United States
Environmental Protection
Office of Water
EPA 832-F-00-004
August 2000
                       FACT  SHEET
                       Funding  MTBE  Prevention and Remediation
                       Projects   with the  Clean Water State
                       Revolving  Fund	
The Problem
Methyl  Tertiary  Butyl  Ether (MTBE)  is  an
automobile fuel additive, introduced in the late 1970's
during lead phase-out as an octane enhancer .  It has
been used in increased quantities during the 1990's to
help gasoline meet the requirements of the Federal
Reformulated  Gasoline  and  Oxyfuels  programs
required by the  Congress in the Clean Air  Act
Amendments of 1990. MTBE has been detected in
ground water  and  surface  water with increasing
frequency throughout the country and in some instances
these contaminated waters have been the sources of
drinking water. Due to its high solubility in water and
small molecular size, MTBE can move rapidly through
ground water when introduced by a leak or spill.  EPA
is working with its research partners to determine the
specific human health effects of MTBE.   However,
because of its unpleasant taste and odor, drinking water
contaminated with MTBE is unacceptable to the public.
The presence  of MTBE has caused some  water
suppliers in affected areas to
stop using water supplies or incur costs of treatment
and remediation. The major source of ground water
contamination has been from leaking underground and
above ground  gasoline storage tanks.  Other sources
have included  gasoline spills and recreational water

MTBE  Projects  and  the  Clean  Water  State
Revolving Fund
The Clean Water State Revolving Fund (CWSRF)
programs primary mission is to promote water quality.
For more than  10 years the CWSRF has been helping
communities improve the quality of their water and
protect it from sources of contamination.  Besides
financial savings, loan recipients can realize significant
environmental benefits, including protection of public
health and conservation of local watersheds. The state
CWSRF programs in every state and Puerto Rico work
like banks.  Federal and state contributions are used to
capitalize or set up the programs. These assets, in turn,
are used to make low or no-interest loans for important
water quality  projects.   Funds  are  repaid  to the
                        CWSRF's over terms as long as twenty years.  Repaid
                        funds are then recycled to fund other quality projects.

                        The MTBE Blue Ribbon Panel on Oxygenates in
                        Gasoline has encouraged states to consider targeting
                        State Revolving Funds to help accelerate treatment
                        and remediation in  high  priority areas.   These
                        CWSRF resources can help  augment the financial
                        resources currently available to fund the following types
                        of MTBE prevention and remediation projects:

                               / Control runoff from leaking pipelines and
                               / Land acquisition to  protect drinking water
                               / Best Management Practices to safeguard
                                 drinking water supplies
                               / Public education programs targeting
                                 marinas and boating facilities
                               /Spill prevention and  remediation at
                                publicly owned fueling stations
                               /Funding LUST (Leaking Underground
                                Storage Tank) prevention and remediation

                        Capacity of the CWSRF
                        Nationally, the CWSRF has in excess of $30 billion in
                        assets (includes loans already made and current funds
                        available to make loans). Currently, the CWSRF is
                        funding approximately $3  billion in water  quality
                        projects each year.
                         Since 1989, the CWSRF program has funded over
                         1,600 nonpoint source projects, investing more
                         than $1 billion to clean up polluted runoff.
                        Getting a Project Funded
                        The Clean Water Act (CWA) of 1987 authorized the
                        CWSRF to fund point source (§212), nonpoint source
                        (§319), and estuary (§320) projects. As stipulated in
                        §603(c) of the CWA,  §212 projects must be publicly

owned to receive CWSRF funds. Nonpoint and estuary
projects, however,  do  not  have this restriction.
Included in a long  list  of eligible  CWSRF loan
recipients for NFS and estuary projects are community
groups, individuals,  agricultural associations  and
nonprofit organizations. Since the program is managed
by the states, project  funding varies according to the
priorities, policies, and laws within each state. Eligible
applicants also vary by state. The necessary first step
in obtaining CWSRF funding is to see if the state
CWSRF will fund nonpoint source or estuary projects
or support them as a pilot project.  Next, get the
activity/project   in   a   state's  Nonpoint   Source
Management  Plan  or   Estuary  Comprehensive
Conservation and Management Plan.  Contact your
state's CWSRF, NPS, or Estuary program for details

Sources of Loan Repayment
liach state must approve a  source of loan repayment
as part of the application process. Though finding a
source of repayment may prove challenging, it does not
have  to be unnecessarily  so.   Many  users of the
CWSRF have demonstrated a high degree of creativity
in identifying sources of loan repayment. The sources
of repayment need not come from the project itself.
Some possibilities include:
        •Fees paid by developers on other lands
        • recreational fees (fishing licenses, park
        entrance fees)
        •Stormwater management fees
        •Wastewater user charges
        •Donations or dues made to nonprofit
        groups and associations
        •Tax on potential contaminants such as
        gasoline and other fuels
        •Permit fees on tank owners

Learning by Example

The following are examples of leakage prevention and
remediation work for   petroleum  storage  tanks.
Although MTBE was not involved, similar approaches
can be used for petroleum products containing MTBE.

 1 he Wyoming State Lands and Investments Board
has provided $57,042,155 in 0% CWSRF loans to the
Wyoming   Department of  Environmental  Quality
(WDEQ).   The WDEQ then contracts  with private
firms and contractors to perform site investigations and
corrective   action contamination  cleanup  work at
approximately 300  leaking  underground  gasoline
storage tank sites. The source of loan repayment for
this innovative approach is from an account called the
Corrective Action Account  (CAA). The CAA funds
are derived from a gas severance tax equal to one cent
per gallon on gas and special fuels sold or distributed in
the state.

 1 he  New York  State Environmental  Facilities
Corporation provided a CWSRF loan in 1996 to the
New York State Office of General  Services for the
remediation of over 700  leaking petroleum tanks  at
approximately 360  State facilities.  The CWSRF loan
was in excess of $23 million. The  CWSRF allowable
work included testing, site assessment, tank removal,
disposal  and  site  remediation.    Tank  upgrade,
replacement or consolidation costs were not financed by
the CWSRF per EPA policy. The loan is being repaid
by appropriated State funds.

 1 he Nebraska  State Revolving Fund loaned the
Petroleum Release Remedial Action Fund $ 10.7 million
in 1996  to conduct  remediation  work on  leaking
petroleum storage tanks. The work covered costs of site
assessment, sampling, monitoring, and remediation.
The loan has been  repaid from permit fees on tank
owners and gallonage fees on petroleum products.

Challenges Ahead
liPA has been encouraging the states to open  their
CWSRF's  to  the  widest variety of water quality
projects,  while addressing  high priority projects  in
targeted watersheds.   Those interested in preventing
and remediating MTBE leakage and spills should seek
out their CWSRF programs, gain an understanding  of
how their state program works, and participate in the
annual process that determines which projects are
For more information:

       *on the CWSRF, or for a program
        representative in your state, please
       contact: the Clean Water  State Revolving
       Fund Branch U.S. Environmental Protection
       Agency 1200 Pennsylvania Avenue, NW
       (Mail  Code  4204)Washington D.C.  20460
       Phone: (202) 260-7359 Fax: (202) 260-  1827,
       Internet: http://www.epa.gov/OWM

       >on MTBE  and EPA  activities related  to
       MTBE in  drinking  water,  call  the   Safe
       Drinking Water Hotline at  1-800-426-4791  or
       visit the Internet address: