Reducing the proliferation of boutique fuels

(a)

Temporary waivers during supply emergencies

Section 211(c)(4)(C) of the Clean Air Act (42 U.S.C. 7545(c)(4)(C)) is amended by inserting (i) after (C) and by adding the following new clauses at the end thereof:

(ii)The Administrator may temporarily waive a control or prohibition respecting the use of a fuel or fuel additive required or regulated by the Administrator pursuant to subsection (c), (h), (i), (k), or (m) of this section or prescribed in an applicable implementation plan under section 110 approved by the Administrator under clause (i) of this subparagraph if, after consultation with, and concurrence by, the Secretary of Energy, the Administrator determines that— (I)extreme and unusual fuel or fuel additive supply circumstances exist in a State or region of the Nation which prevent the distribution of an adequate supply of the fuel or fuel additive to consumers; (II)such extreme and unusual fuel and fuel additive supply circumstances are the result of a natural disaster, an Act of God, a pipeline or refinery equipment failure, or another event that could not reasonably have been foreseen or prevented and not the lack of prudent planning on the part of the suppliers of the fuel or fuel additive to such State or region; and (III)it is in the public interest to grant the waiver (for example, when a waiver is necessary to meet projected temporary shortfalls in the supply of the fuel or fuel additive in a State or region of the Nation which cannot otherwise be compensated for). (iii)If the Administrator makes the determinations required under clause (ii), such a temporary extreme and unusual fuel and fuel additive supply circumstances waiver shall be permitted only if— (I)the waiver applies to the smallest geographic area necessary to address the extreme and unusual fuel and fuel additive supply circumstances; (II)the waiver is effective for a period of 20 calendar days or, if the Administrator determines that a shorter waiver period is adequate, for the shortest practicable time period necessary to permit the correction of the extreme and unusual fuel and fuel additive supply circumstances and to mitigate impact on air quality; (III)the waiver permits a transitional period, the exact duration of which shall be determined by the Administrator, after the termination of the temporary waiver to permit wholesalers and retailers to blend down their wholesale and retail inventory; (IV)the waiver applies to all persons in the motor fuel distribution system; and (V)the Administrator has given public notice to all parties in the motor fuel distribution system, local and State regulators, public interest groups, and consumers in the State or region to be covered by the waiver.

The term motor fuel distribution system as used in this clause shall be defined by the Administrator through rulemaking.

(iv)Within 180 days of the date of enactment of this clause, the Administrator shall promulgate regulations to implement clauses (ii) and (iii). (v)Nothing in this subparagraph shall— (I)limit or otherwise affect the application of any other waiver authority of the Administrator pursuant to this section or pursuant to a regulation promulgated pursuant to this section; and (II)subject any State or person to an enforcement action, penalties, or liability solely arising from actions taken pursuant to the issuance of a waiver under this subparagraph.

(b)

Limit on number of boutique fuels

Section 211(c)(4)(C) of the Clean Air Act (42 U.S.C. 7545(c)(4)), as amended by subsection (a), is further amended by adding at the end the following:

(v) (I)The Administrator shall have no authority, when considering a State implementation plan or a State implementation plan revision, to approve under this paragraph any fuel included in such plan or revision if the effect of such approval would be to increase the total number of fuels approved under this paragraph as of September 1, 2004 in all State implementation plans; (II)The Administrator, in consultation with the Secretary of Energy, shall determine the total number of fuels approved under this paragraph as of September 1, 2004, in all State implementation plans and shall publish a list of such fuels, including the states and Petroleum Administration for Defense District in which they are used, in the Federal Register for public review and comment no later than 90 days after enactment. (III)The Administrator shall remove a fuel from the list published under subclause (II) if a fuel ceases to be included in a State implementation plan or if a fuel in a State implementation plan is identical to a Federal fuel formulation implemented by the Administrator, but the Administrator shall not reduce the total number of fuels authorized under the list published under subclause (II). (IV)Subclause (I) shall not limit the Administrator’s authority to approve a control or prohibition respecting any new fuel under this paragraph in a State implementation plan or revision to a State implementation plan if such new fuel: (aa)completely replaces a fuel on the list published under subclause (II); or (bb)does not increase the total number of fuels on the list published under paragraph (II) as of September 1, 2004.

In the event that the total number of fuels on the list published under subclause (II) at the time of the Administrator's consideration of a control or prohibition respecting a new fuel is lower than the total number of fuels on such list as of September 1, 2004, the Administrator may approve a control or prohibition respecting a new fuel under this subclause if the Administrator, after consultation with the Secretary of Energy, publishes in the Federal Register, after notice and comment, a finding that, in the Administrator’s judgment, such control or prohibition respecting a new fuel will not cause fuel supply or distribution interruptions or have a significant adverse impact on fuel producibility in the affected area or contiguous areas.

(V)Except for a fuel with a summertime Reid Vapor Pressure of 7.0 pounds per square inch, the Administrator shall have no authority under this paragraph, when considering any particular State’s implementation plan or a revision to that State’s implementation plan, to approve any fuel unless that fuel was, as of the date of such consideration, approved in at least one State implementation plan in the applicable Petroleum Administration for Defense District. (VI)Nothing in this clause shall be construed to prohibit a State from requiring the use of an alcohol or bio-diesel fuel additive registered in accordance with subsection (b), including any alcohol or bio-diesel fuel additive registered after the enactment of this subclause; however, this clause shall be construed to prohibit a State from requiring the use of any other fuel additive registered in accordance with subsection (b), including any other fuel additive registered after the enactment of this subclause.

(c)

Sense of the Congress

It is the sense of the Congress that States should seek to maximize the environmental benefits available from the fuels authorized under subsection (b). (d)

Study and report to Congress on boutique fuels

(1)

Joint study

The Administrator of the Environmental Protection Agency and the Secretary of Energy shall undertake a study of the effects on air quality, on the number of fuel blends, on fuel availability, on fuel fungibility, and on fuel costs of the State plan provisions adopted pursuant to section 211(c)(4)(C) of the Clean Air Act (42 U.S.C. 7545(c)(4)(C)). (2)

Focus of study

The primary focus of the study required under paragraph (1) shall be to determine how to develop a Federal fuels system that maximizes motor fuel fungibility and supply, preserves air quality standards, and reduces motor fuel price volatility that results from the proliferation of boutique fuels, and to recommend to Congress such legislative changes as are necessary to implement such a system. The study should include the impacts on overall energy supply, distribution, and use as a result of the legislative changes recommended. In addition, the study shall examine the need for additional, cleaner motor fuel reformulations to assist states in complying with the ozone National Ambient Air Quality Standard. (3)

Responsibility of Administrator

In carrying out the study required by this section, the Administrator shall coordinate obtaining comments from affected parties interested in the air quality impact assessment portion of the study. The Administrator shall use sound and objective science practices, shall consider the best available science, and shall consider and include a description of the weight of the scientific evidence. (4)

Responsibility of Secretary

In carrying out the study required by this section, the Secretary shall coordinate obtaining comments from affected parties interested in the fuel availability, number of fuel blends, fuel fungibility and fuel costs portion of the study. (5)

Public participation

The Administrator and the Secretary shall appoint a task force of interested parties, including but not limited to representatives of Federal, State and local governments, fuel manufacturers, suppliers, and marketers and public interest groups, to provide information to the Administrator and the Secretary and to assist in the development of the recommendations to be included in the report to Congress under paragraph (5). (6)

Report to Congress

The Administrator and the Secretary jointly shall submit the results of the study required by this section in a report to the Congress not later than 12 months after the date of the enactment of this Act, together with any recommended regulatory and legislative changes. Such report shall be submitted to the Committee on Energy and Commerce of the House of Representatives and the Committee on Environment and Public Works of the Senate. (7)

Authorization of appropriations

There is authorized to be appropriated jointly to the Administrator and the Secretary $500,000 for the completion of the study required under this subsection. (e)

Definitions

In this section: (1)The term Administrator means the Administrator of the Environmental Protection Agency. (2)The term Secretary means the Secretary of Energy. (3)The term fuel means gasoline, diesel fuel, and any other liquid petroleum product commercially known as gasoline and diesel fuel for use in highway and non-road motor vehicles. (4)The term a control or prohibition respecting a new fuel means a control or prohibition on the formulation, composition, or emissions characteristics of a fuel that would require the increase or decrease of a constituent in gasoline or diesel fuel.