To amend the Clean Air Act to reduce the proliferation of boutique fuels, and for other purposes.

Summary: Boutique Fuels Reduction Act of 2004 - Amends the Clean Air Act (CAA) to authorize the Administrator of the Environmental Protection Agency to temporarily waive controls or prohibitions on the use of a fuel or fuel additive regulated under specified provisions of that Act or prescribed in an applicable State Implementation Plan (SIP) if the Administrator determines that: (1) extreme and unusual circumstances exist in a State or region that prevent distribution of an adequate supply of the fuel or fuel additive to consumers; (2) such circumstances are the result of a natural disaster, an Act of God, a pipeline or refinery equipment failure, or another unforeseeable event; and (3) it is in the public interest to grant the waiver.

Permits such a waiver only if it: (1) applies to the smallest necessary geographic area; (2) is effective for 20 days or the shortest practicable time period; (3) permits a transitional period after the termination of the temporary waiver to allow wholesalers and retailers to blend down their inventory; (4) applies to all persons in the motor fuel distribution system; and (5) is preceded by public notice to all parties in the distribution system, local and State regulators, public interest groups, and consumers in the State or region covered by the waiver.

States that the Administrator shall have no authority, when considering a SIP or SIP revision regarding State controls or prohibitions on motor vehicle fuel or fuel additives, to approve any fuel: (1) if doing so would increase the total number of approved and fully implemented fuels as of September 1, 2004, in all SIPs; and (2) unless that fuel was approved and fully implemented in at least one SIP in the applicable Petroleum Administration for Defense District (with the exception of fuels with a specified summertime Reid Vapor Pressure).

Requires the Administrator and the Secretary of Energy jointly to study and report to Congress on the effects on air quality, number of fuel blends, fuel availability, fuel fungibility, and fuel costs of SIPs adopted pursuant to CAA provisions regarding State controls or prohibitions on motor vehicle fuel or fuel additives.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Boutique Fuels Reduction Act of 
2004''.

SEC. 2. 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 the enactment of the Boutique 
Fuels Reduction Act of 2004, the Administrator shall promulgate 
regulations to implement clauses (ii) and (iii).
    ``(v) Nothing in this Act 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.''.

SEC. 3. CAP 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 section 2, is further amended by adding at the end the 
following:
    ``(vi)(I) The Administrator shall have no authority, when 
considering a State implementation plan or a State implementation plan 
revision under this subparagraph, to approve any fuel if the effect of 
such approval would be to increase the total number of fuels approved 
and fully implemented as of September 1, 2004 in all State 
implementation plans.
    ``(II) Except for a fuel with a summertime Reid Vapor Pressure of 
7.0 pounds per square inch, the Administrator shall have no authority, 
when considering any particular State's implementation plan or a 
revision to that State's implementation plan under this subparagraph, 
to approve any fuel unless that fuel was, as of the date of such 
consideration, approved and fully implemented in at least 1 State 
implementation plan in the applicable Petroleum Administration for 
Defense District. The preceding sentence shall not limit the 
Administrator's authority to approve any new fuel in any such plan or 
plan revision if such new fuel replaces an existing fuel without 
increasing the total number of fuels approved and fully implemented as 
of September 1, 2004 in all State implementation plans.
    ``(III) Nothing in this clause shall be construed to prohibit a 
State from requiring the use of any fuel additive registered in 
accordance with subsection (b), including any fuel additive registered 
in accordance with subsection (b) after the enactment of this 
subclause.''.

SEC. 4. STUDY AND REPORT TO CONGRESS ON BOUTIQUE FUELS.

    (a) 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)). The primary focus of such study 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 the Congress such legislative 
changes as are necessary to implement such a system. In furtherance of 
such a study, the Administrator and the Secretary shall, as 
appropriate, review studies and other actions of other Federal agencies 
concerning boutique fuels with a view toward avoiding duplication of 
effort and the need to expedite such study.
    (b) Study Areas of Responsibility.--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, and 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.
    (c) 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.

SEC. 5. DEFINITIONS.

    In this Act:
            (1) The term ``Administrator'' means the Administrator of 
        the Environmental Protection Agency.
            (2) The term ``Secretary'' means the Secretary of Energy.