Two recent studies based on composite reddened quasar spectra have indicated the presence of "gray" dust in quasar environments. This gray dust has a relatively flat extinction law in the UV, consistent with the theoretical expectation of a lack of small dust grains close to a quasar. In contrast, individual reddened quasars in the Sloan Digital Sky Survey tend to have steep extinction laws in the UV, similar to that in the SMC. We analyze the method used in determining extinction laws from composite quasar spectra in order to resolve this discrepancy. We show that quasars reddened by SMC-type dust that are present in quasar samples have a negative correlation between E_(B_V) and redshift, due to selection effects. The fact that the highest redshift quasars (which contribute to the UV part of a composite spectrum) are less extincted leads to shallower extinction in the UV. We construct a composite quasar spectrum from a simulated sample of quasars reddened by SMC-type dust and show that the extinction curve derived from the composite does not recover the intrinsic extinction law. We conclude there is no evidence of gray dust in quasar environments.
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