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

Existing law establishes the Division of Petroleum Market Oversight within the commission to, among other things, provide independent oversight and analysis of the transportation fuels market 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 the consumers in the state. Existing law requires the director of the division, when requested, to appear before the appropriate policy committees of the Legislature to provide an update on the divisions performance as compared to its objectives, the status of competition in the transportation fuels markets, and other information the committees request.

This bill would require the commission, on or before January 31, 2029, to seek to enter into memoranda of understanding with relevant air districts and local governments with transportation fuels refining facilities within their jurisdictions, as identified by the commission, to enable the further coordination that is needed to support management of the transportation fuels sector and to ensure the transportation fuels sector is successfully managed and maintains environmental, public health, labor, economic, and consumer protections.

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

Existing law establishes the Division of Petroleum Market Oversight within the commission to, among other things, provide independent oversight and analysis of the transportation fuels market 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 the consumers in the state. Existing law requires the director of the division, when requested, to appear before the appropriate policy committees of the Legislature to provide an update on the divisions performance as compared to its objectives, the status of competition in the transportation fuels markets, and other information the committees request.

This bill would require the commission, on or before January 31, 2029, to seek to enter into memoranda of understanding with relevant air districts and local governments with transportation fuels refining facilities within their jurisdictions, as identified by the commission, to enable the further coordination that is needed to support management of the transportation fuels sector and to ensure the transportation fuels sector is successfully managed and maintains environmental, public health, labor, economic, and consumer protections.

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

Existing law establishes the Division of Petroleum Market Oversight within the commission to, among other things, provide independent oversight and analysis of the transportation fuels market 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 the consumers in the state. Existing law requires the director of the division, when requested, to appear before the appropriate policy committees of the Legislature to provide an update on the divisions performance as compared to its objectives, the status of competition in the transportation fuels markets, and other information the committees request.

This bill would require the commission, on or before January 31, 2029, to seek to enter into memoranda of understanding with relevant air districts and local governments with transportation fuels refining facilities within their jurisdictions jurisdictions, as identified by the commission, to enable the further coordination that is needed to support management of the transportation fuels sector and to ensure the transportation fuels sector is successfully managed and maintains environmental, public health, labor, economic, and consumer protections.

Existing law establishes the Division of Petroleum Market Oversight within the commission to, among other things, provide independent oversight and analysis of the transportation fuels market 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 the consumers in the state. Existing law requires the director of the division, when requested, to appear before the appropriate policy committees of the Legislature to provide an update on the divisions performance as compared to its objectives, the status of competition in the transportation fuels markets, and other information the committees request.

This bill would establish the Interagency Working Group on Transportation Fuels Transition Strategy, which would be led by the State Energy Resources Conservation and Development Commission and consist of various entities, to develop priority policies and programs informed by a specified plan and assessment and strengthen coordination and communication regarding policies and regulations across state, regional, and local authorities, communities, and stakeholders in order to inform transportation fuels policy development and implementation, as provided. The bill would require the commission to annually convene at least one public meeting of the working group to provide the public with information and to receive information and comments from the public. require the commission, on or before January 31, 2029, to enter into memoranda of understanding with relevant air districts and local governments with transportation fuels refining facilities within their jurisdictions to enable the coordination that is needed to ensure the transportation fuels sector is successfully managed and maintains environmental, public health, labor, economic, and consumer protections.

Existing law establishes the Division of Petroleum Market Oversight to, among other things, provide independent oversight and analysis of the transportation fuels market 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 the consumers in the state. Existing law requires the director of the division, when requested, to appear before the appropriate policy committees of the Legislature to provide an update on the divisions performance as compared to its objectives, the status of competition in the transportation fuels markets, and other information the committees request.

This bill would establish an interagency workgroup the Interagency Working Group on Transportation Fuels Transition Strategy, which would be led by the State Energy Resources Conservation and Development Commission and consisting of the State Lands Commission, relevant air districts, local governments, airports, and ports consist of various entities, to do specified things, including, among other things, develop priority policies and programs informed by a specified plan and assessment and strengthen coordination and establish clear lines of communication to prioritize critical energy regarding policies and regulations, as specified, and to propose opportunities for partnership between the Governors office, state agencies, boards, commissions, offices, and other entities, as necessary, and the Legislature in order to advance solutions to strategically align regulations and permitting processes across all levels of government that could best support achievement of state policy goals. regulations across state, regional, and local authorities, communities, and stakeholders in order to inform transportation fuels policy development and implementation, as provided. The bill would require the commission to annually convene at least one public meeting of the working group to provide the public with information and to receive information and comments from the public.

Existing law establishes the Division of Petroleum Market Oversight to, among other things, provide independent oversight and analysis of the transportation fuels market 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 the consumers in the state. Existing law requires the director of the division, when requested, to appear before the appropriate policy committees of the Legislature to provide an update on the divisions performance as compared to its objectives, the status of competition in the transportation fuels markets, and other information the committees request.

This bill would establish an interagency workgroup led by the State Energy Resources Conservation and Development Commission and consisting of the State Lands Commission, relevant air districts, local governments, airports, and ports to do specified things, including, among other things, strengthen coordination and establish clear lines of communication to prioritize critical energy policies and regulations, as specified, and to propose opportunities for partnership between the Governors office, state agencies, boards, commissions, offices, and other entities, as necessary, and the Legislature in order to advance solutions to strategically align regulations and permitting processes across all levels of government that could best support achievement of state policy goals.

 UNFINISHED BUSINESS  

Bill No: SB 1337

Author: Richardson (D)

Amended: 8/13/26

Vote: 21

SENATE ENERGY, U. & C. COMMITTEE: 15-0, 4/7/26

AYES: Allen, Ochoa Bogh, Archuleta, Arreguín, Becker, Caballero, Gonzalez, Hurtado, McNerney, Reyes, Richardson, Rubio, Stern, Strickland, Wahab

NO VOTE RECORDED: Dahle, Grove

SENATE APPROPRIATIONS COMMITTEE: 7-0, 5/14/26

AYES: Cervantes, Seyarto, Cabaldon, Dahle, Grayson, Richardson, Wahab

SENATE FLOOR: 32-0, 5/22/26

AYES: Archuleta, Arreguín, Ashby, Blakespear, Cabaldon, Caballero, Cervantes, Choi, Cortese, Dahle, Durazo, Gonzalez, Grayson, Grove, Laird, Limón, McGuire, McNerney, Menjivar, Ochoa Bogh, Pérez, Reyes, Richardson, Rubio, Seyarto, Smallwood-Cuevas, Strickland, Umberg, Valladares, Wahab, Weber Pierson, Wiener

NO VOTE RECORDED: Allen, Alvarado-Gil, Becker, Hurtado, Jones, Niello, Padilla, Stern

ASSEMBLY FLOOR: Passed, 8/27/26

SUBJECT: Transportation fuels: interagency working group

SOURCE: Author

DIGEST:

1. This bill requires the California Energy Commission (CEC), on or before January 31, 2029, to seek to enter into a memoranda of understanding (MOU) with relevant air districts and local governments with transportation fuels refining facilities within their jurisdictions, as identified by the CEC, to enable the further coordination that is needed to support management of the transportation fuels sector.

Assembly Amendments

replace the language previously in the bill to create an interagency working group and instead requires the CEC to enter into an MOU with relevant air districts and local governments.

ANALYSIS:

Existing law:

1. Establishes the State Energy Resources Conservation and Development Commission, also known as the CEC, consisting of five members appointed by the Governor, and specifies the duties of the CEC. Requires the CEC to assess trends in energy consumption and analyze the social, economic, and environmental consequences of these trends. (Public Resources Code §25200 et seq.)
2. Establishes the Division of Petroleum Market Oversight (DPMO) to provide independent oversight and analysis of the transportation fuels market 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 the consumers in the state. (Public Resources Code §25372 et seq.)
3. Establishes the Independent Consumer Fuels Advisory Committee (ICFAC) consisting of six members appointed by the Governor and one member appointed each by the Assembly Speaker and the Senate Committee on Rules. The ICFAC is charged with providing input to the CEC on the development of the triennial transportation fuels assessment and the effects of refiners’ inventories of fuel and feedstocks and blending components on the price of transportation fuels. (Public Resources Code §§25373, 25354.4, 25371)
4. Requires the CEC and the California Air Resources Board (CARB), by December 31, 2024, to prepare a Transportation Fuels Transition Plan that includes a discussion of how to ensure that the supply of petroleum and alternative transportation fuels is affordable, reliable, equitable, and adequate to meet the demand for transportation fuels. Requires the report to be prepared in consultation with the state’s fuel producers and refiners and a multistakeholder, multiagency workgroup, including the California Environmental Protection Agency (CalEPA) and the California Natural Resources Agency (CRNA), convened by the CEC and the CARB to identify mechanisms to plan for and monitor progress toward the state’s reliable, safe, equitable, and affordable transition away from petroleum fuels in line with declining instate petroleum demand. (Public Resources Code §25371.3)

This bill:

1. Makes several findings and declarations concerning the state’s pioneering climate policies, the uncertainty of the petroleum industry that impacts consumers, the risks of sudden loss of refinery capacity, and the CEC’s continued engagement with stakeholders to a develop a holistic view of the petroleum value chain and to develop solutions that best protect consumers.
2. Requires the CEC, on or before January 31, 2029, to seek to enter into a memoranda of understanding with relevant air districts and local governments with transportation fuels refining facilities within their jurisdictions, as identified by the CEC, to enable the further coordination that is needed to support management of the transportation fuels sector and to ensure the transportation fuels sector is successfully managed and maintains environmental, public health, labor, economic, and consumer protections.

Background

Petroleum fuels market. The state’s petroleum fuels market is experiencing incredible market and policy shifts. California’s policies to support clean air and tackle climate change are accelerating the adoption of fuel-efficient conventional vehicles and zero-emission vehicles which is leading to a decline in demand for petroleum-based fuels. Global market conditions, including the recent war in Iran, affect the availability and price for petroleum-based fuels. Many refineries across the globe, including in California, have shuttered operations. For the state, the recent closures of a declining number of refineries from several dozen forty years ago, to less than 10 today, has raised concerns about the continued availability of refined fuels, especially California’s unique gasoline blend.

Governor Newsom sends letter to CEC Commissioner Gunda. On the heels of two years with consecutive special sessions to address gasoline price spikes and supply, Governor Newsom sent a letter on April 21, 2025 to his appointee, CEC Commissioner Siva Gunda, directing him to “redouble the State’s efforts to work closely with refiners on short- and long-term planning, …to help ensure that Californians continue to have access to a safe, affordable, and reliable supply of transportation fuels, and that refiners continue to see the value in serving the California market...” The Governor also directed Commissioner Gunda to recommend, by July 1, 2025, any changes in the State’s approach that are needed to ensure adequate supply during this transition. On June 27, 2025, CEC Commissioner Gunda sent a response to the Governor outlining recommendations, including:

1. Stabilize fuel supply through imports of refined fuels and maintaining in-state refining capacity.
2. Provide sufficient confidence to industry to invest in maintaining reliable and safe infrastructure operations to meet demand.
3. Develop and execute a holistic transportation fuels transition strategy.

SB 237 (Grayson, Chapter 118, Statutes of 2025). Among its provisions, SB 237 required the CEC to submit an assessment to the Legislature and the Governor that evaluates the recommendations and strategies put forward by Commissioner Gunda in the June 27, 2025, letter. The bill also required the assessment to “offer recommendations to the Legislature and the Governor on potential changes to working group authorities or structures, including on permitting changes and reforms, which may include one-stop-shop permitting, to support the state’s reliable, equitable, safe, and affordable transition away from petroleum fuels.”

Comments

Need for this bill. According to the author, this bill was drafted with the intent to address recommendations on changes to working group authorities anticipated from the assessment required by SB 237, including permitting changes and reform, as noted in Commissioner Gunda’s response to the Governor.

Refinery and petroleum fuels related work groups and taskforces. There exist related work groups and task forces concerning refineries and petroleum fuels. These include the ICFAC established by the first special session bill, SB 2 X1 (Skinner, Chapter 1, Statutes of 2023-24 First Extraordinary Session) and modified by AB 1 X2 (Hart, Chapter 1, Statutes of the Second Extraordinary Session) required the CEC to convene the advisory committee at least once annually. Additionally, the Petroleum Strategy Task Force, referenced in the Governor’s and Commissioner Gunda’s letters which is a cross-agency effort convened by CNRA Secretary Wade Crowfoot and CalEPA Secretary Yana Garcia and established in 2025. The Task Force is evaluating the State's progress and risks in managing an energy transition in which supply and in-state demand for petroleum products are both decreasing over the next 20 years. The membership includes the CNRA, CalEPA, California State Transportation Agency, Governor’s Office of Business (GO-Biz), the CEC, DPMO, CARB, State Water Board, State Lands Commission, Department of Industrial Relations, Department of Conservation, Office of Spill Prevention and Response, Office of the State Fire Marshal, and California Department of Tax and Fee Administration. Lastly, the CalEPA Interagency Refinery Taskforce was established by then-Governor Brown after the August 2012 Richmond Oil Refinery fire. The Taskforce is tasked with addressing safety and prevention, emergency preparedness and response, enforcement coordination, and community outreach. Members include several agencies (though not the CEC), local air districts, and Certified Unified Program Agencies (generally local fire departments).

Hot off the press! CEC Commissioner Gunda issues Draft SB 237 Assessment recommends multi-layered voluntary approach to interagency coordination. On May 1^st, CEC Vice-Chair Gunda issued a Draft SB 237 Assessment which includes a pathway recommendation regarding government coordination models and the Legislature’s interest in permitting reform for key petroleum infrastructure, including consideration of one-stop-shop permitting models. The Draft SB 237 Assessment notes that the scope of petroleum-related infrastructure is broad and includes wells and associated production facilities, pipelines, storage tanks, refineries, and terminals whose construction, operation, modifications, and decommissioning are regulated and permitted by numerous federal, state, regional, and local authorities with specialized expertise. As a result, the Draft SB 237 Assessment recommends a multilayered approach that leverages existing expertise and protects agencies’ existing mandates through a voluntary process that enables flexibility and the ability to respond quickly. Specifically, the coordination would continue the efforts of the recently created Petroleum Strategy Task Force, convened by CNRA and CalEPA, for coordination among state agencies with jurisdictions that touch on petroleum fuels. Additionally, the recommendations include continuing a subgroup of the Petroleum Strategy Task Force to focus on permitting petroleum infrastructure; continuing coordination among CARB, local air districts, and the CEC regarding a focused group on refineries; and continuing the CEC’s engagement with relevant local governments on specific petroleum assets. The Draft SB 237 Assessment is scheduled to be considered for adoption by the CEC at a future business meeting.

Bill intends to reflect Draft SB 237 Assessment’s recommendation. This bill is intended to reflect the Draft SB 237 Assessment’s recommendation for a multilayered, largely voluntary, and less formalized structure for interagency and permitting coordination, particularly between the CEC and local air districts and jurisdictions. The approach is similar to the MOU on energy policy coordination between the state’s energy agencies and the California Independent System Operator which was subsequently codified by SB 319 (McGuire, Chapter 390, Statutes of 2022) or requiring the Office of Emergency Services to enter MOUs with the Los Angeles Organizing Committees and Safety Command to prepare for the 2028 Olympic and Paralympic Games.

Related/Prior Legislation

SB 1259 (Blakespear, 2026) includes provisions concerning required reporting of decommissioning and site mitigation for refineries. The bill is pending in the Assembly.

SB 1245 (Stern, 2026) would have required DPMO’s annual report to be due by July 1 each year. The bill was later amended to authorize the CARB to grant variances from gasoline specifications and require specified reporting of gasoline and then held by the Assembly Appropriations Committee.

SB 237 (Grayson, Chapter 118, Statutes of 2025) among its provisions, required the CEC to submit an assessment to the Legislature and the Governor that evaluates the recommendations and strategies put forward by Commissioner Gunda in the letter dated June 27, 2025.

AB 1 X2 (Hart, Chapter 1, Statutes of 2023-24 Second Extraordinary Session) made changes to, and expanded on, SBX1-2 related to transportation fuels, including changes to the Independent Consumer Fuels Advisory Committee.

SB 2 X1 (Skinner, Chapter 1, Statutes of 2023-24 First Extraordinary Session) proposed several policies to address gasoline supply and pricing, including authorizing the CEC to establish a maximum gross gasoline refining margin and penalty on gasoline sold by refiners in the state. The bill also established a new independent division at the CEC, the DPMO, to provide independent oversight and analysis of the transportation fuels markets and established the ICFAC at the CEC.

AB 1649 (Muratsuchi, Chapter 590, Statutes of 2017) required the CalEPA in consultation with specified federal state and local agencies to examine ways to improve safety through enhanced oversight of refineries and to strengthen emergency preparedness in anticipation of future refinery incidents.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

According to the Assembly Appropriations Committee:

• This bill would require significant ongoing administrative and analytical work of the CEC to develop MOUs and work with relevant air districts. The CEC estimates these costs at $220,000 annually ongoing for one specialist ($185,000) and supporting contracts ($35,000) (Energy Resource Program Account (ERPA) Fund) to lead and coordinate the MOU process, conduct policy and regulatory work, engage partner agencies, develop MOU language, and prepare related briefings and work products. The CEC contends the specialist’s work would continue after signing of the MOUs, to manage, update, implement and monitor the work, and work products, of the air districts.
• The CEC warns that the ERPA Fund, it’s main funding source, faces a structural deficit.  

SUPPORT: (Verified 8/17/26)

Bay Area Council

California Hispanic Chambers of Commerce

California Multicultural Business Alliance

Central Valley Yemen Association

East Bay Leadership Council

Garden Grove Chamber of Commerce

Greater Concord Chamber of Commerce

Harbor Association of Industry and Commerce

Hispanic 100

Hispanic Chambers of Commerce of San Francisco

Latin American and Caribbean Business Chamber of Commerce

Latin Business Association

Long Beach Area Chamber of Commerce

Orange County Hispanic Chamber of Commerce

Redondo Beach Chamber of Commerce

San Pablo Economic Development Corporation

San Pedro Chamber of Commerce

South Bay Association of Chambers of Commerce

State Building & Construction Trades Council of California

Torrance Area Chamber of Commerce

Western States Petroleum Association

Wilmington Chamber of Commerce

OPPOSITION: (Verified 8/17/26)

None received

ARGUMENTS IN SUPPORT: According to the State Building and Construction Trades Council of California:

This bill seeks to coordinate agencies, air boards, the governor's office, commissions, ports, and the legislature to work together on public policy development and implementation to better protect the public from escalating fuel costs by ensuring that in-state resources are best leveraged and protected from premature closure or constriction. In turn, this type of coordination could protect the thousands of workers we represent in the oil and gas industry who depend on California’s public agencies, officers, and elected officials to protect their livelihoods and cost of living. SB 1337 is a first step to ending a polarizing political conflict that has led to the premature closure of several of California’s refineries, resulting in the loss of thousands of high-paid union careers and causing an escalation in the cost of fuel for every California family.

Prepared by: Nidia Bautista / E., U. & C. / (916) 651-4107

8/27/26 16:27:38

**** END ****

SENATE THIRD READING

STR Bill Id:SB 1337

Author:(Richardson)

As Amended Ver:August 13, 2026

Majority vote

SUMMARY

Requires, by January 31, 2029, the California Energy Commission (CEC) to seek to enter into memoranda of understanding (MOU) with relevant air districts and local governments with transportation fuels refining facilities within their jurisdictions, as identified by the CEC, to enable the further coordination needed to support management of the transportation fuels sector and to ensure the transportation fuels sector is successfully managed and maintains environmental, public health, labor, economic and consumer protections.

Major Provisions

COMMENTS

California's fuel market operates with underlying conditions that distinguish it from most other states. The state can imprecisely be considered a fuel island: there are no pipeline inflows of finished gasoline; the pipelines connecting California to Arizona and Nevada move product outward, not in; and rail has not emerged as a viable alternative at any significant scale. The only practical avenue for outside supply is marine imports, which take three to six weeks to arrive from facilities capable of producing California-specification fuel (the California Reformulated Blendstock for Oxygenate Blending, or CARBOB). Add to this a limited, and shrinking, number of in-state petroleum refiners.

These factors, together, isolate California from large volumes of readily available gasoline imports. They also make California susceptible to gasoline price spikes when, for example, an in-state refinery outage suddenly reduces the supply of CARBOB. In addition, the state’s clean energy goals – buttressed by a Governor's executive order – calls for curtailing the sale of internal-combustion-engine passenger vehicles by the middle of the coming decade.

In this context, the Legislature passed SB 237 (Grayson, Chapter 118, Statutes of 2025), which, among other things, directed the CEC to submit an assessment to the Legislature that evaluates recommendations and strategies suggested in a letter, dated June 27, 2025, from CEC Vice Chair Gunda to the Governor to ensure adequate transportation fuels supply during "the state's clean energy transition."

In May of this year, the CEC released its draft SB 327 assessment, in which the CEC, among other things, recommends the formalization of "coordination protocols between state agencies… and relevant air districts and local governments, with clear accountability, defined response timelines for coordination requests, and public-facing reporting on project status."

This bill is consistent with the CEC's recommendation.

According to the Author

According to the author, "California's pioneering climate and air quality policies are critical to protecting our communities' health, which has led to a rapid evolution of California's petroleum market. As the need for petroleum based fuels continues, volatility of the international petroleum market has introduced uncertainty to the petroleum industry that impacts consumers, the workforce, and fence-line communities. SB 1337 will help manage this transition of the State to strengthen coordination, establish clear lines of communication, and propose partnership opportunities to advance strategically advanced solutions to align regulations and permitting processes."

Arguments in Support

This bill is supported by a coalition of business and economic development groups, including the Western States Petroleum Association and the Bay Area Council. The coalition notes in their joint letter that "in many cases, agencies operate in silos with limited coordination, resulting in conflicting requirements" and that this bill "provides a constructive pathway to better align policy objectives with real-world outcomes."

Arguments in Opposition

None on file.

FISCAL COMMENTS

According to the Assembly Committee on Appropriations, this bill will result in significant, ongoing work at the CEC, roughly $220,000 annually.

VOTES

SENATE FLOOR: 32-0-8

YES: Archuleta, Arreguín, Ashby, Blakespear, Cabaldon, Caballero, Cervantes, Choi, Cortese, Dahle, Durazo, Gonzalez, Grayson, Grove, Laird, Limón, McGuire, McNerney, Menjivar, Ochoa Bogh, Pérez, Reyes, Richardson, Rubio, Seyarto, Smallwood-Cuevas, Strickland, Umberg, Valladares, Wahab, Weber Pierson, Wiener

ABS, ABST OR NV: Allen, Alvarado-Gil, Becker, Hurtado, Jones, Niello, Padilla, Stern

ASM UTILITIES AND ENERGY: 18-0-0

YES: Petrie-Norris, Patterson, Boerner, Calderon, Chen, Davies, Mark González, Harabedian, Hart, Irwin, Kalra, Papan, Rogers, Schiavo, Schultz, Ta, Wallis, Zbur

ASM APPROPRIATIONS: 11-0-4

YES: Wicks, Arambula, Calderon, Caloza, Fong, Mark González, Krell, Pacheco, Pellerin, Sharp-Collins, Solache

ABS, ABST OR NV: Hoover, Dixon, Ta, Tangipa

UPDATED

VERSION: August 13, 2026

CONSULTANT: Laura Shybut / U. & E. / (916) 319-2083 FN: 0003636

Date of Hearing: August 5, 2026

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Buffy Wicks, Chair

SBPCA Bill Id:SB 1337

Author:(Richardson) – As Amended Ver:June 29, 2026

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill requires, by January 31, 2029, the California Energy Commission (CEC) enter into a memoranda of understanding (MOU) with relevant air districts and local governments with transportation fuels refining facilities within their jurisdictions to enable the coordination needed to ensure the transportation fuels sector is successfully managed and maintains environmental, public health, labor, economic and consumer protections.

FISCAL EFFECT:

This bill would require significant ongoing administrative and analytical work of the CEC to develop MOUs and work with relevant air districts. The CEC estimates these costs at $220,000 annually ongoing for one specialist ($185,000) and supporting contracts ($35,000) (Energy Resource Program Account (ERPA) Fund) to lead and coordinate the MOU process, conduct policy and regulatory work, engage partner agencies, develop MOU language, and prepare related briefings and work products. The CEC contends the specialist’s work would continue after signing of the MOUs, to manage, update, implement and monitor the work, and work products, of the air districts.

The CEC warns that the ERPA Fund, it’s main funding source, faces a structural deficit.  

COMMENTS:

1. Purpose. The author intends this bill to help the state manage its transition away petroleum fuels by strengthening coordination and communication among state government and local governments.
2. Background. As many, many others have said, California is a fuel island. Not an actual island, but like an island: the state’s unique fuel blend (the California Reformulated Blendstock for Oxygenate Blending, or CARBOB), the scarcity of out-of-state refiners that are capable of producing CARBOB, limited rail capacity and pipelines that flow out of, but not into, the state. Add to this a limited, and shrinking, number of in-state petroleum refiners. These factors, together, isolate California from large volumes of readily available gasoline imports. They also make California susceptible to gasoline price spikes when, for example, an in-state refinery outage suddenly reduces the supply of CARBOB.

In addition, the state’s clean energy goals—buttressed by a Governor’s executive order—calls for curtailing the sale of internal-combustion-engine passenger vehicles by the middle of the coming decade.

In this context, the Legislature passed SB 237 (Grayson), Chapter 118, Statutes of 2025, which, among other things, directed the CEC to submit an assessment to the Legislature that evaluates recommendations and strategies suggested in a letter, dated June 27, 2025, from CEC Vice Chair Gunda to the Governor to ensure adequate transportation fuels supply during “the state’s clean energy transition.”

In May of this year, the CEC released its draft SB 327 assessment, in which the CEC, among other things, recommends the formalization of “coordination protocols between state agencies… and relevant air districts and local governments, with clear accountability, defined response timelines for coordination requests, and public-facing reporting on project status.”

This bill is consistent with the CEC’s recommendation. However, the CEC asserts it sees “technical challenges” with the bill, as worded, that make it “difficult to implement.” The CEC has suggested changes to the author that would, in the CEC’s view, resolve these challenges. The CEC summarizes those changes as follows:

• Specify that the CEC must seek to develop an MOU with an air district or local governments, rather require the CEC to develop an MOU with such an entity.
• Authorize the CEC to identify relevant air districts and local governments with transportation fuels refining facilities within their jurisdictions.
• Not overstate the potential benefits of MOUs.  

Analysis Prepared by: Jay Dickenson / APPR. / (916) 319-2081

Date of Hearing: June 24, 2026

ASSEMBLY COMMITTEE ON UTILITIES AND ENERGY

Cottie Petrie-Norris, Chair

SBPCA Bill Id:SB 1337

Author:(Richardson) – As Amended Ver:April 13, 2026

SENATE VOTE: 32-0

SUBJECT: Interagency Working Group on Transportation Fuels Transition Strategy

SUMMARY: Establishes an Interagency Working Group on Transportation Fuels Transition Strategy led by the California Energy Commission (CEC) with membership from other state agencies and local entities to address transportation fuels policy and coordination. Specifically, this bill:

1. Establishes an Interagency Working Group on Transportation Fuels Transition Strategy led by the CEC and consists of the California Environmental Protection Agency (CalEPA), the California Natural Resources Agency (CRNA), the Transportation Agency, the California Air Resources Board (CARB), the State Water Resources Control Board, the Department of Industrial Relations, the State Lands Commission, relevant air districts, local governments, airports, and ports.
2. Requires the Interagency Working Group to:
   1. Develop priority policies and programs informed by the Transportation Fuels Transition Plan and the SB 237 Assessment, pursuant to Public Resources Code §§ 25371.3 and 25371.4, respectively.
   2. Strengthen coordination and communication regarding policies and regulations across state, regional, and local authorities, communities, and stakeholders to inform transportation fuels policy development and implementation, including developing recommendations for policies and programs that ensure a successfully managed transportation fuels sector.
   3. Provides that the coordination includes opportunities for partnership between the Governor’s office, state agencies, boards, commissions, offices, the Independent Consumer Fuels Advisory Committee (ICFAC), and the Legislature, to align regulations and permitting processes across all levels of government that could best support achievement of state policy goals.
3. Requires the Interagency Working Group to annually convene at least one public meeting, which may be combined with a meeting of the ICFAC

EXISTING LAW:

1. Establishes the State Energy Resources Conservation and Development Commission, also known as the CEC, consisting of five members appointed by the Governor, and specifies the duties of the CEC. Requires the CEC to assess trends in energy consumption and analyze the social, economic, and environmental consequences of these trends. (Public Resources Code § 25200 et seq.)
2. Establishes the Petroleum Industry Information Reporting Act of 1980 (PIIRA), which requires oil refiners and marketers to submit specified data to the CEC and requires the CEC to analyze these data to identify trends in demand and supply for petroleum, including factors influencing gasoline price changes; and also requires retail transportation fueling stations to report specified information about their sales of gasoline, diesel, and other fuels to the CEC. (Public Resources Code § 25350 et. seq.)
3. Establishes the Division of Petroleum Market Oversight (DPMO) within the CEC to provide independent oversight and analysis of the transportation fuels market 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 the consumers in the state. (Public Resources Code § 25372 et seq.)
4. Establishes the ICFAC consisting of six members appointed by the Governor and one member appointed each by the Assembly Speaker and the Senate Committee on Rules. The ICFAC is charged with providing input to the CEC on the development of the triennial transportation fuels assessment and the effects of refiners’ inventories of fuel and feedstocks and blending components on the price of transportation fuels. (Public Resources Code §§ 25373, 25354.4, 25371)
5. Requires the CEC to submit an analysis every three years assessing the transportation fuels market in California, known as the Transportation Fuels Assessment. (Public Resources Code §§ 25371-25371.3).
6. Requires the CEC and CARB, by December 31, 2024, to prepare a Transportation Fuels Transition Plan that includes a discussion of how to ensure that the supply of petroleum and alternative transportation fuels is affordable, reliable, equitable, and adequate to meet the demand for transportation fuels. Requires the report to be prepared in consultation with the state’s fuel producers and refiners and a multistakeholder, multiagency workgroup, including CalEPA and CRNA, convened by the CEC and CARB to identify mechanisms to plan for and monitor progress toward the state’s reliable, safe, equitable, and affordable transition away from petroleum fuels in line with declining instate petroleum demand. (Public Resources Code § 25371.3)
7. Requires the CEC, the California Public Utilities Commission (CPUC), and, in coordination with the California Independent System Operator (CAISO), to review and update the memorandum of understanding between these three entities every five years. (Public Resources Code § 25308)

FISCAL EFFECT: According to the Senate Committee on Appropriations, this bill will result in approximately $235,000 in ongoing, annual costs to the CEC; and $250,000 in ongoing, annual costs to the State Water Board to implement. The State Lands Commission and CARB anticipate any costs to participate in the working group would be minor and absorbable.

BACKGROUND:

How California's Fuel Market Differs from the Rest of the Nation – California's fuel market operates with underlying conditions that distinguish it from most other states. As outlined in past background papers from this committee,^[1] the state can imprecisely be considered a fuel island. There are no pipeline inflows of finished gasoline; the pipelines connecting California to Arizona and Nevada move product outward, not in; and rail has not emerged as a viable alternative at any significant scale. The only practical avenue for outside supply is marine imports, which take three to six weeks to arrive from facilities capable of producing California-specification fuel.^[2] That specification – California Reformulated Blendstock for Oxygenate Blending, or CARBOB – is unique among the states. This poses the second underlying constraint: gasoline meeting the standards of any neighboring state cannot substitute for California supply, and out-of-state CARBOB production is limited to a small number of refineries worldwide.^[3] The third constraint is market structure. Petroleum refining is a high fixed-cost industry with significant barriers to entry. California's in-state refining has historically been concentrated among a small number of large producers. As the 2024 Transportation Fuels Assessment (TFA) noted, "the risk of market power appears to be more pronounced than in other states."^[4]

In October 2024, Phillips 66 announced a planned closure of its Wilmington refinery by year’s end 2025.^[5] And in April 2025, Valero announced the planned closure of its Benicia refinery by April 2026.^[6] These conversions and closures are not unique to the state, as nationally consolidation and closures are occurring.^[7] However, the immediate impact in California is the real potential for significant supply constraints and likely price increases.

As of May 2026, seven refineries produce CARBOB in California, making an already concentrated market more so. To the committee’s knowledge, infrastructure has not kept pace with these closures: dock facilities likely need upgrades; storage capacity may be lacking; and there is no known plan to build either at the needed scale. Little concerted planning has been undertaken to expand California's import capacity, and local governments have been reluctant to embrace the transition – unsurprisingly, given the tax revenue and jobs that terminal operations do not adequately cover compared to what the refinery provided.^[8]

SB 237 (Grayson, Chapter 118, Statutes of 2025) Assessment – Among its provisions, SB 237 required the CEC to submit an assessment to the Legislature and the Governor that evaluates the recommendations and strategies put forward by Commissioner Gunda in a June 27, 2025, letter. The bill also required the assessment to “offer recommendations to the Legislature and the Governor on potential changes to working group authorities or structures, including on permitting changes and reforms, which may include one-stop-shop permitting, to support the state’s reliable, equitable, safe, and affordable transition away from petroleum fuels.”

On May 1, 2026, the CEC submitted the Draft SB 237 Assessment to the Legislature and public.^[9] In response to the directive on potential working group authorities and structures, the Draft SB 237 Assessment recommends formalizing voluntary interagency coordination, citing the Vice Chair's June 2025 letter proposal for a CEC-led interagency workgroup (with the State Lands Commission, air districts, local governments, and ports) and pointing to precedents like the Desert Renewable Energy Action Team, the CPUC's Tracking Energy Development task force, and the Federal Permitting Improvement Steering Council which started as voluntary coordination and was only later codified into statute once it proved its value. The Draft SB 237 Assessment argues, citing collaborative-governance research, that this approach delivers the Legislature's goals (faster permitting, clearer communication, fewer bottlenecks) while preserving local agencies' specialized expertise and community accountability, and notes the state is already building this through the Petroleum Strategy Task Force, a dedicated infrastructure/permitting subgroup, with recurring CEC-CARB-air district coordination.

COMMENTS:

1. Author’s Statement. According to the author, “California’s pioneering climate and air quality policies are critical to protecting our communities’ health, which has led to a rapid evolution of California’s petroleum market. As the need for petroleum based fuels continues, volatility of the international petroleum market has introduced uncertainty to the petroleum industry that impacts consumers, the workforce, and fence-line communities. SB 1337 will help manage this transition of the State by creating a working group established by the State Energy Resources Conservation and Development Commission to strengthen coordination, establish clear lines of communication, and propose partnership opportunities to advance strategically advanced solutions to align regulations and permitting processes.”
2. Purpose of Bill. This bill attempts to address recommendations on changes to working group authorities from the CEC’s Draft SB 237 Assessment, including permitting changes and reform. This bill proposes the creation of an interagency working group, led by the CEC, and including CalEPA, CRNA, the State Lands Commission, other relevant agencies, relevant air districts, local governments, airports, and ports. The working group would help manage and inform the transition of the state’s transportation fuels, including recommendations on permitting reforms. However, the Draft SB 237 Assessment recommendations, alongside existing working group authorities, indicate an alternate approach than the one put forward by this bill may be warranted.
3. Existing Taskforces and Working Groups. Existing refinery and petroleum fuels coordination bodies already cover much of the ground put forward by this bill. The ICFAC, created by SB X1-2 (Skinner, Chapter 1, Statutes of 2023-24 First Extraordinary Session) and modified by AB X2-1 (Hart, Chapter 1, Statutes of 2023-24 Second Extraordinary Session), meets at least annually and advises the CEC on the triennial fuels assessment and on how refiner inventories and blending affect prices. ICFAC’s eight members (six gubernatorial, one each from the Assembly Speaker and Senate Rules Committee) are required to include representation from the fuels industry, consumers, labor, environmental justice, and antitrust expertise. The Petroleum Strategy Task Force, convened in 2025 by the CNRA and CalEPA secretaries, meets roughly monthly and brings together a wide swath of state agencies (CNRA, CalEPA, CEC, DPMO, CARB, State Water Board, State Lands Commission, Department of Industrial Relations, Department of Conservation, the State Fire Marshal, and others) to assess the state's progress and risks in managing the long-term decline in petroleum supply and demand, and already has a dedicated subgroup on petroleum infrastructure and permitting. Separately, the CalEPA Interagency Refinery Taskforce, formed after the 2012 Richmond refinery fire, focuses on refinery safety, emergency response, enforcement coordination, and community outreach, with membership drawn from agencies (excluding the CEC), local air districts, and local fire departments. Given that the Petroleum Strategy Task Force's infrastructure/permitting subgroup and the Interagency Refinery Taskforce already address coordination on petroleum infrastructure, permitting, and refinery oversight, a new working group established by the bill could overlap substantially with these existing structures.
4. An Alternate Approach. The recently released Draft SB 237 Assessment's recommendation for a multilayered, largely voluntary, and less formalized structure for interagency and permitting coordination may not align with the more formalized approach proposed in this bill. The Draft SB 237 Assessment's review of collaborative governance research and precedent, as mentioned above, suggests that a new, formally mandated working group risks producing compliance without genuine engagement, and may not deliver better outcomes than the voluntary coordination already underway through the Petroleum Strategy Task Force and its infrastructure/permitting subgroup. As an alternative to creating another mandated body, the committee recommends directing the CEC to develop memoranda of understanding (MOU) with local governments and air districts with jurisdiction over refineries. An MOU could capture the substantive benefits the bill seeks — clearer lines of communication, shared timetables, and faster identification of bottlenecks — while preserving the flexibility, existing expertise, and community relationships that a new statutory working group could disrupt, and without the lag of standing up new structures, appointments, and procedures. Such an approach is not without legislative precedent, such as the codification of the existing CEC-CPUC-CAISO MOU on transmission and resource planning,^[10] or requiring the Office of Emergency Services to enter MOUs with the Los Angeles Organizing Committees and Safety Command to prepare for the 2028 Olympic and Paralympic Games.^[11]
5. Related Legislation.

SB 1245 (Stern) shifts the CEC’s triennial transportation fuels assessment and DPMO's annual market oversight report deadlines from January 1 to July 1, directs the CEC to implement – not just recommend – its alternative gasoline specifications strategy considering both fees and conditions, and requires the 2027 DPMO report to analyze the branded versus unbranded price differential and import market competition barriers. Status: set for hearing in this committee on June 24, 2026.

SB 1259 (Blakespear) requires oil refiners, no later than December 31, 2028, to submit to the State Water Resources Control Board a draft retirement plan setting forth information concerning decommissioning and site remediation for every refinery it owns, operates, or controls. Status: set for hearing in this committee on July 1, 2026.

1. Prior Legislation.

SB 237 (Grayson), among its provisions, required the CEC to submit an assessment to the Legislature and the Governor that evaluates the recommendations and strategies put forward by Commissioner Gunda in the letter dated June 27, 2025. This Draft 237 Assessment was submitted to the Legislature on May 1, 2026. Status: Chapter 118, Statutes of 2025.

AB X2-1 (Hart) made changes to, and expanded on, SBX1-2 related to transportation fuels, including changes to the Independent Consumer Fuels Advisory Committee. Status: Chapter 1, Statutes of 2023-24 Second Extraordinary Session.

SB X1-2 (Skinner) proposed several policies to address gasoline supply and pricing, including authorizing the CEC to establish a maximum gross gasoline refining margin and penalty on gasoline sold by refiners in the state. The bill also established a new independent division at the CEC, the DPMO, to provide independent oversight and analysis of the transportation fuels markets and established the ICFAC at the CEC. Status: Chapter 1, Statutes of 2023-24 First Extraordinary Session.

SB 319 (McGuire), among its other provisions, codified the existing MOU between the CPUC, CEC, and CAISO and required the entities to update it as necessary every 5 years. Status: Chapter 390, Statutes of 2023.

AB 1649 (Muratsuchi) requires the CalEPA, in consultation with specified federal state and local agencies, to examine ways to improve safety through enhanced oversight of refineries and to strengthen emergency preparedness in anticipation of future refinery incidents. Status: Chapter 590, Statutes of 2017.

REGISTERED SUPPORT / OPPOSITION:

Support

Bay Area Council
California Hispanic Chamber of Commerce
California Hispanic Chambers of Commerce
California Multicultural Business Alliance
Central Valley Yemen Association
East Bay Leadership Council
Garden Grove Chamber of Commerce
Greater Concord Chamber of Commerce
Harbor Association of Industry and Commerce (HAIC)
Hispanic 100
Hispanic Chambers of Commerce of San Francisco
Latin American & Caribbean Business Chamber
Latin Business Association
Los Angeles County Business Federation (BIZ-FED)
Orange County Hispanic Chamber of Commerce
Redondo Beach Chamber of Commerce
San Pablo Economic Development Corporation
San Pedro Chamber of Commerce
South Bay Association of Chambers of Commerce
Torrance Area Chamber of Commerce
Western States Petroleum Association
Wilmington Chamber of Commerce

Opposition

None on file.

Analysis Prepared by: Laura Shybut / U. & E. / (916) 319-2083

1. Among others, see May 5, 2026 hearing, “Fueling Uncertainty: Assessing California’s Petroleum Supply Resilience and Strategic Planning,” https://autl.assembly.ca.gov/system/files/2026-05/05.05.2026_petroleum-background.pdf and May 28, 2025 hearing, “Outlook for California’s Transportation Fuels Sector,” https://autl.assembly.ca.gov/system/files/2025-05/05.28_petroleum-oversight-hearing-background.pdf ↑

2. Pg. 15, Gee and Berliner and Wong. 2024 TFA, Ibid. ↑

3. Pg. 10 and 15, Gee and Berliner and Wong. 2024 TFA, Ibid. ↑

4. Pg. 7, Gee and Berliner and Wong. 2024 TFA, Ibid. ↑

5. Philips 66 news release; “Phillips 66 provides notice of its plan to cease operations at Los Angeles-area refinery;” October 16, 2024; https://investor.phillips66.com/financial-information/news-releases/news-release-details/2024/Phillips-66-provides-notice-of-its-plan-to-cease-operations-at-Los-Angeles-area-refinery/default.aspx. ↑

6. Matthew Green; “Potential Valero Refinery Closure Leaves Benicia, State Officials Scrambling for Alternatives;” KQED; April 26, 2025; https://www.kqed.org/news/12037668/potential-valero-refinery-closure-leaves-benicia-state-officials-scrambling-to-pick-up-pieces ↑

7. Such as LyondellBasell in Texas, Phillips 66 Alliance Refinery in Louisiana, and PBF Energy refinery in Paulsboro, New Jersey. ↑

8. Julie Small, KQED, Ibid. ↑

9. https://efiling.energy.ca.gov/GetDocument.aspx?tn=269793 ↑

10. Public Resources Code § 25308 ↑

11. Government Code §§ 8591.5-8591.7 ↑

 THIRD READING  

Bill No: SB 1337

Author: Richardson (D)

Amended: 4/13/26

Vote: 21

SENATE ENERGY, U. & C. COMMITTEE: 15-0, 4/7/26

AYES: Allen, Ochoa Bogh, Archuleta, Arreguín, Becker, Caballero, Gonzalez, Hurtado, McNerney, Reyes, Richardson, Rubio, Stern, Strickland, Wahab

NO VOTE RECORDED: Dahle, Grove

SENATE APPROPRIATIONS COMMITTEE: 7-0, 5/14/26

AYES: Cervantes, Seyarto, Cabaldon, Dahle, Grayson, Richardson, Wahab

SUBJECT: Interagency Working Group on Transportation Fuels Transition Strategy

SOURCE: Author

DIGEST:

This bill establishes an Interagency Working Group on Transportation Fuels Transition Strategy led by the California Energy Commission (CEC) with membership from other state agencies and local entities to address transportation fuels policy and coordination.

ANALYSIS:

Existing law:

1. Establishes the State Energy Resources Conservation and Development Commission, also known as the CEC, consisting of five members appointed by the Governor, and specifies the duties of the CEC. Requires the CEC to assess trends in energy consumption and analyze the social, economic, and environmental consequences of these trends. (Public Resources Code §25200 et seq.)
2. Establishes the Division of Petroleum Market Oversight (DPMO) to provide independent oversight and analysis of the transportation fuels market 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 the consumers in the state. (Public Resources Code §25372 et seq.)
3. Establishes the Independent Consumer Fuels Advisory Committee (ICFAC) consisting of six members appointed by the Governor and one member appointed each by the Assembly Speaker and the Senate Committee on Rules. The ICFAC is charged with providing input to the CEC on the development of the triennial transportation fuels assessment and the effects of refiners’ inventories of fuel and feedstocks and blending components on the price of transportation fuels. (Public Resources Code §§25373, 25354.4, 25371)
4. Requires the CEC and the California Air Resources Board (CARB), by December 31, 2024, to prepare a Transportation Fuels Transition Plan that includes a discussion of how to ensure that the supply of petroleum and alternative transportation fuels is affordable, reliable, equitable, and adequate to meet the demand for transportation fuels. Requires the report to be prepared in consultation with the state’s fuel producers and refiners and a multistakeholder, multiagency workgroup, including the California Environmental Protection Agency (CalEPA) and the California Natural Resources Agency (CRNA), convened by the CEC and the CARB to identify mechanisms to plan for and monitor progress toward the state’s reliable, safe, equitable, and affordable transition away from petroleum fuels in line with declining instate petroleum demand. (Public Resources Code §25371.3)

This bill:

1. Makes several findings and declarations concerning the volatility of the petroleum fuels market, the abrupt loss of refinery capacity and increased need for imported fuels, the importance of California’s climate policies, and the need for a holistic view of the petroleum value chain and to establish solutions that protect consumers.
2. Establishes an Interagency Working Group on Transportation Fuels Transition Strategy led by the CEC and consists of CalEPA, CRNA, the State Lands Commission, CARB, other agencies and relevant air districts, local governments, airports, and ports.
3. Requires the Interagency Working Group to:
   1. Develop priority policies and programs informed by the Transportation Fuels Transition Plan and the SB 237 Assessment, pursuant to Public Resources Code §§25371.3 and 25371.4, respectively.
   2. Strengthen coordination and communication regarding policies and regulations across state, regional, and local authorities, communities, and stakeholders to inform transportation fuels policy development and implementation, including developing recommendations for policies and programs that ensure a successfully managed transportation fuels sector.
   3. Provides that the coordination includes opportunities for partnership between the Governor’s office, state agencies, boards, commissions, offices, the ICFAC, and, as necessary, the Legislature, to align regulations and permitting processes across all levels of government that could best support achievement of state policy goals.
4. Requires the Interagency Working Group to annually convene at least one public meeting, which may be combined with a meeting of the ICFAC.

Background

Petroleum fuels market. The state’s petroleum fuels market is experiencing incredible market and policy shifts. California’s policies to support clean air and tackle climate change are accelerating the adoption of fuel-efficient conventional vehicles and zero-emission vehicles which is leading to a decline in demand for petroleum-based fuels. Global market conditions, including the recent war in Iran, affect the availability and price for petroleum-based fuels. Many refineries across the globe, including in California, have shuttered operations. For the state, the recent closures of a declining number of refineries from several dozen forty years ago, to less than 10 today, has raised concerns about the continued availability of refined fuels, especially California’s unique gasoline blend.

Governor Newsom sends letter to CEC Commissioner Gunda. On the heels of two years with consecutive special sessions to address gasoline price spikes and supply, Governor Newsom sent a letter on April 21, 2025 to his appointee, CEC Commissioner Siva Gunda, directing him to “redouble the State’s efforts to work closely with refiners on short- and long-term planning, …to help ensure that Californians continue to have access to a safe, affordable, and reliable supply of transportation fuels, and that refiners continue to see the value in serving the California market...” The Governor also directed Commissioner Gunda to recommend, by July 1, 2025, any changes in the State’s approach that are needed to ensure adequate supply during this transition. On June 27, 2025, CEC Commissioner Gunda sent a response to the Governor outlining recommendations, including:

1. Stabilize fuel supply through imports of refined fuels and maintaining in-state refining capacity.
2. Provide sufficient confidence to industry to invest in maintaining reliable and safe infrastructure operations to meet demand.
3. Develop and execute a holistic transportation fuels transition strategy.

SB 237 (Grayson, Chapter 118, Statutes of 2025). Among its provisions, SB 237 required the CEC to submit an assessment to the Legislature and the Governor that evaluates the recommendations and strategies put forward by Commissioner Gunda in the June 27, 2025, letter. The bill also required the assessment to “offer recommendations to the Legislature and the Governor on potential changes to working group authorities or structures, including on permitting changes and reforms, which may include one-stop-shop permitting, to support the state’s reliable, equitable, safe, and affordable transition away from petroleum fuels.”

Comments

Need for this bill. According to the author, this bill was drafted with the intent to address recommendations on changes to working group authorities anticipated from the assessment required by SB 237, including permitting changes and reform, as noted in Commissioner Gunda’s response to the Governor. This bill proposes the creation of an interagency working group, led by the CEC, and including CalEPA, CRNA, the State Lands Commission, other relevant agencies, relevant air districts, local governments, airports, and ports. The working group would help manage and inform the transition of the state’s transportation fuels, including recommendations on permitting reforms.

Refinery and petroleum fuels related work groups and taskforces. There exist some related work groups and task forces concerning refineries and petroleum fuels. These include:

• The ICFAC established by the first special session bill, SB 2 X1 (Skinner, Chapter 1, Statutes of 2023-24 First Extraordinary Session) and modified by AB 1 X2 (Hart, Chapter 1, Statutes of the Second Extraordinary Session) required the CEC to convene the advisory committee at least once annually. The ICFAC is charged with providing input to the CEC and DPMO on the development of the triennial transportation fuels assessment and the effects of refiners’ inventories of fuel and feedstocks and blending components on the price of transportation fuels. The membership of the committee consists of eight members, with six appointed by the Governor and one each by the Assembly Speaker and the Senate Rules Committee. Statute also requires the Governor’s appointees to represent or have specific backgrounds, including related business operations of the transportation fuels market, consumers; a member representing a labor organization with experience in refinery operations; a member with expertise in community, environmental, or environmental justice issues; and a member with expertise in antitrust law.
• The Petroleum Strategy Task Force, referenced in the Governor’s and Commissioner Gunda’s letters. The Petroleum Strategy Task Force is a cross-agency effort convened by CNRA Secretary Wade Crowfoot and CalEPA Secretary Yana Garcia and established in 2025. The Task Force is evaluating the State's progress and risks in managing an energy transition in which supply and in-state demand for petroleum products are both decreasing over the next 20 years. According to staff from the CNRA, the Task Force meets on a roughly monthly basis to coordinate on topics related to petroleum fuels and the transition of fuel. The membership includes the CNRA, CalEPA, California State Transportation Agency, Governor’s Office of Business (GO-Biz), the CEC, DPMO, CARB, State Water Board, State Lands Commission, Department of Industrial Relations, Department of Conservation, Office of Spill Prevention and Response, Office of the State Fire Marshal, and California Department of Tax and Fee Administration. A subgroup of the Task Force focuses specifically on petroleum infrastructure and permitting – including import and distribution infrastructure needs as in-state refining capacity declines.
• The CalEPA Interagency Refinery Taskforce was established by then-Governor Brown after the August 2012 Richmond Oil Refinery fire. The Taskforce is tasked with addressing safety and prevention, emergency preparedness and response, enforcement coordination, and community outreach. Members include several agencies (though not the CEC), local air districts, and Certified Unified Program Agencies (generally local fire departments).

Hot off the press! CEC Commissioner Gunda issues Draft SB 237 Assessment recommends multi-layered voluntary approach to interagency coordination. On May 1^st, CEC Vice-Chair Gunda issued a Draft SB 237 Assessment which includes a pathway recommendation regarding government coordination models and the Legislature’s interest in permitting reform for key petroleum infrastructure, including consideration of one-stop-shop permitting models. The Draft SB 237 Assessment notes that the scope of petroleum-related infrastructure is broad and includes wells and associated production facilities, pipelines, storage tanks, refineries, and terminals whose construction, operation, modifications, and decommissioning are regulated and permitted by numerous federal, state, regional, and local authorities with specialized expertise. As a result, the Draft SB 237 Assessment recommends a multilayered approach that leverages existing expertise and protects agencies’ existing mandates through a voluntary process that enables flexibility and the ability to respond quickly. Specifically, the coordination would continue the efforts of the recently created Petroleum Strategy Task Force, convened by CNRA and CalEPA, for coordination among state agencies with jurisdictions that touch on petroleum fuels. Additionally, the recommendations include continuing a subgroup of the Petroleum Strategy Task Force to focus on permitting petroleum infrastructure; continuing coordination among CARB, local air districts, and the CEC regarding a focused group on refineries; and continuing the CEC’s engagement with relevant local governments on specific petroleum assets. The Draft SB 237 Assessment is scheduled to be considered for adoption by the CEC at the July 8^th business meeting.

Revisiting proposal for new interagency working group given the recommendations in the recently released Draft SB 237 Assessment. The recently released Draft SB 237 Assessment’s recommendation for a multilayered, largely voluntary, and less formalized structure for interagency and permitting coordination may not align with the more formalized approach proposed in this bill. As this bill proceeds, the author and Legislature may wish to consider whether the proposed Interagency Working Group as envisioned by this bill may need to be restructured. Additionally, the author and Legislature may wish to reassess the role of the CEC in convening a new interagency working group and instead consider the current roles of CNRA and CalEPA, as the conveners of the Petroleum Strategy Task Force, as each house critical agencies and departments that regulate portions of the State’s petroleum infrastructure. The CEC oversees energy demand forecasting and has some petroleum pricing and supply regulatory authority from the special session bills, however, it generally does not have permitting authorities for petroleum-related facilities and infrastructure as these are handled by other state agencies and local entities with extensive expertise and public processes.

Prior/Related Legislation

SB 1259 (Blakespear, 2026), includes provisions concerning required reporting of decommissioning and site mitigation for refineries. The bill is pending in the Senate.

SB 1245 (Stern, 2026), requires DPMO’s annual report to be due by July 1 each year. The bill is pending referral in the Assembly.

SB 237 (Grayson, Chapter 118, Statutes of 2025), among its provisions, required the CEC to submit an assessment to the Legislature and the Governor that evaluates the recommendations and strategies put forward by Commissioner Gunda in the letter dated June 27, 2025.

AB 1 X2 (Hart, Chapter 1, Statutes of 2023-24 Second Extraordinary Session) made changes to, and expanded on, SBX1-2 related to transportation fuels, including changes to the Independent Consumer Fuels Advisory Committee.

SB 2 X1 (Skinner, Chapter 1, Statutes of 2023-24 First Extraordinary Session) proposed several policies to address gasoline supply and pricing, including authorizing the CEC to establish a maximum gross gasoline refining margin and penalty on gasoline sold by refiners in the state. The bill also established a new independent division at the CEC, the DPMO, to provide independent oversight and analysis of the transportation fuels markets and established the ICFAC at the CEC.

AB 1649 (Muratsuchi, Chapter 590, Statutes of 2017) required the CalEPA in consultation with specified federal state and local agencies to examine ways to improve safety through enhanced oversight of refineries and to strengthen emergency preparedness in anticipation of future refinery incidents.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

According to the Senate Appropriations Committee:

• The CEC estimates ongoing costs of about $235,000 annually (Energy Resources Program Account [ERPA] or General Fund) to lead and coordinate the interagency workgroup, conduct analysis, engage partner agencies and stakeholders, provide facilitation and administrative coordination, and prepare recommendations, briefings, and other related work products.
• The State Water Board estimates ongoing costs of $250,000 annually (General Fund) for staff to participate in the Interagency Working Group on Transportation Fuels Transition Strategy, assist in developing policies and recommendations to support the transition away from petroleum fuels while meeting the demand for transportation fuels and energy, and to participate in annual public meetings.
• The State Lands Commission and the California Air Resources Board anticipate any costs would be minor and absorbable.
• Unknown but likely minor costs for other state entities participating in the interagency workgroup.

SUPPORT: (Verified 5/14/26)

Bay Area Council
California Hispanic Chambers of Commerce
California Multicultural Business Alliance
Central Valley Yemen Association
East Bay Leadership Council
Garden Grove Chamber of Commerce
Greater Concord Chamber of Commerce
Harbor Association of Industry and Commerce
Hispanic 100
Hispanic Chambers of Commerce of San Francisco
Latin American and Caribbean Business Chamber of Commerce
Latin Business Association
Long Beach Area Chamber of Commerce

Orange County Hispanic Chamber of Commerce
Redondo Beach Chamber of Commerce
San Pablo Economic Development Corporation

San Pedro Chamber of Commerce
South Bay Association of Chambers of Commerce
State Building & Construction Trades Council of California
Torrance Area Chamber of Commerce
Western States Petroleum Association
Wilmington Chamber of Commerce

OPPOSITION: (Verified 5/14/26)

None received

ARGUMENTS IN SUPPORT: According to the State Building and Construction Trades Council of California:

This bill seeks to coordinate agencies, air boards, the governor's office, commissions, ports, and the legislature to work together on public policy development and implementation to better protect the public from escalating fuel costs by ensuring that in-state resources are best leveraged and protected from premature closure or constriction. In turn, this type of coordination could protect the thousands of workers we represent in the oil and gas industry who depend on California’s public agencies, officers, and elected officials to protect their livelihoods and cost of living. SB 1337 is a first step to ending a polarizing political conflict that has led to the premature closure of several of California’s refineries, resulting in the loss of thousands of high-paid union careers and causing an escalation in the cost of fuel for every California family.

Prepared by: Nidia Bautista / E., U. & C. / (916) 651-4107

5/16/26 11:15:18

**** END ****

SENATE COMMITTEE ON

Senator Sabrina Cervantes, Chair

2025 - 2026 Regular Session

SB 1337 (Richardson) - Interagency Working Group on Transportation Fuels Transition Strategy

Bill Summary:

This bill would establish the Interagency Working Group on Transportation Fuels Transition Strategy led by the California Energy Commission (CEC) to address transportation fuels policy and coordination.

Fiscal Impact:

• The CEC estimates ongoing costs of about $235,000 annually (Energy Resources Program Account [ERPA] or General Fund) to lead and coordinate the interagency workgroup, conduct analysis, engage partner agencies and stakeholders, provide facilitation and administrative coordination, and prepare recommendations, briefings, and other related work products.
• The State Water Board estimates ongoing costs of $250,000 annually (General Fund) for staff to participate in the Interagency Working Group on Transportation Fuels Transition Strategy, assist in developing policies and recommendations to support the transition away from petroleum fuels while meeting the demand for transportation fuels and energy, and to participate in annual public meetings.
• The State Lands Commission and the California Air Resources Board anticipate any costs would be minor and absorbable.
• Unknown but likely minor costs for other state entities participating in the interagency workgroup.

Background:

Petroleum fuels market. The state’s petroleum fuels market is experiencing incredible market and policy shifts. California’s policies to support clean air and tackle climate change are accelerating the adoption of fuel-efficient conventional vehicles and zero-emission vehicles which is leading to a decline in demand for petroleum-based fuels. Global market conditions, including the recent war in Iran, affect the availability and price for petroleum-based fuels. Many refineries across the globe, including in California, have shuttered operations. For the state, the recent closures of a declining number of refineries from several dozen forty years ago, to less than 10 today, has raised concerns about the continued availability of refined fuels, including gasoline.

Governor Newsom sends letter to CEC Commissioner Gunda. On the heels of two years with consecutive special sessions to address gasoline price spikes and supply, Governor Newsom sent a letter on April 21, 2025 to his appointee, CEC Vice Chair Commissioner Siva Gunda, directing him to “redouble the State’s efforts to work closely with refiners on short- and long-term planning, including through high-level, immediate engagement, to help ensure that Californians continue to have access to a safe, affordable, and reliable supply of transportation fuels, and that refiners continue to see the value in serving the California market, even as demand for fossil fuels continues its gradual decline over the coming decades.” The Governor also directed Commissioner Gunda to recommend, by July 1, 2025, any changes in the State’s approach that are needed to ensure adequate supply during this transition.

On June 27, 2025, Commissioner Gunda sent a response to the Governor outlining recommendations to ensure Californians have access to safe, affordable, and reliable transportation fuels and that petroleum refiners continue to see value in serving the California market. Specifically, Commissioner Gunda recommended:

1. Stabilize fuel supply through imports of refined fuels and maintaining in-state refining capacity.
2. Provide sufficient confidence to industry to invest in maintaining reliable and safe infrastructure operations to meet demand.
3. Develop and execute a holistic transportation fuels transition strategy.

SB 237 (Grayson, Chapter 118, Statutes of 2025). Among its provisions, SB 237 required the CEC to submit an assessment to the Legislature and the Governor that evaluates the recommendations and strategies put forward by Commissioner Gunda in the June 27, 2025 letter. The bill also required the assessment to:

“offer recommendations to the Legislature and the Governor on potential changes to working group authorities or structures, including on permitting changes and reforms, which may include one-stop-shop permitting, to support the state’s reliable, equitable, safe, and affordable transition away from petroleum fuels.”

As of the date of this bill analysis, the assessment is pending.

Proposed Law:

This bill would:

1. Make several findings and declarations concerning the volatility of the petroleum fuels market, the abrupt loss of refinery capacity and increased need for imported fuels, the importance of California’s climate policies, and the need for a holistic view of the petroleum value chain and to establish solutions that protect consumers.
2. Establish the Interagency Working Group on Transportation Fuels Transition Strategy, to be led by the CEC, and consisting of:
   1. The California Environmental Protection Agency
   2. The Natural Resources Agency
   3. The Transportation Agency
   4. The State Air Resources Board
   5. The State Water Resources Control Board
   6. The Department of Industrial Relations
   7. The State Lands Commission
   8. Relevant air districts
   9. Local governments
   10. Airports
   11. Ports
   12. Local agencies
3. Require the Interagency Working Group on Transportation Fuels Transition Strategy to do both of the following:
   1. Develop priority policies and programs informed by the Transportation Fuels Transition Plan, as provided.
   2. Strengthen coordination and communication regarding policies and regulations across state, regional, and local authorities, communities, and stakeholders.
      1. Develop recommendations, as needed, for policies and programs that ensure a successfully managed transportation fuels sector.
      2. Propose opportunities for partnership between the Governor’s office, state agencies, boards, commissions, offices, and other entities, as necessary, and the Legislature in order to advance solutions to strategically align regulations and permitting processes across all levels of government that could best support achievement of state policy goals.
4. Require the CEC to annually convene at least one public meeting of the Interagency Working Group on Transportation Fuels Transition Strategy to provide members of the public with information and to receive information and comments from the public, as provided.

Related Legislation:

SB 1259 (Blakespear) of 2026, includes provisions concerning required reporting of decommissioning and site mitigation for refineries.

SB 1245 (Stern) of 2026, would require DPMO’s annual report to be due by July 1 each year.

SB 237 (Grayson, Chapter 118, Statutes of 2025), among its provisions, required the CEC to submit an assessment to the Legislature and the Governor that evaluates the recommendations and strategies put forward by Commissioner Gunda in the letter dated June 27, 2025.

AB X2-1 (Hart, Chapter 1, Statutes of 2023-2024 Second Extraordinary Session) made changes to, and expanded on, SBX1-2 related to transportation fuels, including changes to the Independent Consumer Fuels Advisory Committee.

SB X1-2 (Skinner, Chapter 1, Statutes of the 2023-204 First Extraordinary Session) proposed several policies to address gasoline supply and pricing, including authorizing the CEC to establish a maximum gross gasoline refining margin and penalty on gasoline sold by refiners in the state. The bill also established a new independent division at the CEC, the DPMO, to provide independent oversight and analysis of the transportation fuels markets and established the ICFAC at the CEC.

AB 1649 (Muratsuchi, Chapter 590, Statues of 2017) required the CalEPA in consultation with specified federal state and local agencies to examine ways to improve safety through enhanced oversight of refineries and to strengthen emergency preparedness in anticipation of future refinery incidents.

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SENATE COMMITTEE ON ENERGY, UTILITIES AND COMMUNICATIONS

Senator Benjamin Allen, Chair

2025 - 2026 Regular

Bill No: Hearing Date: 4/7/2026

SUBJECT:

DIGEST: This bill establishes an interagency workgroup led by the California Energy Commission to address transportation fuels policy and coordination.

ANALYSIS:

Existing law:

1. Establishes the State Energy Resources Conservation and Development Commission, also known as the California Energy Commission (CEC), consisting of five members appointed by the Governor, and specifies the duties of the CEC. Requires the CEC to assess trends in energy consumption and analyze the social, economic, and environmental consequences of these trends. (Public Resources Code §25200 et seq.)
2. Establishes the Petroleum Industry Information Reporting Act of 1980 (PIIRA). (Public Resources Code §25350 et seq.)
3. Establishes the Division of Petroleum Market Oversight (DPMO) to provide independent oversight and analysis of the transportation fuels market 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 the consumers in the state. (Public Resources Code §25372 et seq.)
4. Requires the director of DPMO, when requested, to appear before the appropriate policy committees of the Legislature to provide an update on the division’s performance as compared to its objectives, the status of competition in the transportation fuels markets, and other information the committees request. (Public Resources Code §25372.3)
5. Establishes the Independent Consumer Fuels Advisory Committee (ICFAC) consisting of six members appointed by the Governor and one member appointed each by the Assembly Speaker and the Senate Committee on Rules. The ICFAC is charged with providing input to the CEC on the development of the triennial transportation fuels assessment and the effects of refiners’ inventories of fuel and feedstocks and blending components on the price of transportation fuels. (Public Resources Code §§25373, 25354.4, 25371)
6. Requires the CEC and the California Air Resources Board (CARB), by December 31, 2024, to take into account findings of the assessment conducted under Section 25371 and prepare a Transportation Fuels Transition Plan. Requires the report to include, at a minimum, a discussion of how to ensure that the supply of petroleum and alternative transportation fuels is affordable, reliable, equitable, and adequate to meet the demand for those transportation fuels described in the most current scoping plan approved by CARB under Section 38561 of the Health and Safety Code. Requires the report to be prepared in consultation with the state’s fuel producers and refiners and a multistakeholder, multiagency workgroup, including the California Environmental Protection Agency (CalEPA) and the California Natural Resources Agency (CRNA), convened by the CEC and the CARB to identify mechanisms to plan for and monitor progress toward the state’s reliable, safe, equitable, and affordable transition away from petroleum fuels in line with declining instate petroleum demand. Requires the DPMO to provide input to and otherwise support other divisions of the CEC in preparation of the plan. (Public Resources Code §25371.3)
7. Requires CalEPA, in consultation with specified federal state and local agencies, to examine ways to improve public and worker safety through enhanced oversight of refineries and to strengthen emergency preparedness in anticipation of any future refinery incident, and to facilitate coordination among these agencies to protect the public, fence line communities, and refinery workers from risks associated with refinery operations throughout the state. (Public Resources Code §71275)

This bill:

1. Makes several findings and declarations concerning the volatility of the petroleum fuels market, the abrupt loss of refinery capacity and increased need for imported fuels, the importance of California’s climate policies, and the need for a holistic view of the petroleum value chain and to establish solutions that protect consumers.
2. Establishes an interagency workgroup led by the CEC and consisting of the State Lands Commission, relevant air districts, local governments, airports, and ports, to:
   1. Strengthen coordination and establish clear lines of communication to prioritize critical energy policies and regulations across state, regional, and local authorities, communities, and stakeholders.
   2. Implement a suite of policies and programs that ensure a successfully managed transportation fuels sector.
   3. Develop and execute a holistic transportation fuels strategy.
   4. Propose opportunities for partnership between the Governor’s office, state agencies, boards, commissions, offices, and other entities, as necessary, and the Legislature in order to advance solutions to strategically align regulations and permitting processes across all levels of government that could best support achievement of state policy goals from the June 27, 2025 letter from the CEC to the Governor.

Background

Petroleum fuels market. The state’s petroleum fuels market is experiencing incredible market and policy shifts. California’s policies to support clean air and tackle climate change are accelerating the adoption of fuel-efficient conventional vehicles and zero-emission vehicles which is leading to a decline in demand for petroleum-based fuels. Global market conditions, including the recent war in Iran, affect the availability and price for petroleum-based fuels. Many refineries across the globe, including in California, have shuttered operations. For the state, the recent closures of a declining number of refineries from several dozen forty years ago, to less than 10 today, has raised concerns about the continued availability of refined fuels, including gasoline.

Governor Newsom sends letter to CEC Commissioner Gunda. On the heels of two years with consecutive special sessions to address gasoline price spikes and supply, Governor Newsom sent a letter on April 21, 2025 to his appointee, CEC Vice Chair Commissioner Siva Gunda, directing him to “redouble the State’s efforts to work closely with refiners on short- and long-term planning, including through high-level, immediate engagement, to help ensure that Californians continue to have access to a safe, affordable, and reliable supply of transportation fuels, and that refiners continue to see the value in serving the California market, even as demand for fossil fuels continues its gradual decline over the coming decades.” The Governor also directed Commissioner Gunda to recommend, by July 1, 2025, any changes in the State’s approach that are needed to ensure adequate supply during this transition.

On June 27, 2025, Commissioner Gunda sent a response to the Governor outlining recommendations to ensure Californians have access to safe, affordable, and reliable transportation fuels and that petroleum refiners continue to see value in serving the California market. Specifically, Commissioner Gunda recommended:

1. Stabilize fuel supply through imports of refined fuels and maintaining in-state refining capacity.
2. Provide sufficient confidence to industry to invest in maintaining reliable and safe infrastructure operations to meet demand.
3. Develop and execute a holistic transportation fuels transition strategy.

SB 237 (Grayson, Chapter 118, Statutes of 2025). Among its provisions, SB 237 required the CEC to submit an assessment to the Legislature and the Governor that evaluates the recommendations and strategies put forward by Commissioner Gunda in the June 27, 2025 letter. The bill also required the assessment to:

“offer recommendations to the Legislature and the Governor on potential changes to working group authorities or structures, including on permitting changes and reforms, which may include one-stop-shop permitting, to support the state’s reliable, equitable, safe, and affordable transition away from petroleum fuels.”

As of the date of this bill analysis, the assessment is pending.

Comments

Need for this bill. This bill is intended to address recommendations that may stem from the assessment required by SB 237 which includes recommendations on changes to working group authorities. These may include permitting changes and reforms. In anticipation of the SB 237 assessment, this bill proposes the creation of a working group, led by the CEC, and including the State Lands Commission, relevant air districts, local governments, airports, and ports. The goals of the working group would be to help manage and inform the transition of the state’s transportation fuels.

Related work groups and taskforces. There exist some related, though not specifically conflicting or overlapping, work groups and task forces concerning refineries. These include:

• The ICFAC established by the first special session bill, SB X1-2 (Skinner, Chapter 1, Statutes of 2023-24 First Extraordinary Session) and modified by AB X2-1 (Hart, Chapter 1, Statutes of the Second Extraordinary Session) required the CEC to convene the advisory committee at least once annually. The ICFAC is charged with providing input to the CEC and DPMO on the development of the triennial transportation fuels assessment and the effects of refiners’ inventories of fuel and feedstocks and blending components on the price of transportation fuels. The membership of the committee, pursuant to the statutes, consists of eight members, with six appointed by the Governor and one each by the Assembly Speaker and the Senate Rules Committee. Statute also requires the Governor’s appointees to represent or have specific backgrounds: a member who holds an academic appointment and has knowledge of economics or business operations of the transportation fuels market; a member representing the California petroleum fuels industry; a member representing consumers; a member representing a labor organization with experience in refinery operations; a member with expertise in community, environmental, or environmental justice issues; and a member with expertise in antitrust law.
• The Petroleum Strategy Task Force, referenced in the Governor’s and Commissioner Gunda’s letters. The Petroleum Strategy Task Force is a cross-agency effort convened by CNRA Secretary Wade Crowfoot and CalEPA Secretary Yana Garcia. The Task Force is evaluating the State's progress and risks in managing an energy transition in which supply and in-state demand for petroleum products are both decreasing over the next 20 years. According to staff from the CNRA, the Task Force meets on a roughly monthly basis to coordinate on topics related to petroleum fuels and the transition of fuel. The membership includes the CNRA, CalEPA, California State Transportation Agency, Governor’s Office of Business (GO-Biz), the CEC, DPMO, CARB, State Water Board, State Lands Commission, Department of Industrial Relations, Department of Conservation, Office of Spill Prevention and Response, Office of the State Fire Marshal, and California Department of Tax and Fee Administration. A subgroup of the Task Force focuses specifically on petroleum infrastructure and permitting – including import and distribution infrastructure needs as in-state refining capacity declines.
• The CalEPA Interagency Refinery Taskforce was established by Governor Brown after the August 2012 Richmond Oil Refinery fire. The Taskforce is meant to address safety and prevention, emergency preparedness and response, enforcement coordination, and community outreach. Members include several agencies (though not the CEC), local air districts, and Certified Unified Program Agencies (generally local fire departments).
• According to staff at the CNRA, the CEC and CNRA also have a recurring coordination venue with the local air districts who regulate air and toxic emissions from refineries.
• CNRA staff also shared that the CEC has also been engaging with relevant local governments on specific petroleum assets and infrastructure projects, especially those relevant to fuel supply stability, and is in the process of developing a coordination structure to bring together a broader group of state and local agencies.

DPMO. In addition to the above workgroups, taskforces, and convenings, the first special session statute also established the DPMO within the CEC, as an independent watchdog agency overseeing the oil and gasoline industry. As an independent division of the CEC, DPMO is responsible for oversight, investigations, economic analysis, and policy recommendations regarding the transportation fuels market. DPMO also provides input into the Fuels Assessment and the long-awaited CEC and CARB authored Fuels Transition Plan required by the statutes.

Need for amendments. In order to account for the anticipated release of both the SB 237 assessment and the SB X1-2 Fuels Transition Plan (required by December 31, 2024), as well as, the existing task forces and work groups, the author and committee may wish to amend this bill to:

• Include membership from CRNA, CalEPA, and other relevant agencies.
• Clarify that priority policies and programs should be informed by the Fuels Transition Plan and the SB 237 assessment.
• Add a reference to potential partnerships with the existing Independent Consumer Fuels Advisory Committee.
• Delete reference to the development of a holistic transportation fuels strategy.
• Require the CEC to provide the public with an opportunity to provide comment, including at a public meeting.
• Additional clarifying changes.

Prior/Related Legislation

SB 1259 (Blakespear) of 2026, includes provisions concerning required reporting of decommissioning and site mitigation for refineries. The bill is pending in the Senate Environmental Quality Committee.

SB 1245 (Stern) of 2026, requires DPMO’s annual report to be due by July 1 each year. The bill is pending referral in the Senate Rules Committee.

SB 237 (Grayson, Chapter 118, Statutes of 2025), among its provisions, required the CEC to submit an assessment to the Legislature and the Governor that evaluates the recommendations and strategies put forward by Commissioner Gunda in the letter dated June 27, 2025.

AB X2-1 (Hart, Chapter 1, Statutes of 2023-2024 Second Extraordinary Session) made changes to, and expanded on, SBX1-2 related to transportation fuels, including changes to the Independent Consumer Fuels Advisory Committee.

SB X1-2 (Skinner, Chapter 1, Statutes of the 2023-204 First Extraordinary Session) proposed several policies to address gasoline supply and pricing, including authorizing the CEC to establish a maximum gross gasoline refining margin and penalty on gasoline sold by refiners in the state. The bill also established a new independent division at the CEC, the DPMO, to provide independent oversight and analysis of the transportation fuels markets and established the ICFAC at the CEC.

AB 1649 (Muratsuchi, Chapter 590, Statues of 2017) required the CalEPA in consultation with specified federal state and local agencies to examine ways to improve safety through enhanced oversight of refineries and to strengthen emergency preparedness in anticipation of future refinery incidents.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

SUPPORT:

Bay Area Council
California Hispanic Chambers of Commerce
California Multicultural Business Alliance
Central Valley Yemen Association
East Bay Leadership Council
Garden Grove Chamber of Commerce
Greater Concord Chamber of Commerce
Harbor Association of Industry and Commerce
Hispanic 100
Hispanic Chambers of Commerce of San Francisco
Latin American and Caribbean Business Chamber of Commerce
Latin Business Association
Orange County Hispanic Chamber of Commerce
Redondo Beach Chamber of Commerce
San Pablo Economic Development Corporation

San Pedro Chamber of Commerce
South Bay Association of Chambers of Commerce
State Building & Construction Trades Council of California
Torrance Area Chamber of Commerce
Western States Petroleum Association
Wilmington Chamber of Commerce

OPPOSITION:

None received

ARGUMENTS IN SUPPORT: According to the author:

California’s pioneering climate and air quality policies are critical to protecting our communities’ health, which has led to a rapid evolution of California’s petroleum market. Decreasing demand, economic factors, and the volatility of the international petroleum market has introduced uncertainty to the petroleum industry that impacts consumers, the workforce, and fence-line communities. SB 1337 will help manage this transition of the State by creating a working group established by the State Energy Resources Conservation and Development Commission to strengthen coordination, establish clear lines of communication, and propose partnership opportunities to advance strategically advanced solutions to align regulations and permitting processes.

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