Alaska state officials and the U.S. Environmental Protection Agency are deadlocked over the issue of the state's resistance to require sale of oxygenated gasoline by Nov. 1.

State officials in Alaska said gasoline formulated with the most widely produced oxygenate, methyl tertiary butyl ether (MTBE), has had negative health effects among its population with numerous complaints registered in Fairbanks and Anchorage.The Clean Air Act of 1989-90 empowered the EPA to oversee state compliance of various requirements, including the sale of gasoline designed to limit carbon monoxide from vehicular exhaust.

Gasolines blended to meet this requirement add oxygen to tailpipe emissions through use of additives.

John Manley, press secretary for Alaska Gov. Walter J. Hickel said the governor would continue to oppose the use of MTBE until questions about its effects on health are answered. We don't believe in "killing the patient with the cure," he said.

John Sandor, Alaska's environmental conservation commissioner, issued emergency regulations exempting the state's refiners and distributors from having to have oxygenated fuel in place for sale by Nov. 1. Mr. Sandor's emergency order will remain in effect until such time as "MTBE is shown to produce a net positive health benefit to the public," he said.

Mr. Sandor's move, supported by Gov. Hickel, came despite the fact that Alaska has not been granted any official EPA waiver to remove itself from the oxygenated gasoline program. Both Anchorage and Fairbanks/Northstar Borough remain on a list of 39 U.S. cities requiring use of oxygenated gasoline.

Under part of Mr. Sandor's agreement, Alaska's two refineries, which are operated by Mapco Petroleum and Tesoro Alaska Petroleum Co., were assured a 75-day notice before the fuel would be be required again.

"We feel very good about that," said Bucky Wright, Mapco's vice president for Alaska operations. "Our main concern is that if we're required to (produce oxygenated gasoline) just tell us and we'll do it," he said, adding, "It can't happen overnight."

In order to meet with the Nov. 1 EPA deadline, the companies would have needed to begin producing and distributing oxygenated gasoline readying for the current season Aug. 15.

The 75-day window is the minimum amount of time needed to acquire and import MTBE, which is not produced in Alaska, and to allow oxygenated gasoline to work its way through supply networks to the retail level of trade, Mr. Wright said.

Mr. Manley said the state's refiners are "stuck in the middle," and added that Tesoro is sitting on $2 million of MTBE inventory. He said both companies have made substantial investments in remodeling and refurbishing operations to accommodate sales of oxygenated fuels.

Should Alaska continue to resist implementing the oxygenated fuel program, which is administered by the state and overseen by the federal EPA, it runs the risk of having highway funds withheld along with other punitive measures prescribed by Congress.

"We'll see how far we can get," Mr. Manley said, adding that if the situation gets to the point where funding becomes effected his governor would negotiate further with EPA head Carol Browner.

Federal EPA insiders said of Alaska's actions, "We're all in a lurch over this."

Mr. Sandor said the issue boils down to the fact that Alaska feels it has an "adequate basis for a waiver request." he said the EPA's general council feels the state does not have that discretionary power.

Upgraded motor vehicle inspection and maintenance requirements in Fairbanks should remove that city from the EPA's carbon monoxide non- attainment list, Mr. Sandor said. He added that Alaska was seeking waivers to the sale of oxygenated gasoline from the EPA for both Fairbanks and Anchorage.

On Dec. 11, 1992, Alaska suspended the sale of oxygenated fuels in Fairbanks, which led to two incidents of carbon monoxide levels exceeding guidelines, an EPA official said.