2023 California Code › Public Resources Code - PRC › DIVISION 15 - ENERGY CONSERVATION AND DEVELOPMENT › CHAPTER 4.5 - Petroleum Supply and Pricing › Section 25355.5.

25355.5. (a) For purposes of this section, the following definitions apply:
(1) “Gross gasoline refining margin excluding state program costs” means the amount, expressed in dollars per barrel and calculated by the commission on a monthly basis, equal to the volume-weighted average rack price of wholesale gasoline sold by a refiner in the state, less the volume-weighted fees or estimated valuations of costs embedded in all of the refiner’s wholesale gasoline sales associated with the low carbon fuel standard and the cap and trade cap-at-the-rack program, less the refiner’s volume-weighted average acquisition cost.
(2) “Maximum gross gasoline refining margin” means the maximum amount of gross gasoline refining margin excluding state program costs established under subdivision (b).
(3) “Volume-weighted average acquisition cost” means the combined volume-weighted average of the refiner’s volume-weighted average crude oil acquisition cost and the refiner’s volume-weighted cost of acquiring refined gasoline imported to California or received from an entity other than the refiner.
(4) “Volume-weighted average rack price of wholesale gasoline” means the combined volume-weighted average of the refiner’s rack price of the branded and unbranded rack sales reported under paragraph (5) of subdivision (b) of Section 25355.
(5) “Volume-weighted average crude oil acquisition cost” means the amount reported as required by paragraph (2) of subdivision (b) of Section 25355.
(b) The commission may, by regulation or order at a business meeting, subject to the requirements of subdivision (f), set a maximum gross gasoline refining margin.
(c) (1) If the commission sets a maximum gross gasoline refining margin under subdivision (b), it shall also establish a penalty for exceeding that maximum margin, by regulation or order at a business meeting, subject to the requirements of subdivision (f), that may be the same meeting described in subdivision (b).
(2) The penalty shall be a percentage of the amount by which the refiner’s gross gasoline refining margin excluding state program costs exceeds the maximum gross gasoline refining margin, converted from dollars per barrel to dollars per gallon, multiplied by the number of gallons sold by the refiner during the calendar month for all transactions described in paragraph (6) of subdivision (b) of Section 25355.
(3) Subject to subdivision (j), the penalty shall be tiered, such that the penalty percentage shall increase with the amount by which the refiner’s gross gasoline refining margin excluding state program costs exceeds the maximum gross gasoline refining margin, as follows:
(A) Amounts earned by a refiner that exceed the maximum gross gasoline refining margin by less than ten cents ($0.10) per gallon shall be subject to the base penalty percentage set by the commission.
(B) Amounts earned by a refiner that exceed the maximum gross gasoline refining margin by ten cents ($0.10) to twenty cents ($0.20), inclusive, per gallon shall be subject to a penalty percentage higher than the base penalty percentage.
(C) Amounts earned by a refiner that exceed the maximum gross gasoline refining margin by more than twenty cents ($0.20) per gallon shall be subject to a penalty percentage higher than the penalty percentage set under subparagraph (B).
(d) In establishing a maximum gross gasoline refining margin and penalty, the commission shall consider information reported under subdivision (b) of Section 25355 and any other public data and reports that it determines will assist its analysis. The commission shall also consider confidential information submitted pursuant to Sections 25354 and 25355. A refiner may submit additional information and facts for the commission to consider under an application for confidential designation pursuant to Section 25364.
(e) The commission shall not set a maximum gross gasoline refining margin or accompanying penalty under subdivisions (b) and (c), respectively, unless it finds that the likely benefits to consumers outweigh the potential costs to consumers. In making that determination, the commission shall consider all factors that in its discretion it deems relevant, including at a minimum all of the following factors, although no one factor shall be determinative:
(1) Whether it is likely that the maximum gross gasoline refining margin and penalty will lead to a greater imbalance between supply and demand in the California transportation fuels market than would exist without the maximum margin and penalty.
(2) Whether it is likely that the maximum gross gasoline refining margin and penalty will lead to higher average prices at the pump on an annual basis than would exist without the maximum margin and penalty.
(3) Whether case-by-case exemptions from the gross gasoline refining maximum margin will be sufficient to ensure that individual refiners have an opportunity to demonstrate the need for a greater margin before they make decisions about production.
(f) Decisions of the commission under subdivision (b) to adopt a regulation or order setting a maximum gross gasoline refining margin, under subdivision (c) to adopt a regulation or order establishing a penalty for exceeding the maximum gross gasoline refining margin, under subdivision (e) regarding the benefits and costs to consumers, and under subdivision (k) regarding adjustments to, or rescission of, the maximum gross gasoline refining margin or penalty, shall be made in accordance with all of the following procedures:
(1) A notice and draft decision, regulation, or order shall be posted publicly at least 30 days before the business meeting at which adoption of the decision, regulation, or order will be considered.
(2) The commission shall receive written comments on the draft decision, regulation, or order.
(3) The commission shall hear public comment on the draft decision, regulation, or order at its business meeting.
(g) If the commission has set a maximum gross gasoline refining margin and penalty, the margin and penalty shall take effect 60 days following the commission’s regulation or order establishing the margin and penalty pursuant to subdivisions (b) and (c), respectively. Within 15 days of the regulation or order establishing a maximum gross gasoline refining margin and penalty, the commission shall notify refiners by a means determined by the commission that may include, but is not limited to, mail, email, or internet website posting.
(h) If the commission has set a maximum gross gasoline refining margin under subdivision (b), it shall be a violation of this section for a refiner to exceed the maximum gross gasoline refining margin.
(i) In addition to any other remedy that may be available, the commission may petition a court to enjoin a refiner from violating this section.
(j) The commission may impose an administrative civil penalty for a violation of this section in the amounts established pursuant to subdivision (c).
(k) The commission may, by regulation or order, at a business meeting, subject to the requirements of subdivision (f), rescind or adjust the maximum gross gasoline refining margin and the penalty percentages and amounts specified in subdivisions (b) and (c) to ensure that a sufficient, affordable, and fairly priced supply of gasoline is available to Californians. A refiner may submit information and facts for the commission to consider in support of any rescission or adjustment under an application for confidential designation pursuant to Section 25364. Rescission of, or adjustments to, the maximum gross gasoline refining margin and the penalty percentages and amounts specified in subdivisions (b) and (c), respectively, pursuant to this subdivision shall be effective on the first day of the calendar month at least 15 days after the commission gives public notice of the rescission or adjustment, unless the commission orders otherwise.
(l) Notwithstanding Section 25901 and except as provided in subdivision (n), a petition for writ of mandate pursuant to Section 1085 of the Code of Civil Procedure shall be the exclusive remedy available to challenge any regulation, order, decision, rule, guideline, or adjudication of an exemption request adopted by the commission under this section. The court’s review shall be limited exclusively to the record before the commission. Any petition shall be filed within 30 days of the commission’s decision.
(m) (1) The commission shall consider a refiner’s request for an exemption from the maximum gross gasoline refining margin and shall grant the exemption upon a showing by the refiner, based on competent and reliable evidence and subject to the commission’s review, examination, and investigation of the evidence, that an application of the maximum gross gasoline refining margin would be unconstitutional as applied to the refiner. The commission may, in its discretion, grant a request for an exemption upon a showing by the refiner of good cause for an exemption, subject to alternative maximum margins or other conditions as the commission may set.
(2) Any refiner seeking an exemption shall, at a minimum, file a statement with the commission, signed under penalty of perjury, setting forth the facts that form the basis for the request for exemption. A refiner may submit information and facts under an application for confidential designation pursuant to Section 25364 to support its application for an exemption.
(n) (1) Before imposing the administrative civil penalty under subdivision (j), the executive director of the commission shall issue and serve a complaint on the refiner, and the commission shall hold a hearing, adopt a decision, and require payment of the penalty in accordance with the procedures described in subdivisions (a) to (d), inclusive, of Section 25534.1.
(2) Judicial review and enforcement of an order imposing an administrative civil penalty under subdivision (j) may be had in accordance with the procedures described in subdivisions (a) and (b) of Section 25534.2.
(3) Penalties collected under this section shall be deposited into the Price Gouging Penalty Fund, which is hereby created in the State Treasury and shall be used, upon appropriation by the Legislature, to address any consequences of price gouging on Californians.
(4) The commission shall make public, on a quarterly basis, the name and address of each refiner that has exceeded the maximum gross gasoline refining margin for any month during the previous quarter, and the amount of administrative civil penalty to be assessed.
(o) The Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code) does not apply to any regulation, order, decision, rule, guideline, adjudication of an exemption request, or adjustment of the maximum gross gasoline margin, adopted by the commission under this section.
(p) The California State Auditor shall begin, no earlier than January 1, 2032, and complete, no later than March 1, 2033, an audit and performance review of the maximum gross gasoline refining margin and penalty set pursuant to this section. The California State Auditor shall make determinations in a report to the Legislature and the commission, by no later than June 1, 2033, as to whether this section is achieving the intended goal to reduce gasoline price spikes and stabilize the gasoline fuel supply market for California consumers. Within 60 days of the issuance of the report, the commission shall hear from the California State Auditor at a business meeting of the commission. If the California State Auditor concludes that the maximum gross gasoline refining margin and penalty should be terminated, then the commission shall cease implementing the maximum gross gasoline refining margin and penalty provisions no later than 180 days after the issuance of the report, unless the Legislature has enacted subsequent legislation to extend the maximum gross gasoline refining margin and penalty provisions in the meantime.
(Amended (as added by Stats. 2023, 1st Ex. Sess., Ch. 1, Sec. 5) by Stats. 2023, Ch. 53, Sec. 3. (SB 124) Effective July 10, 2023.)