Barton on Boutique Fuels Discussion Draft WASHINGTON – U.S. Rep. Joe Barton, R-Texas, chairman of the House Energy and Commerce Committee, made the following statement today during the full committee hearing entitled on a discussion draft providing for the reduction in the number of boutique fuels: “Good morning. Today the committee will consider a discussion draft that would do two things: Provide for the reduction in the number of boutique fuels in this country; and Expand EPA’s authority to waive fuel specifications, granted under the Energy Policy Act of 2005, to include unexpected problems with distribution or delivery equipment necessary for transportation and delivery of fuel or fuel additives. “This discussion draft is another step in trying to create a greater energy security for this country. “A month ago, this committee held a two-day long hearing on gasoline supply, price and specifications, and the reasons why gasoline prices have skyrocketed. Crude oil prices, increased demand, transition from winter to summer fuels, removal of MTBE from the nation’s fuel supply, logistical issues with the delivery of ethanol, and the brittleness of the distribution system all contribute to the increase in the price at the pump. The committee is going to keep looking at the causes, but we’re also continuing to look for solutions, and today we’re here to focus on one of the solutions, which would be streamlining in the boutique fuel system. “Blending special fuels for different parts of the country serves a good purpose, there’s no question about that, but it adds dramatically to the complexity of the gasoline distribution system if every part of the country chooses a unique fuel. When gasoline was simply gasoline, it was fungible and it could be sold anywhere. But when we began deciding that Alabama gasoline should be different from Illinois gasoline, and you could not fill in one with the other, we set the stage for problems we’ve seen today and for the past several years. There may be a sufficient supply of gas generically in the country, but if it’s not the exact kind for that specific region of the country, you’re going to have a problem in that region. “In the Energy Policy Act of 2005, we took initial steps to simplify the complex system of boutique fuels. We began this process by capping the number of boutique fuels allowed to those approved by the EPA as of Sept. 1, 2004. We also gave EPA authority to waive fuel specifications in the event of a natural disaster, an act of God, a pipeline or refinery equipment failure or any other reasonably unforeseeable event. EPA utilized this authority 21 days after the signing of the bill when Hurricane Katrina hit the Gulf Coast. Originally criticized as unnecessary, this authority proved to be vital, within in a month of enactment, in staving off even greater price spikes and supply disruptions. “We also directed EPA to conduct two studies, one that examines the harmonization of the nation’s fuel supply, and another that requires EPA, in coordination with DOE, to develop a fuels system that maximizes fuel fungibility and supply, addresses air quality requirements on a regional basis, and reduces fuel price volatility. “The discussion draft before us today takes another step forward in the simplification process. This draft would move up the completion of certain elements of the studies making it possible for the EPA and DOE to utilize that information when developing what the draft refers to as the Approvable State Fuels List. Each of the fuels included on this list of “pre-approved” boutique fuels must satisfy all prerequisites outlined in the draft. Each fuel must have the ability to reduce emissions thereby assisting the state in attaining the National Ambient Air Quality Standards, provide net benefits to the United States or a region of the country’s fuel supply, and not result in a reduction in supply or producibility. “States, in turn, may choose a fuel from the list, provided that no more than two of the approved fuels may be used in each Petroleum Administration for Defense District (PADD). The fuels included on the Approvable State Fuels List ensure continued protection of air quality while helping to reduce the strain on the distribution system by eliminating the ‘fuel island’ effect that makes states vulnerable to supply disruptions today. “Some may ask if the draft would limit the ability of states to protect their citizens’ air quality. I would say the answer to that question is ‘no.’ Let’s keep in mind that boutique fuels are but one tool in a large collection of resources for improving air quality. The language in the discussion draft does not eliminate boutique fuels. It does not eliminate the reformulated gasoline program, or the ability of a State to opt in. The language does not eliminate the State of California’s unique carve out under the Clean Air Act to develop and implement its own motor vehicle and fuel emission standards. The language seeks to provide options without putting the nation’s air quality or fuel supply at risk. “The discussion draft is just that, a compilation of ideas that provide a basis from which to learn more about a complicated issue. Today, I will ask each of the witnesses how best to craft language to reduce the number of boutique fuels. How do we accomplish such a reduction while ensuring air quality, fuel producibility and supply, and lessening price volatility is the $64 question. I have no doubt each of you will be ready to provide such input on that question. In addition, it is my understanding we will learn more about the potential effect state additive mandates may have on fuel supply and price. “In advance, I want to thank our witnesses here today, in particular, the Honorable Karen Harbert, Assistant Secretary, Office of Policy and International Affairs, Department of Energy and Mr. Bob Meyers, a former Committee on Energy and Commerce counsel, now serving as Associate Assistant Administrator for Air and Radiation, Environmental Protection Agency.” ####