EPA issues final report on "Boutique Fuels"

WASHINGTON (07/12/06) -- The U.S. EPA has released a report by the Boutique Fuels Task Force that fulfills President Bush's charge to increase cooperation among the states on fuel supply decisions and analyze the impacts of boutique fuels, or fuel blends, used by states to help meet clean air standards. 

According to the report, if a fuel supply disruption occurs, boutique fuel requirements make it more difficult to move gasoline supplies around the country. In addition, the report recommended careful consideration of potential legislative authority to allow for the adoption of regional clean fuel programs.

"Innovation and cooperation are vital components of the president's plan to protect our nation's energy security," said EPA Administrator Stephen L. Johnson. "In order to meet our growing energy needs, effective communication and collaboration between states and the federal government are essential. Today's report demonstrates that cooperation can benefit both our energy security and our environment." 

In April, as part of a broad initiative to respond to high fuel prices, President Bush directed EPA to convene a task force of states to identify opportunities to increase cooperation on gasoline supply decisions and analyze boutique fuels. Administrator Johnson invited all 50 governors to participate and received input from non-governmental groups representing industry, public health and consumer organizations. 

As the task force worked to meet its objectives, EPA was required by the Energy Policy Act of 2005 to cap the number of boutique fuels permitted for use and place additional restrictions on the growth of such fuels. The task force report calls for conducting additional analysis of any action to further limit a state's ability to adopt boutique fuels. In addition, EPA will conduct a more comprehensive review in the coming months examining boutique fuels and other factors that affect the fuel supply and distribution system. 

The report's major observations and recommendations include:
 

• The report confirms certain aspects of a previous 2001 EPA report. It indicates that boutique fuels continue to pose a challenge to the movement of fuel when supply disruptions occur. Natural events, like hurricanes, as well as refinery and pipeline breakdowns can cause such disruptions. EPA needed to waive fuel requirements over 30 times in 2005 alone.

• The report did not reach final conclusions regarding the precise effect of boutique fuels on the price of gasoline. Stakeholder opinions were divided on this issue. EPA's previous assessments have focused on the cost of producing fuels by refineries and have not assessed the full market price impact of boutiques. There are many factors and variables that affect the price of fuel and these factors will be studied in connection with EPA's implementation of the Energy Policy Act.
  
  
• Any action to modify the state of existing boutique fuels or limit a state's ability to adopt fuel programs must at least maintain air quality gains and avoid unnecessary restriction. In addition, any future analysis of potential changes to the number and types of fuels must utilize the most up-to-date data and analytical tools and ensure that all aspects, including impacts changes to fuel requirements may have on air quality, as well as the new generation of vehicles, fuel distribution, supply and cost, are appropriately addressed.

• As part of the analyses of future fuel options, careful consideration should be given to the possibility of new legislative authority which would allow for the adoption of regional clean fuel program.

The report and associated documents are available online.