CARB Gasoline Proposal Raises Concerns; Business and Agriculture Fear Risk to MTBE Phase-Out.

SACRAMENTO, Calif.--(BUSINESS WIRE)--Oct. 12, 1999--

In the wake of a California Air Resources Board (CARB) hearing at which the agency introduced plans to further tighten fuel specifications, leaders of California's business and agricultural communities expressed serious concern that the proposal might jeopardize implementation of Governor Davis' executive order calling for the phase-out of the gasoline additive, MTBE, from California cleaner-burning gasoline.

The business community has supported the Governor's Executive Order phasing out MTBE. But these key stakeholders, along with the state's agricultural community, have registered serious concerns about CARB's proposal for more stringent rules.

"The reformulation proposed by CARB goes well beyond the changes necessary to manufacture MTBE-free gasoline," said Jack Stewart, president of the California Manufacturers Association. "We are concerned that should CARB adopt overly restrictive requirements...this could result in tightening gasoline supply."

Bill Hauck, president of the California Business Roundtable, asserted: "CARB's plan to add further stringency will require more of the existing refinery capacity to be used to manufacture less gasoline at a higher cost."

Allan Zaremberg, president of the California Chamber of Commerce, warned: "Burdening the complicated (MTBE phase-out) process by injecting stricter gasoline standards could very well increase risk of marketplace disruptions. Such disruptions if they lead to higher fuel prices would have a significant impact on our members and California consumers in general."

Registering the agricultural community's opposition to the CARB proposal, Bill Pauli, president of the California Farm Bureau Federation, predicted the new regulations would put California farmers and businesses at a competitive disadvantage:

"The reformulation that CARB is proposing is an excellent example of placing this state's enterprises on an unlevel playing field not only nationally, but also globally....putting us at odds with our worldwide competition will severely impact our bottomline as well as the state's economic welfare."

Douglas F. Henderson, executive director of the Western States Petroleum Association, suggested CARB's new standards would impede the already challenging task of phasing out MTBE:

"While we appreciate CARB's desire to further improve air quality, increasing stringency at this time seems inconsistent with the Governor's Executive Order," Henderson said.

All parties urged that CARB refrain from introducing more stringent specifications until the economic impact on gasoline prices, consumers and the California market are fully studied.

WSPA's Henderson observed: "California's current cleaner-burning gasoline standards are already the strictest in the nation, and the MTBE phase-out will not weaken those standards. CARB should focus on ensuring refiners' flexibility to cost-effectively implement the MTBE phase-out, not jeopardize it with additional restrictions."

The Western States Petroleum Association is the non-profit trade organization representing refiners doing business in the Western United States.