Cal. PRC § 25354.4 — California Code / Code prc / Division 15 / Chapter 4.5 / Section 25354.4
Section 25354.4
Status: in_force

(a) The commission, in consultation with the Independent Consumer Fuels 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 shall protect the health and safety of employees, local communities, and the public, and shall provide for all of the following:

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

(2) A process for maximizing the use of existing storage infrastructure.

(3) A process for waiving, if appropriate, minimum inventory requirements for a small refinery, as defined in Section 80.2 of Title 40 of the Code of Federal Regulations, as that section read on the effective date of the bill that added this section, if the refiner of the small refinery demonstrates that those requirements would impose a disproportionate economic hardship.

(4) A process for adjusting, if appropriate, minimum inventory requirements for one or more refiners based on region, season, refinery size and storage capacity, and changes in regional or statewide supply and demand for refined transportation fuels meeting California specifications.

(5) Market 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, including a metric or threshold based on market conditions that would automatically require a refiner to draw down inventories and provide that fuel to the market.

(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) (1) A regulation adopted under this section shall not modify any requirements of, or standards issued pursuant to, Section 6311 of, or Part 7.5 (commencing with Section 7850) of Division 5 of, the Labor Code, including the authority of employees to perform an emergency shutdown of the refinery and necessary maintenance work for safety.

(2) A regulation adopted, or action taken, pursuant to this section shall not excuse an employer’s compliance with the skilled and trained workforce and wage requirements set forth in Section 25536.7 of the Health and Safety Code.

(e) In developing or amending regulations adopted under this section, the commission may consider the use of a compliance mechanism for each refiner that is tradable between or within each refining region for refiners to meet the minimum inventory requirements adopted pursuant to this section.

(f) The commission shall not apply a minimum inventory requirement under this section to a refiner in a manner that would be met only by the construction of additional storage infrastructure, as determined by the commission.

(g) 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.

(h) For purposes of this section, “refining region” means the two in-state regions of concentrated refineries, where the preponderance of refining capacity is located in the San Francisco Bay area and the Los Angeles area.

(i) This section shall remain in effect only until January 1, 2033, and as of that date is repealed.