While California is the only state that effectively prohibits the use of ethanol-blended fuels, concern with the discovery of MTBE in groundwater has many legislators looking at lifting the state's oxygen cap to allow for oxygenate competition. Since California represents the nation's largest gasoline market, removing the cap could mean tremendous new market share for ethanol.

Legislation has been introduced by Debra Bowen, Chairwoman of the California Assembly Natural Resources Committee, and Assemblyman Bernie Richter. Bowen's bill (AB 1642) would remove the state's maximum and minimum oxygenate requirements. Doing so would allow refiners a choice of oxygenates, including ethanol, based on performance and not regulations. "Ethanol blends are a proven alternative to MTBE that have been consistently endorsed by the Legislature... and on which many other states, including our neighbors in Oregon, Nevada and Arizona, rely to meet their Clean Air Act obligations," said Bowen.

Similarly, Richter's bill (AB 1650) would lift the state's 2.2 weight percent oxygenate cap and require the labeling of all oxygenates at retail gasoline pumps.