are also preparing to deal with the need to extend public drinking -water supplies in those areas where there has been widespread contamination of private wells. For our budget planning purposes, we are estimating a need for $200,000 per year to address the State's cost share for the extension of public drinking water supplies in those areas. In sum, we project total annual costs of $740,000 in 2002, increasing to $991,000 in the year 2006 to deal with MtBE contamination at non-USTR sites..
These costs are for only those sites not associated with contamination from leaking underground storage tank facilities. For UST sites, we estimate that approximately 200 such systems have been installed specifically to treat MtBE, of which 100 are currently in operation. The estimated costs associated with these systems is over $1 million for installation, plus $1,600 per year per system for annual operation. Current operation and maintenance costs for the 100 systems are estimated at $160,000 per year.
Currently, two existing dedicated state funds and a federally funded program are being used to investigate and provide water treatment systems to residents whose drinking water is contaminated by MtBE. For MtBE contamination associated with a leaking underground storage tank (LUST), the funding sources consist of the LUST Trust Cooperative Agreement with the US Environmental Protection Agency and the state Oil Discharge and Disposal Cleanup Fund (ODD Fund). The ODD Fund is available for reimbursement of owners of underground storage tanks who incur costs in cleaning up oil discharges in groundwaters and surface waters and soils of the state. This Fund cannot be used when the source of the problem is either unknown or not associated with a LUST site. Expenditures from the LUST Trust Cooperative Agreement are similarly limited to LUST sites alone.
The New Hampshire Oil Pollution Control Fund (OPCF) is used to fund the investigation and cleanup of MtBE contamination from unknown sources or sources not associated with a LUST site. The OPCF is funded by a fee of $0.001 per gallon of petroleum imports into the State, and was originally established principally to cleanup a major petroleum spill in surface waters such as Portsmouth Harbor, the Piscataqua River, and Great Bay. The costs previously discussed for the installation and operation of private treatment systems for MtBE removal were funded solely from the OPCF. As the number of private and public water supplies discovered with MtBE contamination increases, the demands on the OPCF for treatment and remediation will become a major drain on this fund. Long-term use of the OPCF for MtBE related issues will rapidly deplete the fund, leaving the State vulnerable to a major spill in the River and Great Bay and without sufficient funds to cleanup extensive MtBE contamination.
The State of New Hampshire and its municipalities, its businesses, and its citizens have expended considerable funds in addressing MtBE contamination of public water supplies and private wells. It is entirely proper for the federal government to provide funding assistance in the cleanup of "orphan" MtBE contaminated sites. The federal government currently assesses $0.001 per gallon on all petroleum products sold in the country. The revenue from that tax, which in FY 2000 amounted to $189 million, is placed in the federal LUST Trust Fund. The Trust Fund currently has a balance of about $1.5 billion. Interest alone from the Fund nearly equals the annual appropriation of -approximately $70 million that goes to EPA for the LUST Trust Cooperative Agreements to the states. The Trust Fund was established to assist the states in the cleanup of contamination caused by gasoline only from leaking underground storage tank sites. Thus, addressing these "orphan" MtBE contaminated sites from the Fund has not been permitted. New Hampshire believes annual appropriations from the Fund should at least equal revenue to the Fund, including interest. This would amount to over $200 million per year being returned to the states for the cleanup of contamination. In addition, individual states should be permitted to use a portion of those monies for remediation of MtBE sites not associated with leaking underground storage tanks. This will provide a minimum of federal support to assist states in dealing with the unforeseen and unintended consequences of reliance on MtBE as a fuel additive.
CLEAN AIR ACT CONSTRAINTS ON NEW HAMPSHIRE'S ABILITY TO ELIMINATE MTBE FROM THE STATE'S FUEL SUPPLY
As set forth above, there is abundant evidence that MTBE has become a significant and rapidly increasing contamination threat to the State's groundwater and surface water resources. MTBE is difficult and expensive to remediate. Further, it can be difficult to pinpoint the source of the contamination, and we are finding that an increasingly disproportionate part of the funds we have dedicated for petroleum remediation are caused by contamination problems related primarily to MTBE. We have aggressively undertaken preventive and remedial measures to address this contamination epidemic. New Hampshire also has aggressively pursued avenues to reduce and eliminate MtBE from our State's gasoline supply, but the State is severely limited by the federal Clean Air Act in what measures it can take.
The Clean Air Act (1) prohibits states in almost all instances from controlling individual components of gasoline and (2) expressly mandates the oxygen content of RFG (the "oxygenate mandate"), leaving states with practically no authority to implement and enforce regulations to reduce MtBE levels in gasoline. Refiners use MtBE in conventional gasoline to help meet performance standards, and in RFG (which typically contains 5-10 times as much MtBE as conventional gasoline) because it is the most cost- effective alternative for meeting the oxygenate mandate in the East. Thus, virtually all gasoline supplied to the Northeast contains some level of MtBE. Even if it were legal to control MtBE at the state level, to do so could result in the supply of a gasoline that is actually more hazardous to public health and the environment than what we currently have. Also, it would most likely result in the requirement of a formulation for gasoline that is not presently available, which potentially exposes consumers and businesses to extreme variability in pricing and supply. Attachment A, a memorandum to Commissioner Robert W. Varney from DES's Air Director Ken Colburn, provides a more comprehensive discussion of the barriers that states face relative to reducing MtBE levels in gasoline.
In addition to the difficulties states face in trying to enforce actions to reduce MtBE levels in gasoline, there is also an absence of workable substitutes for MtBE. The only currently possible alternative to MtBE to meet the oxygenate mandate is ethanol. However, ethanol is not considered to be a workable substitute for states in the Northeast. Although not final, a recent study entitled Health, Environmental, and Economic Impacts of Adding Ethanol to Gasoline in the Northeast States, conducted jointly by the New England Interstate Water Pollution Control Commission (NEIWPCC) and the Northeast States for Coordinated Land Use Management (NESCAUM), helps to identify the impacts to public health, the environment, and the regional economy of widespread use of ethanol as a gasoline additive in the Northeast. The State of Connecticut currently has by statute instituted a ban on MtBE beginning in January 2003. However, knowing that a ban of MtBE in the presence of an oxygenate mandate would essentially result in an ethanol mandate, and in consideration of the preliminary findings of the NEIWPCC/NESCAUM study, the State's Department of Environmental Protection (DEP) recently wrote to environmental leadership in the legislature recommending that the effective date of the MtBE ban be delayed. Attachment B contains a copy of the letter from the Connecticut DEP to the State's Legislative Environment Committee which provides more information on the concerns with using ethanol in gasoline. It is clear that ethanol does not provide the solution to this problem.
Ultimately, the only rational and legal action that is currently available to states to reduce MtBE is to opt-out of the federal RFG program. This would eliminate the oxygenate mandate and reduce the need for oxygenate additives such as MtBE and ethanol. For these reasons, New Hampshire Governor Jeanne Shaheen last week issued Executive Order 2001- 02, which directs DES to take immediate steps to opt out of the RFG program. Attachment C contains copies of Executive Order 2001-02 and a letter of intent from Governor Shaheen to EPA Administrator Whitman. Even that action, however, prevents timely action to reduce MtBE, as the existing federal regulation pertaining to RFG opt out requests (40 CFR 80.72) prohibits an effective date for opt out earlier than January 1, 2004.
As you know from your efforts on S. 2962 in Congress last session, states have few options to address MtBE in light of current federal law. The Clean Air Act needs to be revised to eliminate the oxygenate mandate. New Hampshire, as have other states, has enjoyed the notable air quality benefits of the RFG program, and would prefer to maintain RFG's considerable air quality upside. We also respect the desire on the part of federal policymakers to maintain regional consistency in fuel formulations. However, New Hampshire alone uses roughly 650 million gallons of gasoline per year. We also have one of the most successful tank replacement programs in the nation. Given the volume of gasoline that is distributed, it is unreasonable to expect that there will be no releases into the environment, even with the most diligent handling. To address the problem of MtBE contamination, we must pursue a pollution prevention approach that reduces, and ultimately eliminates, the use of MtBE as a gasoline additive.
Thank you again for this opportunity to provide the State of New Hampshire's perspective on this important issue.