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<ns0:ActionText>INTRODUCED</ns0:ActionText>
<ns0:ActionDate>2026-02-20</ns0:ActionDate>
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<ns0:ActionText>AMENDED_ASSEMBLY</ns0:ActionText>
<ns0:ActionDate>2026-03-19</ns0:ActionDate>
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<ns0:SessionYear>2025</ns0:SessionYear>
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<ns0:MeasureNum>2672</ns0:MeasureNum>
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<ns0:AuthorText authorType="LEAD_AUTHOR">Introduced by Assembly Member Hart</ns0:AuthorText>
<ns0:Authors>
<ns0:Legislator>
<ns0:Contribution>LEAD_AUTHOR</ns0:Contribution>
<ns0:House>ASSEMBLY</ns0:House>
<ns0:Name>Hart</ns0:Name>
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<ns0:Title> An act to amend Section 43013.2 of the Health and Safety Code, and to amend Sections 25354.2 and 25371 of the Public Resources Code, relating to air pollution.</ns0:Title>
<ns0:RelatingClause>air pollution</ns0:RelatingClause>
<ns0:GeneralSubject>
<ns0:Subject>Transportation fuels: gasoline specifications: air pollution.</ns0:Subject>
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<ns0:DigestText>
<html:p>The Warren-Alquist State Energy Resources Conservation and Development Act establishes the State Energy Resources Conservation and Development Commission and prescribes the commission’s authorities, duties, and responsibilities pertaining to energy matters, including the provision of independent oversight and analysis of the transportation fuels markets for the protection of consumers. Existing law requires the commission to submit an assessment to the Legislature, on or before January 1, 2024, and every 3 years thereafter, regarding transportation fuels in the state. Existing law requires that the first assessment submitted after January 1, 2026, evaluate the cost and supply impacts of allowing the sale of gasoline with alternative specifications to support a reliable and affordable supply of
transportation fuels in California, and, if the evaluation finds that allowing the sale of gasoline with alternative specifications is likely to support a reliable and affordable supply of transportation fuels in California, requires the commission, in coordination with the State Air Resources Board, to recommend a strategy to facilitate the sale of gasoline with those alternative specifications that considers, among other things, the use of a fee associated with the sale of gasoline with those alternative specifications to mitigate for any increase in emissions.</html:p>
<html:p>This bill would require the commission to triennially submit that assessment on or before July 1, rather than January 1, and would require that the commission’s recommended strategy’s discussion of that fee include recommendations regarding the appropriate fee amount to protect consumers from price
impacts and avoid market disruptions.</html:p>
<html:p>Existing law requires the commission to consider ways to manage necessary refinery turnarounds and maintenance that would protect the health and safety of employees, local communities, and the public, and minimize the impact 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, and requires that those regulations include criteria that are required to be met before a refinery commences a turnaround or maintenance event, including the refiner making 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.</html:p>
<html:p>This
bill would expressly provide that those resupply plans or other arrangements may include the sale of gasoline that meets alternative specifications, as provided.</html:p>
<html:p>Existing law requires the state board to adopt and implement motor vehicle emission standards, in-use performance standards, and motor vehicle fuel specifications for the control of air contaminants and sources of air pollution, as provided. Existing law authorizes the state board to grant variances from gasoline specifications adopted by the state board and to impose fees and conditions on those variances, as provided. Existing law requires that the revenues from those variance fees, except as provided, be transmitted to the Treasurer for deposit into the High Polluter Repair or Removal Account and makes those revenues available, upon appropriation by the Legislature, to implement a program for accelerated retirement of light-duty vehicles to achieve specified emission reductions.</html:p>
<html:p>This bill would instead require those revenues to be available, upon appropriation by the Legislature, to implement or fund a program for accelerated replacement of light-duty vehicles manufactured before 2004, or that are at least 20 years old, with cleaner and more efficient motor vehicles. The bill would require the commission to adopt regulations specifying the circumstances under which sellers of gasoline are required to apply for and make use of a variance, as provided. The bill would require those regulations to be adopted and implemented for the purpose of protecting consumers from price impacts associated with supply disruptions. The bill would require the state board to consider amendments to the variance process, as provided.</html:p>
<html:p>
This bill would include a change in state statute that would result in a taxpayer paying a higher tax within the meaning of Section 3 of Article XIII
<html:span class="ThinSpace"/>
A of
the California Constitution, and thus would require for passage the approval of
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of the membership of each house of the Legislature.
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<ns0:VoteRequired>TWO_THIRDS</ns0:VoteRequired>
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<ns0:Preamble>The people of the State of California do enact as follows:</ns0:Preamble>
<ns0:BillSection id="id_9CD680DE-A394-475F-86FE-D81E966A3074">
<ns0:Num>SECTION 1.</ns0:Num>
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Section 43013.2 of the
<ns0:DocName>Health and Safety Code</ns0:DocName>
is amended to read:
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<ns0:Num>43013.2.</ns0:Num>
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<html:p>
(a)
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(1)
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The Legislature finds and declares that variances from the state board’s gasoline specifications may be needed if gasoline producers cannot meet the specifications as required due to circumstances beyond their reasonable control, or to protect consumers from price impacts associated with fuel shortages, and that the state board’s process for granting variances from fuel specifications should be clarified.
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<html:p>
(2)
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It is the intent of the Legislature that the variance process consider the impacts of granting the variance on all parties,
including the applicant, the public, the producers of complying fuel, and upon air quality.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
The state board may grant variances from gasoline specifications adopted by the state board pursuant to Sections 43013 and 43018. In granting a variance, the board may impose fees and conditions.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
The state board shall adopt regulations to implement this section in accordance with Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code. The regulations shall establish guidelines for the consideration of variances and the imposition of fees and conditions. Any fees or conditions shall be imposed in a fair and equitable manner consistent with the regulations. The regulations shall include methods for estimating excess emissions and factors to be considered in determining what is beyond the reasonable control of the applicant. The
regulations also shall establish a schedule of fees to be paid by an applicant for a variance to cover the reasonable and necessary costs to the state board in processing the variance. The state board shall adopt initial regulations as emergency regulations after conducting at least one public workshop. The initial adoption of emergency regulations following the effective date of this section shall be deemed to be an emergency and necessary for the immediate preservation of the public peace, health and safety, or general welfare.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
All variance fee revenues collected pursuant to this section by the state board, except those fees paid by an applicant for a variance to cover the reasonable and necessary costs to the state board for processing the variance, shall be transmitted to the Treasurer for deposit
into the High Polluter Repair or Removal Account created pursuant to subdivision (a) of Section 44091. All money deposited into the account pursuant to this section shall be available, upon appropriation by the Legislature, to implement or fund a program for accelerated replacement of light-duty vehicles manufactured before 2004, or that are at least 20 years old, with
cleaner and more efficient motor vehicles.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
In considering whether to grant a variance, and with regard to any fees and conditions that are imposed as part of the variance, the state board shall take into account whether granting the variance will place the applicant at a cost advantage over other persons, including those persons who produce complying gasoline.
</html:p>
<html:p>
(f)
<html:span class="EnSpace"/>
Any determination of the state board, or the executive officer of the state board pursuant to the authority delegated pursuant to Section 39516, regarding the issuance of any variance from gasoline specifications shall be based solely upon substantial evidence in the record of the variance proceeding. The variance shall be valid for a period not exceeding 120 days, commencing on or after March 1, 1996. The variance may be extended, subject to this section, for up to 90 additional days, upon
a showing of need. The board shall grant a variance only for the minimum period required to attain compliance.
</html:p>
<html:p>
(g)
<html:span class="EnSpace"/>
If a physical catastrophe occurs to a producer of complying gasoline, the state board may extend a variance upon the showing of need. Notwithstanding subdivision (f), any variance extension related to a physical catastrophe shall be approved by the state board. As used in this subdivision, “physical catastrophe” means a sudden unforeseen emergency beyond the reasonable control of the refiner, causing the severe reduction or total loss of one or more critical refinery units that materially impact the refiner’s ability to produce complying gasoline. “Physical catastrophe” does not include events that are not physical in
nature, such as design errors or omissions, financial or economic burdens, or any reduction in production that is not the direct result of qualifying physical damage.
</html:p>
<html:p>
(h)
<html:span class="EnSpace"/>
Notwithstanding any other law, except in the case of emergency variances, the state board shall provide at least 10 days’ public notice of its consideration of any variance or extension.
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
The State Energy Resources Conservation and Development Commission shall adopt regulations specifying the circumstances under which sellers of gasoline are required to apply for and make use of a variance pursuant to this section. Those regulations shall be adopted and implemented for the purpose of
protecting consumers from price impacts associated with supply disruptions.
</html:p>
<html:p>
(j)
<html:span class="EnSpace"/>
The state board shall consider amendments to the variance process that address recommendations made pursuant to subparagraph (I) of paragraph (1) of subdivision (a) of Section 25371 of the Public Resources Code and that result in higher voluntary use, including, but not limited to, clarifying that third-party sellers may apply for a variance and clarifying the circumstances during which a variance will be approved.
</html:p>
<html:p>
(k)
<html:span class="EnSpace"/>
Subdivisions (b) and (e) do not constitute a change in, but are declaratory of, existing law.
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<ns0:Num>SEC. 2.</ns0:Num>
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Section 25354.2 of the
<ns0:DocName>Public Resources Code</ns0:DocName>
is amended to read:
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<ns0:Num>25354.2.</ns0:Num>
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<html:p>
(a)
<html:span class="EnSpace"/>
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, local communities, 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.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
Regulations adopted under this section shall do, but not be limited to, both of the following:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
Protect the health and safety of employees, local communities, and the
public.
</html:p>
<html:p>
(2)
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(A)
<html:span class="EnSpace"/>
Include criteria that are required to be met before a refinery commences a turnaround or maintenance event, including, but not limited to, 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.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
For purposes of subparagraph (A), “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” may include the sale of gasoline that meets alternative specifications pursuant to Section 43013.2 of the Health and Safety Code.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
This section does 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.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
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.
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<ns0:Num>SEC. 3.</ns0:Num>
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Section 25371 of the
<ns0:DocName>Public Resources Code</ns0:DocName>
is amended to read:
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<ns0:Num>25371.</ns0:Num>
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<html:p>
(a)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
Notwithstanding Section 10231.5 of the Government Code, on or before July 1, 2027, 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:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
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 fluctuations 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.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
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:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
An examination of whether branded fuel additives have any impact, and, if so, how much, on fuel efficiency and vehicle emissions.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
Considers different levels of supply conditions and
assesses the impact of potential refinery closures in California.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(E)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(F)
<html:span class="EnSpace"/>
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 of any proposal, including cost impacts to all impacted sectors, both public and private. The assessment shall include recommendations and alternatives.
</html:p>
<html:p>
(G)
<html:span class="EnSpace"/>
Beginning with the first assessment submitted after
January 1, 2025, evaluates California’s future petroleum product and crude oil 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 to meet those needs. 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 at California ports, the State Lands Commission, the California Coastal Commission, and the San Francisco Bay Conservation and Development Commission and evaluate ways to maximize the use of existing infrastructure and minimize cumulative pollution burdens.
</html:p>
<html:p>
(H)
<html:span class="EnSpace"/>
Beginning with the first assessment submitted after
January 1, 2025, evaluates the effects of state regulations on supplies of transportation fuels 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.
</html:p>
<html:p>
(I)
<html:span class="EnSpace"/>
In the first assessment submitted after January 1, 2026, evaluate the cost and supply impacts of allowing the sale of gasoline with alternative specifications from those in Subarticle 2 (commencing with Section 2260) of Article 1 of Chapter 5 of Division 3 of Title 13 of the California Code of Regulations to support a reliable and affordable supply of
transportation fuels in California. If the evaluation finds that allowing the sale of gasoline with alternative specifications is likely to support a reliable and affordable supply of transportation fuels in California, the commission, in coordination with the State Air Resources Board, shall recommend a strategy to facilitate the sale of gasoline with those alternative specifications that, at a minimum, considers (i) a trigger mechanism for when the gasoline with those alternative specifications may be sold based on the conditions of the transportation fuels market, (ii) the existing variance process in Section 43013.2 of the Health and Safety code, and (iii) the use of a fee established pursuant to Section 43013.2 of the Health and Safety Code associated with the sale of gasoline with those alternative specifications to mitigate for any increase in emissions. Any discussion of a fee shall include recommendations regarding
the appropriate fee amount to protect consumers from price impacts and to avoid market disruptions.
</html:p>
<html:p>
(J)
<html:span class="EnSpace"/>
(i)
<html:span class="EnSpace"/>
In the first assessment submitted after January 1, 2026, evaluate the development of a westwide gasoline specification that could be used in a western region to include California and areas outside of the state as an alternative to the California-specific specification established under Subarticle 2 (commencing with Section 2260) of Article 1 of Chapter 5 of Division 3 of Title 13 of the California Code of Regulations to stabilize the petroleum market and petroleum prices in the western region, including California. The commission, in coordination with the State
Air Resources Board, shall conduct outreach to the western states, including the States of Arizona, Nevada, Oregon, and Washington, in furtherance of this evaluation.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
The evaluation pursuant to this subparagraph shall assess the costs and benefits of each alternative specification, including economic impacts to the state and to consumers, labor impacts, public health impacts, and environmental impacts. In making this evaluation, the commission shall take into consideration the impacts of the state’s electrification efforts and the requirements of the federal Clean Air Act (42 U.S.C. Sec. 7661 et seq.). The evaluation shall identify and recommend the alternative specification that would minimize the costs and maximize the benefits to the state.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
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).
</html:p>
<html:p>
(e)
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The Independent Consumer Fuels Advisory Committee established pursuant to Section 25373 shall provide input to the commission in preparation of the assessment required by subdivision (a).
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