Bill Text: CA ABX21 | 2023-2024 | Regular Session | Introduced

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Energy: transportation fuels: inventories: turnaround and maintenance.

Spectrum: Partisan Bill (Democrat 10-0)

Status: (Passed) 2024-10-14 - Chaptered by Secretary of State - Chapter 1, Statutes of 2024. [ABX21 Detail]

Download: California-2023-ABX21-Introduced.html

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CALIFORNIA LEGISLATURE— 2023–2024 2nd Ext.

Assembly Bill

No. 1

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Introduced by Assembly Members Hart and Aguiar-Curry
(Principal coauthors: Assembly Members Addis, Bennett, Bryan, Jackson, Kalra, Lee, and Wood)

September 03, 2024

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An act to amend Sections 25354.2, 25367, 25371, and 25372.2 of, to add Sections 25354.4 and 25354.6 to, and to repeal and add Section 25373 of, the Public Resources Code, relating to energy.

LEGISLATIVE COUNSEL'S DIGEST

AB 1, as introduced, Hart. Energy: transportation fuels: inventories: turnaround and maintenance.

Existing law, beginning on June 26, 2023, establishes the Independent Consumer Fuels Advisory Committee within the State Energy Resources Conservation and Development Commission (Energy Commission) to advise the Energy Commission and the Division of Petroleum Market Oversight, as provided. Existing law prescribes the composition of the 8-member committee, including 6 specified members appointed by the Governor, one member appointed by the Speaker of the Assembly, and one member appointed by the Senate Rules Committee.

This bill would repeal the Independent Consumer Fuels Advisory Committee and would instead establish a 6-member Expert Advisory Committee to advise the Energy Commission and division, as provided. The bill would require 4 of the members of the committee to be appointed by the Governor, one member to be appointed by the Speaker of the Assembly, and one member to be appointed by the Senate Rules Committee. The bill would, among other things, require all members of the committee to either hold an academic appointment in, or demonstrate expertise of, economics or business operations of the transportation fuels market, and would prohibit all members of the committee from having been employed by, contracted with, or received direct compensation from, a company that produces, refines, distributes, trades in, markets, or sells any petroleum product in the preceding 12 months.

Existing law requires the Energy Commission, in consultation with the Labor and Workforce Development Agency and labor and industry stakeholders, to consider ways to manage necessary refinery turnarounds and maintenance that would protect the health and safety of employees and the public, and minimize the impacts of maintenance-related production losses on fuel prices. Existing law authorizes the commission, by regulation, to impose requirements governing the timing of turnaround and maintenance.

This bill would expressly authorize those regulations to include criteria that are required to be met before a refinery commences a turnaround or maintenance event, as provided.

This bill would require the Energy Commission, in consultation with the Expert Advisory Committee, to consider the effects of refiners’ inventories of fuel and feedstocks and blending components on the price of transportation fuels in California. The bill would authorize the Energy Commission, by regulation, to develop and impose requirements for refiners operating in the state to maintain minimum levels of inventories of refined transportation fuels meeting California specifications, including any feedstocks and blending components, as specified.

This bill would impose an administrative civil penalty on a refiner or person who fails to comply with regulations adopted pursuant to the above-described authority and would authorize the Energy Commission to seek any form of injunctive or remedial relief to enforce compliance with those regulations, as provided.

Existing law requires the Energy Commission, on or before January 1, 2024, and every 3 years thereafter, to submit an assessment to the Governor and the Legislature that, among other things, identifies methods to ensure a reliable supply of affordable and safe transportation fuels in California, as provided.

This bill, beginning with the first assessment submitted after the effective date of the bill, would require that the assessment also include both an evaluation of California’s future petroleum product import needs and identified steps that can be taken to ensure that marine infrastructure and port facilities will be adequate to accommodate the efficient movement of petroleum products, and an evaluation of the effects on supplies of transportation fuels of state regulations that the Energy Commission identifies may be causing supply constraints, or for which the Energy Commission believes alternative compliance pathways should be considered by state agencies to mitigate potential impacts on supply.

Digest Key

Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

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Bill Text

The people of the State of California do enact as follows:

SECTION 1.

 Section 25354.2 of the Public Resources Code is amended to read:

25354.2.

 The commission, in consultation with the Labor and Workforce Development Agency and labor and industry stakeholders, shall consider ways to manage necessary refinery turnarounds and maintenance that would protect the health and safety of employees and the public, and minimize the impact of maintenance-related production losses on fuel prices. The commission may, by regulation, impose requirements governing the timing of turnaround and maintenance developed through consultations under this section. section, including, but not limited to, criteria that are required to be met before a refinery commences a turnaround or maintenance event, such as demonstrating to the satisfaction of the executive director of the commission, through a report required by subdivision (m) of Section 25354, that the refiner has made resupply plans or other arrangements sufficient to ensure that the loss of production during the turnaround or maintenance event does not adversely affect the California transportation fuels market.

SEC. 2.

 Section 25354.4 is added to the Public Resources Code, to read:

25354.4.

 (a) The commission, in consultation with the Expert Advisory Committee established pursuant to Section 25373, shall consider the effects of refiners’ inventories of fuel and feedstocks and blending components on the price of transportation fuels in California. The commission may, by regulation, develop and impose requirements for refiners operating in the state to maintain minimum levels of inventories of refined transportation fuels meeting California specifications, including any feedstocks and blending components for those fuels.

(b) Regulations adopted under this section may provide for, but are not limited to, any of the following:

(1) A process for establishing minimum inventory levels specified for each refiner and for each fuel or blending component type.

(2) The locations of inventory storage and additional storage-based considerations.

(3) A process for adjusting minimum inventory requirements based on region, season, and changes in regional or statewide supply and demand for refined transportation fuels meeting California specifications.

(4) Conditions under which a refiner would be permitted or required to draw down its inventories below an established level and requirements for the rebuilding of those drawn-down inventories.

(c) Notwithstanding subdivision (a), the commission shall not adopt a regulation pursuant to this section unless it finds that the likely benefits to consumers from avoiding price volatility outweigh the potential costs to consumers. In making that determination, the commission shall consider all of the following factors, but no single factor shall be determinative:

(1) Whether it is likely that the minimum levels of inventories of refined transportation fuels will lead to greater supply in the California transportation fuels market than would exist without the minimum levels of inventories.

(2) Whether it is likely that the minimum levels of inventories of refined transportation fuels will lead to lower average retail prices on an annual basis than would exist without the minimum levels of inventories, and whether it is likely that the minimum levels of inventories will reduce the severity of retail price volatility.

(3) Whether easing of supply chain inefficiencies or constraints would lead to greater supply in the California transportation fuels market than requirements to establish minimum levels of inventories of refined transportation fuels.

(4) Whether it is likely that supply gains achieved through the adoption of the minimum levels of inventories of refined transportation fuels will be offset by actions of market participants not subject to these regulations and thereby have the effect of reducing supply in the market.

(d) One year after the adoption of any regulation pursuant to this section, and each year thereafter in which a regulation pursuant to this section is in effect, the commission shall submit a report to the Legislature, in accordance with Section 9795 of the Government Code, that includes a reevaluation of the effectiveness of that regulation, including whether the regulation continues to meet the cost effectiveness test described in subdivision (c), and shall provide an update on the factors identified in subdivision (c) regarding the implemented regulation.

SEC. 3.

 Section 25354.6 is added to the Public Resources Code, to read:

25354.6.

 (a) The commission shall notify a refiner or person who fails to comply with the requirements of Section 25354.2 or 25354.4, or fails to comply with the regulations adopted under those sections. If, within three days after being initially notified of the failure to comply, the refiner or person continues or persists in its noncompliance, the refiner or person shall be subject to an administrative civil penalty of not less than one hundred thousand dollars ($100,000), and not more than one million dollars ($1,000,000), per day for each day that the noncompliance occurs or persists.

(b) The executive director of the commission shall issue and serve a complaint on the refiner or person, and the commission shall hold a hearing, adopt a decision, and require payment of the penalty in accordance with the procedures described in Section 25534.1, with the penalty to be assessed based on each day of noncompliance following the third day after the initial notification by the commission.

(c) Judicial review and enforcement of an order imposing an administrative civil penalty under this section may be had in accordance with the procedures described in Section 25534.2.

(d) The commission may seek any form of injunctive or remedial relief from a court of competent jurisdiction to enforce compliance with Sections 25354.2 and 25354.4, and regulations adopted under those sections.

SEC. 4.

 Section 25367 of the Public Resources Code is amended to read:

25367.

 (a) Except as otherwise provided, the adoption of, or amendment to, regulations or orders implementing this chapter shall be considered by the Office of Administrative Law as an emergency, and necessary for the immediate preservation of the public peace, health, safety, and general welfare. Notwithstanding any other law, the emergency regulations or orders adopted to implement this chapter shall remain in effect for two years. Although the commission may adopt regulations to further define terms or prescribe reporting procedures or calculation methodologies pursuant to this chapter, or prescribe any other method of implementing this chapter, the provisions of this chapter are self-executing and shall not require any implementing regulation to be effective.

(b) The commission may enter into contracts to implement this chapter, and the contracts shall not require the review, consent, or approval of the Department of General Services or any other state department or agency and do not need to comply with requirements under the State Contracting Manual or the Public Contract Code.

(c) (1) Any regulation, guideline, other standard adopted, or decision rendered, by the commission under this chapter is not a “project” for purposes of the California Environmental Quality Act (Division 13 (commencing with Section 21000)). However, nothing in this section exempts any project undertaken pursuant to a regulation, guideline, other standard adopted, or decision rendered, pursuant to this chapter from the California Environmental Quality Act.

(2) This subdivision is declarative of existing law and shall apply to all regulations, guidelines, other standards adopted, or decisions rendered, under this chapter whether before or after the effective date of this subdivision.

SEC. 5.

 Section 25371 of the Public Resources Code is amended to read:

25371.

 (a) (1) Notwithstanding Section 10231.5 of the Government Code, on or before January 1, 2024, and every three years thereafter, the commission shall submit an assessment to the Legislature, in accordance with Section 9795 of the Government Code, and to the Governor that does all of the following:

(A) Identifies methods to ensure a reliable supply of affordable and safe transportation fuels in California. The assessment shall include estimates for the level of transportation fuels at the state level, and, to the extent feasible, at regional and local levels, and individual refineries if relevant, that should be held in reserve by refiners to prevent gasoline price spikes. The assessment shall consider all factors causing price fluctuation in retail gasoline prices when recommending adequate reserve levels. The commission shall consider all relevant evidence from any reasonably available source, including, but not limited to, information about imports, by amount, source, if known, and data received by the commission pursuant to existing laws, economic and business experts, and information from any local, state, and federal agencies. The commission shall transmit to the Legislature, in accordance with Section 9795 of the Government Code, any proposals it deems appropriate for mandatory reserve levels and the terms of a program to implement reserve levels.

(B) Evaluates the price of transportation fuels, including branded and unbranded retail prices, alternate formulations of gasoline with lower carbon impact, and other products suitable for production from refineries in California. This evaluation shall consider the market demand for these products at 3-, 7-, 10- and 20-year intervals from the date of the assessment and shall rely on the most recent transportation forecasting and assessment activities conducted pursuant to Section 25304. This evaluation shall include both of the following:

(i) An examination of whether branded fuel additives have any impact, and if so, how much, on fuel efficiency and vehicle emissions.

(ii) An assessment of the presence and availability of retail outlets, including monitoring changes in availability of retail outlets that contribute to increasing retail prices in local and regional areas.

(C) Considers different levels of supply conditions and assesses the impact of potential refinery closures in California.

(D) Includes an analysis of the impacts on production of refinery planned maintenance, unplanned maintenance, and turnaround. The assessment shall evaluate ways to manage necessary maintenance among the various facilities that would protect the health and safety of employees and the public, and minimize the impact of maintenance-related production losses. Notwithstanding any other law, the Department of Industrial Relations and Division of Occupational Safety and Health shall disclose to the commission, upon request, any information the department and division have received under Section 7872 of the Labor Code to ensure all aspects of refinery safety are incorporated into the assessment. All information designated confidential shall be treated as confidential by the commission.

(E) Evaluates the utility and feasibility of alternative methods to maintain adequate supplies of transportation fuels, including delivery alternatives for fuel and components of refined fuel, such as delivery by rail, a publicly maintained strategic fuel reserve, and other solutions beyond the activities of refineries and petroleum market participants.

(F) Proposes solutions to mitigate any impacts described in the assessment. The solutions shall include an assessment of the employment impacts and the cost and cost-effectiveness cost effectiveness of any proposal, including cost impacts to all impacted sectors, both public and private. The assessment shall include recommendations and alternatives.

(G) Beginning with the first assessment submitted after the effective date of this subparagraph, evaluates California’s future petroleum product import needs and identifies steps that can be taken to ensure that marine infrastructure and port facilities will be adequate to accommodate the efficient movement of petroleum products. In preparing the evaluation pursuant to this subparagraph, the commission shall consult with the ports in California at which petroleum and refined transportation fuels are imported, tanker terminal operators in California ports, the State Lands Commission, the California Coastal Commission, and the San Francisco Bay Conservation and Development Commission.

(H) Beginning with the first assessment submitted after the effective date of this subparagraph, evaluates the effects on supplies of transportation fuels of state regulations that the commission identifies may be causing supply constraints, or for which the commission believes alternative compliance pathways should be considered by state agencies to mitigate potential impacts on supply.

(2) The first assessment shall include the evaluation of oil and gas extraction and refining that the State Air Resources Board outlined in the most recent update to the scoping plan prepared pursuant to Section 38561 of the Health and Safety Code.

(b) The assessment shall be separate from the report submitted pursuant to Section 25302 and shall be developed in a public process. The assessment shall be available to the public within the proceeding docket and shall be approved by a vote of the commission at its business meeting.

(c) The commission may enter into contracts to perform the assessment required by subdivision (a) and the contracts shall not require the review, consent, or approval of the Department of General Services or any other state department or agency and do not need to comply with requirements under the State Contracting Manual or the Public Contract Code.

(d) The Division of Petroleum Market Oversight shall provide input to and otherwise support other divisions of the commission in preparation of the assessment required by subdivision (a).

(e) The Expert Advisory Committee established pursuant to Section 25373 shall provide input to the commission in preparation of the assessment required by subdivision (a).

SEC. 6.

 Section 25372.2 of the Public Resources Code is amended to read:

25372.2.

 (a) The division shall do all of the following:

(1) Provide independent oversight and analysis of the transportation fuels markets for the protection of consumers by identifying market design flaws, market power abuses, and any other manner by which market participants act to harm competition or act contrary to the best interests of consumers in the state.

(2) Provide guidance and recommendations to the commission relating to the development of the assessment required by Section 25371 and the Transportation Fuels Transition Plan described in Section 25371.3.

(3) Provide guidance and recommendations to members of the commission, other divisions of the commission, and the California Department of Tax and Fee Administration relating to the reports described in Section 25355.7.

(4) Provide guidance and recommendations to the Governor, members of the commission, and other divisions of the commissions commission on any other issues related to transportation fuels pricing and transportation decarbonization in California.

(5) Report its findings and recommendations to improve market performance at least annually to the Legislature, in accordance with Section 9795 of the Government Code, the Governor, the commission, the Attorney General, and the California Department of Tax and Fee Administration.

(b) (1)  The division may subpoena witnesses, compel their attendance and testimony, administer oaths and affirmations, take evidence and require by subpoena the production of any books, papers, records, or other items material to the performance of the division’s duties or exercise of its powers, including, but not limited to, current and historical pricing and sales data and contracts with other petroleum industry participants.

(2) With respect to the division, the director of the division is the “head of a department” for purposes of, and the division may undertake investigations in the manner described in, Article 2 (commencing with Section 11180) of Chapter 2 of Part 1 of Division 3 of Title 2 of the Government Code.

(c) The division may confidentially refer potential violations of law to the Attorney General confidentially at any time.

SEC. 7.

 Section 25373 of the Public Resources Code is repealed.

25373.

(a)The commission and division shall be advised by the Independent Consumer Fuels Advisory Committee which is hereby established within the commission. The committee shall consist of the following members:

(1)Six members appointed by the Governor as follows:

(A)A member who holds an academic appointment and has knowledge of economics or business operations of the transportation fuels market.

(B)A member representing the California petroleum fuels industry.

(C)A member representing consumers.

(D)A member representing labor.

(E)A member with expertise in community, environmental, or environmental justice issues.

(F)A member with expertise in antitrust law.

(2)One member appointed by the Speaker of the Assembly.

(3)One member appointed by the Senate Committee on Rules.

(b)(1)Except for the member described in subparagraph (B) of paragraph (1) of, or subparagraph (D) of paragraph (1) of, subdivision (a), no member of the committee shall have been employed by, contracted with, or received direct compensation from, a company that produces, refines, distributes, trades in, markets, or sells any petroleum product in the preceding 12 months.

(2)Except for the member described in subparagraph (B) of paragraph (1) of, or subparagraph (D) of paragraph (1) of, subdivision (a), before accepting appointment, members of the committee shall agree, in writing, not to be employed by, contract with, or receive direct compensation from companies described in paragraph (1) for the 12 months following the completion of their service on the committee.

(c)Each member of the committee shall receive a per diem of one hundred dollars ($100) for each day actually spent in the discharge of official duties, and shall be reimbursed for traveling and other expenses necessarily incurred in the performance of official duties.

(d)The duties, organization, and schedule of meetings of the Independent Consumer Fuels Advisory Committee shall be prescribed by the commission. The commission may delegate the authority under this subdivision to the executive director of the commission.

(e)The Independent Consumer Fuels Advisory Committee shall have access to aggregated or otherwise anonymized information submitted to the commission or to the division necessary to fulfill its duties under conditions as the commission determines necessary to ensure that any public disclosure of the specific information would not result in unfair competitive disadvantage to the person supplying the information or adversely affect market competition. The members of the committee shall also agree, in writing, to maintain the confidentiality of all information received.

(f)The executive director of the commission shall ensure that any confidential information shared with the members of the Independent Consumer Fuels Advisory Committee is subject to a nondisclosure agreement and is maintained in a way that protects it from inadvertent disclosure.

SEC. 8.

 Section 25373 is added to the Public Resources Code, to read:

25373.

 (a) (1) The commission and the division shall be advised by an Expert Advisory Committee, which is hereby established within the commission. The committee shall consist of the following six members:

(A) Four members appointed by the Governor.

(B) One member appointed by the Speaker of the Assembly.

(C) One member appointed by the Senate Rules Committee.

(2) All members of the committee shall either hold an academic appointment in, or demonstrate expertise of, economics or business operations of the transportation fuels market. All members of the committee shall serve at the pleasure of their appointing authority.

(b) (1) A member of the committee shall not have been employed by, contracted with, or received direct compensation from, a company that produces, refines, distributes, trades in, markets, or sells any petroleum product in the preceding 12 months.

(2) Before accepting an appointment, each member of the committee shall agree, in writing, not to be employed by, contract with, or receive direct compensation from companies described in paragraph (1) for the 12 months following the completion of their service on the committee.

(c) Each member of the committee shall receive a per diem of one hundred dollars ($100) for each day actually spent in the discharge of their official duties, and shall be reimbursed for traveling and other expenses necessarily incurred in the performance of their official duties.

(d) (1) The duties, organization, and schedule of meetings of the Expert Advisory Committee shall be prescribed by the commission. The commission may delegate the authority under this subdivision to the executive director of the commission.

(2) At a minimum, the Expert Advisory Committee shall evaluate all issues identified in paragraph (1) of subdivision (a) of Section 25371.

(e) The Expert Advisory Committee shall have access to all information submitted to the commission or to the division necessary to fulfill its duties, and shall assist the division in data analysis, by providing recommendations, and identification of market behaviors. The members of the Expert Advisory Committee shall agree, in writing, to maintain the confidentiality of all information received.

(f) The executive director of the commission shall ensure that any confidential information shared with the members of the Expert Advisory Committee is maintained in a way that protects it from inadvertent disclosure.

(g) Members of the Expert Advisory Committee shall provide briefings and perspective to the Speaker of the Assembly, the President pro Tempore of the Senate, and the chair of the relevant policy committees of both houses of the Legislature, upon the request of one of these designated members of the Legislature.